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Portable Technology - US - June 2009

The portable technology market is constantly changing, based on customer needs and technological advances. This report explores the shifts and overlapping between cell phones and MP3 players, as well as competing products—the number of which keeps growing in time with convergence. The report presents ways for manufacturers to stay competitive both in terms of marketing and product development, in the existing MP3-player market and against competing technologies. This includes fine-tuning content offerings and features, identifying niche markets, and how to reach current owners and court new consumer groups.

More specifically, this report addresses the following questions:

  • What is the current level of penetration and what segments under- and over-index on usage?
  • What is the current size of the cellular handset market and what types of devices will drive growth?
  • What recent innovations are shaping current demand and the markets of the future?
  • What features and decision-making criteria have the greatest impact on the probability that a consumer will select a certain model of cellular phone or MP3 player?
  • How are companies marketing portable devices and what approaches are likely to become more important?
  • What segments provide the greatest sales opportunities for portable device manufacturers?
  • How the continuing shift toward smartphones is about to cause substantial changes to the market as consumers focus on interface and functionality in addition to product design?
  • What is Apple’s role in the market and how can other manufacturers compete?
  • What is the role of children and teens in future market expansion?

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Definition
        • Data sources
          • Sales data
            • Consumer survey data
              • Advertising creative
                • Abbreviations and terms
                  • Abbreviations
                    • Terms
                    • Executive Summary

                      • Portable technology, a $28 billion dollar market
                        • Convergence creates CE sales cannibalization
                          • Cell phone segment findings
                            • MP3 player segment findings
                              • Those aged 25-34 important to market…
                                • … as are (English-speaking) Asians and Hispanics
                                  • Apple still MP3 monolith
                                    • Cell phone market still up for grabs
                                      • Key findings about cell phone apps
                                      • Insights and Opportunities

                                        • Sturdy PMPs for family use
                                          • Screen size vs. pocket sized
                                            • Cheap video phones to appeal to middle-income consumers
                                              • $79 (or cheaper) smartphones
                                                • Safety to sell cells for the very old and very young
                                                  • Simplifying and streamlining the lives of 25-44 year-olds
                                                    • Apps for women and 18-24 year-olds
                                                      • Young consumers to spend money in order to save
                                                        • Man-apps
                                                          • Ability to test-drive phones should supply brand advantages
                                                          • Inspire Insights

                                                              • Horizontal Communities
                                                                • What’s it about?
                                                                  • What does it mean for the market?
                                                                    • Life Hacking
                                                                      • What’s it about?
                                                                        • What does it mean for the market?
                                                                        • Market Size and Forecast

                                                                          • Key points
                                                                            • A maturing market faces challenges
                                                                              • Figure 1: Total U.S. manufacturer sales and forecast of cell phones and MP3 players, at current prices, 2004-10
                                                                              • Figure 2: Total U.S. manufacturer sales of cell phones and MP3 players, in inflation-adjusted prices, 2004-10
                                                                          • Competitive Context

                                                                            • Market to move forward by cannibalizing sales of other portables
                                                                              • Portable gaming devices and DVD players
                                                                                • Cannibalizing DVD players by controlling software costs
                                                                                  • The race for gamers at the app store
                                                                                    • Figure 3: Ownership of portable DVD players and portable gaming devices, by age, October 2007-December 2008
                                                                                  • GPS and e-Readers
                                                                                    • Figure 4: Ownership of portable GPS device and e-reader, by age, March 2009
                                                                                  • The income conundrum
                                                                                    • Figure 5: Ownership of portable GPS device and e-reader, by household income, March 2009
                                                                                  • Nearly $4 billion in GPS sales waiting to be cannibalized
                                                                                    • Figure 6: U.S. manufacturer sales and forecast of portable navigation devices, 2004-09
                                                                                  • Consumers unfamiliar with phone GPS
                                                                                    • Figure 7: Attitudes towards GPS on cell phones, by household income, March 2009
                                                                                  • Laptops
                                                                                    • Figure 8: U.S. manufacturer sales and forecast of laptop PCs, 2004-09
                                                                                  • Digital cameras and camcorders
                                                                                    • Figure 9: U.S. sales and forecast of digital still cameras, 2004-09
                                                                                • Segment Performance

                                                                                  • Keeping MP3 player sales moving
                                                                                    • One in three dual product owners do not have video playback on MP3 player
                                                                                      • Figure 10: Reasons for using cell phone instead of MP3 player for entertainment, by age, March 2009
                                                                                      • Figure 11: Reasons for using cell phone instead of MP3 player for entertainment, by HH income, March 2009
                                                                                    • The video phone for the middle incomes
                                                                                      • Figure 12: Attributes towards and uses of PMPs vs. cell phones, by HH income, March 2009
                                                                                    • Segments in transition
                                                                                      • Figure 13: U.S. manufacturer sales and forecast of cell phones and MP3 players, at current prices, 2004-10
                                                                                      • Figure 14: U.S. sales of cell phones and MP3 players, by segment, 2006 and 2008
                                                                                  • Segment Performance—Cell phones

                                                                                    • Cellphone segment negatively impacted by economic downturn…
                                                                                      • …while smartphones defy economic conditions
                                                                                        • Figure 15: U.S. manufacturer sales of smartphones vs. “dumbphones”, 2006 and 2008
                                                                                        • Figure 16: U.S. manufacturer sales and forecast of cell phones, 2004-10
                                                                                    • Segment Performance—MP3 Players

                                                                                      • Declining sales as segment matures
                                                                                        • An accelerated adoption and maturity curve
                                                                                          • A feature, not a product?
                                                                                            • Figure 17: U.S. manufacturer sales and forecast of portable media players/MP3 players, 2004-10
                                                                                        • Market Drivers

                                                                                          • Substantial opportunities in sales to lower-income households
                                                                                            • Figure 18: Ownership of MP3 players and cellular phones, by household income, October 2007-December 2008
                                                                                          • Smartphones still have mountains to climb among higher-income groups
                                                                                            • Figure 19: Ownership of web-enabled phones and operating systems, by household income, March 2009
                                                                                          • Striking potential for low-cost phones
                                                                                            • Figure 20: Household income distribution, 2007
                                                                                          • 12-44 year-olds lead pack in smartphones
                                                                                            • Figure 21: Ownership of web-enabled phones and operating systems, by age, March 2009
                                                                                          • Population by age
                                                                                              • Figure 22: Population, by age, 2004-14
                                                                                            • Asians and English-language Hispanics on the cutting edge
                                                                                                • Figure 23: Population by race and Hispanic origin, 2004-14
                                                                                              • Income and age drive sales of high-end MP3 players
                                                                                                • Figure 24: Mean spend on MP3 players, October 2007-December 2008
                                                                                              • Phone swap services to propel faster rate of change
                                                                                              • Brand Share—MP3 Players

                                                                                                • Apple continues to increase share
                                                                                                  • Figure 25: Brand of portable MP3 player owned, by age, October 2007-December 2008
                                                                                                • Apple’s lock better still in high-income households
                                                                                                  • Figure 26: Brand of portable MP3 player owned, by Household income, October 2007-December 2008
                                                                                              • Brand Share—Cell Phones

                                                                                                • Brand and OS battle far from over
                                                                                                  • Figure 27: Brand-related qualities that affect cell phone choice, March 2009
                                                                                                • Four leaders
                                                                                                  • Figure 28: Brand of cell phone owned, by age, October 2007-December 2008
                                                                                              • Brand Qualities

                                                                                                • Apple
                                                                                                  • Samsung
                                                                                                    • SanDisk
                                                                                                      • LG
                                                                                                        • Nokia
                                                                                                          • Kyocera
                                                                                                            • BlackBerry
                                                                                                              • Google
                                                                                                                • Palm
                                                                                                                  • Motorola
                                                                                                                    • Sony Ericsson
                                                                                                                      • Creative Zen
                                                                                                                        • Sony Walkman
                                                                                                                          • Microsoft Zune
                                                                                                                          • Innovation and Innovators

                                                                                                                            • A mobile phone for the mobile-phobic
                                                                                                                              • Smaller and smaller
                                                                                                                                • Reading becomes the newest entertainment on-the-go
                                                                                                                                  • Broadcasting in real time
                                                                                                                                    • Wireless charging
                                                                                                                                      • Phones for photo-enthusiasts
                                                                                                                                        • GPS in action
                                                                                                                                          • PMP add-ons
                                                                                                                                            • Skype for cell phones
                                                                                                                                              • Video IM
                                                                                                                                                • Kicking voice out of the phone: the iPod touch
                                                                                                                                                • Advertising and Promotion

                                                                                                                                                  • Online marketing highlights
                                                                                                                                                    • Web series offer a new way to reach tech-savvy consumers
                                                                                                                                                      • Save your brain with a headset
                                                                                                                                                        • LG’s interactive design campaign
                                                                                                                                                          • Review sites increasingly important to the market
                                                                                                                                                            • Manufacturer and phone-specific promotional websites
                                                                                                                                                              • Sidekick’s pitch to young males
                                                                                                                                                                • The iPhone Guided Tour
                                                                                                                                                                  • Apple and BlackBerry far in front in ad spending
                                                                                                                                                                    • Figure 29: Ad spend on cell phones and MP3 players, by product and brand, 2007-08
                                                                                                                                                                  • Television advertisements
                                                                                                                                                                    • Apple
                                                                                                                                                                      • Figure 30: iPod touch Funnest television ad, 2008
                                                                                                                                                                      • Figure 31: iPod Nano-chromatic television ad, 2008
                                                                                                                                                                      • Figure 32: iPhone College Apps television ad, 2009
                                                                                                                                                                      • Figure 33: iPhone Small Business television ad, 2009
                                                                                                                                                                    • Google Android
                                                                                                                                                                      • Figure 34: T-Mobile G1 television ad, 2009
                                                                                                                                                                    • Blackberry
                                                                                                                                                                      • Figure 35: Blackberry soccer ball exploding into pictures ad, 2009
                                                                                                                                                                    • Print
                                                                                                                                                                    • Ownership and Usage

                                                                                                                                                                      • Trended ownership of cell phones and MP3 players
                                                                                                                                                                        • Figure 36: Ownership of mobile phones and MP3 players, 2002-08
                                                                                                                                                                      • Children and seniors potential growth arena
                                                                                                                                                                        • Figure 37: Ownership of MP3 players and cellular phones, by age, October 2007-December 2008
                                                                                                                                                                      • Children drive ownership of multiple MP3 players
                                                                                                                                                                        • Figure 38: Ownership of multiple MP3 players, by age, HH income, children in household, October 2007-December 2008
                                                                                                                                                                      • Features available on cell phones
                                                                                                                                                                        • Figure 39: Services on phone, by age, October 2007-December 2008
                                                                                                                                                                      • Parents need connectivity, convenience
                                                                                                                                                                        • Figure 40: Services on phone used in past 30 days, by age, October 2007-December 2008
                                                                                                                                                                    • The New Frontier: Apps

                                                                                                                                                                      • Apps most popular among men, 25-34s, over-$75Ks
                                                                                                                                                                        • Figure 41: Incidence of downloading and mean number of cell phone applications downloaded, by gender, March 2009
                                                                                                                                                                        • Figure 42: Incidence of downloading and mean number of cell phone applications downloaded, by age, March 2009
                                                                                                                                                                        • Figure 43: Incidence of downloading and mean number of cell phone applications downloaded, by household income, March 2009
                                                                                                                                                                      • Apps go viral and influence purchases
                                                                                                                                                                        • Figure 44: Word-of-mouth marketing about cell phone apps, by gender, March 2009
                                                                                                                                                                      • 25-34 year-olds the centerpiece of viral app promotion
                                                                                                                                                                        • Figure 45: Word-of-mouth marketing about cell phone apps, by age, March 2009
                                                                                                                                                                      • Satisfaction with apps
                                                                                                                                                                        • Figure 46: Cell phone app fatigue and problems, by age, March 2009
                                                                                                                                                                      • Productivity vs. phone fun
                                                                                                                                                                        • Figure 47: iPhone print ad featuring cell phone apps, 2009
                                                                                                                                                                        • Figure 48: Cell phone app preferences, by age, March 2009
                                                                                                                                                                    • Spend

                                                                                                                                                                      • Men claim to be willing to pay more, but haven’t as yet
                                                                                                                                                                        • Figure 49: Attitudes towards cell phone price, by gender, March 2009
                                                                                                                                                                      • Under-45s more likely to spend big, with 25-34s in the lead
                                                                                                                                                                        • Figure 50: Attitudes towards cell phone price, by age, March 2009
                                                                                                                                                                      • Highest-income group least likely to spend big
                                                                                                                                                                        • Figure 51: Attitudes towards cell phone price, by household income, March 2009
                                                                                                                                                                    • Phone Selection

                                                                                                                                                                      • Price, battery life, most popular means of phone selection
                                                                                                                                                                        • Figure 52: Qualities that affect cell phone choice, March 2009
                                                                                                                                                                      • 18-34s as bellwethers on price and touch screens
                                                                                                                                                                        • Figure 53: Qualities that affect cell phone choice, by age, March 2009
                                                                                                                                                                      • Higher-income groups seeking big screens for web and email
                                                                                                                                                                        • Figure 54: Qualities that affect cell phone choice, by household income, March 2009
                                                                                                                                                                    • Try Before You Buy

                                                                                                                                                                      • Ability to test drive phones should supply brand advantages
                                                                                                                                                                        • Figure 55: Interest in trying new cell phones, by age, March 2009
                                                                                                                                                                      • Interest in potential concept phones
                                                                                                                                                                        • Figure 56: Interest in trying concept cell phones, by age, March 2009
                                                                                                                                                                    • Teens and Kids

                                                                                                                                                                      • Older kids, girls show higher interest in portable technology
                                                                                                                                                                        • Figure 57: Ownership of portable MP3 players and cellular phones among kids, by age and gender, October 2007-December 2008
                                                                                                                                                                      • Kids’ ownership of MP3 players, by brand
                                                                                                                                                                        • Figure 58: Brand of portable MP3 player owned among teens, by age and gender, October 2007-December 2008
                                                                                                                                                                      • Majority of teens have cell phones, PMPs
                                                                                                                                                                        • Figure 59: Ownership of portable MP3 players and cellular phones among teens, by age and gender, October 2007-December 2008
                                                                                                                                                                      • Teens love Apple
                                                                                                                                                                        • Figure 60: Brand of portable MP3 player owned among teens, by age and gender, October 2007-December 2008
                                                                                                                                                                        • Figure 61: Ownership of various types of MP3 players among teens, by age and gender, March 2009
                                                                                                                                                                      • Online teens more likely to have smartphones
                                                                                                                                                                        • Figure 62: Ownership of web-enabled cell phones and operating systems among teens, by age and gender, March 2009
                                                                                                                                                                      • Teen girls and apps
                                                                                                                                                                        • Figure 63: Mean number of cell phone applications downloaded among teens, by age and gender, March 2009
                                                                                                                                                                    • Impact of Race and Hispanic Origin

                                                                                                                                                                      • A note on Hispanic households
                                                                                                                                                                        • Figure 64: Household income among Hispanics, by language spoken at home, October 2007-December 2008
                                                                                                                                                                      • Asians in the lead
                                                                                                                                                                        • Figure 65: Ownership of MP3 players and cell phones, by race/Hispanic origin, October 2007-December 2008
                                                                                                                                                                      • Asians valuable to the portable technology market
                                                                                                                                                                        • Figure 66: Mean spend on MP3 players, by race/Hispanic origin, October 2007-December 2008
                                                                                                                                                                        • Figure 67: Mean number of cell phone applications downloaded, by race/Hispanic origin, March 2009
                                                                                                                                                                      • Race/Hispanic origin and brand findings
                                                                                                                                                                        • Figure 68: Brand of portable MP3 player owned, by race/Hispanic origin, October 2007-December 2008
                                                                                                                                                                        • Figure 69: Brand of cell phone owned, by race/Hispanic origin, October 2007-December 2008
                                                                                                                                                                    • Cluster Analysis

                                                                                                                                                                        • Integrators
                                                                                                                                                                          • Who they are
                                                                                                                                                                            • Opportunity
                                                                                                                                                                              • Functionalists
                                                                                                                                                                                • Who they are
                                                                                                                                                                                  • Opportunity
                                                                                                                                                                                    • New Standards
                                                                                                                                                                                      • Who they are
                                                                                                                                                                                        • Opportunity
                                                                                                                                                                                          • Cluster characteristics
                                                                                                                                                                                            • Figure 70: Portable technology clusters, March 2009
                                                                                                                                                                                            • Figure 71: Cell phone and MP3 player penetration, by clusters, March 2009
                                                                                                                                                                                            • Figure 72: Top factors influencing cell phone selection, by clusters, March 2009
                                                                                                                                                                                            • Figure 73: Attitudes towards cell phones, by clusters, March 2009
                                                                                                                                                                                          • Cluster demographics
                                                                                                                                                                                            • Figure 74: Portable technology clusters, by gender, March 2009
                                                                                                                                                                                            • Figure 75: Portable technology clusters, by age, March 2009
                                                                                                                                                                                            • Figure 76: Portable technology clusters, by household income, March 2009
                                                                                                                                                                                            • Figure 77: Portable technology clusters, by race/Hispanic origin, March 2009
                                                                                                                                                                                          • Cluster methodology
                                                                                                                                                                                          • Custom Consumer Groups

                                                                                                                                                                                            • Differences in attitudes and behavior by brand ownership
                                                                                                                                                                                              • Understanding smartphone brand ownership by demographics
                                                                                                                                                                                                • Figure 78: Ownership of various types of MP3 players, by age, March 2009
                                                                                                                                                                                                • Figure 79: Ownership of web-enabled phones and operating systems, by age, March 2009
                                                                                                                                                                                                • Figure 80: Ownership of various types of MP3 players, by household income, March 2009
                                                                                                                                                                                              • Apple owners enthusiastic about apps
                                                                                                                                                                                                  • Figure 81: Attitudes towards cell phone applications, by phone owned, March 2009
                                                                                                                                                                                                • Brand loyalty vs. product curiosity
                                                                                                                                                                                                  • Figure 82: Interest in trying existing phones, by phone owned, March 2009
                                                                                                                                                                                                • Apple carries substantial phone leverage from MP3 success
                                                                                                                                                                                                  • Figure 83: Interest in trying existing phones, by MP3 player owned, March 2009
                                                                                                                                                                                                • Gaming, DVR, or MP4 phone could unseat iPhone
                                                                                                                                                                                                  • Figure 84: Interest in trying concept phones, by phone owned, March 2009
                                                                                                                                                                                                • Targeting non-Apple PMP owners
                                                                                                                                                                                                  • Figure 85: Interest in trying existing phones, by MP3 player owned, March 2009
                                                                                                                                                                                                  • Figure 86: Spend on phone and attitudes towards convergence, by MP3 player owned, March 2009
                                                                                                                                                                                              • Appendix: Other Useful Consumer Tables

                                                                                                                                                                                                • MP3 player ownership more common among households with children
                                                                                                                                                                                                  • Figure 87: Ownership of MP3 players and cell phones, by presence of children in the household, October 2007-December 2008
                                                                                                                                                                                                • Brand ownership by household income
                                                                                                                                                                                                  • Figure 88: Brand of cell phone owned, by household income, October 2007-December 2008
                                                                                                                                                                                                • Reasons for using MP3 player instead of cell phone, by age
                                                                                                                                                                                                  • Figure 89: Attitudes towards using cell phone as a portable media player, by age, March 2009
                                                                                                                                                                                                • Cell phone satisfaction by household income
                                                                                                                                                                                                  • Figure 90: Cell phone satisfaction, by household income, March 2009
                                                                                                                                                                                                  • Figure 91: Ownership of multiple portable MP3 players, by race/Hispanic origin, October 2007-December 2008
                                                                                                                                                                                                • Teens like taking pictures, texting, and playing games
                                                                                                                                                                                                  • Figure 92: Services on phone among teens, by age and gender, October 2007-December 2008
                                                                                                                                                                                                • Teen cell phone brand ownership
                                                                                                                                                                                                  • Figure 93: Brand of cell phone owned among teens, by age and gender, October 2007-December 2008
                                                                                                                                                                                              • Appendix: Trade Associations

                                                                                                                                                                                                Companies Covered

                                                                                                                                                                                                • Alliance for Telecommunications Industry Solutions (ATIS)
                                                                                                                                                                                                • Amazon North America
                                                                                                                                                                                                • American Electronics Association
                                                                                                                                                                                                • Apple, Inc
                                                                                                                                                                                                • Archos
                                                                                                                                                                                                • AT&T Inc.
                                                                                                                                                                                                • Blockbuster USA
                                                                                                                                                                                                • CDMA Development Group (CDG)
                                                                                                                                                                                                • Consumer Electronics Association
                                                                                                                                                                                                • Creative Technology (USA)
                                                                                                                                                                                                • Credit Suisse First Boston LLC
                                                                                                                                                                                                • Dealerscope
                                                                                                                                                                                                • Dell Inc.
                                                                                                                                                                                                • Facebook, Inc.
                                                                                                                                                                                                • Google, Inc.
                                                                                                                                                                                                • Greenfield Online
                                                                                                                                                                                                • Hewlett-Packard Company
                                                                                                                                                                                                • Home Box Office, Inc.
                                                                                                                                                                                                • Joost
                                                                                                                                                                                                • Kyocera Corporation
                                                                                                                                                                                                • LG Electronics Inc (USA)
                                                                                                                                                                                                • Microsoft USA
                                                                                                                                                                                                • Motorola Mobility Holdings
                                                                                                                                                                                                • MySpace.com
                                                                                                                                                                                                • National Association of Recording Merchandisers
                                                                                                                                                                                                • Netflix, Inc.
                                                                                                                                                                                                • Nextel Communications Inc.
                                                                                                                                                                                                • Nintendo of America Inc.
                                                                                                                                                                                                • Nokia Corporation (US)
                                                                                                                                                                                                • Oracle Corporation
                                                                                                                                                                                                • Orange SA
                                                                                                                                                                                                • Palm Inc.
                                                                                                                                                                                                • Philips Consumer Electronics North America
                                                                                                                                                                                                • Research In Motion (USA)
                                                                                                                                                                                                • Rural Cellular Association (RCA)
                                                                                                                                                                                                • Samsung Electronics (USA)
                                                                                                                                                                                                • SanDisk Corporation
                                                                                                                                                                                                • Sanyo North America Corporation
                                                                                                                                                                                                • Skype Technologies S.A.
                                                                                                                                                                                                • Sony Ericsson (USA)
                                                                                                                                                                                                • Sprint Nextel Corporation
                                                                                                                                                                                                • T-Mobile USA
                                                                                                                                                                                                • The New York Times Company
                                                                                                                                                                                                • This Week In Consumer Electronics (TWICE)
                                                                                                                                                                                                • TiVo Inc
                                                                                                                                                                                                • TomTom International B.V.
                                                                                                                                                                                                • Toshiba Corporation (USA)
                                                                                                                                                                                                • U.S. Bureau of Labor Statistics
                                                                                                                                                                                                • U.S. Bureau of the Census
                                                                                                                                                                                                • Verizon Wireless (Cellco)
                                                                                                                                                                                                • Walt Disney Company, The
                                                                                                                                                                                                • Washington Post Company (The)
                                                                                                                                                                                                • Wi-Fi Alliance
                                                                                                                                                                                                • Wireless Communications Association International (WCA)
                                                                                                                                                                                                • YouTube, Inc.

                                                                                                                                                                                                Portable Technology - US - June 2009

                                                                                                                                                                                                US $3,995.00 (Excl.Tax)