Mobile Phones in France

8/2/2019 Mobile Phones in France

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MOBILE PHONES IN FRANCE

Euromonitor International

January 2012


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M O B I L E P H O N E S I N F R A N C E P a s s p o r t I

E u r o m o n i t o r I n t e r n a t i o n a l

LIST OF CONTENTS AND TABLESHeadlines ..................................................................................................................................... 1

Trends ......................................................... ................................................................. ................ 1Competitive Landscape ........................................................................................................... ..... 3Prospects ..................................................................................................................................... 4Category Data .............................................................................................................................. 5

Table 1 Sales of Smartphones by Operating System 2008-2010.............................. 5Table 2 Sales of Mobile Phones by Type of Contract 2005-2010 ............................. 5Table 3 Sales of Mobile Phones: Volume 2005-2010 ............................................... 6Table 4 Sales of Mobile Phones: Value 2005-2010 .................................................. 6Table 5 Sales of Mobile Phones: % Volume Growth 2005-2010 ............................... 6Table 6 Sales of Mobile Phones: % Value Growth 2005-2010 .................................. 6Table 7 Mobile Phones Company Shares 2006-2010 ............................................... 6Table 8 Mobile Phones Brand Shares 2007-2010..................................................... 7

Table 9 Sales of Mobile Phones by Distribution Format 2005-2010 .......................... 7Table 10 Forecast Sales of Mobile Phones: Volume 2010-2015................................. 8Table 11 Forecast Sales of Mobile Phones: Value 2010-2015.................................... 8Table 12 Forecast Sales of Mobile Phones: % Volume Growth 2010-2015 ................ 8Table 13 Forecast Sales of Mobile Phones: % Value Growth 2010-2015 ................... 8


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M O B I L E P H O N E S I N F R A N C E P a s s p o r t 1


MOBILE PHONES IN FRANCE

HEADLINES Mobile phones increases in value and volume to reach 27.6 million units in 2010, a 21%

increase

The market for smartphones continues to grow

The French continue to buy feature phones in 2010, but twice as many smartphones as in

2009

Average unit price increases to 120 compared to 110 in 2009

Samsung Electronics France leads mobile phones with a 40% volume share

Constant value sales of mobile phones are expected to grow by a CAGR of 3% over the

forecast period

TRENDS

The French were more willing to use a mobile service such as video telephony, mobile TV or

data transfer through the 3G network in 2010. The number of SIM cards (PCMCIA cards, keys

3G internet or 3G +) dedicated to internet connections continued to increase at a rate of one

million additional cards per year, an increase of 64% in one year.

Increasing sales of smartphones helped mobile phones to grow by 82% to 8.5 million units in

2010. The success of smartphones in France is exponential. France is the second country

where smartphones had the greatest success, behind the UK (28.9% of total sales), but

ahead of Germany (19.6%), Italy (17.6%) and Spain (14.8%). The market is driven by the

proliferation of terminals, the rise of mobile broadband networks and the emergence of

subscriptions.

Mobile phone makers and operators are making smartphones affordable to a wider variety of

people, which helped increase sales. There are two reasons for the success of smartphones

in France. Prices declined due to grants awarded by mobile operators resulting in accessibility

to every socio-demographic group. The advent of the touch screen was also popular. Many

find it easier and quicker to navigate the increasing number of functionalities available on

these devices than with previous mobile phones. The smartphone with tactile screen

represented 40% of sales in 2010 and France remained ahead of its European neighbours.

In 2010, the average price of a smartphone, before any grant by an operator, fell to 220.

Consumers who bought a smartphone spent an average of 154 with operator funding, or

about 70 less than in summer 2009. In addition, there were offers that made smartphones

available for less than 50.

The market share of Android multiplied by more than six in 2010 in France. The mobileoperating system from Google started in 2010 with less than 3% of market share to finish at

20%. Android is present on a growing number of smartphones at affordable prices. French

operators promoted Android phones more strongly in 2010, which helped to reduce

dependence on the iPhone. Now with over 100,000 applications available, the operating

system from Google is mature and benefited from the release of new affordable terminals

capable of competing with Apple's smartphone. Android is used by Samsung, LG, HTC,

Motorola and Sony Ericsson where Apple has only two references. By 2013, the growth of the

Google operating system will reach 40% each year, the highest growth in the market. The

main advantage of Android is the fact that it is open source, ie free. The other advantage of


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Android is the Android Market which includes thousands of applications, approximately 60%

of which are free.

According to ARCEP, 64.4 million SIM cards were activated in 2010, representing a growth of

4.9% compared to 2009. The data SIM cards (M2M and 3G) amounted to 5.4 million units in

2010 (2.6 million for M2M and 2.7 mil lion for 3G). The mobile plans continued to be preferredby 46.4 million mobile users in France, an increase of 8.9%, versus 17.9 million for pre-paid

cards, a decrease of -4.5%. In 2010, the number of mobile subscriptions continued to grow

strongly in France, while the number of prepaid cards continued to decline. Among French

users of smartphones, nearly 4.7 million subscribe to cheap plans versus 2.28 million

subscribers who pay for more expensive plans ie more than 50 per month. Smartphones are

generally perceived as equipment associated with premium prices and very expensive

subscription plans.

Three network operators, France Tlcom, SFR and Bouygues, offer the full range of

telephony and data services, while a growing number of Mobile Virtual Network Operators

provide competition in the low-cost area. The market share of mobile virtual network operators

(MVNO) in France was 6.52% in 2010, with four million mobile customers and 241,000 new

customers. Virgin Mobile, 47.5% of which is owned by the British group Carphone

Warehouse, is the number one MVNO in France.

The mobile penetration rate reached 99.7% in 2010, versus 96% in 2009. In 2010, 19 million

feature phones were sold in France versus 8.4 million smartphones. Despite some

discrepancies, the market for mobile phones in France is homogeneous in terms of region.

Despite the growing success of smartphones, feature phones continue to provide important

volumes. In particular the terminals which embed a full physical keyboard and are equipped

with various services eg SMS/MMS, email, instant messaging, social networks, remain very

popular in France. They are also less expensive than smartphones which remain a strong

attraction to the public.

3G network recorded considerable growth in 2010 as 2.74 million units are now operational.

Following input by ARCEP, Orange and SFR significantly improved their 3G wirelesscoverage. The two operators reached 91% and 88% respectively of the population in late

2010. Bouygues Telecom clearly exceeded the minimum required at 75%. The French

telecoms regulator ARCEP concluded the formal handover of the countrys fourth 3G licence

to Iliads Free Mobile. The Iliad Group committed to launching its network within two years of

being awarded the licence, which took place at the end of 2009. The newcomer pledged to

cover at least 90% of the population with its 3G network within eight years of launch, and its

promise to deliver competitive prices should spur growth in mobile internet access.

France is behind regarding 4G network. According to Orange, the country will take advantage

of the 4G technology only at the beginning of 2013. The French industry minister, Eric

Besson, announced that the nations auction of 4G frequencies should be completed by the

summer of 2011. One issue that the French regulators are concerned about is that rural areas

of the country also get coverage. The French government is hoping to have 99% of thepopulation covered by fourth-generation mobile phone technology by 2025. One barrier,

however, is the cost: operators will have to pay significant sums of money to enter 4G, which

could cause problems, given the economic climate.

Electronics and appliance specialist retailers remained the most important retail channel for

mobile phones in France in 2010 with a 58% volume share. Mobile network operators

Bouygues Telecom, Orange and SFR run their own outlets where customers can get a

contract and/or a mobile phone. The hypermarkets channel is important as well, holding an

18% volume share as it offers pay-as-you-go phones. These shares remained stable in 2010,

as the retail channels are well established and there was no change in the selling process of a


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mobile phone, or the type of contract. Internet retailing saw strong growth over the review

period and had a 10% share of volume sales by 2010. This retail channel became

increasingly appealing to consumers who can make comparisons on features and prices and

very often can get competitive prices.

COMPETITIVE LANDSCAPE

Samsung remains the leader in mobile phones and strengthened its lead in 2010 with 40%

volume share versus 34% in 2009. It is followed by Nokia with 25% share, Apple with 9%,

Sony Ericsson with 8% and LG with 7%.

Apple continues to lead smartphones in France in 2010 with 31% share, although its share

declined compared to 2009. The decline was due to the wait for the iPhone 4 and the

aggressiveness of stronger competitors. Nokia was in second place with 22% volume share,

Samsung with 16%, HTC with 8% and Research in Motion with 8%.

In 2010, Android was the third system used by the French, behind Nokias Symbian and

Apples iPhone. Nokia was preferred by 30% of users. iPhone sales stabilised and the Apple

smartphone is used by 30% of consumers.

Nokia and LG saw a decline in share due to the decrease of feature phones while Sony

Ericsson and Apple showed progress due to the increase in smartphones. There were several

trends in smartphones in France in 2010. iPhone sales were stable throughout the year, while

Nokia saw its sales drop by 12 percentage point in 2010.

French mobile phones is dominated by multinational companies. The arrival of a fourth mobile

phone operator, Free Mobile, which plans to launch its services in early 2012, should ensure

that competition remains strong. In 2010, the operator Free holds the fourth mobile licence

which could decrease prices by 7% and will enable a better penetration rate in France.

Among MVNOs, one new player is scheduled for launch during Q111, La Poste. The operator

will join a crowded bottom end of the market, where more than a dozen MVNOs are active.

The market of seniors, long ignored by mobile manufacturers, began to develop. Operatorsare more willing to reach this market. After SFR and its Amplicom, or the Doro Orange,

Bouygues Telecom launched the EasyPhone, a terminal suitable for seniors. Mobile

manufacturers are also beginning to focus on this market.

French telecoms operator SFR launched a new ultra-high speed triple-play service in a bid to

secure market share and compete in an intense ly competitive market. SFRs new Neufbox

Evolution set-top box (STB) is equipped to deliver 3D TV shows and films, as well as

delivering content to a users smartphone or PC. Priced at 34.99 per month, SFRs new

service compares favourably with the standard market price of 29.99 per month in France.

Bouygues Telecom, Orange and SFR formed a new joint venture in 2010 that will use mobile

phones to help make online payments in France safer. The launch is planned for the middle of

2011. There are no plans for a launch outside France. Several brands including Carrefour,

Franprix and SNCF already tested mobile payment solutions but none decided to deploy on a

large scale in 2010.

To promote Windows Phone 7 (WP7), Microsoft organised a guerilla marketing campaign in

the French capital, Paris, to coincide with the worldwide launch. People in the streets were

give flyers with a barcode printed on it and the organisers selected a few people to win a WP7

device. The highlight of this marketing is the prize; the winners have to find a way to take their

WP7 device out of a frozen ice block.

In 2010, the distributor The Phone House set up a recycling programme of used mobile

phones in its stores. It is estimated that there are 60 million unused mobile phones in France.


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The return of used mobile phones began in May 2010. The first results were promising with

2,000 mobile phones collected in two weeks by the distributor. This recovery was directed

primarily at the purchase of smartphones.

French operator SFR signed an agreement with Nokia Siemens Networks to build extra

capacity in its existing 3G network. SFR plans to start rolling out the upgrade from thebeginning of 2011.

PROSPECTS

Over the forecast period mobile phones is expected to have volume decline with a CAGR of -

4%. However, it is expected to have a constant value CAGR of 3%, as feature phones wil l

gradually decrease while new generation multimedia phones will make a serious impact. The

arrival of Windows Phone meant that competition in mobile operating systems is intensifying.

Manufacturers of mobile devices will become more competitive and new technologies will also

emerge such as 4G and video conferencing.

Smartphones in the forecast period will be more powerful, and will incorporate

microprocessors more similar to those of netbooks. They will be capable of handling high

definition and 3D. Over the forecast period, smartphones could represent 90% of mobile

phones. Smartphones shopping is also an important trend as it could be the key to reviving

slow consumer spending and will provide retailers with renewed optimism.

Since the launch of the iPad in April 2010, most mobile phones manufacturers announced

they would market internet tablets. Samsung launched its Tab Galaxy in November 2010 and

saw success with the brand. In 2011, Blackberry, Motorola and LG will launch their internet

tablets. The mobile operators Orange, SFR and Bouygues Telecom are beginning to offer

internet tablets, combined with 3G packages. In 2011, their catalogues will be more available,

and internet tablets will represent a significant source of revenue for operators. People who

want to buy a tablet will tend to move towards a product with the same OS as their phone.

Competition in smartphones will therefore increase. The arrival of Windows 7 Phone did not substantially change the trend and Microsoft

continues to lose market share. Windows Phone 7 was released in October 2010 and is

expected to perform well since it is different from its competitors and has undeniable qualities.

Windows Phone 7 differentiates itself from the competition through its home page offering

menu in tabs, and its strong integration with popular social networking sites.

A new tax on home internet packages, landlines and mobile phones is being considered to

help improve broadband coverage and speeds around France. Web users in France are

already facing rises because of changes to the way triple play packages, which combine

internet, phone and television, are taxed. These packages will incur VAT at the full rate of

19.6%, after the government scrapped the reduced 5.5% rate. Some internet service

providers said they will pass the tax rise on to customers.

ARCEP recommended that mobile phones contracts be shortened from the 24-month tie-ins

commonly offered, to allow end users to shop around for better deals. In a public consultation

document setting down 30 key recommendations to improve transparency and make the

market more competitive, ARCEP is calling on operators to be required to offer contracts of

either twelve or six months. ARCEP is concerned that under existing rules customers are

locked into long-term deals often to the detriment of competition and often in a way that

makes it difficult for users to switch provider.

The sellers of devices running Android will continue to f ight for market share, which will lower

prices for consumers. This was seen in the price decreases of the iPhone in France. In late

December 2010, Virgin Mobile was the first to lower the price by proposing the Apple terminal


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at 99 on the condition of providing a subscription. Orange, which also distributes the iPhone

4, decided to lower the price of the terminal by at least 100. The price war for iPhone 4 will

continue to intensify in the forecast period with price cuts expected at Bouygues Telecom and

SFR.

In 2010, customers are in a fully digital world and at the centre of several personal,professional, and social networks. This phase is characterised by the need to remain

constantly connected. Operators invested heavily in the review period to improve this service

and expand their mobile coverage. Mobile phones is also characterised by short replacement

cycles and high rates of innovation, meaning that the competitive landscape can change more

quickly than many companies can adjust.

As mobile phones in developing countries approach saturation the replacement market is

becoming increasingly important. Changing trends and interests have strong influence over

smartphones design and features. The popular mobile phones manufacturers such as

Ericsson and Nokia are working on new designs and prototypes. Consumers rapid adoption

of smartphones and tablets, combined with innovative mobile applications, allow retailers to

create a myriad of new ways to connect with customers when inside the store, improving

customer satisfaction and driving revenue. To survive in this new connected purchasing

climate, retailers need to acquire and maintain customers who are loyal and will keep coming

back.

2010 was an intense year with multiple new products for both terminals and operating system

launches. The various players competed mainly on the basis of hardware and technology. To

win share, manufacturers need to strongly differentiate themselves. When Google unveiled

the Nexus One, it attempted to separate the phone from its competitors by calling it a

Superphone. Location awareness will further lead to several other innovations. Mobile phones

in 2015 will know when you are near a McDonalds or Starbucks and will offer to pay your bill.

CATEGORY DATA

Table 1 Sales of Smartphones by Operating System 2008-2010

% retail volume2008 2009 2010

Windows 14.4 9.5 4.0iOS 18.1 40.7 30.7Android 4.7 26.6Symbian 57.3 36.6 25.1BlackBerry OS 8.7 6.9 7.8Other 1.5 1.6 5.8Total 100.0 100.0 100.0

Source: Euromonitor International from official statistics, trade associations, trade press, company research,store checks, trade interviews, trade sources

Table 2 Sales of Mobile Phones by Type of Contract 2005-2010

% retail volume2005 2006 2007 2008 2009 2010

Monthly Subscription 57.7 61.8 64.0 68.0 71.0 76.6Pay as You Go 4.1 3.2 2.8 1.3 0.3 0.2Phone Only 38.2 35.0 33.3 30.7 28.8 23.3


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Total 100.0 100.0 100.0 100.0 100.0 100.0


Table 3 Sales of Mobile Phones: Volume 2005-2010

'000 units2005 2006 2007 2008 2009 2010

Feature Phones 17,824.0 19,540.0 20,044.5 20,349.8 18,238.0 19,145.0Smartphones 176.0 360.0 2,155.5 3,149.2 4,669.5 8,497.7Mobile Phones 18,000.0 19,900.0 22,200.0 23,499.0 22,907.5 27,642.7


Table 4 Sales of Mobile Phones: Value 2005-2010

EUR million2005 2006 2007 2008 2009 2010

Feature Phones 2,403.3 2,419.5 2,092.2 1,885.8 1,479.3 1,448.2Smartphones 56.1 109.3 559.6 728.5 1,041.2 1,866.1Mobile Phones 2,459.5 2,528.7 2,651.8 2,614.3 2,520.5 3,314.3


Table 5 Sales of Mobile Phones: % Volume Growth 2005-2010

% volume growth 2009/10 2005-10 CAGR 2005/10 Total

Feature Phones 5.0 1.4 7.4Smartphones 82.0 117.1 4,728.2Mobile Phones 20.7 9.0 53.6


Table 6 Sales of Mobile Phones: % Value Growth 2005-2010

% current value growth2009/10 2005-10 CAGR 2005/10 Total

Feature Phones -2.1 -9.6 -39.7Smartphones 79.2 101.5 3,224.4Mobile Phones 31.5 6.1 34.8


Table 7 Mobile Phones Company Shares 2006-2010

% retail volume


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Company 2006 2007 2008 2009 2010

Samsung Electronics 23.7 27.8 32.2 33.6 39.5France

Nokia France SA 30.9 29.2 28.5 26.1 24.2

Apple Computer France - 0.1 2.4 8.3 9.4Sony Ericsson SAS France 8.8 13.2 11.6 11.0 8.3LG Electronics France 9.6 6.7 9.3 11.7 7.3HTC Corp - 0.3 0.6 1.5 2.5Research in Motion Ltd 0.2 1.1 1.2 1.4 2.4Sagem Tlcommunications - - 5.5 4.0 2.2Motorola SAS 7.4 4.7 2.9 0.5 0.7Sagem Communications 10.6 10.7 - - -

GroupPalm Inc 0.1 0.1 - - -Others 8.7 6.0 5.9 1.9 3.4Total 100.0 100.0 100.0 100.0 100.0


Table 8 Mobile Phones Brand Shares 2007-2010

% retail volumeBrand Company 2007 2008 2009 2010

Samsung Samsung Electronics France 27.8 32.2 33.6 39.5Nokia Nokia France SA 29.2 28.5 26.1 24.2iPhone Apple Computer France 0.1 2.4 8.3 9.4Sony Ericsson Sony Ericsson SAS France 13.2 11.6 11.0 8.3LG LG Electronics France 6.7 9.3 11.7 7.3HTC HTC Corp 0.3 0.6 1.5 2.5Blackberry Research in Motion Ltd 1.1 1.2 1.4 2.4

Sagem Sagem Tlcommunications - 5.5 4.0 2.2Motorola Motorola SAS 4.7 2.9 0.5 0.7Sagem Sagem Communications Group 10.7 - - -Palm Palm Inc 0.1 - - -Others 6.0 5.9 1.9 3.4Total 100.0 100.0 100.0 100.0


Table 9 Sales of Mobile Phones by Distribution Format 2005-2010

% retail volume2005 2006 2007 2008 2009 2010

Store-Based Retailing 88.7 86.8 84.7 79.6 73.7 74.7- Grocery Retailers 16.7 16.7 17.0 19.1 20.2 20.6- - Discounters 2.1 2.1 2.0 1.9 1.8 1.3- - Hypermarkets 12.5 12.5 13.0 15.3 16.5 17.6- - Supermarkets 2.1 2.1 2.0 1.9 1.9 1.7- Non-Grocery Retailers 62.7 61.3 57.7 52.2 43.1 41.9- - Electronics and 53.7 51.8 48.7 43.3 34.4 32.7

Appliance SpecialistRetailers

- - Mixed Retailers 9.0 9.5 9.0 8.9 8.7 9.2- Other store-based 9.3 8.8 10.0 8.3 10.4 12.2


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retailingNon-Store Retailing 11.3 13.2 15.3 20.4 26.3 25.3- Direct Selling - - - - - -- Homeshopping 3.1 3.1 3.0 2.9 2.7 -- Internet Retailing 8.2 10.1 12.3 17.5 23.6 25.3

Total 100.0 100.0 100.0 100.0 100.0 100.0Source: Euromonitor International from official statistics, trade associations, trade press, company research,

store checks, trade interviews, trade sources

Table 10 Forecast Sales of Mobile Phones: Volume 2010-2015

'000 units2010 2011 2012 2013 2014 2015

Feature Phones 19,145.0 13,018.6 9,243.2 5,083.8 2,084.3 396.0Smartphones 8,497.7 11,556.8 15,255.0 19,526.4 21,479.1 22,553.0Mobile Phones 27,642.7 24,575.4 24,498.2 24,610.2 23,563.4 22,949.1

Source: Euromonitor International from trade associations, trade press, company research, trade interviews,trade sources

Table 11 Forecast Sales of Mobile Phones: Value 2010-2015

EUR million2010 2011 2012 2013 2014 2015

Feature Phones 1,448.2 925.6 599.7 292.9 106.1 18.1Smartphones 1,866.1 2,195.9 2,790.3 3,482.5 3,747.6 3,850.1Mobile Phones 3,314.3 3,121.5 3,390.0 3,775.4 3,853.7 3,868.1


Table 12 Forecast Sales of Mobile Phones: % Volume Growth 2010-2015

% volume growth2014/15 2010-15 CAGR 2010/15 Total

Feature Phones -81.0 -54.0 -97.9Smartphones 5.0 21.6 165.4Mobile Phones -2.6 -3.7 -17.0


Table 13 Forecast Sales of Mobile Phones: % Value Growth 2010-2015

% constant value growth2010-15 CAGR 2010/15 TOTAL

Feature Phones -58.4 -98.8Smartphones 15.6 106.3Mobile Phones 3.1 16.7



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Mobile Phones in France