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Phone fatigue takes hold: SIM-onlys now top UK market

♫ "Boredom, boredom, boredom, b'dum b'dum" ♫

SIM-only contracts are now the most popular kind of mobile deal in the UK, as punters step off the tedious upgrade treadmill.

Retail watcher GfK estimates that SIM-only contracts now account for 29 per cent of the UK phone market. Almost half, or 44 per cent, stayed with their network, but moved from another deal to SIM Only (SIMO). Overall the market grew by 900,000 in Q3 with contract SIM only accounting for half of the figure.

For two decades, networks have acted as financing companies, at first subsidising the expensive "terminal" and making it up through airtime minutes. This is no longer true – it's cheaper to buy the handset outright. But there's more to it than that: the lure of the yearly or biennial upgrade began to fade.

"Customers are beginning to de-couple the handset purchase from the tariff purchase and choosing to buy both separately," said Imran Choudhary, GfK's director of technology.

"Traditional contract handset sales are the bedrock of most mobile operators' and retailers' business models in the UK. If this de-coupling continues to gather momentum over here, many will have to re-evaluate their go-to market strategies."

We’ve been writing about "flagship fatigue" for three years now.

For the first few years of the smartphone era, annual upgrades really seemed to make a difference. The hardware industry raced to compensate for Android's inefficiencies (as you'd expect from an interpeted Java-based OS) with ever beefier specifications, while manufacturers competed to produce ever-more impressive imaging. Google worked hard to make Android more a little bit more efficient.

Each of these three trends produced tangible results every year.

Eventually, these improvements filtered down to midrange and budget phones thanks to the scale and efficiency of the Chinese high-tech manufacturing industry. Once upon a time (well, four years ago, to be precise) we talked about "Landfill Android": instantly disappointing phones with poor performance. These days, you have to try very hard to find a budget Android that doesn't run adequately.

Three years ago, Uswitch told us over a third of its sales were SIM-only, and the networks with a high street retail presence had no option but to follow.

GfK floats another reason for flagship fatigue: vendors aren't giving consumers the features they really value. GfK's consumer panel cited "good battery life" as the most important feature of a phone – but batteries have got smaller this year. Meanwhile, the company notes, "water resistance has become a feature of many devices over the last 12-18 months, but this doesn't even make the top 10 of most important features when buying a new device".

Fancy that. ®

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