Australian smartphone sales remain flat despite soaring usage

Smartwatch sales continue to grow as mobile payments emerges as a killer app

SYDNEY, AUSTRALIA – Australian smartphone sales for the second half of 2016 remained flat despite soaring usage rates, according to a new study by emerging technology analyst firm Telsyte.

New findings from the Telsyte Australian Smartphone & Wearable Devices Market Study 2017 shows 4.1 million smartphones were sold during 2H 2016, down 2 per cent (or 0.1m) compared to H2 2015. Year-on-year the market grew less than 1 per cent. Sales were impacted by a combination of factors including the recall of the Samsung Note 7, rising prices of premium handsets, and a difficult retail environment.

At the end of 2016, Telsyte estimates that 75 per cent of Australians were using a smartphone, with near full penetration in the 18 to 55-year-old age group. The smartphone has quickly become the go-to device for Australians’ digital lifestyles. Telsyte’s study findings show that:

  • 3 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 per cent of all eCommerce (online purchases of physical goods and services) were conducted via post-PC devices (smartphone & tablet), up from 22 per cent 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. Over 2 million Australian smartphone users used online food order and delivery services in 2016 and 1.7m used a ride or car sharing service.
  • 1 in 4 smartphone users indicate that they “feel addicted to their smartphone”.

Apple’s iPhone was the most popular brand of smartphone sold in Australia with an estimated 1.7 million units sold in H2 2016. However, Telsyte believes Apple was not able to replicate its H2 2014 performance which covered the period following the launch of the iPhone 6, which triggered a major upgrade event due to its larger screen size. Telsyte believes price rises have also impacted iPhone sales.

Nonetheless, iPhone repeat purchase intentions remain industry leading at greater than 80 per cent, 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.

Telsyte anticipates that an iOS upgrade in 2017 will result in models such as the iPhone 5 and iPhone 5c being left unsupported.

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’s research, the recall of Galaxy Note 7 has negatively impacted Samsung’s brand for only around a third of Samsung’s smartphone users. Samsung smartphone users indicate around 60 percent repeat purchase intention, similar to before the recall.

Smartwatch sales set to overtake smart fitness bands in 2017

Telsyte estimates nearly 2 million wrist-based wearables were sold in 2016, of which 37 per cent were smartwatches. Telsyte 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 per cent year on year, and down 28 per cent in H2-2015 compared with H2 2016.

“Around 1 in 6 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 is 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 per cent indicating they use it “regularly” or “almost always”. In comparison, less than 10 per cent of iPhone users in Australia that 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.

Telsyte research shows that the number one requested smartwatch feature is longer battery life.

For further information on the study or media enquiries contact:

Foad Fadaghi
Managing Director
Tel: +61 2 9235 5851

Alvin Lee
Senior Analyst
Tel: +61 2 9235 5890

The Telsyte Australian Smartphone & Wearable Devices Market Study 2017 is a comprehensive study which provides subscribers with:

  • Smartphone market sizing estimates, platform and vendor market shares and forecasts.
  • Smart wrist-based wearables market sizing estimates, platform and vendor market shares and forecasts.
  • End user trends across devices, application usage, platforms and operators.
  • Purchase intentions and acquisition channels.
  • Strategic analysis of market trends and issues.
  • Device profiles and Telsyte analyst ratings of tested devices.

Telsyte measures smart wearable devices in the Telsyte Australian Smartphone & Wearable Devices Market Study 2017 as computing accessories worn on a user’s wrist typically paired and controlled via a smartphone. Examples includes products from Adidas, Apple, Asus, Fitbit, Garmin, Huawei, Jawbone, LG, Microsoft, Motorola, Nike, Pebble, Samsung, Sony, TomTom and others.

In preparing this study, Telsyte used:

  • An online survey of a representative sample of Australians 16+ years of age conducted with 1,060 respondents in November 2016.
  • Interviews conducted with executives from service providers, network operators, manufacturers, retailers, financial analysts and channel partners.
  • Financial reports released by service providers and manufacturers.
  • On-going monitoring of local and global market and vendor trends.
  • Analyst reviews of leading smartphone and wearable devices.

Editor’s note:

Telsyte measures sales of devices (“sell out”), not shipments or sales to retailers or carriers (sometimes called “sell-in”). Telsyte believes this is a more accurate measure of performance of products in a marketplace. Telsyte does not rely on disclosure from vendors or general assumptions made for large multinational companies that do not release local market data. Telsyte uses a comprehensive methodology that includes surveys of consumers, discussions with vendors, carriers and their partners, retailers, and financial analysts. In addition, public financial results from manufacturers and carriers are used.  Telsyte tests a wide range of products in real life usage scenarios and conducts satisfaction and repeat purchase surveys with large and representative samples of Australian smart device users. Telsyte is a pioneer in measuring and reporting smartphone sales in Australia and has been providing insights on mobile technologies since 2006.

About Telsyte
Telsyte delivers strategic insights and advisory services to businesses that are producing, or are impacted by, disruptive technologies. Telsyte publishes studies into emerging consumer and business markets and provides custom research and advisory services. Telsyte is an independent business unit of DXC Technology.

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