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Converging Technical Lifestyles - UK

Published by: Mintel International Group Ltd.

Published: Oct. 1, 2007 - 123 Pages


Table of Contents


Issues in the Market


Main issues

Definition

Abbreviations



Market in Brief

Convergence field wide open…

…but the race will be a long one…

…with broadband the engine for all success

Barriers to take-up led by cost, complexity and quality…

…with lack of back-up yet to raise its head

Convergence or connection?

Digital divide shifting from age to affluence

Convergence bundled through the back door

PCs may stay in the background

TV leads through position, not power

Games consoles underachieving

Smart choices in the mobile sector



Insights and Opportunities

Compatibility, not competition

Give remotes the simple touch

Consoles need to hit the ‘new game’ button

Don’t forget the home phone



Internal Market Environment

Key points

Access to technology

Figure 1: Availability of digital communications services, 2005 and 2006

Britons spoiled for platform choice

Take-up of technology

Figure 2: Computer, Internet and broadband take-up, 2002-06

Mobile gets head start in convergence stakes…

…but broadband set to put TV and PC back in the race

Satellite v Freeview

Barriers to use

Risk of online traffic jams

Figure 3: Estimated bandwidth requirements, by application

Complexity of use

The consumption environment

Limited (battery) life-expectancy

Technology issues

Broadband connection speeds

Internet capacity

Spectrum access

Next-generation Networks

Wi-Fi and WiMAX

Faster speeds, even wider coverage

Service bundling

Regulation and legislation

Unbundling leads to bundling

Broadening the spectrum for convergence

Fights over rights?

Price and competition

Usage caps



Broader Market Environment

Key points

Demographic trends

Bridging the digital divide

Figure 4: Trends in the age structure of the UK population, by gender, 2002-12

Approaching a third aged 55+

DTT an important technology for convergence among older groups

Converging upmarket

Figure 5: Forecast adult population trends, by socio-economic group, 2002-12

Convergence flies the nest…

Figure 6: Forecast adult population trends, by lifestage, 2002-12

…but smaller homes require fewer devices

Figure 7: UK households and one-person households, 2002-12

Economic climate

Consumers have cash to spend on converged devices

Figure 8: Trends in personal disposable income and consumer expenditure, 2002-12

Lack of interest

Consumer mobility



Strengths and Weaknesses in the Market

Strengths

A connected country

Development of wireless technologies

Service bundling

Growing technological awareness

Strong consumer electronics market

Weaknesses

Vulnerability to technical failure

Consumer caution

Concerns over performance and complexity

Digital divides

Digital rights management

PCs/the Internet

Strengths

Weaknesses

Interactive television

Strengths

Weaknesses

Games consoles

Strengths

Weaknesses

Mobile phones

Strengths

Weaknesses



Case Studies


IPTV: Joost

Track record and funding create a potential pace-setter

Open access by year-end

Demographic targeting of adverts

A window on the TV world?

Interactive television: Sky Active

A video magazine

An alternative model of convergence - revenue convergence

Games console: Xbox 360

Connected hub or converged device?

Re-inventing the walled garden

Xbox versus Apple TV?

Mobile phone: Nokia N95

First sighting of GPS

Web browsing and email

Sound on vision…

…but mobile’s memory and life limits remain issues to resolve



PCs and the Internet

Key points

The recent past

OK computer - consumers get with the program

Figure 9: Computer, Internet and broadband take-up, 2002-06

Internet age created the possibility of convergence…

…but broadband made it reality

Escape from the bedroom

Figure 10: Market size and forecast of the laptop market, by volume, 2001-11

The present

Download trends add video to audio

Challenging the console: episode one

Changing focus: from distribution to communication

The future

Broadband access to widen further...

…and sit at the heart of convergence - on all devices

Challenging the console: episode two

Where next: Centre stage or behind the scenes?

PCs and the Internet: the consumer

Figure 11: PC ownership, June 2007

No substitute for Internet access

Consumers dislike being chained to their desk(top)

Activities done through PCs

Figure 12: Activities done through PC in the last 12 months, June 2007

Not all Internet users are early adopters

Some functions fit together better than others

Future convergence: a two-way street?

Figure 13: Activities done through PC in the last 12 months, by PC ownership, June 2007

Laptops lead in convergence stakes

Activities done through PCs by demographic analysis

Figure 14: Activities done through PC in the last 12 months, by gender, age, region, socio-economic group, daily and Sunday newspaper readership, household income, presence of children, Internet usage, supermarket usage and mobile provider, June 2007

PCs not doin’ it for the kids

Do women want divergence, not convergence?

Broadsheet brands

Older children hold their parents’ hands



Interactive TV

Key points

The recent past

Rise of the red button

Figure 15: Digital television penetration, October-December 2006

Penetration driven by choice, not necessity

Freeview growth shows price is still an issue

New sets for new services

The present

iTV reaching those on the wrong side of the digital divide

Some services more interactive than others

iTV convergence centres on the living room

Figure 16: UK television reception, by platform, October-December 2006

The future

Increased interactivity for DTT

Putting the TV in IPTV

Converge or die?

Interactive TV: the consumer

Figure 17: TV reception at home, June 2007

Strong links between Internet and multichannel TV…

…and particularly cable

Interactive activities done through the TV

Figure 18: Interactive activities done through TV in the last 12 months, June 2007

TV-based interactivity more ‘passive’ than ‘active’

New services gaining popularity

Interactive activities by TV reception

Figure 19: Interactive activities done through TV in the last 12 months, by TV reception at home, June 2007

Cable viewers look most receptive to online convergence

Most popular interactive activities through TV by demographic analysis

Figure 20: Most popular interactive activities done through TV in the last 12 months, by gender, age, region, socio-economic group, daily and Sunday newspaper readership, household income, presence of children, Internet usage, supermarket usage and mobile provider, June 2007

Next most popular interactive activities through TV by demographic analysis

Figure 21: Next most popular interactive activities done through TV in the last 12 months, by gender, age, region, socio-economic group, daily and Sunday newspaper readership, household income, presence of children, Internet usage, supermarket usage and mobile provider, June 2007

iTV can bring convergence to women…

…but not so much to the young



Games Consoles

Key points

The recent past

Expanding the field of play

Consoles wield convergence clout

The present

Convergence now

Unfulfilled potential

Figure 22: Interactive activities done through games console, September 2006

Price as important as capabilities

The future

More walled gardens?

Static games consoles: the consumer

Figure 23: Games console ownership and purchasing intentions, June 2007

Focus on pure gamers obscures convergence potential

Can Wii fix it? Maybe Wii can

Premature ageing a problem for the sector

Most important static console features

Figure 24: Most important static console features, by platform, June 2007

Little convergence interest among the current console crowd…

…but newcomers are even less convergence-aware

Handheld games consoles: the consumer

Figure 25: Handheld games console ownership, June 2007

Handhelds more popular than statics

More positive picture for PSP

Super Mario Brothers to the rescue?

Handheld console features

Figure 26: Most important handheld console features, by platform, June 2007

Music, video and gaming already converged - and popular

PSP for individuals, DS for communities?

Mobile Phones

Key points

The recent past

Market reaches saturation point

UK goes 3G

Operators cannot hold for call revenues

Figure 27: UK mobile phone market, 2005 and 2006

Demand for data gathering pace

Figure 28: UK mobile phone revenue segmentation, 2001-05

The present

Internet goes mobile…

…as does TV…

…but relevance and cost remain barriers to growth

The future

Falling prices to boost data traffic

3G or not 3G?

Convergence between the phone and PDA?

Mobile phones: the consumer

Figure 29: Activities done through mobile phone, June 2006

Main functions widely used…

…but mobile users concerned about cost…

…and security

Most popular activities done through mobile phones

Figure 30: Most popular activities done through mobile phone, by gender, age, socio-economic group, region, daily and Sunday newspaper readership, household income, presence of children, Internet usage, supermarket usage and mobile provider, June 2006

Next most popular activities done through mobile phones

Figure 31: Next most popular activities done through mobile phone, by gender, age, socio-economic group, region, daily and Sunday newspaper readership, household income, presence of children, Internet usage, supermarket usage and mobile provider, June 2006

Two types of mobile convergence - business and pleasure

Mobile convergence available to all…

…and on all networks



The Consumer: Enthusiasm for New Technology

Key points

Type of technology buyer

Figure 32: Type of technology buyer, June 2007

Convergence set to be a slow sell

Type of technology buyer by demographic analysis

Figure 33: Type of technology buyer, by gender, age, region, socio-economic group, daily and Sunday newspaper readership, household income, presence of children, Internet usage, supermarket usage and mobile provider, June 2007

Early adopters: young, male, affluent

Replacers: older, female and skint

Type of technology buyer by technology ownership

Figure 34: Technology ownership, by type of technology buyer, June 2007

Satellite today, Freeview tomorrow

Early Adopters stand back in static console market

Smart money on the smartphone

Type of technology buyer by interactive activities done on TV

Figure 35: Interactive activities done through TV in the last 12 months, by type of technology buyer, June 2007

Type of technology buyer by activities done through TV

Figure 36: Activities done through PC in the last 12 months, by type of technology buyer, June 2007

Type of technology buyer by activities done through mobile phones

Figure 37: Activities done through mobile phone, by type of technology buyer, June 2006



The Consumer: In-home Convergence

Key points

Attitudes towards in-home technology

Figure 38: Attitudes towards in-home technology, June 2007

Benefits of convergence already understood

Biggest barrier to take-up is not an insurmountable one…

…although consumer jury is still out on IPTV quality

Targeting opportunities

PC/Online Convergers

Console Convergers

Frustrateds

Non-Convergers

Target groups by demographic analysis

Figure 39: In-home technology target groups, by gender, age, socio-economic group, region, daily and Sunday newspaper readership, household income, presence of children, Internet usage, supermarket usage and mobile provider, June 2007

PC man is gadget fan

Consoles strong on value

Young not immune to frustrations of technology

Non-Convergers older and mid-market

Attitudes towards in-home technology by type of technology buyer

Figure 40: Attitudes towards in-home technology, by type of technology buyer, June 2007

Early adopters set convergence pace…

…with the Cautious and Replacers still waiting for results



The Consumer: Mobile Convergence

Key points

Attitudes towards portable technology

Figure 41: Attitudes towards portable technology, June 2007

Significant resistance towards mobile convergence…

…with technical issues to the fore

A solid core are pro-convergence…

…but non-core functions do not determine purchasing patterns

Targeting opportunities

Convergers

Frustrateds

Non-Convergers

Portable technology target groups by demographic analysis

Figure 42: Portable technology target groups, by gender, age, socio-economic group, region, daily and Sunday newspaper readership, household income, presence of children, Internet usage, supermarket usage and mobile provider, June 2007

Affordability drives mobility

Frustrated by static standards

Non-Convergers worth pursuing

Attitudes towards portable technology by type of technology buyer

Figure 43: Attitudes towards portable technology, by type of technology buyer, June 2007



Forecast of Consumer Demand for Converging Technologies


Figure 44: Share of technology buyers, 2007

Figure 45: Convergence in-home and/or mobile within buyers’ profiles, 2007

Nearly 100,000 ready for converging products in 2008

Figure 46: Forecast of purchasers of converging technology, 2007

Abstract

The consumer electronics and communications services sectors have undergone astonishing change over the past decade. In just eight years, digital television has attained penetration levels that analogue services took 40 years to reach; broadband, wireless networks and interactive TV have come from nowhere to be mainstream technologies. Further digitisation and faster, lower-cost Next-generation Networks are now set to increase the pace of change even further.

This report explores this idea by testing the hypothesis that: “pressure on leisure time and living space is creating demand for converged technology that will soon make single-function devices a thing of the past.”



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