Consumer technology players will have to fundamentally restructure their approach to research and development (R&D), to focus on the creation of the "superstack", as consumer spending shifts away from single use devices.
While the demand for consumer technologies is high, there is a shifting landscape of increasingly multifunction devices, and consumers are willing to experiment. This gives industry players a "tremendous opportunity to change the game to win," notes consultancy Accenture.
The 2013 Accenture Consumer Electronics Products and Services Usage Report has found that consumers are less likely to buy single-function electronics products in 2013 and sales of those devices - such as DVD players and photo cameras - are flattening or declining.
Instead, consumers are more likely to buy multifunction devices, with purchase intentions for these tools climbing at double-digit rates, as consumers want "do-it-all" capabilities and user experiences that fit their different lifestyle needs.
All in one
"The consumer electronics market is now predominantly a four-horse race among multifunction devices: PCs, smartphones, tablets and HDTVs," says Mattias Lewren, MD of Accenture's electronics and hi-tech industry group.
"This development amounts to a call to action for electronics manufacturers. They need to focus squarely on innovative devices with multiple applications, from browsing to media consumption, to communications in various settings. Consumers want 'do-it-all' capabilities in various sizes and user experiences that fit their different lifestyle needs."
De Wet Bisschoff, MD of communications, media and technology at Accenture SA, says the movement to the big four is inevitable and it is a game-changer for manufacturers, which will have to respond.
"The advent of smartphones, tablets and other mobile technologies has created a barrage of consumer activity and device adoption, providing consumer electronics and related companies with ample opportunity to innovate in device form factor, apps and online services," says the report.
Changing patterns
In 2013, 41% of consumers aim to buy a smartphone, while 36% want to purchase a desktop, notebook or ultrabook. Some 33% want to acquire a HDTV and 23% a tablet. However, single-use products such as DVD players and digital photo cameras are seeing decreasing ownership as consumers move to multifunction devices.
For example, smartphone ownership increased from 26% in 2009 to 58% in 2012, while ownership of digital photo cameras decreased from 77% in 2009 to 68% in 2012, Accenture notes. The data implies that, over time, mass market single-function devices will be increasingly at risk, it notes.
The largest drop in use of other devices among tablet owners occurs in single-function devices, it says. About 40% of tablet owners use e-book readers and DVD players less often, while only 24% of consumers use their smartphone less as a result of owning a tablet.
Device use is also concentrating on multifunction products and, while PCs remain the most-used device, smartphones and HDTVs tie for second, with 55% of respondents ranking them among the five most-used devices.
While some consumers may not consider the TV to be a multifunction device, those with an HDTV are increasingly using it that way. More than two-thirds of HDTV owners with Internet access have used their TV for Internet browsing, and more than a third do it regularly.
While a majority of consumers use maps, listen to stored music, and download new apps on their PCs, about half also do so on their mobile or smartphones. When it comes to watching shows and movies on demand, the use of the PC and TV are nearly tied, notes Accenture.
In addition, most respondents believe using their consumer devices for these various work purposes improves their productivity.
Time to change
Accenture says companies need to envision their future development more strategically, across all layers, and effectively and tightly integrate a vertical "superstack" of chipsets, devices, operating systems, applications and services, either on their own or through acquisitions and innovative alliances.
"Innovating on the superstack to deliver compelling new form factors, apps and cloud services that further embed the use of technology into consumers' lives will be critical" for technology players in future, says Accenture.
To compete, companies will have to shift their R&D focus fundamentally to focus on creating the superstack, and will have to become more flexible to support rapid response to shifting market demand.
"The combination of intense desire for innovation and willingness to experiment with platforms and brands opens up tremendous opportunities for consumer electronics companies to win the hearts and wallets of consumers. Future winners will be those companies that identify and create cohesive consumer technology superstacks through innovation and integration of computing form factor, cloud services and highly versatile apps."
The study was conducted in September and October 2012 and included a quantitative online survey of more than 11 000 consumers across 11 countries, with 9% of respondents coming from SA.
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