Smartphones for all: reality or fiction?

Transcription

1 Smartphones for all: reality or fiction? Webinar Smartphones for all: reality or fiction? October 2012 Ronan de Renesse

2 Smartphones for all: reality or fiction? 2 Smartphone forecast methodology and global results Smartphone forecast breakdowns by OS and by region Smartphone market commoditisation Maximising smartphone adoption and monetisation

3 Smartphones for all: reality or fiction? Meeting demand and supply assumptions for a more realistic view of the smartphone market 3 Our smartphone forecasts are driven by two conjoined models: demand-side model: active smartphone SIM Figure 1: Modelling methodology used for our smartphone forecasts [Source: Analysys Mason, 2012] Demand supply-side model: smartphone shipments The two models are linked with each-other via handset upgrade cycles and resell rates. Supply Active SIMs (Operators) Adoption This methodology allows us to better integrate and observe the impact of customer trends with regards to: service adoption (such as 4G, multi-device bundles, SIM-only) handset ownership (such as device lifecycle, retail channels, handset subsidies) Unit sales (Vendors) Accurate Smartphone forecasts

4 Handset shipments (billion) Smartphone penetration (%) Active SIMs (billion) Smartphone SIM penetration (%) Smartphones for all: reality or fiction? Smartphone SIM penetration is nearly half of smartphone shipment penetration 4 Figure 2: Handset shipments by device category, worldwide, [Source: Analysys Mason, 2012] % Figure 3: Total active SIMs by handset category, worldwide, [Source: Analysys Mason, 2012] 6 25% % 35% 5 20% % 25% 20% 15% % 10% % 5% 1 5% 0.0 0% 0 0% Non-smartphones Smartphones Non-Smartphones Smartphones Penetration (%) Penetration (%)

5 Smartphone shipments (million) Shipments per SIM Smartphones for all: reality or fiction? Joining the dots: the share of smartphone SIMs that will require a new smartphone will decline to 40% by Figure 4: Smartphone shipments by provenance and smartphone demand by SIM, worldwide, [Source: Analysys Mason, 2012] Upgrade New users Shipments per SIM

6 Smartphones for all: reality or fiction? 6 Smartphone forecast methodology and global results Smartphone forecast breakdowns by OS and by region Smartphone market commoditisation Maximising smartphone adoption and monetisation

7 Smartphone shipments (million) Smartphones for all: reality or fiction? Microsoft will ship almost as many Windows Phone units in 2017 as Apple will ship iphones in Figure 5: Smartphone shipments by OS, worldwide, [Source: Analysys Mason, 2012] ios Android Symbian BlackBerry Windows Phone Other

8 Smartphone shipments (million) Smartphones for all: reality or fiction? Emerging Asia-Pacific will see more shipments this year than Europe and North America combined 8 Figure 6: Smartphone shipments by region, [Source: Analysys Mason, 2012] SSA MENA CALA EMAP DVAP NAM CEE WE

9 Share of total smartphone shipments (m) Smartphones for all: reality or fiction? Chinese manufacturers will capture most of the growth from lower-end customers, affecting the market share of others 9 The leading smartphone vendors can be dethroned in less than a year (for example, HTC, RIM) as the market evolves extremely fast and competition is fierce. The winners of today rely on high-end hardware capabilities, innovative features and large content ecosystems. We expect this to change radically in 2012 and 2013 as strong presence in developing markets and low price points will determine the winners of tomorrow, in volume. China-based manufacturers Huawei and ZTE both revealed smartphone unit sales targets of 60 million and 35 million respectively for 2012, nearly doubling their combined market share compared to 2011 to 13%. Figure 7: Smartphone shipments market share by device vendor [Source: Analysys Mason, 2012] 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Samsung Apple Huawei Nokia HTC ZTE RIM Sony Ericsson LG Motorola Other

10 Smartphones for all: reality or fiction? 10 Smartphone forecast methodology and global results Smartphone forecast breakdowns by OS and by region Smartphone market commoditisation Maximising smartphone adoption and monetisation

11 Smartphones for all: reality or fiction? The smartphone market is transforming as segmentation emerges Smartphone market dominated by high-end devices iphone Samsung Nexus/Galaxy HTC One Nokia Lumia High-end Mid-end Low-end High margins, high brand exposure, stronger customer relationship, alternative revenue streams (content/apps), data plan included Competitive, overcrowded, huge marketing costs, fragmented OS strategy, matured market High growth segment, operator demand, less competitive, little marketing investment Lower margins, needs scale, too many different demographics, limited customer ownership Very high growth segment, operator demand, little to no marketing investment, simpler handset design, quick to market Very small margins, needs high volumes, no associated data plan, no customer ownership, different retail strategy 11

12 ASP (EUR) 12 month ARPU (EUR) Smartphones for all: reality or fiction? Consumer spend shifts from services to hardware, but hardware profitability is at risk because of commoditisation 12 Figure 8: Average selling price by device category, top ten handset vendors by volume, worldwide, [Source: Analysys Mason, 2012] Figure 9: Average service revenue per user forecast by device category, Europe, [Source: Analysys Mason, 2012] All handsets Smartphones All handsets Smartphones

13 Smartphones for all: reality or fiction? Industry responds with new product launches and tailored content and data bundles 13 Data/content bundles Nokia bundles content and apps with its feature phone Asha range: 40 free Electronic Arts games to download from the Nokia Store for a 60-day promotional period Microsoft Exchange synchronisation pre-loaded with WhatsApp Messenger in selected countries Nokia Maps and Nokia Life. New operating system for low-end Deutsche Telekom and Telefónica Digital work with Mozilla on Boot to Gecko (B2G) HTML5- based handset development: launch in Brazil in 1Q 2013 with ZTE using HTML5 to power major device functionalities brings smartphone-like software capabilities to handsets at the USD50 (EUR37.5) price point B2G s main competitor is Tizen, which is also an open-source OS, and is backed by Intel, Samsung and Vodafone.

14 Smartphones for all: reality or fiction? 14 Smartphone forecast methodology and global results Smartphone forecast breakdowns by OS and by region Smartphone market commoditisation Maximising smartphone adoption and monetisation

15 Handset SIMs net additions (million) Smartphone SIM penetration (%) Net smartphone customer additions (million) Smartphones for all: reality or fiction? 15 Smartphone penetration among contract customers is reaching saturation, the prepaid market is where growth is at Figure 10: Handset net additions by subscriber type versus smartphone penetration, Western Europe, [Source: Analysys Mason, 2012] 35 45% Figure 11: Smartphone net additions by subscriber type, Europe, [Source: Analysys Mason, 2012] % 35% 30% 25% 20% 15% % % -10 0% Contract Prepay Smartphone penetration Prepaid Contract

16 unlimited min total cost unlimited min total cost unlimited min total cost unlimited min total cost unlimited min total cost Cost of ownership (EUR) Smartphones for all: reality or fiction? Subsidies are essential in high-end smartphone adoption and mobile data usage, but SIM-only drives market share Figure 14: Total cost of ownership for a 16GB iphone 5 on a 24-month contract, by operator [Source: Analysys Mason, 2012] 2,500 2,000 1,500 1,000 iphone 5 s high cost of ownership offsets the unlimited data premium. However, subsidies are less relevant in the low- and mid-end segments, where most of the growth will come from. Operators will need to focus on content bundles and cheap mobile data pricing to remain relevant among these two smartphone segments Sprint (USA) T-Mobile (USA) of which upfront cost Three (UK) Orange (UK) T-Mobile (UK) Total cost of ownership There is a clear demand for SIM-only tariffs, which are often good customer acquisition drivers. However, aggressive SIM-only tariffs can cannibalise the lucrative long-term smartphone contract customer base. Operators must find the right balance between the two options to retain established customers as well as acquiring new ones.

17 Smartphones for all: reality or fiction? Mobile content and apps are not necessarily the only drivers for smartphone sales 17 Figure 12: Reasons for not using mobile content and apps [Source: Connected Consumer Survey 2012, Analysys Mason, 2012] 1 5.6% 4.9% Figure 13: Propensity to buy a smartphone of respondents who are not interested in mobile content and apps [Source: Connected Consumer Survey 2012, Analysys Mason, 2012] % 16.8% 52.4% 18.0% 49.4% 20.3% 19.4% Not interested Incompatible handset Other Too expensive Poor usage experience 1 Question: Why don't you use your phone for services other than voice, SMS and the camera? ; non-users of mobile content and apps; n = No need for it If both same price Probably buy one Definitely buy one 2 Question: Next time you buy a new handset, will you [select one response]? ; not interested; n = 2246.

18 Smartphones for all: reality or fiction? 18 Key takeaways and recommendations OS duopoly set to remain, but the device mix will be different Low-end segment want cheap data and low device price points, not long-term contracts Use device upgrades and larger data allowances to keep users on long-term contracts

19 Smartphones for all: reality or fiction? 19 Analysys Mason s mobile consumer services programmes Mobile Broadband and Devices programme Covers mobile broadband services, mid- and large-screen devices (including tablets and e-readers), smartphones, and mobile data pricing and strategies Key themes: pricing structures and usage preferences; the role of smartphones; the impact of new devices: impact of 4G on service provision and operator positioning; and new service opportunities. Mobile Content and Applications programme Covers mobile content and applications (handset-based applications and media services, application stores) and adjacent markets (m-payments/m-money, m-health) Key themes: mobile content monetisation; the positioning of different players in the value chain; operator app strategies; and the impact of content and apps on mobile operators core business. The analysis presented in this webinar is drawn from our forthcoming forecast report: Smartphones: worldwide forecasts (to be published at the end of October 2012)

20 Smartphones for all: reality or fiction? 20 Contact details Ronan de Renesse Principal Analyst Boston Tel: Fax: Cambridge Tel: +44 (0) Fax: +44 (0) Dubai Tel: +971 (0) Fax: +971 (0) Dublin Tel: +353 (0) Fax: +353 (0) Edinburgh Tel: +44 (0) Fax: +44 (0) London Tel: +44 (0) Fax: +44 (0) Madrid Tel: Fax: Manchester Tel: +44 (0) Fax: +44 (0) Milan Tel: Fax: New Delhi Tel: Fax: Paris Tel: +33 (0) Fax: +33 (0) Singapore Tel: Fax: