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ChangeWave Research: Consumer Smart Phone Trends

Consumer Smart Phones: 90 Day OutlookAnother Momentum Leap for Samsung

Jean Crumrine

Overview: A new ChangeWave consumer smart phone survey shows Samsung’s momentum continuing – driven by its upcoming Galaxy S IV. Demand for larger-sized screens is also helping Samsung compete with Apple in the battle for market supremacy.

The March 21 - April 2, 2013 survey of 4,011 consumers took a fresh look at smart phone trends, including customer satisfaction, OS preferences and future demand. The survey also focuses on consumer interest in new Blackberry 10 OS devices.

We note that this survey focuses primarily on the North American smart phone market – with 88% of respondents from the U.S. ChangeWave Research is a service of 451 Research.

Next 90 Day North American Demand: Another Samsung Surge

Explosive demand for Samsung (27%) continues – with its Galaxy models helping catapult it another 6-pts higher in terms of planned smart phone buying over the next 90 days.

As the following chart shows, this is the fourth time in the past six surveys that we’ve seen a huge leap for Samsung, and it’s now at its highest level ever in a ChangeWave survey – double that of a year ago.

To find out what’s driving their momentum, we looked at the breakdown of Samsung models consumers plan on buying in the next 90 days.

The Galaxy S III (29%) and Note II (12%) are still quite popular, but it’s the new Galaxy S IV that’s behind much of the surge this quarter (officially launching in late April, it’s already available for pre-order). Better than half (53%) of planned Samsung buyers say the Galaxy S IV is the model they’ll buy.

This information is from ChangeWave Research, a service of 451 Research, LLC, and contains confidential business information.It may not be copied or distributed without permission. © 2013 451 Research, LLC. All rights reserved.

April 22, 2013


Planned SamsungBuyers:

Next 90 Days

Current Survey Mar ‘13

Samsung Galaxy S IV 53%Samsung Galaxy S III 29%Samsung Galaxy Note II 12%Other Samsung 6%

The impact Samsung is having on the market becomes even more apparent when we look at consumer buying plans for the next 90 days among the other major manufacturers:

Apple. The powerful wave of iPhone 5 demand that rocketed Apple to its all-time high just two quarters ago continues to settle back. Apple still leads all manufacturers in terms of North American demand in our survey, with two-in-five respondents (40%) who plan to buy a smart phone in the next 90 days saying they’ll get an iPhone.

Rumors circulating about a next gen iPhone range from a low cost model that competes directly with Samsung, to multiple model devices in 2013. Nothing is certain until an official announcement from Apple, but undoubtedly many consumers are holding off Apple smart phone purchases in anticipation of an upcoming release.

Apple is also rumored to be releasing an iWatch later this year. A new ChangeWave report next week will provide a look at potential consumer demand for the rumored Apple product.

Blackberry. For the second survey in a row, Blackberry (7%) is registering a 3-pt uptick in planned buying. While Blackberry demand has significantly improved over the past two surveys (from 1% to 7%), it’s still a long way from being considered a top competitor in the consumer smart phone market.


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Nonetheless, these findings are a positive sign that the newest devices running the recently launched Blackberry 10 OS are breathing new life into the company.

We note demand for the not yet released Q10 model – featuring a physical keyboard – edges out the just released Z10 among Blackberry planned buyers (50% Q10 vs. 42% Z10).

Other Manufacturers. Consumer planned buying of Motorola smart phones (5%) is registering a slight 1-pt uptick in the current survey, while HTC (2%) is unchanged – but both remain near recent lows.

This survey was conducted prior to the announcement from HTC and Facebook of the First model – the first smart phone to include the new Facebook Home interface for Android phones. We’ll take a look at interest in the HTC Facebook phone in a future survey.

Nokia (2%) is down 1-pt this quarter among planned buyers – a discouraging sign for its Windows Phone 8 Lumia devices.

Other Smart Phone Trends

Overall Purchasing. In each of the past five years our March survey has registered a seasonal slowdown in smart phone buying plans. The current survey is no exception – with 14.1% of respondents saying they plan to purchase a smart phone in the next 90 days, down from 16.6% previously. Nonetheless planned buying is the highest we’ve ever recorded in a March survey, and 2-pts higher than a year ago.


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Customer Satisfaction. The Apple iPhone continues to outperform when it comes to customer satisfaction, with 70% of iPhone owners saying they’re Very Satisfied with their phone.

Percentage of Respondents Very Satisfied with their Smart Phone – By Manufacturer

Samsung is also maintaining a strong satisfaction rating, with 54% of its customers saying they’re Very Satisfied with their smart phone. Nokia (51%) ranks a respectable third.

Blackberry (32%) still comes in last in satisfaction, but for the second survey in a row is seeing a major improvement – up 11-pts in just the past six months.

Mobile Operating SystemsAmong consumers planning to buy a smart phone in the next 90 days, the Apple iOS (38%; down 11-pts) remains the number one preference. But again, that number is down from the all-time high we saw during the iPhone 5 release.

Better than one-in-three (35%) planned buyers say they’d prefer to have the Android OS on their new phone – up 7-pts since December – likely driven in large part by the Samsung Galaxy S IV launch.

Importantly, in the aftermath of the new OS launch, Blackberry OS (7%) is up 3-pts to its highest level of the past three years – but remains well below its peak four years ago. In contrast, Microsoft’s share of OS preference (4%) has dropped 3-pts since the burst of momentum following the Windows Phone 8 launch.

OS Customer Satisfaction. We also took a look at OS customer satisfaction ratings based upon the operating system consumers have on their smart phones. As in previous ChangeWave surveys, Apple remains the clear leader – 73% of customers using the Apple iOS say they’re Very Satisfied.


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In a positive finding for the Windows Phone 8 (53%) operating system, it continues to rank second in customer satisfaction, slightly ahead of the Android OS (49%). Both remain well ahead of Blackberry OS (32%) – though we note this is the first time Blackberry has topped the 30% rating mark since September 2010.

A closer look at Windows Phone OS satisfaction reveals other encouraging news for Microsoft – the new Windows Phone 8 OS Very Satisfied rating (68%) is substantially higher than that of the older Windows Phone 7 (32%).

Strong Interest in Big Screen Smart Phones Our December smart phone survey found strong interest in large screen smart phones, and the current results show this trend continuing to gain momentum.

What screen size are you most interested in buying?Current Survey Mar ‘13

Previous Survey Dec ‘12

Less Than 3 Inch Screen 1% 3%3.0-3.9 Inch Screen 14% 18%4.0-4.9 Inch Screen 52% 52%5 Inch Screen or Larger 33% 27%

When planned smart phone buyers were asked about their screen size preferences, one-third (33%) said they’re interested in a 5 inch or larger screen – up 6-pts from previously.

Samsung is well-positioned for the large-screen demand trend, with the popular Galaxy Note II (5.5 inch screen) already available and Galaxy S IV (5 inch screen) about to be released.

What’s more, Samsung is expected to introduce the next generation Galaxy Note III smart phone later this year, and many analysts believe the new Samsung “phablet” will have a 5.9-inch high resolution display. Samsung also confirmed another upcoming “phablet” release, the Galaxy Mega, which will begin rolling out in May.


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Bottom Line: Our latest smart phone survey shows another burst of momentum for Samsung going forward. Driven in large part by its new Galaxy S IV model and continued strong demand for super-sized screens, Samsung’s share of smart phone purchases in the next 90 days is at its highest level ever in a ChangeWave survey – double that of a year ago.

Blackberry is another manufacturer showing momentum. The road back for Blackberry remains a long, uphill battle, but after many years of market share decline there is a spark of life in the consumer market.

The surging wave of Samsung buying has temporarily shifted demand from other manufacturers. After rocketing to an all-time North American high just six months ago, Apple is settling back, but still leads among respondents planning to buy a new smart phone in the next 90 days. The buying of Windows 8 phones has also calmed in the aftermath of the momentum seen previously.

In the rapidly changing smart phone market there is often a short window of opportunity in which to capitalize on demand before the next new model release. It’s clearly Samsung’s turn now, but it’s also evident that consumers are holding off on Apple purchases in anticipation of a next gen iPhone. While actual features and timing are still unknown, it seems certain Apple will launch at least one if not multiple new products in the near future.

Will Apple go head-to-head with Samsung in the lower cost, larger screen markets? Whichever path Apple takes, it’s highly likely they will have competition from other new Samsung launches – including the new Galaxy Mega and Note III.

Of course these new Galaxy models could prove to be a competitive threat to their own sister device (Galaxy S IV), or they could complement each other and boost overall sales for Samsung. Time will tell, but if the recent past is any indication, the successful releases of both Galaxy S III (Jun 2012) and Note II (Nov 2012) within five months of each other shows the strategy of selling multiple smart phone models at the same time works well for Samsung.


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Summary of Key Findings

The ChangeWave Research Network is a group of 25,000 highly qualified business, technology, and medical professionals in leading companies of select industries—credentialed professionals who spend their everyday lives working on the frontline of technological change. ChangeWave surveys its Alliance members on a range of business and investment research and intelligence topics, collects feedback from them electronically, and converts the information into proprietary quantitative and qualitative reports.


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Another Momentum Leap for Samsung in Smart Phone BuyingSamsung Planned Smart Phone Purchases Among respondents planning

to buy a smart phone in next 90 days, Samsung (27%) is up 6-pts – the fourth major surge in the past 18 months

Galaxy S IV (53%) is most popular among planned Samsung buyers; Galaxy S III (29%) and Galaxy Note II “Phablet” (12%) still strong

Other Manufacturers: Planned Purchases Next 90 Days Apple (40%; down 10-pts)

leads, but is off its all-time high of 6 months ago as consumers wait for next gen

Blackberry (7%) is up 3-pts for second survey in a row

Motorola (5%; up 1-pt) HTC (2%; unchanged) Nokia (2%; down 1-pt)

Strong Demand for Big Screen Smart Phones Continues 33% of planned smart

phone buyers say they’re most interested in 5 inch screen or larger – up 6-pts from Dec

Smart Phone Customer Satisfaction Ratings Apple (70% Very Satisfied) Samsung (54%) Nokia (51%) Motorola (45%) HTC (39%) RIM (32%)

Seasonal Slowdown in Overall Smart Phone Buying Plans 14.1% say they plan on

buying a smart phone in next 90 days, down from 16.6% in December

Consumer Mobile OS MarketCustomer Satisfaction Apple iOS (73% Very

Satisfied) Windows Phone OS (53%) Android OS (49%) Blackberry OS (32%) –

seeing improvement for second consecutive survey

Planned Buying OS Preferences – Next 90 Days Apple iOS (38%) remains

number one preference for those planning to buy smart phone – but is down 11-pts

Android OS (35%) – up 7-pts Blackberry OS (7%) – up 3-

pts to highest level in 3 years Windows Phone OS (4%) –

down 3-pts


Table of Contents

Summary of Key Findings.............................................................................................7

The Findings...................................................................................................................9

Next 90 Days: Smart Phone Manufacturer Demand...................................................9

Overall Smart Phone Purchasing..............................................................................13

Smart Phone Customer Satisfaction.........................................................................14

Mobile Operating Systems .......................................................................................15

Strong Interest in Big Screen Smart Phones Continues ...........................................17

Other Smart Phone Findings ....................................................................................18

ChangeWave Research Methodology........................................................................19

About ChangeWave Research....................................................................................19

About 451 Research.....................................................................................................19


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The Findings

Introduction: A new ChangeWave consumer smart phone survey shows Samsung’s momentum continuing – driven by its upcoming Galaxy S IV. Demand for larger-sized screens is also helping Samsung compete with Apple in the battle for market supremacy.

The March 21 - April 2, 2013 survey of 4,011 consumers took a fresh look at smart phone trends, including customer satisfaction, OS preferences and future demand. The survey also focuses on consumer interest in new Blackberry 10 OS devices.

We note that this survey focuses primarily on the North American smart phone market – with 88% of respondents from the U.S. ChangeWave Research is a service of 451 Research.

(A) Next 90 Days: Smart Phone Manufacturer Demand

Future Manufacturer Share. Explosive demand for Samsung (27%) continues – with its Galaxy models helping catapult it another 6-pts higher in terms of planned smart phone buying over the next 90 days.

As the following chart shows, this is the fourth time in the past six surveys that we’ve seen a huge leap for Samsung, and it’s now at its highest level ever in a ChangeWave survey – double that of a year ago.

To find out what’s driving their momentum, we looked at the breakdown of Samsung models consumers plan on buying in the next 90 days.

Planned SamsungBuyers:

Next 90 Days


Samsung Galaxy S IV 53%Samsung Galaxy S III 29%Samsung Galaxy Note II 12%Other Samsung 6%


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The Galaxy S III (29%) and Note II (12%) are still quite popular, but it’s the new Galaxy S IV that’s behind much of the surge this quarter (officially launching in late April, it’s already available for pre-order). Better than half (53%) of planned Samsung buyers say the Galaxy S IV is the model they’ll buy.

The impact Samsung is having on the market becomes even more apparent when we look at consumer buying plans for the next 90 days among the other major manufacturers:

Apple. The powerful wave of iPhone 5 demand that rocketed Apple to its all-time high just two quarters ago continues to settle back. Apple still leads all manufacturers in terms of North American demand in our survey, with two-in-five respondents (40%) who plan to buy a smart phone in the next 90 days saying they’ll get an iPhone.

Rumors circulating about a next gen iPhone range from a low cost model that competes directly with Samsung, to multiple model devices in 2013. Nothing is certain until an official announcement from Apple, but undoubtedly many consumers are holding off Apple smart phone purchases in anticipation of an upcoming release.

Apple is also rumored to be releasing an iWatch later this year. A new ChangeWave report next week will provide a look at potential consumer demand for the rumored Apple product.

Blackberry. For the second survey in a row, Blackberry (7%) is registering a 3-pt uptick in planned buying. While Blackberry demand has significantly improved over the past two surveys (from 1% to 7%), it’s still a long way from being considered a top competitor in the consumer smart phone market.


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Nonetheless, these findings are a positive sign that the newest devices running the recently launched Blackberry 10 OS are breathing new life into the company.

We note demand for the not yet released Q10 model – featuring a physical keyboard – edges out the just released Z10 among Blackberry planned buyers (50% Q10 vs. 42% Z10).

Planned BlackberryBuyers:

Next 90 Days


Blackberry Q10 (expected May 2013)

50%

Blackberry Z10 42%Other Blackberry 8%

Other Manufacturers. Consumer planned buying of Motorola smart phones (5%) is registering a slight 1-pt uptick in the current survey, while HTC (2%) is unchanged – but both remain near recent lows.

This survey was conducted prior to the announcement from HTC and Facebook of the First model – the first smart phone to include the new Facebook Home interface for Android phones. We’ll take a look at interest in the HTC Facebook phone in a future survey.


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Nokia (2%) is down 1-pt this quarter among planned buyers – a discouraging sign for its Windows Phone 8 Lumia devices.

Who is the manufacturer of the Smart Phone you plan on buying?



Previous Survey Sep ‘12

PreviousSurveyJun ‘12

PreviousSurveyMar ‘12

PreviousSurveyDec ‘11

Apple (e.g., iPhone) 40% 50% 71% 50% 56% 54%Samsung (e.g., Galaxy S IV, Note II, Galaxy Nexus, ATIV Odyssey)

27% 21% 13% 19% 13% 13%

Blackberry (e.g., Z10, Q10) 7% 4% 1% 2% 3% 2%Motorola (e.g., X Phone, Droid Razr Maxx HD, Photon Q)

5% 4% 2% 4% 6% 7%

HTC (e.g., One, Windows Phone 8X, Droid DNA)

2% 2% 1% 3% 3% 3%

Nokia (e.g., Lumia 920, Lumia 820) 2% 3% 2% 2% 1% 1%LG (e.g., Google Nexus 4, Optimus G, Spectrum 2)

1% 3% 0% 1% 1% 1%

Sony (e.g., Xperia Z, Xperia TL) 0% 0% 0% 1% 0% 0%Don't Know / Other 16% 14% 11% 18% 16% 18%


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(B) Overall Smart Phone Purchasing

In each of the past five years our March survey has registered a seasonal slowdown in smart phone buying plans. The current survey is no exception – with 14.1% of respondents saying they plan to purchase a smart phone in the next 90 days, down from 16.6% previously.

Nonetheless planned buying is the highest we’ve ever recorded in a March survey, and 2-pts higher than a year ago.


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(C) Smart Phone Customer Satisfaction

The Apple iPhone continues to outperform when it comes to customer satisfaction, with 70% of iPhone owners saying they’re Very Satisfied with their phone. Among iPhone 5 owners only the Very Satisfied rating jumps to 76%.

Percentage of Respondents Very Satisfied with their Smart Phone – By Manufacturer

Samsung is also maintaining a strong satisfaction rating, with 54% of its customers saying they’re Very Satisfied with their smart phone. Nokia (47%) ranks a respectable third.

Blackberry (32%) still comes in last in satisfaction, but for the second survey in a row is seeing a big improvement – up 11-pts in just the past six months.


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(D) Mobile Operating Systems

Among consumers planning to buy a smart phone in the next 90 days, the Apple iOS (38%; down 11-pts) remains the number one preference. But again, that number is down from the all-time high we saw during the iPhone 5 release.

Better than one-in-three (35%) planned buyers say they’d prefer to have the Android OS on their new phone – up 7-pts since December – likely driven in large part by the Samsung Galaxy S IV launch.

Importantly, in the aftermath of the new OS launch, Blackberry OS (7%) is up 3-pts to its highest level of the past three years – but remains well below its peak four years ago.

In contrast, Microsoft’s share of OS preference (4%) has dropped 3-pts since the burst of momentum following the Windows Phone 8 launch.

*In surveys prior to Sep ‘12 the response choice was either Windows Phone 7 or Windows Mobile


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OS Customer Satisfaction

We also took a look at OS customer satisfaction ratings based upon the operating system consumers have on their smart phones. As in previous ChangeWave surveys, Apple remains the clear leader – 73% of customers using the Apple iOS say they’re Very Satisfied.

In a positive finding for the Windows Phone 8 (53%) operating system, it continues to rank second in customer satisfaction, slightly ahead of the Android OS (49%). Both remain well ahead of Blackberry OS (32%) – though we note this is the first time it has topped the 30% rating mark since September 2010.

A closer look at Windows Phone OS satisfaction reveals other encouraging news for Microsoft – the new Windows Phone 8 OS Very Satisfied rating (68%) is substantially higher than that of the older Windows Phone 7 (32%).


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(E) Strong Interest in Big Screen Smart Phones Continues

Our December smart phone survey found strong interest in large screen smart phones, and the current results show this trend continuing to gain momentum.

What screen size are you most interested in buying?



Less Than 3 Inch Screen 1% 3%3.0-3.9 Inch Screen 14% 18%4.0-4.9 Inch Screen 52% 52%5 Inch Screen or Larger 33% 27%

When planned smart phone buyers were asked about their screen size preferences, one-third (33%) said they’re interested in a 5 inch or larger screen – up 6-pts from previously.

Samsung is well-positioned for the large-screen demand trend, with the popular Galaxy Note II (5.5 inch screen) already available and Galaxy S IV (5 inch screen) about to be released.

What’s more, Samsung is expected to introduce the next generation Galaxy Note III smart phone later this year, and many analysts believe the new Samsung “phablet” will have a 5.9-inch high resolution display. Samsung also confirmed another upcoming “phablet” release, the Galaxy Mega, which will begin rolling out in May.


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(F) Other Smart Phones Industry Trends

“Split Screen” Functionality

Our previous ChangeWave surveys have shown how mobile applications are critically important factors in the overall success or failure of individual smart phones and mobile operating systems.

In the current survey we asked respondents how important it is for their next smart phone to have “split screen” functionality so they can view two different apps simultaneously.

How important is it for your next smart phone to have “split screen” functionality - which allows you to view 2 different apps simultaneously?

Smart Phone

OwnersVery Important 3%Somewhat Important 21%Not Very Important 44%Not At All Important 21%Don't Know/ NA 11%

A total of 3% say it’s Very Important that their next smart phone has “split screen” functionality and another 21% say Somewhat Important.

NFC “Mobile Payment” Functionality

We also asked and current smart phone owners and non-smart phone owners (i.e., cell phone owners) how important it is for their next smart phone to have NFC “Mobile Payment” functionality.

Some smart phones now have NFC “Mobile Payment” functionality - which allows you to use your phone like a credit card. How important is it for your next smart phone to have “Mobile Payment” functionality?

Smart Phone

Owners

Non-Smart Phone

OwnersVery Important 4% 1%Somewhat Important 25% 12%Not Very Important 38% 24%Not At All Important 26% 41%Don't Know / NA 8% 22%

Nearly three-in-ten (29%) say it’s important that their next smart phone have NFC “Mobile Payment” functionality (4% Very Important and 25% Somewhat Important). Non-smart phone owners are less likely to say it’s important.


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ChangeWave Research MethodologyThis report presents the findings of a ChangeWave Research survey on consumer demand trends within the Smart Phone market. The survey was conducted March 21-April 2, 2013 and a total of 4,011 consumers participated.

ChangeWave's proprietary research and business intelligence gathering system is based upon the systematic gathering of valuable business and investment information directly over the Internet from accredited members of its research network.

The business and investment intelligence provided by ChangeWave provides a real-time view of companies, technologies, and consumer and business trends in key market sectors, along with an in-depth perspective of the macro economy – well in advance of other available sources.

About ChangeWave ResearchChangeWave Research, a service of 451 Research, is a survey research firm that identifies and quantifies change in corporate buying & business trends, telecom trends, and consumer spending & electronics trends.

The ChangeWave Research Network is a group of 25,000 highly qualified business, technology, and medical professionals – as well as early adopter consumers – who work in leading companies of select industries. ChangeWave surveys its Network members weekly on a range of business and consumer topics, and converts the information into a series of proprietary quantitative and qualitative reports. ChangeWave delivers its products and services on the Web at www.ChangeWaveResearch.com.

451 Research, LLC, including its ChangeWave Research service, does not make any warranties, express or implied, as to results to be obtained from using the information in this report. Investors should obtain individual financial advice based on their own particular circumstances before making any investment decisions based upon information in this report.

About 451 Research451 Research, a division of The 451 Group, is a leading global analyst and data company focused on the business of enterprise IT innovation. Clients of 451 Research – at end-user, service-provider, vendor, and investor organizations – rely on 451 Research’s insight through a range of syndicated research and advisory services to support both strategic and tactical decision-making. For additional information on 451 Research, go to: 451research.com.

For More Information:ChangeWave Research Telephone: 301-250-23637101 Wisconsin Ave. Fax: 240-200-3988Suite 1301 www.ChangeWaveResearch.comBethesda, MD 20814 [email protected]


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