Smartphone sales dropped 2% in major global markets last year according to the report An Incredible Decade for the Smartphone: What's Next? from Kantar Worldpanel ComTech. The declines come as the industry matures, consumers show reluctance to change brands and ecosystems, and vendors focus their efforts on selling more upgrades and replacing existing devices rather than connecting with larger numbers of new buyers.
Kantar Worldpanel releases the report during the Mobile World Congress 2017 in Barcelona.
The speed of smartphone innovation has slowed considerably in the past few years, and consumers are holding on to their phones for longer than ever. In 2016 in the US, the average consumer kept their smartphone for 23 months before upgrading, up from 21 months in 2014. In EU5, the life cycle increased similarly. Bucking that trend was Urban China, where the smartphone life cycle remained at 20 months.
Earlier upgrade and tighter bond
Finding success in the new smartphone economy will require a fundamental change in the tactics used by vendors to market devices and services. Early upgrade programs have become more common among carriers in recent years. However, as can be witnessed from the lengthening life cycle of smartphones, these programs have failed to make a significant impact, since the value proposition to the consumer remains somewhat unclear.
Pulling consumers further into a vendor’s ecosystem is a proven way could stimulate growth. Loyalty among iPhone owners in the US was 92% in 2016. For those who also owned an iPad, that number jumped to 96%. A similar pattern is seen among Samsung smartphone owners. Their loyalty to the phone alone ranked at 67% and jumped to 74% among those who also owned a Samsung tablet.
Drawing consumers into new technologies
Wearables were expected to be the next big mobile technology, promising to expand the smartphone ecosystem to the wrist. However, judging from disappointing sales results, vendors were far more excited by the potential than were consumers.
Virtual Reality, Augmented Reality & AI
The latest in cutting edge technology, such as Artificial Intelligence, Virtual Reality and Augmented Reality, could stimulate future growth, but without more compelling applications for these technologies they may end up being little more than hype. The market will need to prove a satisfying combination of technology, content, and services that make consumers’ lives easier.
Content must play a part in every future hardware push, particularly if mobile VR/AR is going to be offered. There must be a compelling use case, whether that consists of games, music, videos, or something more. Accomplishing this may involve developing a unique service. But more likely this will include leveraging partnerships with established content providers like Netflix, Hulu, or Amazon – or with content producers or with telecoms providers like AT&T, Verizon, Comcast, and others.
For companies in the mobile space, the days of business as usual are gone. If mobile manufacturers want to preserve the global brands they’ve worked so hard to build, they must blaze new trails, innovate new offerings, and nurture new partnerships. Those that fail can be assured their rivals will step up to the challenge.
Source: Kantar Worldpanel