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Mobile data allowance grows in importance among smartphone owners

Recent research conducted by GfK NOP shows that, among smartphone owners, mobile data allowance is more important than the network operator and the handset type.

From previous posts on TechTalk we’ve shown how the use of mobile apps shows no sign of abating and that the tight integration services on the iPhone drives Apple’s smartphone success. This thirst for apps and services is the reason why smartphone owners are placing greater importance on their mobile data allowance. Smartphone owners now rely on the services their phone provides and taking these away is not an option.

With many UK operators having recently capped their data allowances smartphone owners will think carefully about their next mobile tariff. GfK NOP estimates that 24 per cent of contract customers using smartphones would actually switch operators if they could get a better mobile data allowance elsewhere.

The decision to cap mobile data usage is a sensible one as the major UK network operators have millions of customers who depend on a reliable mobile network. However, in doing so, network operators need to consider the mindset of the consumer. The average mobile phone user including many smartphone users simply don’t know how much data they use. Those who require a data allowance will always prefer an ‘unlimited’ package for peace of mind. Now that ‘unlimited’ data is coming to an end, consumers will look for the safest option; in other words the operator offering the most generous package.

It is easy to see why smartphone owners react this way when you look at the level of importance they place on using services on their mobile phone. Table 1 (below), shows the level of importance consumers place on mobile services in their day-to-day routine:

Table 1: Importance of mobile service usage

There is clearly a stark contrast between the UK average mobile consumer and smartphone users. Given this huge difference in attitudes it is little wonder the extra emphasis smartphone users are placing on mobile data tariffs. The biggest challenge for network operators over the next few years is how they cope with the increasing demand for smartphones and the increase in data usage this will inevitably bring.

This research was conducted in association with Reuters who have published a thorough market analysis here

If you have any questions or comments regarding the research please click here to email us or leave your opinion in the comments section below

RESEARCH NOTES

Research was conducted by GfK NOP in association with Reuters between 16 – 19 July 2010
978 interviews were conducted online among UK adults aged 16 and over. The sample is representative of UK adults with internet access.

Connected Kids: the future generation of mobile owners

Mobile phone users under the age of 16 are extremely sophisticated, with deep brand experiences and preferences. This raises significant questions for network operators, handset manufacturers and service providers regarding how best to engage an increasingly important market segment.

You could be forgiven for a sense of déjà vu. After all, rising mobile phone use amongst children is not a new phenomenon. As long ago as 2004 the Guardian was reporting growth in ownership amongst under-10s, [1] and media coverage concerning potential health concerns can be traced back even further. However, our ever-increasing reliance on, and immersion in, mobile phones and the digital services we use them to access, justify revisiting the topic.

Recent data from GfK reinforces just how prevalent mobile ownership amongst under-16s has become (2.5 million 12-15 year olds, almost 9 in 10, now have one). Furthermore, this is the age group cementing the shift in behaviour from passive entertainment, such as television, to more active digital and online activities. [2] As such, it should come as no surprise that the value placed on their mobiles increases accordingly.

It would be easy to assume these younger consumers are neophytes, new to the category with few preconceptions. Not the case. While 12-15s may be the first to acknowledge the importance of the technology, many of them are the same children the Guardian was reporting on five or more years ago. Instead, as many as 85% of those acquiring a phone are already on (at least) their second handset, and already hold the assortment of brand perceptions that follow this prolonged involvement in the category.[3]

As established users, with a penchant for advanced features and functions (camera, music, and games usage are all high, alongside social networking, IM, and email), it comes as no surprise that entry-level handsets have limited appeal. While the majority (70%) of phones in this age group are being gifted, three-quarters (74%) of users were involved in the selection process, with medium and high-end handsets flourishing and above average spending. [3] Unsurprisingly therefore, style and functionality will be key to handset manufacturers, for whom it will be necessary to attract the end-user as much as the purchaser.

The scenario facing operators is less clear. Selection of network and tariff, nominally a decision of less outward importance to younger consumers, remain primarily the domain of the purchaser (in contrast to handset, just 49% and 45% of 12-15 year olds influenced the choice of network/tariff respectively). How then, do operators approach these consumers? Given their focus on handset, clearly an appropriate and desirable range is a prerequisite. Beyond this however, high levels of gifting and relatively low interest in network/tariff imply it’s the gifter, as much as the end-user, who needs to be won over.

Mary Robinson at GfK Telecoms Research Panels highlights the importance of the under-16 market for network operators:

“Recent GfK findings for contract phones show that 83% of adults replacing their mobile chose to remain on the same network as before. With such high levels of loyalty in the adult market, the product propositions and brand experiences of the under-16s become massively important. Ignore them at your peril.”

Ultimately, when this generation hits adulthood and consumption becomes self-sustained, they will already be sophisticated mobile users consuming a range of services and content. Harnessing their demand will be a key revenue stream in the future mobile marketplace, and the brand preferences already developing will play a significant role.

For handset manufacturers, operators and service providers, the prize is a significant one.

For more information on the under 16 telecoms market please click here

[1] http://www.guardian.co.uk/technology/2004/apr/28/mobilephones.uknews

[2] http://www.statistics.gov.uk/cci/nugget.asp?id=2199

[3] GfK Research Panels: Kids Mobile Phone Market Report Q110

PHOTO COURTESY OF:

http://www.flickr.com/photos/uberculture

Apple sell 2 million iPads but competition will be fierce in 2010

Expect to see a vibrant and competitive tablet PC market over the next 12 months as Apple sell 2 million iPads globally in less than 60 days.

Apple certainly knows how to get the media and public excited about their latest creation, the iPad. Everyone is talking about the iPad and tablet PCs and this is not just tech press but also mainstream news bulletins. Apple is extremely proficient at sparking people’s imagination around all the creative ways their products, iPhone and iPad, can be used. Apple’s famous strapline for the iPhone was “there’s an app for that” which creates a powerful perception that anything is possible, and the same applies on the iPad.

Whilst Apple have created an enormous buzz around tablet PCs and educated the market as to all the potential uses, competitors will be launching rival products to compete with Apple’s iPad. In the next 12 months we’ll see a plethora of tablet PCs launched from a number of different manufacturers, running a number of different operating systems, from Microsoft Windows to various open source based platforms such as Android and MeeGo (Intel and Nokia joint venture).

The tablet PC market will be a place where laptop manufacturers and smartphone providers really start to compete head to head. At the smartphone end of the market expect to see Nokia, Blackberry and HP (running newly acquired Palm OS) launch alternatives to the iPad. At the PC end of the market the first entrant will be the Dell Streak which will quickly follow the iPad launch in mid June. Asus and Lenovo also have tablet PCs in the pipeline, which will most likely be based on Windows 7. Google won’t be left behind and will launch either an Android or even a Chrome OS based tablet during the course of the year.

With all the different tablet PCs, consumers will be spoilt for choice. Looking at the main three operating systems, Apple mobile OS, Windows 7 and Android/Chrome OS, each company will take a slightly different approach which will add great variety for consumers. For example, Google will be pushing for more of a cloud-based solution, Apple will be heavily app and services based while Microsoft will be evolving their traditional Windows based platform that everyone is familiar with.

As tablet PCs become more popular the netbook market will take a further nosedive. In July 2009 the netbook market grew an astonishing 641% but in April 2010 it grew only 5%, a remarkable fall from grace.

So if netbooks fall victim to tablet PCs, who will benefit?

Well, the iPad was launched in the UK last Friday and today Apple announced that they have sold more than 2 million units globally. According to GfK NOP Technology research Apple are expected to sell up to 2 million 1^st generation iPads in the UK if they can meet high levels of early demand. The pricing of the iPad varies and is available as Wi-Fi only models as well as 3G devices from the major UK operators. Apple will almost certainly occupy the more premium end of the market, with competitor tablets likely to be more cost effective. However, price is not the only determining factor for success. The provider who can package up content and services that make tablets easy to use and relevant to the consumer will be the ones who come out on top.

Apple has proven credentials when it comes to delivering multi-media services and apps to their users. They’re not standing still either as Apple launched the iBookstore on the iPad which has already sold 1.5 million ebooks in the US. But even in the services market, competition is strong. Expect to see compelling service offerings from Google, Nokia, RIM (Blackberry) and HP Palm, all of which produce excellent hardware and are quickly improving their services and access to vibrant market places for 3^rd party apps.

If competitor tablets can get their service offerings right we can expect to see a very competitive and exciting tablet market in the next 12 months.

Will consumers rise to operators’ high hopes of a Apple App Store challenge?

The launch of the Wholesale Applications Community is potentially a substantial challenge from network operators to the dominance of Apple. Managing consumer demand and the consumer experience are likely to be key.

Recent news that 24 leading network operators are launching The Wholesale Applications Community, a mobile apps store which aims to make it easier for developers to build and sell apps “irrespective of device or technology”, begs the question of how consumers will respond.

It’s certainly a tough market for network operators with recent research by GfK Technology showing handset manufacturers dominating the apps market and indeed, a recent report by Gartner gives the somewhat startling statistic that Apple is responsible for 99.4% of mobile apps sales in 2009.

The four key factors that GfK Technology consider to be critical in driving the potential success of this sort of store are:

High awareness: Significant investment is needed to promote the site so consumers know of its existence and where to go to access it
‘Must-have’ apps: Apple has been instrumental in building the market for mobile apps, any store needs to be able to offer apps that tap into consumer needs across a wide range of different demographics and lifestyles
Excellent user interface: Possibly a challenging area for operators as the user interface for the store and the apps will need to work across a wide range of devices. Furthermore, finding a common and easy to use purchase mechanism is essential if operators want to eat into Apple’s 99.4% share of app sales.
Getting commercials right: So that developers are incentivised to create new applications and they are attractively priced for consumers to purchase.

The prize for getting this right is huge, the global market for mobile apps is in the billions and whereas Apple are constrained to only selling to iPhone or iTouch users there appears to be no such constraint for this initiative. Network operators have one big advantage over some other player – their proximity to the consumer which they will need to leverage in order to make this a success.

Photo courtesy of:

http://www.flickr.com/photos/ousby/ / CC BY-NC 2.0

Mobile advertising continues to build

Mobile devices continue to be a significant advertising channel according to recent research GfK Technology recently undertook in the UK. The proportion of consumers who had received some form of mobile advertising stood at 47%, fairly consistent with the findings from Q2 ’09. The big shift is perhaps the growth of iPhone as a staggering 84% of iPhone users say they have seen mobile advertising in the last 3 months vs. 45% of all other mobile phone users.

SMS continues to be the dominant form of mobile advertising with 38% of UK consumers receiving at least one in the last quarter. It’s therefore not surprising that network operators are putting significant investment into this area with O2 launching their SMS marketing service, More, in December and Orange partnering a trial with Blyk mid ’09.

Work that GfK has undertaken in this area identifies a number of criteria that brands need to consider in order for this form of marketing to be most effective. GfK recruited a number of consumers to an opt-in ‘panel’ to trial mobile advertising. Although this took place some time ago, the findings are just as relevant today. The key findings included:

Positive consumer response: The trial prompted a favourable reaction from participants with a staggering 84% saying they were likely to recommend the service; explicit permission to receive text messages was considered to be critical
Relevance: Appropriate targeting of offers to participants was important and was felt to have driven the positive response
Creative execution: Triallists looked for snappy, entertaining or informative text adverts with a strong emphasis on humour

The trail was able to show a positive impact of advertising on raising awareness and on building brand perceptions but there was a striking 63% of people claiming to have replied or taken action as a result of receiving a text advert. In fact a significant number of responses were generated to text adverts that had not specifically requested a response. For example, Carlsberg lager ran a campaign involving humour and timely use of the medium, such as ‘PINT! It’s your round. Probably…Carlsberg.’ This went out at 10.30pm on a Friday and a range of responses came back including ‘It was and I got 6 in’!

In this context, the fact that SMS advertising has held up so well is no surprise and bodes well for other forms of mobile advertising, and in principle, the mobile device is the ultimate medium for one-to-one interactive marketing. However, it is our view that brands must not ignore the need for the advertising to be opt-in, relevant and for the copy to be creatively executed, otherwise we will see the promise of this medium quickly evaporate.

NOTES

Photo courtesy of:

http://www.flickr.com/photos/ywds/ / CC BY 2.0

GfK TechTalk

Independent technology research and opinion

Mobile data allowance grows in importance among smartphone owners

Connected Kids: the future generation of mobile owners

Apple sell 2 million iPads but competition will be fierce in 2010

Will consumers rise to operators’ high hopes of a Apple App Store challenge?

Mobile advertising continues to build

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