For the first time since the Apple iPhone was released in 2007, the number of iPhone owners who say they definitely will or probably will purchase their next phone from the same brand has declined in both the US and Western Europe (see iPhone Owner Loyalty Declines: Is Apple Losing its Innovation Edge?)

In 2012 only 75% of iPhone owners in Western Europe say they are likely to buy their next phone from Apple, down from 88% in 2011. Despite this decline, Apple retains a higher repeat purchase intention level than any other major phone manufacturer surveyed by Strategy Analytics. Respondents who say they probably or definitely will not buy their next phone from Apple is low.

It is respondents in Western Europe and the US who are unsure whether they will remain with the same brand or not for their next phone that Apple should be concerned about. Having launched the game-changing original iPhone in 2007, Apple is no longer the innovator it once was. At the launch of the Apple iPhone 5, one of the biggest changes compared to previous iPhones was an increase in display size from 3.5" to 4.0". However, previous Strategy Analytics research suggest that existing smartphone owners want something even bigger, with 4.3" the most preferred size in our 2011 size preference research (Smartphone Owners Want Thin Devices with Larger Displays), while early provisional results from an update to this research suggest that 4.5? may be the most preferred size for respondents surveyed from June-December 2012. It should also be noted that most of Apple's leading competitor's flagship devices have a considerably larger screen - the Samsung Galaxy SIII at 4.8", the HTC One X and Motorola RAZR HD at 4.7" and the Nokia Lumia 920 at 4.5".

There is no doubt that Apple is continuing its success (figures released by Apple show that the over five million iPhone 5's were sold in the first three days alone). However, on the back of a lack of recent innovation from Apple we are starting see growth in the number of previously highly loyal consumers who are considering whether or not they will purchase a new iPhone for their next device.

- Paul Brown

Nokia launched their new Windows Phone 8 devices today - the Lumia 920 and Lumia 820. During the event, Nokia and Windows Phone fans took to social media, encouraging consumers to embrace the new experiences delivered by these offerings by tweeting the hashtag #switchtolumia

The devices, which feature a number of incremental enhancements from previous models, have raised the bar in the extremely competitive smartphone market. Nokia has successfully differentiated with its hardware. The design of the previous Lumia models has received a lot of praise, and a range of colors will certainly help Nokia stand out from the crowd. Wireless charging will help to differentiate Nokia devices (for the time being), and it has made great advancements with its imaging technology and software - object remover and Cinemegraph in particular are cool. Location services also featured prominently, with the augmented reality of Nokia City Lens another great feature.

Nokia Lumia 920 (Source: press.nokia.com)

However, are these hardware and software features compelling enough to convince consumers to switch operating systems or are Nokia left to fight with Apple and Android for new smartphone buyers? Previous Strategy Analytics research has found that most consumers are hesitant to switch OS due to:

• Concerns about having to learn a new, unfamiliar OS;
• Potential to lose data or content currently saved or downloaded to their device, and importantly;
• Lack of availability of the long tail of apps that individual consumers are particularly attached to.

With new announcements to come from Apple and Motorola/Google this month, do these new offerings from Nokia and Microsoft offer sufficiently compelling innovations to convince consumers to switch to a new operating system? While some of the enhancements -especially wireless charging - are currently not supported by competing platforms, we are unconvinced that incremental innovations, such as the ability to use the touchscreen while wearing gloves, are sufficient to provide those consumers who purchase high-end devices (who tend to be the most platform-loyal) with a compelling reason to switch.

See the first impressions of the Nokia Lumia 920 from my Wireless Smartphone Strategies colleagues here - Nokia Microsoft Lumia 920 WP8 Smartphone: Our First Impressions

- Paul Brown

As smartphone hardware becomes commoditized, smart accessories can help to provide differentiation, as well as potentially extending the life-cycle of devices. Strategy Analytics Wireless Device Lab recently undertook focus group interviews with smartphone owners in the US and UK investigating consumer interest in smart accessories, and found that they have the ability to optimize the user experience of a smartphone for dedicated use cases, leading to increased levels of satisfaction.

Consumers experienced 27 different smart accessories, and interest was highest in the Nokia Play 360 wireless speaker, Jawbone UP and HTC Rhyme Dock.

In order to provide value, smart accessories should:

• Be designed with specific use cases in mind, and they should provide an enhanced experience for that use case;
• Be wireless and portable. Due to their smartphone or tablet already being portable, participants liked the convenience of wireless accessories, with no need to plug in for power or use, making the accessory portable as well;
• Be compatible with multiple devices (not just smartphones) and across multiple operating systems is important. The ability to use an accessory with multiple devices also provides added value, with participants indicating that they may be reluctant to purchase a smart accessory that is designed only for a specific device, as they run the risk of it becoming obsolete over time.

The full report, including which smart accessories are currently being used, how interested respondents were in each of the 27 smart accessories evaluated, and what the highlights and lowlights of each accessory were, click here: Smart Accessories Extend Device Capabilities and Enhance the User Experience (subscription required)

- Paul Brown

Nokia has announced the first CDMA Windows Phone designed specifically for the Chinese market, the Nokia Lumia 800c. Our Wireless Smartphone Strategies colleagues believe that it remains to be seen how the device will help Nokia regain the ground it is losing in the Chinese smartphone market.

However, having recently included the Lumia 800 in a user experience benchmark with Chinese smartphone buyers, we observe that Nokia has unveiled a product that is well placed to meet the needs of the target audience in this market.

In our research, the Lumia 800 received positive feedback for its high-end industrial design and the uniqueness of the Windows Phone interface.  At the same time, we identified a number of areas where all of the major smartphone platforms – including Windows Phone – failed to meet the specific needs of Chinese consumers. These include:

• Lack of integration of Chinese internet services.  In our research, Chinese users were clear that deep integration of Facebook, Twitter etc. was of little relevance to them. They wanted the same level of integration of Chinese internet services from RenRen, Sina Weibo, QQ and Baidu. 
• Some China-specific use cases not supported.  Our research identified opportunities for apps that meet the specific needs and behaviors of Chinese consumers (such like group messaging, data management, phone number location, etc.) which are not currently supported by default by the main smartphone platforms.
• Insufficient offline implementations of experiences.  Chinese users prioritize applications and features that work entirely in offline mode.  Functions such as maps that can only operate in connected mode are likely to be considered as too costly.  In our latest research, Chinese smartphone owners reported that only 29% of music listened to on their device was streamed, compared to 42% of US smartphone owners. 

Based on the available information, the Lumia 800c appears to address these challenges, to at least some extent:

• The device will be optimized for local internet brands.  Nokia has announced that the Chinese version of the Lumia 800 will support all of the major Chinese internet services.  Of course, 'support' does not necessarily imply deep integration throughout the OS (as desired by our research participants), but the launch announcement touts a "compelling, locally relevant experience ... especially tailored for people in China".
• Bundling free music, games and Nokia Maps will be appealing to price sensitive Chinese consumers.  However, the extent to which services will be able to be used entirely offline (to avoid expensive data charges) will be critical to adoption.
• The launch of “BeTop”, an incentive program to encourage local developers to produce apps for the platform is a smart move.  To maximize the value of this investment, we believe that Nokia should prioritize the creation of apps that meet the specific needs and behaviors of Chinese consumers that we identified, and promote the best apps that plug these gaps to the user base.

We also note that, as a brand, Nokia remains stronger in China than in most regions.  Our latest brand loyalty research found that 66% of Chinese Nokia owners plan to remain loyal to the brand when they purchase their next device, compared to 50% of UK Nokia owners. 

As identified by our colleagues, price will be a key factor in determining the success of the Lumia 800c - especially as the product will be targeted towards younger Chinese users, who are particularly price sensitive.  However, if Nokia and China Telecom can offer a very competitive subsidized price, as the vendor achieved with the launch of its Lumia 900 device in the US earlier this week, this will make the product a very appealing offering.

Strategy Analytics’ user research in China is available to Wireless Device Lab clients or for purchase here. Strategy Analytics’ China Handset Market Share report for Wireless Smartphone Strategies clients can be found here.

As widely rumoured, Nokia this morning announced that it will adopt Windows Phone as its main smartphone platform, embracing Microsoft's operating system to power its future high end devices.

At first glance, this alliance represents a very positive development for two organizations that at one time dominated the smartphone market but are now struggling to achieve scale, their offerings having been overshadowed by those from Apple and Google in recent years.

We do not agree with the assessment that this collaboration represents the coming together of "two turkeys".

• Our user experience benchmarks of smartphones have shown that Nokia has consistently demonstrated its ability to produce hardware with exceptional build-quality. Nokia also continues to demonstrate leadership in hardware experiences including mobile imaging. However, we do feel that Nokia has yet to produce a compelling device form-factor that is as appealling as the Samsung Galaxy S or Motorola Droid X to consumers in the world's largest smartphone market - the USA.


• From the software perspective, we have been impressed by the usability of Windows Phone 7.

Moreover, the collaboration appears to be a good fit in terms of brand recognition - our recent research into consumer brand perception showed that Windows Phone is stronger in the USA, while Nokia remains a highly trusted brand in Europe, India and China.

However, while this alliance looks good on paper, we believe that one of the biggest challenges facing these organizations lies in execution. Both companies have been plagued by an inability to get high end product to market in a timely manner over the past few years. For Nokia in particular, the question must be asked - after failing to get both Symbian^4 and Meego products into the hands of consumers, what are the implications on time to market of switching horse yet again?

In theory, working with MSFT gives Nokia a platform that is complete and should therefore be faster to integrate. However, questions over how elements such as Ovi and Windows Marketplace will be integrated remain as yet unanswered, and have the potential to impact ability to launch.

Nokia has jumped from its burning platform into the life raft of Windows. In my view, both organizations must now paddle as fast as they possibly can if they are to reach the safety of the shoreline.

- Kevin Nolan