In the EU5, 48% of Smartphone Owners Are Currently Planning to Upgrade Over the Next 12 Months
According to a paper just published by Kantar Worldpanel ComTech, mobile penetration in the US and Europe's Big Five Countries (EU5) has reached 91%, and in urban China, that number has risen to 97%. Nearly everyone now has a mobile phone, and if those numbers are not staggering enough--65% of Americans, 74% of Europeans, and 72% of urban Chinese consumers own a smartphone.
"With this kind of market penetration already in place, some in the industry are wondering where future sales will come from," said Carolina Milanesi, chief of research at Kantar Worldpanel ComTech, one of the authors of the paper. "As is often the case, the answer depends on how you look at it."
During 2016, Milanesi estimates, smartphone sales will be largely based on:
* Convincing die-hard feature phone users that they need a smartphone
* Persuading smartphone owners that they want and need the "next big thing"
Changes in smartphone OS market share, along with sales for the two top smartphone brands (Apple and Samsung), will come mainly from convincing users to switch from the competition.
"Many feature phone owners simply do not want a smartphone," Milanesi added. "Price is the biggest hurdle in getting feature phone users to upgrade to a smartphone. In Germany, 79% of recent feature phone buyers spent less than EUR 60 on their device, while just 19% of smartphone buyers spent that amount. Smartphone buyers spent a total average of EUR 276, while feature phone buyers spent an average of only EUR 57."
Feature phone owners across markets are challenged in finding smartphones that offer what they consider a good value for money spent. They are unlikely to upgrade to a smartphone until they can no longer rely on their current device. While looking year over year might not be enough to see a clear trend, examining the past three years makes it clear that smartphone life cycles are getting longer.
In mature markets, the profitable high end of the market is saturated. In the US, the high-end segment, devices with an unsubsidized price of more than $500 represented 48% of sales in 2015, growing a mere 9% over 2014. In the EU5, where the high-end segment represented just 27% of sales, growth was...