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Mobile Phones and Networks - Re-igniting The Replacement Cycle - UK - January 2010

  • Mintel’s research shows that contracts are still the main way people are getting a new mobile handset. But will the rising popularity of SIM only deals mean this will always be the case?
  • Older respondents are most likely to opt for basic, pay as you go handsets (68% of over 55’s). What strategies could retailers take to make more expensive smartphone contracts appeal to this group?
  • Respondents are focussed more on mobile design (47%) over more technical aspects, such as mobile operating system (8%). Will this create challenges in selling smartphones to the mass-market?
  • Despite increased media attention towards mobile applications, very few respondents have paid to download them (5%). What barriers are there to more advanced mobile usage such as this?
  • Mintel’s research shows that total mobile retail revenues to have declined by an estimated £0.6bn in 2009. What is the cause, and how important will smartphones be in driving revenues in the future?
  • In terms of choosing a mobile network, respondents are most interested in quality of customer service (33%) and price (30%). But how important are value added extra’s, such as 2 for 1 cinema tickets?

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Table of contents

  1. Issues in the Market

      • Definition
        • Abbreviations
        • Future Opportunities

          • 24-7 access to a screen
            • A map for your shopping trip
              • A handset that monitors how you feel
              • Market in Brief

                • Polarisation in handset demand
                  • Challenges in a saturated market
                    • Shift in marketing and retail strategies
                      • What consumers look for from a handset and network
                      • Internal Market Environment

                        • Key points
                          • Mobile ownership goes from strength to strength
                            • Figure 1: Trends in mobile handset ownership, 2003-09
                            • Figure 2: Average mobile cost per voice minute, 2003-08
                          • Phones get increasingly smart
                            • Figure 3: Smartphone usage, October 2008-November 2009
                          • Handset usage: Still focused on the basics
                            • Figure 4: Features mobile users have versus features used on a handset, 2009
                          • The mobile web still in its infancy
                            • Figure 5: Sites visited in the last three months using a mobile phone, July 2009-October 2009
                          • Males and the young most likely to go online with their mobiles
                            • Figure 6: Those browsing any site on a mobile phone in the last three months, by gender and age, October 2009
                            • Figure 7: Smartphone ownership, by gender and age, November 2009
                          • Mobile phones usurping other devices on the move
                            • Figure 8: Items taken on out-of-home leisure activities, August 2009
                        • Broader Market Environment

                          • Key points
                            • Stagnating personal disposable incomes
                              • Figure 9: GDP, PDI, consumer expenditure and savings, at current prices, 2004-14
                            • An ageing population
                              • Figure 10: Trends in the age structure of the UK population, by gender, 2004-14
                            • UK more broadband-enabled than ever
                              • Figure 11: Penetration of broadband internet at home, by demographics, October 2009
                              • Figure 12: Tech competency groups, by number of activities done regularly using the internet, October 2009
                          • Competitive Context

                            • Key points
                              • Consumers happy to wait for the latest innovations
                                • Figure 13: Attitudes towards new technology products, October 2009
                              • Mobiles aren’t a one-stop entertainment platform, yet
                                • Figure 14: Methods used to watch films, October 2009
                              • Reservations towards mobile banking
                                • Figure 15: Attitudes towards mobile banking, June 2009
                              • PC-based social networking access more popular
                                • Figure 16: Where people access social networking sites, September 2009
                            • Who’s Innovating?

                              • Key points
                                • Google joins the mobile handset race
                                  • Mobile goes HD
                                    • Xbox Live goes mobile
                                      • Nokia makes a push into mobile TV
                                      • Strengths and Weaknesses in the Market

                                          • Strengths
                                            • Weaknesses
                                            • Market Size and Forecast

                                              • Key points
                                                • Saturated market conditions reduce subscriber growth
                                                  • Figure 17: UK mobile phone subscriptions, 2003-09
                                                • Total mobile revenues decline by £0.6 billion…
                                                  • Figure 18: Total mobile retail revenues, 2004-14
                                                • …driven by falling values of SMS and voice
                                                  • Figure 19: Estimated mobile retail revenues, by service, 2004-09
                                                • Smartphones will impact on voice and text revenue…
                                                  • …but also grow data revenues
                                                    • Revenues by network operator
                                                      • Figure 20: Mobile retail revenues by leading network, 2004-09
                                                  • Network Market Share

                                                    • Key points
                                                      • T-Mobile and Orange set to dominate the market
                                                        • Figure 21: leading networks by total number of subscriptions, 2006-09
                                                      • What next for mobile network 3?
                                                        • Contract growth boosted by SIM-only deals
                                                          • Figure 22: Leading networks, by subscriptions and payment type, 2006-09
                                                      • Companies and Products

                                                          • Mobile networks
                                                            • O2 UK
                                                              • Orange
                                                                • T Mobile
                                                                  • Virgin Mobile
                                                                    • Vodafone
                                                                      • Handset manufacturers
                                                                        • LG Electronics
                                                                          • Motorola Limited
                                                                            • Nokia
                                                                              • Samsung
                                                                                • Sony Ericsson
                                                                                • Channels to Market

                                                                                  • Key points
                                                                                    • Retailers feel the iPhone factor
                                                                                      • Figure 23: Leading specialist retailers and mobile network provider stores, by number of outlets, 2003-09
                                                                                    • Focusing on more advanced handsets
                                                                                      • Best Buy still to make its presence felt
                                                                                        • Figure 24: Method internet respondents used when it came to buying their latest main mobile, December 2008
                                                                                      • Increased pressure from supermarkets
                                                                                      • Brand Communication and Promotion

                                                                                        • Key points
                                                                                          • Handset manufacturers dwarf network spend
                                                                                            • Figure 25: Adspend by top 20 mobile handset manufacturers and network operators, January 2006-October 2009
                                                                                          • Growth in spend of the smartphone specialists
                                                                                            • Figure 26: Adspend by smartphone specialists, January 2006 to October 2009
                                                                                          • Focusing on emotional benefits
                                                                                            • Focusing on added value
                                                                                              • Greater use of social media
                                                                                                • Figure 27: Types of sites on which online ads are most likely to be paid attention to, by age, August 2009
                                                                                            • Brand Elements

                                                                                                • Key points
                                                                                                  • Brand map
                                                                                                      • Figure 28: Attitudes towards and usage of mobile phone service provider brands, December 2009
                                                                                                    • Brand qualities of mobile phone service provider brands
                                                                                                      • Reliability and ease most important
                                                                                                        • Figure 29: Personalities of various mobile phone service provider brands, December 2009
                                                                                                      • Experience of mobile phone service provider brands
                                                                                                        • ‘New’ network 3 has room to grow
                                                                                                          • Figure 30: Consumer usage of various mobile phone service provider brands, December 2009
                                                                                                        • Brand consideration for mobile phone service provider brands
                                                                                                          • Most customers, most considered
                                                                                                            • Figure 31: Consideration of various mobile phone service provider brands, December 2009
                                                                                                          • Brand satisfaction for mobile phone service provider brands
                                                                                                            • Tesco up top for customer experience, 3 the least magic number
                                                                                                              • Figure 32: Satisfaction with various mobile phone service provider brands, December 2009
                                                                                                            • Brand commitment to mobile phone service provider brands
                                                                                                              • O2 has most loyal customers
                                                                                                                • Figure 33: Commitment to various mobile phone service provider brands, December 2009
                                                                                                              • Brand intentions for mobile phone service provider brands
                                                                                                                • O2 has best retention, 3 causes biggest upset
                                                                                                                  • Figure 34: Future usage intentions for various mobile phone service provider brands, December 2009
                                                                                                                • Brand recommendation for mobile phone service provider brands
                                                                                                                  • O2 most recommended, Vodafone and T-Mobile just average
                                                                                                                    • Figure 35: Recommendation of various mobile phone service provider brands, December 2009
                                                                                                                  • O2
                                                                                                                    • What the consumer thinks
                                                                                                                      • Figure 36: Attitudes towards the O2 brand, December 2009
                                                                                                                    • Orange
                                                                                                                      • What the consumer thinks
                                                                                                                        • Figure 37: Attitudes towards the Orange brand, December 2009
                                                                                                                      • 3
                                                                                                                        • What the consumer thinks
                                                                                                                          • Figure 38: Attitudes towards the 3 brand, December 2009
                                                                                                                        • Lebara Mobile
                                                                                                                          • What the consumer thinks
                                                                                                                            • Figure 39: Attitudes towards the Lebara Mobile brand, December 2009
                                                                                                                          • Tesco Mobile
                                                                                                                            • What the consumer thinks
                                                                                                                              • Figure 40: Attitudes towards the Tesco Mobile brand, December 2009
                                                                                                                          • Contract vs. Pay As You Go

                                                                                                                            • Key points
                                                                                                                              • Greater interest in SIM-only plans
                                                                                                                                • Figure 41: Types of mobile phone deals used, November 2009
                                                                                                                              • Polarisation of the market
                                                                                                                                • What next for the pay as you go market?
                                                                                                                                  • Figure 42: Types of mobile phone deals used, by age, November 2009
                                                                                                                                • How did respondents get their previous handsets?
                                                                                                                                  • Figure 43: How contract mobile phone users acquired their latest handset, November 2009
                                                                                                                                  • Figure 44: How pay as you go mobile phone users acquired their latest handset, November 2009
                                                                                                                              • Handset Users by Brand

                                                                                                                                • Key points
                                                                                                                                  • Nokia still the most used handset brand
                                                                                                                                    • Figure 45: Handset usage, by brand, November 2009
                                                                                                                                  • Impact of range on overall handset usage
                                                                                                                                    • Figure 46: Availability of pay monthly phones, by brand and price, December 2009
                                                                                                                                    • Figure 47: Availability of pay as you go phones, by brand and price, December 2009
                                                                                                                                  • Over-55s most likely to opt for a Nokia
                                                                                                                                    • Figure 48: Handset usage by brand, by gender and age, November 2009
                                                                                                                                • What do Buyers Look for in a New Handset?

                                                                                                                                  • Key points
                                                                                                                                    • Hardware versus software requirements
                                                                                                                                      • Figure 49: Most important characteristics looked for in a new mobile handset, November 2009
                                                                                                                                    • Differences by gender and age
                                                                                                                                      • Figure 50: Importance of design, brand and quality of integrated camera, by gender and age, November 2009
                                                                                                                                    • Software versus physical characteristics
                                                                                                                                      • Figure 51: Most important factors (netted) in deciding to buy a mobile handset, by demographics, November 2009
                                                                                                                                    • What consumers look for in a new handset, by brand owned
                                                                                                                                      • Figure 52: Most important factors in deciding to buy a mobile handset, by brand of current handset, November 2009
                                                                                                                                  • Factors Influencing Choice of Mobile Network

                                                                                                                                    • Key points
                                                                                                                                      • Consumers want great customer service on cheap deals
                                                                                                                                        • Figure 53: Most important factors in choosing a mobile network, November 2009
                                                                                                                                      • Women want clear information, men want 3G coverage
                                                                                                                                        • Figure 54: Most important factors in choosing a mobile network, by gender, November 2009
                                                                                                                                      • Older respondents most likely to want to pay the least
                                                                                                                                        • Figure 55: Most important factors in choosing a mobile network, by age, November 2009
                                                                                                                                    • Usage of Mobile Applications

                                                                                                                                      • Key points
                                                                                                                                        • Heavy media speculation, but low numbers of users
                                                                                                                                          • Figure 56: Usage of mobile applications, November 2009
                                                                                                                                        • Few would consider downloading, even with the right handset
                                                                                                                                          • Younger males the most likely to download apps
                                                                                                                                            • Figure 57: Usage of mobile applications, by gender and age, November 2009
                                                                                                                                          • Usage of mobile apps by network provider
                                                                                                                                            • Figure 58: Personal mobile phone network provider, by most popular statements on paid mobile services to mobile owners, November 2009
                                                                                                                                        • Appendix – Contract vs. Pay As You Go

                                                                                                                                            • Figure 59: Current mobile phone deal, by demographics, November 2009
                                                                                                                                            • Figure 60: Previous mobile phone deal, by demographics, November 2009
                                                                                                                                            • Figure 61: Current handset with contract how obtained, by demographics, November 2009
                                                                                                                                            • Figure 62: Current handset with PAYG phone how obtained, by demographics, November 2009
                                                                                                                                        • Appendix – Handset Users by Brand

                                                                                                                                            • Figure 63: Brand of current handset, by demographics, November 2009
                                                                                                                                        • Appendix – What do Buyers Look for in a New Handset?

                                                                                                                                            • Figure 64: Most popular factors in deciding to buy mobile handset, by demographics, November 2009
                                                                                                                                            • Figure 65: Next most popular factors in deciding to buy mobile handset, by demographics, November 2009
                                                                                                                                            • Figure 66: Other factors in deciding to buy mobile handset, by demographics, November 2009
                                                                                                                                        • Appendix – Factors Influencing Choice of Mobile Network

                                                                                                                                            • Figure 67: Most popular factors in choosing mobile network, by demographics, November 2009
                                                                                                                                            • Figure 68: Next most popular factors in choosing mobile network, by demographics, November 2009
                                                                                                                                        • Appendix – Usage of Mobile Applications

                                                                                                                                            • Figure 69: Most popular statements on paid-for mobile services, by demographics, November 2009
                                                                                                                                            • Figure 70: Next most popular statements on paid-for mobile services, by demographics, November 2009

                                                                                                                                        Companies Covered

                                                                                                                                        • Alcatel
                                                                                                                                        • Aldi Stores Ltd (UK & Ireland)
                                                                                                                                        • Amazon.co.uk
                                                                                                                                        • Apple Computer UK Ltd
                                                                                                                                        • Asda Group Ltd
                                                                                                                                        • Barclaycard
                                                                                                                                        • Bebo Inc
                                                                                                                                        • Best Buy Co.
                                                                                                                                        • British Broadcasting Corporation (BBC)
                                                                                                                                        • British Market Research Bureau (BMRB)
                                                                                                                                        • British Sky Broadcasting Group plc (BSkyB)
                                                                                                                                        • BT Group plc
                                                                                                                                        • Channel 4
                                                                                                                                        • Chelsea Football Club
                                                                                                                                        • Co-operative Group
                                                                                                                                        • Dell B2C Retail
                                                                                                                                        • Deutsche Bank AG
                                                                                                                                        • Deutsche Telekom AG
                                                                                                                                        • Dolce & Gabbana
                                                                                                                                        • Facebook, Inc.
                                                                                                                                        • Fallon Ltd
                                                                                                                                        • First Direct
                                                                                                                                        • France Telecom SA
                                                                                                                                        • Freeview
                                                                                                                                        • FriendsReunited
                                                                                                                                        • Google UK
                                                                                                                                        • Government Actuary's Department (GAD)
                                                                                                                                        • HTC
                                                                                                                                        • Hutchison 3G UK Limited
                                                                                                                                        • Hutchison Whampoa Limited
                                                                                                                                        • Innocent Drinks Ltd
                                                                                                                                        • J. Sainsbury
                                                                                                                                        • John Lewis Partnership
                                                                                                                                        • Kelkoo S.A.
                                                                                                                                        • LG Electronics (UK)
                                                                                                                                        • Lidl (UK)
                                                                                                                                        • Market & Opinion Research International (MORI)
                                                                                                                                        • Marks & Spencer
                                                                                                                                        • Microsoft Ltd (UK)
                                                                                                                                        • mmO2 plc
                                                                                                                                        • Motorola Mobility Holdings
                                                                                                                                        • MSN UK
                                                                                                                                        • MySpace.com
                                                                                                                                        • NatWest
                                                                                                                                        • Netto Foodstores Ltd
                                                                                                                                        • Nintendo UK Entertainment Ltd
                                                                                                                                        • Nokia Corporation (UK)
                                                                                                                                        • Ofcom
                                                                                                                                        • Office for National Statistics
                                                                                                                                        • Orange plc (UK)
                                                                                                                                        • Palm Inc.
                                                                                                                                        • Phones 4U Ltd
                                                                                                                                        • PriceRunner UK
                                                                                                                                        • Research in Motion Uk Ltd.
                                                                                                                                        • Samsung Electronics (UK) Ltd
                                                                                                                                        • Skype Technologies S.A.
                                                                                                                                        • Sony (UK) Ltd
                                                                                                                                        • Sony Ericsson Mobile Communications AB
                                                                                                                                        • T-Mobile (UK) Ltd
                                                                                                                                        • Telefónica UK Ltd.
                                                                                                                                        • TelefónicaO2 Europe
                                                                                                                                        • Telewest Broadband
                                                                                                                                        • Tesco Plc
                                                                                                                                        • The Carphone Warehouse Ltd
                                                                                                                                        • TomTom International B.V.
                                                                                                                                        • Toshiba Corporation
                                                                                                                                        • Twitter, Inc.
                                                                                                                                        • Universal Music Group
                                                                                                                                        • Virgin Media Ltd
                                                                                                                                        • Virgin Mobile
                                                                                                                                        • Vodafone Group Plc (UK)
                                                                                                                                        • Waitrose
                                                                                                                                        • Wanadoo UK plc
                                                                                                                                        • Wm Morrison Supermarkets
                                                                                                                                        • Yahoo! UK & Ireland
                                                                                                                                        • YouTube, Inc.

                                                                                                                                        Mobile Phones and Networks - Re-igniting The Replacement Cycle - UK - January 2010

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