The new generation of non-smart touchscreen mobiles have brought about a significant drop in the value generated from UK bills, according to new research from TNS ComTech.
Since the iPhones launch, touchscreen technology has taken the mobile market by storm, and today, touchscreen phones account for 43% of all UK sales. Despite their success, however, non-smart, cheaper touchphones, like the Samsung Tocco and the LG Viewty, are accelerating the decline in average spend per user (ARPU), which is now 13% lower than it was this time last year, at the height of the recession.
While users of non-touchscreen handsets are spending 12% less on using their mobile per month than they were at the same time last year, the comparable decrease amongst users of non-smart touchscreen handsets is 23%. The result is severely squeezed margins for both carriers and handset manufacturers that are developing and promoting the phones. In stark contrast, ARPU among touchscreen phone users with advanced operating systems, such as Apples iPhone and Blackberrys Storm, is up by an average of 5 per month.
The research behind the study was extracted from the TNS ComTech consumer panel in the UK. Data included within this piece was taken from around 240,000 interviews conducted in Great Britain over the year to July 2009.
The study reveals that consumer misunderstanding of the different mobile technologies is to blame. Consumers are not aware of the difference between a phone with an advanced operating system and a touchscreen phone with a non-advanced operating system. As long as a phone looks like a high end Smartphone, the average Brit will think that it is one and go for the cheapest deal they can find. The message for manufactures and carriers is clear, says Comtech: choosing to grow their customer base at the expense of their margins is not a sustainable strategy.
Although it is all too easy to attract value driven customers with non-smart touchscreen phones, carriers and manufacturers alike need to think long and hard about their handset portfolio and the effect that handset types are having on customer value, says TNS ComTech Director, Paul Moore. They should take care to educate consumers about the differences between operating systems and not simply punt phones that drive volume sales but contribute negatively to value. Conditions in the mobile market are tough and will remain so for some time. It is up to the industry to find long-term solutions to better engage consumers, rather than quick fixes that will escalate the drop in the value of the market.