Digitizing An Extensive Product Catalog with Handshake
Case Study
How three brands with a high volume of SKUs and product variants were able to make the switch to digital catalogs and sell more eeffectively.
Digitizing An Extensive Product Catalog with Handshake
Case Study
How three brands with a high volume of SKUs and product variants were able to make the switch to digital catalogs and sell more eeffectively.
Google will use self-driving cars to compete with Uber — California’s proposed regulations for self-driving cars — Z-Wave’s new security protocols
BI Intelligence
ALPHABET’S SELF-DRIVING CAR PROJECT WILL BECOME INDEPENDENT COMPANY NEXT YEAR: Alphabet’s business plans for its ongoing self-driving car project are becoming clear: the project will spin off next year into its own business, and that business will compete directly with Uber. Rather than selling self-driving cars to consumers, Alphabet (formerly Google) is going to offer a ride-hailing service similar to Uber with its self-driving cars, Bloomberg reported.
Uber has been working hard to develop self-driving cars for its own ride-hailing service. Self-driving cars would drastically lower costs for Uber rides to the point that it would be less costly for many consumers to take Uber rides everywhere instead of owning their own car. Asset management firm ARK Invest estimated earlier this year that self-driving cars would cut the cost of Uber rides to only 25 cents per mile. Uber has even hired a number of former Google employees to help with its own self-driving car efforts.
As Uber and others pour resources into developing self-driving cars, they’re all playing catch up to Google, which has been working on self-driving cars the longest. In the last six years, cars equipped with Google’s self-driving software have driven more than one million miles on the road. That means that Google’s software has more experience handling real-world obstacles and situations on the road than any other company’s self-driving technology right now. So Google is likely closer to delivering a ride-hailing service using self-driving cars than Uber is.
Although this could be bad news for Uber, it might be even worse news for automakers. If self-driving cars make ride-hailing services like Uber as cheap as ARK Invest predicts, it could make auto sales fall off a cliff. A Barclays analyst note earlier this year predicted that ride-hailing services combined with self-driving cars could reduce US auto sales by 40% in the next 25 years.
CALIFORNIA RELEASES SELF-DRIVING CAR REGULATIONS FOR THE PUBLIC: California’s Department of Motor Vehicles released a draft of proposed regulations that would allow self-driving cars to be used by the public on the state’s roads. This makes California the first state to propose legislation that would give consumers the right to ride in self-driving cars on public roads. Tech Insider provided a rundown of the proposed rules:
California was early in allowing self-driving car tests on its roadways. Google started testing self-driving cars in Mountain View, California back in 2009. The state is clearly trying to lead the way in becoming the first to propose rules to regulate the use of self-driving cars by consumers. Other states might look to California’s rules as a blueprint for their own self-driving car regulations. However, companies currently testing their self-driving cars in California might find these rules restrictive, and could look to take their self-driving car projects elsewhere if other states create more lenient regulations.
SMART HOME MESH NETWORK Z-WAVE IMPLEMENTS NEW SECURITY FRAMEWORK: Research has shown over the past year that many smart home devices are vulnerable to common cyber attacks. Z-Wave, one of the more popular mesh networks used to connect different smart home devices, is looking to relieve some of these security concerns with a set of new security features in its latest software development kit.
The security protections Z-Wave is issuing will help prevent hackers from compromising IoT devices to infiltrate home networks and steal consumers’ data. Those protections include strong encryption for any data sent over a Z-Wave network and secure exchange protocols that prevent hackers from stealing the encryption keys that protect that data. Without such protections, a hacker could infiltrate the home Wi-Fi network via the hub to steal data such as the homeowner’s financial credentials.
Z-Wave is already installed on more than 50 million smart home devices throughout the world including smart lights, smart thermostats, smart plugs, and hubs. Z-Wave is the second oldest mesh network designed specifically to serve the smart home besides Zigbee, it’s biggest competitor. Earlier this year, security researchers found a vulnerability in Zigbee’s communication protocols that allowed them to steal the encryption keys used to protect data sent over Zigbee networks. Z-Wave could be angling to promote its security as a competitive advantage over Zigbee, which has gained far wider acceptance so far than Z-Wave has.
How self-driving cars will disrupt auto parts suppliers — Can self-driving cars make ethical choices? — Jasper integrates with IBM
BI Intelligence
SELF-DRIVING CARS WILL UPEND THE AUTOMOTIVE SUPPLY CHAIN: With the rise of self-driving cars on the horizon, traditional auto parts manufacturers will face increasing competition from new suppliers and startups that specialize in components for self-driving cars. This new group of suppliers is already helping companies like Tesla and Google build self-driving vehicles. Here are some of these new suppliers featured in a recent article by re/code:
AUTONOMOUS CARS AND ETHICAL CHOICES: One of the significant challenges still remaining to the adoption of fully autonomous vehicles is how they will make choices to minimize damage in an accident, a recent MIT Technology Review article said. For instance, if something goes wrong and an autonomous car is about to hit a group of pedestrians, should it swerve out of the way, even if it could hit a wall and kill the car’s occupant? In other words, should the car minimize loss of life by avoiding the pedestrians, or risk the life of the occupant?
This question might seem like a faraway, abstract exercise, but with several automakers lining up to launch self-driving cars over the next few years, it will soon become a real dilemma for automakers and their customers. The question also goes to the heart of how much the public really trusts autonomous vehicles: will they trust them even in life-threatening situations?
It turns out they don’t. Researchers at the Toulouse School of Economics in France asked hundreds of people whether they think an autonomous car should swerve out of the way of 10 pedestrians even if it guaranteed that the car would crash and kill its owner. In general, the respondents said that the car should be programmed to minimize the death toll, even if it killed the occupant. However, the majority of the respondents said they wouldn’t drive themselves in a car programmed to do that.
This is why many industry experts expect that even though self-driving cars will hit the market relatively soon, it will be many years before steering wheels are removed from them. Consumers will want the ability to take control of the car in a dire situation. If consumers want to do that, than automakers will likely require that they keep their hands on the steering wheel when the car is self-driving to avoid liability in the case of an accident, just as Tesla is doing with its Autopilot mode.
JASPER INTEGRATES WITH IBM’S IOT FOUNDATION: Jasper, an IoT platform provider, announced this week that it is integrating its Control Center with IBM’s IoT Foundation platform. This will tie together the Control Center’s device management and task automation capabilities with IBM’s application development, data management, and analytics tools.
This combination will help enterprises bring services for their IoT devices to market much faster by combining all of these capabilities into a single solution. For example, an enterprise could manage a fleet of vehicles using the integrated solution, automating alerts and notifications for predictive maintenance while gathering and analyzing vehicles’ speed and location data to optimize routes and cut fuel costs.
Jasper has already integrated its platform with several other major enterprise IT providers including SAP, Microsoft, and Salesforce to offer device management and task automation capabilities for IoT devices through those providers’ platforms as well. Adding Jasper’s capabilities helps these providers offer a one-stop shop for IoT device, network, and data management and analytics.
Top 5 barriers to IoT adoption — Tesla Model S crosses the US in Autopilot – How the IoT can help emergency responders
BI Intelligence
TOP BARRIERS TO ADOPTION OF THE IoT: The Internet Society, which advocates for public policy and standards that help develop the internet, released a white paper last week detailing the top five barriers to the adoption of the IoT.
BI Intelligence agrees that these barriers represent the chief obstacles to the development of the IoT. However, we expect that the enormous economic potential of the IoT will push governments, enterprises, and consumers to deploy billions of connected over the next five years despite these obstacles.
THREE DRIVERS CROSS THE UNITED STATES IN A TESLA ON AUTOPILOT: A trio of drivers set a record for the fastest cross-country trip in an electric vehicle on Wednesday. They drove a Tesla Model S from Los Angeles to New York in 57 hours and 48 minutes, and they drove 96% of the trip in Autopilot, according to WIRED.
The drivers said that they used the Autopilot mode at speeds around 90 miles per hour, which almost led to a couple of accidents. There were a few instances where the car almost spun out and went off the road taking highway bends at such high speeds.
One of the drivers admitted that they set the car’s speed too high, making it difficult for the Autopilot to compensate during turns. However, the drivers also pointed out that the car shouldn’t be allowed to go so high over the speed limit on Autopilot either. The Autopilot software can adjust speed to follow other vehicles at a safe distance, but apparently doesn’t prevent the car from pushing well past speed limits.
Tesla’s Autopilot software beeps at the driver if the driver doesn’t touch the steering wheel every few seconds, and drivers can quickly take back control of the vehicle by turning the steering wheel slightly with both hands. Tesla has also told its customers that they need to keep their hands on the wheel while the car is in Autopilot in an effort to avoid any liability if a Tesla vehicle crashes while in Autopilot mode.
Regulations are still hazy around liability and self-driving cars, with different states setting their own regulations. If an accident occurs, Tesla could still be on the hook, and could have to recall its cars equipped with Autopilot, one legal expert told WIRED. This liability issue is the reason that many automakers that are also working on self-driving cars haven’t released their self-driving technology yet.
HOW EMERGENCY RESPONDERS CAN USE THE IoT: Gemalto announced a new cloud-based platform this week that collects data from IoT devices like sensors and IP cameras to generate insights for law enforcement and emergency responders. Through a mobile app, the platform can provide first responders with alerts about the location and timing of an incident, and continuously update them with more data as they rush to respond.
The platform was developed in cooperation with Intrado, which provides technology solutions for emergency responders, Prodapt, an IT services company, and Commnet, a networking provider that helps connect the sensors and devices back to Gemalto’s platform.
The solution is already being used in parks, where sensor data can provide real-time information on weather conditions and visitors’ location within the park. Visitors can report emergencies to park rangers through SMS texts, and IP cameras can be used to find visitors who are in an emergency or detect trespassers in the park. If someone gets lost or loses their child, geo-fencing technology can be used to help locate them. Additionally, the platform can send real-time updates to visitors about developing emergencies such as a wildfire or approaching storm.
The companies involved will look for more emergency response use cases beyond parks, and as cities begin to connect their infrastructure with sensors and IP cameras, it’s easy to imagine this type of system finding favor with emergency responders in smart cities.
Verizon launches IoT platform — Connected cars could cost consumers’ privacy — AIG offers insurance for enterprise drones
BI Intelligence
VERIZON LAUNCHES IoT PLATFORM: Verizon became the latest major tech company to launch an IoT platform for managing IoT devices and building IoT applications on Wednesday, according to a press release. IBM, Amazon Web Services, Salesforce, SAP, and Microsoft have all launched IoT platforms as well.
Verizon’s platform, called ThingSpace, provides tools for developers to create, test, and deploy applications for IoT devices. It also provides tools for managing IoT devices and the data they generate, as well as Verizon’s own internal analytics engine to help gain insights from that data. Verizon will hold a hackathon in December in Boston where it will make the platform’s APIs available to developers.
Along with the platform, Verizon announced initiatives to lower the cost of providing connectivity for IoT devices through its 4G LTE network:
Verizon has already made nearly $500 million in revenues from its IoT and telematics businesses already this year, according to their latest earnings report. The new platform and cheaper networking offerings should help Verizon grow those businesses over time.
THE PRIVACY IMPLICATIONS OF VEHICLE-TO-VEHICLE COMMUNICATIONS: Vehicle-to-vehicle (V2V) communications can help cars on the road relay their precise location to each other to help avoid collisions, but the technology could also make it easier for governments, enterprises, and hackers to track connected vehicles’ exact location. Researchers from two European universities recently demonstrated how they could track cars using V2V communications protocols with radio modules and antennas as the cars traveled around a college campus, according to WIRED. With more radio modules and antennas, someone could track all of the vehicles traveling around a small city at the cost of less than half a million dollars, the researchers said.
V2V communications could prevent up to 81% of car accidents, according to a study by the National Highway Traffic and Safety Administration (NHTSA) that was cited by WIRED. The NHTSA announced last year that it is looking into mandating V2V communications in all new vehicles by 2017. BI Intelligence estimates that 22 million connected cars will be shipped in 2017 that could be covered by that mandate if it’s enacted.
V2V communications will also be one of the foundational technologies for the development of self-driving cars, allowing self-driving vehicles to communicate their position and speed on the road to prevent collisions.
Privacy remains one of the biggest barriers to IoT adoption in general, and this example shows how that applies to connected vehicles. Although V2V technology offers clear safety benefits, it could also open the door for governments, enterprises, or even criminals to track cars’ locations. Other IoT devices like sensors, wearables, connected cameras, and voice-controlled smart home devices could be used to constantly monitor consumers’ movements and conversations without their consent or knowledge. That potential for constant monitoring and eavesdropping could turn consumers off to IoT technologies unless regulations and penalties are put in place that prevent the collection and sharing of data from these devices without users’ consent.
Graph: Estimated Global Connected Car Shipments
AIG OFFERS INSURANCE FOR DRONES: AIG is now offering insurance to enterprises that use drones for commercial purposes, according to Fortune. The insurance policies cover physical damage to the drones if they’re involved in a collision, and covers liability expenses resulting from a collision. It also offers optional coverage for damage caused by hacked drones.
Right now the policies will cover drones that weigh up to five pounds and have a wingspan of three feet or less. AIG is covering drones used for aerial photography and other commercial done uses, as well as drones used by government organizations to perform tasks like search and rescue missions in natural disasters.
Very few insurers currently offer coverage for drones because there is little historical data about drone collisions and accidents to help determine the cost of premiums for drone coverage. This could be a barrier for enterprise drone adoption, as enterprises will likely be hesitant to fly large numbers of drones without insurance coverage to protect them from the potential costs of an accident.
Samsung’s Q3 squeeze — Smartphones approach saturation in US — Google’s Project Loon plans trials in Indonesia
Bi Intelligence
SAMSUNG CUTS PRICE OF SMARTPHONES, SEES SHIPMENT GROWTH: Samsung’s third quarter revenue was up 6% sequentially to $45.6 billion in Q3 2015, according to its earnings call Wednesday. Most of that gain came from the firm’s semiconductor and display panel businesses, aided by favorable currency rates.
Samsung’s mobile business struggled to compete with higher-end Apple products as well as lower-end vendors like Xiaomi. The Korean tech company saw a significant increase in sales of its Galaxy Note 5, S6 Edge Plus, Galaxy A and Galaxy J handsets. However, while it shipped more mid-tier smartphones, the average selling price (ASP) of its smartphones dropped due to a price cut to its flagship Galaxy S6 and S6+ devices.
Here’s a rundown of some of the key takeaways from Samsung’s third quarter:
Samsung finds itself in a rough spot in the smartphone industry as it faces tough competition from vendors at both ends of the price spectrum. On the premium end, Samsung’s flagship devices compete directly with Apple’s iPhone 6s and 6s Plus, largely in mature markets like the US and UK. In the low- to mid-tier categories, the company face both Huawei and Xiaomi, which are the number one and two leading smartphone vendors in China, respectively.
Looking ahead, the company stated that it expects Q4 smartphone shipments to increase over the holiday season. However, the global smartphone market will likely slow in 2016 as key developed smartphone markets saturate and upgrade cycles slow. In response to this, the company may double down on its efforts to sell entry-level devices in emerging markets. Samsung will also look to its lucrative semiconductor and display panel divisions to keep it afloat.
SMARTPHONE OWNERSHIP APPROACHES SATURATION IN THE US: Smartphone ownership is nearing a saturation point with some age groups in the US, according to latest data by the Pew Research Center. As of October 2015, 68% of American adults have a smartphone, up four percentage points from the 64% of US adults who were smartphone owners this time last year. Specific sub-segments of the US adult population see smartphone penetration rates much closer to full adoption; 86% of US adults aged between 18 and 29 years own a smartphone, as do 83% of those between 30 and 49 years of age.
Rising smartphone penetration in the US market has made some technologies redundant, including devices like MP3s, e-books, and portable gaming devices. The wide range of tasks that smartphones can be used for will help cannibalize more niche consumer electronics, and is likely to have a trickle down effect on ownership rates of other devices.
Finally, the number of computers — both desktop and laptops — owned in the US has steadily declined since its high point of 80% in 2012. As of October 2015, 73% of consumers in the US own a laptop or desktop, which remains largely unchanged from the 71% who owned a computer or laptop in 2004. Smaller computing devices like smartphones and tablets are cannibalizing sales of their larger more cumbersome counterparts. The mobile-only portion of the US population is now larger than the desktop-only segment.
PROJECT LOON WILL BEGIN TESTING IN INDONESIA: Google announced Thursday that Project Loon will begin a testing phase in Indonesia sometime in 2016 after partnering with Indonesia’s three leading mobile network operators. Project Loon aims to bring internet connectivity to “unconnected” communities in developing countries.
Only one in three people are currently connected to the internet in Indonesia, according to Google. By using what are essentially hot air balloons as floating cell towers, the tech giant hopes to bring high speed LTE internet to about 100 million Indonesians in the near future. Doing so will require partnerships with some of Indonesia’s mobile carriers including Indosat, Telkmsel, and XL Axiata.
Indonesia represents an important future market for Google. The country touts both a rising middle class and a growing smartphone user base. Forecasts suggest that 40% of all phones in Indonesia will be smartphones in 2015, according to the Internet Society’s Asia Pacific regional director Rajnesh Singh. The Indonesian government has also expressed its intent to invest large sums of money into developing its communications infrastructure over the next five years.
Google has rolled out similar efforts in other emerging markets to achieve its goal of connecting the next one billion internet users. This includes launching Project Loon in Sri Lanka earlier this year, as well as its Android One program, which aims to make smartphones (sub-$100 devices) accessible to first time buyers in emerging market countries. Similar programs by rival companies like Facebook’s internet.org are active in developing markets as well. These are all clear efforts to establish a footprint in some of the most lucrative mobile markets of the future.
Counterfeits still persist on Alibaba’s Taobao — Online ads effective with luxury shoppers — Beacon usage in sports arenas
BI Intelligence
INDUSTRY ASSOCIATION WANTS ALIBABA’S TAOBAO BACK ON COUNTERFEIT MARKET LIST: Alibaba’s popular customer-to-customer (C2C) online marketplace, Taobao, is facing some serious doubt from the US’s American Apparel & Footwear Association (AAFA) and wants it put back on the “Notorious Markets” list. The office of the US Trade Representative compiles the annual list to readily identify online marketplaces that enable selling of counterfeit goods, and the AAFA fully believes Taobao belongs on there.
While the AAFA cites Alibaba’s persistent lack of cooperation to fight counterfeits, Alibaba claims that the US Trade Representative office has refused to meet with the company in order to work together on cleaning up its marketplace, reports Internet Retailer.
One potential course of action for many of these brands claiming that Alibaba is not vigilant enough in taking down counterfeit listings is to reach out to the company itself. Taobao’s business-to-consumer (B2C) branch Tmall.com has also come under fire for counterfeit listings. In order to combat this, luxury apparel brand Burberry agreed to a partnership with Tmall.com in which it would list a curated selection of its items for sale on the site in exchange for Tmall to take down the counterfeit ones. As a result, Alibaba removed 23,000 illicit Burberry products from Tmall this past April, reports Bloomberg.
Across Alibaba’s multiple marketplaces, consumers spent $105 billion in the second quarter of 2015, representing a 31% year-over-year (YoY) increase.
Chart: Alibaba Global Gross Merchandise Volume
LUXURY SHOPPERS ARE MORE LIKELY TO REMEMBER ADS SEEN ONLINE THAN IN PRINT: Luxury brands allocate the majority of their holiday ad spending on print advertising, but those ads aren’t resonating with shoppers, according to data sent to us by Shullman Research Center.
This shows that many luxury brands misunderstand digital marketing channels, and in some cases it may be what’s holding them back from selling more high-priced items online.
It’s particularly important for brands that sell electronics and jewelry to understand this behavior because those items rank high on luxury shoppers’ lists this holiday season. Among luxury shoppers, 41% say they plan to purchase electronics as gifts in the fourth quarter, and 37% plan to buy jewelry, according to Shullman Research Center.
Chart: US Shoppers Who Say They Recall Seeing An Ad In the Past Month, By Channel
BEACONS ARE INVADING SPORTS ARENAS: Beacons are moving past physical retail stores and into sports venues where they can reach a whole new audience of consumers. Multiple athletic arenas have installed beacons to drive up consumer engagement.
As beacons expand into the sports realm, this opens up brands to huge audiences of consumers — especially for brands that sponsor sports teams. For example, Coca-Cola sponsors the New York Yankees and Party City sponsors the New York Islanders. Beacons can be seen as another marketing space that brands should be considering when laying out marketing strategies in order to leverage a dedicated population of sports fans known for consistently purchasing team merchandise. BI Intelligence estimates that $4.1 billion worth of in-store sales in 2015 for the top-100 US retailers will be influenced by beacon-triggered messages.
Chart: US In-Store Retail Sales Influence by Beacon Triggered Messages
COMPANIES IN THE NEWS
Beacon adoption rates continue to grow — Apple takes advantage of growing m-commerce — Online marketplace growth slows
BI Intelligence
BEACONS ARE MAKING THEIR WAY INTO MAJOR DEPARTMENT STORES: Beacons — low-cost devices that communicate with smartphone apps — are making their way mainstream. Retailers are quickly adopting them as they are proving to be a powerful tool for targeting offers, driving sales, and collecting data about customers’ in-store shopping behavior.
The latest retailer to jump on the beacon bandwagon is Target, which announced an initial testing phase in 50 stores and plans to go nationwide by the holiday season, according to TechCrunch. The beacons will serve to work alongside the Target Mobile App and push notifications to shoppers based on their location within the store. As with all beacon-enabled apps, the user must opt-in to receive push notifications and have their Bluetooth enabled before entering the store. Target’s first round of beacon testing will happen in 50 stores throughout Chicago, Denver, Minneapolis, New York City, Pittsburgh, Portland, San Francisco, and Seattle.
This year, beacons could influence up to 7% of sales at US retail stores operated by the top 100 retailers. That’s equivalent to more than $138 million in sales. In 2016, we estimate beacons could influence up to 26% of in-store sales at those same retailers. That would be equivalent to more than $555 million in sales.
Graph: Percent of US In-Store Sales Potentially Influenced By Beacon Messages
TAKING NOTICE OF MOBILE COMMERCE OPPORTUNITIES: Consumers are increasingly shopping on their mobile devices, and this is presenting a huge market opportunity for advertisers to reach consumers. Apple has taken notice of this trend, and it plans to leverage its large user base to give the company an advantage in this space. The company recently filed a patent for a system that would allow e-commerce brands to use iTunes’ customer data to target shoppers on mobile devices, Business Insider reports. In other words, the system would assess the status of iTunes users’ credit/debit card accounts (i.e. their available funds and balances), and advertisements would promote items that users can afford. Previously, targeted advertisement was segmented based on demographic information or online activity. The ability to promote items that users can most likely afford opens up a new avenue for retailers to target audiences.
Mobile commerce spending reached $11.1 billion in the US in the first quarter of 2015, or 15% of digital commerce, according to comScore. That’s a 52% increase year-over-year (YoY).
Graph: Share of Country’s E-Commerce Transactions From Mobile, By Device
ACTIVE BUYER GROWTH SLOWS AT TOP ONLINE MARKETPLACES: The rate at which online marketplaces are acquiring active buyers is slowing, according to our analysis of company data. The metric “active buyer” is defined as a customer who has completed a purchase on an e-commerce site in the past twelve months.
These findings are part of a series that can be found in our “Future of Retail” slide deck presentation.
We believe current macroeconomic conditions do not favor US-based marketplaces. That’s because weak foreign currencies have made shopping US marketplaces more expensive for international shoppers. For example, the Euro has lost 23% of its value against the USD so far in 2015, which has likely incentivized European shoppers to purchase from local retailers. This is a problem for marketplaces like Amazon because it relies on globalization to help drive the company’s overall growth.
Graph: Year-Over-Year Growth in Active Buyers
COMPANIES IN THE NEWS
THE FUTURE OF RETAIL: 2015
BI Intelligence
The retail sector is undergoing a major transformation driven by digital. Technology is changing the way people shop, as well as how retailers operate.
BI Intelligence has created a slide deck highlighting the biggest e-commerce trends in retail. Some of the topics we cover in the deck include:
The companies mentioned in this year’s presentation include:Walmart, Target, Amazon, eBay, Google, Uber, JCPenney, Gap, Kroger, Kohl’s, Macy’s, Safeway, SuperValu, Albertsons, Blue Apron, HelloFresh, Plated, Instacart, FreshDirect, Peapod, Fresh Market, Harris Teeter, Whole Foods, Birchbox, Olay, L’Oreal, Avon, Ulta, CVS, Walgreens, Sephora, Postmates, FedEx, UPS, US Postal Service
The smartphone upgrade cycle is shrinking among millennials
BI Intelligence
Graph: Main Reasons for Early Smartphone Upgrades
US consumers have historically upgraded their smartphones every two years, but millennials are cutting down that timeline by upgrading early, according to results from a recent survey of 1,000 millennials commissioned by SellCell. Almost 60% of millennials have had at least three smartphones over the past five years, and 12% have owned at least five. This trend is driving changes in the mobile carrier arena, which is further spurring early smartphone upgrades.
The traditional two-year upgrade has been largely driven by mobile operators like Verizon and AT&T offering promotional subsidies on smartphones at the two-year mark. This encourages consumers to re-sign their mobile service contracts in exchange for a less costly way of getting a new smartphone. But this two-year timeline is shrinking as competitive mobile operators offer consumer-friendly promotions that enable carrier changes and device upgrades more rapidly and with fewer consequences. US millennials, aged 18 to 34, are both driving this trend and benefiting from it.
Millennials’ desire to be unhindered in their pursuit of the newest smartphone technologies, and to upgrade without penalty, is catalyzing heightened competition among the Big 4 US mobile operators (Verizon, AT&T, Sprint, and T-Mobile). For example, T-Mobile’s JUMP! On Demand Program lets consumers upgrade their device up to three times in a year and AT&T’s Bring Your Own Phone (BYOP) program allows consumers to sign up for contracts using phones purchased elsewhere at more affordable prices. T-Mobile, which has been aggressively pursuing US millennials with a seemingly endless string of no-commitment campaigns, is seeing this approach pay off. No. 4 US mobile operator T-Mobile likely surpassed No. 3 Sprint in terms of subscribers during the most recent quarter.