Seismic Shift To Smartphones

ChangeWave survey shows consumers abandoning basic models for advanced RIM and Apple phones

By Paul Carton and Jim Woods

Record numbers of consumers are abandoning their basic cell phones for more-advanced models, according to the latest ChangeWave consumer cell phone survey. The January survey of 4,182 consumers tracked key market share changes affecting cell phone manufacturers and service providers alike.

Research In Motion (RIMM) and Apple (AAPL) appear to be the primary beneficiaries of the seismic shift toward more-advanced cell phones. Looking ahead, the Apple iPhone is now the top choice among respondents planning to buy a new cell phone in the next six months (up one point to 17%), but second-place RIM has the most momentum (up three points to 15%).

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On the downside, one-time market dominator Motorola (MOT) has declined another four points in terms of future planned purchases, continuing a monstrous slide that began immediately after Apple CEO Steve Jobs' initial announcement regarding the iPhone.

As the above chart shows, Motorola's share of future planned purchases has plummeted during the past 12 months.

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Feeling Satisfied?

Apple also maintained its big industry lead in customer satisfaction compared with the other major manufacturers: 72% of respondents having reported that they are very satisfied with their iPhone. RIM is a strong second with 55% having said that they are very satisfied.

To put this in context, the following chart shows the percentage of respondents who said they are very satisfied with their current cell phone, broken out by manufacturer.

As we've seen in our recent consumer surveys, Palm (PALM) now ranks at the very bottom in terms of customer satisfaction. And Motorola, Sony (SNE)/Ericsson (ERIC) and Samsung are tied for next-to-last place.

Warning Signs on the Consumer Front

Our surveys show that the overall consumer cell phone buying environment appears weaker -- only 23% of respondents said they'll purchase or upgrade their cell phone during the next six months. That's three points less than at any other point during the past year.

This finding is in line with the overall slowdown in consumer spending we've been tracking in our ChangeWave surveys during the past six months, and is a trend we will continue to watch closely in the weeks ahead.

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Cellular Service Providers Battle it Out

Verizon (VZ), unchanged with 30%, and AT&T (T), down one point to 28%, remain locked in a tight battle for supremacy in the cellular service providers market -- with Verizon maintaining a slight edge in terms of current share among respondents.

The story is different, however, when it comes to future purchases. AT&T has regained its footing after falling precipitously in our past survey, with 25% of respondents who plan to switch carriers during the next six months now saying they'll go with AT&T. That's a two-point increase.

Verizon remains in second place with 21%, unchanged from previously.

When it comes to customer satisfaction, however, Verizon held on to top honors -- 42% of its customers said they're very satisfied. By comparison, only 30% of AT&T customers reported being very satisfied.

As these results clearly show, the consumer cell phone market is continuously evolving. And, as always, we'll keep our ear to the ground and monitor any new developments as they occur.

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Paul Carton is Executive Director of the ChangeWave Alliance. Jim Woods is ChangeWave's Senior Editor. The Alliance is a network of 14,000 highly-qualified business, technology and medical professionals in leading companies of select industries. The Alliance is surveyed weekly on a wide range of business and investment research and intelligence topics.

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