NEW YORK T-Mobile TMUS.N overtook Sprint Corp (S.N) as the No. 3 smartphone purchaser in the United States in the first quarter, according to a report, as the company used aggressive discounting to add more new subscribers than any other U.S. wireless operator.
T-mobile bought 6 million smartphones in the first quarter, compared with Sprint's 5 million, according to Neil Shah, analyst at Counterpoint Technology Market Research.
Smartphones account for 87 percent of total handsets in the United States but their numbers are growing at a crawling pace. In this nearly saturated market, companies are relying on promotions to lure subscribers from one another.
T-Mobile, Verizon (VZ.N) and AT&T (T.N) recently launched device installment plans that separate the cost of devices from the cost of service, prompting more customers to switch from basic to smartphones.
While T-mobile still trails Sprint in total subscribers, the numbers show that T-Mobile's price cuts and promotions are working, Shah said.
"Sprint doesn't have that much demand to sell into," Shah said in an interview. "They will have to up their strategy".
Apple APPL.O and Samsung (005930.KS) captured more than two-thirds of the smartphone purchases in the quarter, with Android making up 59 percent of shipments.
Apple phones were more popular with the two largest carriers, AT&T and Verizon, while Samsung was the best performing brand at T-Mobile.
Android's popularity with the smaller carriers is partially because T-Mobile and Sprint were the last two major wireless providers to carry Apple's iPhone, so their existing customer base is more familiar with the android phone, said Shah.
(Reporting By Marina Lopes)