Smartphones Start to Attract Older Generation, NPD Finds

New research from NPD suggests that as smartphones become more ubiquitous, buyers of these devices have become significantly older and less affluent.

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For three quarters in a row, year-over-year sales of smartphones among consumers earning under $30,000 annually grew by more than 50 percent, according to NPD Group research, which examined data through February 2015.

The data suggests that smartphone buyers are significantly older and less affluent than they were in previous years. This demographic (buyers ages 55 and up) is now the largest segment of the smartphone market, accounting for 28 percent of all sales, while sales among consumers earning more than $100 thousand a year increased by just 24 percent.

NPD calibrates its statistics from its online consumer panel with the point-of-sale (POS) data they collect from retailers, from which nearly 2 million people provide information for their consumer-tracking services.

"As smartphones become more ubiquitous and the reasons for having one grow, then even the folks who saw limited value begin to be enticed," Stephen Baker, vice president of industry analysis at NPD, told eWEEK. "Products are more capable, offer more functions and understanding of what the device can do spreads, and non-users begin to see acceptable use cases for them. All part of the natural progression of a consumer electronic device—I think it is just a slow progression."

Baker said smartphone manufacturers can entice older consumers by offering ease of use and a compelling use case.

Over the three month period ending in February, overall sales of mobile phones rose 28 percent from the same period last year, while smartphone sales increased 35 percent.

During that period, the share of sales for non-smartphones declined to just 14 percent.

"I think it is less about the hardware than the entire use case and the entire ecosystem," he explained. "There needs to be synergy between hardware, carriers, app ecosystem and retailers, and that is the point where we are in the product’s development today."

Apple and Samsung accounted for two out of every three smartphones sold over the three-month period, although Apple's sales increased by 45 percent and Samsung’s just 10 percent.

"I think older users want what younger users want, ease of use, compelling usage cases and a high value, but I think your example of your dad wanting to call you in Europe is perfect because communication is likely the killer app for older people," Baker said. "Those are most attractive to them. Interestingly, I might argue that this is the most compelling use case for young people as well."

The iPhone 6 and iPhone 6 Plus were most popular among the older demographic, with 69 percent of sales to consumers ages 55 and up, while only 46 percent of purchases made by customers ages 18 to 34 were the newest iPhone models.

Less affluent consumers accounted for just 35 percent of sales for iPhone 6 and 6 Plus, and buyers earning more than $100,000 a year chose the newest iPhone more than two-thirds of the time.

"It’s not about price, [but] all about value. Entry-level consumers don’t necessarily want to spend absolutely less dollars, they want the best bang for their buck," Baker said. "So if Apple offers them the best-perceived value, then they can certainly be empowered to buy that. I would also add that regardless of the OEM pricing strategy, the carriers are embarking on a different strategy that lets them lower the price for entry-level consumers and drive volume there, even with higher-end devices."