A few key trends are proving to significantly impede the growth of the consumer electronics industry, despite the opportunities a smart-driven, mobile world represents.
A new Accenture survey shows heightened data security concerns, falling demand for smartphones and tablet PCs, as well as the stagnant growth of the Internet of Things (IoT) are stunting the growth of this industry and will continue to do so over the next year.
Security concerns halt buying
The Igniting Growth in Consumer Technology survey, which polled 28,000 consumers across 28 countries, finds that for nearly half (47%) of respondents, security concerns and privacy risks rank among the top three barriers to buying an IoT device and service. IoT devices include smartwatches, wearable fitness monitors, and smart home thermostats, among others.
Of the survey respondents who indicated they either own or plan to buy an IoT device this year, nearly three-quarters (69%) said they know these products are capable of being hacked and therefore can result in stolen data or device malfunctions.
Within the groups of IoT device owners or those planning to buy one in the next year, more than one-third (37%) decided to be more cautious when using these devices and services; 24% chose to postpone buying an IoT device or subscribing to an IoT service; and 18% quit using their IoT devices or terminated their IoT services until they can get safer guarantees.
Smartphone and tablet demand declining
The survey also highlights sluggish demand for traditional consumer technology devices.
Of those surveyed, less than half (48%) of respondents said they intend to buy a smartphone this year, down six points from the 54% who said they planned to buy one last year.
Consistent with this, the number of people who said they plan to buy a new TV or a tablet PC this year - 30% and 29%, respectively - also dropped from 38% last year for both device types.
“The slowdown in the consumer technology market is irrefutable, serious and global,” says Sami Luukkonen, Accenture’s Electronics and High Tech group global managing director.
“The market is not about the glitzy gadgets anymore - rather, it’s about providing secure, innovative and practical digital services and more open collaboration.
“As device demand tapers off, the industry needs to make a sharp turn toward providing innovative, value-added services that consumers are able to use with confidence,” he says.
IoT devices market flatlines
The survey also reveals lacklustre demand for IoT device markets, which the industry has been counting on to drive growth as other device markets such as smartphones mature.
Only 13% of respondents said they plan to purchase a smartwatch in the next year, up only 1 percentage point from last year.
The survey found similar stagnation in demand for a range of devices, including fitness monitors, wearable health devices, smart thermostats and connected home-surveillance cameras – with each only cited as a planned purchase by 9% of respondents, about the same percentage as last year.
Smartwatch sales have been particularly challenging for manufacturers and retailers because the products are failing to meet consumers’ battery-life, ease-of-use, and design expectations, the survey shows.
“Despite all its promise, the Internet of Things market has revealed itself to be a double-edged sword,” Luukkonen says.
“The market opportunity is enormous, but security and ease-of-use concerns are hindering its near- and long-term potential.
“To ignite this market, consumer technology companies should consider getting 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, and door lock.
“Furthermore, these companies need to consider investing more in innovative services and make consumers’ online lives more secure, convenient and enriching,” Luukkonen added.
“Until the promise of IoT meets consumers’ expectations, the IoT market will remain more promise than profit and do little to reinvigorate the overall digital consumer market,” he says.