Description

“After relatively stable sales over the past five years, COVID-19 is disrupting purchase plans by prospective smartphone shoppers, and the market is expected to sharply decline in 2020. However, outside of medium-term delays to purchasing, COVID-19 is unlikely to result in a longer-term material change when it comes to sales. Consumers will adopt new behaviors or accelerate usage for features like contactless mobile payments, video chatting and mobile gaming, which should further spur the importance of smartphones for consumers.”
– Buddy Lo, Sr. Technology and Consumer Electronics Analyst

This report will look at the following areas:

  • The short, medium and longer term impact of COVID-19 on the smartphone market and consumer behavior
  • The recessionary impact of COVID-19 on smartphone sales
  • The leading brands for ownership and consideration among shoppers
  • The most important features smartphone shoppers look for in their next phone

Table of Contents

  1. Overview

    • What you need to know
      • Definition
      • Executive Summary

          • Market overview
            • COVID-19 expected to shock smartphone demand
              • Figure 1: Total unit sales and forecast of smartphones (millions), 2015-25
            • Top takeaways
              • Impact of COVID-19 on the smartphone market
                • Figure 2: Short-, medium- and longer-term impact of COVID-19 on technology hardware and smartphones, May 2020
              • The issues
                • Smartphone purchase intent healthy before COVID-19
                  • Figure 3: Smartphone purchase intent, March 2020
                • Strong brand loyalty for smartphone owners reduces consideration for alternative brands
                  • Figure 4: Smartphone brands considered, by smartphone brands owned, March 2020
                • Mobile network providers account for more than half of all smartphone sales
                  • Figure 5: Smartphone purchase method, March 2020
                • The opportunities
                  • Pro-replacement attitudes and parental status a key indicator for purchase intent
                    • Figure 6: Smartphone purchase intent – CHAID – Tree output, March 2020
                  • Aspirational Owners and Trendy Owners key to success in the smartphone market
                    • Figure 7: Smartphone owner consumer segments, March 2020
                  • 5G-capable models have the potential to trigger consumers to switch brands
                    • Figure 8: Attitudes toward smartphones – brand, by smartphone brand owned, March 2020
                  • What it means
                  • The Impact of COVID-19 on Smartphones

                    • What you need to know
                      • Figure 9: Short, medium and longer term impact of COVID-19 on technology hardware and smartphones, June 2020
                    • Opportunities and threats
                      • Financial impact of COVID-19 adjusts budgets and delays upgrades
                        • Figure 10: Xfinity Mobile iPhone SE direct mail promotion, May 2020
                      • The hands-on experience is considered essential for many smartphone shoppers
                        • Upgrades to 5G smartphones are likely to be delayed
                          • Privacy concerns re-emerge from contact tracing app discussions
                            • Impact of COVID-19 on the smartphone market
                              • Figure 11: Total unit sales and forecast of smartphones (millions), 2015-25
                            • How the crisis will affect key consumer segments
                              • Younger consumers bear the brunt of immediate economic impact of COVID-19
                                • Young urban consumers could drive a shift toward contactless mobile payments
                                  • How a COVID-19 recession will reshape the smartphone industry
                                    • Mobile phone sales remained resilient during the Great Recession
                                      • Figure 12: Annual % change in US mobile phone sales – smartphones and feature phones, 2008-12
                                    • Refurbished/pre-owned market should gain prominence in economic downturn
                                      • Figure 13: Timing of most recently acquired smartphone and purchase method, March 2020
                                    • Comprehensive bundles that appeal to specific lifestyles will draw consumers
                                      • Figure 14: Samsung S20 5G Series and Spotify Premium display ad, April 2020
                                      • Figure 15: iPhone SE and Apple TV+ promotional email, April 2020
                                      • Figure 16: Samsung Galaxy Note10 and Galaxy Fit New Year Promotional Email, January 2020
                                    • COVID-19: US context
                                    • The Market – What You Need to Know

                                      • COVID-19 shocks smartphone demand for 2020
                                        • Smartphone ownership grows, even among lower-income households
                                          • Sheltering in place could reduce battery frustrations that spur upgrades
                                            • Consumer confidence plummets due to COVID-19
                                              • Privacy concerns re-emerge with contact tracing discussion
                                              • Market Size and Forecast

                                                  • COVID-19 expected to cause a steep drop in smartphone unit sales for 2020
                                                    • Figure 17: Total unit sales and forecast of smartphones (millions), 2015-25
                                                    • Figure 18: Total unit sales and forecast of smartphones (millions), 2015-25
                                                • Market Breakdown

                                                  • Smartphones overtake nearly entire mobile phone market
                                                    • Figure 19: Mobile phone ownership and type of phone used, 2012-19
                                                  • Lower-income households increase smartphone ownership rates
                                                    • Figure 20: Smartphone ownership, by household income, 2012-19
                                                    • Figure 21: Smartphone and feature phone breakdown, by age and household income, October 2018-December 2019
                                                • Market Perspective

                                                  • 5G rollout should spur upgrades in the longer term
                                                    • Figure 22: T-Mobile 5G Instagram post, May 2020
                                                    • Figure 23: Verizon 5G Instagram promotion, May 2020
                                                  • Social distancing may reduce frustrations with smartphone batteries
                                                  • Market Factors

                                                    • COVID-19 hits consumer disposable income
                                                      • Figure 24: First-time applications for unemployment (thousands), January-June 2020
                                                    • Additional disruption in supply chain could limit inventory for 2020
                                                      • Figure 25: Percentage of people who have returned to work – China, February 2020 – June 2020
                                                    • Trade disputes hinders Huawei expansion into the US
                                                      • Privacy vs public health – which is prioritized by consumers?
                                                        • Consumer confidence drops alongside smartphone sales
                                                          • Figure 26: Consumer Sentiment Index, January 2007-May 2020
                                                      • Key Players – What You Need to Know

                                                        • Apple’s iPhone lineup leads
                                                          • Samsung not giving on folding smartphones
                                                            • Apple launches a lower-cost iPhone for price-sensitive shoppers
                                                              • Google’s Pixel struggling to gain traction among US consumers
                                                              • Smartphone Brand Shares

                                                                • Apple continues growth in smartphone segment while competitors falter
                                                                  • Figure 27: Brand of smartphone owned, 2013-19
                                                              • What’s Working

                                                                • Apple’s brand allure has strong connection with younger consumers
                                                                • What’s Struggling

                                                                  • Foldable smartphones flop
                                                                    • Figure 28: Samsung Galaxy Z Flip Instagram post, February 2020
                                                                  • Google Pixel unable to crack 5% market share
                                                                  • What to Watch

                                                                    • Apple’s upcoming 5G smartphone will arrive facing established competition
                                                                      • Samsung Access – Samsung’s smartphone subscription program
                                                                      • The Consumer – What You Need to Know

                                                                        • Apple leads the market in both ownership and purchase consideration
                                                                          • Three quarters of owners’ smartphones are less than two years old
                                                                            • More than half purchased their smartphone from a mobile network provider
                                                                              • Battery improvements top desired smartphone features for shoppers
                                                                                • Attitudes point to strong brand loyalty
                                                                                  • Two thirds of smartphone shoppers considering only one brand
                                                                                  • Smartphone Brands Owned

                                                                                    • Half of US smartphone owners have an Apple iPhone
                                                                                      • Figure 29: Smartphone brands owned, March 2020
                                                                                    • Lower-income households opt for alternative smartphone brands
                                                                                      • Figure 30: Smartphone brands owned, by household income, March 2020
                                                                                    • Youth enamored with iPhones
                                                                                      • Figure 31: Smartphone brands owned, by gender and age, March 2020
                                                                                      • Figure 32: Smartphone brands owned, by age and household income, March 2020
                                                                                    • iPhone continues to grow market share
                                                                                      • Figure 33: Smartphone brands owned, January 2019 and March 2020
                                                                                      • Figure 34: iPhone ownership, by age, January 2019 and March 2020
                                                                                  • Length of Smartphone Ownership

                                                                                    • Majority of smartphone owners purchased within the past two years
                                                                                      • Figure 35: Timing of most recently acquired smartphone, March 2020
                                                                                    • Older consumers hold onto their current models longer
                                                                                      • Figure 36: Timing of most recently acquired smartphone, by age, March 2020
                                                                                  • Smartphone Purchase Method

                                                                                    • Mobile network providers play major role in smartphone purchasing
                                                                                      • Figure 37: Smartphone purchase method – New, March 2020
                                                                                    • Lower-income households more likely to rely on gifts or secondhand market
                                                                                      • Figure 38: Smartphone purchase method, by household income, March 2020
                                                                                    • Apple Store experience plays a major role in iPhone sales
                                                                                      • Figure 39: Smartphone purchase method, by Apple iPhone owners, March 2020
                                                                                  • Smartphone Purchase Intent

                                                                                    • Four in 10 planned to buy a smartphone within the year before COVID-19
                                                                                      • Figure 40: Timing for next smartphone purchase, March 2020
                                                                                    • Household income doesn’t correlate with smartphone purchase intent
                                                                                      • Figure 41: Timing for next smartphone purchase, by household income, March 2020
                                                                                    • Millennials are the most active in the market
                                                                                      • Figure 42: Timing for next smartphone purchase, by generation, March 2020
                                                                                  • Smartphone Brands Considered

                                                                                    • Apple has dominant lead in smartphone consideration
                                                                                      • Figure 43: Smartphone brands considered, March 2020
                                                                                      • Figure 44: Smartphone brands considered, January 2019 and March 2020
                                                                                    • Apple and Samsung have highest brand reconsideration
                                                                                      • Figure 45: Smartphone brands considered, by smartphone brands owned, March 2020
                                                                                      • Figure 46: Smartphone brands considered, by smartphone brands owned, March 2020
                                                                                      • Figure 47: Average number of smartphone brands considered, by smartphone brand owned, March 2020
                                                                                    • Two thirds of smartphone shoppers are only considering one brand
                                                                                      • Figure 48: Breakdown of smartphone brand ownership and purchase consideration of single brand shoppers, March 2020
                                                                                      • Figure 49: Breakdown of smartphone brand ownership and purchase consideration of single brand shoppers, March 2020
                                                                                  • Desired Smartphone Features

                                                                                    • Smartphone shoppers are nearly unanimous in wanting a better battery
                                                                                      • Figure 50: Desired smartphone features, March 2020
                                                                                    • Camera improvements and innovations are a better draw among women
                                                                                      • Figure 51: Desired smartphone features – camera, by gender and age, March 2020
                                                                                    • Multi-brand shoppers more likely to want 5G capabilities
                                                                                      • Figure 52: Desired smartphone features, by single- and multiple-brand smartphone shoppers, March 2020
                                                                                      • Figure 53: Desired smartphone features, by smartphone brand, March 2020
                                                                                    • Older consumers seek convenience and performance from their battery
                                                                                      • Figure 54: Desired smartphone features – battery, by generation, March 2020
                                                                                  • Smartphone Purchase Triggers

                                                                                    • Non-buyers predominantly older consumers
                                                                                      • Figure 55: Age breakout of non-buyers, March 2020
                                                                                      • Figure 56: Timing of most recent smartphone purchase, by non-buyers and age, March 2020
                                                                                    • Performance and usability issues will trigger the shopping process
                                                                                      • Figure 57: Smartphone purchase triggers, March 2020
                                                                                  • Attitudes toward Smartphones

                                                                                    • Half of consumers say their smartphone is the most important device they own
                                                                                      • Figure 58: Attitudes toward smartphones – smartphone importance, by age, March 2020
                                                                                    • Smartphone owners hesitant to switch brands
                                                                                      • Figure 59: Attitudes toward smartphones – brand, by smartphone brand owned, March 2020
                                                                                      • Figure 60: Attitudes toward smartphones – brand, by smartphone brands owned and age, March 2020
                                                                                    • Age more than income correlates with replacement attitudes
                                                                                      • Figure 61: Attitudes toward smartphones – replacement, by age, March 2020
                                                                                      • Figure 62: Attitudes toward smartphones – replacement, by household income, March 2020
                                                                                      • Figure 63: Attitudes toward smartphones – replacement, by age and household income, March 2020
                                                                                    • Parents with pro-replacement attitudes highly likely to purchase within the year
                                                                                      • Figure 64: Smartphone purchase intent – CHAID – Tree output, March 2020
                                                                                    • Interest in convenience and innovations peaks among 25-34 year olds
                                                                                      • Figure 65: Attitudes toward smartphones – innovations, by age, March 2020
                                                                                  • Consumer Segmentation – Attitudes toward Smartphones

                                                                                        • Figure 66: Smartphone owner consumer segments, March 2020
                                                                                      • Aspirational Owners (21%)
                                                                                        • Characteristics
                                                                                          • Figure 67: Profile of Aspirational Owners, March 2020
                                                                                          • Figure 68: Smartphone purchase method – used/refurbished, by consumer segments, March 2020
                                                                                        • Opportunities
                                                                                          • Figure 69: Smartphone purchase intent – within the next two years, by consumer segments, March 2020
                                                                                          • Figure 70: Profile of Tech Trendsetters (consumer segment from Wearable Technology), November 2019
                                                                                          • Figure 71: Smartphone brands owned, by consumer segments, March 2020
                                                                                          • Figure 72: Attitudes toward smartphones – brands, by consumer segments, March 2020
                                                                                        • Conservative Owners (27%)
                                                                                          • Characteristics
                                                                                            • Figure 73: Profile of Conservative Owners, March 2020
                                                                                            • Figure 74: Attitudes toward smartphones – importance and having an old smartphone, by consumer segments, March 2020
                                                                                          • Opportunities
                                                                                            • Mainstream Owners (29%)
                                                                                              • Characteristics
                                                                                                • Figure 75: Profile of Mainstream Owners, March 2020
                                                                                              • Opportunities
                                                                                                • Figure 76: Single and multiple brand shoppers, by consumer segments, March 2020
                                                                                              • Trendy Owners (23%)
                                                                                                • Characteristics
                                                                                                    • Figure 77: Profile of Trendy Owners, March 2020
                                                                                                    • Figure 78: Breakout of gender and ethnicity, by consumer segments, March 2020
                                                                                                  • Opportunities
                                                                                                      • Figure 79: Attitudes toward smartphones – switching and texting, by consumer segments, March 2020
                                                                                                  • Appendix – Data Sources and Abbreviations

                                                                                                    • Data sources
                                                                                                      • Sales data
                                                                                                        • Forecast
                                                                                                          • Consumer survey data
                                                                                                            • Direct marketing creative
                                                                                                              • Abbreviations and terms
                                                                                                                • Abbreviations
                                                                                                                  • Terms

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