GigaOM » smartphone penetration

Carrier data confirms it: Half of US now owns a smartphone

Kevin Fitchard — Mon, 13 Aug 2012 16:16:57 +0000

For the first time, more people in the US own a smartphone than a regular talk and text devices, according to a new report from Chetan Sharma Consulting. Smartphone penetration exceeded 50 percent in the second quarter, making the feature phone a shrinking minority among US mobile users.

A Nielsen study found in May reached similar conclusions, revealing that 50.4 percent of US subscribers surveyed owned a smartphone, up from a mere 18 percent in 2009. But while Nielsen’s number are based on polling data, Sharma’s come from the operators’ quarterly reports.

It was an easy trend to spot as the Big 4 have been selling smartphones at a rapid clip, especially AT&T which gained a big lead over its competitors through years of exclusivity with the iPhone. In the second quarter, AT&T’s smart-device penetration rose well over 60 percent and three-quarters of all devices came embedded with an OS.

The rest of the operators are now starting to catch up, and not just the remainder of the Big 4. Regional operators like MetroPCS, Cricket Communications and U.S. Cellular as well as growing number of mobile virtual network operators (MVNOs) are all tapping into the trove of cheaper smartphones in the market.

While contract dumb-phone users are upgrading to iPhones and Android devices, the biggest boom appears to be in the prepaid segment. According to Sharma, postpaid growth in the U.S. remained flat, while prepaid subscriptions grew by 12 percent year-over-year. There are now 100 million prepaid subscribers in the U.S., more than one-third of the overall market. The NPD group recently found that prepaid smartphone penetration increased 91 percent between 2011’s second quarter and last quarter. As my colleague Kevin Tofel points out that growth rate will surely increase now that prepaid operators like Cricket and Virgin Mobile have the iPhone.

Sharma also found that all of those new smartphones subscribers aren’t necessarily turning into big money makers for the carriers. Revenues from new subscribers fell below 5 percent in the second quarter. That means operators can no longer count on adding new customers to make their profits. Instead, they’ll have to upsell their current subscribers on new services and pricing structures such as Verizon and AT&Ts’ new shared plans. That may be a tough thing to do if a good hunk of the market is gravitating toward cheaper prepaid service.

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1 in 3 smartphones sold in Q4 had 4G connectivity

Kevin Fitchard — Tue, 13 Mar 2012 15:32:11 +0000

Aided by the launch of the iPhone 4S, the number of U.S. smartphones embedded with mobile broadband connectivity jumped in 2011, increasing from 6 percent at the end of 2010 to 35 percent in the last quarter, according to new data from the NPD Group. Smartphone penetration reached 44 percent in the U.S. last year, NPD found, meaning smartphones are becoming not only more popular but also a lot faster.

NPD uses the U.S. operators’ definition of 4G, which means LTE, WiMAX and, in the case of both T-Mobile and AT&T, includes any device capable of connecting to HSPA+ networks at peak rates of 14.4 Mbps (many of T-Mobile’s devices can far exceed those theoretical speeds, though AT&T’s cannot). That means NPD is classifying the iPhone 4S as a 4G device, even though Apple is not. The launch of the iPhone 4S over AT&T’s network in the fall thus precipitated a huge surge in 4G activations, which will only continue as the 4S sales ramp up and future iterations of the iPhone include HSPA+ and LTE.

“HSPA+, which has combined high throughput with practical power efficiency, has been a compelling evolutionary 4G upgrade option for carriers upgrading GSM networks,” said Ross Rubin, the executive director of Connected Intelligence for the NPD Group, in a statement. “With all major U.S. carriers committing to LTE as their 4G future, it is clearly the cellular network technology that will determine the baseline for the next generation of advanced smartphones.”

Given those definitions it should be no surprise that the balance of 4G smartphones is skewed toward AT&T and T-Mobile. According to NPD, 22 percent of all smartphone sales in the fourth quarter were for HSPA+ devices, led by the iPhone 4S. Sprint was the sole provider in the WiMAX category, which accounted for 6 percent of sales and was dominated by the HTC Evo 4G. LTE device sales rose from zero in 2010 to 7 percent last quarter, the results of a Verizon Wireless’ big 4G push in 2011. The leading LTE device was the HTC Thunderbolt, NPD said.

NPD also noted that some consumers are starting to cut through the 4G marketing clutter to form their own opinions on what constitutes 4G. In its surveys NPD found that 26 percent of consumers who bought LTE phones were specifically seeking a 4G device. But most consumers didn’t care one way or another. Only 9 percent of overall smartphone buyers registered 4G as a purchase consideration.

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