Feature phones are making a comeback in the US market, driven by the advocacy of Gen Z and millennials for digital detoxes amidst concerns about mental health related to smartphones and social media. The hashtag #bringbackfliphones on TikTok has gained millions of views, leading to increased adoption of feature phones by younger consumers embracing movements like digital detoxing, minimalist lifestyles, and unplugging. With feature phones priced relatively affordably at $20-$50 with a prepaid carrier and $50-$100 unlocked, more people are experimenting with these devices and sharing their experiences on social media.
The current smartphone market is becoming increasingly crowded, with TCL and HMD taking the lead. However, competition is intensifying as Schok, Sonim, and white-label manufacturers like Tinno are entering into agreements with carriers.
Smartphones gained rapid adoption upon their arrival, leading to a significant decrease in the US feature phone market over the past decade. Currently, feature phones contribute to just over 2% of overall handset sales in the US. Among the companies targeting this segment, TCL holds the top position with a 43% share, manufacturing feature phones for major carriers under both branded and white-label capacities. HMD follows with a 26% share, while smaller players make up the rest of the market.
Furthermore, partnerships between carriers and OEMs play a crucial role in shaping the market dynamics. The three major US carriers – AT&T, Verizon, and T-Mobile – are exploring various feature phone OEM options. This has led to increased competition in the US feature phone market, particularly as carriers shift away from TCL devices and explore offerings from smaller OEMs such as Tinno and FIH, which have produced devices for AT&T’s white-labeled feature phones. Verizon’s feature phone brands are Sonim and Kyocera, providing ruggedized devices, while T-Mobile's feature phone brands are Schok and Hot Pepper.
Feature phone sales are projected to reach 2.8 million in 2023, with sales expected to remain steady in the near future due to niche demand drivers.
Feature phones continue to have a strong presence in the market and are likely to experience consistent shipments, supported by their affordability and durability for specific use cases. While the increase in numbers may not be substantial, the demand from consumers seeking a feature phone as a digital detox method is expected to persist. Moreover, B2B sales may contribute to demand as feature phones offer cost-effective solutions for businesses. Additionally, tourists and other consumers in need of an inexpensive disposable feature phone are also expected to sustain stable sales.
Incorporating new hardware configurations such as eSIM or NFC can enhance the relevance of devices for modern consumers who wish to simplify their tech gadgets while seamlessly engaging in the digital world.
There is a consumer base seeking devices that are minimalist yet equipped with features relevant for staying connected in today’s world. The design and specifications of feature phones have remained largely unchanged over the past few years, which has deterred consumers from purchasing them. Introducing new hardware configurations and features that align with current trends while maintaining user-friendly simplicity may unlock further growth opportunities for feature phones. NFC is one such feature that can enable payments, home automation, quick pairing, and enhance public transport access for users. Similarly, eSIMs could also be a compelling hardware integration, attracting consumers to adopt a feature phone as a secondary device that they can easily switch to from their primary smartphone in situations where they prefer not to use their expensive device. Incorporating these attributes would make feature phones more relevant for day-to-day use.
Source: counterpoint