1. Tween Market Opportunity Study, 2005 Project Summary
Iain Gillott
(512)

2. Agenda Introductions Project Goals Methodology Tween Segment Forecasts
Tweens in Household
Purchase Intent
Features and Services
Devices
Child Feedback
Recommendations
Questions
Parent Demographics

3. About iGillottResearch
Based in Austin, Texas
Wireless & Mobile Market Analysts
Competitive analysis, new business opportunity assessments, market studies
Why we love wireless
Wireless is forever changing…
Technology choices directly affect the end user experience and value
Rate of innovation is very high

4. Project Goals
Determine the current barriers preventing the adoption and use of wireless services by Tweens
Prioritize these barriers and determine those that have a critical effect on adoption and usage by Tweens
Discuss the potential of the Tween wireless applications market, including but not limited to messaging, gaming, music, photos and other data services
Examine mobile operator concerns and plans regarding Tween services
Specific device requirements for Tween-specific devices
Determine the details of the Tween value chain, including billing, customer care and value-added service considerations
Forecast Tween services and devices in North America.

5. Methodology Parental Tween Survey Tween Industry Overview
iGillottResearch first conducted a web-based survey targeting the parents of children aged six to twelve years old, with additional questions at the end of the survey for the children themselves. iGillottResearch interviewed 400 parents of tweens
Responses from 202 children were also collected
Average survey completion time was 12 minutes 25 seconds
Respondents were invited to take the survey based on selection from a panel acquired for this specific task
Tween Industry Overview
iGillottResearch to conduct interviews with the various players in the tween value chain. Interviews were conducted with North American Tier 1 and Tier 2 mobile operators, handset OEMs, game developers, application developers, WiFi network operators, retailers and major distributors and mobile content distributors
Analysis and Recommendations
Market Sizing and Forecast

6. Segment Forecasts

7. Projected Population of the United States by Age, 2000 to 2050
Slight decline

8. U.S. Tween Subscribers, 2004 to 2009
11-12s majority

9. U.S. Tween Cellular Service Revenue, 2004 to 2009

10. Device shipments rate per year, 2004 to 2009
Significant replacement rate

11. Tween device retail revenue, 2004 to 2009

12. Tweens in Household

13. Age of Tweens in Houshold
 Years
Child 1 
Child 2 
Child 3 
Child 4  6 67 21 7 2
16.9%
14.9%
25.9%
33.3% 51 24 4 1
12.8%
17%
14.8%
16.7% 8 59 28
19.9%
7.4% 0% 9 47 27 5
11.8%
19.1%
18.5% 10 15 3
10.6%
11.1% 11 58
14.6%
6.4% 12 68 17
17.1%
12.1%
Total
397
141
100%

14. Sex of Tweens in Household
Child 1 
Child 2 
Child 3 
Child 4 
Male
215 87 16 3
54.2%
61.7%
59.3%
50%
Female
182 54 11
45.8%
38.3%
40.7%
Total
397
141 27 6
100%

15. Current use of cellular phone by Tween in household?

16. Purchase Intent for Tween Cellular Phones

17. Do you have any concerns about your child or children using a cellular phone?
Higher concerns:
older parents
parents with less experience with cellular phones
Higher monthly spending
Higher education level

18. What are your concerns about giving your child a cellular phone?
Responses in the ‘Other’ category include:
Confrontations with others
Too Young
Spoiled

19. When would you consider buying your child a cellular phone?
Compared to the approximately 35 percent of parents who said they did not want their child to have a cell phone, just 4.3 percent gave the same response to this question. This can be explained by either that:
The parents are not currently willing to let the child use a cell phone, but plan to do so as they get older
The parent’s opinion has changed as the surveyed progresses.

20. Would you buy a cellular phone for your child as a reward or as a gift?
One third of parents said that they would give a cell phone as a reward for their child, compared to 47 percent who said it would be a gift.
Of the 86 ‘Other’ responses, 28 (7 percent of the total sample) said they would not buy their child a cell phone.

21. What are the top TWO reasons you would buy a cellular phone for your child or children?
The principal reason (four-fifths of respondents) was so the child can contact the parent, followed by the parent knowing where the child is located (52.5 percent).
The ability for the child to call friends, to take photos and to play games were definitely at the bottom of the list, with just four responses in total.

22. Features and Services

23. Use by Parent and Tweens of features and services at least once per month

24. If you were to buy your child a cellular phone, what features would you like the handset to have?
Several trends:
Voice-only services are preferred for children under ten years
While it first appears that location/tracking capabilities are preferred for children under ten, parents of eleven year olds also expressed interest. Therefore, we can assume that location/tracking is required for all ages.
Walkie Talkie service is also required by multiple age groups.

25. What services would you like the operator to provide?
Parents are more interested in the ability to block certain numbers and to restrict the phone to call only pre-determined numbers for the children under ten
Parents tend to require the ability to track the device even when it is turned off for children over ten years
Interest in an emergency or ‘always call’ phone number is higher for those under nine, but this is not a strong trend
The ability to restrict the number of text messages is stronger for those under nine than in the older age groups.

26. If you had the capability to modify the functionality of your child’s phone anytime you wanted, would you rather prefer to make these changes from:
There is a clear trend for the older parents to prefer a customer service interface, compared to the younger parents who prefer access through the Web.

27. Devices

28. Which of the following devices would you consider for your child/children?
Parents are interested in the camera phone for children aged eleven and twelve – this is a very strong trend.
Interest in the cellular handset with celebrity or entertainment themes is much stronger for the six and seven year olds, although the sample size for this analysis is small, as interest in this design is weak overall.

29. 1 2 3 4 5 6 7 8

30. Which one handset design do you think you would be likely to choose for your child?
Interest in Phone 1 is higher for those under ten years, while Phone 2 appeals slightly more for those over ten.
Parental interest in Phone 8 is much stronger for children aged ten and older, although the sample is small.

31. What brand of cellular phone would you buy your child?
Parents who had Motorola and Nokia handsets tended not to want these brands for their children – in fact, interest in all of the major brands is much lower.
This presents something of a challenge for the major manufacturer brands – clearly, the parents do not perceive them as having designs suitable for children.
Conversely, this is good news for companies such as Firefly Mobile and Enfora.

32. Responsibility for choosing and purchasing Tween cellular phone?

33. When would you expect to buy your child another mobile phone?

34. How much would you be willing to pay for a device for your child?
General trend of the parents willing to pay more for a child’s device as they spend more per month for their own service.

35. Where would you like to buy it?
Firefly Mobile’s strategy of selling through Target may prove to be a problem, based on this data.
Together with the preference to add a child to an existing rate plan, this shows a clear preference for the mobile operator.
This is especially true when the amount the parents pay per month for their own service – preference for the mobile operator stores for those parents spending over $75 per month.

36. What type of plan would you prefer [for your child]?
The preference for a prepaid rate plan is strongest with those parents spending less than $40 per month on their own cell phone

37. Would you prefer to add your child to your existing plan or get your child their own plan?
The preference for a prepaid rate plan is strongest with those parents spending less than $40 per month on their own cell phone

38. How much would you be willing to pay for service per month for your child/children? Per child

39. Monthly service costs for parent and willingness to pay per child

40. Who would be primarily responsible for paying the monthly service charges on your child's mobile phone?

41. Child feedback

42. Is your child available to complete this survey?

43. Are you a boy or a girl?

44. How old are you now?

45. Do you currently have your own cellular phone?

46. Why do you not have a cellular phone now?

47. Where do you keep your cellular phone?

48. What do you like best about having a cellular phone?

49. If your parents could control certain things on your cellular phone, would you still want a cellular phone?

50. What types of things would you like to do on a cellular phone?

51. 1 2 3 4 5 6 7 8

52. Which one do you think you would be likely to choose?
Two thirds of the girls chose Phone 1, whereas the boys favored Phone 7, followed by Phone 6.
Clearly, color is important and the boys tend toward the more ‘technical’ design.
Interestingly, Phone 6 does not look like a phone at all (it is a Firefly), although it was chosen over some of the more traditional designs.

53. Choice of Cellular Phone Design for Parent and Tween

54. Recommendations

55. Recommendation 1
Since none of the major North American mobile operators are currently targeting the tween market directly, there would seem to be an open opportunity
While MVNOs, specifically Disney Mobile, will start to address this segment, there is a window of opportunity before the Mouse’s services are introduced
iGillottResearch believes this opportunity should not be overlooked

56. Recommendation 2
While there are some specific requirements for the tween market, the mobile operators have most of the pieces already in place
Rate plans, customer service, billing systems, distribution channels and marketing are already available
The operators are therefore positioned well to maximize this opportunity

57. Recommendation 3
One of the requirements to address the younger age groups in the tween segment is a specific device, such as the FireFly or TicTalk
While a low-end cellular handset can be marketed to the eleven and twelve year olds, a specific kid-friendly device will be required for those ten and under
The mobile operators must therefore start working with FireFly Mobile, Enfora or one of the other handset OEMs to develop a suitable device
Obviously, FireFly Mobile and Enfora have a head start in this area
The top features the parent would like to see on the tween handset were an E911 or help button, durable and rugged construction and location or tracking capabilities and walkie talkie services

58. Recommendation 4
For the major handset OEMs, the main recommendation is to recognize that many cellular users are now under twelve years – business plans based on an assumption that the youngest users are teenagers are flawed

59. Recommendation 5
Marketing messages must be targeted at the parents and at the tweens themselves
While the tweens see the need for a cell phone and believe it is ‘cool’, many parents need to be convinced that a child under 16 needs a cell phone
Advertising should therefore point out how much time tweens can potentially spend away from their parents and the opportunities for use of a cell phone, such as when a parent is running late to pick up a child from a birthday party or sports event
Based on the evidence from the survey, these parents can be convinced and persuaded

60. Recommendation 6
iGillottResearch believes that one of the keys to tapping the potential of the tween market is the ability to package an additional line with an existing parent rate plan and to allow the child to share the minutes and usage
In other words, a family rate plan
While many companies believe that a prepaid solution is required, the research in this project shows the exact opposite
The mobile operators therefore have a distinct advantage over the MVNOs but they need to realize this opportunity

61. Recommendation 7
For distribution channels, the mobile operators again have an advantage, since most parents expected to buy the tween device at the mobile operator store
Since they want to add a line to their existing account, this makes sense
Again, the prepaid solutions offered through major retailers do not directly address the needs of the parents

62. Recommendation 8
The major handset OEMs also need to leverage the fact that the parents currently use their devices – many parents in the study did not know which brand they would buy for their child, even though they knew which brand they used themselves
Loyalty was particularly low among LG and Samsung users
By marketing to the parents and making them aware that they offer devices specifically for the tween, the handset OEMs have the chance to create ‘family packs’ of devices, where each member of the family uses the same brand
This opportunity should be researched with the mobile operators and should not be overlooked

63. Recommendation 9
Gaming on mobile devices is big for both parents and tweens. Just as Enfora has done by partnering with Leapfrog for the TicTalk, the mobile operators and device OEMs should consider the gaming needs of the tweens from the basic definition of the product
For this segment, gaming is not an option – it is as important as voice calling or text messaging

64. Recommendation 10
Offering a postpaid family rate plan and a specific device are not enough to guarantee success
Given the parents’ concerns over costs and access to the tween device, an easy-to-use, integrated Web site is also required
The parent should be able to:
Track the device, even when it is turned off
Block certain numbers and to restrict the phone to call only pre-determined numbers
Restrict the number of text messages

65. Recommendation 11
Parents are not willing to pay that much for the device, ideally less than $75
Device OEMS and mobile operators must therefore pay close attention to device pricing
Finally, the industry must accept that the ARPU for the tweens will be lower than for other subscribers – the tween users are incremental

66. Recommendation 12
However, the profit potential from the tween users cannot be ignored, especially when games and other applications are considered
Setting expectations internally at the mobile operators will therefore be critical

67. Questions?

68. Parent Demographics

69. How long have you used a cellular or wireless phone?

70. What type of cellular phone call/ monthly service plan do you have?

71. What is your average monthly cellular phone bill?

72. Who pays the bill for your monthly cellular phone use?

73. What brand of cellular phone do you have?

74. What type of cellular phone do you have?

75. Who is your cellular service provider?

76. Do you have a family plan?

77. If yes, how many lines do you have on your family plan?

78. How often do you usually use your cellular phone to make voice calls?