Category Archives: TUP 2005

Technology User Profile – 2005 Annual Edition

Fad, Niche, or Next Big Thing?

The technology industry has a perennial sport called “The Next Big Thing.” It involves spotting, creating, and being part of the newest technological advance that will change people’s lives. Even though advances seem to arrive overnight, in truth most true innovations take years to reach broad market acceptance.
Why is this important?
Timing is everything. The critical turning point for most technology products or services are when they reach that first 5% to 10% of the potential market. Depending on how they fare among these early adopters, they may either be doomed as fads, may limply hang on, or might break away into widespread use.
Even languishing niche products and services may hold promise for the future, and therefore can garner renewed investment and media attention. One recent example is the ability to make phone calls over the Internet through VoIP/Voice over Internet Protocol. Even though less than 5% of U.S. Home PCs have this as a regular activity, eBay recently committed billions to this market.  [See our TUPdate of December 1, 2005 – “VoIP: Still Calling, But Not an Answer Yet”]
Several other activities are in that same small-market zone and are worthy of note.
Most of the activities that have captured the regular attention of between 5% and 10% of home PCs involve active use. Their nature is markedly different from passive couch-potato-style TV viewing. Although dynamic activities can deliver the stickiness of frequent use so desired by marketers, the demands of regular interaction may discourage use by the broader mass of otherwise passive consumers. Writing a blog takes more ongoing and concerted effort than tuning into a primetime TV program. Indeed, there are nearly twice as many blog contributors than blog initiators.
Sites that help people meet other people are also used by this small group. The many dating services sites from Match.com to eHarmony.com have captured nearly one in fifteen home PCs. Although social networking was expected to skyrocket in the late 90’s, this activity has managed to reach a rather small, focused contingent of social and tech-savvy users.

Home PC Activities Among Small Market Segments

Activities for Which Home PC is Regularly Used (between 5% and 10% of total)

% of U.S. Home PCs

Post a comment on someone else’s blog/online journal

9.2%

Use an online dating service (e.g. Match.com)

7.4%

Create web pages (web publishing)

6.6%

Use a community/social networking group (e.g. Friendster, LinkedIn, Ryze)

5.7%

Write your own blog/online journal (e.g. MySpace, blogspot)

5.3%

Make voice telephone calls/voice chats over the Internet (VoIP)

4.5%

Source: MetaFacts Technology User Profile 2005 Annual Edition

Part of the sport of identifying technology trends involves carefully understanding core behavior. Even though technology itself may be disruptive and evolve quickly, consumer habits do not change quite so quickly. Consumers will gladly shift from one technology to another, causing seemingly fickle behavior to companies invested too deeply in a narrow technology and without their eyes on their customer’s broader activities and choices.

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Filed under Consumer research, Market Research, Trends, TUP 2005, TUPdate

PC Hours Continue to Climb

News flash: even more recent updates to this information are available to subscribers to the full Technology User Profile service.

Where do you spend your waking hours?

For most Americans, looking at a computer screen is the growing answer.

More of Americans’ time is with their computers – both at home and in the workplace. On average, Americans spent 25.9 hours a week using their PCs in 2005, up from 24.5 hours a week two years earlier. Both home and workplace PC usage levels have continued to grow in the last two years.

Why is this important?

As Americans integrate computers even further into their lives, the implications are wide-ranging, from their ergonomics and health, to privacy and national security, and even social interaction and consumerism. Besides the PC, software, and Internet companies, it also impacts media such as TV and radio that chase the attention of Americans’ eyeballs.

The total number of hours Americans use computers has climbed to 6.5 billion hours per week in 2005, up from 4.8 billion hours in 2004 and 4.3 billion hours in 2003. This is significant, representing 1 out of 7 total hours in a week, up from 1 of 12 only two years prior. To put this further into perspective, this is 20% of all waking hours, up from 13% only two years prior.

In the workplace, some occupational groups use computers much more than others. It’s hardly a surprise that Computer-Related occupations lead all Americans in their use of work computers, with an average of 37.6 hours per week. Since this is nearly all of a standard 40-hour workweek, we have to wonder if they’re having their lunches at their desks. More likely they’re working more hours than average.

Employees in Accounting & Finance jobs also use computers more than most, at 35.2 hours per week on average. In their case, it’s about spreadsheets – lots of spreadsheets. 79% of these employees cite spreadsheets as a regular computer activity, compared with 36% of other PC users.

At the other end of the spectrum, some occupational groups use computers less often, at nearly half the rate of the busiest. Of the Construction/Labor employees that use a work computer, the average is 21 hours per week. This is only slightly higher than the lowest group, Education/Training, who stand at 20.6 hours per week. Evidently, instructors spend more time in front of the classroom instead of their computer.

There are numerous factors that explain why Americans continue to increase their PC usage. Like the adaptable Swiss Army knife, the PC can be used for a wide range of activities reasonably well. Meanwhile, function-specific products, although technically superior at their core tasks, fail to convince convenience-hungry Americans. For example, cell phones have higher penetration than PCs, although are still primarily used for communication, despite efforts to entice callers to expand their handset experience to play games, take pictures, and organize their lives. They even have to compete with the PC as a communication device. Only a small number of Americans, 14%, agree with the statement “I Would Rather Use a Telephone Than Email.”

Even though TV media continue to vie for American’s eyeballs, a large number of Americans aren’t fully convinced. Nearly a third, 31%, agree with the statement “I Spend More Time Using my Computer Than Watching TV” and 28% agree that “The Internet is a Big Part of My Home Entertainment.”

Although the primacy of the PC isn’t assured forever, Americans continue to find ways for their PCs to be a big and growing part of their lives. This is a good sign for the health of the computer industry.

Average Hours Using a PC Continues to Climb

Total Hours Americans Use PCs

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Filed under Consumer research, Households, Market Research, Statistics, Tech Market, Technology, Trends, TUP 2005

Online and Retail Shopping – Not All Buyers Fit in the Same Big Box

Many dot-com pundits spelled the death of brick-and-mortar retail years ago. Consumers of technology products were assumed to be tech-savvy enough to skip visiting their local Wal-Mart. However, many consumers enjoy the social aspect of shopping, while at the same time others have integrated the web into their shopping process.Now that over half (50.1%) of Americans with home PCs agree that “My computer is a big part of my life,” it should be no surprise that it plays a big part in their shopping behavior. This is based on 7,958 households with Home PCs that were surveyed as part of the most recent MetaFacts Technology User Profile survey.

American consumers have been well-trained to wait for lower prices. Technology companies have further reinforced this through continued emphasis on “the next big thing.”

Nearly 8 times as many consumers agree than disagree with the statement “I hold off on buying technology products until their prices come down.” More than four in ten (41%) of home computer owners agreed with this statement, while one in twenty (5%) disagreed.

Best Buy customers aren’t as hesitant about shopping for technology products as are customers of other major retailers. Perhaps the “Geek Squad” has helped. Just over a third (36%) of Best Buy shoppers agree, much less than the 43% of Wal-Mart and Walgreens shoppers. Nearly ten times as many Wal-Mart and Walgreens shoppers agree than disagree with the above statement.

Further, retail consumers are strongly incorporating the web into their shopping, even while some shoppers strongly value the social interaction of shopping.

Why is this important?

As technology product shoppers transform what they value – low prices, brands, social interaction – as well as their sophistication with integrating the web into their buying processes – then this can split the market into pieces. This can leave some retailers following their customers, instead of the other way around.

There’s a sizable group that have integrated the Internet into their retail buying process. Over a third (35%) of American shoppers prefer to do their buying research online and then purchase in person. This is four times as high a rate as among those that don’t. Among the major retailers, Best Buy has attracted most of these, with 41% that agree while 7% disagree.

Low prices resonate with many buyers. Nearly 3 in 10 (29%) agree with the statement “low prices are more important than brand names.” Almost three times as many agree than disagree. 14% of Barnes & Noble online buyers disagree that low prices are more important than brand names, a small number, but the largest among the national online and retail outlets. The national rate is 11%.

Many buyers value in-person social interaction in their shopping process. 29% of shoppers with home PCs agree with the statement “I enjoy shopping in person because I can talk with and meet people,” compared with 15% that disagree.

Dell or Amazon shoppers are less interested in the social value of shopping than most other consumers. More Dell & Amazon customers disagree than agree. One-fifth (21% of Dell and 20% of Amazon shoppers) disagree, higher than the 15% national rate.

We expect the market to further splinter as Americans continue to learn and evolve how they buy consumer electronics. As the Internet becomes more integral in certain American’s lives, they will be very different from who they are today. At the same time, shoppers who haven’t embraced the web or have pulled the plug will be taking completely different shopping approaches, further frustrating those retailers attempting to fit all buyers into the same big box.

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VoIP: Still Calling, but not an answer yet

I’m old enough to remember when a long-distance call was a special event. Our family would drop everything to crowd around the phone. We’d take their turns, trying to speak quickly so as to not run up an enormous bill. Even while we were paying an exorbitant amount by today’s standards, the quality was often crackly and faint.

I’ve also seen many voice and data integration startups come and go over the last 25 years. From a technologist’s perspective, voice bits aren’t all that different than data bits, so there’s an appeal for a single digital pipe. However, technology promises don’t always drive consumer behavior. Today in the U.S., the promise of VoIP (Voice over IP) has created more static than clear communications.

Why is this important?

As companies like eBay pour billions into this still-embryonic “killer app” through their acquisition of Skype, other companies are likely to also bring their attention and resources to bear. If accepted by consumers and businesses, VoIP promises to upset a lot of apple carts. At the end of the day, the most important thing to watch is customer behavior: if the American public won’t use the technology, then the fastest bandwidth fanciest headphones won’t amount to much.

U.S. Households haven’t been flocking to use VoIP. Today, nearly 1 in 20 home PCs (4.5%) make voice calls over the Internet. That’s even down from last year, where this number stood at 7.8% of home PCs. These figures are based upon surveys taken from 8,203 computer users as part of the Technology User Profile 2005 Annual Edition, and 7,527 respondents in the 2004 Annual Edition.

Use among the self-employed is higher, at 7.2% of self-employed PCs. At least there is growth for VoIP among the self-employed, as this rate stood at 5.5% of self-employed PCs last year. These are still relatively small numbers, and largely unchanged over the past three years.

There are numerous factors that explain why VoIP has yet to take off in the U.S.

Frankly, speaking over a crackly connection can be painful and annoying, even when free, and dial-up connections just don’t give enough speed for high quality. The highest-bandwidth connections were at first being adopted by people who aren’t as price-sensitive – the wealthiest. In 2004, 46.3% of households with home PCs and $50,000 or more household income had DSL or Cable Internet connections, compared with 28.7% of lower-income households. In 2005, this gap has narrowed but still persists, with 68.7% of high-income home PC households having either DSL or cable access, compared with 54.8% of lower-income households.

At the same time, competition among cellular carriers drove prices down. Furthermore, a growing number of consumers pulled the plug on their home phone lines. So, Americans learned to enjoy having easy, mobile, low-price access to long distance. Furthermore, cell phone penetration grew faster among lower-income households and worked its way into American’s daily lives.

Fundamentally, Americans like the convenience of having a clear phone line accessible wherever they may be. It trumps needing to make phone calls while tethered to a computer workstation and headset. 

Although it’s true that American consumers like free or low-cost services, they continue to pay premiums for convenience.

Yet another factor to dampen enthusiasm for VoIP is the prevalence of email and consumer’s preferences for email over the telephone. Among 7,599 home-PC households we surveyed as part of Technology User Profile, less than one in seven (14.1%) agreed or strongly agreed with the statement “I Would Rather Use a Telephone than Use Email,” ranking it a 6 or 7 on a 7-point agreement scale. Nearly double that rate, 27.8%, disagreed or strongly disagreed, ranking it a 1 or 2.

What does this portend for the future of VoIP in the U.S.? Most likely, VoIP as a separate service will continue to be a niche offering. It will be most popular among the price-sensitive, the tech-savvy, and the self-employed. It will also likely do well outside of the U.S., where long-distance charges can be so much relatively higher. As a bundled service along with cable, satellite, or ISP services, it is likely to increase in adoption, further challenging the landline phone companies.

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Filed under Consumer research, Market Research, Market Segmentation, Mobile Phones, TUP 2005, TUPdate

TUPdate:Senior Couples Leading the Way with In-Car Navigation

Maybe they tried to ask for directions, or maybe they didn’t, but married active seniors appear to have been lost often enough and badly enough that they’re willing to pay money to avoid repeating the experience-because on average they are more than twice as likely to own or be planning to buy an in-car navigation system than other Americans. Younger folks, however, are not totally lost (ahem) to the technology.

Current in-car navigation systems marry GPS receivers with online map displays to show where the car is at a given moment. Then, anyone with basic map-reading skills can more easily find their way to their destination, whether it is day or night. MetaFacts, Inc., was able to identify this surprise market segment and gauge the market potential of this latest automotive accessory by analyzing responses to questionnaires from its large-scale Technology User Profile survey.

Married active seniors are 213 percent of the national average in their usage or near-term purchase intent for an in-car GPS. Older empty-nesters (or the single-income-no-kids crowd) are the next most likely, being won over to the technology at a rate that’s 153 percent higher than average.

Why is this important?

The early adopters for new technology aren’t always young, urban hipsters. Any technology marketers that put all their energies in the wrong direction will simply miss the mark. The other side of an old marketing adage goes: when someone finds a need, they’ll fill it. With newly-emerging portable navigation devices (PNDs), consumers that don’t want to wait for Detroit will simply bypass the automakers and get an aftermarket product from their computer store, cellular carrier, or other wireless supplier.

It’s not as if the typically-targeted youthful early adopters are out of the picture for in-car GPS. Adoption and interest among younger, affluent singles were 127 percent of the national average. Affluent traditional families were neck and neck with affluent, older singles, rating, respectively, 119 percent and 118 percent. Single parents were not far behind at 112 percent.

But keep in mind that while we are talking about a tidy business-3.3 million households that own or plan to soon buy a system-demand for in-car systems remains well short of a tidal wave. Those “you can’t get there from here” jokes are not about to become obsolete. The technology’s comparative popularity among married active seniors still means that only about one in nine are interested. But that’s wildly better than the national average of 5.2 percent-or slightly better than one in 20-who are interested in the technology.

The other 95 percent of the market are finding other solutions. They either only drive in familiar territory so know their way, download maps in advance from sites like RandMcNally, Mapquest, or maps.google, or have a notebook or handheld with either a GPS receiver or in-car Internet connection. Alternatively, they simply have a traditional paper map, or when that fails, stop and ask for directions. With the exception of using the last approach or having an in-car Internet connection, the other approaches don’t help much when you change your destination somewhere along the way, or somehow get off course.

Meanwhile, while married active seniors lead the way, being old in and of itself does not appear sufficient to trigger interest for in-car GPS-the demographic classification that displayed the least interest in the technology were the single heads of households who were at least 75 years old. With an interest rate of 2.4 percent, they were less than half the average. Nor does having a spouse along to nag you cause the interest to skyrocket-married heads of households who were at least 75 years old had nearly the same score, at 2.5 percent. Single active seniors were also comparative holdouts, at 3.3 percent. Evidently, the “married active” in “married active seniors” is the key-both husband and wife like to get out and travel, and have mutually decided that an in-car GPS is a worthwhile investment to enhance their travel experience.

Other notable holdouts were low to middle income older singles, and both young and older low-to-middle income empty nesters. Presumably, they travel only for business. Both working parents and low-to-middle income traditional families also fell below average in their interest in in-car GPS—presumably, they have family members to assume the chore of reading a paper map, or leaving the car to enter a diner and ask for directions. DINKs (double income no kids) were slightly below average. Perhaps, with no children to pack along, they can afford to fly to their destinations.

Looking ahead, as cell phones and other technologies emerge to challenge satellite-based GPS as the locational technology, consumers will have a wider range of options. This will put pressure on automakers to move more quickly, lest aftermarket wireless solutions pass them by. Senior couple pioneers that navigated the way will in turn be followed by younger early adopters, just as early cell phone adopters enjoyed not needing to find a pay telephone and bypassed the laggards.

 

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Filed under Consumer research, Market Research, Tech Market, Technology, TUP 2005, TUPdate