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Invasion of the Tween Phones
Parents Are Ready. . . But What About Their Kids?

A new mobile phone category is quickly emerging in the U.S. market: Tween phones. These child-friendly phones are aimed at helping busy parents stay in touch with their tweens (i.e., children age 8 to 12). They are very basic phones that feature a limited number of parent-controlled phone numbers and just a handful of buttons. While these phones sound like a good deal to parents, nervous industry insiders are left wondering if there’s a real market for them, and if so will tweens buy in?

The Disney Effect

Clearly interest in this market segment is heating up. In July, Walt Disney Internet Group and Sprint announced plans to launch Disney Mobile in 2006. This Mobile Virtual Network Operator (MVNO) strategy includes exclusive phones specifically designed for family communication.

Disney will have plenty of company on the handset side when its service arrives. Already at least four devices have entered (or will soon enter) the market. They include the following:

Firefly from Firefly Mobile is a flashy and compact GSM phone that’s priced at $100.
TicTalk from Enfora and partner LeapFrog is a bare bones yet rugged GSM device for kids 6 and older (yes, 6!). It features educational games and is priced at $99.
Wherifone G550 from Wherify Wireless is a compact GSM device featuring a built-in GPS tracker that’s priced at about $150.
VX-1000 (tentative name) from LG is a CDMA phone just emerging from the FCC approval process, with several mentions of Verizon Wireless. The price has not yet been set.

Market Reality

NPD’s current best estimate of the total available market for tween phones is about 12 million tweens. Certainly not all tweens will immediately buy one of these new phones. After all it’s taken about three years for the U.S. smartphone market to reach three percent of all mobile phones (roughly 3.8 million units shipped last year). And smartphone users have been highly motivated – plus, they have the means to afford them. Tweens won’t be nearly as motivated – even if their parents are.

Let’s say the tween phone market mimics the market penetration of smartphones: In three years, product penetration would reach three percent of the 12 million potential users. That would translate into just 360,000 units in 2008. Even if penetration eventually reaches a million units, that’s still not a very large market – especially when compared with the entire mobile phone market, which is more than a hundred times that size.

Furthermore, according to the latest NPD Group data, many tweens (and even younger kids) already have mobile phones. In fact penetration has already reached 7 percent of kids age 6 to 8, 22 percent of kids 9 to 11 and 54 percent of kids age 12 to 14. So, there’s built-in competition already (and a sign that the market is already being served with traditional mobile phones).

Carrier View

What does the tween market offer the carrier? Not very much:

Few voice minutes
Little to no data traffic
Mostly prepaid customers
Few up-selling opportunities

This is not a big win for carriers. Sure they can hope little Johnny becomes a lifetime customer, but that’s a dubious prospect. So if carriers see little upside, these devices will certainly struggle. For an example of how brutal category-focused phone can be, look no further than the dearth of gaming phones, such as N-Gage. So far, carrier support for tween phones has been tepid, at best.
Consumers’ Views

Most tween phones are reasonably priced. But what’s the advantage over just adding a line and a standard phone for $10 a month to an existing family plan? The added “safety” of a parent-controlled tween phone might be nice, but kids will soon figure out that older siblings and friends have cooler phones, and will likely want more features, such as ringtones, cameras, games, and the ability to call whomever they like whenever they want to.

Parents will embrace the tween phone concept, of course, since it offers control of the device and access to their kids – at an affordable price. But tweens might not play ball. They are likely to:

Bristle at parent controls
Shun the phones for lack of coolness compared to regular models
Lose interest once they figure out how “basic” they really are

Who will win?

Of all the entries, Firefly might be the big winner, mostly because the phone looks so cool. The Wherifone G550 is also a contender, because of its GPS functionality. And perhaps no one can crack this market – even mighty Disney could end up struggling.

There’s a fundamental problem working here: Kids don’t seek more dependence on parents. They’re looking for less, with each passing year. A device so tightly parent-controlled might be a hard sell, except for a few extremely dependent kids.

It’s important to remember that kids grow up quickly – and they’re smarter than most adults want to admit. Common sense tells us they’ll want a normal mobile phone sooner than parents (and marketers) might imagine.

And with that: There goes the market.

— Neil Strother, Research Director, Mobile Device