OUR WORLDCONNECTED

OUR WORLD,CONNECTEDA study on consumer behavior and the emergence of new social connections from Best Buy Co., Inc.

CONTENTSExecutive Perspective Brian Dunn, CEO, Best Buy Co., Inc.

Introduction

Re-Defining Connection

The Shi!ing Tech Universe: Consumers at the Center of Consumer Electronics

Promise of the Connected World Top 10 Gi!/Gadget Trends For Holiday 2010

Connection Conundrum

Our World, Connected:New Social Connections from Best Buy

1

EXECUTIVE PERSPECTIVE

The current dynamics of the consumer technology industry are fundamentally and rapidly changing as innovation is driven by consumers themselves. Basic human needs for comfort, connection, variety and uniqueness now drive society’s desire for a truly connected world. With few exceptions, the consumer technology industry continues to seek ways to fully understand and satisfy this growing demand.

New research commissioned by Best Buy and conducted by e-Rewards reveals that people believe in the notion of the connected world. They have taken what they’ve experienced over the past two decades (since technology began to be ubiquitous in our lives) and on their own have redefined what ”being connected” means. In the process, they have naturally grown dissatisfied with some consumer technologies that actually inhibit their ability to live in a truly connected world. This has led them to become more knowledgeable, more vocal, and more involved in how and what the industry produces.

In other words, people have, through the sheer force of their mounting interest in and reliance on ge"ing and staying connected, moved to the center of the consumer electronics world.

People remain, to varying degrees, skeptical about the technology that in so many ways powers our lives. Even as they acknowledge the great promise of technology, they recognize its limitations. They remain bewildered by the number of options, the lack of compatibility, the absence of customer service, and the challenge of new product innovations and introductions.

As Robert Stephens, currently our Chief Technology O#cer and founder of Geek Squad, has observed, “what’s going to happen and how technology is going to change our lives during the next 10 years is going to make the last 50 look like we were at a standstill.” Human ingenuity, dynamism and entrepreneurship have brought us to where we are today. We are excited to be a part of where we go tomorrow – and over the next decade. This study is the start of that journey.

Brian Dunn, CEO, Best Buy Co., Inc

2

INTRODUCTION

%85% of consumers say they are

optimistic about the experiences that technology products and

services enable

Consumer technology today is driven by human desire, not devices.

Devices, a!er all, merely beep and blink. But desire ignites dreams. Desire energizes our imaginations. Desire inspires experience. And perhaps most important, desire arouses expectations. Increasingly, we look to consumer technology not as a collection of devices but as a way to help us match our reality to our desires, to help us meet our expectations.

While in the past, as the technological revolution unfolded, we may have looked to technology to show us what we could do, today we look to technology to help us do what we want to do.

This has triggered a fundamental shi! in our relationship with technology. People have moved from passive users of devices to active drivers of technology and innovation. So while consumer technology companies may still create, manufacture and sell devices, it is people who have reassessed their relationship to what happens on the assembly line – declaring through their actions, opinions, behaviors, and a"itudes that they are no longer willing to be enslaved

by technology. Instead, they want to use technology to connect with people and ideas, to mesh their lives with their desires and expectations.

More important, people have awakened to the possibilities technology presents and decided they like what they see. In fact, new research commissioned by Best Buy and conducted by e-Rewards1 shows that not only do a majority of people rely on technology in their everyday life (including more than 70 percent of those age 18-24 and almost half of those 55 and older) but that overall almost 85 percent are optimistic about the experiences technology products and services enable. The interest and joy people feel is encouraging them to become an integral part of what’s coming next in order to both experience and humanize technology.

As technology blogger Jonathan Harris noted in an August 2010 post, “Instead of fleeing to the forest, we must find the humanity in the machine and learn to love it. If we decide the humanity does not yet exist there in the ways we expect, then we must create it.”

Today people are recognizing that the only way they can humanize their relationship with technology and stay connected to the people, information, ideas, entertainment, services and media they care about most, is to be smack dab in the center of the consumer technology universe.

To be there, in the center, to generate new ways of ...

... being ... acquiring … connecting ... communicating ... seeing ...doing

... experiencing ... creating ... loving ... gathering ... sharing ... learning ...

competing ... protesting ... reacting ... inventing

In other words, to be there, in the center, not just as a part but the most important part of

the thrilling evolution in how, why, where, and when we connect with one another. It is a bold, new

partnership that is not merely refining the relationship between people and the consumer technology industry, but redefining it, based on ...

... mutual participation

... mutual inspiration

... mutual satisfaction. 3

People want to participate, co-create, curate and collaborate by engaging in the development of consumer technology. An August 2010 Forrester report2 notes that more than six out of 10 (61 percent) online adults want to co-create alongside the industry, suggesting that industry professionals, “should feel comfortable proceeding with co-creation strategies, as chances are good that there are engaged, interested consumers who are willing to help improve your product.”

This is a new phenomenon, the rapid development of which has taken many people and, significantly, the consumer electronics industry, by surprise. It’s as if there’s been a collective “a-ha moment” in which people realized they no longer had to accept, lemming-like, what industry o#ers and, simultaneously, industry acknowledged that what it delivers may not automatically be embraced.

It’s not that people are necessarily in the labs or doing market research or writing code. But by their behavior and by their sharing, they are continually making it known to anyone or anything that will listen what ma"ers most to them, what doesn’t ma"er at all, what direction their concerns are moving, and what new options they want explored and addressed.

In some cases, of course, technology users actually are doing the creating. Some of today’s most socially altering tech advances were first developed by everyday people (despite their later status as visionaries and billionaires) who had a hunch about what people might want, a great idea on how to turn that hunch into a function or platform, and the ambition and smarts to follow through. Facebook, YouTube, Napster and other content providers that changed the world as we know it were all created by individuals with deeply creative brainpower and insight into what people wanted to be able to do but couldn’t.

Industry and the media are paying a"ention like never before. They’re listening not only to what people say they want, but to what they do. They’re analyzing what devices people are buying and scrutinizing what

functions on those devices people are actually using. And when they use them. And how they use them. And why they use them. And where they use them.

And, in turn, they are le"ing information drive innovation.

This reconstituted relationship between people and consumer technology – this partnership that moves people to the center – is unleashing unprecedented ingenuity in people and in the consumer technology industry.

People today are connecting with more people and more ideas more o!en and in more ways for more reasons than ever before possible. Consumer technology has given people the means by which

they can fulfill their dreams and exceed their expectations. At the same time, it has

inspired people to dream even bigger and expect even more.

Our World, Connected delivers up-to-the-minute insight and data that suggests this new relationship between people and consumer technology – what drives it, what it means, what it

promises, what risks it introduces, and what barriers still need to be

overcome – o#ers extraordinary opportunities for industry, the

media, and others to innovate, create, and prosper as never before.

We are living in truly momentous times.

What’s happening now is nothing less than a seismic shi! in

the human experience, literally a new and permanent way of being based on a new

and empowering relationship with technology -one unimpeded by economic ups and downs

and political winds of change.

-Brian Dunn, CEO, Best Buy Co., Inc

%80% of consumers 55+ say

they rely on technology in their everyday lives

(86% of consumers overall)

RE DEFININGCONNECTION

5

Only 20 years ago it would have been impossible to imagine standing at a bus stop in Chicago at 10 p.m. trading “instant messages” with a friend in Kuala Lumpur. It would have been impossible to imagine someone in Dubuque “playing” tennis in real time with a challenger in Dublin using a motion-sensing device. It would have been impossible to “demand” a movie on a wireless phone no bigger than a Hershey’s bar.

We are connected to one another in ways that not too long ago would have been dismissed as science fiction or part of a “House of the Future” display at a world’s fair, right along with flying cars, teleportation devices and robots that mix cocktails.

People understand that today they and the world are connected in ways that have transformed society. There’s no going back. And most people wouldn’t choose to even if they could. Pre-technology might as well be pre-history.

The technological revolution also has broadened the way people think about what being connected even means. In a research study about service in the Connected World conducted by Best Buy in April 2010,3 consumers defined connection as far more interactive and dynamic than merely having access to friends, family and professional colleagues, though certainly access was a part of it.

People say being connected means being able to share more information more o!en and with

more people than ever, including what industry professionals and the media call “content,” but what everyday people call photos and videos; scrapbooks; advice on products,

services and destinations; entertainment recommendations; and, of course, news and

gossip, among an endless list. Added to this, sharing is easier than ever before, too – no standing in long lines at the post o$ce to mail vacation photos,

no calls to 15 friends looking for advice on a hotel in Palm Springs, no clipping articles from the newspaper with the intention of mailing them. A few keystrokes or taps on a screen and voila, sharing is accomplished, connections are made, information is acquired and relationships are enriched.

People say the ability to share so e#ortlessly means they feel more connected to the people they care about most. Grandmothers and grandchildren, husbands and wives (and, in some cases, wives and wives, husbands and husbands), moms and kids, dads and kids, friends both old and new, teachers and students.

Being connected means being close to other human beings.

Importantly, people add that this new, broadened definition of what it means to be connected includes an almost indescribable feeling of comfort. By being able to keep in touch in so many ways so easily, parents worry less about their children, adult children worry less about their elderly parents, bosses worry less about their employees, spouses worry less about one another. Less worry, less stress, and an easier time focusing on other things that are important.

People also say that being connected today is partly defined by the ability to learn about anything

RE-DEFINING CONNECTION

%79% of consumers say they

will be more dependant on technology in the future

6

at almost any time and anywhere. Watching the Emmys and don’t know

who Archie Panjabi is? Type her name into Google and up pop almost 500,000 citations in .23 seconds. Writing a term paper on how class and poverty influenced the 18th century British criminal

justice system? Much of what will be needed can be found online,

quickly and e$ciently. And for the information that’s not yet online, access to

inventories of libraries around the world are available. People can get their college degrees online, learn to cook online, study foreign languages online, discover new passions and new ways of doing things online, and surf data on virtually any topic of interest. Almost any of this can be accomplished on a variety of devices too, so while people may want to study at their desks using a computer, they can also study by calling up information on their smart phone while riding the bus to school or access a spreadsheet while at the airport.

Some say that the ease with which people can connect these days not only adds a new dimension to their lives in terms of information shared and learned, but that the entire experience of sharing – from downloading vacation pictures to surfing YouTube for funny videos to following URLs on Twi"er – makes sharing more fun, more interesting.

The Best Buy data4 also indicates that people take this new definition of what it means to be connected to the next level by not merely passively sharing content but creating it through blogs, vlogs and podcasts; videos posted to YouTube or Facebook; photo albums posted on Shu"erfly or flickr; personal profiles on match.com or Bleetbox, and more.

Profound shi!s in how we lead our lives, especially shi!s that have occurred relatively quickly, as has happened through the use of consumer technology, always inspire worries, too. The growth in consumer technology has

made some people concerned that, as one survey respondent put it, “we are individuals interacting with our wireless machines, looking like we are together, but we aren’t.” This sentiment was echoed by others who are concerned that “technology will distance us emotionally from each other,” that it is “futuristic, a li"le frightening, overwhelming” and that life “becomes exponentially degraded by service to and reliance on technology.”5

These fears ladder up to anxiety over issues related to privacy and abuse. Some people are uneasy about how easily information about them is available, and how products and services they buy, or things in which they’ve shown interest online, are tracked.

No one suggests that concerns about living in a connected world means we should (or even could) turn back time and return to rotary phones, brick and mortar stores exclusively and an era of network television only.

People want to be connected and want to experience the promise of these new ways of defining what it means to be and feel connected. People want to live in a truly connected world.

Being connected today has moved far beyond the traditional dictionary definition to encompass the way we live, the technology that is available to us, and the opportunities that technology presents for creating connections that not only re-define the word, but re-define our lives.

%54% of consumers want to be able to connect with people from ANY device

One in three Americans have used Skype for video or phone conversation

7

THE

SHIFTINGTECH UNIVERSE

Consumers at the Center of Consumer Electronics

8

SHIFTING TECH UNIVERSEPeople have begun to experience the possibilities of a connected world and they like how it feels.

In fact, a Pew Research Center survey6 shows that Americans of all ages (and political ideologies) believe technology companies have the most positive e#ect on how things are going in the country today –

... more positive than religion

... more positive than universities

... more positive than the federal government.

Of the top 15 “changes for the be"er” that people believe, Pew reports 11 are technology related, including cell phones (in first place), online shopping (in eighth place) and social networking sites (in twel!h place).

These positive feelings toward technology and the change in everyday behaviors it enables will continue to drive companies to develop new and innovative products in order to satisfy people’s desires and expectations to be a part of a connected world.

No longer are people willing to be limited by their technology devices – people want to be able to do more on their cell phones than just talk, more on their TVs than just sit passively, couch-potato-like, receiving but not interacting with what’s on, more with their computers than write e-mail and create spreadsheets, more on their iPods than just listen to the latest music.

Today people are multitaskers in virtually every facet of their lives and, increasingly, platform agnostic. Through their behaviors they are telling the consumer technology industry that despite the many gadgets and gizmos available, in some significant ways it is not doing enough – not creating the right products, not o#ering the right services, and not listening to people’s concerns about ease of use and customer service, among other things.

People want their consumer technology – and the companies that create, sell and service it – to multitask along with them by providing ways to receive, send, share, comment on, alter and create content, regardless of device or platform.

People are at a tipping point, with Pew reporting that almost four out of 10 adults claim to have increased the amount of time they spend online as they come to trust and depend on their mobile devices more. And it’s not just the increasing availability or reliability of broadband driving this shi!. Instead, more adults are seeing how an increasingly connected world – one in which they are more accessible to their families, friends, colleagues and others and vice versa – can benefit them and improve their lives. While Pew notes that some adults do not “feel the pull of mobility,” it’s clear than many others feel the pull intensely.

That pull – that shi! in human behavior – is pushing consumer technology companies in new directions as people’s usage habits grow and evolve.

%89% of consumers believe

consumer electronics companies should use more consumer feed-

back to influence innovation

%66% of consumers have

provided feedback to technology retailers or

manufacturers9

Natural user interface (NUI), for instance, in which devices and services are driven through natural human movements or gestures that control and manipulate experiences and content – as opposed to those movements or gestures that are unique to each device or service and have to be learned and relearned with each successive device or service – is one that has been quickly embraced by both the public and the consumer technology industry. Face- and voice-recognition, movement sensors and other “humanistic ways” of interacting with technology are no longer limited to “high-tech secret agents and ‘Star Trek,’” notes a January 10, 2010, feature story on Microso!.com.7 “NUI is meant to remove mental and physical barriers to technology,” August de los Reyes, principal director of user experience for Microso! Surface, said in the Microso! feature “to make computing feel more intuitive, and to expand the pale"e of ways users can experience technology.” As The New York Times8 pointed out in an article in September, 2010, on the subject, “The next generation of screens might not even need touch.”

Consumer usage habits – and the way and speed with which consumer companies address those habits – will also change as millennials, Gen Xers, and baby boomers age (and, inevitably, the next as-yet-unnamed generation grows in influence).

According to an August 2010 comScore report,9 for instance, while 87 percent of people 65 years or older watch TV on their TV sets only, less than half (45 percent) of people aged 18-24 watch TV on TV sets exclusively. An almost equal number of those in this age group watch TV on a variety of platforms, while only 12 percent of those 65 and older do. Data for those age groups in between the youngest and oldest analyzed in the comScore report (25- to

34-year-olds, 35- to 49-year-olds and 50- to 64-year-olds) also indicates that the younger

people are the more apt they are to be platform agnostic, watching television shows on whatever platform is most suited to them

at the moment, which may be a traditional TV set at home but may also be a smart phone while

standing in line at the grocery store, a laptop while waiting for a flight to take o# or an iPad while si"ing by the pool.

This gradual progression – a generational shi! – of people moving from platform-centric usage to platform-agnostic usage suggests that eventually nearly everyone will be less concerned with the means by which they watch TV. This will drive innovation in consumer technology products, devices, platforms, retailers and services to take greater advantage of this platform agnosticism. As an example, Flo TV, a unit of Qualcomm, recently invested about $1 billion in mobile video distribution, which will send ESPN and MTV, among other channels, to phones.

Television-viewing habits are not the only behaviors being impacted.

Nielsen data10 indicates that American teens are showing consistent pa"erns of technology use and connectedness, increasingly gravitating to texting and social networks as their primary lines of digital communication. More than other generations, they think alternatives, such as e-mail, as somewhat passé – more appropriate for their parents and even grandparents than for themselves.

Of course, these teens will grow up and be young adults and then middle-aged adults and seniors. Eventually their habits will be everyone’s habits.

What’s more, as technology evolves and ensuing generations of young people adopt new platforms, products and services sooner and more enthusiastically than their parents, consumer technology companies will be able to use these new

“Power is moving away from the old elite in our industry – the editors, the chief executives and let’s face it, the proprietors. A new genera-tion of media consumers has arisen, demanding content delivered when they want it, how they want it and very much as they want it.”

- Rupert Murdoch

10

usage habits (or non-usage habits as the case may be) as direction indicators, showing them how and where to proceed, what people want – or don’t – and what may catch on.

Mike Walsh, author of Futuretainment11, points to another key indication that a shi! in habits among consumer technology users may impact how and when and where technology companies innovate, and introduce new and be"er products and services. He notes that despite the poorer resolution quality of devices such as MP3 players, camera phones and Web-streamed videos, they’ve all flourished at the expense of their higher-quality progenitors: CDs, film cameras and DVDs, respectively.

“Clearly,” Walsh writes, “to consumers, utility is a more powerful incentive than fidelity.”

It may become clear to consumer technology companies, too, that in a connected world people are no longer accepting as a given that their preferred means of interacting with content o#ers lower-quality experiences than elsewhere. If companies respond by bringing high-quality technology to the products they create, it will be consumers who can take the credit.

Myriad other data points exist that all point to the same thing: shi!s in human behaviors, desires and expectations may significantly influence how all sectors of the consumer electronics industry innovate going forward.

Moreover, this shi! o#ers all sectors of the consumer technology industry opportunities to lead and build a favorable reputation through cu"ing-edge innovation and honest, and transparent interaction with consumers.

Finally, and maybe most important, this shi! and the impact of its influence will further move people to the center, solidifying their position as dynamic central players in the future of the consumer technology industry.

Our world, connected• User-recommendation site GDGT features more than

17,000 devices and reports “hundreds of thousands” of users rating and recommending technology to each other.

• Data from the Consumer Electronics Association for 200912 indicates that the average number of devices owned per household had risen to 24, tracking far faster than growth in number of people per household, suggest-ing that individual device usage is multiplying as well.

• Some analysts have called 2010 the year augmented reality became a reality, with popular apps such as Layar and Yelp! Monocle featuring on latest generation smart phones. Layar’s makers reported 1.5 million downloads of its app as of April 2010.

11

PROMISEOF THE CONNECTED

WORLD12

PROMISE OF THE CONNECTED WORLDLike other profound, life-will-never-be-the-same-again advances – the invention of fire, the first wheel, the skinny soy iced chai tea la"e – consumer technology and the promise of a connected world has already altered our individual, day-to-day lives as deeply and permanently as it has society overall.

No one anywhere – from the teeming streets of Tokyo to the most remote villages in India to the glassy high-rises along the seafront Corniche in Abu Dhabi to the shrub-lined suburbs surrounding every American city – is immune from its reach.

As technology has slowly and then quickly seeped into our lives, as broadband speeds increase, as more 4G networks and natural user interfaces and the devices that take advantage of them both grow in number, the promise of a connected world has evolved along with the functions and diminishing size and he! of the devices that house them.

In short, the promise of a connected world is not sacrosanct (like “to love, cherish and obey till death us do part”) but an evolving promise that, in business-speak, is also easily customizable. Each of us view the promise of a connected world through the lens of our own lives, experiences and expectations. The promise of a connected world is, in part, unique to the individual.

For a 17-year-old high school senior in Spokane who has absorbed technology into his life virtually since the day he was born, the promise of a connected world may be so big and unknowable he can’t wrap his brain around it. Yet for his 82-year-old grandmother 3,000 miles away in Boca Raton who prizes her Sunday evening video chats with him, the promise of a connected world may feel delightfully fulfilled.

As more people connect with more people for more reasons, creativity and anticipation for what’s next and what could be has blossomed. Everyday people – not just Harvard geeks and Silicon Valley engineers – are thinking up ideas, big “what ifs” that will challenge the consumer technology industry for years to come.

Ultimately, what the promise of a connected world suggests, perhaps, is that we are not alone (or, at least, that we don’t have to be alone).

The promise of a connected world – our connected world – holds that we are a part of something bigger than ourselves. It holds that we are part of a web of people and ideas and traditions and concerns that bring us together – that expand our social and professional circles; that introduce us to people and cultures and data and insights to which we might not have ever been exposed; that provoke us to

%60% of consumers have

watched a TV show online

Despite our individual take on the promise of a connected world, on a mass scale our

pursuit of, use of and society-wide discussion of technology

suggests that we also hold a common view of this promise.

13

think di#erently and act responsibly; that allow us to unite to hold those in power accountable, to change our communities and even the world; that help us feel safe and secure and in control of our health and wellness; that allow us to have both a virtual presence in the real world and a real presence in the virtual world.

Consumer technology itself, of course, hasn’t made any promises; it is we who have projected our hopes and dreams and expectations on technology.

In other words, ultimately, it is we who hold the promise of a connected world.

%

Our world, connected2009 Forrester data13 suggests that people

plan to continue connect-ing, with 30 million new homes expected to be

connected in the next four years and an additional 39 million expected to

purchase HDTVs between 2009 and 2014.

87% of consumers have paid a bill online,

with 96% of those 18-24 having done so

83% of consumers have watched user-generated content online, and 30% have contributed content

themselves

65% of those 18-24 say they want to be connected to the Internet at all times

14

TOP 10 GIFT/GADGET TRENDS FOR HOLIDAY 2010

The promise of the connected world isn’t about being “on” as much as it is about being “there.”

There in the moment.

There in the conversation. There in the center, exactly where people today want to be.

Holiday 2010 advances this idea by giving people an extraordinary number of gi! options that will allow them and those with whom they share the holidays new and exciting ways to stay connected.

A Best Buy Consumer Insights Unit study in September 2010 looked at the 2010 top 10 holiday season technology product categories and found that they include vastly di#erent devices with an incredible array of functions and capabilities.

What many of them have in common, however, is

portability, accessibility and wireless capability

that allows users to connect and

share content and experiences and games and entertainment and music with family, friends,

lovers, colleagues, people on the other

side of the world with whom they play

games, or the 500 million Facebook users with whom

they have the potential to connect – among others – in an instant at any time and from anywhere.

They can be “there,” wherever “there” is at any given moment, whenever they want, from wherever they are.

The human appetite for new and be"er consumer technology that allows people to stay connected rises year over year, especially during the holiday season and despite the prevailing economy. As in previous years, research indicates that both “staples” – gi! categories such as televisions, cameras, and MP3 players – as well as those deemed “hot” by retailers, the media, tech influencers, celebrities and others will be in high demand.

Included on the list of the top 10 expected top sellers for 2010:

• Gaming products like Kinect for Xbox 360, PlayStation Move and Wii will change the ways that families and friends connect in the living room.

• Internet-connected TVs, BluRay players and set top

boxes will help “Smart TVs” redefine the category. 3D TV also will drive a lot of buzz.

• Di"o for iPads and other tablet PCs that burst onto

the scene earlier this year and have continued to pique the media’s a"ention.

• Cell phones continue to get scooped up, with

interest in the iPhone 4 and Droids especially rabid. • Rounding out the top five, DSLR and point & shoot

cameras are expected to be high on many holiday shopping lists.

Despite the reality of these and other devices, they are merely the means by which people continue to drive connections and build relationships. As they grow in functionality yet (where meaningful) shrink in size, they are be"er able to be used by people to do what people do best: connect.

They allow for content creation, content sharing, content rating and most importantly, content contentment as never before.

This holiday season the promise of a connected world inches closer to reality.

Holiday 2010 Top Trending Tech Gi!

Categories

Gaming systemsTelevisionsComputing

Smart PhonesCameras

MP3 playerse-readers

BluRay playersGPS

Video games

15

CONNECTIONCONUNDRUM

16

Our world, disconnected

While the things that frustrate people about consumer technology, such as those listed below, may not be surprising, they may bear repeating since in addition to being frustrations, they are also barriers to adoption, barriers to sales and barriers to expanding the reach of technology into our lives.:

•!Too many choices, too li"le trusted counsel•!Unrequested computer updates•!Too many functions on one device• Spam• Lack of support for older products• Possibility of losing files, work, music, etc.• Perceived smugness of workers in tech support• Viruses• Vast array of phone plans• Monitoring children’s online use• Ba"eries that need constant charging

CONNECTION CONUNDRUMYes, the promise of a connected world is celebrated by many. A!er all, more than 4.6 billion cell phones are in use, YouTube has nearly 2 billion views a day, and Facebook claims more than 500 million users.

Yet consumer technology still frustrates a hell of a lot of people.

In fact, the greatest hurdle the industry may have to overcome to make the promise a reality is the continuing anxiety, aggravation and annoyance consumer technology inspires.

Unfortunately, the problem may get worse before it gets be"er.

For instance, according to “Greying Gadgets: How Older Americans Shop for and Use Consumer Elec-tronics,” a 2009 study from the Consumer Electron-ics Association (CEA)14, older age groups use many electronic devices at about the same rate as those younger than them. “Consumers in their 50s are as likely to own, or plan on buying, an HDTV as those un-der 50. Eighty percent of 60-somethings used a cell phone in the past week, nearly equal the usage rates of 18-34 year olds,” notes the study. Even Facebook – which started out as a social networking site for college students – is graying, with a new report from the Pew Research Center’s Internet & American Life Project reporting that almost half (47 percent) of people on the site are now between 50 years of age and 64 years of age.15

But the CEA study, as well as reports from other sources including Pew, also note higher levels of frustration with consumer technology among older Americans. As more people who get frustrated adopt

more technology, the instances of frustration may grow, as well. That said, as younger people who are more comfortable with technology themselves age, frustration among this now-older generation may dissipate commensurately.

While older people may tip the scales in their levels of frustration, adults of all ages are easily frustrated by the technology they’ve adopted. As a 2010 study from the CMO Council’s Customer Experience Board notes, 64 percent of people say their computer has caused them “anguish or anxiety.”16

61% of consumers have a hard time keeping up with tech changes

(79% of those ages 55+)

54% of consumers agree that ge"ing technology products set up is the hardest

part about buying new technology

%17

And a 2008 report from Pew17 shows that almost half (48 percent) of technology users require help with new devices. Moreover, as technology becomes more integral to people, and more integrated into their personal and professional lives, notes the Pew report, “their patience wears thin when things break.” Among people whose technology had failed, 48 percent felt “discouraged” with the amount of time and e#ort ge"ing things fixed took and 40 percent felt “confused” by the information available to them.

Turning to professional help, which should ease anxiety, o!en only adds to it.

According to the CMO Council’s study, “today’s digitally dependent consumers are increasingly overwhelmed and upset with technical glitches and problems in their daily lives. The source of their pain: frustrating, complex computers and devices, techni-cal failures, viral infections, and long waits to resolve support issues that disrupt the flow of their work and personal lives.” These users, it concludes, “face a continuous state of technical anxiety.”

A Parks Associates study18 shows that in 2009 almost one out of three people used in-store or in-home technical support, a 10 percent increase from 2006. Whether this is a result of poor-quality de-vices, connections, customer service, the growth of and marketing by tech support companies like Geek Squad that are making it okay to seek help from out-side service providers or other causes, the fact that more people are requesting help is itself frustrating.

Yet customer technical support has not kept pace with the growing complexity of technical require-ments, deepening frustration among those who need help (and creating opportunity for those that provide it). Top sources of stress and frustration with the tech support experience, says the CMO, include long

wait times, inability to fix problems, the cost of the service and limited language skills of technicians.

How the various sectors of the consumer technology industry address the obstacles to a more positive relationship between people and technology may mean the di#erence between fulfilling the promise of a connected world or coming up short.

Reputations are built over the long term, yet they can be destroyed over night. The longer people remain (or, worse, grow more) frustrated by aspects of consumer technology, the more di$cult it will be for them to embrace and ultimately benefit from the promise of a connected world.

While people increasingly are becoming more central in the consumer technology universe, without some serious industry a"ention to the issues that frustrate people most, their movement to the center may be delayed indefinitely.

Happy holidays, please hold

Hard to believe it, but in 2008 a study from the TechGuys, one of the largest technical support providers in the UK, reported that on Christmas morning frustration with consumer technology gi!s and gadgets peaks at 11:48 a.m., on the dot.

“The language used by major technology companies can be completely ba%ing even for the most technically gi!ed of us,” linguistics expert David Crystal, author of the Cambridge Encyclopedia of Language, said in an article about the study that appeared in the Dailey Telegraph in London. “Many use highly complex terms that only spe-cialists within the technology field would be able to put into context.”

Whereas it used to be the greatest frustration a gi! giver felt was forge"ing to have enough triple-A ba"eries on hand or di$culty using a screwdriver or wrench to get a much-anticipated gi! up and running, today Christmas morning (or any morning) can involve long waits online or on the phone with customer service representatives overwhelmed with calls.

The promise of a connected world that includes easy assemble, easy set up and easily had help when necessary may be the greatest holiday gi! of all.

%56% of consumers do not feel

they get the most out of the technology products they own

(65% of those 55+)

18

OUR WORLD,CONNECTEDNew Social Connections from Best Buy

19

BEST BUY: OUR PERSPECTIVE

We live in a connected world that every day is connecting faster and faster and faster. At Best Buy we relish the pace. We’re exhilarated by how the connected world is evolving and presenting new opportunities to deepen our relationship with consumers. We’re inspired by discovering new ways to help people understand and enjoy all that the connected world allows today and promises tomorrow.

We’ll be the first (and the loudest) to say that the connected world is less about the technology and devices people use and more about how that technology and those devices access and bring to life the human interaction people want and need (it’s about experiences). A!er all, vacation pictures are about the memories they evoke, not about the camera. Watching a movie is about the experience of a great film, not the DVD player. Talking with friends and family is about the human connections those conversations create, not about the phone. The devices are important, but they are only a means to an end, not the end itself.

The connected world may mean di#erent things to di#erent people but, ultimately, the definition resides in the fundamental premise that people are innately social beings and want to connect with other people.

People are looking for a resource they can trust to help them understand and navigate the complexities of the connected world...

because constant change can be overwhelming ... because usual customer service can be underwhelming...

because while people are ge"ing savvier with each new technology purchase, they’re still feeling unsure about how to connect it, connect with it and use it to connect with others...

because people are fearful of being le! behind ... because people are excited about charging ahead.

For these reasons and more, our distinctive relationship with consumers has given us an extraordinary opportunity to help them get the most from this new world.

We are the consumer advocate in consumer electronics, o#ering many brands and lots of choice. Every day we help customers find solutions for their needs and help them be"er understand the possibilities of all that we o#er in devices, content, connections and services.

We know, for instance, that being a part of a “social network” has li"le to do with Facebook, Beebo, hi5 or Orkut. These don’t define our world. Instead, in the

We believe in our Connected World strategy so much – both in its current

reality and in its promise to continue to enrich and enliven our days far into the

future – that we have taken our Best Buy heritage and shaken it up a bit

to become not just Best Buy, but the Best of what you Buy, helping people

bridge the connectivity gap in selection, service, price and convenience this holiday

season and beyond.

%64% of consumers agree

that technology brings families closer together

20

connected world as we believe it truly is, social networks are about people and the relationships they form with one another, enabled by devices and websites. Real social networks are complex and personalized, built through multiple technologies that enable person-to-person human connections: the ones in the family room that bring family and friends together to watch the big game, the ones via smart phones that enable social network access, the ones that share documents and photos and e-mail, the ones using Webcams that allow friends to show o# their latest fashion finds with one another.

These are the experiences of the connected world, the results of coming together.

We believe in the human experience of social networks so much that we’ve created our own human social network – a virtual human search engine with 160,000 uniquely trained Blue Shirts and 20,000 Geek Squad Agents who help consumers address their needs and be"er understand the possibilities of devices, content, connections and services. Our Blue Shirts are trained to help customers zero in on the experience they want, allow them to test and try things, and advise them on how to best connect the various devices, content and people to enhance their lives. Our Geek Squad Agents provide resources for technical support anytime and anywhere it’s needed – 24 hours a day, 365 days a year. We o#er the most convenient technology-support service available, with agents available in every Best Buy store, via house calls and online remote service.

Ultimately, Best Buy is more than a place to buy devices. It is a comprehensive resource to help people use technology to connect (and stay connected) to the services they need, the information they crave, the entertainment they want and, perhaps most importantly, the people they love.

The promise of the connected world comes together at Best Buy every day.

Eventually, I believe we won’t even need any devices. We’ll all have con-tact lens with built-in three-dimensional displays - bionic eyes that will allow us to receive and share content, redefining the connected world as we know it.

-Robert StephensChief Technology O$cer at Best Buy Co., Inc., Founder of Geek Squad

21

SECTION SUMMARIES AND IMPLICATIONS

Re-Defining Connection: Today’s definition of what it means to be connected is all about generating content, sharing content, and deepening relationships between people and those they care about; between people and brands, companies and products that are important to them; and between people and the never-ending sources of information that the Web has inspired. Being connected today has moved far beyond the traditional dictionary definition to encompass the way we live, the technology that is available to us, and the opportunities that technology presents for creating connections that not only redefine the word, but redefine our lives. The Shi!ing Tech Universe:Myriad. . . data points exist that all point to the same thing: shi!s in human behaviors, desires and expectations may significantly influence how all sectors of the consumer electronics industry innovate going forward. . . this shi! o#ers all sectors of the consumer technology industry opportunities to lead and build a favorable reputation through cu"ing-edge innovation, and honest and transparent interaction with consumers. And finally, more importantly, this shi! and the impact of its influence will further move people to the center, solidifying their position as dynamic central players in the future of the consumer technology industry. The Promise of a Connected World:The promise of a connected world is not sacrosanct but an evolving promise that, in business-speak, is also easily customizable. Each of us views the promise of a connected world through the lens of our own lives, experiences and expectations. Technology plays a unique and integral role in our ability to connect, and consumer see the possibility of what’s ahead. Fi!y-four percent of consumers

want to be able to connect with people from any device. A full 65 percent of consumers want all of their technology devices to “talk” to each other. In the not too distant future, consumer desires will be a reality. Connectivity Conundrum: With the great promise of the connected world and the possibility that new technologies enable, there is no doubt that consumer technology still frustrates the hell out of a lot of people. People o!en are overwhelmed by choices, customer support challenges and the speed at which technology is evolving. Only eight percent of consumers feel they are completely on top of technology changes and 54 percent agree that ge"ing products set up is the hardest part about buying new technology. Without serious industry a"ention to the issues that frustrate people most, it will be di$cult for people to fully embrace and ultimately benefit from the promise of the connected world. Our World, Connected – New Social Connectivity from Best Buy:At Best Buy, we believe in our Connected World strategy so much – both in its current reality and in its promise to continue to enrich our days far into the future – that we have taken our Best Buy heritage and shaken it up to become not just Best Buy, but the Best of what you Buy. Helping people bridge the connectivity gap in selection, service, price and convenience. Our 160,000 Blue Shirts and 20,000 Geek Squad Agents talk to consumers every day and help people use technology to connect to the services they need, the information they crave, the entertainment they want and the people they love.

22

END NOTES1 Our World, Connected Omnibus Survey, August 2010. Methodology: Study findings compiled by the Consumer Insights Unit at Best Buy. The survey was conducted online among a sample of 994 respondents ages 18+ using the field services of e-Rewards from August 26-30, 2010. The results are nationally representative of the U.S. and have a margin of error of +/- 3 percent 2 Williams, Doug, J.P. Gownder, Laura Wiramihardja, and Anne E. Corbe". US Consumers Are Willing Co-Creators - August, 2010. Forrester Research3 Best Buy: “BTP in the Connected World,” qualitative pre-study, 20104 Our World, Connected Omnibus Survey, August 20105 Best Buy: “BTP in the Connected World,” qualitative pre-study, 20106 Internet, Cell Phones Are Changes for the Be"er. December 21, 2009. Washington, D.C.: Pew Research Center7 “Natural User Interfaces: Voice, Touch and Beyond: Project Natal and Other Natural User Interface Products That Microso! Is Working on Are Helping Usher in a New Generation of Human-computer Interaction.” Microso! Corporation. Web. <h"p://www.microso!.com/presspass/features/2010/jan10/01-06cesnui.mspx>8 “To Win Over Users, Gadgets Have to Be Touchable.” New York Times. 1 September 2010. Web. 15 September 2010. <h"p://www.nytimes.com/2010/09/01/technology/01touch.html?src=busln>9 ComScore: “Great Expectations, How Advertising for Original Scripted TV Programming Works Online,” August 2020 10 Nielsen Netview, June 2009 – June 201011 Walsh, Mike. Futuretainment: Yesterday the World Changed, Now It’s Your Turn. London: Phaidon, 2009. Print12 Consumer Electronics Association 11th Annual Household Consumer Electronics and Market Potential Study, May 2009 13 Forrester’s North American Technographics Benchmark Survey of nearly 48,000 respondents, 2009 h"p://www.forrester.com/ER/Press/Release/0,1769,1304,00.html14 Consumer Electronics Association/TNS Compete: “Greying Gadgets: How Older Americans Shop for and Use Consumer Electronic,” January 200915 Swi!, Mike. “Near Majority of the Over-50 Crowd Using Social Networks.” San Jose Mercury News 27 August 201016 CMO Council, Customer Experience Board: “Combating Computer Stress Syndrome: Barriers and Best Practices in Tech Support,” May 201017 Pew Research Center’s Internet & American Life Project: “When Technology Fails, November 200818 Park Associates study on Customer Support in the Digital Home, 2009

Material may be used with credit given to Best Buy.

23