Betting on a smart device explosion

Keeping track of tech trends and the rapidly evolving telecom sector may seem like a fool's errand at times. Just when you are getting your head around one trend another appears to usurp its place and gain primacy.

Decoding the future of technology is never a cut and dry affair, in fact it's notoriously difficult. However, what we do know is that there a number of trends – smart device adoption, the importance of big data to business and mobility –  that have found fertile ground in 2011 and will find even greater traction in 2012.

With that in mind here's a look at some of the key trends which global consultancy Deloitte's Technology, Media & Telecommunication (TMT) unit reckons are going make a splash this year. This is the 11th report by the TMT team and it actually has a pretty good track record.

Consumer spend on tech to maintain momentum

Demand for consumer technology is going to remain a major driver in the sector and Deloitte believes that the rush for smartphones and tablets is going to continue despite economic uncertainty. 

According to Deloitte's national TMT leader Damien Tampling, consumers are more likely to defer spending on the ‘big-ticket' items in favour of consumer electronics, mainly because the cost of technology is on its way down. 

This trend is going to manifest itself strongly in 2012 which in turn should provide plenty of opportunities for both consumers and vendors.

However, it might not readily translate into big dollars because Deloitte predicts the dollar value of the market to moderate.

“The average Australian household is predicted to spend around two per cent of their weekly disposable income, just under $24 per week, on home computer equipment, including pre-packaged software and mobile phone related expenses;  a similar proportion to the US spend,” Tampling says.

Tablet explosion and the multi-tablet owner

Smart device adoption rates are on the rise globally and with many of us already owning multiple devices the Deloitte report predicts the ascent of the multi-tablet owner. Deloitte expects roughly five million tablets will be sold globally in 2012 to people who already own one - generating up to two billion dollars  in revenue. 

This tablet explosion was in full bloom at the Consumer Electronics Show (CES) in Las Vegas this year, with more than 40 tablets, some good, mostly bad, making an appearance. The rise of Google Android has obviously played a big part in fuelling this explosion and Deloitte's team points out the BYOD trend is also going make its mark this year.

Tablets are increasingly feeling at home in the corporate space, with more than 25 per cent of tablet sales in Australia expected to be generated by companies seeking greater mobility for their employees. Having one tablet for work and another for play doesn't seem that farfetched after all.

According to Deloitte, this trend will both be an opportunity and a challenge, not only for workplaces and how they manage their support hardware but also for content owners and network operators that will need to evaluate the impact on connectivity and possibly new data usage plans.

The budget “smartphone”

The rising demand for smart devices is going to manifest itself in the smartphone market as well with more than half a billion low-cost versions likely to be in use by the year's end, according to Deloitte's report. Budget smart phones – costing less than $US100 – are attractive because consumers are getting used to their phones having basic functionality like email, web browsing and cameras.

According to Tampling, this trend will have an impact not only on device manufacturers but also app developers and telco operators.

“This will put pressure on the supply chain to cut the price of components, but it will also present a challenge for app developers as low-cost smartphone owners are less likely to want to pay for downloads,” Tampling says. 

With Wi-Fi set to become part of a normal feature of every device Tampling adds that operators will also need to be careful how they price data.

“They must keep pace with the consumer's ability to pay, or risk causing them to shy away from all future data services.”

NFC and mobile payments 

Commonwealth Bank's recent foray into the “wave and go” mobile payment systems field through the launch of Kaching has invigorated interest in near-field communications (NFC) technology in Australia and with an estimated 42,000 NFC readers rolled out in local retail merchant premises the idea of embedding a credit card into a mobile phone could gain momentum. The bank has followed up the launch of Kaching with the introduction of ‘QkR' which is being tested in conjunction with cinema group Hoyts and will allow moviegoers to select, order and pay for food without leaving the theatre.

However, wholesale NFC adoption is going to take time in Australia due to a number of factors and Tampling points out that success ahead will depend on how well banks, telcos and device manufacturers work together.  

“Any lack of interest or motivation to get moving will however only provide a longer window for other innovative payment technologies to emerge, for example payment systems that use social media and operate across industry and borders, making the development of an appropriate legislative regime very difficult.”

Even if 2012 doesn't turn out be a watershed year for mobile payments, Deloitte reckons that the NFC chips won't be going to waste because the technology has other applications many of which are being explored globally. NFC technology is already being tested in the US to enable parking metres, and device makers like RIM have introduced products like the BlackBerry Tag which will enable users of NFC phones to exchange contact information, documents, URLs, photos and other multimedia content with a tap of their phones. NFC technology may still be under the radar for most of us but that could change this year.

Big data, big deal

The big data message is resonating loud and clear and while it's still early days in Australia the trend has the potential to revolutionise businesses. The trend has been given a real push by the proliferation of data sources – social networks, real time consumer behaviour, mobility, sensor networks –  and the data deluge has not gone unnoticed by organisations. From total industry revenue of only $100 million in 2009, Deloitte predicts Fortune 500 companies to kick off big data initiatives, which will trigger industry revenues of between $1 billion and $1.5 billion, this year.  While internet companies have so far led the way, the trend could soon find a place in the public sector, financial services, retail, and media sectors.

Hard times for the hard drive

The proliferation of data will have an  impact on the storage side of  the equation as well and 2012 could be a turning point for the sector, with the traditional hard disk drive (HDD) potentially losing out to solid state drive (SSD) technology. According to Deloitte, demand for SSD technology is set to increase across a number of markets. Size and power are the two critical advantages that SSD has over HDD. They take up half the room of an HDD, weight half as much, and use half the power. However, they are still about ten times more expensive per gigabyte that HDDs, although prices in the storage game are on a downward tilt. The big game changer for SDDs in 2012 could be the cloud as a greater consumer shift towards cloud-based storage services will prompt savvier consumers to opt for SDDs.