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Insights Tag： Prepaid

Feature phones still have a place in the US market

Feature phones see an average share of just 2% in the US handset market but their shipments still remain consistent. These feature phones still have their place in the handset market due to their affordability, simplicity and ruggedness that appeal to various consumer bases. Although smartphones are becoming more affordable, they are yet to match the simplicity and durability offered by feature phones.

Basic phones in a complex world

Smartphones became popular quickly and evolved even faster to embrace new ways to use them to interact with the world, like QR codes, touchless payment and GPS navigation. Although it seems like everyone in the US owns a smartphone, there is a consumer base that is not interested in the specs, or cannot get the hang of the smartphone layout. Such consumers still choose the simple layout of the feature phone which allows them to make phone calls and send SMS messages but lacks all the bells and whistles of a smartphone, like merging data from the cloud and interaction with apps. The longer smartphones are in the world and people continue to live in a digital world, the adoption of smartphones will keep on rising but it will still be a slow adoption and likely never reach 100%.

Feature phones still have their place in market

The consumer base for feature phones has typically been the following:

  • Workers in fields that require a tough phone in case of damage (i.e. farming, mining, construction, etc.)
  • Criminal use cases to prevent tracking – burner phones.

There are newer use cases for feature phones also. Some consumers may use the feature phone as a secondary device for either traveling (less concerned if the device gets broken or lost) or for digital disassociation/break from the apps, notifications and global connectivity that come with a smartphone. These are much smaller drivers for feature phones than those mentioned above but important to note as large smartphone OEMs like Apple are taking steps to address the concept of digital disassociation through software updates (like the new “focus” feature that allows the users to disconnect from apps/notifications for productivity or just for a break from being connected). These sales would be seen in the prepaid channels and well-known national retailers (like Walmart and Best Buy) along with a temporary SIM card.

Conclusion

Feature phones remain consistent in the US as their simple design, affordability and ruggedness still pander to specific demographics. Although there will not be a significant spike for feature phones in the market, there are consistent needs that create the steady demand for feature phones in a smartphone-dominated market. Prepaid channels will continue to sell these devices to accommodate an affordable and durable option for people who only need a simple device.

See the full report here for more information

 

Will 10 Pro Provide Premium Push to OnePlus’ US Dream?

OnePlus’ 10 Pro model originally launched in China in January 2022, but people stateside had to wait for the device until its global launch on March 31. This time around, OnePlus went with a single flagship device and some hardware choices that cut the full retail price by $100 compared to its predecessor, the OnePlus 9 Pro. The device becomes available on April 14 at T-Mobile and retailers such as OnePlus.com, Amazon and Best Buy.

A short review

 The good

 There are already plenty of reviews of this device out there since it launched in the beginning of 2022, so this will touch upon a few things only. I have now had the device for over a week and can tell OnePlus has definitely made improvements on the camera via its partnership with Hasselblad. Pictures are less saturated and more natural. The same camera sensors from the 9 Pro are used in the 10 Pro so you can really tell the difference that software can make. OnePlus has not confirmed if these software updates will be available for the 9 Pro. In addition to the camera, the 5,000 mAh battery and 65W charger are terrific. Being able to charge your device from 0% to 100% in roughly 32 minutes is amazing. The 80W version of the charger even shaves off a few more minutes, but the US electrical system does not support that kind of power, unfortunately. The 65W charger can also double up as a laptop charger. The device feels fast and snappy thanks to the latest Snapdragon 8 Gen 1 processor and 6.7” QHD+ (3216 x 1440 pixels) resolution on a 120Hz Fluid AMOLED with an LTPO panel.

Counterpoint Research Will OnePlus 10 Pro Provide Premium Push to OnePlus’ US Dream?

The bad

 Spec-wise, the phone truly can compete head-to-head with flagship devices from Apple, Samsung, Google and others. However, there are two minor downgrades that the device has compared to the 9 Pro. The latest version does not include mmWave and only supports sub-6 5G bands. It is certified on both T-Mobile and Verizon’s 5G networks but can only run on AT&T’s 4G network as it will not pursue certifications from this carrier. Secondly, OnePlus is only offering one memory and RAM configuration model in the US, the 128GB and 8GB RAM variant, which will disgruntle some users wanting the higher variants that are available in other countries.

On the software front, OnePlus is promising three major OS updates and four years of security updates, which falls slightly short compared to Samsung. While OnePlus and OPPO are developing their own OSs, they do share a unified OS code base, which has led to some design choice issues related to the latest OxygenOS 12 software. Icons and fonts feel more heavy and rigid instead of the minimalist design of OnePlus. The widget shelf that OnePlus implemented often gets opened accidentally when you try and swipe down from the top of the screen.

US market and OnePlus: Still just a prepaid contender?

Ever since OnePlus launched with US carriers, it has offered a premium smartphone for consumers. This strategy has been largely unsuccessful due to the stranglehold Apple and Samsung have in the premium market. OnePlus has had much better success in the sub-$300 space with its Nord series, especially the N200 5G in Metro by T-Mobile. In fact, due to LTE chip shortages in 2021 combined with T-Mobile’s push to upgrade its lower-end base to 5G, OnePlus grew its market share to almost 10% in Q2 and Q3 2021 for both prepaid and postpaid sales combined. Overall, OnePlus sold 2.5 million Nord series devices in 2021, the vast majority of them through T-Mobile channels.

OnePlus Share in T-Mobile

With the OnePlus 10 Pro, the company is again making a bid for premium market share. The $899 price is competitive, putting it at the same level as the Pixel 6 Pro and $100 cheaper than the S22 Plus. No other OEM includes a powerful 65W charger. T-Mobile is currently offering the OnePlus 10 Pro for new and existing customers for free with an eligible trade-in on Magenta MAX, or 50% off with an eligible trade-in on any postpaid plan with 24-month bill credits.

From a discussion with OnePlus during a pre-launch briefing, it seems the company is ramping up its marketing efforts for the US market in 2022. In February, The Boston Marathon announced that OnePlus would be the official smartphone and key sponsor for the 2022 Boston Marathon. For the past several years, OPPO was the sponsor. OnePlus has promised more such announcements to come in 2022, which is all that can be said for now. These initiatives will certainly help OnePlus gain more visibility in the US, where it remains relatively unknown. A larger mind share will help the brand in postpaid sales where brand perception and trust are larger purchase decision factors compared to the prepaid market which is more price focused.

It was a good move on OnePlus’ part to go with an even more streamlined premium option for its 2022 flagship strategy. There is no “base” version like in the OnePlus 9 or a “T” version like it had with the OnePlus 8T. This makes it less confusing for consumers who don’t know the brand well yet. T-Mobile continues to be a strong partner for OnePlus given the (un)carrier’s history of being more less dominated by Apple and presenting consumers with more Android smartphone SKUs. However, the device will unlikely make a big impact on the premium space, especially since Samsung launched its S21 FE and S22 devices earlier this year. OnePlus may also lose out on some of its core customers due to the limited SKUs and OxygenOS 12. But for new potential customers, the strategy makes sense for the long run.

For the full version of the report, subscribe to the US Channel Share Tracker by contacting info@counterpointresearch.com

Related Posts

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  3. Top 5 Smartphone Models Share For 8 Countries

What Verizon’s Tracfone Acquisition Means for US Smartphone Market

On November 23, the FCC finally approved Verizon’s acquisition of Tracfone from América Móvil, closing a deal that was first announced in September 2020. Through the $6.9-billion deal, Verizon will gain over 20 million prepaid subscribers, vaulting Verizon ahead of competitors AT&T and T-Mobile in terms of total prepaid subscribers. It also increases Verizon’s existing lead in total subscriber count. What remains to be seen is how Verizon’s acquisition will transform the US smartphone market and mobile landscape.

Verizon Tracfone AcquisitionThrough this acquisition, Verizon also gains a massive retail footprint of over 90,000 locations. Tracfone brands are popular at national retailers like Walmart, Target and Best Buy and also sell in stores like Kroger and Dollar General. They primarily appeal to low-income customers, with the sub-$100 segment being the sweet spot.
The Verizon acquisition is likely to have an immediate impact on that market. First and foremost, it will exacerbate the ongoing low-end shortages. The chip shortage has been significantly holding back sales of low-end devices as suppliers struggle to meet demand. While roughly 13 million of Tracfone’s customers are already on Verizon’s network and have Verizon compatible devices, the rest are currently on AT&T and T-Mobile’s networks and will need to be migrated. This will require millions of low-end devices that are compatible with Verizon’s network, which will be difficult to find considering the shortages.
While adding to the low-end supply woes caused by the chip shortage, Verizon’s expansion in the prepaid market is likely to help 5G penetration. Verizon has been a major proponent of 5G mmWave technology. It will put pressure on OEMs to bring mmWave-capable devices to the low-end segment, which have remained restricted to the mid and premium segments due to the cost of components. Additionally, Verizon is likely to feature promotions that encourage subscribers to switch to 5G capable devices and more expensive plans. This should drive 5G penetration deeper into the low end of the market.

To learn more about how Verizon’s Tracfone acquisition will impact the US market, see our full report on the subject here. The report examines the impact of the acquisition on OEM competition within Tracfone, 5G penetration, service prices, and more.

Q2 2021: AT&T Has a Strong Wireless Performance

From the perspective of hardware sales, AT&T had a strong Q2 2021. Smartphone sales were up 31% YoY. The carrier sold over five million smartphones within postpaid and about 1.6 million smartphones within its prepaid brands. The third largest carrier in the US saw 789,000 postpaid net additions and 174,000 prepaid phone net additions. These were solid wireless results. The selloff of some international assets and media units will continue to help AT&T focus on its 5G rollout and new service offerings. For complete AT&T and Q2 2021 results, click here.

Interesting takeaways from AT&T’s quarterly results:

  • AT&T’s ‘upgrade the base’ campaign remains on track and successful. The carrier seems committed to this expensive but effective way of reducing churn and pushing subscribers onto unlimited 5G services.
  • AT&T’s service revenues grew 5%. Impressive growth, which will likely keep AT&T aggressive on upgrading the base.
  • Equipment revenues were up 32% YoY. Much of the growth was due to a poor Q2 2020 due to COVID-19 lockdowns. However, even after taking COVID-19 into account, smartphone sales were strong, and AT&T punched above its weight selling iPhones and flagships during the quarter. Again, much of this can be attributed to the same promotions being offered to its base – the best deals are not reserved for ‘switchers’ coming from other carriers.
  • AT&T is divesting its media units. DirecTV was a disaster. TimeWarner faces similar problems plus it was hit during COVID-19 as cinemas and sports activities were shut down for many months. It appears AT&T is worried about debt and will focus more on wireless, 5G and new 5G services, reducing the leverage of media. Verizon is ahead of AT&T here, already divesting most of its media investment errors.
  • AT&T continues to invest to grow digital sales. Counterpoint’s Online, Offline Channel Share Tracker estimates online sales increased to over 33% during COVID-19 but have reverted to just above pre-COVID levels. Prepaid is slower to transition to online sales. AT&T will be adding more Cricket authorized retailers, which will help its prepaid business.
  • To further help digital sales, AT&T is adding same-day delivery. AT&T aims for “more sales via less stores”. This is an especially good goal for postpaid, which is more accustomed to digital purchases.
  • AT&T is focusing on improving the customer experience, shortening sales distribution, and quickening customer service responses. T-Mobile has done a nice job improving in this area and AT&T is pushing in similar areas. This will help keep churn low.
  • Within prepaid, LG volumes will be quickly selling through for good. Moto and Samsung have been the first OEMs to gain on LG’s void. Top-sellers within prepaid have been the Moto G Power 2021, Moto G Play, Samsung Galaxy A01 and Samsung Galaxy A12.
  • Surprisingly, AT&T sounds less optimistic about fixed wireless access (FWA) than Verizon and T-Mobile. The carrier is focusing on AT&T Fiber and its faster speeds. It continues to add fixed broadband subscribers — 246,000 during the quarter — and penetration has increased to 36%. AT&T expects to add over one million fiber broadband subscribers in 2021.
  • AT&T added 4.2 million connected device subscribers during the quarter. It had a very solid wearables quarter. Connected cars continue to be strong, too.

Verizon’s TracFone Acquisition: What it Could Mean for the Wireless Industry

Verizon Communications announced on Monday that it would buy América Móvil’s wireless service TracFone in a $6.25 billion cash and stock deal. Verizon says it expects this deal to be completed in the second half of 2021.

The deal will be split into $3.125 billion cash and $3.125 billion Verizon common stock. In addition, following the closing of the deal, Verizon shall pay to América Móvil:

  • Up to $500 million as an earn-out if TracFone continues to achieve certain performance measures during the 24 months following the closing, calculated and paid in four consecutive six-month periods
  • 150 million deferred commercial consideration payable within two years following the closing


TracFone Verizon Subscriber

 

What it could mean:

  • Even more consolidation: If approved, this will further consolidate the industry and catapult Verizon to the largest prepaid service operator in the US. Verizon had 4 million prepaid connections in Q2 2020 and TracFone would add 21 million subscribers.
  • Retail expansion: Verizon would gain share in national retail channels, especially in Walmart via the Straight Talk brand. TracFone has had success in retail channels such as Walmart, Target, BestBuy, and even offers a limited SKU of devices and SIM cards in stores such as Kroger’s and Dollar General. TracFone is present in over 90,000 retail locations nationwide.
  • Network availability: It is unclear if Verizon would switch the new TracFone network over to be 100% Verizon based. There are 13 million TracFone customers who use the Verizon network. This means 8 million customers would have to transition to the Verizon network and use a Verizon compatible device. TracFone has historically had agreements with four major carriers to run its network (Verizon, AT&T, T-Mobile, and Sprint). This created different device SKUs depending on the area subscribers live in and the coverage that was available.
  • OEM opportunities: Verizon is expanding into the value segment with this deal. Verizon’s stealth MVNO Visible has ranged devices from the struggling ZTE and newcomer Hot Pepper and Verizon Prepaid’s lineup includes devices from Nokia and Wiko. These OEMs could benefit from the acquisition by potentially having more of their devices featured in TracFone and its sub-brands.
  • 5G push: Lastly, this move will push Verizon’s 5G ambitions forward, especially when it begins its sub-6 GHz 5G service via dynamic spectrum sharing in 2021. However, 5G will only be truly accessible to a large swath of the US population once 5G devices get below the $200 price point. For TracFone subscribers, the ideal sweet spot would be below $100.

While the deal was just announced, a lot of regulatory hurdles still need to be overcome before it gets approved. With the T-Mobile-Sprint merger, we have seen already how long large mergers and acquisitions can take in the telecom sector. The FCC will need to be convinced that this move will truly increase competition and improve the wireless industry as a whole. More to come here and we will continue updating on this as it develops.

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