Deloitte analyses 2012 top trends for the TMT industry - 19/01/2012DOWNLOAD
The Technology, Media & Telecommunications (TMT) practice at Deloitte launched its predictions for 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 €1,200 in the late 1970s. Today, that could buy you a colour TV, two tablets, three smartphones and a netbook.
According to Georges Kioes, TMT leader at Deloitte Luxembourg: “This year’s predictions cover a range of topics, including the rise of the multi-tablet owner and targeted advertising. As last year, our predictions consist of analysing the market, researching on likely scenarios and indicating our opinions on what will happen over the next 12 months. With the growth of social networks and the popularity of social gaming, the financial potential of ‘social gaming’ has been drawn to businesses’ attention.”
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.
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.
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 €16.76 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 €778 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 €160 million and anyone expecting the era of the Star Trek ‘replicator’ may have to wait a while yet.
95 % of all television programmes watched in 2012 will be live or within a day of the original broadcast, despite the proliferation of technology that enables the schedule to be bypassed. A leading video-streaming company has even acknowledged that it is not directly competing against traditional linear television and offered a service it dubbed ‘re-run TV’. Even the advent of social networks has enhanced, rather than diminished, the schedule’s appeal as commentary on programs has expanded from the living room to a community. Choice is cherished but choosing is a chore. Conventional broadcasters need to build on this power and show advertisers the advantages of the schedule and building campaigns within the context of a schedule.
Despite the growth in the popularity of social gaming in 2010 and 2011, growth has already started to slow for some developers, while the overall community of social gamers has stuttered over the past two years. Growth in revenue across the sub-sector will slow to less than 20% in 2012 which may force games developers to focus less on selling virtual goods over social networks and to consider the potential of advertising or charging for games up front. In this way it needs to adopt the business model of the more traditional console gaming industry and look to develop franchises.
The advertising industry’s use of functional Magnetic Resonance Imaging - fMRI - machines grows in influence. Similar to larger, more expensive MRI machines used in the medical sector, fMRI analysis can show that activity in certain regions of the brain correlates with specific emotions and types of thinking. The controversial technique, known as neuromarketing, has already started to gain traction with food companies altering their packaging and even the flavour of their products as a result of this technique. It appears likely that fMRI will become a key tool for advertisers in 2012 but it is likely to work best as part of a package alongside more traditional marketing techniques.
Smartphones are typically considered high-end devices; yet by year-end 2012, at least 500 million $100 ‘smartphones’ will be in use. These devices will have the look and feel of smartphones, sporting touch screens or full qwerty keyboards. $100 smartphones will have weaker processors, less memory, slower connectivity options, lower resolution cameras – but purchasers of these devices will be happy to trade off lower specifications for lower price. The rise of the $100 smartphone is comparable to the growth of the netbook, which offered a low-cost and low-powered alternative to standard laptops. The biggest demand for $100 smartphones is likely to be in emerging markets where Internet access is low but the desire for communication and information services is growing. Yet, the $100 smartphone could also appeal to users in mature markets where it could become a perfect teenage ‘starter’ phone. This will put pressure on the supply chain to cut the price of components but also presents a challenge for app developers as low-cost smartphone owners are less likely to want to pay for downloads.
The demands on the developer are increasing as the variety of smartphones and tablets increases. To reach a global target market, a developer may have to make 360 different variants which has almost called time on the part-time app developer. With so much choice on offer, app-store providers should consider ways to improve and assure the quality of the products on offer. Stores should look to differentiate by considering subscription models focused on different genres, or selected by editors, that would create ‘app bundles’. As smartphones go truly mass market, there will be a growing demand for local language, local content apps.
The strain on networks, both fixed and mobile, is set to force more people to turn to short-range wireless connections to transfer data. Such technology has been pervasive before in the form of infrared and Bluetooth connectivity and is set for a resurgence in the form of web bypass - cutting out the need to connect to the internet at all - as the need for the quick transfer of data between devices and users grows. Roughly 1% of all wireless data exchanged in 2012 will be between devices rather than routed over the internet, double the level of 2011. With telecoms companies balancing the need to invest in network improvement with the demands of customers for data capacity, web bypass will emerge as a third network option alongside fixed broadband and mobile for transferring information.
Many people remain uncomfortable with the notion of using a phone to pay for items and consumer perception about the security and battery-draining aspects of NFC (Near Field Communications) need to be overcome. Even if 2012 turns out to be no more than a ‘transitional year’ for mobile payments, the NFC chips will not go to waste. There are thousands of applications of NFC - from gambling, to games to healthcare - that could build up a head of steam over the course of the year, even if the media continues to focus on the ‘digital wallet’.