2014 Mobile Trends Report
JANUARY 2014
CES LAS VEGAS, NV
B R I G H T S TA R
I N T E L L I GE NC E
1 DEVICE LIFECYCLE IS SHRINKING
1 DEVICE LIFECYCLE IS SHRINKING
Trend Overview
Smartphones have the shortest product lifecycle
of any product in consumer electronics:
Shelf life has
declined by
almost 50%
since 2005
Average
shelf-life for
some mobile
phones is
currently 8-10
months
Mobile phones
can last as
few as 4 short
months on a
retailers’ shelf
2014 MOBILE TRENDS REPORT
Trend Driver
OEMs are developing and cycling devices
at a faster pace than ever with each
generation adopting the latest carrier
driven technologies, market-driven
software developments and consumer
driven features/enhancements. Additionally,
in an attempt to capture niche driven
market share, the development of multiple
models within the same price point is also
trending among OEMs. With the Apple
and Samsung iconic devices representing
the top 10 postpaid smartphone spots
which account for 60+% of total market
share, the ability for all others to move
any sizeable volume of product in the
market is finite and ultra-competitive.
All of these conditions result in a glut of
inventory in the market that creates a
race to the bottom for OEMs and retailers
to capture the attention of price sensitive
consumers and ultimately driving the
shrinking device lifecycle trend.
JANUARY 2014
CES LAS VEGAS, NV
B R I G H T S TA R
INT E L L I GE NC E
1 DEVICE LIFECYCLE IS SHRINKING
Industry Perspective
While the mobile phone is in the mature stage of
the product lifecycle, its revenues and ASP continue
to increase. This can be attributed in part to two
main factors:
1
2
Q4 2012 – Q3 2013
Prepaid/Postpaid
Smartphones Only
APPLE
GOOGLE 0.7%
MOTOROLA 5%
HTC
6%
12%
OTHER
LG
SAMSUNG
As smartphones
cannibalize other
product lines
(cameras, portable
gaming, navigation,
media players),
they’re able to
command a greater
share of the
consumers’ wallet.
44%
7%
Market power
of Apple and
Samsung allows
them to maintain
high ASPs in an
environment of
low competition.
26%
2014 MOBILE TRENDS REPORT
JANUARY 2014
CES LAS VEGAS, NV
B R I G H T S TA R
INT E L L I GE NC E
1 DEVICE LIFECYCLE IS SHRINKING
CARRIER
DRIVE CONSUMER BEHAVIOR
Tier 1 carriers are trying to break
consumers habit of upgrading to a new
phone every 18 months to 2 years.
CONSUMER
OEM
FEWER OPTIONS
MAINTAIN PROFITS
There is a major impact
for non-Apple and
Samsung manufacturers
who are struggling to
stay relevant. Without
consumer demand,
product pricing can
tumble quickly.
TREND
IMPACT
RETAILER
If retailers and
operators continue
to lose money on
offering a larger
product selection,
they may reduce
choice for
consumers.
HIGH RISK
The big question for retailers and carriers is how do you pick the
next winner. While going with Apple and Samsung is the safe
bet today, consumers want to see more choices on the shelf…but
that can be a costly endeavor if costs are high and product
doesn’t turn quickly.
2014 MOBILE TRENDS REPORT
JANUARY 2014
CES LAS VEGAS, NV
B R I G H T S TA R
I NT E L L I GE NC E
1 DEVICE LIFECYCLE IS SHRINKING
Brightstar Perspective
The shrinking life cycle creates a variety of pressures on overall profitability for
Tier 2 and Tier 3 OEMs due to supply chain inefficiencies, promotional inequities,
and brand awareness.
The ability to drive analysis and make decisions throughout the product lifecycle is
critical. Brightstar has developed tools that use key indicators to identify product
value at all points – allowing operators and retailers to make decisions earlier to
move through declining product faster, ultimately reducing profit erosion.
Solutions like Virtual Inventory (VIP) or “endless aisle” combine technology with
product selection and have proven to be very successful at retail. Brightstar’s VIP
solution enables national retailers to offer product without having to range or own
inventory in store.
2014 MOBILE TRENDS REPORT
JANUARY 2014
CES LAS VEGAS, NV
B R I G H T S TA R
I NT E L L I GE NC E
2 NO-CONTRACT WILL DOMINATE
2 NO-CONTRACT WILL DOMINATE
Trend Overview
No-contract is estimated to be 50% of market
by the end of 2015.
• No-contract plans have seen 19% growth
from 2011-2013.
• No-contract plans now have a 37% share.
NO-CONTRACT PLAN GROWTH
Trend Drivers
1) Better no-contract phone offerings
2013
2) Better no-contract plans
2012
3) Carrier interest in getting out of
the postpaid subsidization game
2011
60
70
80
90
IN MILLIONS
2014 MOBILE TRENDS REPORT
JANUARY 2014
CES LAS VEGAS, NV
B R I G H T S TA R
I NT E L L I GE NC E
2 NO-CONTRACT WILL DOMINATE
Industry Perspective
No-contract is driving the unit volume growth in
mobile phones. With only a 37% category share
in mobile, no contract is driving the entire 7%
projected unit volume growth for mobile phones
in 2013.
UNIT VOLUME (YEAR OVER YEAR)
POSTPAID
PREPAID
27.3
30.7
33.4
36.6
72.7
69.3
66.6
63.4
2010
2011
2012
2013 (ESTIMATED)
In 2013, T-Mobile made a game-changing play
with their “Un-Carrier” strategy of replacing
service contracts with phone leasing contracts,
leading the industry toward a tipping point.
2014 MOBILE TRENDS REPORT
JANUARY 2014
CES LAS VEGAS, NV
B R I G H T S TA R
I NT E L L I GE NC E
2 NO-CONTRACT WILL DOMINATE
CARRIER
COMPETITIVE PRICING
Carriers are plentiful in this category so there are
lots of plan options for consumers. Carriers need to offer
competitive plans that are focused on pricing, not just
services and they need to offer a range of phone options
that appeal to this changing consumer. Tier 1 operators
are now competing heavily with traditional no-contract
carriers which may reduce options in the future.
OEM
DEVICE VALUE
CONSUMER
DEVICE AFFORDABILITY
Product that used to be
contract only is now being
offered without one. While
traditionally no-contract or
prepaid product has been
devices later in the
lifecycle, now consumers
demand the latest and
greatest regardless of plan.
This could have a negative
impact on device value and
end up reducing the
number of devices offered
going forward.
TREND
IMPACT
RETAILER
This could change the game.
Having popular phone
models appear in prepaid
faster is a great benefit to the
consumer but that means
that the price for these still
popular phones will be high.
Many consumers want to
consider no-contract as an
option but they will need
financing to be able to afford
the phone along with the
more affordable plan.
CATEGORY MANAGEMENT
The category and the consumer are changing and retail needs to
adapt no-contract merchandising to these changes and maximize
the potential of this new opportunity. Also, while the price for
no-contract phones are increasing they are still not to the level of
postpaid’s which could affect the categories dollar growth as
no-contract begins to overtake postpaid’s share.
2014 MOBILE TRENDS REPORT
JANUARY 2014
CES LAS VEGAS, NV
B R I G H T S TA R
I NT E L L I GE NC E
3 BUY-BACK & TRADE-IN IS A MUST
3 BUY-BACK & TRADE-IN IS A MUST
Trend Overview
Mobile Buy-Back & Trade-In solutions have grown to
the point where consumers are expecting it as part
of the activation/upgrade process.
• Most devices are graded as C stock (61%) at time
of trade-in, which typically nets a consumer $50.
• Trade-In is now a promotional strategy as well as
a profit driver.
Trend Drivers
Certain devices are retaining their
value much longer. Phones are not
disposable anymore and people in
secondary markets can own a popular
phone, like the iPhone, at a much
reduced price when it is used /
refurbished.
TRADE IN YOUR SMARTPHONE OR TABLET
GET UP TO A
$300
Buy-Back & Trade-In programs create
opportunities for consumers to
replace and recycle old devices while
helping to finance their next device.
IN STORE CREDIT
Another driver for the trend is
insurance replacements, which is
becoming a popular service for mobile
phones. Using recycled devices to
meet consumer claims is critical for
service profitability.
2014 MOBILE TRENDS REPORT
JANUARY 2014
CES LAS VEGAS, NV
B R I G H T S TA R
I N T E L L I GE NC E
3 BUY-BACK & TRADE-IN IS A MUST
Industry Perspective
While Buy-Back & Trade-In is a critical service
offering, it has some concerning potential
downsides. Some industry experts believe the
influx of used and refurbished product could
significantly drive down prices and profits,
further shortening the product life-cycle, and
slow down product innovation.
D
10
S1
9
8
PRICE
7
6
S2
P5
4
SURPLUS
3
P2
1
0
10
20
30
40
50
60
70
80
90
As supply increases, a
surplus of the good is
created. In order to
combat this, prices must
drop to drive demand to
clear the surplus, driving
down profitability.
1 00
QUANTITY BOUGHT & SOLD
2014 MOBILE TRENDS REPORT
JANUARY 2014
CES LAS VEGAS, NV
B R I G H T S TA R
I NT E L L I GE NC E
3 BUY-BACK & TRADE-IN IS A MUST
CARRIER
DRIVE LOYALTY
Carriers are using trade-in programs to help retain
customer loyalty, to drive promotional activities and to
demonstrate corporate social responsibility by
recycling or reusing devices.
OEM
INCREASE DEMAND
OEMs will experience
increased demand as the
consumer upgrade cycle
shortens however if the
market becomes saturated
with refurbished products
and prices/profit fall, new
production innovations
could decline as well.
CONSUMER
TREND
IMPACT
SELF-SUBSIDY
Consumers receive cash or
credit in exchange for their
used devices, which can
offset the cost of their new
phones.
RETAILER
MUST PLAY TO COMPETE
Retailers must offer a trade-in program to
compete with other retailers and the carriers.
2014 MOBILE TRENDS REPORT
JANUARY 2014
CES LAS VEGAS, NV
B R I G H T S TA R
I NT E L L I GE NC E
4 DEVICE FINANCING CATCHES ON
4 DEVICE FINANCING CATCHES ON
Trend Overview
As more consumers move to a no-contract model,
they are realizing the true unsubsidized cost of their
phones. With average prices for top tier smartphones
at $550, they are looking for financing options.
• OEMs are offering financing programs:
HTC & Motorola launched programs in 2013.
• Retailers have programs: Amazon, Best Buy
and Walmart all introduced financing options
on select phones.
• Movement to No-Contract is impacting the
necessity of this model.
Industry Perspective
Financing is going to become a key
service offering with the other
changes in the market. Savvy consumers
will compare various financing offers
against each other to make decisions
about their carrier, phone, and store.
• There are opportunities to expand
financing solutions beyond
handsets to include supplemental
accessories and services resulting
in incremental growth in basket
and profit.
2014 MOBILE TRENDS REPORT
JANUARY 2014
CES LAS VEGAS, NV
B R I G H T S TA R
INT E L L I GE NC E
4 DEVICE FINANCING CATCHES ON
CARRIER
TRANSFORMATIONAL
Tier 1 carriers are following T-Mobile and offering
consumers a device finance plan. Some believe
that a focus on financing rather than providing
a subsidy would be “transformative” for the industry.
CONSUMER
OEM
PRODUCT DIFFERENTIATOR
OEMs can use financing as a
differentiator to try and gain
additional market share in an
hyper competitive space.
FINANCING A MUST
TREND
IMPACT
Financing will become an
integral part of the purchase
decision process. More
expensive devices, more
accessories to buy and less
subsidization means
consumers will need
financing in order to afford
the products they desire.
RETAILER
GRAB YOUR SHARE
All channels will need to offer this as an option
for consumers if they want to remain a viable
part of the mobile retail market. Retailers can set
themselves apart with unique product bundles
and complementary financing solutions.
2014 MOBILE TRENDS REPORT
JANUARY 2014
CES LAS VEGAS, NV
B R I G H T S TA R
I N T E L L I GE NC E
4 DEVICE FINANCING CATCHES ON
Brightstar Perspective
A variety of financial services products are beginning to penetrate the category
offering attractive consumer solutions that focus on increased ASPs & basket lift to
supplement the profit squeezed device sale and drive incremental margin growth.
Financing will not be limited to handsets, but also can be used to drive increased
accessory sales and services that will become critical to the profitability of the industry.
2014 MOBILE TRENDS REPORT
JANUARY 2014
CES LAS VEGAS, NV
B R I G H T S TA R
INT E L L I GE NC E