The quiet comeback of the dumbphoneThe quiet comeback of the dumbphone

According to the analysts at Counterpoint Research, the market for "feature phones" has bottomed out at around 2% of the US phone market. And now they're making a bit of a resurgence.

"Gen Z and millennials are advocating for digital detoxes due to the mental health concerns brought on by smartphones and social media," the firm wrote in a new report. "Hashtags like #bringbackfliphones on TikTok have garnered millions of views leading to the increased adoption of feature phones by younger consumers looking to adhere to movements like digital detoxing, minimalist lifestyles and unplugging. Given the relatively cheap price point of feature phones ($20-$50 with a prepaid carrier and $50-$100 unlocked), more people are trying out these devices and sharing their experiences on social media."

Counterpoint reported that "feature phone" vendors will sell 2.8 million of the gadgets in the US this year, "with stable sales continuing in the near term."

The findings are somewhat noteworthy considering US network operators are facing a slowdown in new customer additions. Moreover, smartphone vendors like Apple and Samsung continue to see sales declines, partly due to consumers holding off on buying new phones.

The market, and the players

The analysts at Counterpoint noted that there are a handful of use cases for feature phones:

The Counterpoint analysts said TCL is the leading feature phone manufacturer in the US, with 43% market share. The firm said HMD Global ranks second with a 26% share.

Indeed, HMD is leaning into the feature phone opportunity. The company licenses the Nokia trademark and recently introduced several new Nokia-branded feature phones. Company officials have said they're seeing a 5% rise in sales of such phones.

"In an always-on digital world, people crave quality and simplicity," HMD wrote on its Nokia phone website. "We hope today's generation of feature phones will remind us just how sophisticated they are, delivering all of the essentials with a touch of nostalgia to boot. And they are, indeed, a little fun."

The context

Of course, the feature phone market remains minuscule compared with the world's massive smartphone market. But that market sits on a downward trajectory.

"Smartphone shipments totaled 265.9 million units in 2Q23 according to the latest Omdia smartphone preliminary shipment report," the firm wrote in a release earlier this month. Omdia and Light Reading are owned by the same company, Informa. "Compared to the previous year, this marks a decrease of 9.5 percent, and compared to the previous quarter, a 1.2 percent fall. All major smartphone set OEMs, apart from Transsion Holdings and Huawei, saw declines year-on-year."

That decline can also be seen among US wireless network operators. The financial analysts at KeyBanc Capital Markets recently noted that US providers collectively added just over 2 million postpaid phone net customer additions in the second quarter of 2023. Although that figure is higher than normal, it nonetheless represents the fourth quarter in a row of a cooldown in customer growth in the industry.

Thus, operators may jump at the chance to sell a "companion" device to smartphone customers looking for relief from their phone's constant notifications.

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— Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano