Smartphones and beyond: device innovation continues but incremental value lies in digital services

2022 has been a tough year for smartphone sales, with reduced volumes compared to 2021 due to supply-chain issues, geopolitical tensions and rising inflation globally. As these issues are still ongoing, smartphone sales are not expected to recover before H2 2023. Nevertheless, smartphone innovation continues, which includes new 5G capabilities, eSIM (e.g. the arrival of eSIM-only phones), foldables and breakthroughs in some of the features that consumers value the most (camera and battery quality). These trends will become even more important in 2023, as vendors will look to take advantage of the recovery of smartphone sales.

Hardware innovation is important, but the value for consumers will increasingly lie in two areas beyond the smartphone itself: smartphones as a central control platform for other devices (e.g. smartwatches and smart TVs) and as the platform most frequently used for digital entertainment and services. A growing share of consumers use their smartphone to access digital entertainment content (e.g. video, music, gaming) and other digital services (e.g. payment, health, information) on a weekly basis. 5G is also enhancing the user experience, making some digital services even more attractive. This can drive greater smartphone usage beyond communications services but will require focused marketing activities towards specific consumer segments. Meanwhile, the wider tech ecosystem, including operators, is laying the groundwork for the next big thing – the metaverse.

In this fourth edition of the devices report from GSMA Intelligence, we examine how consumer behaviour for devices is changing across different areas (smartphone replacement rate, preferred sales location for next smartphone purchase, smartphone purchase drivers, brand loyalty); the impact of new technologies such as 5G and eSIM; and how to leverage the smartphone to capture incremental value from non-smartphone devices and digital services.