Deloitte TMT Predictions 2014

The converged living room: a plateau approaches 2014: #Deloittepredicts combined global sales of smartphones, tablets, PCs, TV sets and gaming consoles will exceed $750 billion, up $50 billion from 2013 and almost 50% from 2010 numbers. TMT Prediction 1


Deloitte’s TMT Predictions 2014 explores the technology, media and telecommunication (TMT) trends that will impact the Canadian marketplace over the next 12 to18 months. The annual report is based on global research — including in-depth interviews with clients, industry analysts, global industry leaders and more than 8,000 Deloitte member-firm TMT practitioners. TMT Predictions reveals the future developments of all three industry segments and the business implications associated with them. Whether you are a manufacturer, bank or work in the public sector, these insights will help you capitalize on the trends that affect your business.

Transcript of Deloitte TMT Predictions 2014

Page 1: Deloitte TMT Predictions 2014

The converged living room: a plateau approaches2014: #Deloittepredicts combined global sales of

smartphones, tablets, PCs, TV sets and gaming consoles will

exceed $750 billion, up $50 billion from 2013 and almost

50% from 2010 numbers.

TMT Prediction 1

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Outside of celebrity culture, nothing expands at an accelerating rate forever. So prepare for the massive 10-year run-up in sales of smartphones, tablets, PCs, TVs and gaming consoles to plateau. The market will continue expanding, but more slowly, and it won’t crack the $800 billion annual ceiling. Demand for premium products may support average selling price for some categories. But market penetration, price sensitivity and longer product cycles are all playing a role in slowing growth.

The boom times of record revenues are so yesterday…

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The Next Big Thing is not visible yet. 3D printers and wearable computers will likely be big, but not big enough to ‘move the needle’ in an $800-billion market. But there may be good news for service providers which will likely focus on upping data packages in lieu of pushing a new phone every six months. Content providers will retain ample audiences for programming that may shift hardware dollars to content.

…and finding products that blow customers away is elusive.

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Wearables: the eyes have it2014: #Deloittepredicts consumers will be wearing

more than $3 billion worth of newly purchased

computer equipment.

TMT Prediction 2

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Tony Stark is closer than you think. Okay, flying Iron Man suits may not be in stores yet. But sci-fi style wearable computers are here, along with the digital information and quasi-bionic abilities they provide. So-called smart glasses will sell millions of units at around $500 each, totalling about $2 billion in 2014. Sales for the rest of the wearables market – watches, wristbands, clothing and the like – will amount to about half of head-mounted gear, in dollar terms.

Tech-wear: 20/20 2.0 and more…

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How to get from geek to chic will likely be the easiest problem to solve for companies producing these wearable wonders. Early adopters may lead to a user base in the tens of millions by 2016 as the technology improves, prices decline and prescription lenses go smart. But safety and privacy concerns are perhaps not so easily solved. Governments will set limits while manufacturers and app designers work to give these items “must have” ubiquity.

…. but there will be regulations.

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The eDoctor is in2014: #Deloittepredicts eVisits are going

mainstream with a 25% share of the potential market

in North America and could save the healthcare

system $5 billion compared to in-person doctor visits.

TMT Prediction 3

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What’s up, Doc? Diagnosing everything from pimples to allergies and strep throat is increasingly being done through virtual physician consults, questionnaires and photos. eVisits are part of the booming global telehealth market, which will reach an estimated $25 billion in 2015. Annual eVisits in Canada are growing by 50% a year, reducing wait times by up to eight months for some procedures. Accessibility issues, physician shortages, the focus on prevention and budget imperatives all provide tailwinds for eVisits.

Healthy, wealthy and patient-driven…

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…it’s a digital apple a day.

The eVisit revolution will largely play out through digital data collection. Laws will evolve to allow public insurance providers to bill governments for eConsults while governments will move to force private payers to sign on. North America leads the trend, but both the UK and Denmark provide some services. Kenya, with a serious physician shortage and accessibility issues, has started an eVisit pilot. Over time, billions in cost savings in North America may be trumped by millions of lives saved in the developing world.

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MOOCs (short term/long term)2014: #Deloittepredicts enrollment in Massive Open

Online Courses (MOOCs) will be up 100% over 2012 to

more than 10 million courses.

TMT Prediction 4

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From correspondence courses to online learning, alternatives to in-person education have been growing for decades. Now, MOOCs are growing in the face of rising tuition costs, both in North America and developing countries. New technology, alternative modes of teaching and a need to continuously update skills are driving the trend, suggesting MOOCs will grow enormously over the longer term, even if disruption is minimal in 2014.

Massive, maybe, but not as big as the media hype

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Competencies will begin to matter more than credentials. While some bricks and mortar educational institutions will seek to protect the revenue streams traditional course models provide, potential savings will bring governments and employers onside with MOOCs. Social media will chip away at the perceived isolation of online learning while rising student debt will force millions to find alternatives. Like music and media companies, educational institutions that find a way to embrace the new digital world will lead the way.

…cheers for a new era.

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Extreme TV2014: #Deloittepredicts Canadians will watch more

than 55 billion minutes of traditional TV per day.

TMT Prediction 5

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Increasingly, it’s a tale of extremes, although average traditional TV viewing hours remain relatively constant. In English Canada, the least voracious viewers will watch half an hour of TV a day, down from an hour in 2004. But the top 20% of English and French Canadian couch potatoes are watching more than eight and nine hours per day, respectively. That’s up in the last few years, and it accounts for almost half of all the television hours watched in any language by anyone, anywhere in Canada.

Tune in, turn on…

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Canadian TV watching habits vary by language, but also by age. Research from other countries suggests they also segment on factors like income, ethnicity and education. Since the bulk of viewing is concentrated in 20% of the population, it allows for more targeted messaging. The lightest TV viewers tend to be young and affluent and they’re not reading or listening to traditional media either. Brands looking to target them will need to find new channels.

…and segment into distinct demographics.

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Doubling up on pay TV 2014: #Deloittepredicts that by year-end, 50 million

homes worldwide will be paying for two or more baskets

of TV-like content.

TMT Prediction 6

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By the end of 2015, households subscribing to three or more content packages will amount to 20% of consumers in selected markets. That’s based on pay TV-heavy North America where more than 90% of homes subscribe to some kind of pay TV. Former DVD rental spend simply migrated to subscription video-on-demand. The bonus? Without spending all that time in lines snaking between candy displays and the “pre-owned” bargain bin, there’s even more time for consumers to watch what they want, when they want.

Ask not what cords can be cut…

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The once hotly contested competition for the remote control is moving upstream. Subscription packages are the new battleground. Broadcasters and platform owners can expect tech companies and retailers to join the content fray as they look to differentiate their offerings. Many additional subscriptions will be available at lower costs than legacy platforms. Platform owners who are also broadband providers will not be left out. Customers migrating to alternative services will likely demand (and pay for) higher speed broadband and larger download allowances.

...but what cords will be added.

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TV sports score and win2014: #Deloittepredicts that the global value

of premium sports video rights will increase by

14% led by North American sports leagues

and European soccer.

TMT Prediction 7

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PVR-proof programming that commands a passionate following is behind the continuing run-up of broadcast sports rights. Globally, fees paid for broadcast, live streaming and video-on-demand for “super premium” brands garnered 14% increases, compared to 5% annual growth in 2009-2013. In Canada, where hockey is king, the $5.2 billion multi-year agreement between Rogers Communications and the NHL for all of the league’s broadcast rights showcases that this trend is already taking hold.

Rights fees are stealing the show...

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Fans craving access, a finite number of elite events and increasing competition for content rights mean leagues know the value of their properties. And because small screens just don’t work for big games, the fans who consume 90% of video sports minutes via traditional TVs will also pony up for bigger and better screens.

...but commissioners and tech will be running it.

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The decline of the cellular voice call…but only for some

2014: #Deloittepredicts about 20%

of Canadian cellular customers will

spend only three minutes per day

talking on their phones.

TMT Prediction 8

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Maybe “Mr. Watson, I wn2 CU” lacks the historical gravitas of Alexander Graham Bell’s famous first telephone call. But texting – or rather non-voice communication – is taking over for some cellular customers. While voice minutes are still rising in Canada, they are falling in the US and UK. And Americans use three-quarters of their total smartphone time – about one hour a day – on non-voice apps. Voice calls are also getting shorter, dropping from just over three minutes in 2006 to about a minute and 45 seconds in 2011.

Look who’s not talking…

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Texting is cheaper – one reason younger generations type before they talk. The rise of mobile social media is a factor, as are “over-the-top” mobile voice apps such as Skype, though the total number of voice minutes over those services is still small. Enticing subscribers gets harder as low-cost text and talk plans lose their appeal. The voice seldoms will likely boost phablet sales, and perhaps even spur a new class of plan where voice is completely à la carte.

…and how they are talking.

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Phablets are not a Phad2014: #Deloittepredicts shipments of phablets –

smartphones with screens 5.0” or greater – will

represent 25% of the global market, or 300 million

units. Canadian sales will likely be lower: 15–20%

of smartphones.

TMT Prediction 9

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With global sales up 100% over 2013 and 1,000% over 2012, this $125 billion category is strongest in Asia where the number of phablets sold each quarter is almost exactly the same as the number of tablets and notebook computers combined. What’s driving sales? It’s easy to text in Chinese and Korean on a larger screen. Avid gamer populations, more mobile video watchers and those looking for an all-in-one device that is at once smartphone, gaming unit, tablet and PC are also boosting sales.

Is that a Phablet in your pocket?

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About two-thirds of phablet sales in 2014 will just barely meet the definition at 5.1 inches or less. Only 10% will measure more than 6 inches. Pants pockets, purses and the need for a constant two-handed telephone grip limit size. This sets a natural ceiling for the phablet market, though multi-device ownership and potential marketing to seniors seeking bigger screens and keypads could offset that ceiling somewhat. Phablets will also bring big changes to mobile ads, gaming and data usage.

…and size does matter.

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Narrowing the gap: seniors embrace the smartphone2014: #Deloittepredicts smartphone adoption will grow

fastest among the 65+ crowd with 50% year-over-year

growth and over 40% market penetration.

TMT Prediction 10

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It’s mostly a trends and demographics story. In the developed world, the smartphone market for 18-to-24-year-olds is almost completely saturated, leaving the 65-plus group as a potential growth market. Because seniors comprise 20% of the adult population with a disproportionate amount of income and wealth, tech companies know blue-haired stereotypes of the past are giving way to Bluetooth and Blu-Ray among media savvy seniors.

The next group of Bluetooth users...

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Carriers will accelerate this trend with pricing packages that should appeal to this potentially penny-pinching group. Weekends and grandchildren free minutes anyone? Developers of senior-friendly apps and games have a market, albeit one where 30% of over-65 smartphone owners have never downloaded a single app. The growing appeal of phablets should help. The 65-plus crowd loved tablets almost as much as younger people distanced themselves from “frailty friendly” phones. Mainstream devices with bigger screens and keypads could attract the older demographic.

...and they are hooked on free grandchildren minutes.

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Predictions authors

Twitter: @dunstewartLinkedIn

Duncan Stewart DTTL Director of Research, TMT

Twitter: @pjvleeLinkedIn

Paul LeeGlobal Director of TMT Research

© Deloitte LLP and affiliated entities.