New findings from the Telsyte Australian smartphone and wearables devices market study 2017 showed 4.1 million smartphones were sold during the second half of 2016, a drop of 2% — or 0.1million — compared to the second half of 2015.
Year-on-year, the market grew less than 1% and, according to the telecoms research firm, sales were affected by a combination of factors including the recall of the Samsung Galaxy Note7, rising prices of premium handsets, and a difficult retail environment.
At the end of 2016, Telsyte estimates that 75% of Australians were using a smartphone, with near full penetration among 18 to 55-year-olds.
• Three in 4 smartphone users streamed music, video or both to their device during 2016, as mobile data caps increased and more than half of all mobile phones were connected via 4G;
• Around 30% of all eCommerce (online purchases of physical goods and services) was conducted via post-PC devices (smartphone and tablet), up from 22% in 2015 (averaged across 23 measured product and service categories);
• Services such as ride-sharing, food ordering and delivery services that are primarily accessed via smartphone apps are growing strongly. More than two million Australian smartphone users used online food order and delivery services in 2016 and 1.7 million used a ride- or car-sharing service; and
• One in 4 smartphone users indicate that they “feel addicted to their smartphone”.
Not surprisingly, the study found that Apple’s iPhone was the most popular brand of smartphone sold in Australia with an estimated 1.7 million units sold in H2 2016.
But, Telsyte says it believes Apple was not able to replicate its H2 2014 performance which covered the period following the launch of the iPhone 6, triggering a major upgrade event due to its larger screen size.
Telsyte says it believes price rises have also affected iPhone sales.
The research firm observes, however, that iPhone repeat purchase intentions remain industry-leading at greater than 80%, creating a big opportunity for Apple if it can deliver a “compelling new product at the end of 2017”.
“A third of the iPhone installed base is on the iPhone 5S or earlier models, making them ripe for an upgrade,” Telsyte senior analyst, Alvin Lee, says.
He says Telsyte anticipates that an iOS upgrade in 2017 will result in models such as the iPhone 5 and iPhone 5c being left unsupported.
The firm also says that Android remains the most popular operating system on smartphones in Australia (52% of the installed base), with Samsung continuing its Android sales leadership followed by Huawei.
According to Telsyte, the recall of Galaxy Note7 has affected Samsung’s brand among only around a third of Samsung’s smartphone users, with about 60% indicating repeat purchase intentions, similar to before the recall.
Telsyte also says smartwatch sales are set to overtake smart fitness bands in 2017.
The research firm estimates nearly two million wrist-based wearables were sold in 2016, of which 37% were smartwatches.
Telsyte says it expects by the end of 2017 over half of all wrist-based wearable sales will be smartwatches, as more basic smart fitness band sales decline in sales.
“Telsyte estimates that smart fitness band sales in Australia were down 10% year on year, and down 28% in H2-2015 compared with H2 2016.
“Around one in six smart fitness bands are given as gifts in Australia which is impacting longer term usage rates,” Telsyte managing director, Foad Fadaghi, says.
Telsyte believes mobile payments are quickly becoming the “killer application” for smartwatches.
Telsyte surveys show that almost half of Apple Watch owners have used Apple Pay, with more than 70% indicating they use it “regularly” or “almost always”. In comparison, less than 10% of iPhone users in Australia who have a compatible handset have used Apple Pay.
“Once users get over the initial barrier of raising a smartwatch to a payment terminal, they start to use it regularly, indicating it might be a critical application for smartwatch retention,” Fadaghi says.
Finally, Telsyte research shows that the number one requested smartwatch feature is longer battery life.