1. Spring 2011 Corporate Research and Strategic Analysis CONFIDENTIAL By: Andrea Sharkey, PhD Corporate Research & Strategic Analysis Forrester Smartphones – Special Issue

2. Corporate Research and Strategic Analysis CONFIDENTIAL Overview This report provides a brief overview of some of the research on smartphones which has been released by Forrester in the past several months 2

3. Corporate Research and Strategic Analysis CONFIDENTIAL Overview While the information in this reports focuses on the U.S. market where smartphone penetration is higher, many of the insights Forrester puts forth are relevant to the Canadian market as well as we too are witnessing a smartphone boom*. 3 *This year’s MTM shows a 10% growth in smartphones amongst Canadians between 2009 and 2010 (14% to 24% respectively)

4. Spring 2011 Corporate Research and Strategic Analysis CONFIDENTIAL The Landscape

5. Corporate Research and Strategic Analysis CONFIDENTIAL 5 Mobile phones are virtually the only device that people have on them at all times

6. Corporate Research and Strategic Analysis CONFIDENTIAL 6 In the U.S. alone, Forrester is forecasting nearly 100 million smartphone users by the end of 2011

7. Corporate Research and Strategic Analysis CONFIDENTIAL 7 Bothandhave sold hundreds of millions of devices globally In fact, Google activates 400,000 Android devices each day

8. Corporate Research and Strategic Analysis CONFIDENTIAL Forecast: U.S. Cell Phone Market (millions) U.S. smartphone adoption will grow to 63% by the end of 2015 *Messaging phones are specifically designed to make sending and receiving messages easier and have a designated keyboard

9. Corporate Research and Strategic Analysis CONFIDENTIAL Forecast: U.S. Cell Phone Market (millions) Even though the number of total mobile subscribers will grow just 10% during that same time *Messaging phones are specifically designed to make sending and receiving messages easier and have a designated keyboard

10. Spring 2011 Corporate Research and Strategic Analysis CONFIDENTIAL Smartphone Owners

11. Corporate Research and Strategic Analysis CONFIDENTIAL Traditionally, smartphone owners were… 11 From households with higher incomes Career motivated 3 times more likely to regularly access the Net on their phone Tech- optimists More than 5 years younger than the average cell owner Male

12. Corporate Research and Strategic Analysis CONFIDENTIAL 12 But rapid expansion in the smartphone market is being driven by… Lower price points Affordable data plans Consumer demand for functionality

13. Corporate Research and Strategic Analysis CONFIDENTIAL 13 And previous assumptions about smartphone owners are changing

14. Forrester now sees smartphone owners in three distinct groups Corporate Research and Strategic Analysis CONFIDENTIAL *Quick messaging device or messaging phone

15. Corporate Research and Strategic Analysis CONFIDENTIAL 15 Travellers in the U.S. are also more likely to own smartphones of online adults own smartphones 22% of online leisure travellers own one 35% of online business travellers own one 55%

16. Corporate Research and Strategic Analysis CONFIDENTIAL Compared to other business travellers, smartphone business travellers tend to be… 16 About 4 years younger College graduates In the early stages of creating travel brand relationships Tech- optimists Primarily motivated by entertainment and content Higher income earners

17. Corporate Research and Strategic Analysis CONFIDENTIAL 17 Google has stated that by mid-2011 more map searches will be conducted from mobile phones than on desktop computers

18. Corporate Research and Strategic Analysis CONFIDENTIAL 18 Forrester expects that by 2013 the two most important touch-points for travellers will be: Smartphones Traditional Websites

19. Spring 2011 Corporate Research and Strategic Analysis CONFIDENTIAL Activities

20. Corporate Research and Strategic Analysis CONFIDENTIAL 20 Smartphone owners are no longer just texting and surfing the web…

21. Now they’re… Corporate Research and Strategic Analysis CONFIDENTIAL 21 Banking Finding deals Listening to music Watching video Buying merchandise Paying bills Booking travel Creating content Doing their taxes Opening car doors Checking blood sugar levels Voting Recording TV shows Getting directions Playing games Changing the channel Levelling a shelf Learning Mandarin And more…

22. Corporate Research and Strategic Analysis CONFIDENTIAL 22 As more and more functionality is built into smartphones, this will cause disruption for many products

23. Corporate Research and Strategic Analysis CONFIDENTIAL 23 Forrester notes that as markets collide, some existing portable device will win and some will lose… The PDA is dead Cells have increasingly capable address books, calendars and organizers PDA Handheld game consoles are under pressure to evolve High quality graphics and large screens make smartphones a valid gaming alternative Handheld Game Console MP3 players must evolve to stay relevant Virtually all mobile phones now offer MP3 playback MP3 Player Unless the standalone GPS evolves it will be gone GPS applications are now available for free on all smartphones GPS The disposable film camera is now a niche Multimegapixel cameras are now available in all phones Disposable Camera

24. Spring 2011 Corporate Research and Strategic Analysis CONFIDENTIAL Forrester’s 2011 Predictions for the Smartphone Industry

25. Corporate Research and Strategic Analysis CONFIDENTIAL 25 2011 Will be the Year of the “Dumb” Smartphone User With smartphone adoption booming, new users are likely to be less engaged and active than early adopters

26. Corporate Research and Strategic Analysis CONFIDENTIAL 26 Mobile Fragmentation Will Continue to Be a Problem Multiple operating systems, screen sizes and devices mean companies planning to reach mass audiences through apps will continue to face high costs for creation and maintenance

27. Corporate Research and Strategic Analysis CONFIDENTIAL 27 Consumers Will Spend Billions Via Mobile Because of this, U.S. advertisers will spend more than $1 billion to reach people on their cell phones

28. Corporate Research and Strategic Analysis CONFIDENTIAL 28 Premium news and music content spaces will use new business models Subscriptions, microtransactions and in-app billing will expand to news and music mobile sites

29. Corporate Research and Strategic Analysis CONFIDENTIAL 29 Use of the Mobile/Social/Local Combination Will Explode Many geo-targeted mobile promotions will launch next year but will generate little revenue

30. Corporate Research and Strategic Analysis CONFIDENTIAL 30 Smartphones will increasingly prompt people to interact with their physical environment While still a niche activity, QR codes and augmented reality apps will be more common

31. Corporate Research and Strategic Analysis CONFIDENTIAL 31 Buzz about 4G will be overrated It’s taken nearly 7 years for half of all mobile subscribers to benefit from 3G and 4G access will be no different

32. Corporate Research and Strategic Analysis CONFIDENTIAL 32 The Term “Mobile” Will Mean a Lot More Than Just Phones Soon Consumers are connecting more devices wirelessly to the Internet so apps and services need to work across devices (i.e tablets)

33. Corporate Research and Strategic Analysis CONFIDENTIAL Reference Articles Ask, J. & T. Husson. (January 2011). 2011 Mobile Trends. Forrester Research. Ask, J. et al. (August 2011). Digital Marketing: The Future of Mobile is Context. Forrester Research. Fogg, I. (December, 2010). Portable Media Players Must Evolve With Cloud or Become Extinct. Forrester Research. Golvin, C.S. (March 2011). Crafting Products for the Next Smartphone Owners. Forrester Research. 33

34. Corporate Research and Strategic Analysis CONFIDENTIAL Further Information If you have any questions about the material presented here, please contact Andrea Sharkey (ext. 6360; andrea.sharkey@cbc.ca) 34