Ownership of Larger Smartphones Is Growing; Satisfaction Outpacing That of Smaller Smartphones

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1 Ownership of Larger Smartphones Is Growing; Satisfaction Outpacing That of Smaller Smartphones Apple Ranks Highest among Smartphone Manufacturers; LG, Motorola and Pantech Rank Highest among Traditional Mobile Phone Manufacturers WESTLAKE VILLAGE, Calif: 15 October 2015 More wireless subscribers are purchasing smartphones with screen diagonals over 5 inches (large phones), and customer satisfaction with these devices has improved, according to the J.D. Power 2015 U.S. Wireless Smartphone Satisfaction Study SM Volume 2 and the J.D. Power 2015 U.S. Wireless Traditional Mobile Phone Satisfaction Study SM released today. For information about the studies, visit: Now in its ninth year, the U.S. Wireless Smartphone Satisfaction Study measures customer satisfaction based on four factors (listed in order of importance): performance (29%); features (26%); physical design (23%); and ease of operation (22%). The 2015 U.S. Wireless Traditional Mobile Phone Satisfaction Study measures customer satisfaction based on four factors: features (31%); physical design (24%); performance (23%); and ease of operation (22%). Both studies measure customer satisfaction with wireless OEMs across tier 1 1 wireless carriers. Satisfaction is calculated on a 1,000-point scale. According to the 2015 Vol. 2 Study, the proportion of customers who own smartphones with a screen display larger than 5 inches has increased to 37 percent from 26 percent in Vol. 1 an 11 percentage point increase in just six months. The popularity of larger devices is mainly attributable to display size, as images such as photos, movies and websites are easier to view and social media sites are easier to navigate on these devices. Even typing on a virtual keyboard is more user friendly on a larger screen. Consequently, overall satisfaction with the larger devices is typically higher than with smaller size smartphones (4 inches or smaller) at the brand level. Additionally, the gap in satisfaction between owners with larger smartphones and those with the smaller devices among all brands is 40 points, up from 32 points in the 2015 Vol. 1 Study (856 vs. 816, respectively), with the performance, features and physical design factors generating the largest satisfaction gaps between the two segments. Notably, customers are paying more for their smartphone as devices have increased in size. In the 2015 Vol. 2 Study, the average price paid for a smartphone (excluding free phones) is $287, compared to $239 in Vol. 1. Satisfaction is clearly higher among owners of larger smartphones, based on a number of reasons surrounding the physical display size and latest technology capabilities, said Kirk Parsons, senior director and technology, media & telecom practice leader at J.D. Power. It s important for the wireless providers that offer these devices to realize that spending on new service rises when subscribers upgrade smartphones. Also, when customers are more satisfied with their smartphone selection, OEMs and carriers can benefit through increased customer loyalty and repurchase intent. 1 Tier 1 carriers are the four national wireless providers in the United States: AT&T, Sprint, T-Mobile and Verizon Wireless. (Page 1 of 3)

2 Wireless Smartphone Satisfaction Study KEY FINDINGS Among smartphone manufacturers, Apple ranks highest in overall satisfaction across all four tier 1 carriers, including AT&T (840), Sprint (848), T-Mobile (847) and Verizon Wireless (835). Samsung follows closely among customers of AT&T (839), Sprint (845) and Verizon Wireless (831), while HTC ranks second among T-Mobile customers (845). The share of customers who own smartphone devices they purchased through an equipment installment plan (EIP) 2 has increased in 2015 Vol. 2 from 2015 Vol. 1 (20% vs. 16%, respectively). On average, owners of larger smartphones spend 1.5 hours more per week using their device for such everyday activities as browsing, ing and listening to/viewing content than owners of smaller smartphones. Nearly one-third (31%) of customers select their phone based on its features, followed by price at 22 percent; operating system at 17 percent; and style/design at 15 percent. Satisfaction is highest among customers who choose their phone based on operating system (864), with 79 percent of these customers saying they strongly agree or somewhat agree that they feel loyal to the smartphone brand. Wireless Traditional Mobile Phone Satisfaction Study Among traditional mobile phone manufacturers, LG, Motorola and Pantech tie for the highest rank position across tier 1 carriers, with a score of 716 each. Samsung follows with a score of 714. Overall satisfaction with traditional phones averages 712 in 2015, a 22-point drop from Satisfaction with traditional phones is declining as the gap widens between the capabilities of smartphones vs. traditional phones. Excluding free phones, the average price of a traditional phone is $57, a slight decline from $59 in A relatively high proportion of traditional phone customers receive their phones free (40%), while relatively few of these customers purchase phones through equipment installment plans, compared with smartphone customers (10% vs. 20%, respectively). Among customers who are highly satisfied with their device s ease of operation (providing a rating of 9 or 10 on a 10-point scale), 83 percent say they definitely will or probably will purchase another phone from the same OEM in the future. In comparison, only 44 percent of customers who are much less satisfied with their ease of operation experience (ratings of 1 to 5) say they definitely will or probably will purchase again from the same OEM. The 2015 U.S. Wireless Smartphone Satisfaction Study Volume 2 is based on experiences evaluated by 11,464 smartphone customers who have owned their current smartphone device less than one year and are customers of one of the four tier 1 carriers. The study was fielded from March through August The 2015 U.S. Wireless Traditional Mobile Phone Satisfaction Study is based on experiences evaluated by 1,327 traditional device customers who have owned their current phone less than 18 months and are a customer of one of the four tier 1 carriers. The study was fielded from September 2014 through August An equipment installment plan is one in which a mobile device is leased for a specific time period and can be purchased outright at the end of the term or upgraded to a newer device. (Page 2 of 3)

3 Media Relations Contacts John Tews; Troy, Mich.; ; About J.D. Power and Advertising/Promotional Rules About McGraw Hill Financial # # # (Page 3 of 3) Note: Seven charts follow.

4 Year / Project / Study Name J.D. Power 2015 U.S. Wireless Smartphone Satisfaction Study SM Volume 2 Overall Wireless Smartphone Index Rankings AT&T (Based on a 1,000-point scale) JDPower.com Power Circle Ratings TM for consumers: Apple 840 Samsung 839 AT&T Average 837 HTC 828 LG 823 Microsoft/Nokia 799 Source: J.D. Power 2015 U.S. Wireless Smartphone Satisfaction Study SM Volume 2 Power Circle Ratings Legend Among the best Better than most About average The rest J.D. Power as the publisher and the study from which it originated as the source. Rankings are based on numerical scores,

5 Year / Project / Study Name J.D. Power 2015 U.S. Wireless Smartphone Satisfaction Study SM Volume 2 Overall Wireless Smartphone Index Rankings Sprint (Based on a 1,000-point scale) JDPower.com Power Circle Ratings TM for consumers: Apple 848 Samsung 845 Sprint Average 841 HTC 824 LG 812 Note: Included in the study, but not ranked due to small sample size is Motorola. Source: J.D. Power 2015 U.S. Wireless Smartphone Satisfaction Study SM Volume 2 Power Circle Ratings Legend Among the best Better than most About average The rest J.D. Power as the publisher and the study from which it originated as the source. Rankings are based on numerical scores,

6 Year / Project / Study Name J.D. Power 2015 U.S. Wireless Smartphone Satisfaction Study SM Volume 2 Overall Wireless Smartphone Index Rankings T-Mobile (Based on a 1,000-point scale) JDPower.com Power Circle Ratings TM for consumers: Apple 847 HTC 845 Samsung 830 T-Mobile Average 823 Motorola 819 LG 797 Microsoft/Nokia 795 Alcatel 705 Source: J.D. Power 2015 U.S. Wireless Smartphone Satisfaction Study SM Volume 2 Power Circle Ratings Legend Among the best Better than most About average The rest J.D. Power as the publisher and the study from which it originated as the source. Rankings are based on numerical scores,

7 Year / Project / Study Name J.D. Power 2015 U.S. Wireless Smartphone Satisfaction Study SM Volume 2 Overall Wireless Smartphone Index Rankings Verizon Wireless (Based on a 1,000-point scale) JDPower.com Power Circle Ratings TM for consumers: Apple 835 Samsung 831 Verizon Wireless Average 829 Motorola 817 LG 809 HTC 807 Source: J.D. Power 2015 U.S. Wireless Smartphone Satisfaction Study SM Volume 2 Power Circle Ratings Legend Among the best Better than most About average The rest J.D. Power as the publisher and the study from which it originated as the source. Rankings are based on numerical scores,

8 J.D. Power 2015 U.S. Wireless Traditional Mobile Phone Satisfaction Study SM Year / Project / Study Name Overall Wireless Traditional Mobile Phone Index Rankings (Based on a 1,000-point scale) JDPower.com Power Circle Ratings TM for consumers: LG 716 Motorola 716 Pantech 716 Samsung 714 Study Average 712 Alcatel 691 Note: Included in the study, but not ranked due to small sample size is Microsoft/Nokia. Source: JD Power 2015 U.S. Wireless Traditional Mobile Phone Satisfaction Study SM Power Circle Ratings Legend Among the best Better than most About average The rest J.D. Power as the publisher and the study from which it originated as the source. Rankings are based on numerical scores,

9 J.D. Power 2015 U.S. Wireless Smartphone Satisfaction Study SM Volume 2 Year / Project / Study Name Award-Eligible Smartphone Companies Included in the Study Company Name CEO Name US Company Address Alcatel Nicolas Zibell (President) Irvine, CA Apple Tim Cook Cupertino, CA HTC Peter Chou Bellevue, WA LG Juno Cho Englewood Cliffs, NJ Microsoft Satya Nadella Redmond, Wash. Motorola Rick Osterloh (COO) Chicago, IL Samsung Gregory Lee Ridgefield Park, NJ Source: J.D. Power 2015 U.S. Wireless Smartphone Satisfaction Study SM Volume 2 J.D. Power as the publisher and the report from which it originated as the source. Rankings are based on numerical scores,

10 J.D. Power 2015 U.S. Wireless Traditional Mobile Phone Satisfaction Study SM Year / Project / Study Name Award-Eligible Traditional Mobile Phone Companies Included in the Study Company Name CEO Name U.S. Company Address Alcatel Nicolas Zibell (President) Irvine, CA LG Juno Cho Englewood Cliffs, NJ Motorola Rick Osterloh (COO) Chicago, IL Pantech Charles Park Atlanta, GA Samsung Gregory Lee Ridgefield Park, NJ Source: 2015 U.S. Wireless Traditional Mobile Phone Satisfaction Study SM J.D. Power as the publisher and the report from which it originated as the source. Rankings are based on numerical scores,