Friday, June 20, 2014

Device UnBundling: Parks Survey Results Show Amazon May Have A Better Guess of What the Market Wants

Device bundling has always been part of service providers' strategy to sign on more subscribers and sell more data. After all, selling gigabytes of data on 3G or 4G LTE only makes sense if mobile subscribers are able to own smart devices from which they are able to access their favourite applications, browse the internet and keep up with their social circles. However, how well have these bundling strategies contributed to increased usage of data? While revenues increase from the sales of these devices, the question as to whether bundling really does increase the amount of data sold has not been answered to date. Maybe the recent research results, announced by Parks Associates in its 360 View: Mobility and the App Economy report sheds some light on this.

Parks Associates, an international market research and consulting company specializing in emerging consumer technology products and services, recently released the findings from research based on its 1Q 2014 survey of 10,000 U.S. broadband households. The survey revealed that over two-thirds of U.S. mobile phone subscribers prefer to purchase a smartphone at full price if it eliminates the contract and lowers their monthly fee.It said that lower-income households are especially likely to prefer unsubsidized handsets, reflecting the wider use of prepaid services among this demographic. Parks Associates further added that the research showed that over two-thirds of U.S. mobile phone subscribers prefer data plans that cover only smartphones, while one-third prefer plans that would extend to multiple devices, such as tablets and laptops. They also highlighted that nearly 40% of smartphone owners use a retail and shopping app on a monthly basis, and the average time spent on retail shopping is one hour per week.

The survey results may have a profound effect in the market, especially as it comes just in time as the market's anticipation grows on Amazon's possible entry to the mobile market, where Amazon is believed to be unveiling subsidized mobile data plans and its own smartphones to fill the gap in the market for subscribers who prefer unbundled services which gives them the option to use less costly devices and cheaper data rates.

“T-Mobile in particular has tapped into the strong consumer desire for unsubsidized handsets, prompting Verizon and AT&T to make their own competitive offers that include lower monthly fees, unsubsidized handsets, and installment payment options. It makes sense for Amazon to launch a smartphone in this market. The Internet giant is hoping to expand its footprint by offering consumers better experiences through simplified data plans as well as better retail shopping experiences for mobile consumers.It’s not too late for Amazon to launch a smartphone, especially given strong Kindle Fire tablet sales. Our research shows the Kindle Fire is neck-and-neck with Samsung Galaxy tablets in terms of household ownership in the U.S., with 16% of households owning a Kindle vs. 14% owning a Galaxy.”
- Tejas Mehta, Research Analyst, Parks Associates

From the article, "Device UnBundling: Parks Survey Results Show Amazon May Have A Better Guess of What the Market Wants" by Tara Neal. 

Next: SmartPhones Influence Demand for 'Connected Car' Services, Stronger Outlook for CarPlay and Android Auto

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