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FEBRUARY 2021

Michael Nocerino

Consumer smartphone purchasing is showing an uptick in our latest survey, in contrast to the normal seasonal drop-off seen during the winter months. Apple remains the biggest beneficiary as new iPhone models are driving buying plans. Pent-up demand due to the coronavirus pandemic and the availability of 5G-enabled phones are also contributing to the positive outlook.

This report represents the findings of a December 2020 survey of approximately 2,200 primarily North American respondents from the 451 Alliance’s Leading Indicator panel focused on the latest trends in smartphones.

Uptick in Smartphone Buying

Our December survey bucks the long-term trend of a drop-off in planned smartphone buying this time of year. We usually see the peak for smartphone purchasing in our September survey when respondents are excited about new models that have been announced and plan to make those purchases prior to the holidays.

Additionally, the uptick in December can be credited to improved spending plans among lower-income households (<$125,000). Among this group, we are seeing a 1-point improvement compared to September (10% to 11%). While higher-income households (>$125,000) are still outperforming by comparison, they are unchanged with 13% again planning to buy a smartphone in the next 90 days.

This is the first time over the last decade that we have not seen a December drop-off in smartphone purchasing plans, partly because new phone release dates and spending priorities shifted due to the pandemic, creating pent-up demand and causing purchasing to overlap different survey fieldings. 5G appears to be a large driver as well. Almost half (46%) of respondents planning to buy a smartphone in the next 90 days said 5G is a new capability that would cause them to purchase a new phone sooner than originally planned.

The fact that spending is being supported by both higher- and lower-income households is a good sign that we may be in store for other unexpected positives as the pandemic subsides in 2021 and consumers are able to gradually assuage their pent-up demand across a variety of consumer spending categories.

Looking at specific manufacturers, Apple (65%) continues to take the lion’s share of planned purchases with its highest December reading of the last decade. That said, iPhone purchasing is following the long-term trend of a seasonal drop-off in December, but as noted above, it’s a positive sign to see such relatively strong demand in this survey.

Like last quarter, demand for Apple is being driven by the new iPhone 12 models. Nearly three-quarters (71%) of respondents who plan to buy an Apple in the next 90 days chose one of the new models. We also continue to see a low number of those who are undecided about which model they plan to purchase; buyers are more sure about what they want because of the availability of the newest models, further supporting the iPhone 12 upgrade cycle we first saw in September.

Samsung (14%) is a distant second but showing a slight uptick in the current survey compared to September. With that said, Samsung is down 9 points compared to this time last year, and the current results are the lowest December reading for Samsung of the last decade. A potential positive for Samsung is that the uptick in the current survey may be the beginning up an upgrade cycle around the new Galaxy S21 models that were released in January. Our next survey in March will give us additional insight into the impact these new phone models are having on Samsung ownership.

Apple Leads in Satisfaction and Loyalty

Apple’s success is predicated on delivering devices with consistently high customer satisfaction. The current survey is no exception. Looking at the top two box rating (very/somewhat satisfied), Apple (97%) holds a narrow lead over rival Samsung (95%), but looking solely at owners who are very satisfied with their devices, Apple (65%) holds a huge lead over Samsung (53%).

Device owners who are very satisfied are the most likely to maintain brand loyalty. As such, this is another area where Apple outperforms its competitors. Due in large part to their high satisfaction levels, 95% of current Apple owners who plan to buy a new smartphone in the next 90 days will buy a new iPhone. Samsung loyalty is almost half that, with only 53% of current owners planning to replace their current Samsung with a new Samsung. Interestingly, 4% of current Apple owners are unsure what brand they will buy. Any of them who ultimately stay with Apple will help push that retention number even higher.

With Apple and Samsung continuing to produce similar-caliber hardware, what is the differentiator that pushes Apple out in front by so much? Apple’s products exist inside an ecosystem that is built on seamless interoperability between a variety of products and services. While Samsung also has an ecosystem, it’s not as cohesive as Apple, and the sum of its parts – i.e., the quality of each individual product that makes up the ecosystem – does not match the perceived quality of the Apple counterparts. As such, Apple users become locked in over time as they add more products and services to their households.

An important piece that cannot be ignored is the initial 'cool' factor that gets consumers to jump into the Apple universe in the first place. Apple has curated an elite brand image that started all the way back with the first iPod. Meanwhile, Samsung has gone through several iterations of brand identity across different products in an effort to match what Apple has created.

When asked what common smartphone features most influence their decision to buy, compatibility with other devices is twice as important for Apple owners (40%) as it is for Samsung owners (20%). In the minds of consumers who are thinking about buying new phones, making sure their new phone works with other devices in their home directly impacts their decision to switch brands. This type of brand lock-in is one of Apple’s competitive advantages.

Comparatively, other common features across both manufacturers' smartphones – like long battery life (73% to 78%), camera quality (49% to 47%) and fast processor speed (42% to 43%) – hold similar levels of importance.

Furthermore, when asked specifically how important it is for their smartphones and other devices to have the same manufacturer, 61% of Apple owners said it is very or somewhat important. Only 22% of Samsung owners felt the same. As wide as this gap is currently, it has actually widened since our September survey and is another point that underscores how Apple’s ecosystem gets consumers locked in because of a more seamless experience across multiple device and service categories.