Although smartphone penetration is still growing in many markets in Europe and the United States, carriers will need to get increasingly creative to get those remaining non-smartphone users to convert over to smartphones, which have higher average revenue per user, according to a new study by Analysys Mason.
According to the research firm, which recently surveyed 6,600 consumers in the United States, France, Germany, Poland, Spain and the United Kingdom, 52 percent of respondents with a mobile handset had a smartphone. However, there are some signs that the market is starting to saturate, with the smartphone share of handsets purchased in the past six months apparently declining in France and Spain, the markets with the highest smartphone adoption.
Further, the percentage of respondents aged 18 to 24 who owned or regularly used a smartphone increased from 64 percent in October 2011 to 77 percent in October 2012, an indication that carriers will need to aggressively target older users if they want to continue to drive smartphone adoption.
While nearly half of the respondents in the survey who owned a handset said they would definitely buy a smartphone as their next device (up from 30 percent last year), of those who do not own a smartphone, fully 40 percent indicated that they do not plan to (or are unsure whether they will) purchase a smartphone next time they acquire a device, even if a smartphone costs the same as a non-smartphone.
Prices are coming down for smartphones across the board as adoption surges, component prices drop and OEMs discount older flagship models. However, price was not cited as much of a barrier to adoption, according to Analysys Mason. Of the survey respondents who do not own a smartphone, the majority (61 percent) were on prepaid or SIM-only subscriptions, compared with only 36 percent of smartphone users. The survey found those who do not own a smartphone are also generally older, with 50 percent of the non-smartphone users being older than 55, while only 17 percent of smartphone users were in this age group.
As a result, carriers are faced with several challenges, Analysys Mason noted, adding that handset subsidies do not serve as an incentive in the prepaid and SIM-only market. Further, handset upgrade programs, which have recently been introduced in the U.S. market by T-Mobile US (NYSE:TMUS), AT&T Mobility (NYSE:T) and Verizon Wireless (NYSE:VZ), likely won't appeal to older, non-smartphone users who do not care as much about getting the latest and greatest devices. The survey shows that 42 percent of non-smartphone respondents have had their handset for more than two years, compared to 7 percent of smartphone respondents.
Most non-smartphone users are attracted to cheaper rate plans, the research firm noted, and carriers will need to a better job of showing the benefits of owning a smartphone and explaining how mobile data prices are structured in order to avoid bill shock, if they hope to get these users to convert. Analysys Mason noted that recent innovative carrier approaches include offering to pay-as-you-go SIM customers the ability to purchase higher amounts of data, which could incentivize them to switch to a smartphone. The firm also noted that non-smartphone users place a premium on voice and messaging services, and that carriers could pre-load over-the-top (OTT) messaging or social network apps to attract non-smartphone users.
- see this Analysys Mason release
- see this Canalys release
- see this The NextWeb article
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