Younger demographic more a PC than smartphone generation, Deloitte says

Despite rapid growth in smartphone and tablet use, more than 80 per cent of global Internet traffic, as measured in bits, will continue to come from laptops and PC computers in 2013, consulting firm Deloitte and Touche LLP will forecast in its annual media and technology predictions in January. Duncan Stewart, director of technology, media and telecom at Deloitte Canada, said in an interview that a younger, 18-to-24 year-old demographic continues to prefer PCs (including laptops) over smartphones and tablets. The laptop and desktop share of Internet traffic will remain at about 80 per cent in 2013, though computers make up less than 50 per cent of devices. “Their share is declining, and will continue to decline,” he said, “but they are still the king of usage for now.” Citing survey data collected by Deloitte, Stewart said that, in the United States, 40 per cent of people between the ages of 66 and 75 said they would get rid of their PC and use only a tablet. In the 18-to-24-year-old demographic, 92 per cent of respondents said they preferred their PC. Deloitte and The Harrison Group conducted the online survey of 1,890 tablet and PC owners and 1,252 “business people” in the United States in January and February 2012. Stewart said the results would be similar for Canada. The popular belief that a younger demographic is the “smartphone generation” is “completely backwards,” he said. “Younger demographics are in fact more PC reliant than older demographics.” PCs, with their keyboards and larger displays, are still preferred by those who spend lots of time on the Internet, such as young professionals or university students working on assignments, he said. Deloitte's data has shown “the opposite of what everybody thinks,” Stewart said. “If you’re the CEO of a company, you may never have to write more than 50 words,” Stewart said. “But at 22, you’re the grunt sitting there who brings the PC home and spends four hours typing and trying to finish a project. You’re making all the content.” Stewart said many Canadians look at their smartphones 60 times a day though they may spend a total of just 30 minutes daily on that device. He said session lengths on PCs are much longer and data intensive. “If you only ever read stuff on a device, if you only ever consume content, you never have to input data, you don’t have to use an excel spreadsheet, or you never have to edit someone else’s work, in that case, you can get away with a tablet a lot of the time,” Stewart said. According to a study by San Francisco-based mobile analytic startup Flurry, the average time spent by U.S. users inside mobile applications grew by 35 per cent from 2011-2012, rising from 94 minutes in December 2011 to 127 minutes in December 2012. In a Dec. 5 blog post, Flurry said its results are based on a survey of more than 250,000 mobile applications. The firm said U.S. users spent less time online in 2012 than in 2011, declining 2.4 per cent from an average of 72 minutes per day to 70 minutes. “By our measurement, U.S. consumers are spending 1.8 times more time in apps than on the web,” Flurry said. Deloitte’s 2013 predictions will also challenge the idea that tablets and smartphones are bringing computing to the developing world. “It’s not true,” Stewart said. In the developed world, Stewart said, Internet data driven by mobile devices amounts to between one and five per cent of network traffic. Despite cheap, government-subsidized devices such as the $35 Aakash tablet in India, consumers in countries like India or China are willing to spend half of their annual wage on a computer for their family. “ can either get one that they can watch videos on and they can’t type , or I can get a netbook, which has 20 times the storage, a keyboard, a bigger screen and a battery,” Stewart said. He said battery power in the developing world is an asset where power is intermittent. “When you can only afford one device in the developing world, they tend to buy PCs. They don’t buy tablets,” he said. Deloitte will also forecast slowing mobile Internet speeds in the coming years if the problem of spectrum shortage persists. Even fourth-generation LTE networks will slow down as mobile devices continue to proliferate and congest networks. “We are not going to continue to enjoy these kinds of speeds if spectrum remains a problem,” Stewart said. He said network speeds in the United States have already begun to slow as the industry starts to suffer from a “malnourishment” of spectrum. In Texas, he said, where consumers at one time received mobile download speeds of 15 Mbps, they now get 5 Mbps. Networks will no longer perform as expected as consumers, over time, have trouble getting onto networks and experience more dropped calls, he said. In Canada, the Industry Department's auction of 700 MHz spectrum is planned for the first half of 2013, licensing additional, new spectrum for mobile carriers. Stewart said more WiFi offloads are also taking place, relieving pressure from mobile networks. The problem, he said, is that there are too many users on the available mobile spectrum and the processes for releasing spectrum can take decades. Deloitte’s 2013 predictions will also discuss the emergence of “cord nevers,” as opposed to TV “cord cutters,” Stewart said. Cord nevers tend to be those within a demographic of 18-to-24-year-olds who move out of their parents’ homes and never subscribe to traditional TV services like satellite or cable. Deloitte's research shows that, going into 2013, people who are cutting the TV cord are younger, better educated and wealthier, Stewart said. Younger people tend to watch less television than those who are older, poorer or unemployed, he said. “We’re expecting in 2013 that not only will penetration continue to drop, but that the absolute number of subscribers may, for the first time ever, fall for non-economic reasons,” he said. Stewart said sports and reality television programming will continue to help anchor TV subscribers because the content is not easily obtained through streaming or over-the-top services like that of Netflix Inc. He said people who do not watch sports, or about 20 per cent of households in Canada, tend to subscribe to TV services for reality TV shows. Stewart said cord cutting ranges between one and two per cent of subscribers due in part to sports and reality TV anchors. Another emerging trend in 2013 will be “4KTV,” the next generation of high-definition television, though consumers should not expect to see its full emergence until 2015, Stewart said. 4KTV sets, which provide 4,000 pixels of resolution, now cost about $10,000 and are not compatible with current content formats or blue-ray players, he said, adding: “People will get 4KTV sets as a status symbol.” The technology is expensive, and at normal television viewing distances, most consumers do not differentiate between HDTV and a 4KTV. “It’s like people who buy cars with more power than they need because they like being able to show it off,” he said. Deloitte's full list of predictions will become public during its TMT Predictions 2013 national roadshow, starting in Toronto Jan. 15, 2013. Deloitte’s Ottawa release will be Jan. 18. dgrenier@thewirereport.ca

Younger demographic more a PC than smartphone generation, Deloitte says

Broadcast | December 7, 2012

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