Tuesday, 20 February 2018 15:13

Telsyte stats show Aussie smartphone sales grew strongly in 2017

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Myths about smartphone sales being saturated seem overrated as Telsyte tells of Australian smartphone sales having experienced "strong growth in 2017 driven by an Android replacement cycle".

The research and analytical gurus at Telsyte have released their anticipated "Telsyte Australian Smartphone and Wearable Devices Market Study 2018," on sale to relevant parties at relevant prices, which found "overall year-on-year smartphone sales were up 11% with 9.2 million units sold."

The company estimates that "4.8 million smartphones were sold in the second half of 2017, up 6% from 2H 2016", with Android devices making up "55% of all units sold, mainly due to 2017 being a 'replacement year' for Android users".

In addition, we're told that "there are now some 19.3 million smartphone users in Australia, with 8.6 million using iPhones and 10.3 million on Android (about 0.4 million use other platforms)".

 The top three Android vendors in H2 2017 were Samsung, OPPO and Huawei.

Telsyte says "Apple misses iPhone X factor"

Despite a predicted upturn in Apple sales due to the iPhone X (which Telsyte reminds us is pronounced "iPhone ten"), Telsyte claims "a significant number of additional sales were not recorded in Australia, mostly due to the high price tag and short time-in-market during the calendar year. Overall, the iPhone 8, 8 Plus, and 7 were the most popular iPhone models in 2H 2017".

Australians paying more for internal storage

Telsyte estimates "the average cost of a smartphone in Australia has risen by more than 30% since 2015. One reason for this rise is Australian smartphone users are now seeking models that have more internal storage, which generally cost more".

"Internal storage is now ranked the fourth most important feature when choosing a smartphone, up from sixth in 2016. Over 70% of smartphone users claim internal smartphone storage is an important factor in their purchasing criteria.

"Due to higher investments in smartphones, the average replacement cycle for devices is now closer to three years than the previous two years. Additionally, 44% of smartphone users say the number one reason for not buying a new device is that their smartphone is “still in good condition”.

Despite iPhone sales remaining steady to H2 2017, Apple maintained the highest repeat purchase rate of any brand. Among those who use an iPhone and had purchased a replacement smartphone in 2H 2017, around 85% chose to purchase another iPhone. The next highest was Samsung, with more than a 70% repeat purchase rate.

The smartphone operating system is the fifth most important factor to people when choosing a smartphone (up from 10th in 2016), with three quarters of both iPhone and Android smartphone users finding this important.

Telsyte managinfg director Foad Fadaghi said: “As the smartphone market has matured, platform loyalty is at an all-time high, creating almost two unique marketplaces,”

Apple watches dominate smart wrist wearable sales

Contrary to some of the most biased and vitriolic anti-Apple Watch attacks over the past three years by so-called "journalists" who falsely, and with extreme malice predicted Apple Watch was doomed, Telsyte adds to yet more facts and stats that show Apple has ended up completely dominating "smart wrist wearable sales".

Telsyte stats show that "sales of smartwatches exceeded smart wristbands for the first time in Australia (58% smartwatch vs. 42% smart wristbands), with 844,000 smart wrist wearable devices sold in 2H 2017. Overall there was a year-on-year decline in smart wrist wearables dragged down by plummeting fitness band sales, which declined by over 30%".

Conversely, Telsyte tells us that "six-month sales of smartwatches grew 29% (compared to 2H 2016), as health and fitness features on smartwatches cannibalise less capable wrist bands. Almost three quarters of smartwatches sold during 2H 2017 were Apple Watches (360,000), compared to just over half a year ago".

Telsyte research shows "annual unit sales of Apple Watches have been consistently outselling Swiss watches in Australia since 2016. However, Swiss watch revenues are higher as they often cost more and deliver higher margins for watch retailers", with Telsyte pointing to "Federation of the Swiss Watch Industry FH" stats, with the disclaimer that "sales figures are wholesale prices", and that "Telsyte applies typical luxury watch retail margins for comparisons purposes".

What about smart watches with LTE connectivity built-in?

Telsyte says "LTE or mobile network connectivity is igniting interest in the smartwatch category. Telsyte research shows almost 30% of Australians are now showing interest in smartwatches that have built-in mobile connectivity. The percentage increases to 51% amongst existing smartwatch users."

Telsyte believes "the new Apple Watch LTE (able to connect to mobile networks) version and lower entry prices on other models were the main drivers for the surge in Apple Watch sales during 2H 2017. Telsyte believes Apple exceeded one million Watch users in late 2017. Apple and Fitbit are still the market leaders in smartwatch and fitness bands market respectively at the end of 2017".

Mobile payments growing in Australia

Telsyte research shows one in seven (14%) have completed a mobile contactless payment transaction at a payment terminal in store at least once, an increase from 8% in 2016. The increasing adoption in mobile contactless payments is starting to influence Australian’s banking decisions.

Telsyte research indicates Apple Pay has the most potential to change Australians’ banking decisions as Android Pay is more widely supported by major banks in Australia. "More than half of Apple Watch users in Australia cannot use Apple Pay with their primary bank, creating a climate for attrition among some of the most valuable customers,” said Telsyte senior analyst Alvin Lee.

Around one in five (22%) iPhone users claim they are more likely to bank with a provider if it supports Apple Pay. This figure increases to 32% for those who are also using an Apple Watch.

For those interested in acquiring the full Telsyte Australian Smartphone & Wearable Devices Market Study 2018, some additional detail is below.

We're told subscribers will receive a comprehensive study which provides:

  • 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.
  • Smart location-based item tracker market sizing estimates 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 notes that it "measures smart wearable devices in the Telsyte Australian Smartphone & Wearable Devices Market Study 2018 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:

  • Telsyte’s annual Digital Consumer survey conducted in November 2017 with a representative sample of 1,162 respondents, 16 years and older
  • 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

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Alex Zaharov-Reutt

One of Australia’s best-known technology journalists and consumer tech experts, Alex has appeared in his capacity as technology expert on all of Australia’s free-to-air and pay TV networks on all the major news and current affairs programs, on commercial and public radio, and technology, lifestyle and reality TV shows. Visit Alex at Twitter here.

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