I’ve been explaining to a number of executives at large tech companies we work with that we may not know what we think we know about consumers in a global tech market. This seems like a surprising statement. Shouldn’t we know already what does and doesn’t work? The tech industry is already 30 years old after all. My response is to remind them that, while the tech industry is actually quite old, the consumer tech industry is quite young.
I touched on this subject here, where I wrote about the uncharted waters we are seeing in consumer markets. This market started, in my mind, in the late 2000s, when consumers who did not have desk jobs started buying PCs for truly personal use. This run of the PC in consumer markets peaked in 2010-2011 as pure (non-commercial) consumers started buying PCs for personal and home use.
When viewed via this lens, the PC industry woes make a great deal of sense. Every PC company, Microsoft, Intel, and many in the analyst community viewed this as a run that would continue. The PC would keep on this path as billions of new consumers across the planet got their first desktop or notebook PC and started benefiting from its software ecosystem and the internet. Then the smartphone happened and the nearly one billion non-commercial consumers started doing what consumers do and held onto their PCs for very long periods of time. The growth was halted and shifted to smartphones.
Now the market which was supposed to be for PCs has gone to smartphones. Nearly a billion people around the world have a pocket computer as their only device to use software and internet services. This number grows by approximately 300-400 million every year. At some point, the smartphone installed base will reach about four billion and the PC’s base is likely to drop to around one billion if current trends hold.
The point in all of this is we are still learning new things about these billions of first-time computer owners but we are learning these new things in a mobile only context. We are learning these consumers develop behaviors we had not seen before. We are learning consumers in rural India operate differently than the ones in rural China. And that consumers in Indonesia are very different than consumers in many countries in Africa. We are genuinely learning new things about global consumers as it relates to their behaviors in tech. This is why I discourage many of our clients from thinking “we have tried this before and it didn’t work.” Maybe the market wasn’t ready before and it is now? The point about learning new things about consumer behaviors is directly related to the maturity of the market. For example, China only recently matured as a smartphone market (in the developed regions) and we are now seeing fascinating behavior like a sweeping shift from Android to iOS. This maturity on the part of the consumer has benefitted Apple in ways many did not predict. Similarly, the maturity of the smartphone market in China has rekindled some interest in the traditional PC form factor. Hence this interesting move by Xiaomi to start making notebooks.
The over-arching point is to emphasize we may not know what we think we know about global consumers. Keeping our eyes and minds open to new observations and learnings is central strategically as we think about where these markets go. In reality, the global consumer tech market is only 4-5 years old. Younger, if we are only looking at smartphones as the gateway to the broader consumer tech landscape. We still have growing pains, meaning lots of companies making mistakes in this market, to endure.