Gartner Says By 2018, 50 Percent of Consumers in Mature Markets Will Use Smartphones or Wearables for Mobile Payments

Customers Behaviors Are Evolving Alongside Ever-Changing Technology

Mobile payments are gaining acceptance among consumers in North America, Japan and some countries in Western Europe, according to Gartner, Inc., with half of consumers in mature markets expected to be using smartphones or wearables for mobile payments by 2018. This is just one of many innovations impacting customer preferences in the personal technologies market.

"Innovation in apps, mobile devices and mobile services are impacting traditional business models, particularly in the way people use personal technology for productivity and pleasure," said Amanda Sabia, principal research analyst at Gartner. "Product managers must understand who their customers are for these new devices and services, and how the products are being used. Knowing your customer is imperative in order to capture a fair share of spending opportunities in this dynamic marketplace."

When it comes to mobile payments, there are three types of mobile payments or mobile wallets available now: smartphone or wearables-based payments, branded mobile wallets from banks or credit card providers, and branded mobile wallets from retailers such as Starbucks.

However, mobile payments using Near Field Communication (NFC) technology (Apple Pay, Samsung Pay and Android Pay) will be limited in the short to midterm due to a lack of partnerships between retailers and financial organizations, as well as consumers seeing little value in such payments. "Any mobile payment wallets that are tied to the device will have limited adoption and only if the device has a huge installed base," said Annette Jump, research director at Gartner. "Instead, cloud-based solutions will have a better chance to succeed as they can reach a wider audience and can support many use cases beyond face-to-face or in-store options. Also, mobile payment and mobile wallet adoption requires a country-by-country rollout plan with an enabled payment infrastructure and agreement with major banks and retailers."

Gartner made two further predictions for the personal technologies market:

By 2018, 75 percent of TV-style content will be watched through application-based services in mature markets

"The increasing prevalence of application-based TV-style viewing will be disruptive to the traditional pay-TV market. Consumers are already cutting back on premium pay-TV channels in favor of subscription video on demand (S-VOD) services such as Netflix and Hulu Plus," said Derek O'Donnell, senior research analyst at Gartner. "We expect that this phenomenon will continue to accelerate over the next three years, putting pressure on the revenue of pay-TV operators, particularly from premium channel subscriptions."

As the mainstream market spends more time viewing TV through applications, more households will begin to "cut the cord" entirely, putting additional pressure on traditional pay-TV service providers. Pay-TV operators will need to provide application-based functionality for their content in order to remain competitive in an ever-increasing app-based TV-viewing culture.

By 2019, less than 20 percent of users in mature markets will subscribe to mobile data-only connections

Since the launch of 3G and even more so since 4G has become the new standard for mobile broadband in mature markets, mobile data consumption has been increasing. Most of it still takes place on smartphones, but communications service providers (CSPs) have been promoting mobile data-only connections as a complement to fixed broadband accessed through Wi-Fi, when consumers need the flexibility to use their data-centric devices on the go.

"In markets where fixed broadband and Wi-Fi is widely available, and where CSPs' offerings are allowing tethering as part of their mobile offerings, the value-add of a stand-alone mobile data-only connection is harder to demonstrate," said Stephanie Baghdassarian, research director at Gartner. "Also, when focusing on tablets specifically, it has to be noted that cellular-enabled tablets are noticeably more expensive than Wi-Fi-only versions. This is yet another inhibitor to mobile data-only connectivity uptake."

The mobile data-only opportunity is, however, proportionally larger in emerging markets. Tablet users in emerging markets are almost twice as likely to connect their tablet using the cellular network than in mature markets, while laptop users in emerging markets are more than three times more likely to use the cellular network to connect their laptop than in mature markets.

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