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Mobile Phones and Network Providers - UK - January 2011

Demand for high-end smartphones continues to rise, driven primarily by young, technology-savvy mobile customers.With mobiles increasingly becoming ‘pocket PC’-type devices, handset operating systems (OS) are becoming a more important point of competitive differentiation. Research for this report shows that a large proportion of customers now look at the operating system before making a purchase

  • Despite the strong market push toward ‘pocket pc’ type smartphones, a large proportion of mobile users have yet to fully embrace mobile multi-functionality. Over half (56%) agree that ‘as long I can make voice calls and texts, I don’t care about other features and functions’.
  • A sizable chunk of mobile customers feel disorientated by the pace of technological change in the market, with about one in two agreeing that mobile phones have gotten too complicated.
  • General mobile ownership is dominated by the traditional ‘big three’ handset manufacturers. Nokia (32%), Samsung (21%) and Sony Ericsson (15%) are the most widely owned brands among mobile users. When taken together, this amounts to three in four mobile users owning a device from one these companies.
  • Nokia has particularly strong penetration among over-55-year-olds, with about one in two owning a Nokia handset.
  • iPhone owners are more regular users of ‘advanced’ mobile functions. Looking at daily mobile usage, they are about three times more likely to browse the internet, three times more likely to listen to music and four times more likely to download apps than mobile users overall.
  • Some 40% of 16-24-year-olds use their phone to access the internet on a daily basis, compared to 23% of mobile users overall.

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Table of contents

  1. Issues in the Market

      • Key issues in the market
        • Definition
        • Future Opportunities

          • Targeting older mobile users
            • Educating the customer base
            • Market in Brief

              • Consumers look to contracts to fund smartphone acquisition
                • Big three handset manufacturers dominate general ownership
                  • Nokia performs well among over-55s
                    • A large chunk of customers not ready for multi-functionality…
                    • Internal Market Environment

                      • Key points
                        • Increased mobile ownership offers both challenges and opportunities
                          • Figure 1: Mobile ownership, 2006-10
                        • Customers steadily migrating to pay monthly contracts
                          • Figure 2: Percentage-point change in type of consumer payment method, 2006-10
                        • Bundled services help boost customer loyalty
                          • Figure 3: Length of time spent with current provider, 2006-10
                      • Broader Market Environment

                        • Key points
                          • Higher consumer spending/PDI boosts contract subscriptions, though pre-pay market remains fragile
                            • Figure 4: GDP, PDI, consumer expenditure and savings, at current prices, 2005-15
                          • Companies will need to cater for an older mobile customer
                            • Figure 5: Trends in the age structure of the UK population, by gender, 2005-15
                        • Competitive Context

                          • Key points
                            • Dedicated devices remain most popular with consumers
                              • Figure 6: Device ownership summary April 2009-October 2010
                            • MVoIP, an emerging threat to network providers?
                              • Figure 7: Use of VoIP in the last three months, April 2009-November 2010
                            • Supermarkets changing the market dynamic
                            • Strengths and Weaknesses in the Market

                                • Strengths
                                  • Popularity of mobile apps
                                    • Advent of 4G
                                      • Demand for premium smart handsets
                                        • Low-cost smartphones appeal to the more price -conscious
                                          • Network sharing proves effective cost reduction strategy
                                            • Weaknesses
                                              • High level of competition among network operators
                                                • Consumers less likely to trade up during the economic downturn
                                                  • Basic users still make up bulk of the market
                                                    • MVNOs challenge incumbent operators’ position
                                                      • VoIP services represent long-term threat
                                                      • Who’s Innovating?

                                                        • Key points
                                                          • The gamer’s smartphone
                                                            • Samsung going round the bend
                                                              • 3D on your mobile round the corner, but do customers really want it?
                                                                • World’s first from LG
                                                                • Market Size, Segmentation and Forecast

                                                                    • Market size
                                                                      • Figure 8: Total mobile market revenues, 2005-10
                                                                    • Market segmentation
                                                                      • Figure 9: Estimated mobile phone market revenues, by service, 2005-10
                                                                    • Market forecast
                                                                      • Figure 10: Total mobile phone market revenues, 2005-15
                                                                    • The best case is based upon the following
                                                                      • The worst case is based upon the following
                                                                      • Companies and Products

                                                                          • Apple
                                                                              • Figure 11: Financial performance of Apple Inc, 2009-10
                                                                            • HTC
                                                                              • LG
                                                                                  • Figure 12: Financial performance of LG Electronics UK Limited, 2009-10
                                                                                • Nokia
                                                                                    • Figure 13: Financial performance of Nokia UK Limited, 2008-09
                                                                                  • Research In Motion
                                                                                    • Samsung
                                                                                      • Sony Ericsson
                                                                                        • Network operators
                                                                                          • 3 UK
                                                                                            • Everything Everywhere
                                                                                              • O2
                                                                                              • Brand Elements

                                                                                                • Brand map
                                                                                                    • Figure 14: Attitudes towards and usage of mobile phone brands, December 2010
                                                                                                  • Brand attitudes
                                                                                                    • Figure 15: Attitudes by mobile phone brand, December 2010
                                                                                                  • Brand personality
                                                                                                    • Figure 16: Mobile phone brand personality – macro image, December 2010
                                                                                                    • Figure 17: Mobile phone brand personality – micro image, December 2010
                                                                                                  • Correspondence analysis
                                                                                                    • Brand experience
                                                                                                      • Figure 18: Mobile phone brand usage, December 2010
                                                                                                      • Figure 19: Satisfaction with various mobile phone brands, February 2010
                                                                                                      • Figure 20: Consideration of mobile phone brands, December 2010
                                                                                                      • Figure 21: Consumer perceptions of current mobile phone brand performance, December 2010
                                                                                                      • Figure 22: Mobile phone brand recommendation – Net Promoter Score, December 2010
                                                                                                    • Brand index
                                                                                                      • Figure 23: Mobile phone brand index, December 2010
                                                                                                      • Figure 24: Mobile phone brand index vs. recommendation, December 2010
                                                                                                    • Target group analysis
                                                                                                      • Figure 25: Target groups, December 2010
                                                                                                      • Figure 26: Mobile phone brand usage, by target groups, December 2010
                                                                                                    • Group One – The Conformists
                                                                                                      • Group Two – Simply the Best
                                                                                                        • Group Three – Shelf Stalkers
                                                                                                          • Group Four – Habitual Shoppers
                                                                                                            • Group Five – The Individualists
                                                                                                            • Handset Ownership

                                                                                                              • Key points
                                                                                                                • Nokia tops general ownership, but still faces challenges in the smartphone market
                                                                                                                  • Figure 27: Types of handset owned, December 2010
                                                                                                                • Less tech savvy over-55s turn to Nokia handsets
                                                                                                                  • Figure 28: Types of handset owned, by gender and age, December 2010
                                                                                                              • Mobile Phone Activities

                                                                                                                • Key points
                                                                                                                  • Voice calling and texts still by far the most popular activities…
                                                                                                                    • Figure 29: Usage of mobile phone features, December 2010
                                                                                                                  • … though mobile internet increasingly important for young users
                                                                                                                    • Figure 30: Usage of mobile phone to browse the internet, by gender and age, December 2010
                                                                                                                  • iPhone owners most tech-savvy
                                                                                                                    • Figure 31: Usage of mobile phone features, by most popular types of handset owned, December 2010
                                                                                                                • Attitudes Towards Mobile Phones

                                                                                                                  • Key points
                                                                                                                    • Mobile multi-functionality not for everyone… yet
                                                                                                                      • Figure 32: Attitudes towards mobile phones, December 2010
                                                                                                                    • Customers looking to operating system before handset purchase…
                                                                                                                      • Figure 33: Agreement with the statement “I always look at the operating system before buying a new phone”, by gender and age, December 2010
                                                                                                                    • …. and want fast, easy-to-use internet
                                                                                                                      • Figure 34: Agreement with the statement “fast and easy to use internet is important to me”, by gender and age, December 2010
                                                                                                                  • Appendix – Mobile Payment Methods

                                                                                                                      • Figure 35: Type of mobile phone deal, by demographics, December 2010
                                                                                                                  • Appendix – Handset Ownership

                                                                                                                      • Figure 36: Types of handset owned, by demographics, December 2010
                                                                                                                  • Appendix – Mobile Phone Activities

                                                                                                                      • Figure 37: Usage of mobile phone to browse the internet, by demographics, December 2010
                                                                                                                      • Figure 38: Usage of mobile phone to use Bluetooth, by demographics, December 2010
                                                                                                                      • Figure 39: Usage of mobile phone to take pictures, by demographics, December 2010
                                                                                                                      • Figure 40: Usage of mobile phone to make video calls, by demographics, December 2010
                                                                                                                      • Figure 41: Usage of mobile phone to download applications, by demographics, December 2010
                                                                                                                      • Figure 42: Usage of mobile phone to make voice calls, by demographics, December 2010
                                                                                                                      • Figure 43: Usage of mobile phone to play games, by demographics, December 2010
                                                                                                                      • Figure 44: Usage of mobile phone to listen to music, by demographics, December 2010
                                                                                                                      • Figure 45: Usage of mobile phone to text, by demographics, December 2010
                                                                                                                      • Figure 46: Usage of mobile phone to email, by demographics, December 2010
                                                                                                                      • Figure 47: Usage of mobile phone to use GPS, by demographics, December 2010
                                                                                                                      • Figure 48: Usage of mobile phone to use Bluetooth, by demographics, December 2010
                                                                                                                  • Appendix – Attitudes Towards Mobile Phones

                                                                                                                      • Figure 49: Attitudes towards mobile phones, December 2010
                                                                                                                      • Figure 50: Agreement with the statement “I care if my mobile phone is fashionable”, by demographics, December 2010
                                                                                                                      • Figure 51: Agreement with the statement “As long as I can make calls and text, I don’t care about other features or functions”, by demographics, December 2010
                                                                                                                      • Figure 52: Agreement with the statement “mobile phones have gotten too complicated”, by demographics, December 2010
                                                                                                                      • Figure 53: Agreement with the statement “I always look at the operating system before buying a new phone”, by demographics, December 2010
                                                                                                                      • Figure 54: Agreement with the statement “I tend to buy the cheapest phone I can find”, by demographics, December 2010
                                                                                                                      • Figure 55: Agreement with the statement “fast and easy to use internet is important to me”, by demographics, December 2010
                                                                                                                      • Figure 56: Agreement with the statement “the range and quality of apps available is important to me”, by demographics, December 2010
                                                                                                                      • Figure 57: Agreement with the statement “I get the most out of all my phone’s functions”, by demographics, December 2010
                                                                                                                      • Figure 58: Attitudes towards mobile phones, by types of handset owned, December 2010
                                                                                                                      • Figure 59: Attitudes towards mobile phones, by types of handset owned, December 2010

                                                                                                                  Companies Covered

                                                                                                                  • Apple Retail UK
                                                                                                                  • Asda Group Ltd
                                                                                                                  • Bank of England
                                                                                                                  • British Broadcasting Corporation (BBC)
                                                                                                                  • British Sky Broadcasting Group plc (BSkyB)
                                                                                                                  • Deutsche Telekom AG
                                                                                                                  • Government Actuary's Department (GAD)
                                                                                                                  • HTC
                                                                                                                  • Hutchison Whampoa Limited
                                                                                                                  • Kantar Media
                                                                                                                  • LG Electronics (UK)
                                                                                                                  • Microsoft Ltd (UK)
                                                                                                                  • mmO2 plc
                                                                                                                  • NatWest
                                                                                                                  • Nokia Corporation (UK)
                                                                                                                  • Ofcom
                                                                                                                  • Orange plc (UK)
                                                                                                                  • Research in Motion Uk Ltd.
                                                                                                                  • Samsung Electronics (UK) Ltd
                                                                                                                  • Sony Ericsson Mobile Communications AB
                                                                                                                  • T-Mobile (UK) Ltd
                                                                                                                  • Tesco Plc
                                                                                                                  • The Carphone Warehouse Ltd
                                                                                                                  • Virgin Media Ltd
                                                                                                                  • Virgin Mobile
                                                                                                                  • Vodafone Group Plc (UK)
                                                                                                                  • Yahoo! UK & Ireland

                                                                                                                  Mobile Phones and Network Providers - UK - January 2011

                                                                                                                  £1,750.00 (Excl.Tax)