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Mobile Phones - UK - April 2015

"The factors determining consumers’ choice of mobile phone will become increasingly centred around the capabilities of the operating system used, as more people consider compatibility with their favourite services, software programmes, and integration with their ‘Internet of Things’."

- Paul Davies, Senior Leisure & Technology Analyst

This report covers the following areas:

  • 'Devices and services' model could set brands apart
  • Attracting first-time smartphone buyers

The factors determining consumers’ choice of mobile phone will become increasingly centred around the capabilities of the operating system used, as more people consider compatibility with their favourite services, software programmes, and integration with their ‘Internet of Things’. This could be an advantage for brands that control both hardware and software, as companies such as Apple and Microsoft will be have the benefit of building devices with services in mind, and vice-versa.

Manufacturers that use third-party operating systems may not have the same foresight, while their reliance may see them suffer from a lack of differentiation. As a result, hardware-only brands will face the increasingly difficult challenge of standing out through offering enhanced product design or unique features, which may explain why Samsung is one company trialling a phone running its own Tizen OS overseas.

The factors determining consumers’ choice of mobile phone will become increasingly centred around the capabilities of the operating system used, as more people consider compatibility with their favourite services, software programmes, and integration with their ‘Internet of Things’. This could be an advantage for brands that control both hardware and software, as companies such as Apple and Microsoft will be have the benefit of building devices with services in mind, and vice-versa.

Manufacturers that use third-party operating systems may not have the same foresight, while their reliance may see them suffer from a lack of differentiation. As a result, hardware-only brands will face the increasingly difficult challenge of standing out through offering enhanced product design or unique features, which may explain why Samsung is one company trialling a phone running its own Tizen OS overseas.

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Table of contents

  1. Overview

    • What you need to know
      • Covered in this report
      • Executive Summary

        • Market expected to return to growth
          • Figure 1: Best and worst-case forecast for the value of mobile phone sales, 2009-19
        • Android and iOS have strong, but different, areas of expertise
          • Figure 2: Brand personality – Micro image, November 2014
        • Apple now nearly as popular as Samsung
          • Figure 3: Manufacturer of smartphones owned by consumers, November 2014
        • A quarter of basic handset owners intend to upgrade
          • Figure 4: Intentions to own smartphones in the future, November 2014
        • Potential owners willing to spend almost £100 on first smartphone
          • Figure 5: Amount non-smartphone owners are prepared to spend on a smartphone, November 2014
      • Issues and Insights

        • ‘Devices and services’ model could set brands apart
          • The facts
            • The implications
              • Attracting first-time smartphone buyers
                • The facts
                  • The implications
                  • The Market – What You Need to Know

                    • 2014 sees return to growth
                      • Mid-range increase on the cards
                        • Distribution set to centralise
                          • Quad play competition intensifies
                            • Some first-time targets remain
                              • 12-month contracts regaining popularity
                              • Market Size and Forecast

                                • Market expected to return to growth
                                  • Chinese brands could boost mid-range
                                      • Figure 6: Value of mobile phone sales, 2009-19
                                      • Figure 7: Best and worst-case forecast for the value of mobile phone sales, 2009-19
                                  • Channels to Market

                                    • Market to become more centralised
                                        • Figure 8: Retailer or network that consumers acquired their device from, November 2014
                                      • Half of consumers still buy phones in-store
                                        • Figure 9: Channel used by consumers to purchase their device, November 2014
                                    • Market Drivers

                                      • Three quarters of UK consumers now own a smartphone
                                          • Figure 10: Ownership of mobile phones, January 2012-November 2014
                                          • Figure 11: Ownership of mobile phones, by age, November 2014
                                        • Nearly three fifths of consumers now on post-pay contracts
                                            • Figure 12: Mobile subscriptions, by pre-pay and post-pay, 2008-13
                                          • Growth of 24-month contracts may have peaked
                                            • Figure 13: Contract length, November 2014
                                          • 4G coverage expands while work begins on 5G
                                            • Figure 14: 3G and 4G coverage in the UK, by mobile network provider, June and October 2014
                                          • Waning demand for tablets likely to boost ‘phablet’ market
                                          • Key Players – What You Need to Know

                                            • Positive perceptions and widespread awareness bode well for Android
                                              • Consumers less clear about Windows Phone proposition
                                                • Cross-sector presence breeds trust for Samsung
                                                  • Nokia and HTC struggle to stand out
                                                    • Top two brands account for nearly half of adspend
                                                      • Mid-range focus while top-end scrap continues
                                                        • Doro delivering for older consumers
                                                        • Brand Research – Manufacturers

                                                          • Brand map
                                                            • Figure 15: Attitudes towards and usage of selected brands, December 2014
                                                          • Key brand metrics
                                                            • Figure 16: Key metrics for selected brands, December 2014
                                                          • Brand attitudes: Samsung has a strong overall brand image to entice consumers
                                                            • Figure 17: Attitudes, by brand, December 2014
                                                          • Brand personality: Nokia struggles against more innovative brands
                                                            • Figure 18: Brand personality – macro image, December 2014
                                                          • Apple has a desirable but exclusive image
                                                            • Figure 19: Brand personality – micro image, December 2014
                                                          • Brand analysis
                                                            • Samsung’s strong image built through history and exposure
                                                              • Figure 20: User profile of Samsung, December 2014
                                                            • Apple has a loyal fan base who are likely to buy despite higher cost
                                                                • Figure 21: User profile of Apple, December 2014
                                                              • HTC’s smartphone specialism limits brand awareness
                                                                • Figure 22: User profile of HTC, December 2014
                                                              • Nokia is seen as basic and outdated but may provide cheaper alternative
                                                                  • Figure 23: User profile of Nokia, December 2014
                                                              • Brand Research – Operating Systems

                                                                • Brand map
                                                                  • Figure 24: Attitudes towards and usage of selected brands, November 2014
                                                                • Key brand metrics
                                                                  • Figure 25: Key metrics for selected brands, November 2014
                                                                • Brand attitudes: Familiar Android OS wins consumers’ trust
                                                                  • Figure 26: Attitudes, by brand, November 2014
                                                                • Brand personality: Windows Phone struggles to create an upbeat image
                                                                  • Figure 27: Brand personality – macro image, November 2014
                                                                • Android and iOS have strong, but different, areas of expertise
                                                                  • Figure 28: Brand personality – micro image, November 2014
                                                                • Brand analysis
                                                                  • Android noted for user-friendly attributes
                                                                    • Figure 29: User profile of Android, November 2014
                                                                  • iOS is strong on style, but has a more exclusive image
                                                                    • Figure 30: User profile of iOS, November 2014
                                                                  • Windows Phone has a weaker overall brand image than Android or iOS
                                                                      • Figure 31: User profile of Windows Phone, November 2014
                                                                  • Brand Communication and Promotion

                                                                    • Samsung and Apple accounted for 44% of market adspend in 2014
                                                                      • Figure 32: Top 10 mobile phone manufacturers, by adspend, 2013-14
                                                                    • Battle of the operating systems
                                                                    • Launch Activity and Innovation

                                                                      • Mid-range battle heats up
                                                                        • Figure 33: Microsoft Lumia 640 XL, unveiled at Mobile World Congress, March 2015
                                                                        • Figure 34: Sony Xperia M4, unveiled at Mobile World Congress, March 2015
                                                                      • Apple achieves record iPhone sales
                                                                        • Figure 35: Apple iPhone 6 and iPhone 6 Plus handsets, launched September 2014
                                                                      • Samsung prepares its response
                                                                        • Figure 36: Samsung Galaxy S6 edge, unveiled at Mobile World Congress, March 2015
                                                                      • It’s about more than just the phone
                                                                        • BlackBerry and Microsoft make software push
                                                                          • 5G: The next tier on the spectrum
                                                                            • Dyson smartphone battery life
                                                                              • Doro targets untapped over-65 market
                                                                                  • Figure 37: Doro Liberto 820, launched winter 2014
                                                                              • The Consumer – What You Need to Know

                                                                                • Twice as many using Android as iOS
                                                                                  • Samsung dominates Android handset ownership…
                                                                                    • …but Apple now nearly on a par
                                                                                      • Windows appeals to first-time owners
                                                                                        • Trust and familiarity key for buyers
                                                                                          • Penetration hits 75% but non-owners indicate interest in entering the market
                                                                                            • Awareness of affordability could be holding back first-timers
                                                                                              • Basic handsets now mainly ‘emergency-only’
                                                                                                • Dual-SIM potential
                                                                                                • Operating Systems

                                                                                                  • Android still the dominant platform
                                                                                                      • Figure 38: Operating systems used by smartphone owners, November 2014
                                                                                                    • More than half of Android users have a Samsung handset
                                                                                                      • Figure 39: Split of android operating system, by manufacturer of smartphone owned, November 2014
                                                                                                    • Can Microsoft reverse its age bias and compete with Apple?
                                                                                                        • Figure 40: Operating systems used by smartphone owners, by age, November 2014
                                                                                                    • Manufacturer of Smartphones

                                                                                                      • Apple now nearly as popular as Samsung
                                                                                                        • Figure 41: Manufacturer of smartphones owned by consumers, November 2014
                                                                                                      • Combating the threat posed by Chinese brands
                                                                                                      • Stage of Ownership

                                                                                                        • Two fifths of smartphone owners are still using their first device
                                                                                                          • Figure 42: Stage of smartphone ownership, November 2014
                                                                                                        • Half of Windows users still using their first smartphone
                                                                                                          • Figure 43: Stage of smartphone ownership, by operating system used by smartphone owners, November 2014
                                                                                                      • Purchasing Influences

                                                                                                        • Brands can look to break the habit
                                                                                                          • Figure 44: Reasons for choosing smartphone owned, November 2014
                                                                                                        • Apple users demonstrate the most brand loyalty
                                                                                                          • Figure 45: Reasons for choosing smartphone owned, by manufacturer of smartphones owned by consumers, November 2014
                                                                                                      • Non-Smartphone Owners’ Intentions

                                                                                                        • A quarter of basic handset owners intend to upgrade
                                                                                                          • Figure 46: Intentions to own smartphones in the future, November 2014
                                                                                                        • Bringing back human advice
                                                                                                            • Figure 47: Intentions to own smartphones in the future, by age, November 2014
                                                                                                          • Gaining connectivity is potential owners’ main motivation
                                                                                                            • Figure 48: Features most wanted by potential smartphone owners, November 2014
                                                                                                        • First-Time Buyers

                                                                                                          • Potential owners willing to spend almost £100 on first smartphone
                                                                                                            • Figure 49: Amount non-smartphone owners are prepared to spend on a smartphone, November 2014
                                                                                                          • Microsoft could attack low-end with favoured Nokia brand
                                                                                                              • Figure 50: Amount non-smartphone owners are prepared to spend on a smartphone, by age, November 2014
                                                                                                          • Reasons for Not Owning Smartphones

                                                                                                            • Price still a barrier, at least in consumers’ minds
                                                                                                              • Figure 51: Reasons for not owning smartphones, November 2014
                                                                                                            • Smartphones as incentives
                                                                                                            • Attitudes towards Mobile Phones

                                                                                                              • Consumers ‘prepare for the worst’ with backup handsets
                                                                                                                • Figure 52: Attitudes towards mobile phones, November 2014
                                                                                                              • Multiple user accounts
                                                                                                                • Room for an extra SIM
                                                                                                                • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                  • Data sources
                                                                                                                    • Abbreviations
                                                                                                                      • Fan chart forecast
                                                                                                                        • Brand research
                                                                                                                          • Brand map

                                                                                                                          Companies Covered

                                                                                                                          To learn more about the companies covered in this report please contact us.

                                                                                                                          Mobile Phones - UK - April 2015

                                                                                                                          US $2,648.76 (Excl.Tax)