Spring 2011 Corporate Research and Strategic Analysis CONFIDENTIAL

By: Andrea Sharkey, PhDCorporate Research & Strategic Analysis

ForresterSmartphones – Special Issue

Corporate Research and Strategic Analysis CONFIDENTIAL

Overview

This report provides a brief overview of some of the research on smartphones which has been released by Forrester in the past

several months

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Corporate Research and Strategic Analysis CONFIDENTIAL

Overview

While the information in this reports focuses on the U.S. market where smartphone penetration is higher,

many of the insights Forrester puts forth are relevant to the Canadian

market as well as we too are witnessing a smartphone boom*.

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*This year’s MTM shows a 10% growth in smartphones amongst Canadians between 2009 and 2010 (14% to 24% respectively)

Spring 2011 Corporate Research and Strategic Analysis CONFIDENTIAL

The Landscape

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Mobile phones are virtually the only device that people have on them at

all times

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In the U.S. alone, Forrester is forecasting nearly 100 million

smartphone users by the end of 2011

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Both and have sold

hundreds of millions of devices globally

In fact, Google activates 400,000

Android devices each day

Corporate Research and Strategic Analysis CONFIDENTIAL

Forecast: U.S. Cell Phone Market(millions)

U.S. smartphone adoption will grow to

63% by the end of 2015

*Messaging phones are specifically designed to make sending and receiving messages easier and have a designated keyboard

Corporate Research and Strategic Analysis CONFIDENTIAL

Forecast: U.S. Cell Phone Market(millions)

Even though the number of total mobile

subscribers will grow just 10% during that same

time

*Messaging phones are specifically designed to make sending and receiving messages easier and have a designated keyboard

Spring 2011 Corporate Research and Strategic Analysis CONFIDENTIAL

Smartphone Owners

Corporate Research and Strategic Analysis CONFIDENTIAL

Traditionally, smartphone owners were…

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From households with higher

incomes

Career motivated

3 times more likely to regularly

access the Net on their phone

Tech-optimists

More than 5 years younger

than the average cell

owner

Male

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But rapid expansion in the smartphone market is being

driven by…

Lower price points

Affordable data plans

Consumer demand for functionality

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And previous assumptions about smartphone owners are changing

Forrester now sees smartphone owners in three distinct groups

Corporate Research and Strategic Analysis CONFIDENTIAL

*Quick messaging device or messaging phone

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Travellers in the U.S. are also more likely to own smartphones

of online adults own smartphones

22%

of online leisure travellers own one

35%

of online business travellers own one55%

Corporate Research and Strategic Analysis CONFIDENTIAL

Compared to other business travellers, smartphone business travellers tend to

be…

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About 4 years

youngerCollege graduates

In the early stages of

creating travel brand

relationships

Tech-optimists

Primarily motivated by entertainment and content

Higher income earners

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Google has stated that by mid-2011 more map searches will be

conducted from mobile phones than on desktop computers

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Forrester expects that by 2013 the two most important touch-points for

travellers will be:

SmartphonesTraditional Websites

Spring 2011 Corporate Research and Strategic Analysis CONFIDENTIAL

Activities

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Smartphone owners are no longer just texting and surfing the web…

Smartphone owners are no longer just texting and surfing the web…

Now they’re…

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Banking

Finding deals

Listening to music

Watching video

Buying merchandise

Paying bills

Booking travel

Creating content

Doing their taxes

Opening car doors

Checking blood sugar levels

Voting

Recording TV shows

Getting directions

Playing games

Changing the

channel

Levelling a shelf

Learning Mandarin

And more…

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As more and more functionality is built into smartphones, this will

cause disruption for many products

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Forrester notes that as markets collide, some existing portable device will win

and some will lose…•The PDA is dead•Cells have increasingly capable address books, calendars and organizersPDA

•Handheld game consoles are under pressure to evolve•High quality graphics and large screens make smartphones a valid gaming alternative

Handheld Game Console

•MP3 players must evolve to stay relevant •Virtually all mobile phones now offer MP3 playback MP3 Player

•Unless the standalone GPS evolves it will be gone•GPS applications are now available for free on all smartphonesGPS

•The disposable film camera is now a niche•Multimegapixel cameras are now available in all phones

Disposable Camera

Spring 2011 Corporate Research and Strategic Analysis CONFIDENTIAL

Forrester’s 2011 Predictions for the Smartphone Industry

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2011 Will be the Year of the “Dumb” Smartphone User

With smartphone adoption booming, new users are likely to be less engaged and active

than early adopters

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Mobile Fragmentation Will Continue to Be a Problem

Multiple operating systems, screen sizes and devices mean companies planning to reach

mass audiences through apps will continue to face high costs for creation and maintenance

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Consumers Will Spend Billions Via Mobile

Because of this, U.S. advertisers will spend more

than $1 billion to reach people on their cell phones

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Premium news and music content spaces will use new business

models

Subscriptions, microtransactions and in-app

billing will expand to news and music mobile sites

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Use of the Mobile/Social/Local Combination Will Explode

Many geo-targeted mobile promotions will launch next year but will generate little

revenue

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Smartphones will increasingly prompt people to interact with their

physical environment

While still a niche activity, QR codes and augmented reality apps will be more common

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Buzz about 4G will be overrated

It’s taken nearly 7 years for half of all mobile subscribers

to benefit from 3G and 4G access will be no different

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The Term “Mobile” Will Mean a Lot More Than Just Phones Soon

Consumers are connecting more devices wirelessly to the Internet

so apps and services need to work across devices (i.e tablets)

Corporate Research and Strategic Analysis CONFIDENTIAL

Reference Articles

• Ask, J. & T. Husson. (January 2011). 2011 Mobile Trends. Forrester Research.

• Ask, J. et al. (August 2011). Digital Marketing: The Future of Mobile is Context. Forrester Research.

• Fogg, I. (December, 2010). Portable Media Players Must Evolve With Cloud or Become Extinct. Forrester Research.

• Golvin, C.S. (March 2011). Crafting Products for the Next Smartphone Owners. Forrester Research.

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Corporate Research and Strategic Analysis CONFIDENTIAL

Further Information

• If you have any questions about the material presented here, please contact Andrea Sharkey (ext. 6360; andrea.sharkey@cbc.ca)

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