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US Feature Phone Market Stages Comeback as Gen Z, Millennials Advocate Digital Detox

  • The US feature phone market is more crowded and competitive now as OEMs enter agreements with carriers. 
  • Feature phone sales are forecast to reach 2.8 million in 2023 with stable sales continuing in the near term. 
  • New hardware configurations like eSIM or NFC can make devices more relevant for today’s consumers. 

Feature phones have made a resurgence due to digital detox and Gen Z/millennials  

Feature phones in the US market have made a resurgence as Gen Z and millennials are advocating for digital detoxes due to the mental health concerns brought on by smartphones and social media. Hashtags like #bringbackfliphones on TikTok have garnered millions of views leading to the increased adoption of feature phones by younger consumers looking to adhere to movements like digital detoxing, minimalist lifestyles and unplugging. Given the relatively cheap price point of feature phones ($20-$50 with a prepaid carrier and $50-$100 unlocked), more people are trying out these devices and sharing their experiences on social media.  

The market is more crowded now, TCL and HMD are leading but competition from Schok, Sonim, and white-label makers like Tinno are entering agreements with carriers 

Smartphones were widely adopted almost instantly when they arrived. Due to this, the US feature phone market shrank significantly over the past 10 years. Currently, the feature phone market contributes to only a little more than a 2% share of overall handset sales in the US. Among the players catering to this segment of the market, TCL, which manufactures feature phones for major carriers in both branded and white-label capacities, leads the pack with a 43% share due to its strong presence on carrier channels. HMD ranks second with a 26% share, while other smaller players make up for the rest of the market. 

Additionally, carrier and OEM tie-ups play an important role in the dynamics. The big three US carriers – AT&T, Verizon and T-Mobile – are exploring different feature phone OEM options due to which the US feature phone market has grown more crowded lately, especially with carriers moving away from TCL devices and trying out smaller OEMs instead, like Tinno and FIH which have manufactured devices for AT&T’s white-labeled feature phones. Sonim and Kyocera, which provide ruggedized devices, are Verizon’s feature phone brands, while Schok and hot pepper are T-Mobile’s.  US feature phone marketFeature phone sales are forecast to reach 2.8 million in 2023 with continued stable sales in the near term as niche demand drivers maintain sales

Feature phones still hold their place in the market and are likely to see consistent shipments, helped by their affordability and durability to suit specific use cases. Although the growth in numbers may not be huge, the demand from consumers looking for a feature phone as a digital detox mechanism will continue. Additionally, B2B sales may drive some demand as feature phones simplify costs for businesses. Furthermore, tourists and other consumers needing a cheap disposable feature phone will also continue to keep sales stable.

New hardware configurations like eSIM or NFC can make devices more relevant for modern consumers wishing to simplify their tech gadgets but still interact seamlessly in the digital world

There is a consumer base looking for devices that are minimalistic but also have features that are relevant to staying connected in today’s world. The design and specifications of feature phones have not changed much over the last few years. This is one of the factors that keep consumers from purchasing a feature phone. The addition of some new hardware configurations and features that are abreast with the current trends while still maintaining the simplicity of usage may open more gates for the growth of feature phones. NFC is one such feature. NFC can enable payments, home automation, quick pairing, and make public transport access more convenient for users. Similarly, eSIMs may also be a great hardware integration as it may attract consumers to adopt a feature phone as a companion device that they can easily switch to from their main device in situations where they do not want to bring out their expensive smartphone. Adding these attributes would help make feature phones more relevant for day-to-day use.

See the full report below for more information:

 

US Feature Phone Trends and Outlook in the Age of Smartphones

The US feature phone market has seen a recent resurgence with Gen Z/Millennials advocating for digital detoxes due to mental health concerns. While TCL and HMD remain the dominant OEMs in the US, challenger brands are making the market more crowded. Feature phones will remain an important part of the US handset market for years to come as they continue to solve for niche needs that smartphones cannot address.

Number of Pages: 18

  • Key Takeaways
  • Current Market Dynamics
    • Feature Phone Volumes by Year
    • Current Market Drivers
    • Market Share by OEM
    • Postpaid and Prepaid Market Share by OEM
  • Specification Analysis
    • Current Feature Phone Specifications and Market Innovations
  • Feature Phone Outlook
    • Market Forecast until 2027
    • Future Trends and Specifications

Contact Us Read More

 

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US Smartphone Shipments Decline in Q1 2023 Amid High Inflation, Inventory Correction; Apple Share Up

  • Shipments declined 17% YoY in Q1 2023 due to inventory correction and weak consumer demand.
  • Apple increased its market share to 53% in Q1 2023 from 49% in Q1 2022.
  • The uncertain economic outlook forced consumers to hold off on new device purchases.
  • Some niche categories like foldables may continue to perform well despite overall weakness.
  • Incumbent postpaid players may increase promotional activity during H2 to take on cable MVNOs.

Denver, Boston, Toronto, London, New Delhi, Hong Kong, Beijing, Taipei, Seoul – May 8, 2023

Smartphone shipments in the US declined 17% YoY in Q1 2023 as OEMs corrected high channel inventory and as consumer demand declined due to macroeconomic pressures. The market witnessed a dip in shipments across all major OEMs after registering a strong first quarter last year. However, Apple managed to increase its market share despite a YoY drop in its shipments.

Counterpoint-Research-US-Smartphone-Shipments-Q1-2023Counterpoint US OEM Share Q1 2023

Commenting on the situation, Research Analyst Matthew Orf said, “Inflation started impacting the US smartphone market in H2 2022, especially the low end where consumers have less disposable income and are more sensitive to changes in prices. Persistent inflation and an uncertain economic outlook are causing consumers to hold off on new device purchases, resulting in lower upgrade rates and fewer device sales, especially in the prepaid segment.”

The impact of inflation and other macroeconomic pressures on the market has been uneven. Senior Analyst Maurice Klaehne noted, “While prepaid brands saw significant YoY declines in shipments, there were some silver linings. Samsung’s Galaxy S23 shipments were up double digits YoY while the Galaxy A14 5G performed exceptionally well in prepaid. The gap between low-end and premium devices seems to be widening, creating a vacuum in the mid-range device category.”

Associate Research Director Hanish Bhatia noted, “Some niche categories may continue to perform well despite overall weakness. For instance, there is a lot of excitement around foldables this year as more OEMs jump onto the bandwagon, which may stir demand for premium devices. Similarly, demand from government-supported Lifeline and ACP programs will largely remain unaffected. But at a broader level, Android-to-iOS migration driven by young and first-time smartphone users continues to remain a key pain point among Android OEMs.”

Commenting on the direction of the US smartphone market, Director of North America Research Jeff Fieldhack said, “During Q1 2023, there was sluggish consumer demand with very low upgrades. We expect the incumbent postpaid players to increase promotional activity during the second half of the year to combat cable MVNOs, which saw higher net additions than the Big 3 during the quarter, a first for the US market.”

Feedback or a question for the analyst that wrote this note?

 

Matthew Orf

Research Analyst

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Background 

Counterpoint Technology Market Research is a global research firm specializing in products in the technology, media and telecom (TMT) industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.

Analyst Contacts 

Matthew Orf

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Maurice Klaehne

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Hanish Bhatia

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Jeff Fieldhack

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Follow Counterpoint Research

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Further Reading: 

Global Smartphone Market Declines 14% YoY in Q1 2023; Apple Records Highest-Ever Q1 Share

China Smartphone Sales Fall 5% YoY in Q1 2023; Apple on Top with Highest Sales Share

India Smartphone Market Records Highest Ever Q1 Decline of 19%, 5G Smartphones Contribution at 43%

 

US Cable Players Capture Highest Quarterly Postpaid Phone Net Adds Ever

Comcast, Charter and Altice managed yet another strong quarter of wireless subscriber growth in Q3 2022, cumulatively adding 734,000 net mobile customers, the highest number of mobile customer net additions in a quarter yet. Spectrum Mobile (Charter) led the pack with 396,000 net additions, while Xfinity Mobile (Comcast) added 333,000 mobile customers. Both were record highs. Meanwhile, Optimum Mobile (Altice) managed 5,000 mobile customer additions, down from the previous quarter’s 33,000 additions.

Postpaid Net Adds & Losses*From Q3 earnings

Cumulatively, the cable players added more mobile customers than Verizon and AT&T combined, trailing only T-Mobile for the quarter. Strong service pricing and attractive bundling at the cable players continue to make inroads with customers, especially those looking to tighten their belts due to rising inflation and a gloomy economic outlook. This should benefit the cable players in their search for more customers in the year ahead.

Total and Mobile Subs*From Q3 earnings

Subscriber growth has been strong at the cable players, but penetration is still relatively low, with mobile subscriptions only penetrating about 14% of Charter and Comcast’s respective customer relationships. This means that there is plenty of runway for subscriber growth to continue, which should be expected. Mobile is an increasingly pivotal part of Charter, Comcast and Altice’s offerings as legacy video and voice services are losing customers. While mobile will likely never surmount broadband services for the cable players, it is likely to be the second most important service for these companies in the next several years and the primary driver of revenue growth. The pairing of strong mobile service pricing along with bundling opportunities like Charter’s new Spectrum One package should help to improve total revenue per customer while also making it even more difficult for broadband customers to churn away to competitors. Despite the strong growth, the cable players remain relatively small smartphone sales channels compared to the major carriers due to minimal sales through upgrades and high levels of BYOD (bring your own device) according to Counterpoint’s US Monthly Sell-Through Tracker.

*From Q3 earnings

Beginning in October, Charter doubled down on customer acquisition, announcing new mobile line pricing and a new bundle, Spectrum One. Earlier, a single mobile line of unlimited data at $45/month and two or more lines at $29.99/line/month were available. Now, mobile lines with unlimited data are available at $29.99/month starting with the first line. The new bundle that Spectrum is offering puts together home internet and a single mobile line for just $49.99/month, a very strong offering for a package that if purchased separately would be nearly $85/month. This aggressive pricing should accelerate mobile customer acquisition in Q4 2022 and into 2023.

Spectrum One*From Spectrum’s website

Along with the strong growth in mobile subscribers has come impressive growth in mobile revenues. Spectrum’s mobile revenues were up 40.2% YoY while Xfinity’s were up 30.8% YoY. Due to the extensive Wi-Fi networks of both companies, they are able to offload most of their traffic onto Wi-Fi, keeping payments for using Verizon’s host network at a minimum.

Cable Mobile Revenues*From Q3 earnings

Operating margins should improve for Xfinity and Spectrum as well in the coming years. Comcast announced last month that it was partnering with Samsung to build out small cells in key metropolitan areas to offload traffic from Verizon’s host network onto the CBRS spectrum it purchased at auction. Spectrum is yet to make an announcement, but its strategy will likely be the same – to keep costs paid out to Verizon at a minimum. While this will require upfront capex, it will pay off over the long term.

Heading into Q4 2022 and 2023, the cable players are well positioned to continue skimming subscribers off the postpaid carriers. They offer a strong value proposition by bundling mobile and broadband services. Margins should continue to improve as Comcast and Charter look towards building out small cells. As economic conditions turn sour in 2023, cable players should benefit, offering strong pricing for consumers looking to trim down their budgets. Expect the cable players to continue their strong streak of growth well into 2023.

 

Cable Players Capture Nearly One-third of US Postpaid Phone Net Additions in Q2 2022

The US cable players are continuing to make their presence known across the wireless landscape, even if their total subscribers are dwarfed by those of Verizon, T-Mobile and AT&T. Over the course of the past few years, the cable players have captured an unignorable number of postpaid phone net additions throughout the industry, snatching subscribers from the major carriers and limiting their growth. In Q2 2022, Xfinity, Spectrum and Optimum Mobile together captured 694,000 postpaid phone net additions. While this lagged AT&T’s 813,000 and T-Mobile’s 723,000, their subscriber growth far outpaced Verizon’s. Together, the cable companies stand as a significant competitor to the wireless incumbents and one that is having a significant impact on the shape of the industry.

Postpaid Net Adds and Losses

*From Q2 2022 earnings releases

Cable players offer strong value

Over the course of the past two years or so, the dynamics of the US smartphone industry have changed, with the carriers bringing back huge device subsidies that allow many customers to get new flagship devices for free. The cable players played a role in this dynamic, challenging the postpaid carriers to offer better value to their subscribers in fear that the cable players could win them over with their low service plan prices. Based on pricing for two lines of entry-level unlimited plans, the cable companies offer wireless service for half the amount per line that Verizon and AT&T charge. But there are drawbacks. For one, mobile services from the cable companies are only available to existing customers. Additionally, Xfinity and Spectrum both throttle data speeds on their unlimited plans after customers use 20 GB of data, below the threshold of the carriers. The carriers also offer Wi-Fi hotspot data with their unlimited plans, an extra perk the cable players do not offer.

Thanks to their low operating costs due to the leasing of spectrum from the carriers and the dynamic use of existing Wi-Fi networks, the cable companies have been able to offer much lower prices for wireless plans than are on offer at the carriers. This value proposition has been recognized by consumers who are looking to save money amid macroeconomic uncertainty and high inflation.

 Plan Pricing

Competition to stay hot in H2 2022 as Boost Infinite and Cox Mobile launch

The competition between the postpaid carriers and cable companies has helped to keep service and device prices low for consumers even as inflation reached the highest level in decades. The battle over value is likely to stay hot through 2023, as Boost plans to launch Boost Infinite, its long-awaited postpaid service, in Q4, and as Cox Communications launches its own wireless services in several states.

With about 6.8 million customers, Cox Communications may not have the extensive subscriber base that Comcast or Charter have, but its entry into the market shows the impact that Comcast, Charter and Altice have had, pioneering a new model that other cable companies are following. Like its forebearers, Cox Mobile will operate as an MVNO while offloading traffic onto its extensive Wi-Fi network, when possible, to keep costs down. Progress will be slow at first. Right now, Cox Mobile is available in only three locations – Hampton Roads (VA), Omaha (NE) and Las Vegas (NV). Cox offers services in 18 states across the country and the strong value cable companies can offer customers is sure to capture mobile customers. If customer adoption follows in Comcast, Charter and Altice’s footsteps, wireless service penetration of existing Cox customers could be about 10% in three years.

For more info, find the full report here.

 

 

AT&T Reports Strong Q2 Numbers as Investors Fret Over Free Cash Flow Woes

AT&T announced its earnings for Q2 2022 on July 21, delivering strong results for its core mobility business. Despite macroeconomic headwinds, AT&T was able to deliver strong net additions for both its postpaid and prepaid businesses, at 813,000 and 196,000 respectively. Service revenues were up 2% QoQ and about 5% YoY on the back of strong subscriber growth. Equipment revenues were down 8% QoQ, mainly due to spillover demand for the Apple iPhone 13 in Q1 2022 following a supply-demand imbalance in Q4 2021. But equipment revenues were up 7% YoY, suggesting no slowdown in consumer spending on devices despite the highest levels of inflation in 40 years.

ATT Metrics

AT&T was able to manage strong net additions and minimal churn despite inflation-related price increases. During Q2, AT&T increased prices on single-line plans by $6 per month and on family plans by $12 per month, but this didn’t increase churn or drive customers to Verizon or T-Mobile. One reason for this is AT&T’s strong promotional lineup, which the operator suggested would remain stable in the second half of this year. AT&T offered up to $800 off the Samsung Galaxy S22 series with a trade-in of any Galaxy S-series or Note-series device, regardless of age and condition, as long as the customer chose an unlimited plan. A similar offer of up to $700 off with a trade-in and unlimited plan was available on the iPhone 13 series. For more information on model-level sales by channel, check out Counterpoint’s US Channel Share Tracker.

AT&T also continued seeing strong uptake for its fiber services with 316,000 net additions, which more than offset the decline in legacy internet services. AT&T’s total consumer fiber subscriber base increased to 6.6 million. The company maintains its plans to lay more fiber after already expanding its footprint by 2 million locations so far this year.

While AT&T reported strong performances for its mobility and fiber businesses, there were signs of weakness this quarter and on the horizon.  AT&T’s wireline business was a weak spot in the company’s performance, with its revenues declining 7.5% YoY. Besides, AT&T CEO John Stankey noted that the payment cycle was lengthening as prepaid customers struggle to pay their bills on time, a trend that tends to emerge amid economic hardship. The company also warned that it saw the macro environment souring in the second half of 2022 and into 2023. But Stankey remained confident that AT&T would be relatively insulated, noting that the low end of the market was more likely to be impacted by inflation and a possible recession.

ATT Free Cash Flow

Despite the relatively strong performance that AT&T managed during Q2, share prices were down over 9% following its earnings call, primarily due to a reduction in free cash flow guidance for 2022. AT&T managed only $1.4 billion in free cash flow for Q2, resulting in the company lowering its guidance from $16 billion for the full year to $14 billion. Free cash flow so far this year only amounts to $4.2 billion, meaning AT&T will need to manage an average of $5 billion per quarter for the rest of the year to meet its guidance. Free cash flow is being held back by high capital expenditures and vendor financing payments, which were up 32% and 38% respectively compared with the same period last year. High levels of capex are expected at least through the end of this year as AT&T ramps up its 5G C-band deployment and continues to lay fiber to more locations.

Follow these links for insights on T-Mobile and Verizon.

Nokia HMD set to gain from Walmart summer reset

In late Spring or early Summer each year, Walmart refreshes its lineup of smartphones. This year, the refresh came in June, and along with it, OEM competition at the retailer should intensify. The biggest winners of the refresh appear to be Nokia HMD and Samsung.

Walmart’s sweet spot is the sub-$100 segment and its consumers are very sensitive to price. Nokia HMD launched two new devices through Straight Talk and Tracfone, two of the most popular prepaid brands available at Walmart, the C100 and C200. The devices retail for $39.99 and $69.99 respectively, placing them squarely in Walmart’s sweet spot. While the specifications and design of these devices are unlikely to wow anyone, they pack the necessary power and battery life to meet the needs of users in this market, and more importantly, they do it at a very low price. Nokia HMD also gained shelf space at Walmart with its Nokia 2760, a popular feature phone due to its $29.99 price tag. One sales representative interviewed at a Walmart in Washington, D.C. reported that the device was the best-selling model at his location.

Nokia HMD C100 and C200

 

Samsung also gained from Walmart’s recent refresh, as prepaid brands changed-up their portfolios of Galaxy A-series devices with the latest Galaxy A03s, Galaxy A13 LTE, and Galaxy A13 5G. The Galaxy A02s and Galaxy A12, which were major hits with prepaid brands in 2021, and up until the refresh in 2022, are largely absent from shelves now, though Walmart stores across the country will be selling through any inventory they have on hand at discounted prices.

Galaxy A03s and A13 5G

TCL also had a new device on shelves at Walmart following the refresh, the TCL 30 Z, which is offered through Cricket Wireless, AT&T Prepaid, Straight Talk, and Tracfone for $79.99. This adds another TCL device to Walmart’s shelves, which should help the brand continue to drive strong sales in the channel alongside its popular A3 and A3x devices, which will now have to compete with the Nokia C100 and C200.

Each of these brands could face trouble in the coming months, however, as inflation related to the conflict in Ukraine eats away at consumers wallets, especially in the low-end of the market where consumers are the most price sensitive. When surveying sales representatives at Walmart, reports of inventory piling up was mentioned, as consumers decide to hold-off on new smartphone purchases if they’re able to. As prepaid demand cools, each of the brands mentioned above will be impacted.

 

For the full report, click here.

Apple’s Pay Later Option May Impact US Consumption Patterns

In the latest Worldwide Developers Conference (WWDC), some key updates were announced for Apple Wallet. Besides the Tap to Pay feature, which allows users to skip the use of a POS terminal, Apple has introduced the Pay Later option, under which the cost of a purchase can be split across four payments over six weeks for US users. Given the US’ big iOS user base, the Pay Later option is expected to impact consumption patterns and payment behaviour there.

Buy-now-pay-later (BNPL) has been a rapidly growing payment method in recent years. Even as digital/mobile wallets are increasingly becoming popular, the fintech sector is developing further, with BNPL catching on with consumers, particularly in the US and Europe. BNPL is a short-term financing service that allows consumers to trade first and pay the total amount in instalments within a specified period after the product purchase and delivery. It helps in expanding the consumer’s purchasing power. It should be noted here that BNPL is not a replacement or alternative for credit cards or debit cards. It relies on the user’s original bank account (credit card or debit card) to offer a time gap between consumption and payment.

How Apple’s Pay Later works?

When the consumers choose Apple Pay to make payments at Apple stores or merchants adopting the Apple Pay API, the payment can be split into four equal instalments spread across six weeks, without incurring any interest or fees. “Built into Apple Wallet and designed with users’ financial health in mind, Apple Pay Later makes it easy to view, track and repay Apple Pay Later payments within Wallet,” the company said in a press release on Monday.

Apple Pay Later is operated on its own database set mainly. It is the latest technologies being used in financial services that differentiate BNPL from the traditional credit card system. These technologies enable a new way of assessing personal credits and managing risk levels. BNPL needs to update the database to adjust the risk control model quickly to be much faster than the credit card repayment cycle, generally no more than three months. Each cycle (from borrowing to repayment) is considered to have run out of data once. The BNPL companies need to continuously run the data to improve the risk control system. With the tons of data on transactions and purchasing behaviour via Apple Wallet, Apple possesses a healthy and trained risk management model to support its operation on Pay Later.

Pay Later Advantages and Risks

Just like Apple Cash and Apple Card, Apple Pay Later will launch in the US initially. After all, Apple Wallet enjoys the biggest base in the US. Furthermore, the US has some of the best banking and credit systems globally.

Klarna, Afterpay (owned by Square) and Affirm are the world’s largest BNPL companies and they all have operations in the US. Moreover, the US is among the top countries in terms of BNPL consumers.

It is a good move to launch Tap to Pay together with Pay Later because Pay Later has a strong link with merchants. The typical business model of BNPL companies has most of the operating income coming from merchants. With Apple Pay’s new functions, merchants can benefit from Tap to Pay with less system integration investment and extra transactions from the Pay Later users. The Tap to Pay and Pay Later combination is the unique selling point for Pay Later over other BNPL providers.

At the same time, Apple Pay Later may experience the shared risk of other BNPL companies –  uncertainty cropping from macroeconomic changes. The BNPL companies have to pay more for funding when the central bank or federal government raises benchmark interest rates. Furthermore, if the debt carries floating interest rates, it gets more expensive when the Federal Reserve raises its benchmark rate. Some companies can pass higher funding costs to merchants through higher fees, or to their borrowers. However, raising the fee for merchants may affect the business relationship. Even if some companies choose fixed-rate debt funding, the attendant risks will come along. But Apple may have less to fear as it has a solid cash flow.

Also, Apple can only encourage its current installed base because the business model leverages Apple Wallet. This can make it easier for the current Apple users to buy more or upgrade Apple products at an early stage.

Apple’s Pay Later will probably be released after the new generation of iPhone and iOS 16 upgrades. Its popularity is expected to grow within years because it is more like an ecological development.

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US Smartphone Sales Remain Flat YoY in Q4 2021 Due to Shortages of Premium Flagships

Los Angeles, Buenos Aires, Toronto, London, New Delhi, Montreal, Denver, Hong Kong, Beijing, Seoul – January 28, 2022

US smartphone sales remained flat YoY in Q4 2021 as premium flagship devices were in short supply during the holiday season, according to Counterpoint Research’s latest data from its US Monthly Smartphone Channel Share Tracker. Strong holiday promotions in carrier channels, backorders due to supply constraints, delayed launches and in-store restrictions due to COVID-19 remained key highlights of the quarter.

Counterpoint Research US Smartphone Market Share Q4 2021Commenting on the market performance, Research Director Jeff Fieldhack said, “The US smartphone market was very competitive in Q4 2021. Carriers were aggressive with promotions to retain their smartphone bases. This contributed to continued record or near-record low smartphone churn among the major carriers. Specific to hardware sales, T-Mobile was the largest smartphone channel in the US and grew modestly YoY. Verizon was the second largest smartphone channel and was flat YoY. AT&T was the third largest channel and its smartphone volumes fell just over 4% YoY. The high promotion levels are likely to continue in 2022 and should keep demand for devices elevated, while headwinds are more likely to come from the supply side.”

Commenting on the shortages, Senior Analyst Hanish Bhatia said, “Carriers remained under pressure to secure smartphone supply, but regional carriers struggled the most, especially in the case of flagship devices. Overall, inventory remained at record low levels in Q4 2021. Android inventory improved on QoQ basis except for certain flagship devices. Apple inventory remained the leanest but managed to fulfill higher demand. The shortages also helped established OEMs, which have stronger relationships with suppliers, while smaller OEMs faced tough times.”

Carrier whitelabeled devices also had an impressive quarter, accounting for 8% of the total smartphones in the sub-$250 price band. AT&T remained the single largest white-label device brand, while T-Mobile’s REVVL-branded devices faced shortages during the fourth quarter. Visible and Boost Mobile also launched their first ever white-label devices — Visible Midnight and Boost Celero 5G. (See: Celero 5G emerges as best-selling device at Boost in December 2021).

Commenting on the prepaid market expectations, Research Analyst Matthew Orf said, “OEMs targeting the low-end and mid-range Android market have an opportunity to register substantial growth in 2022. 3G sunsets will force carriers to move subscribers onto new LTE and 5G devices. Dish and Verizon will also look to migrate newly acquired prepaid users to carrier partners or their own networks. Verizon’s acquisition of Tracfone and Dish’s acquisition of Gen Mobile, Republic Wireless and Ting will increase competition in national retail channels. This could help create new demand in the sub-$250 price band.”

Key OEM Highlights:

  • Apple sales grew 17% QoQ with demand for the iPhone 13 series outpacing supply, especially for the Pro series models. The iPhone 13 Pro and Pro Max were on backorder much of December, with wait times lasting up to six weeks.
  • Samsung sales grew 11% YoY. Several factors held back the brand’s sales, including shortages of the Galaxy S21 series devices and the delayed launch of the Galaxy S21 Fan Edition. But a higher mix of the A series and strong performance of foldables helped Samsung register YoY growth. The Galaxy A12 became the best-selling Android device in 2021.
  • Motorola sold the largest number of smartphones in the US market in its history, beating its Q4 2019 performance. The brand benefitted from the demise of LG and its strong lineup of affordable devices. The Moto G Pure, Motorola’s first MediaTek-powered device in the US, was among the top three best-selling devices in the quarter.
  • OnePlus sales were up 524% YoY as its Nord series devices continued to see success at T-Mobile and Metro by T-Mobile and received an added boost from Metro by T-Mobile and T-Mobile’s entry into over 2,000 Walmart locations.
  • Google grew its sales 56% YoY with the launch of its redesigned Pixel 6 and Pixel 6 Pro, featuring Google’s own silicon.
  • Nokia HMD registered YoY gains with its first carrier-ranged device for T-Mobile and Metro by T-Mobile channels.
  • Alcatel-TCL continued to have a strong grip on national retail channels. New device launches in T-Mobile, Tracfone and the first carrier-ranged device in Boost Mobile further strengthened its position among top Android OEMs.

Component shortages, ongoing inflation and the spread of the Omicron variant of COVID-19 along the supply chain will continue to pose challenges to the US smartphone market in early 2022. Inflation and component shortages will impact the low end of the market more significantly as OEMs prioritize the production of high-end devices.

Background

Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.

Analyst Contacts:

Matthew Orf

 

Maurice Klaehne
 

Jeff Fieldhack
 

Hanish Bhatia

Follow Counterpoint Research

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Shortages, Promotions Shaped US Prepaid Market in Q3 2021

The third quarter of 2021 is in the books and the major US carriers have announced their end-of-quarter results. While the postpaid segment saw healthy growth across the board, the prepaid segment was a mixed bag, with shortages impacting low-end LTE devices and leaving the carriers to fight for supply. Additionally, 5G network competition between AT&T and T-Mobile, in particular, is driving strong promotions on low-price 5G devices at Cricket and Metro by T-Mobile. Meanwhile, Verizon Prepaid and Boost Mobile continued to struggle in Q3 after they had difficult starts to 2021. TracFone brands also struggled during the quarter with the shortage of low-end LTE devices. These trends are likely to continue in Q4 and intensify due to a number of key factors.

Counterpoint Research

Cricket and Metro battle for net additions
AT&T dominated prepaid net additions this quarter with 249,000 net additions between its AT&T Prepaid and Cricket brands, with Cricket leading the charge. T-Mobile had decent growth with 66,000 net additions through Metro by T-Mobile. Both Cricket and Metro by T-Mobile featured strong promotions on some of the latest and greatest low-end devices for switchers throughout the quarter. These promotions were significantly better than those offered by Dish through Boost Mobile. The devices on offer were newer than many in Tracfone’s older, though cheaper, portfolio.
T-Mobile and AT&T also benefitted from their device portfolios. Metro in particular focused on driving 5G devices into the hands of its subscribers, taking advantage of T-Mobile’s significant network lead. For Metro, almost 40% of the devices sold in Q3 were 5G, meaning a sizeable portion of its supply was unaffected by the low-end LTE chip shortages experienced in the quarter. Additionally, Metro was able to rely on its diverse portfolio to avoid some impact from shortages. Besides selling popular devices from Samsung and Motorola, Metro also offers a range of devices from OnePlus and its own REVVL brand, which helped sustain sales when Motorola and Samsung were experiencing shortages and vice versa. While each brand was impacted by shortages at different points in the quarter, Metro could rely on other brands for supply. More can be read about T-Mobile’s momentum here.

Counterpoint Research

AT&T’s prepaid brands were in a similar position as Metro by T-Mobile. Besides offering a wide array of the latest Samsung and Motorola devices, Cricket also offers devices from Alcatel and Nokia HMD in addition to Cricket white-label devices. While these brands were impacted by shortages at some points in Q3, Cricket could rely on supplies from at least a couple of these brands at any given point. You can read more about AT&T’s recent performance here.

Counterpoint Research
Another major factor driving prepaid subscriber growth for AT&T and T-Mobile is their growing 5G networks. 5G is already a big draw at Metro by T-Mobile where strong promotions on devices like the Samsung Galaxy A32 5G, OnePlus Nord N200 5G and T-Mobile REVVL V+ 5G have driven 5G phones into the hands of consumers and traffic onto T-Mobile’s nationwide 5G network. Cricket also featured decent promotions for 5G devices but not to the same extent as Metro. Cricket is likely to push 5G in Q4 following announcements that 5G plans will be available to its subscribers at no additional charge and leading up to the launch of AT&T’s 5G mid-band network. Access to a dependable nationwide 5G network is a sizeable advantage for Cricket and Metro. Metro will likely do even better during Q4 as T-Mobile expands into over 2,300 Walmart stores where prepaid dominates handset sales.

Boost Mobile, Verizon Prepaid and TracFone lose subscribers in Q3, face headwinds in Q4 and early 2022
Dish struggled to retain subscribers yet again in Q3 and faces major challenges in Q4 and early 2022. An older portfolio of devices and relatively poor promotions put Boost at a competitive disadvantage compared to Metro and Cricket. Verizon Prepaid brand also struggled in Q3, losing three thousand subscribers. Marketing for Verizon’s Visible brand has improved but overall has little momentum in terms of adoption. Meanwhile, TracFone brands lost 185,000 subscribers during Q3, which was partly due to supply issues. During a conference call, América Móvil CEO Daniel Hajj said the following regarding TracFone: “…we are seeing a little bit of [a] problem of handsets. So, we don’t have enough handsets to sell…really the problem in the handset business is more on the low-end or mid-end segment of prices on those handsets than in the high-end prices.” Supply shortages coupled with greater competition from Metro by T-Mobile at Walmart, a key sales channel for TracFone, will likely make the fourth quarter even tougher for TracFone.
Boost and TracFone are likely to face subscriber and revenue losses in Q4, too. While Boost caught a break when T-Mobile announced it would be pushing back its CDMA network shutoff until the end of March 2022, subscribers still need to be migrated onto its LTE network and given an LTE device, which will be in short supply. With service interruptions and supply issues, many consumers may look for other operators. TracFone will be in a similar position, especially once Verizon’s acquisition of the MVNO goes through, which is expected at the tail end of Q4. Millions of subscribers will need to be migrated onto Verizon’s network, which may lead to high churn and demand for low-end LTE devices. Shortages again could hold back growth. However, things may turn around soon for both. If Boost’s 5G network launch in early 2022 attracts subscribers and improves its economics, then its strategy of shedding high data usage and high-cost subscribers can be replaced with the one focused on attracting high data usage and high-revenue subscribers. Similarly, if the TracFone acquisition by Verizon goes through without a hitch, customers may be lured in by Verizon’s impressive network quality. More about Verizon’s recent performance can be read here.

US Smartphone Trends 2019-2021 Report: The Stats on Specs

US Smartphone Trends 2019-2021 Report: The Stats on Specs

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Published date: April 2021

In this note, we look at the evolution of smartphone specs from 2019 to 2020, providing data and commentary on key trends and what to expect for 2021.

  • Overall shipments by key brands
  • Display sizes
  • Main camera MP
  • Selfie MP
  • NAND flash and RAM capacity
  • Battery sizes
  • Chipset vendors
  •  

KEY HIGHLIGHTS

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