Forgot your wallet? No problem. The tide will turn for in-store mobile payments
Print book sales will be at least four times higher than eBook sales, Deloitte predicts
Toronto, Ontario – January 13, 2015 –2015 will mark the tipping point for near-field communication (NFC)-enabled smartphone in-store payments, according to Deloitte’s 2015 Canadian Technology, Media & Telecommunications (TMT) Predictions. In 2015, about five percent of the 600 million NFC-equipped smartphones worldwide will be used to make an in-store NFC payment at least once a month, more than a 1,000 percent increase from 2014, making its way to Canada at the end of 2015.
“Canadian smartphones are already being used to check balances, transfer funds and transact online, which indicates that consumers are comfortable with using their phones to handle money. But almost no one used their phones for contactless in-store payments at the register,” said Duncan Stewart, Director of TMT Research at Deloitte in Canada. “2015 will be the first year in which all of the requirements for mainstream mobile payments – satisfying financial institutions, merchants, consumers and device vendors – have been sufficiently addressed."
Now in its 14th year, Deloitte’s TMT Predictions provide an outlook on the 10 most important trends for Canada in the technology, media and telecommunications industry over the next 12 to 18 months.
Also in 2015, the smartphone upgrade market will see sustained, but slower growth. 1.4 billion smartphones will sell worldwide in 2015, up 12 percent from 2014’s 1.2 billion units. More than a billion smartphone sales worldwide will be upgrades, countering ideas that the device has matured and cannot be improved.
“Although the smartphone refresh cycle is lengthening, existing smartphone owners are continuing to buy new phones. About 5 million smartphone upgrades in Canada will occur in 2015,” said Robert Nardi, Partner and National TMT Leader for Deloitte in Canada. “PC growth has been on a decline as consumers and enterprises started to buy new ones at longer intervals, but it would be premature to expect the same to occur for smartphones. Pride, pixel count, durability and storage needs will continue to drive growth for smartphone refreshes.”
Consumers don’t always lead the way: The pendulum swings back to enterprise adoption
Historically, new technologies, like PCs and cellular phones, were adopted by the enterprise and then by the mass consumer market years later. In the last decade, it’s been the opposite. Tablets and smartphones with large screens were adopted widely by consumers first, but the pendulum will start to swing back. In 2014, consumer uptake of wearable technology like smart glasses was modest, signaling a shift away from the consumerization of IT. Enterprise adoption of wearables, 3D printing, drones and the Internet of Things (IoT) will have a bigger impact generating more economic value in goods and addressing business needs than the consumer market for those technologies.
10 TMT Predictions most relevant in Canada (All dollar amounts are USD):
1. In-store mobile payments will (finally) gain momentum – The end of 2015 will mark the tipping point for the use of mobile phones for NFC-enabled in-store payments in Canada. It will be the first year in which the multiple prerequisites for mainstream adoption – satisfying financial institutions, merchants, consumers and device vendors – have been sufficiently addressed. In 2015, about five percent of the base of 600 million NFC equipped smartphones worldwide will be used to make an in-store NFC payment at least once a month, compared to less than half a percent of about 450 million NFC phones in mid-2014. In-store mobile payments in the Canadian market are likely to be slower than the US, depending on when various payment services are introduced, but 56 percent of Canadians are not interested in paying with a smartphone*. It remains to be seen if they will change their minds.
2. For the first time, the smartphone upgrade market will exceed one billion. 1.4 billion smartphones will sell worldwide in 2015, but over a billion of them will be upgrades – new phones for those who already have one. The refresh cycle may be lengthening, but screen size, speed, storage, software and design will drive growth for smartphone refreshes. In Canada, more than 5 million smartphone sold will likely be upgrades
3. Print is not dead, at least for print books – Sales from print books will be at least four times the sales of eBooks globally. eBooks have not substituted print books in the same way that sales of CDs, print newspapers and magazines have declined. Young people (age 18-34) are as attached to print books as their elders and read at about the same rate than older demographics, and they are willing to pay for them.
4. The ‘generation that won’t spend’ is spending on TMT – Millennials who are 18-34 years old in Canada will spend an average of $750 for content, both traditional and digital. With 9 million millennials, that’s nearly $7 billion in sales for the Canadian media industry. What are millennials spending on? Pay TV, music, computer games, books, live sports, streaming video, and even print newspapers. In an Ipsos survey, commissioned by Deloitte, more Canadians aged 18-32 increased or spent the same amount of money this year than last on books (84 percent), live music (83 percent) or live sports (92 percent) relative to GenX-ers (78 percent, 76 percent, 82 percent respectively) or Boomers (78 percent, 73 percent, 76 percent respectively).
5. Click and collect booms: a boon for the consumer, a challenge for retailers. The number of click and collect locations in Europe will reach half a million in 2015, a 20 percent increase on the previous year. Click and collect provides shoppers with the option to pick up items purchased online from locations such as a special section in a store, or a secure locker located in a transit station or a shopping mall. It is prevalent in Europe, but just starting to be trialed in Canada, even though the concept was pioneered by a Canadian company back in the Dotcom era.
6. The connectivity chasm deepens as gigabit Internet adoption rockets – Globally, the number of homes with broadband Internet will grow by about two percent to 715 million, and average broadband speeds in most countries will increase by 20 percent. But variations in broadband speed in homes will be significant. The top decile of homes in some markets will have five times the average speed of those in the bottom decile. Factors unique to each home from the thickness of walls, age of a router, time of day and browsing habits of neighbours will determine the actual speeds attained at each broadband-connected device. Hundreds of thousands of Canadians get broadband speeds of more than 50 Mbps, but even more have realized ‘broadband’ speeds of less than 5 Mbps.
7. The end of the consumerization of IT? In 2015, the pendulum of technology adoption will begin to swing back to the enterprise market, reversing a decade long trend that went the other way - when mass adoption of technologies like large screen smartphones and tablets started with consumer adoption first.
8. The Internet of things really is things, not people – In 2015, over 60 percent of the one billion global wireless IoT devices will be bought, paid for and used by enterprises - despite media focus on consumers controlling their thermostats, lights, and appliances (ranging from washing machines to tea kettles). The IoT-specific hardware will be worth $10 billion, but the services enabled by the devices will be worth about $70 billion.
9. 3D printing is a revolution: Just not the revolution you think - In 2015 nearly 220,000 3D printers will be sold worldwide, with a dollar value of $1.6 billion, but it is unlikely that there will be a “factory in every home.” Deloitte estimates about 80 percent of the value of all 3D printers will be for companies instead of consumers, meaning the real revolution will be in the enterprise market.
10. Short form video: a future, but not the future, of television - The total time spent watching online short-form video clips and programming of less than 20 minutes in length will represent less than three percent of all video seen in the year, both in Canada and globally. However, viewers of short form video may be more engaged and less passive than viewers of traditional long form video, meaning that ads for short form video may generate higher sales with a more-engaged audience.
Deloitte’s TMT Predictions are based on worldwide research supported by in-depth interviews with clients, industry analysts, global leaders and more than 8,000 Deloitte member firm TMT practitioners.
Over the last five years, Deloitte was more than 79 percent accurate with its TMT predictions.
Deloitte’s TMT predictions will be showcased in a 12-stop Canadian road show with events starting on January 13.
Deloitte, one of Canada's leading professional services firms, provides audit, tax, consulting, and financial advisory services. Deloitte LLP, an Ontario limited liability partnership, is the Canadian member firm of Deloitte Touche Tohmatsu Limited.
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.
*These are the findings of an Ipsos Reid study conducted on behalf of Deloitte between January 5th – 8th 2015. This online survey of 900 Canadian adults (18+) was conducted via the Ipsos Online Opinions Panel, one of Ipsos Reid's national online panels. Weighting was then employed to balance demographics to ensure that the sample's composition reflects that of the adult population according to Census data and to provide results intended to approximate the sample universe. The precision of Ipsos online polls is measured using a credibility interval. In this case, the poll is accurate to within +/-3.3 percentage points had all Canadian adults been polled. All sample surveys and polls may be subject to other sources of error, including, but not limited to coverage error, and measurement error.