Smartphone Penetration Approaching Tipping Point As PC Usage Declines

Smartphone penetration is slowly approaching the tipping point where it will be more common to have a smartphone than a feature phone among the general population. Ofcom says the UK and Japan are among the countries leading the way to that milestone as consumers turn away from PC usage — a trend with wider implications for the digital content market as a whole.

UK communications regulator Ofcom, which released its annual Communications Market Report today, covering usage trends across Europe and other key markets like the U.S. and China, said that some 46 percent of consumers in the UK are using smartphones, giving it the highest smartphone penetration in Europe, with Spain in second position at 45 percent. Japan, meanwhile, can boast that some 93 percent of its consumers are using devices with 3G connections across smartphones and high-end featurephones (that figure is only 48 percent in the UK, since some feature phones will have 3G access but many do not).

Given that mobile penetration in the UK is now 130 percent (some people have more than one device), it effectively means that nearly half the population is using a smartphone now.

The rate of adoption of smartphones has been going through a period of fast acceleration, with the percentage actually doubling between February 2010 and August 2011 in the UK — no doubt fuelled by the number of cheaper models, and those subsidized by operators, hitting the shelves.

It will be worth watching is whether that trend will slow down in the months ahead: various analyst groups are putting out figures worldwide that imply that a slowdown in the past quarter when comparing smartphone growth with previous quarters. Added to that, some handset makers have been warning investors of flat sales forecasts, too.

The rise of smartphones has also led to a rise in mobile internet usage, with the number of people using devices for internet-based tasks rising in the five major markets surveyed by Ofcom (UK, France, Germany, Italy, U.S., Australia). It points out, however, that despite the rise of smartphones with fast processing power, many of those services are of the “low bandwidth” variety, such as email, instant messaging and gaming and social networking apps, rather than straight internet browsing. Video services like watching clips and full-scale TV viewing are less prevalent, which is not only down to the experience of doing that on a small screen, but also likely because of the cost of mobile data. The full run-down:

Age-wise, younger people are using the mobile internet more, but across all age groups, the number is going up:

One side effect of the rise of mobile internet usage, however, seems to have been a decline in PC usage for internet access. This is something that we picked up on last week, and wondered aloud if Facebook’s increasing attention to what it does in mobile might be its attempt to pre-empt that trend and stay with where their users’ eyeballs are going.

Ofcom notes that the average number of minutes per week on computers online has been declining gradually since 2008 (coincidentally as smartphone began their ascent) among all the countries it researches. The U.S. still spends the most time online among the countries surveyed, although even at 13 hours, 11 minutes per week that is down 15 minutes on the year before:

The trends outlined above are having a massive impact, as we see everyday, on how media companies are formulating their digital content strategies, with more being invested in apps and figuring out ways of consuming content that are optimized for those smaller screens. Ironically, though, that decline is still not translating into much of an increase in terms of ad dollars spent across the two mediums.

In the UK, online advertising now accounts for almost 30 percent of all ad spend, with £65 spent per head on advertising online. On mobile, however, the figure is a lot smaller: only £1.33. Ofcom reports that in the U.S. the average amount of mobile ad money invested per consumer is only equivalent to around $1.94, compared to around $85 per head online.

Read the full Ofcom report here.