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Smartphone, Tablet and Smartwatch Research
BayStreet Research provides timely primary research on the U.S. smartphone, tablet, and connected smartwatch markets. Using a proprietary methodology refined over more than fifteen years, BayStreet collects and maintains the premier database of mobile device sell-through data with rolling six month forecasts, and retail and wholesale pricing at the SKU level. Leveraging this data and our deep network of industry contacts, we provide unique insights and competitive intelligence on the smartphone industry, allowing our clients to truly understand the "why" behind the numbers.
Research Highlights
Sell-through quantities by:
- Carrier
- OEM
- SKU
- Device type (smartphone, tablet, smartwatch)
- Sale type (postpaid, prepaid)
- Smartphone OS
- Wholesale and retail price
- Components (e.g., dual cameras) and other device characteristics (e.g., bezel size)
Six-month rolling forecasts by SKU
Installed base estimates
Upgrade rate modeling with three-year market forecasts
Insights into the Smartphone, Tablet, and Connected Smartwatch Industries
5G is a Feature Not a Savior
While 5G will undoubtedly be an essential innovation, we view 5G networks as moving along a spectrum beginning in 2019 that will take another two to three years to achieve meaningful consumer utility beyond simple future-proofing. Samsung attempted to charge a 5G premium for variants of its GS10, Note 10, and its entire GS20 portfolio and did not succeed. Even without a premium price, we have seen minimal traction for “value 5G” devices in 3Q20, as they lack the flagship status consumers prefer. We believe it is safe to conclude the attempts to charge a 5G premium failed, and today's 5G is more of a carrier network marketing opportunity than a meaningful smartphone experience worth a premium. Read More
On the Path to $2,000
The Red Hydrogen One launched this month with weak initial sales and horrible reviews, however, at some point, AT&T and Verizon, thought the device would sell at $1,300. Samsung’s rumored GS10 triplets are expected to follow Apple’s current flagship pricing (~$750-$1,100) with an additional larger screen 5G variant costing as much as $1,300. Add in Samsung’s rumored $2,000 foldable smartphone, and there are few signs, (except for the OnePlus 6T) of smartphone price increases slowing. While we cannot predict how the market will respond to these astronomical price increases, we do see a higher than expected mix of Apple’s $1,000+ XS and XS Max, albeit at the expense of overall volumes. With smartphone utility surpassing the PC for the masses, we believe if future smartphones can last as long as a PC (4+ years), maybe $2,000 will appear reasonable at some point? Read More
Waiting on iPhone XR
We have been surprised to see the iPhone XR overshadowed by the XS and XS Max thus far. While the device’s reviews and sales reps impressions have been positive, we are beginning to feel like the pragmatic iPhone 6/6S customer base we expected to purchase the XR are in much less of a hurry to upgrade than we expected. We believe the iPhone XR may ramp later than our initial forecast due in part to having become “lost in the shuffle” with these mass-market consumers following a delayed launch post announcement. An interesting sentiment we are picking up from our surveys of carrier stores is, regardless of great reviews and a relatively premium price, the XR is still a “step down” from the XS and XS Max. It is possible that with an elongating upgrade cycle, more consumers are interested in future-proofing their devices, and thus could be more hesitant to buy a “stepped down” device. Read More
Carrier Promotions Weak
Carrier promotions are an essential driver of our 4Q18 forecasts. In early October, we were surprised by T-Mobile’s removal of the down payment requirement for the Note 9, iPhone XS and XS Max, as well as offering $390 trade-in value for iPhone 7 without a new line requirement and adding a 36-month financing option. We were even more surprised by Verizon and AT&T’s lack of response to such an aggressive offer. In fact, entering 4Q18 AT&T reduced their promotions by reinstating the DirecTV requirement to qualify for their BOGO offer with a new line. Overall, with Sprint remaining aggressive, and AT&T and Verizon not responding to T-Mobile, the promotion environment has proven weaker than our expectations thus far in 4Q18. Furthermore, today (11/8) T-Mobile ended its no down payment promotion on the XS and XS Max. We can only guess at what we will see for holiday promotions, but if October is any indication, we are not expecting much. Read More
T-Mobile’s Down Payment
T-Mobile instituted a down payment for smartphones above $720 with the launch of the Galaxy S8 in 2017. The impact has not only slowed T-Mobile’s super premium smartphones but also elongated the smartphone upgrade cycle at T-Mobile. Interestingly, while last year’s Note 8 required a down payment, the Note 9, with only a $80 higher down payment, is down over 50% vs the Note 8. Conversely, Note 9 sales at AT&T, Verizon, and Sprint are flat to down high-single digits y/y. Highlighting the power of the down payment, sales of the $720 GS9 are twice as high at T-Mobile than the other national carriers when comparing Samsung flagship mix. Assuming the combined T-Mobile/Sprint follows the down payment strategy, the 2H19 could see decreased premium smartphone sales as the aggressive Sprint leasing programs, which allows even credit challenged customers to get into super premium devices, gives way to T-Mobile’s down payment strategy. Read More
Updated iPhone Thoughts
As we wrote last month, our base case assumption for the refreshed iPhones was 50% iPhone XR, 25% iPhone XS and 25% iPhone XS Max. We believe the limitations of the iPhone XR vs the XS and Max will be unnoticed by the mass market and view the $250 discount vs the iPhone XS as likely to drive iPhone XR mix to 60-65% and decrease the iPhone XS to 10-15% and the Max to 20-25%. We believe the iPhone XR will offer the iPhone 6 & 6S base of customers a “reasonably” priced device with the look and features worth the price to upgrade. While still early, initial trends indicate enthusiasts have no problem spending $1,100+ on the iPhone XS Max. As of the end of Sep, the iPhone XS Max is far more supply constrained than the iPhone XS with our sales mix at 60/40 to the Max. We would not be surprised to see trends slow materially over the next 3-6 weeks as either the enthusiast demand is satisfied, and/or the iPhone XR launch drives hesitation for the Max’s almost 50% premium to the iPhone XR. Read More
BayStreet Research in the News
Dial Down the 5G Hype: New wireless standard will bring undeniable benefits, but significant business in 2019 isn’t likely
The problem with launching 5G phones in such a market is that they deliver an unclear value proposition—especially with limited availability of 5G networks. Most analysts don’t expect Apple to launch a 5G version of the iPhone until 2020. JPMorgan estimates that 5G phones will account for less than 1% of total global unit sales in 2019. And services such as augmented reality that would benefit greatly from 5G speeds still aren’t big draws for consumers.
As Cliff Maldonado of BayStreet Research put it, “Facebook and email won’t be any different on 5G.” Read More
Your Apple products are getting more expensive. Here’s how they get away with it.
The paradox is that many Apple customers think they must have the latest, trained by Apple marketing to future-proof ourselves. So this year, instead of buying a year-old iPhone 8 at a discount or an iPhone XR (a much less expensive compromise to the top iPhone XS), many customers are skipping out on an upgrade altogether. “People are looking at the R as the step-down product. Like it’s less of a smartphone,” says BayStreet’s Cliff Maldonado. Read More
Inside Samsung's Bid to Challenge Apple With 5G, Folding Phones
"Samsung is also rushing to complete development of a bendable device that it hopes will let it dominate a niche market with potential to grow. “If you think about how Samsung can differentiate itself and compete in this market, it’s with hardware,” said Cliff Maldonado, an analyst at BayStreet Research in San Francisco. “That’s what their forte is, and their foldable phone is about positioning and branding.”" Read More
The Silver Lining in Apple’s Very Bad iPhone News
Given a long enough horizon, Apple may see a financial benefit from less frequent upgrades as well. An iPhone that lasts longer keeps customers in the iOS ecosystem longer. That becomes even more important as the company places greater emphasis not on hardware but on services like Apple Music. It also offers an important point of differentiation from Android, whose fragmented ecosystem means even flagship devices rarely continue to be fully supported beyond two years.
“In reality, the big picture is still very good for Apple,” Maldonado says. Compared with Android, “Apple’s in a better spot, because the phones last longer.” Read More
Verizon, Apple lead growing smartwatch opportunity
"Based on new data from BayStreet Research, the [Apple Watch Series 3] is helping create a significant opportunity for the nation’s wireless operators. Specifically, BayStreet found the nation’s wireless network operators collectively are selling tens of thousands of Apple Watch devices every month, and the vast majority of those sales include a new line of wireless service.... And though many carriers are offering a free month or three of service for the gadgets, BayStreet found that, at least so far, most Apple Watch customers are electing to pay the $10 per month to keep their watch activated." Read More
Samsung's Smartphone Business Could Face Some Headwinds
"Samsung’s latest flagship, the Galaxy S9, which was launched in March, appears to be off to a relatively lackluster start. Analysts at BayStreet Research estimated that S9 preorders were down by as much as 40% compared to last year’s Galaxy S8, and the device is already seeing relatively aggressive discounts and promotions from major carriers." Read More
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