Deloitte analyses top trends for the technology industry for 2012
17 January 2012
The Technology, Media & Telecommunications (TMT) practice at Deloitte today announces its predictions for the technology sector in 2012. Deloitte forecasts that the demand for consumer technology will continue to advance in 2012 with record numbers of smartphones and tablets likely to be sold and demand from emerging markets for lower-cost televisions and computers boosting volumes. Moore’s Law and strong competition will continue to drive the value for money of many consumer technology products, from televisions to tablets. A colour TV cost, adjusting for inflation, about £1,000 in the late 1970s. Today, that could buy you a colour TV, two tablets, three smartphones and a netbook.
Jolyon Barker, global lead for Deloitte's Technology, Media & Telecommunications Industry, comments: “This year’s predictions cover a range of topics, including the demand for consumer technology, the rise of the multi-tablet owner, 3D printing and the growth of big data.
“So-called ’Big data’ projects had a total industry revenue of only £65 million in 2009. However, 2012 will see 90 per cent of Fortune 500 companies kick off a data-related initiative, which will boost the industry’s revenue to between £650 million and £1 billion. Acceptance of big data is still in its infancy, mostly used for meteorology and physics simulations, but interest is gaining pace. Nevertheless, as data warehouses start to overflow and as the need for more relevant and timely analysis begins to put strain on traditional analytics tools, the industry cannot afford to get carried away with the ‘big’ in big data; it needs to maintain its focus on extracting insights that help to improve decision-making and business outcomes.
“The tablet explosion has shown little sign of slowing down since hitting the market in 2010 and is set to take the mantle of the most rapid multiple market penetration in history. Around five million tablets will be sold to people who already own one in 2012, generating up to £1.3 billion in revenue for technology businesses. It is worth remembering that it took several decades after introduction for more than five percent of households to have more than one car, phone, radio or TV.
”Peter O’Donoghue, UK Head of Technology at Deloitte, adds: “The storage technology used for the world’s consumer devices is mostly taken for granted by consumers by the increasing desire for smaller, lighter gadgets and increasing acceptance of cloud-based services could provide a boost for the solid-state drive vendors.
“By the end of 2012, solid state storage for small devices such as MP3/4 players, smartphones and tablets will likely account for 90 per cent of the market, compared to 20 per cent in 2006, and a sixth of the laptop segment.”
Key predictions include:
Demand for consumer technology will continue to advance in 2012. However, the dollar value of the market may prove to be flat as lower prices and the ‘bang for your buck’ value of technology becomes more paramount. The cost of technology has plummeted over the past three decades and the usage of a tablet and a television, compared to a car, overseas holiday or sporting event, proves that consumer electronics fare well in terms of value. Compared to the cost of buying a car or a house, the traditional rite of passage for families, an investment in consumer electronics could become an alternative status symbol for consumers with constrained budgets. Buyers may even sacrifice holidays in order to upgrade to a new computer and television rather than choosing which device to buy.
It took several decades for one household to have more than one car, phone, radio or television and ten years for a similar landmark to be reached in the computing and mobile phone markets. However the tablet market will diversify around size, processing power, price and operating system in 2012, as was the case with smart phones. Corporations are also likely to require tablets with greater security and ruggedness. That presents a challenge for content owners, network operators and retailers that need to prepare to respond to the rise in the multi-tablet household.
Internet companies have led the way with exploring big data but the sectors that are likely to follow include the public sector, financial services retail, entertainment and media. This could trigger a talent shortage with up to 190,000 skilled professionals needed to cope with demand in the US alone over the next five years. Although managing the increasing volume, variety and velocity of data is critical to the future success of the industry, companies launching initiatives should ensure that their approach remains focused on the insight needed to drive better decision-making and business outcomes not just the data input. Mastery of the sheer expanse and complexity of data is important but it will not be the driver for investment. Instead, the driver will be how the insight derived is used to change the way that organisations compete.
Even the data centre market could turn to smaller, cooler, power-sipping solid state drives as an alternative to more traditional hard drives. The technology, which builds storage onto silicon chips, should benefit from more savvy consumer behaviour, people start to pay more attention to how much storage they actually need on specific devices, particularly as more cloud-based storage services become available.
Wireless power transmission - where TV towers and mobile phone masts could be used to create a sea of ambient Radio Frequency (RF) energy to power devices - has been a dream since the age of Nikola Tesla. However power harvesting products based on RF will remain a niche market during 2012 due to significant technical challenges. One issue is the scarcity of ambient RF energy with solar a much more plentiful resource. Another problem is that the amount of power density from a RF source varies dramatically depending on the distance and location of the user. Interference from other environmental factors and the conversion process also add hurdles. Charging a tablet in this manner would be like filling a swimming pool with a shot glass. There are a few applications - such as ceiling sensors and remote controls - that may be tuned to RF but the sector will remain niche with moderate growth potential in 2012.
3D printing has caught the attention of the public but the hype around the technology does not recognise the severe limitations of the concept. The ability to download designs for anything imaginable and create the product on the spot will become a viable segment in several niche markets over the coming years such as the £14 billion global power tools market, the biomedical sector and the after-sales service industries such as auto repair. It is likely that several ‘do-it-yourself’ enthusiasts to invest in 3D printers as prices drop below £650 in 2012 but the cost of the materials needed to create a product as prosaic as a running shoe remains specialised and expensive. Sales in 2012 will likely remain below £134 million and anyone expecting the era of the Star Trek “replicator” may have to wait awhile yet.
Notes to editors:
The 2012 series of Predictions has drawn on internal and external inputs from conversations with member firm clients, contributions from Deloitte member firms’ 7,000 partners and managers specialising in TMT, and discussions with industry analysts as well as interviews with leading executives from around the world.
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.
Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.
The information contained in this press release is correct at the time of going to press.
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