A MetaFacts TUPdate by Dan Ness, MetaFacts Principal Analyst
How strong are intentions to switch carriers, and does this vary by mobile phone type?
Intention to churn is a key concern for wireless carriers and handset manufacturers alike. Based on our most recent wave of Technology User Profile (TUP) surveys, 21% of Smartphone users intend to switch carriers when their contracts expire. This is based on over 7,000 representative respondents who regularly use a mobile phone and either agree or strongly agree with the statement: “I plan to switch carriers when my contract expires.”
Smartphone churn intention raters are a much higher churn rate than among basic feature phone users, with 14% planning to switch. Since there are so many basic mobile phone users, even at a lower rate, this group outnumbers Smartphone users, standing at 16 million subscribers poised to change.
There is the chance that when basic phone subscribers switch, they will move to a Smartphone. This is not a certainty, however, as many subscribers are finding ways to get their needs met with their basic feature phones. Also, switching to a Smartphone is not the only reason subscribers switch carriers, they also report dissatisfaction with customer service and unsatisfying network coverage. In the report, we specify how much lower network and customer service satisfaction is among AT&T and T-Mobile subscribers than other carriers such as Verizon.
Furthermore, pre-paid subscriptions are on the rise, as subscribers let their fingers do the walking to exercise their dissatisfaction with the restrictions of term plans. Brands and sub-brand such as Net10 and Straight Talk offered in WalMart through MVNO America Movil are just one example of likely rapid entrants to join the fray of prepaid brands TracFone, Virgin, Leap and others.
Consumers are fickle, and vote with their pocketbooks. Once they start considering defecting from a carrier, they look at competitive handsets served by other carriers, just as they have in the past. Now, however, more subscribers have broadened their consideration set to include pre-paid agreements. Also, we expect some Smartphone users to retreat back to basic mobile phones, due in part to overwhelm with complex & costly agreements, or with the handsets and apps themselves. Although any market movement away from Smartphones may be considered heresy by fanboys and early tech adopters, many regular people consider anything with thousands of apps and hundreds of features to be an overcomplicating negative.
From the changes evident from high churn intention and low satisfaction rates, the outlook is for a continued fracturing of the mobile phone market. The early adopters with Smartphones will form the bulk of a Smartphone replacement market as concerned carriers placate them with newer handsets. Meanwhile, they will also be heavily courted by competitors, so may defect even before their plans terminate. At the other end of the spectrum, the segment of pre-paid plan basic mobile phone users will continue to attract defectors from plans they see as onerous, carriers they are dissatisfied with, or from phones they see as overly complicated. MetaFacts expects less activity from other segments in the near term.
Most certain today is that mobile phone users express resistance to having their phones pried from their fingers. Most do, however, plan to change carriers, handsets, subscription plans, and how they use them.
MetaFacts Technology User Profile Overview Edition – report available by contacting MetaFacts. View findings in 25 pages of executive summary analysis, 200+ pages of charts and graphs, all supported by 95+ pages of detailed tables. The complete, 300+ page report is delivered to you electronically. This edition is for the U.S. based on the 2010 wave of Technology User Profile gathered among a scrupulously selected set of representative respondents, surveyed both online and offline.
To see other research coverage of communication products and activities – from smartphones to feature phones, desktops to notebooks, social networking, chat, and webcams – see the other communication-oriented questions TUP covers on www.technologyuser.com.
MetaFacts releases ongoing research on the market shifts and profiles for Smartphones, Netbooks, Windows Vista, Mobile PCs, Workplace PCs, Home PCs, Moms and Dads, Web Creators, Broadband, and many other technology industry trends and facts. These TUPdates are short analytical articles in a series of specific topics utilizing the Technology User Profile Annual Edition study, which reveals the changing patterns of technology adoption around the world. Interested technology professionals can sign up at http://technologyuser.com/contact/ for complimentary TUPdates – periodic snapshots of technology markets.
MetaFacts, Inc. is a market research firm focusing exclusively on the technology industries. MetaFacts’ Technology User Profile survey is the longest-running, large-scale comprehensive study of its kind, conducted continuously since 1983, the year before Apple released the Apple Macintosh. The detailed results are a primary market sizing and segmentation resource for leading companies providing consumer-oriented technology products and services, such as PCs, printers, software applications, peripherals, consumer electronics, mobile computing, and related services and products. For more information about the syndicated research service, analysis tools, publications and datasets, contact MetaFacts at 1-760-635-4300.