Key findings:

• The majority of 25-34 and 18-24 year olds now own smartphones (64% and 53% respectively);
• The majority of smartphone owners (62%) have downloaded apps on their devices and games are the top application category used in the past 30 days;
• The number of smartphone subscribers using the mobile Internet has grown 45 percent since 2010;
• 87 percent of app downloaders (those who have downloaded an app in the past 30 days) have used deal-of-the-day websites like Groupon or Living Social;
• Younger groups text the most. In Q3, teens 13-17 sent and received the most text messages (an average of 3,417 each month).

This report draws from a broad range of Nielsen data sources, including: Nielsen’s in-depth monthly surveys of mobile consumers (more than 300,000 consumers surveyed each year); Device metering data from the iOS and Android smartphones of thousands of consumers who have volunteered to be a part of our research panel; detailed, monthly analysis of the cellphone bills for 65,000 lines in the U.S., again, thanks to volunteer panelists.

For more, download State of the Media: The Mobile Media Report Q3 2011.

According to an August survey, 43 percent of all smartphone owners have an Android device. But if you ask only those who got a new smartphone in the past three months what kind of phone they chose, more than half (56%) will tell you they picked an Android device. The preferences of these so-called “recent acquirers” are important as they are often a leading indicator of where the market is going.

Apple iOS remains popular in second place with 28 percent of all smartphone users, and the same percentage among those who recently got a new device. But those figures could change quickly in the months to come. Every time Apple launches a new iPhone or makes it available on a new wireless carrier, there is an increase in their sales.

Changes in share aside, the smartphone pie is getting bigger. While 43 percent of all mobile subscribers in the US had a smartphone as of August, 56 percent of those who got a new device in the last 3 months chose a smartphone over a feature phone. The holiday season and the launch of new devices like the next iPhone could further accelerate smartphone adoption, though this is always tempered by the fact that many consumers are unwilling or unable to break their service contracts before they expire. In any event, the growing popularity of app-and-media friendly smartphones spells tremendous opportunity for those advertisers, publishers and developers eager to leverage mobile media.

Highlights of Nielsen’s “State of the Media: The Social Media Report”

• Social networks and blogs continue to dominate Americans’ time online, now accounting for nearly a quarter of total time spent on the Internet
• At over 53 billion total minutes during May 2011, Americans spend more time on Facebook than they do on any other website
• Tumblr is an emerging player in social media, nearly tripling its audience from a year ago
• Nearly 40 percent of social media users access social media content from their mobile phone
• Internet users over the age of 55 are driving the growth of social networking through the Mobile Internet
• 70 percent of active online adult social networkers shop online, 12 percent more likely than the average adult Internet user
• Across a sample of 10 global markets, social networks and blogs are the top online destination in each country, accounting for the majority of time spent online and reaching at least 60 percent of active Internet users

For a more in-depth look at the social media landscape and audience, view the complete State of the Media: The Social Media Report. 

When consumers use their mobile phones to check the news, weather, email, or their social networks, they often have a choice between the mobile web version or a specially-created mobile app. But which do they prefer? Mobile apps – at least in terms of time spent.

According to first-reported data from Nielsen Smartphone Analytics, a new effort that tracks and analyzes data from on-device meters installed on thousands of iOS and Android smartphones, the average Android consumer in the U.S. spends 56 minutes per day actively interacting with the web and apps on their phone. Of that time, two-thirds is spent on mobile apps while one-third is spent on the mobile web.

Perhaps more surprising, despite the hundreds of thousands of apps available for Android, a very small proportion of apps make up the vast majority of time spent. In fact, the top 10 Android apps account for 43 percent of all the time spent by Android consumers on mobile apps. The top 50 apps account for 61 percent of all time spent. With 250,000+ Android apps available at the time of this writing, that means the remaining 249,950+ apps have to compete for the remaining 39 percent of the pie.

• For more Android insights, join us for our free webinar, All About Android on September 15.

Nielsen recorded an overall volume jump of 19 percent in August, with the major news publishers being the key beneficiaries of the increase in traffic.

Amongst the major news sites, Nine News saw the largest increase in mobile traffic in August, up 27 percent from July 2010. Fairfax Digital’s SMH and The Age mobile sites were up 21 percent and 18 percent respectively, while News Digital Media’s news.com.au increases 18 percent.

“The increasing ownership of smartphones and more affordable mobile data pricing plans have seen mobile Internet usage increase in recent months,” observes Matt Bruce, Managing Director of Nielsen’s online division in Australia. “This growth was given an extra jolt in August as Australians looked to mobile news sites via their mobile phones for updates on the election results and the subsequent negotiations with the Independents.”

Bruce notes that major spikes in mobile Internet usage to news sites were recorded on the day of the Federal Election and the day following (August 21 and 22), and then again on September 7 as the three Independents announced their decision, and the subsequent news that Labor had won the election.

To get a better sense for how the world is watching video, today, Nielsen recently completed a survey of more than 27,000 online consumers in 55 countries, asking simple questions about how they watch video. Internet access still varies considerably by region, so the results of an online survey are not representative of the total global population, but show us how an important subset of the global population (the connected population) is consuming video across multiple platforms. The results from the survey, with corresponding syndicated Nielsen insights where available, were released today in a new report, “How People Watch – A Global Nielsen Consumer Report.”

“This report provides one of the broadest looks at how consumers watch video, to date,” says Matt O’Grady, who oversees the integration of Nielsen’s TV, online and mobile audience measurement. “The research reveals how connected consumers all over the world are expanding their video experience across screens.”

Key Findings

• Online Video: approximately 70% of global online consumers watch online video; but North Americans and Europeans lag in adoption. More than half of global online consumers watch online video in the workplace.
• Mobile Video: is already used by 11% of global online consumers: penetration is highest in Asia-Pacific and among consumers in their late 20s.
• Tablet PCs: are expanding the definition of mobile video. Globally, 11% of online consumers already own or plan to purchase a tablet PC (such as an iPad) in the next year.
• Television: is a universally important platform for video consumption, with connected consumers in many markets spending 4+ hours per day watching television.
• HDTV (High-Definition TV): is improving the TV viewing experience for as many as 30% of global online consumers. Adoption is highest among older consumers and in North America, where HD content has proliferated.
• 3DTV (Three-Dimensional TV): will have a small but important audience: 12% of global online consumers own or have definite intent to purchase a 3DTV in the next year.
• “Over the Top” TV: televisions with Internet connections are gaining interest. About one in five (22%) global online consumers owns or has definite interest in buying a television with Internet connection in the next year.

For the first time, this report identifies important differences in cross-platform video behavior by region and country:

• Claimed TV viewership is higher than average in the emerging BRIC economies, Brazil, Russia, India and China, and lower than average in many developed European markets
• North America and Europe appear to lag slightly behind other regions in the use of online and mobile video
• Connected consumers in Asia-Pacific are 45 percent more likely to use mobile video than the global average
• Claimed interest for Tablet PCs is highest in MEAP markets: Middle East, Africa and Pakistan. Connected Pakistanis are twice as likely as the global population to say they own or are interested in a Tablet PC.
• Connected Latin American consumers express above average interest in TVs with Internet connections. Online Consumers in Colombia, in particular, are very interested in acquiring this technology.

• Download “How People Watch – A Global Nielsen Consumer Report“

AT&T’s shift away from unlimited data pricing has led us to examine the issue of data consumption in the United States. The Nielsen Company collects phone bills from more than 60,000 mobile customers every month and analyzes every line item on the bill. These bills show how much data each customer has consumed in the previous month, regardless of whether the customer is on a metered or unlimited data plan, in order to give customers the opportunity to understand their data consumption habits.

When we look at smartphone data consumption distribution and year-over-year change, we see a large disparity of usage among smartphone users and are struck by the staggering amounts of data used by the heaviest users.

Average data consumption increased from about 90MB per month during the first quarter of 2009 to 298MB per month during the first quarter of 2010. This represents a year-over-year increase of approximately 230 percent. While this increase is substantial, in the first quarter of 2009 more than a third of smart phone subscribers used less than 1MB of data per month; this number has dropped to a quarter in the first quarter of 2010 as the number of applications and the utility of smart devices has increased substantially. That means about 20 million current smartphone users are hardly using data.

Other conclusions:

1. Usage-based pricing may be more fair. The top 6 percent of smart phone users are consuming half of all data. The vast majority of customers, 99 percent according to the 60,000 phone bills that Nielsen collects and analyzes every month as part of their Customer Value Metrics product, are better off with a pricing scheme like AT&T’s new data pricing model than under flat-rate pricing where they are paying for much more than they ever use.
2. There is a growing need to educate smartphone users. With about 23 percent smartphone penetration in the United States, we are still in the early adopter phase. A quarter of these early adopters are not using their device for data services at all. They use exactly zero MB per month. For some reason these customers have purchased a miracle in engineering and technology that has more computing power than what was used to get men safely to the moon and back and yet they only use their smartphone for phone calls and text messaging. Operators have to do a much better job in conveying the value and utility of these powerful devices–and to marrying the right device to the right customer. The more suitable the device is to the usage and spending pattern of the customer the more satisfied the customer will be.
3. More than a third of smartphone users have not yet signed up for a data plan. Most of these smart phone users were among the first to get these devices, before operators required a data plan be added to the device subscription. Over time, these device owners will get converted into paying customers for data, but it is critical for the long term success of the industry to not only collect revenue but to also provide and convey value.

The industry has its work cut out for itself as it undergoes its most revolutionary shift to a post-voice-centric world. The priorities of large swaths of customers are shifting. Some operators have been better than others in adapting to the changing industry landscape and have been able to capitalize on it. As this trend continues, voice calls are increasingly commoditized and the average revenue per user on voice has been falling. Operators with the right cost structure will still be able to operate efficiently, effectively and profitably in this increasingly challenging voice segment, but most operators are condemned to sink or swim in the new data-centric world.

The iPhone, Blackberry, Droid and smartphones in general dominate the buzz in the mobile market, but only 21% of American wireless subscribers are using a smartphone as of the fourth quarter 2009 compared to 19% in Q3 2009 and 14% at the end of 2008. We are just at the beginning of a new wireless era where smartphones will become the standard device consumers will use to connect to  friends, the internet and the world at large. The share of smartphones as a proportion of overall device sales has increased to 29% for phone purchasers in the last six months and 45% of respondents to a Nielsen survey indicated that their next device will be a smartphone. If we combine these intentional data points with falling prices and increasing capabilities of these devices along with a explosion of applications for devices, we are seeing the beginning of a groundswell. This increase will be so rapid, that by the end of 2011, Nielsen expects more smartphones in the U.S. market than feature phones.

The Smartphone User
Slightly more males than females are getting smartphones (53% versus 47%) which is what we would expect for technical early adopter products. In terms of demographics, Hispanic Americans and Asians are slightly more likely to have a smartphone than what their share of population would indicate, which is a trend we see in the adoption of other mobile data services. While smartphones started out in the business segment, two-third of today’s buyers of smartphones are personal users.

Loyalty
In the last six months, roughly 77% of new smartphone buyers remained loyal to their wireless operator, while 18% switched to a new provider to get their new smartphone with the remaining percentage made up of first-time smartphone buyers. Interestingly enough, the percentage of people who switched carriers and got a new smartphone is not higher than that of the average wireless subscriber.

This indicates that the portfolio of the wireless carriers in general is robust enough to prevent any wide-spread smartphone flight from one carrier to the other, with very few exceptions. The added bonus for wireless carriers is that smartphone owners are significantly more satisfied (81%) with their device than feature phone owners (66%).

Features, features, features
Smartphones show higher application usage than feature phones even at the basic built-in application level. During Nielsen’s Mobile Insights survey we asked the respondents about features they’ve used in the last 30 days. The good news for the smartphone market is that people are actually taking advantage of the device capabilities.

The percentage of people who use their phone for only voice communications drops from 14% among new feature phone owners to 3% of smartphone owners. The use of the built-in camera and video capability jumps by almost 20% for both categories, due to the generally better quality and user friendliness of the features. Smartphones also often have a better speaker which translates into more frequent usage from about half of feature phone owners to about two-thirds of smartphone owners. Not surprisingly the use of Wi-Fi increases 10-fold from 5% for feature phone owners to 50% for smartphone users to satisfy the need for fast downloads.

The launch of the Droid by Motorola–which runs Google’s Android 2.0 operating system–is the latest smartphone to be tagged “game changing iPhone killer.”  We prefer to view it as simply a quality choice in a growing line of smartphones rather than something that will stifle the competition. With only 10,000 applications available in the Android market and more than 100,000 available for the iPhone, the Droid–or any Android phone–won’t be killing the iPhone anytime soon. What the Droid will do is advance the use and adoption of web content to a connected device. Android’s integration with popular and widespread Google applications such as Gmail, Google Calendar and Google Voice is a big help as is its ability to run multiple applications (up to six on the Droid). Most users do this on their computers so being able to listen to music while browsing the web and sending email makes a multi-tasking smartphone an appealing option.

The Competition to The Competition

The mobile marketplace is not just a faceoff between the iPhone and Droid; over the next few months, there are at least six new devices on deck that will have large screens like the Droid, keyboards (the Droid has both a virtual and physical keyboard), and an ever-increasing number of applications.

Nielsen’s data from Q3 2009 suggests that if you buy an Android phone, you’ll likely use more of the data features more often than if using any other smartphone.

Also, for the first time in Q3, Nielsen saw more users accessing the Internet on smartphone than that of feature phone users. If this trend continues, we’ll see more than 80% of the devices accessing the Internet being these advanced phones.

The Mobile Universe is Expanding

In Q3 2009, historically the slowest phone sales quarter, more than 25% of all phones sold were smartphones. Expect Q4 to have more than 40% of the new phones sold be smart devices. This is important to watch as smartphones are on track to be the majority of phones in the U.S. by 2011. Projecting Nielsen data out through 2010, we see smartphones crossing 50% of the market by the middle of 2011, roughly equal to 150 million users. This shift could happen much faster with the right conditions such as continued competitive price points on devices, lower “all you can eat” data packages and the increasing consumer need to be connected anytime, anywhere.

By mid-2011, the U.S. should be just over 300 million mobile subscribers. If we assume that we will have over 150 millions uses of smartphones (based on our projections) and that 80% of these users will access the Internet and 60% will access video (given the current data trend these assumptions may actually be low), this means that over 120 million mobile users will be on the Internet and 90 million will be watching video. What we have typically called the “third screen” is quickly becoming an extension of the first and second screens (TV and desktop viewing) especially in some key demographics. Note how Hispanics and African-Americans over-index on Mobile Video and Internet Usage.

Overall, we see mobile media growth accelerating over the next year with more users paying for video and premium content. Remember,  the mobile phone is the one media device that is always within reach. The trend in the U.S. is more interaction, more consumption, and more connected devices. While not a competition killer, the Droid is the next logical step in a market with a wide array of rich media devices. As that trend continues, the battle for better smartphones with better access to content will wind up seeing the consumer as the clear winner.