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Deloitte launches 2013 predictions in technology, media and telecommunications
15 January 2013 - The PC is not dead; crowdfunding portals bring in the bucks; dual video screening goes primetime and “mobile advertising” evolves for tablet and smartphone – Deloitte launches 2013 predictions
Deloitte, the leading business advisory firm, today launches its predictions for the technology, media and telecommunications industries for 2013. The report by Deloitte’s Technology, Media & Telecommunications (TMT) Industry Group outlines, amongst other topics, how the PC will fare this year in the age of smartphones and tablets in addition to how consumers will change their television viewing habits with the advent of dual video screening. The report also outlines how mobile operators may change the way in which they charge customers for data usage.
Commenting on the launch of the report, Harry Goddard, Partner, Deloitte commented:
“The report highlights the emerging global trends likely to have significant medium to long term impacts for companies in technology, media, telecommunications, and other industries. The launch is particularly timely and insightful for the Irish TMT industry as one of the key priorities for Ireland’s presidency of the EU is realising the potential that the digital economy brings.
“I believe that Irish TMT companies can be at the forefront in driving forward these trends and supporting them with technology innovations. Here in Ireland, we are advancing our position as a Global Innovation Hub, and I am fully confident that the industry in Ireland has the capability, know-how and creativity to capitalise on these emerging trends and cement our standing in this regard.”
Predictions outlined in the report include:
The PC is not dead: it’s about usage, not units
Strong sales of tablets and smartphones have prompted some to suggest that the PC is becoming an anachronism. From 2010 to 2012, sales of tablets and smartphones have grown from over 350 million to around 1 billion units. This is far greater than the volume of PC sales, which also grew over that period, just at a lower rate. PC sales were 350 million in 2010, 353 million in 2011 and are likely to be about 355 million units in 2012.
In 2011, Deloitte predicted that tablets would be popular in the enterprise market, and so far companies around the world have purchased about 30 million of them. However, it’s likely that only 10-15 million of those units are currently being used as PC replacements. In fact they replace paper, not PCs, whether it is pilots taking tablets into the cockpit, doctors reviewing medical records in hospitals, restaurants showing wine lists, or boards of directors using them as binders. While the enterprise PC installed base is about 500 million, at most 15 million enterprise tablets are being used as someone’s principal computing device. Fewer than five million of these are complete PC replacements where employees had PCs taken away and now rely solely on tablets to do 100 per cent of their work tasks.
We are not in a ‘post-PC era.’ We are in the era of ‘PC Plus.’ PCs have larger screens, full- or mid-size keyboards and mice and are therefore more favourable for certain tasks such as reviewing documents, browsing the web or watching video. The Deloitte Ireland 2012 CIO Survey also observes this trend – only 3% of respondent Irish CIOs identified tablets as an alternative to laptops, reflecting the laptop/PC as the preferred content creation device for the foreseeable future.
Let’s get together: crowdfunding portals bring in the bucks
Deloitte predicts that crowdfunding portals will raise $3 billion (€2.2 billion) in 2013, a 100 percent increase on the $1.5 billion (€1.1 billion) raised in 2011. Crowdfunding’s growth matters to TMT for two reasons. First, some crowdfunded projects raise funds for new technological devices and media content such as computer games. Second, the portals themselves are likely to become a new type of tech company. Crowdfunding will more likely have a role in complementing traditional venture capital, generating additional capital at the ’friends and family’ stage of funding that generally precedes VC involvement. Indeed, crowdfunding could benefit the ‘A round’ market (where start-up companies usually first try to access institutional money; typically for one to three million dollars) by helping more start-ups establish proof of concepts and secure their first paying customers. Further it could enable VCs to skip the riskier and more laborious early stage investing that many would rather avoid. Crowdfunding also brings the potential for more democratic or broader access to capital for start-ups and innovators without personal connections to capital.
Here in Ireland, websites such as fundit.ie, an Ireland-wide initiative that provides a platform for people with great ideas to attract funding from friends, fans and followers across the world, is one local example which is capitalising on this trend. Seedups.com is also an example of a crowdfunding platform for tech start-ups and investors.
Dual video screens for TV consumption at the same time in the same room
Deloitte predicts that in 2013, about ten percent of households in developed countries will dual video screen their television consumption on a monthly basis. That is, they will have two (or more) screens, most likely of different sizes, showing television programmes at the same time and in the same room. These television images may be separate programmes or alternate streams of footage for the same event, such as different matches in the same golf tournament. By the end of 2013, time spent dual video screening could exceed the time spent consuming the combination of a television programme and its dedicated programme app or website. Deloitte’s prediction is that the smaller screen will often be used to watch sport. Dual video screening enables families to spend time together, without compromising on what to watch. Deloitte expects that dual video screening of the same content in the first half of 2013 will be dominated by combinations of TV sets and smaller connected devices, with the latter often positioned on the viewer’s lap. Thereafter, second TV sets and larger computer monitors may start to predominate. By 2020, Deloitte predicts that between five to ten percent of homes in developed countries will have a second large TV set in their living rooms, primarily to facilitate secondary video viewing.
Currently, there are no interactive services available on Irish domestic digital TV, something broadcasters should look at considering the success of multiple interactive feeds available, such as the 2012 Olympic coverage on the BBC. For now, Irish viewers will have to rely on the services provided by satellite TV systems, the built in multi-feed capabilities of modern TVs or externally connected devices. There is undoubtedly a demand for services to facilitate multitasking with nearly 90% of Irish smartphone owners admitting to using their phones while doing other things such as watching TV.
“Mobile” advertising evolves for tablet and smartphone
Deloitte predicts that in 2013, what is currently described as “mobile” advertising will get split into two categories representing two similar but distinct devices – tablets and smartphones. The smartphone sector may generate about $4.9 billion (€3.7 billion) in revenues in 2013, while advertising on tablets may be worth about $3.4 billion (€2.5 billion). Display revenues, which include in-app ads, are forecast at about $7 (€5.25) per tablet, considerably higher than a forecast $0.60 (€0.45) per smartphone. Differences between search revenue per device are less marked but still significant – at about $1.70 (€1.27) per smartphone and about $5.60 (€4.20) per tablet. Usage of smartphones and tablets is sufficiently distinct to merit them being regarded as separate categories in multiple respects, including advertising. Splitting the device categories should make it easier for the industry to realise value from the advertising opportunities offered by billions of smartphones and tablets. The increasing variety of smartphones may also merit further delineation, for example by screen size, operating system or device age.
Last year saw a 20% increase in spend on mobile advertising in Ireland with the trend set to continue as investment in traditional forms of advertising decreases and focus moves to TV and online. Currently mobile makes up almost a third of online spend with paid search options still the most popular. Companies however are increasingly recognising the potential power of combined TV and mobile campaigns with a lot of us reaching for our devices when we see services we are interested in on TV.
All-you-can-app. Making all-you-can-eat digestible
Deloitte predicts that in 2013 between 50 and 100 mobile operators will offer all-you-can-eat services with unlimited access to specific applications. All-you-can-app (AYCA) will, for a fixed monthly subscription, offer unrestricted use of each service’s content, with connectivity charges bundled in. In 2013 AYCA services will be aimed primarily at customers interested in, but hesitant about, mobile data usage, due to worries about running up large data charges. These will mostly be the hundreds of millions of users currently migrating or recently migrated to smartphones. AYCA is a middle ground between unrestricted all-you-can-eat tariffs and metered data charging. All-you-can-eat is attractive to consumers but unpredictable, and occasionally rampant usage has made the offer uneconomic for some operators. Metered usage enables carriers to charge according to network impact, but inadvertent usage can land subscribers with unexpectedly high data bills. AYCA may fit the bill for a mobile data pricing model which will appeal to later adopters, who will need to perceive this as low risk.
The AYCA pricing model may be of interest to Irish operators as an alternative to all-you-can-eat data packages with fair usage policies. It gives the consumer the usage levels they desire while providing more predictable demand patterns on operator networks. There is also the potential to bundle services, content and applications, similar to the packages put together by Pay TV services, particularly with the increased availability of various media streaming providers in Ireland (e.g. Netflix, spotify).
Notes to editors
For a full copy of the report with all of the Deloitte predictions please visit www.deloitte.com/ie/tmt.
The 2013 series of Predictions has drawn on internal and external inputs from conversations with Deloitte's clients globally, contributions from Deloitte member firms’ 7,000 partners and managers specialising in TMT, and discussions with industry analysts as well as interviews with leading executives from around the world.