Benedict Evans of Enders Analysis explains the market distortions that make smartphones so expensive in the US - and other data explains whether they go to new or existing buyers

Here's a statistic: in the first quarter of 2012, of the 18m smartphones sold in the US through carriers, the majority went to existing smartphone owners. Less than half - about 8.6m - went to new smartphone owners: people upgrading from a featurephone or getting their first phone. (The former is more likely.)

Decided how? A combination of two sets of data. First is the analysis by Benedict Evans of Enders Analysis, who in his latest blogpost looks at the balance of smartphones sales in the US.

Evans's post is interesting in itself:

the iPhone is now roughy half of ALL smartphone sales in the USA, as reported by the operators themselves, who really ought to know. And yet globally, Android is outselling the iPhone 2:1. How to explain the discrepancy? In a word, price.

US smartphone share, 1Q 2012, by carrier. Source: Benedict Evans/Enders Analysis

He explains that "Relative to most other developed markets, the US mobile market is structured around significantly higher usage, higher monthly bills and much less competition on handset subsidy".

He shows that the way US carriers set up their contracts means that an iPhone is barely more expensive than other smartphones there:

With a minimum entry price of $80/month and a handset price of $200, the minimum 24 month total cost of ownership [TCO] for an iPhone 4S in the USA is $2,120, whereas the minimum TCO for a 'free' smartphone is $1,920. For a US consumer, the potential saving from getting a cheaper smartphone instead of an iPhone is just 10% of the 24m TCO Conversely the lowest TCO at which a consumer can get an iPhone in the UK is just $998. This is under half what they would have to pay in the USA: however, it is also possible to get a smartphone in the UK for a TCO of just $384 – 20% of the US equivalent. Hence, an American can only save 10% over two years by getting a 'free' smartphone over an iPhone. In the UK, the iPhone is 160% more expensive than the cheapest smartphone offer.

Which would go a long way to explaining why the iPhone sells so much better in the US: it's not a very competitive market. "The iPhone 4S 16Gb is available in the UK at 10 different prices (including free), depending on what contract you take out," Evans notes. "In the USA, it costs $200 on any contract".

Now, to the other point, about the number of those smartphones going to existing owners. Evans's data says that in the first quarter of 2012, there were 18m smartphones sold through the five principal operators in the US - 9m iPhones, and 9m other smartphones.

In parallel, ComScore has a gigantic panel of mobile phone owners whom it polls every month, and it releases the data from those polls about a month behind.

Looking at the period from January to March, the installed base of smartphones (among a total of 234m users) grew from 97.9m users in the three months ending in December 2011 to its March figure, where it says 106m people owned a smartphone during the three months ending in March. That's a growth of 8.6m in the installed base - the number who have one.

That indicates that less than half (47%) went to new owners. Which suggests that the real challenge for the smartphone makers who are looking to grow - and those who are looking to get into the market - will be getting the 50% who are still using a featurephone to buy a smartphone - or even to use a smartphone in that way even if they get it. Perhaps what it really needs is for the US carriers to introduce a more competitive market. But there's no sign of that happening lately.