TORONTO – This year will mark the tipping point for near-field communication-enabled smartphone in-store payments, according to Deloitte's 2015 Canadian Technology, Media & Telecommunications (TMT) Predictions, released Tuesday.
In 2015, about 5% of the 600 million NFC-equipped smartphones worldwide will be used to make an in-store NFC payment at least once a month, more than a 1,000% increase from 2014, making its way to Canada at the end of 2015.
"Canadian smartphones are already being used to check balances, transfer funds and transact online, which indicates that consumers are comfortable with using their phones to handle money. But almost no one used their phones for contactless in-store payments at the register," said Duncan Stewart, director of TMT Research at Deloitte in Canada. "2015 will be the first year in which all of the requirements for mainstream mobile payments – satisfying financial institutions, merchants, consumers and device vendors – have been sufficiently addressed."
Now in its 14th year, Deloitte's TMT Predictions provide an outlook on the 10 most important trends for Canada in the technology, media and telecommunications industry over the next 12 to 18 months, says the press release.
Also in 2015, the smartphone upgrade market will see sustained, but slower growth. 1.4 billion smartphones will sell worldwide in 2015, up 12% from 2014's 1.2 billion units. More than a billion smartphone sales worldwide will be upgrades, countering ideas that the device has matured and cannot be improved.
"Although the smartphone refresh cycle is lengthening, existing smartphone owners are continuing to buy new phones. About five million smartphone upgrades in Canada will occur in 2015," said Robert Nardi, Partner and National TMT Leader for Deloitte in Canada, in the release. "PC growth has been on a decline as consumers and enterprises started to buy new ones at longer intervals, but it would be premature to expect the same to occur for smartphones. Pride, pixel count, durability and storage needs will continue to drive growth for smartphone refreshes."
Consumers don't always lead the way: The pendulum swings back to enterprise adoption
Historically, new technologies, like PCs and cellular phones, were adopted by the enterprise and then by the mass consumer market years later. In the last decade, it's been the opposite. Tablets and smartphones with large screens were adopted widely by consumers first, but the pendulum will start to swing back. In 2014, consumer uptake of wearable technology like smart glasses was very low, signaling a shift away from the consumerization of IT. Enterprise adoption of wearables, 3D printing, drones and the Internet of Things (IoT) will have a bigger impact generating more economic value in goods and addressing business needs than the consumer market for those technologies.
Nobody wants a mini-mill like a 3D printer in their home, nor do they want to wear a pair of creepy glasses. But for small businesses, a 3D printer is a great way to print samples and large corporations might be able to boost employee efficiency with smart, wearable devices.
But back to mobile paying. The end of 2015 will mark the tipping point for the use of mobile phones for NFC-enabled in-store payments in Canada, believes Deloitte.
It will be the first year in which the multiple prerequisites for mainstream adoption – satisfying financial institutions, merchants, consumers and device vendors – have been sufficiently addressed. In-store mobile payments in the Canadian market are likely to be slower than the US, depending on when various payment services are introduced.
For the first time, the smartphone upgrade market will exceed one billion. 1.4 billion smartphones will sell worldwide in 2015, but over a billion of them will be upgrades – new phones for those who already have one. The refresh cycle may be lengthening, but screen size, speed, storage, software and design will drive growth for smartphone refreshes. In Canada, more than 5 million smartphone sold will likely be upgrades
Print is not dead, at least for print books – Sales from print books will be at least four times the sales of eBooks globally. eBooks have not substituted print books in the same way that sales of CDs, print newspapers and magazines have declined. Young people (age 18-34) are as attached to print books as their elders and read at about the same rate than older demographics, and they are willing to pay for them.
The 'generation that won't spend' (the prevailing wisdom) is spending on TMT – Millennials who are 18-34 years old in Canada will spend an average of $750 for content, both traditional and digital. With nine million millennials, that's nearly $7 billion in sales for the Canadian media industry. What are millennials spending on? Pay TV, music, computer games, books, live sports, streaming video, and even print newspapers. In an Ipsos survey, commissioned by Deloitte, more Canadians aged 18-32 increased or spent the same amount of money this year than last on books (84%), live music (83%) or live sports (92%) relative to GenX-ers (78%, 76%, 82% respectively) or Boomers (78%, 73%, 76% respectively), says the release.
But all is not well on the TV side when it comes to millennials. Sports is the anchor for all TV packages and those in the 18-34 year old group is three times less likely to even be a casual sports fan. We’ll have more on this issue next week.
There is still a problem when it comes to connecting those who live beyond the large centres. Globally, the number of homes with broadband Internet will grow by about 2% to 715 million, and average broadband speeds in most countries will increase by 20%. “But variations in broadband speed in homes will be significant. The top decile of homes in some markets will have five times the average speed of those in the bottom decile. Factors unique to each home from the thickness of walls, age of a router, time of day and browsing habits of neighbours will determine the actual speeds attained at each broadband-connected device. Hundreds of thousands of Canadians get broadband speeds of more than 50 Mbps, but even more have realized 'broadband' speeds of less than 5 Mbps,” reads the research.
Also noteworthy in the report is that the Internet of things really is things, not people. In 2015, over 60% of the one billion global wireless IoT devices will be bought, paid for and used by enterprises – despite media focus on consumers controlling their thermostats, lights, and appliances (ranging from washing machines to kettles). The IoT-specific hardware will be worth $10 billion, but the services enabled by the devices will be worth about $70 billion. And the data from all that? Incalculable at this point.
When it comes to video, the total time spent watching online short-form video clips and programming of less than 20 minutes in length will represent less than 3% of all video seen in the year, both in Canada and globally. However, viewers of short form video may be more engaged and less passive than viewers of traditional long form video, meaning that ads for short form video may generate higher sales with a more-engaged audience.
Deloitte's TMT Predictions are based on worldwide research supported by in-depth interviews with clients, industry analysts, global leaders and more than 8,000 Deloitte member firm TMT practitioners. Over the last five years, Deloitte was more than 79% accurate with its TMT predictions.
