Devices > Handset Country Share Blog

A Coming Replacement Boom for UK Smartphones?

by David Kerr | 4月 19, 2021

As we are solidly into Q2 with a very strong performance in terms of smartphone shipments already in the books north of 340M, we have taken a deeper dive in to the replacement outlook in the UK and US.

Strategy Analytics regularly polls owners and intenders of smartphone (and a whole range of other consumer electronics products) to keep our finger on the pulse of the market and to track changes in consumer expectations and plans for purchase.  We have in-market resources to support ongoing tracking and analysis around the world.

In this blog, we fill focus on the UK smartphone buyers and compare them to the US. Strategy Analytics polled 1300 smartphone owners in the UK and 1200 in the US at the end of March 2021 using an online survey.  

We covered a wide range of topics in our full survey including:

  • Length of current smartphone ownership
  • Intention to buy a new smartphone in the next 12 months
  • Expected purchase Channel for next smartphone
  • Price Paid for current and expected for next smartphone
  • Frequency of use for smartphone video creation, editing images, sharing video/images, gaming, and a range of other use cases
  • Satisfaction with current smartphones by brand, Operator, price tier.
  • Preferred Brands and Repeat Purchase Intention
  • Attitudes/Awareness and intentions for 5G
  • Expected purchase and spend for next smartphone (4G and 5G)
  • Attitudes to sustainability comparing customer ratings of mobile device vendors and operators to other industries.
  • … and lots more. Reach out to me if you would like to find out more about our capabilities and ongoing consumer insights and countries.

    This blog will focus on:

  • Length of current smartphone ownership
  • Intention to buy a new smartphone in the next 12 months
  • Expected purchase Channel for next smartphone

Key Findings

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  • One in four UK smartphones are 2-3 years old. In the US almost one in three are in this group
  • This indicates strong positive momentum for replacement as these numbers are at historic highs.
  • Consumer spending overall in Q1 was strong as stimulus payments and tentative steps to return to normalcy appeared.
  • Mobile operators in both countries are preparing promotional campaigns for customer churn centered on 5G offers.

In our most recent analysis, we have seen evidence of a critical risk to the smartphone vendor community and indeed to operators. In the US the 18-24 group are feeling the economic pinch and unable or unwilling to keep up with surging prices of preferred brand, new flagships.  

1 in 5 US buyers in the age group have opted for a used/refurbished smartphone.

 A similar pattern is seen in the UK. UK smartphone owners in the 55+ age group in the UK are much more open to used/refurbished devices. So, although the large base of smartphone owners who are due to replace their aging devices (2+ years old) is a strong positive in both countries, the potential that critical Gen Z and some Millennials opt for used/refurbished devices is a significant risk that needs to be evaluated. We note that although the share of shipments globally that are used/refurbished remains low, there is evidence that the surging prices for high end and premium flagships from Apple, Samsung is creating a market for n-1 devices.

Over 30% of smartphone owners in the UK and US report they plan to buy a smartphone in the next 12 months.

In the dynamic Chinese market, a full 60% of smartphone owners intend to buy a new device in that same period. China historically has had a much shorter replacement cycle (months than US, UK, and most other market around the world. Our tracking and forecast of smartphone replacement in 88 countries can be accessed by clients here.

In the UK, over 40% of owners in the high tier and flagship segments anticipating purchase of a smartphone in the next 12 months. In terms of 5G both UK and US smartphone owners are bullish on 5G for their next devices. The segment of smartphone owners who regularly capture, edit, and share video on their smartphone are particularly positive with approximately half intending to upgrade in the next year. Significant variances of course exist by age, gender, urban vs suburban, rural as well as other demographics.

We have seen significant changes in how smartphones are bought around the world over the last five years with online channels growing in importance in both developed and developing markets.

The Covid-19 crisis and significant lockdowns accelerated that trend. Although the pendulum will swing back to some degree towards in-store and order online/pickup in store there are segments that will likely never return to retail without some incentive.

  • In the US and UK, we see significant differences in use of online vs physical stores. The US trails UK in online channels for current phones for New and Used Devices but embraces online for refurbished.
  • A growing segment of buyers who are not locked into a specific purchase channel in both US and UK.
  • Click and Pickup strong in both USA and UK among 18-44 age groups for next smartphone.
  ukuspurchchnlnextsparpl21

With one quarter already in the books and strong return to growth expected globally (+13% in 2021), the smartphone outlook is positive but regional exposure to the surging levels of Covid-19 variants is a major downside risk.

Chip shortage also are playing a role in nudging smartphone prices higher which could limit replacement for some segments. Operators are beginning to be more generous with their trade in allowances to help catalyze change to load up their largely empty 5G networks. For example, Verizon has relaxed its policy to now accept broken or cracked screens on devices offered for trade-in and is offering generous packages up to $1000 in some cases for users to switch network.

The conditions are positive for growth in terms of a body of aging devices, inflow of stimulus payments from governments around the world, improving unemployment levels (although still well above pre-covid levels) and increasingly relaxed covid restrictions. On the other side of the ledger, the surge in covid-19 variants, cases, deaths and hospitalizations in India, Brazil in particular is cause for concern.

In the UK and US, the transition to 5G and ability of operators to convince consumers that there is a good reason to upgrade to 5G today will be the key battleground. Awareness of 5G and understanding of potential benefits is steadily growing but there is in truth little consumer pull at this stage. A portion of the potential buyers are very satisfied with their current network, current device and see no reason to change or upgrade.

The scale of the marketing challenge to convince users to upgrade to 5G is significant. 

A few  key questions which we pose to consumers users around the world can help understand different segments of buyers:

How much do you agree with the following statements?

  • I expect that the features I use on my next smartphone will be mostly the same as the ones I currently have.
    • Spoiler: Over half agreed with this statement in US, UK overall with strong variance across demographics.

  • Given the quality and reliability of my smartphone, I expect my current phone to last longer than any I have previously owned
  • I plan to spend less on my next smartphone than I did on my current one
  • I will keep using my current smartphone until its performance gets worse
  • New smartphone models have some improved features, but I will wait until prices drop before buying one
  • Advanced features and improved capabilities are an important reason I would buy a new smartphone
  • I would buy a previously owned and reconditioned smartphone with a good warranty in order to save money
  • I would buy a new brand of smartphone if it had good reviews and was a good price.

 

I welcome your questions and comments.

dkerr@strategyanalytics.com

 

Previous Post: Brazil Smartphone Market Dynamics to Alter in 2021? | Next Post: India Smartphone Shipments Soar to 39 Million in Q1 2021

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