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Analyst Angle: Breaking down why tablet users are averse to cellular connectivity

Editor’s Note: Welcome to our weekly feature, Analyst Angle. We’ve collected a group of the industry’s leading analysts to give their outlook on the hot topics in the wireless industry.

On Oct. 22, Apple announced that it has sold 170 million iPads since the launch of the tablet in 2010. The unprecedented use of tablets at a mass-market level in Western countries has many implications for operators and device manufacturers. According to Analysys Mason’s recently published major worldwide survey of 43,000 tablet users in June and July of this year across 17 countries, 43% of respondents did not buy the tablet that they use. Instead, many tablets were given as gifts by friends and family (39%) or provided by an employer (4%). This partly explains the under-use of 3G/4G on tablets as people are more likely to receive non-cellular tablets as gifts. Our survey shows that less than 10% of tablet respondents in the United Kingdom and the United States use cellular networks to connect their tablet, highlighting simultaneously the opportunity and the challenge that this market represents for operators.

More results from this survey will be released and discussed as part of an Analysys Mason webinar that will take place on Nov. 27.

Wi-Fi availability, connectivity costs are major inhibitors to 3G, 4G adoption on tablets

The survey results highlighted that usage of tablets varies widely by region. However, we observed some common trends, particularly when looking at the opportunities for cellular connectivity on tablets – 47% of respondents had a tablet with cellular connectivity, but only half of them actually used that capability. We identified the following three key factors that affect cellular connectivity attachment rates on tablets.

1. Wi-Fi satisfies the connectivity needs of most tablet users. Forty-five percent of respondents with a 3G/4G-capable tablet who did not use this capability stated that Wi-Fi availability was the main reason for not enabling a SIM in their device. Tablets are mostly used at home, at work and in public places, where Wi-Fi is commonplace, particularly in developed markets. Wi-Fi is also used while on the move via smartphone tethering.

2. The price of cellular connectivity is not declining as fast as the average retail price of tablets. This has increased the percentage of the total cost of ownership that is attributed to service charges. For example, the TCO over 12 months for the LTE version of Amazon’s Kindle Fire HDX with a five gigabyte monthly data plan on AT&T Mobility is four-times higher than the cost of a Wi-Fi-only Amazon Kindle Fire HDX, because of the high data charges.

3. There is a direct link between mobility and the use of 3G/4G on tablets. The shaded area in Figure 1 illustrates this link. However, some countries fall outside this correlation, particularly in the Middle East, where mobility is high but connectivity is low; and in South Africa, where mobile data connectivity is often used as a replacement for fixed services.

Figure 1: Relationship between tablet 3G/4G connectivity and tablet user mobility, by country [Source: Analysys Mason, 2013]


43% of tablet users did not buy the tablet that they use

Operators need to effectively use retail channels to promote and educate customers about their services and offers directly at the point of sale. For example, understanding ownership trends in terms of replacement cycles is critical for synchronizing operator marketing strategies with actual tablet demand from new and current tablet users. However, a fundamental difference between purchase behavior for tablets and smartphones is the impact that gifting or sharing has on their distribution and access. Overall, 43% of survey respondents did not originally buy the tablet that they used – 39% were acquired from a family member or a friend, who had either given it as a gift or who was simply lending or sharing the tablet.

–16% of respondents indicated that the tablet that they used did not belong to them. Among those, 60% of the devices belonged to a family member, most likely living in the same household, and 26% belonged to an employer.

–Family members accounted for a significant majority (79%) of tablets given as gifts.

Replacement rates for tablets are relatively long, particularly in the most mature markets. According to the survey results, 49% of tablet owners in the United States and 46% in the United Kingdom expect to keep their tablet for more than two years. Tablet users that do not own the device they use may therefore present a better target sales demographic than existing tablet users during the 2013 holiday season, particularly in countries where tablet adoption growth has significantly slowed down, potentially showing early signs of market saturation.

Ronan Renesse is the lead analyst for Analysys Mason’s Mobile Content and Applications and Mobile Broadband and Devices programs. His primary areas of specialization include rich media applications and services on mobile, application store forecasting, mobile broadband, tablets and smartphone adoption. Ronan has been analyzing the telecoms and media industry since 2003. Prior to joining Analysys Mason, Ronan was a senior analyst and the head of mobile at IHS Screen Digest, where he had overall responsibility for the Mobile Media Intelligence service and all related activities. For the past five years, Ronan has led the conception and development of various mobile media and technology forecasts, including those for mobile video, mobile music, mobile games, mobile applications, mobile broadband and smartphones. Before becoming an industry analyst, Ronan was an academic researcher at the Centre for Telecommunications Research at King’s College London. He had numerous articles published in international technology journals and also gave various presentations at high-profile conferences. Ronan holds a PhD in Telecommunications from King’s College London. Ronan has also participated on the GSMA Global Mobile Awards judging panel.


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