Carphone Warehouse 2011 Annual Report Download - page 17

The smartphone revolution
The proliferation of smartphones into the
market has stimulated consumer demand
in both Europe and the US in a way that
we haven’t seen for several years.
Alongside the features available on
traditional handsets, smartphones offer
multimedia functionality including fully
synchronised email, internet access, and
the ability to download applications, at ever
improving speeds. The past couple of
years have seen the entry of new product
suppliers, creating new competition in the
market, both across products and handset
operating systems. This competition is
resulting in rapid innovation, and ever
more affordable products.
Because smartphones enable customers
to access the web, music and movies
while they are on the move, they drive
significantly greater levels of network
activity, which provides the opportunity
for growth in operator data revenues.
Smartphones are therefore also
stimulating competition between the
network operators, again providing
consumers with outstanding value.
The most compelling data packages to
date have been on postpay tariffs, and
we expect smartphones to dominate the
postpay category even further in the
coming year. Due to a combination of
relatively expensive data pricing on
prepay propositions and weak consumer
confidence, smartphones have not yet
taken a significant share of the prepay
category in our leading markets; however,
we expect penetration to increase in the
medium term, as smartphones reduce
in price.
We think our businesses in both the US
and Europe are well-placed to capitalise
on continuing smartphone growth. Our
significant investment in training is all the
more important as technology becomes
increasingly complex and our impartial
proposition ever more relevant as choices
multiply around products, operating
systems, services and content.
Tablets enter the market
Tablets share many similarities with
smartphones, typically employing touch-
screen technology and designed to
provide multimedia services on-the-go.
The tablet format only launched in 2010,
but it has already established itself as an
important category and we expect it to
become increasingly significant in the
years to come.
With numerous devices coming to
market, we see tablets as an important
opportunity for the business, again playing
into our proposition of impartial expert
advice, and ongoing customer support.
Consumer electronics
The consumer electronics market has
seen a move to online channels in the past
year as consumers search for the best
possible price and offering.
At the same time, we are seeing rapid
technological innovation in the market,
and increasing complexity in the products
and services being offered. Many new
products – including tablets, home
computers, home theatre systems and
even some domestic appliances – offer
opportunities for synchronisation with
other devices, home networking
and for receiving services across
multiple devices.
We see this complexity increasing the
need for expert support and guidance,
services which are more readily provided
in a store environment.
BUSINESS REVIEW
MAKING THE MOST OF OUR CHANGING MARKETPLACE
The business is experiencing one of the most exciting periods of technological innovation that
it has ever known, with increasingly sophisticated smartphones evolving all the time, and the
advent of tablets in a wide range of formats. Like other retailers, the business is operating in a
challenging economic environment, and this has undoubtedly affected the prepay category in the
past year. But the business is in good shape operationally to face these challenges, and remains
well-placed to capitalise on the market opportunity going forward.
BUSINESS REVIEW
BEST BUY EUROPE: MARKETPLACE
Carphone Warehouse Group plc Annual Report 2011 13