The Global Transfer of Digital Consumption to Small and Wireless Screens

The global love affair with wireless web-enabled handheld devices is transforming how consumers intake information, make purchasing decisions and communicate with each other. Increasingly, consumers are willing to accept small screens in return for mobility, which is gradually displacing big screens, such as TVs and PCs, from significance in households. As a result, having a marketing or sales strategy that includes small-screen capability is paramount for any business.

This Q&A sets out to examine the reasons behind the rise of small screens and analyse associated future trends that will impact consumers and businesses:

  • Why are small screens seeing surging uptake globally?
  • How is this transforming digital consumption?
  • What is the impact on big-screen technologies?
  • Which telecom segments offer the greatest opportunities through small-screen implementation?

Why are small screens seeing surging uptake globally?

The small-screen takeover is very much a global movement. Global retail value of smartphones stood at US$203 billion in 2012, having risen by 582% in real terms over 2007, while there were almost 1.5 billion mobile Internet subscriptions worldwide. The smartphone market is the most dynamic telecom segment globally.  Some of the factors behind this growth include:

  • The rollout of next-generation high-speed mobile broadband services, such as 3G and 4G, is allowing consumers fast web access on a mobile device, crucial for viewing media or downloading content on the go. Users are increasingly able to match the speed of fixed connections on their mobile devices;

Consumers in emerging countries often cannot afford contracted fixed broadband tariffs and PCs, with mobile devices instead acting as a one-stop shop for telecom services such as online banking, social and digital media. Household possession of a mobile phone is higher than possession of a broadband enabled PC in all countries;

Global Household Possession of a Mobile Phone and PC: 2007-2020

Source: Euromonitor International from national statistics/International Telecommunications Union (ITU)

Note: 2013-2020 data is forecast

  • The costs of both mobile broadband tariffs and web-enabled handheld devices have declined significantly. This has been crucial to the uptake of smartphones in emerging economies such as China and India, where the growing availability of devices for under US$100 is attracting rural and low-income users;
  • Improvements in storage capacity, processing speeds and multimedia capabilities have meant that small-screen devices are able to replace large-screen devices such as PCs and TVs, yet have the added benefit of mobility. Consumers can access emails, news and other digital content on the go, without the necessity of switching to fixed platforms. Small-screen devices will be the major drivers behind the 47.1% real rise in global consumer expenditure on telecom equipment over 2013-2020.

How is this transforming digital consumption?

The telecom segment is experiencing a historical shift as consumers and services migrate from fixed, physical-keypad platforms to mobile and touchscreen alternatives:

  • Digital consumption is experiencing evolution as users are able to access services at all times from their web-enabled handsets, which is transforming e-commerce into m-commerce. This trend is driving consumer activity on sellsuming platforms such as Amazon and Internet retailing in general, which amounted to a global value of US$521 billion in 2012;
  • Handsets are becoming retail assistants for shoppers, with in-built technology such as near-field communications (NFC) allowing consumers to interact digitally with stores on-site through their smartphones. Consumers are increasingly able to redeem coupons, scan barcodes, compare prices and pay while out shopping through their small-screen devices;
  • However, traditional businesses unable to launch mobile-friendly online platforms or offer interactive services in-store face the risk of losing their clientele. In 2012, there were already 1.5 billion mobile Internet subscribers globally. Businesses are having to be increasingly price-competitive as consumers are able to compare deals in-store and choose goods and services based on value-for-money;

Global Mobile Internet Subscriptions and Smartphone Retail Value: 2007-2012

Source: Euromonitor International from trade sources/national statistics

  • Perhaps the biggest impact of mobile consumption will be on rural and low-income homes in emerging countries, which have traditionally been outside of online trends due to limited infrastructural access to broadband Internet and high costs of PCs. These consumers are increasingly able to afford and access mobile broadband services, with countries such as Kenya, China and Nigeria home to vibrant m-commerce segments. The rural population in developing countries amounted to a sizeable 3.2 billion in 2012.

What is the impact on big-screen technologies?

Although consumers stand to largely benefit from the small-screen transfer, a number of industries are feeling the pressure as demand for traditional big-screen products falls:

  • PCs and laptops have been the major victims of rising global demand for tablets and smartphones, as the necessity to own a large-screen platform diminishes in the face of mobile, cheaper and trendier alternatives. According to trade sources, the end of September 2013 saw the sixth straight quarter of a global decline in PC sales, while analysts expect tablets to overtake PC sales by the end of 2013;
  • PC ownership has hit saturation levels among developed households while emerging-nation consumers are choosing handheld devices as their first computing platform. As a result, PCs are becoming a segment largely targeted at businesses as opposed to private consumers, with a growing focus on security, longevity and cost-effectiveness;
  • Gaming consoles that are aimed at big-screen TV usage are coming under increasing pressure from the mobile gaming market. The surging popularity of mobile app stores, such as Google Play, that offer low-cost gaming at users’ fingertips are eating away into the revenues of Microsoft and Sony, which dominate the console sector. In 2012, only 8.8% of the world’s homes had possession of a video game console, compared to 85.2% of homes in possession of a mobile phone, which highlights the huge accessibility advantage of the mobile segment;
  • However, traditional big-screen segments are recognising that their future depends on increasing integration with handheld devices. TVs, for example, are being increasingly developed to link with small-screen platforms wirelessly so that users can utilise larger screens at home through their handheld devices.

Which telecom segments offer the greatest opportunities through small-screen implementation?

Segments such as social media, digital advertising, gaming and general m-commerce offer unbridled potential on handheld devices as their penetration increases and a greater proportion of the population is set to access the web on the move:

  • Social media has benefitted immensely from its mobile rollout globally. As a communications service, the segment has tapped into consumer desire to stay connected via social profiles continuously. In early 2013, Facebook announced more users log-in via its mobile platform than through PCs, while the segment is being increasingly driven by emerging-nation mobile users that rely on their devices to come online;
  • Digital marketing is being transformed as web-enabled handheld devices are allowing direct marketing techniques beyond the traditional SMS mail-outs still common in emerging economies. According to trade sources, global mobile ad revenues amounted to over US$3.0 billion in the first half of 2013, with the segment being a major driver behind overall online adspend, which itself is expected to grow by an annual real 7.0% in 2013;
  • Mobile payments, money transfers and banking services are seeing rapid uptake in emerging economies, across Africa and Asia Pacific especially, as consumers without easy access to physical infrastructure and fixed broadband points turn to their mobile screens instead. However, security is a major challenge as more consumers carry vital financial data on their handheld devices, which are more exposed to theft;
  • Despite the rapid proliferation of small-screen technology, there remain challenges for segments betting on mobile web users, especially in emerging economies that represent the dominant share of global mobile subscribers. Mobile broadband Internet is limited in rural areas, especially in high-population regions in the interior of India and China, and IT literacy rates are lagging in Africa.