Smartphones Head To ‘Tipping Point’


Android is now the top smartphone OS in eight key countries having edged past Nokia’s Symbian in Spain, according to the latest quarterly sample data from Kantar Worldpanel ComTech.

In the UK, Android’s growth is being driven by non-smartphone owners upgrading, rather than people switching from other platforms. According to the research, 74.3 percent of new Android sales come from owners of “feature phones”; only 1.4 percent of new Android owners come from former iPhone owners.

But in the UK it is BlackBerry maker RIM (NSDQ: RIMM) which is doing best in picking up upgrading non-smartphone owners: the study says nearly 85 percent of its new customers come from feature phone owners. RIM announced on Friday that it had gained 1m users in Europe in just the past three weeks.

The research shows the challenges facing Nokia: of those changing between smartphones, Symbian provides 19 percent of new iPhone users, 17.5 percent of new Symbian users and 10.9 percent of new RIM users.

Every four weeks about 2.5 percent of feature phone owners have shifted to smartphones since April 2010 in the UK, suggesting that the “tipping point” when smartphones make up half of all users lies about a year away, in June 2012.

The UK, US and Australia all show high levels of smartphone penetration and growth, according to the Kantar.

RIM is performing well in the UK, while it is declining in the US and showing no growth in Australia.

Android has grown its share of smartphone users in the UK from 1 percent to 9.2 percent between June 2010 and June 2011, though Apple has meanwhile doubled its share of the total installed based from 5.6 percent to 10.3 percent. RIM’s share grew from 3.7 percent to 7.4 percent as smartphone ownership overall grew from 21.3 percent to 36.9 percent. But because the overall market grew, Apple’s market share fell from 30.6 percent to 18.3 percent. ComTech notes though that in the UK the iPhone 4 has been the top-selling smartphone for the past 12 months.

While smartphone ownership in the UK tends to be male-dominated, with 60 percent being men, RIM has reversed that trend over the past year, shifting from a male-dominated balance a year ago (57 percent v 43 percent) to a female-dominated one (45 percent male to 55 percent female) now.

There has also been a significant growth in prepay smartphone use in the UK, which has gone from 18 percent of smartphones to 32 percent in just one year – though contract tariffs still dominate.

The average price of smartphones has also fallen in the UK, in the contract and prepay markets. Generally, iPhones remain the most expensive, with only 45 percent of contracts offering the handset for free – compared to more than 90 percent for Android and RIM phones. That means that Android and RIM phones skew towards a younger demographic, the study found.

For Android owners, the OS brand is seen as the most important element – while for Apple users, it is the availability of apps that they value most.

Kantar Worldpane ComTech’s global consumer insight director, Dominic Sunnebo, said: “We are yet to see any real signs of consumers switching between Android and Apple (NSDQ: AAPL). Our data shows that Apple and Android’s customers are intensely loyal when choosing their upgrade. One reason for this is the investment consumers make in their device through apps. In France for example, the average iPhone costs €215, and 17 percent of iPhone owners download more than 10 apps each month. This investment is then lost if they want to choose a different OS as the apps are non-transferable.”

Sunnebo warns that RIM’s market gains now may not last: “With 63 percent of British consumers still owning a non-smartphone, future growth lies with upgrading customers. BlackBerry is currently attracting the most upgrading shoppers with 84.9 percent of its new customers previously owning a non-smartphone. Our data shows that most first-time smartphone owners look for lower prices. BlackBerry’s competitive pricing allows younger consumers to switch to a smartphone device at a price they can afford.

“However, a concern for brands targeting the lower end of the market is that once consumers have tried a smartphone they are prepared to spend more on their next device and could turn to other brands. With more and more consumers buying smartphones the future for middle-to-high-end smartphones is set to become ever more competitive.”

He noted though that the BlackBerry Messenger app, which lets people contact each other on RIM phones without incurring text charges, is a key driver of use: 70 percent of BlackBerry owners aged 16 to 24 had used BBM in the previous four weeks.

Nokia (NYSE: NOK) has staged something of a revival in France, where it lost only 3.9 percent of share in a market that grew 75 percent year on year – indicating that it grew the number of smartphones it sold. The C7 has been key in that.

Kantar gathers its data from interviewing consumers, carrying out up to 1m interviews in Europe alone. This data excludes enterprise sales, which means that RIM’s share in particular may be understated.

This article originally appeared in MediaGuardian.

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