Consumer Tech Industry Maturity. Observations and Implications

It is becoming clear the consumer tech industry has reached maturity. This seems like an odd thing to say given how long the tech industry has been around, but as I’ve observed through the years, the consumer tech part of the industry is relatively young. PCs didn’t truly go mass market until the mid-2000s and the most personal computer ever invented, the smartphone is only now showing signs of functioning as a mature market. Nearly every single data point I collect sends a signal that consumer tech is now reaching full maturity which will shift the industry dynamics dramatically for everyone looking to compete.

Before going deeper, I think it is helpful to articulate my definition of what makes a market mature. Most business professors I talk to, and most executives and authors of business books, etc., would define a mature market as when a consumer has a full understanding of what it is exactly they want. I take this definition farther and add they also need to comprehend why. When doing interviews with consumers, I find the most insights into their mindset are generated when you ask them why they like a specific product over another, or why they choose this product over another. At some point in time in the maturity of a market, the reasons move from simple things like price, or brand, or one feature to a deeper articulation of why these certain things matter to them.

One observation that had not clicked with me before is how Apple has served as the barometer to measure industry maturity. In particular, the iPhone is now up against mature market fundamentals at around the same time the entire smartphone market is showing signs of maturity. Things like lengthening replacement cycles, consumers spending more on devices that fit their interests as their interests refine and they know what they want. Smartphone buyers are now purchasing smartphones with a mature market mentality, and that is impacting the market and Apple at nearly identical times.

While it is certainly true areas of consumer tech are not mature yet, like smartwatches, for example, the vast majority of categories are now mature. And even with some categories not being mature, we still see consumers purchasing with an overall heightened awareness of their likes and dislikes across all categories of products. One of the more interesting observations, which serves as a supporting point for mine on the overall consumer tech landscape being mature, is how fast we see new technology be adopted.

This reality first hit me when we first started researching Apple Watch right after it was released. We discovered that a larger amount of regular, mainstream consumers, were purchasing Apple Watches than any of us anticipated. While 70% or so of early buyers were early adopters, as predicted, we were surprised to find more than 25% of early buyers fit more into the mainstream category than early tech. I certainly did not expect this, and when I interviewed more than a dozen folks in our panel who were what I consider regular non-techie consumers, I was surprised to see how well articulated their reasons for wanting Apple Watch was. Even though it was a relatively new product concept, these consumers immediately saw the value even though they had no frame of reference for its value.

Similarly, smart speakers made their run to penetrate 20% of US households (and growing rapidly) in under three years. This was similarly a new category, with an entirely new value proposition, and consumers flocked to it more quickly than anyone anticipated. All of this to emphasize the point that many of the assumptions we have made historically about how consumers may behave need to be re-evaluated in light of our enlightening of the maturing of the consumer tech industry as a whole.

Where To Go From Here?
I’ve had a broad thesis that the single best industry to study to observe how consumers behave in mature and then post mature markets, is consumer packaged goods. The common traits the CPG industry holds every category is brand and choice. Brands within consumer packaged goods companies often stand on their own, even if owned by a large parent company, and they offer a wide variety of choice and options of products within categories.

Again, using Apple as a barometer, this is why Apple’s product offering has grown dramatically in the last few years. While Apple used to only offer a few options for iPhones, they now offer a wide variety of choice of not just colors, but size, features, specs, and price. An exact strategy right out of the consumer packaged goods playbook. Interestingly, this isn’t the first time Apple has done this. The iPod followed a similar product dynamic that started out limited in its offerings then expanded to a robust product lineup of many different choices. The difference between the two products is the iPhone–and Apple–has reached a level of scale that is unprecedented in consumer technology.

My expectation is this trend will continue as consumers gravitate toward brands and desire to see a range of choice and options from those brands to meet their needs. In fact, for all the criticism facing Apple out there, if you view Apple through the lens of consumer packaged goods market dynamics then Apple is quite well positioned.

This is a key reason I’ve always argued brands will rule the future of consumer tech. And a key reason why any company looking to compete in this space and own a piece of the future must be investing in building their brand at a global level.

The last point I want to make is how this dynamic will lead to new entrants in hardware just like we have seen with Amazon, Google, and Microsoft ramping up their hardware efforts. Hardware remains an important dynamic in consumer electronics, and I expect many companies with a big brand who are not yet in hardware to consider it as the dust continues to settle and the tech industry moves to postmaturity.

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Ben Bajarin

Ben Bajarin is a Principal Analyst and the head of primary research at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research and he is responsible for studying over 30 countries. Full Bio

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