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Mobile Phones - UK - April 2017

“In the context of a slowing smartphone market, manufacturers’ upgrade programmes can help gain valuable control of the smartphone distribution market, which has thus far been mostly in the hands of operators and specialist retailers. Moreover, such programmes can increase switching costs and further foster brand loyalty by leading customers to enter what in practice becomes a rolling year-by-year contract with the manufacturer. Furthermore, returned one-year-old devices would give manufacturers much more valuable control over the second-hand market.”
– Sara Ballaben, Senior Technology Analyst

This Report discusses the following key topics:

  • Potential developments of brand loyalty in a slowing smartphone market
  • The threat of the second-hand market and how to overcome it

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Table of contents

  1. Overview

    • What you need to know
      • Products covered in this Report
      • Executive Summary

          • The market
            • The smartphone market is approaching maturity
              • Figure 1: Value of mobile phone sales in the UK, 2011-21
              • Figure 2: Value of mobile phone sales in the UK (source data), 2011-21
            • Companies and brands
              • Manufacturers responsible for most of the promotional effort
                • Figure 3: Total above-the line, online display and direct mail advertising expenditure on smartphones, by advertiser, 2016
              • Sony struggles to challenge market leaders’ brand positioning
                • Figure 4: Attitudes, by manufacturer brand, January 2017
              • Windows Phone struggles to compete in the binary OS eco-system
                • Figure 5: Attitudes, by operating system brand, January 2017
              • The consumer
                • Samsung and Apple continue to strengthen their market leadership
                  • Figure 6: Manufacturer of smartphone owned, December 2016
                • Towards a binary OS eco-system
                  • Figure 7: Operating system of smartphone owned, December 2016
                • Buying smartphones outright is the preferred option
                  • Figure 8: Ways in which consumers paid for their smartphone, December 2016
                • No marked preference for online or offline smartphone shopping
                  • Figure 9: Ways in which consumers got their smartphone, December 2016
                • Mobile network providers dominate smartphone distribution market
                  • Figure 10: Whom consumers got their smartphone from, December 2016
                • Majority of smartphone owners to upgrade in the next two years
                  • Figure 11: Intentions to buy or upgrade to a new smartphone in the next two years, December 2016
                • Non-upgraders want to make the most of their current device
                  • Figure 12: Reasons not to plan a smartphone purchase in the next two years, December 2016
                • Brand loyalty in the smartphone market
                  • Figure 13: Attitudes of consumers planning on a smartphone purchase in the next two years, December 2016
                • Longer battery life by far the most wanted feature
                  • Figure 14: Most important features when upgrading to a new smartphone, December 2016
                • Two in five smartphones have second life…
                  • Figure 15: Second life of smartphones, December 2016
                • Almost half of smartphone owners wouldn’t buy second-hand
                  • Figure 16: Attitudes towards second-hand smartphones, December 2016
                • What we think
                • Issues and Insights

                  • Potential developments of brand loyalty in a slowing smartphone market
                    • The facts
                      • The implications
                        • The threat of the second-hand market and how to overcome it
                          • The facts
                            • The implications
                            • The Market – What You Need to Know

                              • The smartphone market is approaching maturity
                                • Innovation to help revive the market from 2020 onwards
                                  • Substitution of basic phones with smartphones continues
                                    • Purchasing intentions remain strong despite market slowdown
                                      • Voice assistants could further drive mobile-first behaviours
                                        • The smartphone market is the most brand-driven
                                        • Market Size and Forecast

                                          • The smartphone market is approaching maturity
                                            • Figure 17: Value of mobile phone sales in the UK, 2011-21
                                            • Figure 18: Value of mobile phone sales in the UK (source data), 2011-21
                                          • The short and long-term impact of Brexit
                                            • Innovation to help revive the market from 2020 onwards
                                              • Forecast methodology
                                              • Market Drivers

                                                • Substitution of basic phones with smartphones continues
                                                  • Figure 19: Ownership of mobile phones and smartwatches, January 2012-December 2016
                                                • Purchasing intentions remain strong despite market slowdown …
                                                  • Figure 20: Plans to purchase or upgrade consumer technology products, by timescale, December 2016
                                                • …as smartphone usage continues to grow
                                                  • Figure 21: Devices used to access the internet in the last three months, June 2013-September 2016
                                                • Mobile-first teens and tweens entering the adult demographic
                                                  • Figure 22: Devices used by children aged 10-15, May 2016
                                                • Voice assistants could further drive mobile-first behaviour
                                                  • Mobile gaming further drives smartphone usage
                                                    • The smartphone market is the most brand-driven
                                                      • Figure 23: Factors on which consumers would decide first when buying technology products, April 2017
                                                  • Companies and Brands – What You Need to Know

                                                    • Upgrade programmes become a reality in the UK
                                                      • The Nokia 3310 is back
                                                        • Welcome Pixel, the first true Google Phone
                                                          • A shift in the monitored admix
                                                            • Manufacturers responsible for most of the promotional effort
                                                              • Sony struggles to challenge market leaders’ positioning
                                                                • Windows Phone struggles to compete in the binary OS eco-system
                                                                • Launch Activity and Innovation

                                                                  • Upgrade programmes become a reality in the UK
                                                                    • The Nokia 3310 is back
                                                                      • Figure 24: the new Nokia 3310 in the three colour variations available, March 2017
                                                                    • Welcome Pixel, the first true Google Phone
                                                                      • Figure 25: The Pixel and Pixel XL, October 2016
                                                                    • Sony bets on slow motion
                                                                      • LG moves from modular designs to split-screen support
                                                                        • Are bendable and flip smartphones on the horizon?
                                                                          • Figure 26: The Lenovo CPlus Prototype, April 2017
                                                                      • Advertising and Marketing Activity

                                                                        • A shift in the monitored admix
                                                                            • Figure 27: Total above-the line, online display and direct mail advertising expenditure on smartphones, by media type, 2015 and 2016
                                                                          • Manufacturers responsible for most of the promotional effort
                                                                            • Figure 28: Total above-the line, online display and direct mail advertising expenditure on smartphones, by advertiser, 2016
                                                                          • Nielsen Ad Intel coverage
                                                                          • Brand Research – Manufacturers

                                                                              • Brand map
                                                                                • Figure 29: Attitudes towards and usage of selected manufacturer brands, January 2017
                                                                              • Key brand metrics
                                                                                • Figure 30: Key metrics for selected manufacturer brands, January 2017
                                                                              • Brand attitudes: Sony struggles to match market leaders’ positioning
                                                                                • Figure 31: Attitudes, by manufacturer brand, January 2017
                                                                              • Brand personality: Apple’s exclusivity is unmatched
                                                                                • Figure 32: Brand personality – Macro image, January 2017
                                                                              • HTC and Lumia equally struggling
                                                                                • Figure 33: Brand personality – Micro image, January 2017
                                                                              • Brand analysis
                                                                                • Samsung’s reputation unaffected by Galaxy Note 7 backlash
                                                                                  • Figure 34: User profile of Samsung, January 2017
                                                                                • Sony appears stuck in the middle
                                                                                  • Figure 35: User profile of Sony, January 2017
                                                                                • Apple’s exclusive positioning has some drawbacks
                                                                                  • Figure 36: User profile of Apple, January 2017
                                                                                • HTC’s value for money proposition best appeals to men
                                                                                  • Figure 37: User profile of HTC, January 2017
                                                                                • Lumia struggles on awareness
                                                                                  • Figure 38: User profile of Microsoft Lumia, January 2017
                                                                              • Brand Research – Operating Systems

                                                                                  • Brand map
                                                                                    • Figure 39: Attitudes towards and usage of selected operating system brands, January 2017
                                                                                  • Key brand metrics
                                                                                    • Figure 40: Key metrics for selected operating system brands, January 2017
                                                                                  • Brand attitudes: Windows Phone struggles to compete in the binary OS eco-system
                                                                                    • Figure 41: Attitudes, by operating system brand, January 2017
                                                                                  • Brand personality: exclusivity vs accessibility is key to the competition between iOS and Android
                                                                                    • Figure 42: Brand personality – Macro image, January 2017
                                                                                  • iOS outperforms competitors for both features and style
                                                                                    • Figure 43: Brand personality – Micro image, January 2017
                                                                                  • Brand analysis
                                                                                    • Android’s wide availability is its key advantage
                                                                                      • Figure 44: User profile of Android, January 2017
                                                                                    • iOS’s exclusivity drives upbeat brand image
                                                                                      • Figure 45: User profile of iOS, January 2017
                                                                                    • Windows Phone struggles to keep up in the binary OS eco-system
                                                                                      • Figure 46: User profile of Windows Phone, January 2017
                                                                                  • The Consumer – What You Need to Know

                                                                                    • Samsung and Apple continue to strengthen their market leadership
                                                                                      • Buying smartphones outright is the preferred option
                                                                                        • Mobile network providers dominate smartphone distribution market
                                                                                          • Brand loyalty is a key driver in the smartphone market
                                                                                            • Two in five smartphones have second life…
                                                                                            • Manufacturer and Operating System

                                                                                              • Samsung and Apple continue to strengthen their market leadership
                                                                                                • Figure 47: Manufacturer of smartphone owned, December 2016
                                                                                              • Samsung has wider appeal but Apple is able to reach key demographics
                                                                                                • Figure 48: Ownership of Samsung and Apple smartphones, by gender and age, December 2016
                                                                                              • Keeping up with the top players
                                                                                                • Towards a binary OS eco-system
                                                                                                  • Figure 49: Operating system of smartphone owned, December 2016
                                                                                              • Smartphone Purchasing Process

                                                                                                • Buying smartphones outright is the preferred option
                                                                                                  • Figure 50: Ways in which consumers paid for their smartphone, December 2016
                                                                                                  • Figure 51: Ways in which consumers paid for their smartphone, by manufacturer of smartphone owned, December 2016
                                                                                                • No marked preference for online or offline smartphone shopping
                                                                                                  • Figure 52: Ways in which consumers got their smartphone, December 2016
                                                                                                  • Figure 53: Ways in which consumers got their smartphone, by ways in which consumers paid for their smartphone, December 2016
                                                                                                • Mobile network providers dominate smartphone distribution market
                                                                                                  • Figure 54: Whom consumers got their smartphone from, December 2016
                                                                                                  • Figure 55: Whom consumers got their smartphone from, by ways in which consumers paid for their smartphone, December 2016
                                                                                              • Buying Intentions in the Next Two Years

                                                                                                • Majority of smartphone owners to upgrade in the next two years
                                                                                                  • Figure 56: Intentions to buy or upgrade to a new smartphone in the next two years, December 2016
                                                                                                • The impact of the second-hand market on upgrades
                                                                                                  • Non-upgraders want to make the most of their current device
                                                                                                    • Figure 57: Reasons not to plan a smartphone purchase in the next two years, December 2016
                                                                                                  • Brand loyalty in the smartphone market
                                                                                                    • Figure 58: Attitudes of consumers planning on a smartphone purchase in the next two years, December 2016
                                                                                                  • Manufacturers’ upgrade programmes could threat operators’ positioning
                                                                                                    • Retailers and operators can use trade-ins to attract upgraders
                                                                                                    • Important Features When Upgrading

                                                                                                      • Longer battery life by far the most wanted feature…
                                                                                                          • Figure 59: Most important features when upgrading to a new smartphone, December 2016
                                                                                                        • …but cameras remain a key area of competition
                                                                                                          • Still looking for the next killer smartphone feature
                                                                                                            • Figure 60: Most important features when upgrading to a new smartphone, by repertoire of most important features when upgrading to a new smartphone, December 2016
                                                                                                        • Smartphones’ Lifecycle and the Second-hand Market

                                                                                                          • Two in five smartphones have a second life…
                                                                                                              • Figure 61: Second life of smartphones, December 2016
                                                                                                            • …but keeping a spare remains the most popular option
                                                                                                              • Almost half of smartphone owners wouldn’t buy second-hand
                                                                                                                • Figure 62: Attitudes towards second-hand smartphones, December 2016
                                                                                                            • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                • Abbreviations
                                                                                                                  • Consumer research methodology
                                                                                                                    • Market size and forecast
                                                                                                                      • Fan chart forecast
                                                                                                                          • Figure 63: Best- and worst-case forecast for the value of the UK mobile phone market, 2016-21
                                                                                                                        • Brand research
                                                                                                                          • Brand map

                                                                                                                          Mobile Phones - UK - April 2017

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