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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
2014 MOBILE TRENDS REPORT

Because things are
the way they are,
things will not stay
the way they are
Bertolt Brecht

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
2014 MOBILE TRENDS REPORT

About the Trend Report
Nothing moves like the speed of mobile. And this year, we will see rapid-fire
changes as market dynamics collide with technology, creating a new world for
manufacturers, carriers and retailers to compete in.
From Brightstar’s vantage point as a global leader in wireless products and services,
we see changes emerging that are poised to transform the way we all conduct
business. Our trends were identified and commented on by Brightstar’s global
network of experts, validated by third party research and explored for the impact
they will make on OEMs, carriers, retailers and even consumers in the future.
In all, we see eight major trends that are critical to understand and be ready for
in 2014 and beyond. From product prices, to device lifecycles, to consumer
shopping behaviors and preferences, the impacts will be wide reaching.
Our industry doesn’t change slowly – it leapfrogs. And we’re about to take the
next, major jump.

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
2014 MOBILE TRENDS REPORT

8 DRIVING TRENDS FOR 2014
1 Device Lifecycle is Shrinking
2 No-Contract Will Dominate
3 Buy-Back and Trade-In is a Must
4 Device Financing Catches On
5 Attachments Become Critical to Profitability
6 Connected Devices Flood the Marketplace
7 Consumers Blur the Line
8 The End of Subsidization is Coming

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
5 ATTACHMENTS BECOME CRITICAL
TO PROFITABILITY
5 ATTACHMENTS BECOME CRITICAL TO PROFITABILITY

Trend Overview
The industry continues to be squeezed as a result
of micro and macro issues at work including a
demanding consumer population for price, function,
and availability. Aggressive OEMs and retailers are
learning how the puzzle pieces are coming together
to optimize revenues and profitability through
integrated strategic partnerships throughout the
value chain.
•

400% basket lift can be achieved with the
right mix of accessories, attached services, and
financing solutions.

• Over 25% of consumers are adding handset
protection to their devices.
• Mobile wireless accessory shipments to approach
170 million by 2018.
• Accessories are hot - Sales on wireless
speakers jumped 175% in the US last year.

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
5 ATTACHMENTS BECOME CRITICAL TO PROFITABILITY

Industry Perspective
As these varying trends begin to merge
(no-contract, buy-back & trade-in, financing)
onto each other, consumers are learning that
smartphones are expensive investments that
need to be protected and optimized for maximum
benefit. As a result, industry players are seizing
the opportunity to infuse profit solutions through
comprehensive and integrated models that meet
and exceed the savvy consumer needs.
But there is risk in putting everything in this basket.
Lack of new phone releases, sudden discontinuance
of popular models as well as less consumers
upgrading their handsets, all lead to a drop in
the number of opportunity for attached sales.

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
5 ATTACHMENTS BECOME CRITICAL TO PROFITABILITY

CARRIER

CUSTOMER LOYALTY
A new 2013 mobile loyalty audit revealed that only 13% of
customers show the level of loyalty required to protect them
from competitive offers and service disruptions.

CONSUMER

OEM

DEVICE PROTECTION

VALUE IN ATTACHMENTS
Device OEMs need to
develop innovative branded
accessories to ensure their
share of the expanding
accessory market.

TREND
IMPACT

As the smartphone becomes
integral to many consumers’
lives, they are increasingly
willing to pay for services
and accessories that enhance
their overall experience and
satisfaction.

RETAILER

REVENUE GROWTH
Retailers must ensure they are offering the
right accessories for their device portfolio and
should consider offering a full range of
value-added services (i.e.; insurance, handset
protection, buy-back & trade-in).

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
5 ATTACHMENTS BECOME CRITICAL TO PROFITABILITY

Brightstar Perspective
Retailers, carriers and OEMs all have the opportunity to capitalize on the expanding
profit pools created by demand for new accessory and service attachments.
The overall basket must get larger because of shrinking profit margins. Accessories,
smart apps/accessories, insurance and subscription based services are a vital part
of basket and margin enhancements.

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
6 CONNECTED DEVICES FLOOD
THE MARKETPLACE
6 CONNECTED DEVICES FLOOD THE MARKETPLACE

Trend Overview
Most of the focus in connected devices for
smartphones has been wearables in the physical
health space. Consumers will increasingly see their
smartphones as tools for total lifestyle well-being.
From improving techniques for self-treatment,
developments in stress-detecting technologies and
near-total smartphone penetration in many markets,
consumers will lap up innovations that help track
and improve overall well-being and lifestyle.
• Consumer interest in wearable fitness quadrupled
in the last year.
• 75 Billion devices will be connected to the internet
of things by 2020.
• The wearable tech market will reach $4.5B
globally this coming year.
In addition, a vast number of up-and-coming
innovative solutions both from a horizontal and
vertically integrated perspective are making their
way onto the scene; most leveraging smartphone
technology via the iOS and Android platforms.

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
6 CONNECTED DEVICES FLOOD THE MARKETPLACE

Industry Perspective
“There's no reason to doubt that connected devices
will soon be flooding the mass market. Technology
with compact, connected sensors and actuators
make their way onto everyday consumer electronics,
household appliances, and on general infrastructure.”
Tony Darova (Morgan Stanley, Business Insider)

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
6 CONNECTED DEVICES FLOOD THE MARKETPLACE

CARRIER

COMPETITIVE ADVANTAGE

OEM

DEMONSTRATE
LEADERSHIP
Need to determine what is a fad
for early adopters and what has
mainstream staying power. They
need to set the stage for how to
market these products as well as
if and how they can reach and
educate the consumer. This may
also lead to new OEMs being able
to enter this space and become a
factor in mobile that may begin to
challenge Apple and Samsung
with possible exclusive/strategic
partnerships.

Carriers are currently providing the best spaces for
displaying and educating consumers on these new devices
with their interactive store formats. Big data operators
have a lot to gain in this space, with any and all things
connected to the Internet, that opens up more real-time
data inventory to sell.

CONSUMER

REQUIRE EXPERT ADVICE

TREND
IMPACT

Based on all of the emerging
devices and connected
devices, consumers will need a
retail environment where they
can ask questions and
“play/interact” with devices
before they purchase them.
They will need to find a way to
feel comfortable with the new
technology and understand it
before they adopt.

RETAILER

SMART PRODUCT RANGE
While ideas are limitless, consumer interest is finite. Obviously they
can't all be a hit. The big challenge for this industry is trying to gauge
consumer interest and understand how the consumer will learn about
and shop the product. A big question is how can retailers effectively
play in this space without losing their shirt on inventory. What will be
considered valuable and what will supply chain and retail distribution
look like for this new category?

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
6 CONNECTED DEVICES FLOOD THE MARKETPLACE

Brightstar Perspective
Initially, operators will be better positioned to support connected devices. They
have already started marketing connected and mhealth devices horizontally as
add-ons to existing vertical services.
With platform-based APP development (iOS, Android) being the gateway to the
development of so many devices, OEMs should look at driving innovation with
start-up device manufactures to help them bring the next big thing to market.

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
7 CONSUMERS BLUR THE LINE
7 CONSUMERS BLUR THE LINE

Trend Overview
70% of consumers said that they have a better
customer experience when they can choose how
they purchase.

72% of respondents expect to be able to research,
shop and receive goods and customer services
through whichever channel they choose. This figure
rises to 83% amongst omni-enthusiasts.

15% of customers feel extremely satisfied that
retailers provide a consistent experience across
different channels.
In 2016 e-retail will account for 9% of total retail
sales, up from 7% in 2011 & 2012.
Nearly half of shoppers (44%) said that they
expect to purchase through more than one channel
within five years’ time.

3/4 of participants surveyed claimed that being
able to use different channels cohesively (in store,
online, mobile) is important.

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
7 CONSUMERS BLUR THE LINE

Industry Perspective
Retailers are moving towards creating a seamless
shopping experience whether in-store, online, or
through mobile devices. Site-to-store delivery,
online price match, and an interactive experience
at retail are all driving omni-channel evolution.
Ensuring that customers can cost-effectively shop
across multiple channels and still enjoy a consistent
and cohesive experience must be a top consideration
for retailers today.

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
7 CONSUMERS BLUR THE LINE

CARRIER

DIFFERENTIATION
Carriers will need to evaluate the devices they
choose to adopt into their networks as well as
cultivate new service solutions to create
differentiators that appeal to next gen shoppers.

OEM

CONSUMER

INCREASED PRODUCT
PORTFOLIO
OEMS will benefit if retailers
and carriers begin to offer a
wider device portfolio as
virtual inventory and extended
aisle options become available.

EXPECTATION IS NOW
As consumers experience
consistent and memorable
engagements across platforms,
they will begin to seek out and
reward those companies that
deliver on these unique
solutions and eventually
come to demand it.

TREND
IMPACT
RETAILER

SEAMLESS EXPERIENCE
While ideas are limitless, consumer interest is finite.
Retailers can no longer operate their brick and mortar
and .com businesses in silos, even in mobility. Retailers
must move faster to offer a seamless experience.

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
7 CONSUMERS BLUR THE LINE

Brightstar Perspective
Full integration of online shopping solutions were inevitable and adopted
successfully by many. The mobile experience continues to challenge many
however large screen devices and better software solutions are starting to
turn the tide with consumers as evidenced by 2013 mobile shopping.
• In 2013, over 23% of Black Friday and 17% of Cyber Monday online shoppers
placed their orders from mobile phones (up 43% and 55% respectively
from 2012), reinforcing the growing importance of mobile phones as a
valid shopping platform.
The importance of executing a seamless omni-channel merchandising
strategy within the retail market is of paramount importance.
Retailers will need to ensure that customer online, in-store and mobile
experiences are consistent across platforms.

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
8 THE END OF SUBSIDIZATION IS COMING
8 THE END OF SUBSIDIZATION IS COMING

Trend Overview
Subsidies were used to kick-start and grow the
market for mobile devices. Now that we’re nearing
100% mobile penetration in the US, subsidies don’t
make sense for the carriers any more.
• Subsidies are common in the US. 63% of all sold
devices are via a subsidized carrier contract.
Globally however, unsubsidized phone plans are
the global standard. Several carriers such as
Telefonica and Vodaphone have stopping offering
subsidies to new customers or have stopped
offering subsidies altogether.

Mobile phone
penetration in
the US is
nearing 100%

Operators’
subsidized
subscriber base
is predicted to
decline by 16% in
the next 2 years

• While subsidies have helped carriers to lure in
customers and lock them into long-term deals,
they are also bottom-line killers that carriers have
long said they would like to do away with.

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
8 THE END OF SUBSIDIZATION IS COMING

Industry Perspective
"Is the subsidy-model definitely going away?"
asked Pierre Alain Sur, leader of Price Waterhouse
Coopers' global communications business.

It's hard to say at this point,
but the trend is pointing in that
direction.
Smartphones are becoming more durable, and
innovation is slowing. Apple is still selling large
amounts of the iPhone 4, a device that was
launched two years ago.
All that's left is to change customers' mindset.
Interestingly, consumers have no issue paying full
price for tablets, which are essentially large
smartphones with all of the same features outside
of the functionality to place calls, but carriers have
been using the subsidy model for phones since
the beginning.

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
8 THE END OF SUBSIDIZATION IS COMING

CARRIER

LOYALTY GROWTH
Carriers can stand alone on the quality of their
networks and the services they provide. Expect
financing solutions to become more comprehensive
and more complex as carriers look to further secure
their subscriber bases. Carriers will focus on program
specific enhancements to network services in order to
build customer loyalty in new and innovative ways.

CONSUMER

OEM

BRAND AWARENESS
AND LOYALTY
Tier 2/3 OEMs are generally
less expensive and have a
price advantage with no
subsidy, assuming they can
compete technically.

ABUNDANCE OF CHOICES

TREND
IMPACT

As contracts come up for
renewal and new programs
hit the market, consumers
will have an abundance of
choices to develop a plan that
works best for them. Look for
consumers to express their
wants and needs via social
networks. All parties should
be monitoring this closely to
stay on top of consumer
demand.

RETAILER

DIFFERENTIATION
Expect retail to come to the table with accessory and
device upgrade/financing programs. Retailers will
look to create unique programs that differentiate
themselves both in the category and in the market.

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
8 THE END OF SUBSIDIZATION IS COMING

Brightstar Perspective
The removal of subsidies could be a game changer. It removes a significant differentiator
and forces each carrier to stand on its own merits.
OEMs will need to spend even more money to merchandise their products in store, in
advertising and at POS as carriers will no longer participate in reducing the consumers
purchase price.
Customers may look to financing solutions as phone costs continue to rise. They may
also hold their phones for longer periods of time, potentially impacting the buy-back &
trade-in market.

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
2014 MOBILE TRENDS REPORT

About Brightstar

Retail Doors

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
Source Bibliography
"7 Consumer Trends to Run with in 2014." Trendwatching.com: Consumer
Trends and Insights from around the World. N.p., Dec. 2013. Web. Dec.
2013. <http://www.trendwatching.com/>.

Kenderdine, Dan. "The Wireless Xcessories Group Announces Third
Quarter 2013 Results." Yahoo Finance. Globe Newswire, 17 Dec. 2013.
Web. Dec. 2013. <http://www.finance.yahoo.com/>.

Best, Eric. "Key Trends in Omni-Channel Retail for 2013." Ecommerce
Marketing Software for Online Retailers - Mercent. N.p., n.d. Web. Dec.
2013. <http://www.mercent.com/>.

"Loyalty among Mobile Phone Users in the U.S." WDS | A Xerox Company. Xerox, 18 Mar. 2013. Web. Dec. 2013. <http://www.wds.co/>.
"Mobile Phone Manufacturers Market Analysis 2013-2018 Trends."
Xerfi/Global, Oct. 2013. Web. Dec. 2013.

Bhas, Nitin. "Mobile Wireless Accessory Shipments to Approach 170
Million by 2018." Juniper Research. N.p., 31 July 2013. Web. Dec. 2013.
<http://www.juniperresearch.com/>.

Reardon, Marguerite. "AT&T Chief: We Can't Keep Doing Big Subsidies on
Phones." Www.news.cnet.com. N.p., 10 Dec. 2013. Web. Dec. 2013.
<www.news.cnet.com>.

Brandweiner, Natalie. "Omnichannel Trend Set to Explode but Can
Retailers Keep Up?" MyCustomer.com. IBM, Oct. 2013. Web. Dec. 2013.
<http://www.mycustomer.com/>.

"Retailer Share of Cell Phone Accessory Sales." NPD Group, Inc., Nov.
2013. Web. Dec. 2013.

"Credit Suisse on Smartphones 2012." Global Equity Research, Apr. 2013.
Web. Dec. 2013.
Daniel, Rhonda. "Multi-Channel Alignment for CE Retailers with Physical
Stores." Home - CEA. Consumer Electronics Association, 17 Oct. 2013.
Web. Dec. 2013. <http://www.ce.org/>.
Danova, Tony. "75 Billion Devices Will Be Connected To The Internet Of
Things By 2020." Business Insider. Morgan Stanley, 2 Oct. 2013. Web.
Dec. 2013. <http://www.businessinsider.com/>.
"E-Waste Facts and Figures." Home – Electronics TakeBack Coalition.
CEA, 25 Sept. 2015. Web. 01 Dec. 2013.
<http://www.electronicstakeback.com/>.
Holbrook, Steven. "7 Hidden Smartphone Expenses."
Www.money.usnews.com. N.p., June 2013. Web. Dec. 2013.
<www.money.usnews.com>.

Scantlin, Anna. "Here’s Your Problem." Phonedog.com. N.p., 31 Mar. 2013.
Web. 01 Dec. 2013. <http://www.phonedog.com/>.
Team, Trefis. "T-Mobile's Success With No-Contract Plans Could Spur
Industry Shift." Forbes. Forbes Magazine, 13 May 2013. Web. Dec. 2013.
<http://www.forbes.com/>.
Tillmann, Kevin. "Smartphones: Consumer Behavioral Trends." Home CEA. Consumer Electronics Association, 17 Sept. 2013. Web. Dec. 2013.
<http://www.ce.org/>.
Troianovski, Anton. "Wireless Carriers Chip Away at Phone Subsidies."
Www.online.wsj.com. N.p., 7 May 2013. Web. Dec. 2013.
<www.online.wsj.com>.
"US Consumer Electronics Sales and Forecast." Home - CEA. Consumer
Electronics Association, July 2013. Web. Dec. 2013.
<http://www.ce.org/>.
Source: © NPD Group, Inc . 2013

Johnston, Susan. "The Rise of No-Contract Cellphones."
Www.money.usnews.com. N.p., 16 Sept. 2013. Web. Dec. 2013.
<www.money.usnews.com>

Source: © TraQline – The Stevenson Company 2013
Source: © 2013, Forrester Research, Inc. and/or its subsidiaries

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

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2014 Mobile Trends Report

  • 1. 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
  • 2. 2014 MOBILE TRENDS REPORT Because things are the way they are, things will not stay the way they are Bertolt Brecht 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
  • 3. 2014 MOBILE TRENDS REPORT About the Trend Report Nothing moves like the speed of mobile. And this year, we will see rapid-fire changes as market dynamics collide with technology, creating a new world for manufacturers, carriers and retailers to compete in. From Brightstar’s vantage point as a global leader in wireless products and services, we see changes emerging that are poised to transform the way we all conduct business. Our trends were identified and commented on by Brightstar’s global network of experts, validated by third party research and explored for the impact they will make on OEMs, carriers, retailers and even consumers in the future. In all, we see eight major trends that are critical to understand and be ready for in 2014 and beyond. From product prices, to device lifecycles, to consumer shopping behaviors and preferences, the impacts will be wide reaching. Our industry doesn’t change slowly – it leapfrogs. And we’re about to take the next, major jump. 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. 2014 MOBILE TRENDS REPORT 8 DRIVING TRENDS FOR 2014 1 Device Lifecycle is Shrinking 2 No-Contract Will Dominate 3 Buy-Back and Trade-In is a Must 4 Device Financing Catches On 5 Attachments Become Critical to Profitability 6 Connected Devices Flood the Marketplace 7 Consumers Blur the Line 8 The End of Subsidization is Coming 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
  • 5. 1 DEVICE LIFECYCLE IS SHRINKING
  • 6. 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
  • 7. 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
  • 8. 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
  • 9. 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
  • 10. 2 NO-CONTRACT WILL DOMINATE
  • 11. 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
  • 12. 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
  • 13. 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
  • 14. 3 BUY-BACK & TRADE-IN IS A MUST
  • 15. 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
  • 16. 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
  • 17. 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
  • 18. 4 DEVICE FINANCING CATCHES ON
  • 19. 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
  • 20. 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
  • 21. 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
  • 22. 5 ATTACHMENTS BECOME CRITICAL TO PROFITABILITY
  • 23. 5 ATTACHMENTS BECOME CRITICAL TO PROFITABILITY Trend Overview The industry continues to be squeezed as a result of micro and macro issues at work including a demanding consumer population for price, function, and availability. Aggressive OEMs and retailers are learning how the puzzle pieces are coming together to optimize revenues and profitability through integrated strategic partnerships throughout the value chain. • 400% basket lift can be achieved with the right mix of accessories, attached services, and financing solutions. • Over 25% of consumers are adding handset protection to their devices. • Mobile wireless accessory shipments to approach 170 million by 2018. • Accessories are hot - Sales on wireless speakers jumped 175% in the US last year. 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
  • 24. 5 ATTACHMENTS BECOME CRITICAL TO PROFITABILITY Industry Perspective As these varying trends begin to merge (no-contract, buy-back & trade-in, financing) onto each other, consumers are learning that smartphones are expensive investments that need to be protected and optimized for maximum benefit. As a result, industry players are seizing the opportunity to infuse profit solutions through comprehensive and integrated models that meet and exceed the savvy consumer needs. But there is risk in putting everything in this basket. Lack of new phone releases, sudden discontinuance of popular models as well as less consumers upgrading their handsets, all lead to a drop in the number of opportunity for attached sales. 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
  • 25. 5 ATTACHMENTS BECOME CRITICAL TO PROFITABILITY CARRIER CUSTOMER LOYALTY A new 2013 mobile loyalty audit revealed that only 13% of customers show the level of loyalty required to protect them from competitive offers and service disruptions. CONSUMER OEM DEVICE PROTECTION VALUE IN ATTACHMENTS Device OEMs need to develop innovative branded accessories to ensure their share of the expanding accessory market. TREND IMPACT As the smartphone becomes integral to many consumers’ lives, they are increasingly willing to pay for services and accessories that enhance their overall experience and satisfaction. RETAILER REVENUE GROWTH Retailers must ensure they are offering the right accessories for their device portfolio and should consider offering a full range of value-added services (i.e.; insurance, handset protection, buy-back & trade-in). 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
  • 26. 5 ATTACHMENTS BECOME CRITICAL TO PROFITABILITY Brightstar Perspective Retailers, carriers and OEMs all have the opportunity to capitalize on the expanding profit pools created by demand for new accessory and service attachments. The overall basket must get larger because of shrinking profit margins. Accessories, smart apps/accessories, insurance and subscription based services are a vital part of basket and margin enhancements. 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
  • 27. 6 CONNECTED DEVICES FLOOD THE MARKETPLACE
  • 28. 6 CONNECTED DEVICES FLOOD THE MARKETPLACE Trend Overview Most of the focus in connected devices for smartphones has been wearables in the physical health space. Consumers will increasingly see their smartphones as tools for total lifestyle well-being. From improving techniques for self-treatment, developments in stress-detecting technologies and near-total smartphone penetration in many markets, consumers will lap up innovations that help track and improve overall well-being and lifestyle. • Consumer interest in wearable fitness quadrupled in the last year. • 75 Billion devices will be connected to the internet of things by 2020. • The wearable tech market will reach $4.5B globally this coming year. In addition, a vast number of up-and-coming innovative solutions both from a horizontal and vertically integrated perspective are making their way onto the scene; most leveraging smartphone technology via the iOS and Android platforms. 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
  • 29. 6 CONNECTED DEVICES FLOOD THE MARKETPLACE Industry Perspective “There's no reason to doubt that connected devices will soon be flooding the mass market. Technology with compact, connected sensors and actuators make their way onto everyday consumer electronics, household appliances, and on general infrastructure.” Tony Darova (Morgan Stanley, Business Insider) 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
  • 30. 6 CONNECTED DEVICES FLOOD THE MARKETPLACE CARRIER COMPETITIVE ADVANTAGE OEM DEMONSTRATE LEADERSHIP Need to determine what is a fad for early adopters and what has mainstream staying power. They need to set the stage for how to market these products as well as if and how they can reach and educate the consumer. This may also lead to new OEMs being able to enter this space and become a factor in mobile that may begin to challenge Apple and Samsung with possible exclusive/strategic partnerships. Carriers are currently providing the best spaces for displaying and educating consumers on these new devices with their interactive store formats. Big data operators have a lot to gain in this space, with any and all things connected to the Internet, that opens up more real-time data inventory to sell. CONSUMER REQUIRE EXPERT ADVICE TREND IMPACT Based on all of the emerging devices and connected devices, consumers will need a retail environment where they can ask questions and “play/interact” with devices before they purchase them. They will need to find a way to feel comfortable with the new technology and understand it before they adopt. RETAILER SMART PRODUCT RANGE While ideas are limitless, consumer interest is finite. Obviously they can't all be a hit. The big challenge for this industry is trying to gauge consumer interest and understand how the consumer will learn about and shop the product. A big question is how can retailers effectively play in this space without losing their shirt on inventory. What will be considered valuable and what will supply chain and retail distribution look like for this new category? 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
  • 31. 6 CONNECTED DEVICES FLOOD THE MARKETPLACE Brightstar Perspective Initially, operators will be better positioned to support connected devices. They have already started marketing connected and mhealth devices horizontally as add-ons to existing vertical services. With platform-based APP development (iOS, Android) being the gateway to the development of so many devices, OEMs should look at driving innovation with start-up device manufactures to help them bring the next big thing to market. 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
  • 32. 7 CONSUMERS BLUR THE LINE
  • 33. 7 CONSUMERS BLUR THE LINE Trend Overview 70% of consumers said that they have a better customer experience when they can choose how they purchase. 72% of respondents expect to be able to research, shop and receive goods and customer services through whichever channel they choose. This figure rises to 83% amongst omni-enthusiasts. 15% of customers feel extremely satisfied that retailers provide a consistent experience across different channels. In 2016 e-retail will account for 9% of total retail sales, up from 7% in 2011 & 2012. Nearly half of shoppers (44%) said that they expect to purchase through more than one channel within five years’ time. 3/4 of participants surveyed claimed that being able to use different channels cohesively (in store, online, mobile) is important. 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
  • 34. 7 CONSUMERS BLUR THE LINE Industry Perspective Retailers are moving towards creating a seamless shopping experience whether in-store, online, or through mobile devices. Site-to-store delivery, online price match, and an interactive experience at retail are all driving omni-channel evolution. Ensuring that customers can cost-effectively shop across multiple channels and still enjoy a consistent and cohesive experience must be a top consideration for retailers today. 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
  • 35. 7 CONSUMERS BLUR THE LINE CARRIER DIFFERENTIATION Carriers will need to evaluate the devices they choose to adopt into their networks as well as cultivate new service solutions to create differentiators that appeal to next gen shoppers. OEM CONSUMER INCREASED PRODUCT PORTFOLIO OEMS will benefit if retailers and carriers begin to offer a wider device portfolio as virtual inventory and extended aisle options become available. EXPECTATION IS NOW As consumers experience consistent and memorable engagements across platforms, they will begin to seek out and reward those companies that deliver on these unique solutions and eventually come to demand it. TREND IMPACT RETAILER SEAMLESS EXPERIENCE While ideas are limitless, consumer interest is finite. Retailers can no longer operate their brick and mortar and .com businesses in silos, even in mobility. Retailers must move faster to offer a seamless experience. 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
  • 36. 7 CONSUMERS BLUR THE LINE Brightstar Perspective Full integration of online shopping solutions were inevitable and adopted successfully by many. The mobile experience continues to challenge many however large screen devices and better software solutions are starting to turn the tide with consumers as evidenced by 2013 mobile shopping. • In 2013, over 23% of Black Friday and 17% of Cyber Monday online shoppers placed their orders from mobile phones (up 43% and 55% respectively from 2012), reinforcing the growing importance of mobile phones as a valid shopping platform. The importance of executing a seamless omni-channel merchandising strategy within the retail market is of paramount importance. Retailers will need to ensure that customer online, in-store and mobile experiences are consistent across platforms. 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
  • 37. 8 THE END OF SUBSIDIZATION IS COMING
  • 38. 8 THE END OF SUBSIDIZATION IS COMING Trend Overview Subsidies were used to kick-start and grow the market for mobile devices. Now that we’re nearing 100% mobile penetration in the US, subsidies don’t make sense for the carriers any more. • Subsidies are common in the US. 63% of all sold devices are via a subsidized carrier contract. Globally however, unsubsidized phone plans are the global standard. Several carriers such as Telefonica and Vodaphone have stopping offering subsidies to new customers or have stopped offering subsidies altogether. Mobile phone penetration in the US is nearing 100% Operators’ subsidized subscriber base is predicted to decline by 16% in the next 2 years • While subsidies have helped carriers to lure in customers and lock them into long-term deals, they are also bottom-line killers that carriers have long said they would like to do away with. 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
  • 39. 8 THE END OF SUBSIDIZATION IS COMING Industry Perspective "Is the subsidy-model definitely going away?" asked Pierre Alain Sur, leader of Price Waterhouse Coopers' global communications business. It's hard to say at this point, but the trend is pointing in that direction. Smartphones are becoming more durable, and innovation is slowing. Apple is still selling large amounts of the iPhone 4, a device that was launched two years ago. All that's left is to change customers' mindset. Interestingly, consumers have no issue paying full price for tablets, which are essentially large smartphones with all of the same features outside of the functionality to place calls, but carriers have been using the subsidy model for phones since the beginning. 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
  • 40. 8 THE END OF SUBSIDIZATION IS COMING CARRIER LOYALTY GROWTH Carriers can stand alone on the quality of their networks and the services they provide. Expect financing solutions to become more comprehensive and more complex as carriers look to further secure their subscriber bases. Carriers will focus on program specific enhancements to network services in order to build customer loyalty in new and innovative ways. CONSUMER OEM BRAND AWARENESS AND LOYALTY Tier 2/3 OEMs are generally less expensive and have a price advantage with no subsidy, assuming they can compete technically. ABUNDANCE OF CHOICES TREND IMPACT As contracts come up for renewal and new programs hit the market, consumers will have an abundance of choices to develop a plan that works best for them. Look for consumers to express their wants and needs via social networks. All parties should be monitoring this closely to stay on top of consumer demand. RETAILER DIFFERENTIATION Expect retail to come to the table with accessory and device upgrade/financing programs. Retailers will look to create unique programs that differentiate themselves both in the category and in the market. 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
  • 41. 8 THE END OF SUBSIDIZATION IS COMING Brightstar Perspective The removal of subsidies could be a game changer. It removes a significant differentiator and forces each carrier to stand on its own merits. OEMs will need to spend even more money to merchandise their products in store, in advertising and at POS as carriers will no longer participate in reducing the consumers purchase price. Customers may look to financing solutions as phone costs continue to rise. They may also hold their phones for longer periods of time, potentially impacting the buy-back & trade-in market. 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
  • 42. 2014 MOBILE TRENDS REPORT About Brightstar Retail Doors 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
  • 43. Source Bibliography "7 Consumer Trends to Run with in 2014." Trendwatching.com: Consumer Trends and Insights from around the World. N.p., Dec. 2013. Web. Dec. 2013. <http://www.trendwatching.com/>. Kenderdine, Dan. "The Wireless Xcessories Group Announces Third Quarter 2013 Results." Yahoo Finance. Globe Newswire, 17 Dec. 2013. Web. Dec. 2013. <http://www.finance.yahoo.com/>. Best, Eric. "Key Trends in Omni-Channel Retail for 2013." Ecommerce Marketing Software for Online Retailers - Mercent. N.p., n.d. Web. Dec. 2013. <http://www.mercent.com/>. "Loyalty among Mobile Phone Users in the U.S." WDS | A Xerox Company. Xerox, 18 Mar. 2013. Web. Dec. 2013. <http://www.wds.co/>. "Mobile Phone Manufacturers Market Analysis 2013-2018 Trends." Xerfi/Global, Oct. 2013. Web. Dec. 2013. Bhas, Nitin. "Mobile Wireless Accessory Shipments to Approach 170 Million by 2018." Juniper Research. N.p., 31 July 2013. Web. Dec. 2013. <http://www.juniperresearch.com/>. Reardon, Marguerite. "AT&T Chief: We Can't Keep Doing Big Subsidies on Phones." Www.news.cnet.com. N.p., 10 Dec. 2013. Web. Dec. 2013. <www.news.cnet.com>. Brandweiner, Natalie. "Omnichannel Trend Set to Explode but Can Retailers Keep Up?" MyCustomer.com. IBM, Oct. 2013. Web. Dec. 2013. <http://www.mycustomer.com/>. "Retailer Share of Cell Phone Accessory Sales." NPD Group, Inc., Nov. 2013. Web. Dec. 2013. "Credit Suisse on Smartphones 2012." Global Equity Research, Apr. 2013. Web. Dec. 2013. Daniel, Rhonda. "Multi-Channel Alignment for CE Retailers with Physical Stores." Home - CEA. Consumer Electronics Association, 17 Oct. 2013. Web. Dec. 2013. <http://www.ce.org/>. Danova, Tony. "75 Billion Devices Will Be Connected To The Internet Of Things By 2020." Business Insider. Morgan Stanley, 2 Oct. 2013. Web. Dec. 2013. <http://www.businessinsider.com/>. "E-Waste Facts and Figures." Home – Electronics TakeBack Coalition. CEA, 25 Sept. 2015. Web. 01 Dec. 2013. <http://www.electronicstakeback.com/>. Holbrook, Steven. "7 Hidden Smartphone Expenses." Www.money.usnews.com. N.p., June 2013. Web. Dec. 2013. <www.money.usnews.com>. Scantlin, Anna. "Here’s Your Problem." Phonedog.com. N.p., 31 Mar. 2013. Web. 01 Dec. 2013. <http://www.phonedog.com/>. Team, Trefis. "T-Mobile's Success With No-Contract Plans Could Spur Industry Shift." Forbes. Forbes Magazine, 13 May 2013. Web. Dec. 2013. <http://www.forbes.com/>. Tillmann, Kevin. "Smartphones: Consumer Behavioral Trends." Home CEA. Consumer Electronics Association, 17 Sept. 2013. Web. Dec. 2013. <http://www.ce.org/>. Troianovski, Anton. "Wireless Carriers Chip Away at Phone Subsidies." Www.online.wsj.com. N.p., 7 May 2013. Web. Dec. 2013. <www.online.wsj.com>. "US Consumer Electronics Sales and Forecast." Home - CEA. Consumer Electronics Association, July 2013. Web. Dec. 2013. <http://www.ce.org/>. Source: © NPD Group, Inc . 2013 Johnston, Susan. "The Rise of No-Contract Cellphones." Www.money.usnews.com. N.p., 16 Sept. 2013. Web. Dec. 2013. <www.money.usnews.com> Source: © TraQline – The Stevenson Company 2013 Source: © 2013, Forrester Research, Inc. and/or its subsidiaries 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