Smartphones ‘too good to upgrade’

The iPhone 6 is displayed during an Apple special event on September 9, 2014 in Cupertino, California

The iPhone 6 is displayed during an Apple special event on September 9, 2014 in Cupertino, California

47% of smartphone users said they were not upgrading because they were “satisfied with their current devices.”

Consumer electronic companies have a peculiar problem. People are happy with their devices.This has far-reaching implications for the tech sector as, according to the 2016 Accenture Digital Consumer Survey, the public is in no mood to upgrade their gadgets.

In a way, it turns out electronics firms have been too good at their job, as 47% of smartphone users said they were not upgrading because they were “satisfied with their current devices”.

This is bad news for the likes of Samsung and Apple as they count on people to move onto the next best thing once their device is up for replacement.

It’s also bad news for resellers
of these devices, such as Massmart’s Incredible Connection. It is facing a double whammy as the fall in the rand over the past year will force it to increase its prices, probably to the detriment of sales.

The survey, which polled 28 000 consumers in 28 countries on their use of consumer technology found that the smartphone market had matured.
“The days of huge growth in the smartphone market appear to be over,” Accenture said.

The biggest drops in purchase intent are in countries that previously experienced rapid growth in smartphone purchases. China for instance had dropped from 82% to 61%, South Korea was down from 64% to 54% and India fell from 80% to 68%.

According to Strategy Worx CEO Steven Ambrose, in SA a distinction should be made between the high-end and the middle- to low-end markets. While the high-end looks like it will take strain, the low smartphone penetration in the middle- to low-ends means there is still a lot of potential for growth in these segments.

Accenture said smartphone demand was not alone in taking a dip. It found there was a nine-point drop in purchase intent for tablet computers, a eight-point drop in TVs and a six-point drop for laptop computers. “Overall, 20% [of those surveyed] planned to decrease spending versus only 7% in 2014.” Ambrose says he is not surprised by the findings, as he has already seen a drop off in demand for some categories like television sets.

While in South Africa consumer electronic retailers look set to struggle, mobile operators like MTN and Vodacom – which sell devices – are shielded. Ambrose says the operators not only buy their handsets at cost, they also get add-ons like marketing support from manufacturers.
The slump in demand is a blow to supporters of the much hyped ‘internet of things’ or IoT – a trend that sees everyday objects like watches and security cameras connected to the internet – as this is not gaining traction.

Though IoT has grown in the enterprise space, it is struggling in the consumer sector. Growing concern about privacy and security, as well as the role of technology in people’s lives and the cost of the devices, has dampened demand.

Getting a tech strategy right can be tricky. One of the biggest dangers for companies in the sector is running too quickly ahead of their customers. Often they get sidetracked with the newest features, forgetting what it is that customers actually want.

Local telecoms group TeleMasters (TLM) learned this when it tried to migrate its customers from a least cost routing service to an internet-based voice product. After years of failing to get them to convert, the group’s CEO Mario Pretorius realised they just did not want to shift. Pretorius said his customers were familiar with the old technology and did not want to go through the hassle of putting in new systems just for the sake of progress.
To be readily adopted, features must make a difference in consumers lives, Accenture notes. But getting these features right is only part of the solution. To encourage sales in IoT devices, Accenture advises tech groups to lower prices or add more features without ramping up prices. They should also make them easier to use and build trust in the security of these devices. While consumers
have been slow to adopt the IoT, business on the other hand has been quick to adopt it.

The ability to control power usage and monitor premises remotely via a smartphone has tremendous cost and operational advantages. Companies, like Vodacom Business have been quick to tap into this trend. It managed to increase its IoT (also called machine-to-machine) customers by 17.5% to 1.9 million in the six months to end September.

If tech groups can get consumers to buy into it in the same way  businesses currently are, they will have no problem getting newfangled devices into their hands. If they don’t, sales seem set to slide.






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