Igniting Growth in Consumer Technology: An Indian Perspective

NEW DELHI, INDIA: According to a latest report by Accenture there are four main reasons why market growth for traditional devices such as smartphones, tablet PCs, TVs, and PCs is plateauing. Meanwhile, demand for IoT devices is much slower than initially hoped.

Privacy and Security fears shutting down use

Security and privacy concerns has moved from being a nagging problem to a top barrier as consumers are now choosing to abandon IoT devices and services over security concerns

In India, about 70% of the customers have rated privacy/ security concerns as one of the main reasons for not using an IoT device

More than three-fourths of consumers surveyed in India are aware of the recent security breaches such as hacker attacks resulting in stolen data or malfunctions

Among the consumers aware of hacker attacks and owning or planning to own IoT devices in the next five years, 34 percent decided to terminate use of the devices and related services until they get safety guarantees. These are customers who once saw value in the device or service but now perceive the risk to outweigh that value

This indicates that the consumer technology industry does not have the fundamentals in place—and the consumer trust established—to push into more personalized and sensitive areas as it searches for the next wave of innovation

Lack of “wow” factor to attract new consumers

Almost 32 % of the consumers are not planning to purchase a smartphone this year because either they are happy with their current device or they cannot afford another one

Another 29 percent say they recently purchased a new smartphone and 4 percent indicate they do not plan to buy a smartphone because there are no innovative features in the new devices that interest them. This seems to indicate that the consumer technology industry has not delivered a “wow” factor attractive enough to consumers to drive replacement upgrades

It is not just smartphones—growth is stalling across all traditional categories

Globally, in addition to the six-point drop in purchase intent for smartphones, the survey revealed a nine-point drop in purchase intent for tablets, an eight-point drop in televisions and a 6 point drop for laptop computers. Overall, 20 percent plan to decrease spending versus only 7 percent in 2014

Though globally only 13 percent plan to increase spending on smartphones, tablets and laptops, India saw a turnout of about 27% planning to increase spends on smartphones, tablets, TV sets and laptops

IoT has not yet ignited growth

But the market for IoT devices will not grow fast enough to offset declines in traditional categories. In fact, the growth in demand for IoT devices is much slower than initially hoped for—there has been virtually no increase in purchase intent over last year globally

However, the uptake for IoT products seems to have a bright future in India, with about one-third of the customers planning to purchase a smartwatch in the next one year and 24% planning to purchase a wearable fitness monitor in the next one year

Roadblocks of IoT adoption

Our research shows there are three main roadblocks preventing greater adoption—price, security concerns and ease of use. Moving from technology-led innovation, to innovation that mates technology with a deep understanding of core consumer needs, will be critical to accelerate IoT device adoption.

Lack of value perception raising concern over price

Consumers report that price is the top barrier to the purchase of IoT devices, with 62 percent believing these devices are too expensive globally and 51 percent echoing the same concern

Consumers identified as early adopters of IoT and early majority are less concerned about price than late majority and late adopters. They (meaning early adopters or late?) are willing to spend on devices when they believe there is a compelling value proposition

Ease of use still a barrier to adoption

While the industry has definitely made some progress, ease of use and customer experience are still lagging and far from satisfactory

Globally, more than two-thirds (64 percent) of consumers experienced a challenge when using a new IoT device this year, While this is down from 83 percent last year, it is still far too high to drive adoption

In India, Internet connectivity was cited as one of the main challenges faced by users with more than one quarter of respondents highlighting it. This was followed by 17% percent of the respondents citing the complicated nature of the devices

Three actions to take now to ignite the next five years of growth

Consumer technology is more than a US$200-billion, highly profitable global industry with customers using their products extensively (not so based on our survey) But with evidence of stalling consumer interest in spending on both mainstay technologies and IoT devices, consumer technology companies must act now to ignite their next wave of growth. Growth in new categories will happen, and can happen quickly. But companies need to fix the fundamental enablers that will help them ramp up when disruptive innovation occurs.

Ignite innovation to avoid stalling

Shift investment to “disruptive innovation”. Investment in incremental, sustaining engineering—particularly in the mature product categories such as smartphones—is producing diminishing returns. Innovation will most likely come from increasing investment in disruptive engineering technology

Leverage IoT to create new types of solutions and customer experiences. IoT offers a better possibility of creating solutions that meet customer needs than ever before. Now that IoT devices and a more open technology environment are a reality, it may be time to go back to the shelf to see what previous innovation could be market-viable and attractive to consumers. While it is unlikely that services could be the single strategy to propel growth, they do represent an opportunity for device manufacturers to create incremental revenue. For example, mobile payments have developed rapidly with strong market awareness. About 30% percent of consumers use mobile payments on a daily basis in India, China and Turkey having the strongest online adoption.

Think ecosystem–it’s time to co-innovate with partners

Get serious about ecosystems. Sharing data and creating integrated services across multiple companies—such as building a connected home through an integrated home security camera, thermostat, door locking and more—provides consumers with a richer experience and an opportunity for each company to offer a more robust set of services. In fact, a new round of ecosystem innovation can ignite consumer demand and set the consumer technology industry back on the growth path.

Leverage strengths, including the data, of each player. Increasingly, no individual company can develop and deliver the holistic experience customers demand. Instead the industry needs to look for collaborative partnerships that leverage the unique capabilities of different players.