Business Report 1. The Market for Smart phones 2.

Consumer Expectations of Smart phones

Written by Nanda Maharaj Business Analyst BHW&R Agency 14th March 2013.

Executive Summary (Summary of the report)

Table of Contents 1. Executive Summary 2. Terms of Reference 3. Procedures 4. Findings

5.

1. Terms of Reference
This report is an analyst of smart phones and the consumer expectations of smart phones. It will give the Client Cellular Ltd guidance as to whether the Smartphone market is worthwhile to venture into. This report will analyze both internal and external factors of the Smartphone market. The report is written by Nanda Maharaj for BHW&R Agency, a Business Analyst with extensive knowledge on Market Research. Its purpose is to give the management of Cellular Limited recommendations based on the external and internal analysis.

2. Procedures
The Internet was the main source of information for this report. Mainly search engines, but also the corporate website and Websites such as Yahoofinance.com or the Business Insider.

3. Findings Introduction
Cellular Limited is a leading company that operates as a supplier of unlocked handsets in the retail market for mobile phones. The company is considering entering the Smartphone market. Cellular is aware of the lucrative market that exists for such phones and requires a blue print for conducting market research on smart phones and consumer expectations of smart phones. Cellular Ltd has provided forecasted net earnings over a five year period, which would be reviewed using various tools and techniques that would assist Cellular Ltd in making a sound business decision. Who wants everything inside mobile phone? People at first are skeptical about the potential of the socalled modernized Operating System stored in mobile phone. It turns out that the idea became a multibillion dollar industry. Everybody is trying to get a piece of the Smartphone pie including Microsoft, Google, Apple, Nokia, and Research in Motion (RIM). Gone are the days when mobile phone users solely made and received telephone calls across a wide geographic area. Nowadays, what consumers care about is how much I can get access using a mobile device rather than just making and receiving a phone call.

From PDAs to Smart Phones: The Evolution of an Industry in the Beginning

Before the Smartphone, there was the Personal Digital Assistant (PDA). Even though PDAs had innovative and sophisticated product designs, companies failed due to several reasons. First, enabling technologies were not up to par and such features as wireless connectivity, greater processing power, longer battery life and replicating streamlined versions of office software compromised the performance and size of the PDA. Another reason was due to the lack of market awareness about the functionality and the future potential of pen-based PDA and the market was still undeveloped in terms of such technology. With the lack of publicity, how would the public see any use for a PDA? This was especially true for a generation that was not technologically driven as we are today. With a device more expensive than desktop systems, it seemed that without proper marketing the public would not understand the need for it. Furthermore, potential users were unsure of the PDAs performance, compatibility and availability showing how companies failed to address user needs and did not focus on the type of consumer that would most likely buy such a device. In addition to these setbacks, Microsoft stalled the market acceptance of PDA technology when it announced it was planning

on making a PDA, but failed to follow through with it. It is obvious that companies producing PDAs could have developed successful marketing tactics to gain momentum and build a consumer base upon such publicity. However, it can be debated whether the PDA could of survived the emergence of the smart phone. Although many companies such as Momenta and GO failed in the PDA business, Palm proved to be the most victorious. The Palm Pilot was successful because the product was fast, simple, and was available for less than $300. With the extinction of PDAS came the launch of the smart phone which created competition among such companies as Research In Motion, Motorola, Samsung, and HTC. However, in 2007, these companies were in for a major battle when computer giant Apple entered into the smart phone industry. Being late to the smart phone market proved in no way to be a disadvantage for Apple as the iPhone surpassed present smart phone models, especially with its integration of touch screen technology into smart phones. Apple was able to successfully enter into the industry when it did due to its well known and trusted brand. The companys triumph can be measured by the success of its computers, computer software including iTunes, and iPods. The iPhone has been successful due to such features as its user interface, touch screen technology, applications, synchronization with iTunes, and its simplicity along. Apple has always been known for its innovation and the iPhone was proof of that. Overall, there seems to be increasing returns in the smart phone market as its consumer base grows; nevertheless, it is not likely that a single operating system as the dominant design as the cell phone industry produces a variety of different models that accommodate users preferences. Overall, the smart phone industry has gained the longevity and potential for further technological advances that PDAs failed to obtain demonstrating how the timing of a products entry into its industry is vital in the products success. Over the last decade, mobile phones have become one of the major means of communicating both voice and data. Today, mobile phone is virtually a social necessity for most of us. Increase in computing power of mobile phones, improved bandwidth of wireless technologies, and internet technology have led to the introduction of Smartphone which provides greater levels of intelligence to its users. This intelligence lies partly in the phone itself and partly in the smarter-network in to which it connects. This intelligence is a potent combination of hardware used to build the Smartphone and software i.e., operating system which runs on the hardware of the Smartphone.

What is a Smartphone?
Smartphone can be defined to be a device that enables the user to make telephone call and at the same time has some features that allow the user to do some activities that in the past was not possible unless using a computer or a personal digital assistant (PDA), such as sending and receiving e-mails, amending an office document.

Features of a Smartphone
Operating System: In general, a Smartphone will be based on an operating system that allows it to run applications. Apple's iPhone runs the iOS, and BlackBerry smart phones run theBlackBerry OS. Other devices run Google's Android OS, HP's webOS, and Microsoft's Windows Phone. Application: about all cell phones contain a number of software, most of them incorporate an address book or a contact manager but Smartphone can do extra, Smartphone allow the user to create, edit and view Microsoft Office document, in many cases it allows the user to download apps, apps such as business finance and personal managers, or many other apps. In many Smartphone it is also possible to view and edit photos, or get navigation direction through GPS service and create list of tunes. Web Access: due to the 4G and 3G data network many Smartphone can get access to the web with a high speed, in addition to that connection, many Smartphone are supported with Wi-Fi, although not all Smartphone have high speed web access but all Smartphone have access. QWERTY Keyboard: By our definition, a Smartphone includes a QWERTY keyboard. This means that the keys are laid out in the same manner they would be on your computer keyboard--not in alphabetical order on top of a numeric keypad, where you have to tap the number 1 to enter an A, B, or C. The keyboard can be hardware (physical keys that you type on) or software (on a touch screen, like you'll find on the iPhone). Messaging: All cell phones can send and receive text messages, but what sets a Smartphone apart is its handling of e-mail. A Smartphone can sync with your personal and, most likely, your professional e-mail account. Some smart phones can support multiple e-mail accounts. Others include access to the popular instant messaging services, like AOL's AIM and Yahoo! Messenger. These are just some of the features that make a Smartphone smart. The technology surrounding smart phones and cell phones is constantly changing, though. What constitutes a Smartphone today may change by next week, next month, or next year?

Brands of Top 10 Smart phones

The biggest known name in this market is Apple; they were the first to make the Smartphone popular and fired the first few shots in the battle. This led to companies like Samsung and Motorola to fire back with offerings of their own. These were the first three combatants in the battle to make the best Smartphone and offer it for the best price possible.

(1) Apple iphone 5

The iPhone 5 gives Apple fans what theyve been waiting for, including a bigger screen, 4G LTE and easier Facebook sharing. But its the design of this phone that makes it truly stand out. Measuring just 0.3 inches thick and and weighing a mere 4 ounces, the iPhone 5 is so light and svelte that you really have to hold it in your hands to believe it. This one-hand-friendly handset also boasts one of the sharpest cameras around, a fast A6 chip and more than 7 hours of battery life. Yes, the Maps app is flawed, but otherwise the iPhone 5s combination of portability, performance, apps and accessories cant be beat.

(2) Samsung Galaxy S III

The most innovative Smartphone of the year makes it easier to share everything, whether youre looking to transfer videos between Galaxy phones with a tap or broadcast your photos to an entire group over Wi-Fi. The S III has a ton of other nifty features behind its 4.8-inch HD screen, including Direct Call for dialing a contact just by lifting the phone to your head and Pop up Play for watching a video while youre using another app. While the screen could be brighter, a slim design, swift camera and smooth performance solidify the S III as one of the very best phones of 2012.

(3) Motorola Droid RAZR Maxx HD

The Droid RAZR Maxx HD is the marathoner of smartphones. In fact, this Verizon device lasts more than two hours longer than the average smartphone. Were talking 8 hours and 13 minutes in the LAPTOP Battery Test, which involves continuous Web surfing over 4G LTE. But the Droid RAZR Maxx isnt all about its beefy 3,300 mAh battery. It sports a sleek but strong Kevlar-infused design, a very bright and crisp HD display and loud and clear audio. A recent upgrade to Jelly Bean adds welcome enhancements like Google Now and offline voice typing. Youll pay a premium for the Maxxs extra endurance, but its well worth it.

(4) Nokia Lumia 920

If you havent considered a Windows Phone, the Lumia 920 will make you a believer. In addition to sporting Microsofts compelling Live Tile interface, this Windows Phone 8 device features a breakthrough PureView camera that takes some of the best low-light pictures weve seen. Nokia sweetens this $99 steal of an AT&T phone with integrated wireless charging capability and useful and entertaining apps like Nokia Drive and Nokia Music. Although the Lumia 920 is on the hefty side, we love how colors pop off the 4.5-inch screen, as well as the multiple color options for the phone itself.

(5) Samsung Galaxy Note II

Proving that bigger can be better, the Galaxy Note II makes the most of its ginormous 5.5-inch HD display, starting with an S Pen that makes it easy to take notes and preview emails just by hovering the pen above the screen. It gets better. Samsungs multi-window feature lets you run two applications side by side, so you can surf the Web while you watch YouTube or check Facebook. The Note II is also a powerhouse, thanks to its quad-core Exynos, and lasts more than 9 hours on a charge. Those with smaller hands may want to steer clear, but overall the Note II is the big-screen phone to beat.

(6) HTC Droid DNA

The first Smartphone with a 1080p display is a true eye-opener. HTCs Droid DNA for Verizon Wireless crams a 5-inch full HD Super LCD 3 screen into a design thats compact enough to use comfortably with one hand. Not only is this panel the crispest in all the land, it beats the Galaxy Note II on brightness and offers ultra-wide viewing angles. The DNA also benefits from a blazing quad-core processor, a camera that can shoot up to 4 frames per second and Beats Audio. If you want a big and beautiful canvas in a design that wont weigh you down, the DNA is the super phone to get.

(7) LG Optimus G

LG stepped up its game big-time in 2012 with the Optimus G, which combines impressive quad-core speed (courtesy of a Snapdragon S4 Pro CPU) with innovative features. One of our favorite perks of the Optimus G is QSlide, which lets you run apps on top of a video thats playing in the background. Quick Memo enables users to capture screens, add a note with your finger and then share it with ease. Other highlights include a beaming 4.7-inch IPS display and a high quality 8-megapixel (AT&T) or 13-MP (Sprint) camera thats quick on the draw.

(8) Samsung Galaxy Rugby Pro

Dont try this with a regular Android phone. The Rugby Pro survived multiple drops on New York City streets, as well as sitting in a vase of water for 30 minutes. The rubberized Rugby Pro meets military standards for dust, rain, humidity and shock resistance, making it the ideal handset for people who are rough on their phones. When youre not knocking it around, the Rugby Pro stands up well as an everyday smartphone, offering fast 4G LTE speeds on AT&Ts network along with nearly 8 hours of battery life. (9) HTC Windows Phone 8X

You know HTC is serious about Windows Phone when it puts the name of the OS in the product name. The 8X is a beauty, sporting a slim soft-touch design available in multiple colors. (The design was actually inpsired by Microsofts Live Tile interface.) A wide-angle front camera allows users to fit more people in the frame when making Skype video calls, while a dedicated ImageChip ensures quick shutter speed for snapping stills. Add in Beats Audio for rocking out and wireless charging (Verizon model only) and you have a lot of reasons to switch to Windows Phone.

(10) Motorola Droid RAZR M

In a year dominated by giant phones, the Droid RAZR M stood out by offering a big screen in a small package. This Android device weighs just 4.4 ounces and measures 0.3 inches thick yet packs a 4.3-inch display. No, its not HD, but this AMOLED screen is more than bright enough to read in direct sunlight.The RAZR M also makes Android approachable, thanks to a selection of easy-to-use circle widgets and settings shortcuts on its home screens. Despite its somewhat diminutive dimensions, the RAZR Ms speaker gets plenty loud, which means youll have no problem hearing those GPS directions or impromptu conference call.

Data Analysis on Smartphones (2012)

80% of humans own a mobile phone There are 91.4 million smart phones in the United States alone. Out of the 5 billion mobile phones in the world, 1.08 billion are smart phones. Android has the highest market share with 46.9% the iPhone has 28.7%. 9 out of 10 Smartphone users use their phone on a daily basis. The most popular Smartphone activity is texting, followed by internet browsing and playing games. A higher percentage of Android users are below the age of 34 in comparison to iPhone users. People between the ages of 25 and 34 are more likely to own a Smartphone (62%) than any other age group. Android users consume the more data on a monthly basis (582MB) compared to users of other mobile operating systems. iPhone users download more apps on a monthly basis (48) when compared to users of other mobile operating systems. The top 10 countries in terms of Smartphone penetration are: o Singapore 54% o Canada 39% o Hong Kong 35% o Sweden 35% o Spain 35% o USA 35% o Australia 33% o Norway 33% o New Zealand 32% o Denmark 31%

2013 Smartphone Usage Highlights: By 2016, 80% of the US population will use mobile phones. By 2016, 50% of the US will use iPads / tablets. 97% of 18-29 year olds use smartphones to send text messages. By November 2012, over 20% of all blog visits came from a mobile device or tablet. Smartphone users are less likely to click on a link in a newsletter than computer users. Most common activities by smartphone users: 1. SMS / text messaging 90% 2. Maps 72% 3. Surfing while traveling 70% 4. Surfing while in a restaurant 64% 5. While in a store 63% Most common activities by tablet users: 1. Web browsing 88% 2. Email 84% 3. Playing games 72% 4. Watching videos 52% Mobile and Smartphone usage is most prevalent in the morning and evening. Smartphone users tend to glance at and skin over e-mails more those desktop users who tend to fully read e-mails. Smartphone users around the world tend to use their smart phones at home more than anywhere else. From October 2010 to October 2012, email open rates on smart phones increased by 300%. Mobile email creates twice as many conversions as social and search. The average price of an order placed from a mobile device is higher than the average order from a tablet or desktop. Mobile and Smartphone usage is higher Thursday Monday than on Tuesday or Wednesday

Data Analysis on the Demand for Smart phones

% of Smartphone Users
60% 50% 40% 30% 20% 10% 0% 2011 2012 2013

From the Graph above, it can be seen the % of Smartphone users have increased from 31% in 2011 to 44% in 2012 and it is estimated that this increase could reach about 57% in 2013. The Mean % of Smartphone users from 2011 to 2013 is estimated at 31 + 44 + 57/3 = 44%. The median is also estimated at 44%. Top Five Smartphone Vendors, Shipments, and Market Share, Q2 2012 (Units in Millions) 2Q12 Unit 2Q12 Market 2Q11 Unit 2Q11 Market Year-overVendor Shipments Share Shipments Share year Change Samsung Apple Nokia HTC ZTE Others Total 50.2 26.0 10.2 8.8 8.0 50.7 153.9 32.6% 16.9% 6.6% 5.7% 5.2% 32.9% 100.0% 18.4 20.4 16.7 11.6 2.0 39.2 108.3 17.0% 18.8% 15.4% 10.7% 1.8% 36.2% 100.0% 172.8% 27.5% -38.9% -24.1% 300.0% 29.3% 42.1%

Samsung extended its lead over Apple during the second quarter, taking advantage of Apple's release schedule and launching its flagship Galaxy S III. In addition, Samsung experienced continued success of its smartphone/tablet hybrid device, the Galaxy Note. As a result, Samsung topped the 50 million unit mark and reached a new quarterly smartphone shipment record in a single quarter. What remains to be seen is how the companys smartphones will fare against Apple's next-generation iPhone expected later this year. Apple posted an expected sequential decline last quarter, similar to years past. The quarter-over-quarter shipment decline came six months after it unveiled its latest iPhone. The decline is not unusual as iPhone shipment volume is highest in the first two quarters after its release. The companys once-a-year release cycle usually results in two quarters of lower volumes leading up to the next-generation model

introduction. Nonetheless, Apple made significant inroads into new markets and segments, including smaller regional carriers and prepaid service providers. Nokia smartphone business underwent another quarter of transition. Demand for Symbian and MeeGo units declined, reaching levels not seen since 2005 though the company almost doubled its Windows Phone shipments from the previous quarter. Nokias Lumia sales were not terribly affected by Microsoft's Windows Phone 8 announcement, which will prevent current Lumia owners from upgrading to the new mobile operating system. However, Lumia sales have remained steady and key enhancements available on the new platform will eventually become available to current Lumia owners. Nokia, however, has a long path to travel before it can reclaim previous volume levels and challenge Apple and Samsung for smartphone supremacy. HTC rebounded from its struggles in the two previous quarters to reclaim the number 4 spot in the smartphone vendor rankings. Its relatively strong performance in the Asia/Pacific region allowed it to climb back up the rank order as did the correction of its channel inventory issues. The company's streamlined portfolio means future share gains will be predicated upon the success of its One products. ZTE climbed into the smartphone Top 5 for the first time thanks primarily to shipments of its lowercost entry-level smartphones in China, where it's based. However, the vendor has also grown its international smartphone sales, particularly in the U.S. where its smartphones can be found under other brands. Latin America is another source of significant smartphone growth for the vendor. Despite impressive gains last quarter, brand equity may prove to be an issue for ZTE in future. Strong brand recognition is a necessity if high-growth Smartphone sales abroad are a priority for the company. Using The Measures of Central Tendency such as the mean, it can be seen that the average number of Smartphone units in 2Q11 Shipments were 108.3/6 = 18.05 (million) units and in 2Q12 average shipments were 153.9/6 = 25.65 (million) units. There were considerable increases, which suggest a higher demand for Smartphone as compared to previous years. The median of Smartphone units in 2Q11 shipments were 16.7 + 11.6/2 = 14.15 (million) units. In 2Q12 = 10.2 + 8.8 = 9.5 (million). There is a decrease in the median from 2Q11 to 2Q12 because of a decrease in the unit shipments of Nokia and HTC smart phones. Nokia showed a 38.9% decline and HTC a 24.1% decline.
Smartphone Shipments 2Q 2012 Units (m) Deviations Deviations Squared Column1 1 50.2 24.55 602.7 Column2 2 26 0.35 0.12 Column3 3 10.2 -15.45 238.7 Column4 4 8.8 -16.85 283.92 Column5 5 8 -17.65 311.52 Column6 6 50.7 25.05 627.5 Column7 Sum 153.9 0 2,069.46

Sum of Deviations Squared = 2,069.46 Variance = 2,069.46/6 = 344.91 Standard Deviation = 344.91 = 18.57 million units

Smartphone Shipments Q2 2011

Smartphone Shipments 2Q 2011 Units (m) Deviations Deviations Squared

Column1 1 18.4 0.35 0.12

Column2 2 20.4 2.35 5.52

Column3 3 16.7 -1.35 1.82

Column4 4 11.6 -6.45 41.6

Column5 5 2 -16.05 257.6

Column6 6 39.2 21.15 447.32

Column7 Sum 108.3 0 753.98

Sum of the deviations squared = 753.98 Variance = 753.98/6 = 125.66 Standard deviation = 125.66 = 11.21 million units Based on the calculation of the Standard deviations for Q2 2011 and Q2 2012, it can be seen that there was an increase in the shipment of Smartphone units from Q2 2011 to Q2 2012.

Recent sales stats (global):

IDC say 153.9 million smartphones sold worldwide in Q2 2012. Total 2011 sales were 491.4 million units. Gartner estimate sales of smartphones in the same period at some 153.8 million. Estimated total sales across 2011were 472 million or 31% of mobile communication device sales. This compares with figures for 2010 from the same company of 297 million smartphones or 19% of the 1.6 billion mobile phones sold that year. So year-on-year smartphone sales rose 58%.

Sales predictions:

The Financial Times cites a JPMorgan prediction that 657 million smartphones will leave stores in 2012. IDC expect 2012 smartphone sales to reach 686 million, and predict they will rise to 982 million in 2015. IMS Research expect smartphones to reach 1 billion in annual sales in 2016 (half the mobile device market). Morgan Stanley Research estimates sales of smartphones will exceed those of PCs in 2012.

The Operating System of a Smartphone plays an important role in determining the quality of the Smartphone brand. The mobile operating systems (OS) used by modern smartphones include Google's Android, Apple's iOS, Nokia's Symbian, RIM's BlackBerry OS, Samsung's Bada, Microsoft's Windows Phone,Hewlett-Packard's webOS, and embedded Linux distributions such as Maemo and MeeGo. Such operating systems can be installed on many different phone models, and typically each device can receive multiple OS software updates over its lifetime. A few other upcoming operating systems are Mozilla's Firefox OS, Canonical Ltd.'s Ubuntu Phone, and Tizen.

There are many different mobile phone operating systems currently being used. Some of the most wellknown include Symbian, BlackBerry OS, iOS, Windows Mobile, and Android. Most of them are associated with specific brands of phone made by specific companies while others are open-source and are available on a variety of platforms. Symbian is primarily found on Nokia phones, but phones by Sharp, Fujitsu, Sony and other companies have the operating system installed as well. Symbian is open source, meaning anyone can use it without having to pay. It is widely used, but it is not the most advanced or full-featured of mobile phone operating systems. Most phones that use Symbian are low-end devices, not full-featured smart phones. Many manufacturers, including Nokia, who had long been the biggest supporter of the OS, have switched over to other operating systems. One of the most well-known operating systems for mobile phones is the BlackBerry OS. It is the only one of the mobile phone operating systems to be found on BlackBerry devices. The BlackBerry OS is tailor-made for business, with functionality taking a seat over personality or appearance. Its main focus is on messaging, email and other communication features. Media players, and other entrainment-based applications are less-common for the device. Apple's iOS is found on the iPhone, iPad and iPod Touch. Operating system security and compatibility has been a point of contention for some in regards to iOS. It is entirely closed-source, and Apple chooses on its own which software the platform will and will not support. Adobe Flash, for example, does not work on the embedded operating system. Still, it does have a wide variety of apps and an interface that many laud for its ease of use. Windows Mobile, also known as Windows Phone, is the mobile phone version of Microsoft'soperating system. Because of this, it is easily compatible with many Windows programs such as Microsoft Office, making it a popular choice for businesspeople. Windows Mobile was originally designed for Microsoft's line of Pocket PCs before being adapted for use in phones. The Android is based off of the Linux operating system. Originally developed by an independent organization, it was later bought by Google, although the OS itself remains free and open source. Android is praised by many for his flexibility as a platform. Anyone can develop apps for the OS, and any company can release a phone using it. There are just some of the mobile phone operating systems currently in use. Palm's webOS, bada from Samsung, and Nokia's Maemo are just some of the operating systems that are used on smart phones around the world. Given the ever-changing nature of the technology industry, even more are bound to show up in time.

Data Analysis on Operating Systems Operating System Market Share

From the data above it can be seen that Android phones lead the market with 68.1%. Apples iOS shows a second lead with 16.9% despite being a leader in Smartphone manufacturers. 0.1%, 2.3%, 3.5%, 4.4%, 4.8%, 16.9%, 68.1% Quartile 1 = 8/4 = 2nd observation i.e. 2.3% Quartile 2 = 8/2 = 4th observation i.e. 4.4% Quartile 3 = 3(8)/4 = 6th observation i.e. 16.9% The mean % of operating system is 100% / 7 = 14.3%, the median is 4.4%

Column1 Values % Deviations Deviations squared

1 0.1 -14.2 201.62

2 2.3 -12 144

3 3.5 -10.8 116.64

4 4.4 -9.9 98.01

5 4.8 -9.5 90.25

6 16.9 2.6 6.76

7 68.1 53.8 2894.44

Sum 100 0 3551.72

Sum of the deviations squared = 3551.72 Variance = 3551.72 / 7 = 507.39 Standard deviation = 507.39 = 22.53%
Operating System Q2 2012 Shipments (millions) 104.8 26 7.4 5.4 143.6 Q2 2011 year- over- year Shipments change (millions) % 50.8 106.50% 20.4 27.50% 12.5 -40.90% 2.5 115.30% 86.2

Android ios Blackberry OS Windows Phone 7 Grand Total

From the table above it can be seen that Android is leading the Smartphone market operating system. There was a 106.5% increase in Android phone over the period Q2 2011 to Q2 2012. However apple ios showed a slight increase of only 27.5%. Blackberry showed a decline and windows phone 7 a significant increase. The mean of the shipments in Q2 2011 amounted to 86.2/4 = 21.55 million units and in Q2 2012 showed an increase of 143.6/4 = 35.9 million units. The Median in Q2 2011 = 20.4 + 12.5/2 = 16.45 million units The Median in Q2 2012 = 26 + 7.4/2 = 16.7 million units Shipments Q2 2012
Column1 Values (m) Deviations Deviations Squared 1 104.8 68.9 4747.21 2 26 -9.9 98.01 3 7.4 -28.5 812.25 4 5.4 -30.5 930.25 Sum 143.6 0 6587.72

Sum of the deviations squared = 6587.72 Variance = 6587.72/4 = 1646.93 Standard deviation = 1646.93 = 40.58 million units Shipments Q2 2011
Column1 Values (m) Deviations Deviations Squared 1 50.8 29.25 855.56 2 20.4 -1.15 1.32 3 12.5 -9.05 81.90 4 2.5 -19.05 362.90 Sum 86.2 0 1,301.68

Sum of the deviations squared = 1,301.68

Variance = 1,301/4 = 325.25 Standard Deviation = 18.03 million units

Consumer Expectation of Smart phones

Executive Summary Todays consumers can do things they never dreamed possible. The pervasiveness Of technology in our daily lives is fueling the desire to unite online and offline activities in smart devices small enough to hold in our palms. Consumers want to interact, review, compare, manage, transact and buywhether in a store or bank branch, at home or on the go. And the more that consumer capability expand, the greater their desire to connect what they are doing, transforming fragmented transactions into a seamless whole. Times have changed. Consumers, whether buying their first Smartphone or upgrading to better ones, demand more features and better performance. Smartphone owners use all or most of their devices features, whether iPhone, Android, Samsung or BlackBerry devotees, mobile intensives through social media are convincing their friends to upgrade. Smartphone users are consistently consuming more mobile data than tablet users. In response to the burgeoning demand for smartphones, major players in the ecosystemhandset manufacturers, carriers, application developers and the mediafeverishly develop, release, market and review new models. Marketers, like mobile intensives, are directly communicating with potential customers through Twitter, Face book and other social networking sites, encouraging dialogue and engagement. Moreover, mobile marketers and advertisers, now convinced mobile is here to stay, are testing advertising strategies that drive high customer response within apps and on mobile websites. Consumers desire the best smartphones at the lowest possible prices. Manufacturers fight for higher handset market share. Carriers and operators compete for higher consumer ARPU (average revenue per user) and low churn. App developers need increased market presence and profits. Marketers and advertisers are adding mobile to their marketing budgets. And the media, sitting on the sidelines in this mobile football game, fill countless web pages with reviews and commentary. Customer expectations using smart phones will only improve if the mobile industry releases hardware and software products that perform flawlessly and offer excellent value and choice. That, in turn, will help all players in the mobile ecosystem to share the wealth in the global communications revolution.

Key Findings

% of smartphone-wielding consumers like to research products on their phones and then purchase in a store, a new report finds. Whats more, 83% of these consumers who used their phones to access product information and compare prices while in a store found the experience to be valuable or extremely valuable, says Understanding the Power of the Smart Consumer, a report from e-commerce and m-commerce technology provider Demandware Inc. By enabling increased access to product information, smartphones increase the expectations that consumers have of retailers, the report says. The Nielsen Co. projects by the end of this year half of all mobile phones in use will be smartphones. Retailers not prepared to deliver exceptional brand experiences and ubiquitous access to product information run the risk of alienating smartphone-toting consumers and losing market share, Demandware contends.

Data on Consumer Expectation of Smart phones

One of the most compelling findings of the study was just how strong the impact of smart phones has been on shaping consumer activity, and as a result, consumer expectations. More than any other variableincluding age, gender, income, and geographySmartphone ownership is the greatest determinant of shopping, buying and banking behaviors. With nearly half of all U.S. mobile subscribers using smart phones today and the number of U.S. smartphone users expected to reach 138 million by 2015, the continuing importance of this technology in shaping consumer expectations of shopping, buying and banking experiences cannot be ignored. There is no question that smartphone owners are using their devices to make more informed decisions, and that they are significantly more active online than basic cell phone users. They lead the way in web browsing, online banking, comparison shopping, and online payments, among other activities (See Figure 1). More than any other group, Smartphone owners expect to blend what they do online, offline, and on the go into seamless experiences. Comments from study participants such as, I like the convenience of not being tied to a physical location. When I have a spare moment I can fill it, and I like the convenience of seeing a coupon online and then using it in the store (on my phone) without printing it out, highlight the value these consumers place on spontaneity, instant gratification, and real-time action, at any time, from any location.

Based on the average customer satisfaction, it shows that Apple and HTC rank the highest with Nokia trailing not too far off. BlackBerry has the lowest score with customer satisfaction even though the average satisfaction for each Smartphone is fair. The mode of the average customer satisfaction is 1.20.

72% of customers prefer the Android operating system with the lowest being blackberry.

Based on the Customer reviews, it shows 39% of customers prefer the brand of Samsung with Sony being the least popular with 2%. Apple, LG have the same customer preference of 9%. RIM and Nokia have a customer review of 6%.

Data Statistics on Smartphone

Smart phones are embedded in a consumer daily life. 89% of consumers use their Smartphone throughout the day.

Where Smartphones are used

Conclusion
As smart technology enables consumers to bridge their online, mobile, and offline worlds, they are empowered to know more, do more, and share more. This capability, in turn, is driving them to expect

more from retailers and financial institutions as they think about what they want when shopping, banking, and paying. Consumers are taking the lead in transforming transactions into part of a larger, multi-channel experience that is convenient, personally relevant, and available anywhere. Increasingly, they are expecting the same technology-enabled conveniences they enjoy throughout their daily lives to be present in their shopping and financial activities. Understanding this fundamental transition in consumer thinking is the first step in formulating engagement strategies that create closer customer connections while still acknowledging consumers concerns about privacy and security. The good news is that informed consumers are desirable customers, and they are often willing to use technology to deepen their relationships with preferred retailers and financial institutions, and to pass their opinions on to others. The challenge is creating experiences for which they will be enthusiastic advocates. As retailers and financial institutions design strategies to meet consumer needs, they should above all seek to provide functionality that is secure and provides better control, convenience and value for consumers. First Datas Universal Commerce consumer research points to three overarching themes that may guide this pursuit: 1. Consumers are increasingly viewing the transaction as integral to the complete shopping experience. The shopping experience itself, through ubiquitous access and peer-to-peer influences, is becoming a shared life experience that is not confined by traditional channels of commercial activity. Consumers prefer a seamless integration of their shopping activities. 2. Consumers want to engage with retailers and financial institutions in ways that are relevant to their lifestyles and personal preferences, while still protecting their privacy. 3. Building brands and customer advocacy is no longer a company-directed, top-down discipline. Rather, customerto-customer interactions and instant access to information are significant influences on consumer decision making. Consumers are taking the lead in this dialog. Retailers and financial institutions need to listen to and actively participate in the conversation.