70% Indian customers not using connected devices over security concerns

Research by Accenture indicates there are four main reasons why market growth for traditional devices such as smartphones, tablet PCs, TVs, and PCs is plateauing. Meanwhile, demand for Internet of Things (IoT) devices is much slower than initially hoped.

Privacy and security fears shutting down use

Security and privacy concerns has moved from being a nagging problem to a top barrier as consumers are now choosing to abandon IoT devices and services over security concerns

In India, about 70% of the customers have rated privacy/ security concerns as one of the main reasons for not using an IoT device

More than three-fourths of consumers surveyed in India are aware of the recent security breaches such as hacker attacks resulting in stolen data or malfunctions

Among the consumers aware of hacker attacks and owning or planning to own IoT devices in the next five years, 34 percent decided to terminate use of the devices and related services until they get safety guarantees. These are customers who once saw value in the device or service but now perceive the risk to outweigh that value

This indicates that the consumer technology industry does not have the fundamentals in place—and the consumer trust established—to push into more personalized and sensitive areas as it searches for the next wave of innovation

Smartphone market has reached maturity

Only 48 percent of consumers plan to purchase a smartphone in the next 12 months; this is a six-point drop from the purchase intent rate last year and a more than nine-point drop from the 2014 peak

In the Indian market, the percentage of consumers planning to purchase a smartphone in the next 12 months has dropped from a peak of 80 percent in 2014 to 68 percent

Globally and in India, a hefty 80 percent of online consumers now own a smartphone. This represents a huge increase of penetration globally of more than 25 percent points over the last five years

In India, about 32% said they plan to increase spending on mobile services in the next year

Lack of “wow” factor to attract new consumers

Almost 32 % of the consumers are not planning to purchase a smartphone this year because either they are happy with their current device or they cannot afford another one

Another 29 percent say they recently purchased a new smartphone and 4 percent indicate they do not plan to buy a smartphone because there are no innovative features in the new devices that interest them. This seems to indicate that the consumer technology industry has not delivered a “wow” factor attractive enough to consumers to drive replacement upgrades

It is not just smartphones—growth is stalling across all traditional categories

Globally, in addition to the six-point drop in purchase intent for smartphones, the survey revealed a nine-point drop in purchase intent for tablets, an eight-point drop in televisions and a 6 point drop for laptop computers. Overall, 20 percent plan to decrease spending versus only 7 percent in 2014

Though globally only 13 percent plan to increase spending on smartphones, tablets and laptops, India saw a turnout of about 27% planning to increase spends on smartphones, tablets, TV sets and laptops

IoT has not yet ignited growth

But the market for IoT devices will not grow fast enough to offset declines in traditional categories. In fact, the growth in demand for IoT devices is much slower than initially hoped for—there has been virtually no increase in purchase intent over last year globally

However, the uptake for IoT products seems to have a bright future in India, with about one-third of the customers planning to purchase a smartwatch in the next one year and 24% planning to purchase a wearable fitness monitor in the next one year

Roadblocks of IoT adoption

Accenture research shows there are three main roadblocks preventing greater adoption—price, security concerns and ease of use. Moving from technology-led innovation, to innovation that pairs technology with a deep understanding of core consumer needs, will be critical to accelerate IoT device adoption.

Lack of value perception raising concern over price

- Consumers report that price is the top barrier to the purchase of IoT devices, with 62 percent believing these devices are too expensive globally and 51 percent echoing the same concern

- Consumers identified as early adopters of IoT and early majority are less concerned about price than late majority and late adopters. They (meaning early adopters or late?) are willing to spend on devices when they believe there is a compelling value proposition

Ease of use still a barrier to adoption

- While the industry has definitely made some progress, ease of use and customer experience are still lagging and far from satisfactory

- Globally, more than two-thirds (64 percent) of consumers experienced a challenge when using a new IoT device this year, While this is down from 83 percent last year, it is still far too high to drive adoption

- In India, Internet connectivity was cited as one of the main challenges faced by users with more than one quarter of respondents highlighting it. This was followed by 17% percent of the respondents citing the complicated nature of the devices