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January 5, 2016updated 31 Aug 2016 12:18pm

IoT demand fails to offset smartphone market slowdown

News: Is demand for smartphones in terminal decline?

By Alexander Sword

Worldwide growth in the smartphone market is slowing down and the IoT is failing so far to plug the gap.

Research from Accenture found that the number of people planning to buy a new smartphone in 2016 had either stalled or fallen dramatically, dropping below half of global consumers for the first time in several years to reach 48 percent.

This represents a 6 percent drop from 2015 and 9 percent drop from the 2014 peak.

The UK remained static, with 37 percent of consumers planning to buy devices over the next 12 months. The US also remained static at 38 percent.

The biggest fall was seen in China, which dropped from 82 percent to 61 percent of consumers wishing to replace their device.

The survey revealed that the main reason for this trend was that 47 percent of customers were already satisfied with their existing devices. 26 percent had just bought a new phone, 14 percent could not afford a new phone and 4 percent felt that there were no innovative features.

Hopes that this shortfall in growth are being met by the Internet of Things were as yet unrealised. Smartwatches and fitness monitors had purchase intent of 13 percent, a rise of only 1 percent in each case.

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Connected home devices such as IoT surveillance cameras and smart home thermostats had purchase intents of 11 percent and 9 percent respectively. Personal drones had a purchase intent of 7 percent.

The main reason cited for not buying IoT devices was that they were too expensive, given by 62 percent.

Security also ranked highly, with 47 percent concerned about it. Due to security considerations, 24 percent had postponed buying IoT devices and 18 percent had quit or terminated an IoT service.

However, security hadn’t slowed adoption for all; 37 percent were merely going to be more cautious when using IoT devices and 21 percent were "not too concerned."

The respondents also indicated a lack of interest in IoT devices, with 23 percent unsure which device would be useful. 17 percent also found them too confusing.

There were also challenges in the use of the devices after purchase; 18 percent couldn’t connect to the internet, 16 percent found an IoT devices too complicated, 14 percent had problems setting one up and 13 percent said that theirs did not work as advertised.

Martin Garner, SVP at CCS Insight, argues that selling IoT products will be approached differently to other devices.

"The nature of the competition is changing and there will be other ways of approaching this market," he told CBR.

Garner cites the examples of Samsung, Google and Apple as possible leaders, companies which CCS Insight expects will all eventually incorporate some sort of smart home hub into already popular consumer products such as TVs.

He also cites the importance of marketing in approaching the market.

"There are so many technologies in the IoT that it is hard to choose which horse or horses to back. The people who win will be those who get the marketing right.

"We have the tech we need but we don’t have enough space around brands and shelf-space. It is more of a marketing issue than a tech one, particularly for the connected Home.

"The most successful marketing will play down the technology and play up the brand and its trust and values."

The Accenture survey, ‘Igniting Growth in Consumer Technology’, polled 22,000 consumers worldwide.


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