During the past several months, Accenture has been conducting global market research on consumer usage and spending of mobile handsets and services. The goal has been to determine how consumer electronics companies might better differentiate their products and services to grow their businesses.
As part of this initiative, we analyzed thousands of online surveys from Internet-enabled consumers in eight countries: China, France, Germany, India, Japan, Malaysia, Singapore and the United States. We selected these countries to compare the preferences of consumers in emerging countries (China, India, Malaysia and Singapore) to those of their mature country counterparts (France, Germany, Japan and the United States).
The survey asked participants about 18 different technologies including mobile handsets, smartphones, computers and various other devices. It also asked about 18 different consumer technology applications such as their use of mobile handsets for texting, e-mailing, watching videos and other applications.
Based on our analysis of this research, it’s clear that the differences in usage and spending on mobile handsets among consumers around the world vary significantly by country. To illustrate these differences, we’ve compiled the top 10 highlights of our research:
One: Japanese respondents are trailing other country respondents in multiple categories.
Japanese consumers historically have been early adopters of wireless technologies for texting, e-mailing, music and games. But with the overall economy stagnating and the nation’s popu­lation already heavily equipped with consumer electronics, the country’s consumers rank low among those countries surveyed in the percentage who have bought and plan to buy mobile handsets in the next year. During the past year, only one in five (19 percent) Japanese respondents bought a mobile handset, compared with 49 percent of all respondents. An average of only 16 percent plan to buy a mobile handset next year, compared with a 36 percent global average. And just 4 percent plan to purchase a smartphone. That’s more than five times below the 21 percent global average. In Japan, it could be that their mobile handset upgrade cycle rate has slowed compared with the other countries surveyed, not necessarily that they trail in usage. This slowing of the upgrade cycle may be an eventual actuality in the other countries.
Two: Chinese respondents’ usage of mobile handsets and mobile service applications is above average.
Chinese respondents tend to take more advantage of the technology purchased than respondents from the other countries. For example, 63 percent occasionally watch videos on mobile devices, which is nearly twice the 35 percent global average. Services in which the largest percentage of Chinese respondents will invest during the next year include mobile data service for laptops (44 percent vs. 21 percent global average), mobile data services for mobile phones (41 percent vs. 22 percent), and mobile phone service (36 percent vs. 35 percent).
A big reason for this heavy use of mobile handsets in China is the country has rapidly embraced wireless technology. In many cases, the nation has skipped the process of building out the wireline telecom infrastructure and widely embraced wireless technologies instead.
Three: A higher percent of mobile handsets get returned than any of the other 17 technologies in the study.
A higher percentage of respondents indicated they return mobile handsets than any of the other 17 technologies. The most frequent reasons cited for these returns are they don’t work properly and are too expensive. In fact, return rates by India’s consumers for mobile phones amounted to 11 percent, twice the global industry average.
Our analysis reveals that mobile handsets have a comparatively high return rate because they are, arguably, more complex, less standardized, more challenging to operate and more prone to functional flaws (such as dropped calls) than the other technologies consumers were asked to rate. With increased complexity comes more consumer confusion and difficulties figuring out how to use the devices, and hence more product returns. Compounding the problem could be that survey respondents are not getting the help they need during the handset purchasing process.
Four: The most popular mobile handset applications are texting and e-mailing.
The top ranked applications used on mobile handsets (besides making phone calls) for all eight countries, ranked in order, were texting, e-mailing and taking photos. In general, these are the most popular applications because they are relatively inexpensive compared with downloading and watching videos on a mobile handset, yet enhance the user experience considerably. And texting ranked far ahead of the other applications in popularity. Mobile handsets are increasingly being used as multi-function devices, though mobile video continues to lag other applications.
Five: Among the least popular applications on mobile handsets are watching videos and browsing the Internet.
Watching videos and browsing the Internet on mobile handsets remain relatively low in usage by respondents compared with texting, e-mailing and listening to music. An overall average of only 35 percent of respondents indicated they watch videos on mobile handsets, and only 34 percent browse the Web. By contrast, 65 percent send texts and 47 percent send e-mail. Why such differences? This disparity stems from the challenges to make watching videos and browsing the Internet easier to use compared with the relative ease in texting, e-mailing and listening to music. In addition, consumers are still attracted to watching videos on other screens such as TVs and PCs, and connecting to the Internet via a PC, rather than a mobile handset. Despite these formidable challenges, the percentages of mobile handset users now watching videos and browsing the Internet is likely to increase during the next several years.
Six: U.S. respondents’ use of Web-enabled mobile devices has nearly quadrupled in the past two years, but trails Chinese and Malaysian use.
Fifty-nine percent of Chinese surveyed — more than any other country surveyed — use Web-enabled mobile devices. Singaporeans also ranked high at 46 percent, followed by Malaysians at 33 percent. U.S. respondents landed in the mid-range at 27 percent but nearly quadrupled from 7 percent usage in 2007. The explanation for the lower U.S. percentage is probably that PC penetration is so high in the United States that it continues to be the main device used to access the Internet, whereas in China and Malaysia the handset has become, in relative terms compared with the PC, more of the main device to connect to the Internet.
Seven: Users in India discontinue mobile service more often than home Internet access.
In India and Germany, mobile service is more often discontinued by users than home Internet access. Nineteen percent of India’s respondents discontinued mobile phone service compared with 13 percent who stopped home Internet access. Among German respondents, 17 percent stopped mobile service versus 14 percent who halted home Internet. But among U.S. respondents, 8 percent ended mobile phone service, the same percentage that ceased home Internet.
These findings could be explained by the competitive shopping, package and wireless carrier hopping people do when service contracts expire. Another possible reason is the inherent complicated nature of mobile service compared with home Internet service. Mobile service costs relatively more and is less predictable on a monthly basis, which would explain the higher rates.
Eight: Among Indian respondents, there will be heavy investment in mobile phone service during the next year.
Next year in India, 45 percent of respondents indicated they will purchase mobile phone service, well above the 25 percent global average. This finding underscores the massive telecom infrastructure upgrades taking place in this country. There are few countries in the world more aggressively deploying wireless services than India.
Nine: Emerging country respondents are more than two and half times as likely to buy a smartphone during the next year than respondents in mature countries.
Fifty-two percent of emerging country respondents are likely to buy a smartphone next year. By contrast, only 20 percent of mature country respondents are likely to do so. One reason is the rapid expansion of the middle class in emerging countries, which has a growing amount of disposable income. Additionally, the increased demand in emerging countries for smart connected devices such as smartphones is being driven by social networking applications, which our survey found to be especially popular in emerging countries such as Malaysia. Part of the reason for this disparity could be the higher penetration and use of smartphones already in mature countries.
Ten: Mobile devices are more widely used than computers to access Internet applications among emerging country consumers.
Emerging-country consumers use mobile devices more than they do computers to access Internet-enabled applications and services, and consumers in mature countries are also headed in that direction.
To achieve high performance in the mobile handset market, it’s crucial to focus on the emerging countries. A disproportionately high percentage of usage and spending will take place in these countries during the next several years. Another key focus area is social networking applications, which are driving the growth in mobile handset use, applications and spending. The two are propelling each other. And, finally, innovation is a big industry driver. The mobile handset market is in many ways an innovation haven. The more innovative companies are in this market, the more they invest in research and development to build more feature rich handsets to improve the customer experience, the more differentiated they are going to be. This is not a market that’s all about reducing costs. Investments are also key.
Jean-Laurent Poitou is the global managing director of Accenture’s Electronics and High-Tech group. He can be reached at firstname.lastname@example.org.