Consumer Purchases of Smartphones Expected to Rebound This Year, Accenture Survey Finds

Services powered by artificial intelligence also gaining wider acceptance

Price and security concerns hurting demand for smartwatches and fitness monitors

NEW YORK--()--After dropping to a three-year low last year, consumer purchases of smartphones are expected to rebound this year, fueled by better security, new functions, improved performance and device refresh schedules, a global Accenture (NYSE:ACN) survey finds.

“The ‘insecurity of things’ is a major industry challenge”

The survey of 26,000 consumers in 26 countries – whose findings are summarized in Accenture’s new Dynamic Digital Consumers – reveals consumer demand for specific types of connected devices, such as smartwatches and fitness monitors, will remain sluggish this year due to high prices and persistent concerns about the security and privacy of their personal data. The survey also shows consumers are increasingly embracing artificial intelligence capabilities such as digital voice assistants.

Resurgence of Smartphone Market

More than half (54 percent) of consumers surveyed said they plan to buy a smartphone in the next year, up from 48 percent in last year’s survey. Chinese consumers are the main drivers of this upturn, with three-quarters (74 percent) of respondents in China saying they intend to purchase a smartphone in the coming 12 months, up from less than two-thirds (61 percent) in last year’s survey. The number of respondents in India and the United States who said they plan to buy a smartphone in the coming 12 months also increased by double digits over last year, to 79 percent in India (from 68 percent last year) and 52 percent in the United States (from 38 percent last year).

Among all consumers surveyed, the leading driver of purchase intent is the ability to access the newest and most innovative features and functions, cited by 51 percent of respondents in this year’s survey, compared with only 41 percent last year. Another reason consumers are opting to buy new smartphones is inadequate performance of their existing devices, cited by 45 percent of customers this year – up from 33 percent last year.

“Improved features and falling prices are key reasons consumers around the world are signaling a desire to buy new smartphones,” said David Sovie, global managing director for Accenture’s Electronics and High-Tech business. “Growing acceptance of services powered by artificial intelligence, such as voice assistants, is also fueling this market upswing. 2017 will be the year when artificial intelligence goes mainstream in consumer devices.”

Strong interest in AI-powered devices and services

For the first time, the annual survey polled consumers about their intentions to buy digital voice-enabled assistants such as Amazon Echo and Google Home. Powered by artificial intelligence, the products recognize a human’s voice commands, such as ‘Turn on the light’ and ‘Play music’ and answer questions such as ‘What time is it?’ and ‘What is the temperature outside?’ While only 4 percent of the respondents said they own such a device today, two-thirds (65 percent) of owners said they use their device on a regular basis, showing strong acceptance of this new technology.

Voice assistants on smartphones are also becoming increasingly popular as the AI technology powering these services has improved dramatically. Younger consumers are leading the adoption, with more than four in five (84 percent) of 14-to-17 year olds saying they either use this technology today or are interested in doing so.

Consumers are also willing to embrace a wide array of potential AI-powered, personalized services, with a majority of respondents saying they are interested in personal health assistants (cited by 60 percent), smart trip assistants (59 percent) and entertainment advisors (51 percent).

Personal data concerns are widespread

Many consumers remain uneasy about securing their personal data, much of which is housed on smartphones or in the cloud. Nearly nine in 10 respondents (87 percent) said they are concerned about the security of financial transactions such as buying online. Similarly, 89 percent are uneasy that companies or systems they have not approved would get access to their financial information.

The encouraging news for smartphone manufacturers is that consumers trust device manufacturers with their personal data more than they trust telecom providers, banks and search-engine companies. More than one-third (37 percent) said they trust device manufacturers, up from 31 percent last year. By contrast, 36 percent trust telecom providers with their data – a drop from 42 percent last year, and only 13 percent trust search engine providers, down from 23 percent last year.

Stalling demand for connected devices

Although smartphone purchase intent is on a growth trajectory this year, the same does not hold true for other connected devices. For example, only 14 percent said they plan to buy a wearable fitness monitor and smartwatch this year, virtually unchanged from last year (at 13 percent).

“The ‘insecurity of things’ is a major industry challenge,” added Sovie. “There are widespread consumer concerns about the privacy of their personal data being stolen or compromised. And relative to the value delivered, prices of these connected devices remain too high. Market momentum for these devices will stall unless the industry overcomes these obstacles. If that happens, market demand could accelerate quickly.”

The survey findings provide evidence that this could happen for connected devices. Nearly half (46 percent) of respondents said they plan to buy a home connected surveillance camera within the next five years, compared with only 10 percent who said they plan to do so in the next year. In addition, 44 percent intend to buy a wearable fitness monitor in the next five years, versus 12 percent who said they will do so in the next year, and 42 percent said they plan to buy a smart home thermostat over the next five years, compared with only 8 percent who said they will do so this year.

Methodology

Between October and November 2016, Accenture conducted an online survey with approximately 26,000 consumers in 26 countries: Australia, Brazil, Canada, China, Czech Republic, France, Germany, Hungary, India, Ireland, Italy, Japan, Mexico, Netherlands, Poland, Romania, Saudi Arabia, Singapore, Slovakia, South Africa, Spain, Sweden, Turkey, United Arab Emirates, the United Kingdom and the United States. The sample in each country was representative of the online population. Ages of respondents ranged from 14-to-55 and over. The survey, and related data modelling, quantify consumer perceptions of digital devices, content and services, purchasing patterns, preference and trust in service providers, and the future of their connected lifestyles.

About Accenture

Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions – underpinned by the world’s largest delivery network – Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With more than 394,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at www.accenture.com.

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Release Summary

Accenture research says that better security, new functions, better performance and device refresh will increase smartphone sales this year.

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