Smartphone boom may be slowing as the oldies hold out

Aug 6, 2013

In its recent Connected Consumer Survey 2013 report Analysys Mason points out that despite the huge success of the smartphone, the remaining non-smartphone user base will require a different approach - lower prices and more features won't be enough.

The researchers found that out of 6600 consumers in France, Germany, Poland, Spain, the UK and the USA, 52 per cent had a smartphone, and that adoption amongst the 18 to 24s had accelerated, from 64 per cent in October 2011 to 77 per cent in October 2012. So there was no longer much growth left there. Instead operators had to go after the older user segments if they wanted to move the dial.

On the up side, with most of the segments there is a steadily increasing willingness to adopt (or re-adopt) a smartphone at the next mobile phone purchase - half of the respondents in this year’s Connected Consumer Survey said they would definitely opt for a smartphone for their next handset purchase, compared to just over 30 per cent last year.

The researchers also looked at the 48 per cent of respondents who do not use a smartphone, 40 per cent of whom indicated that they didn't plan to purchase a smartphone next time even if it were to cost the same as a non-smartphone.

Of those respondents who do not own a smartphone 61 per cent were on prepaid or SIM-only subscriptions, compared with only 36 per cent of smartphone users. Also, 50 per cent of the non-smartphone users were older than 55, while only 17 per cent of smartphone users were in this age group.

These factors all present a challenge for service providers looking to upgrade the remaining non-smartphone customers, claims Analysys Mason.

Handset subsidies aren't an incentive in the prepaid and SIM-only market, while app-focused marketing campaigns that appeal to younger users won't necessarily be useful either since many of the targets are over 55.

Device-leasing plans might also get a raspberry - these tend to target lower-end customers who want the ‘hottest’ smartphones, but they may not be particularly interesting for an older demographic who tend to hold on to the one they have - 42 per cent of non-smartphone respondents have had their handset for more than 2 years, compared to 7 per cent of smartphone respondents.

So, says Analysys Mason, Operators must get creative about promoting smartphones to the ‘remaining’ lower-end and older subscriber base.

The report recommends:

"A high share of non-smartphone users on prepaid or SIM-only subscriptions are likely to be attracted by low-end packages that are usually not available on smartphone tariffs. Operators still need to educate non-smartphone users – particularly older ones – about the benefits of owning a smartphone and about how mobile data tariffs are structured, in order to avoid bill shock.

Recent innovative operator approaches include offering to pay-as-you-go SIM customers the chance to purchase packages of more data than the token amounts that were previously available. This could encourage more prepaid subscribers to adopt low-end smartphones in order to make best use of the data.

Non-smartphone users continue to attach a lot of value to voice and messaging services, which operators must consider when trying to promote smartphones to these consumers. For example, pre-loaded over-the-top (OTT) communications or social networking apps could be used as an incentive, whether provided by the operator or by a third-party player. Operators may also be able to convince non-smartphone users to upgrade to a smartphone by providing rewards in the form of free voice and messaging credits."

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