Table of Contents
Executive Summary
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- Short, medium and long-term impact on the industry
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- Figure 1: Expected impact of COVID-19 on consumer technology markets - short, medium and long-term, 26 June 2020
- How COVID-19 Has Already Affected Technology Markets
- Contrasting fortunes across key tech categories
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- Figure 2: Technology market size and forecast (adjusted for COVID-19 on 24 June 2020), 2014-24
- The Impact of COVID-19 on consumer sentiment
- Which Behaviours Will Change in the Short-term?
- Which Behaviours Will Change in the Medium-term?
- Which Behaviours Will Change in the Long-term?
- What Can We Learn from Previous Slowdowns?
- Lessons from Other Markets
- COVID-19: UK context
The Impact of COVID-19 on Consumers
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- Anxiety levels align with case curve...
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- Figure 3: Mintel COVID-19 exposure anxiety index, 28 February – 3 June 2020
- … but consumers remain anxious about their health
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- Figure 4: People’s level of concerns about the risk of being exposed to the coronavirus, 28 February – 3 June 2020
- COVID-19 concerns by demographics
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- Figure 5: Proportion of consumers showing the highest degree of concern (4 or 5 out of 5) regarding the risk of being exposed to the coronavirus, by age, 28 February – 3 June 2020
- UK begins to soften lockdown measures
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- Figure 6: Government COVID-19 lockdown exit strategy, published 11 May 2020
- Lockdown fears moderate
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- Figure 7: People’s level of concerns about how the outbreak might affect their lifestyle, 28 February - 3 June
- A bleak outlook for the economy
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- Figure 8: Consumer views on the impact of the COVID-19 outbreak on the UK economy and their own finances, 28 May – 3 June 2020
- Consumers cut back outgoings, and add to savings
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- Figure 9: How consumers have been affected or changed their behaviour as a result of the outbreak, 21-28 May 2020
- Household finances hold steady for most
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- Figure 10: changes in financial situation since the start of the COVID-19 outbreak, 21-28 May 2020
- COVID-19 is yet to meaningfully affect most households’ well-being…
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- Figure 11: The financial well-being index, January 2015-May 2020
- …but confidence for the year ahead plummets
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- Figure 12: Consumers’ financial confidence for the coming year, May 2020
- Middle age groups feel particularly vulnerable…
- …and self-employed respondents show the importance of the COVID-19 support package
How COVID-19 Has Already Affected Technology Markets
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- Technology purchasing and purchase intentions have been suppressed by the crisis
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- Figure 13: Technology and communications spending intentions for the next month compared to usual, 21 March-18 June
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- Figure 14: Electrical equipment bought in the last three months and next three months, Jan-May 2018-20
- Supply chain shortages have had an immediate impact
- Apple revises revenue guidance
- Samsung warns of drop in Q2 mobile earnings
- TV panel shortages reported; Nintendo Switch production and shipments delayed
- Facebook says hardware production has been hit
- Major trade show cancellations have limited opportunities for exposure
- Internet traffic has surged
- Shift to homeworking and home schooling drove computer sales in April
- People have turned to video calling in droves
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- Figure 15: Changes in leisure habits as a result of COVID-19 outbreak, 26 Mar-16 Apr
- Zoom usage boomed in March…
- …but its path to success has raised security concerns
- Digital entertainment is in demand
- Gamers’ online activity putting strain on servers
- Key players offering freebies to help during periods of isolation
- Esports stepping into the void left by traditional sport cancellations
- Time and money spent in apps has grown as people shift their focus online
- Strong growth in previously niche categories
- Big tech has offered its services…
- …but the UK government initially went its own way with track and trace
- Privacy issues abound regardless of which platform is used
Category Forecasts
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- Spend on digital goods to get COVID-19 boost
- Hardware category will suffer as people defer big-ticket purchases
- Long contracts will cushion the impact for service providers but SIM-only shift will accelerate
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- Figure 16: Technology market size and forecast, 2014-24
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- Figure 17: Technology market size and forecast, 2014-24
Which Behaviours Will Change in the Short-term?
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- 2020 to be a tough year on all fronts…
- …but some categories could benefit
- People may add to their home offices
- Focus on home improvement could boost interest in smart home devices
- Facebook Portal is tailor-made for lockdown
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- Figure 18: Portal ad on Facebook mobile
- Figure 19: Facebook Portal TV
- Videoconferencing competition to continue in the consumer market
- Tech can use this time to establish healthcare credentials
Which Behaviours Will Change in the Medium-term?
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- Spending in 2020 will remain subdued even post-lockdown
- Caution will remain in 2021 but some pent-up demand will be released
- The delayed 5G boost will kick in next year
- Growing focus on health could benefit wearable technology
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- Figure 20: Whether have placed greater importance on eating healthily or doing exercise since COVID-19 outbreak, by generation,16-23 Apr 2020
- Bringing healthcare and fitness together will resonate more than ever
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- Figure 21: Withings marketing email, April 11 2020
- Esports viewers gained during lockdown will boost medium-term revenue growth
Which Behaviours Will Change in the Long-term?
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- People will show greater appreciation for tech as a tool to connect
- Manufacturers and marketeers will need to adjust their focus accordingly
- Move to homeworking will reduce purchasing of separate work and leisure devices
- Boundaries between the consumer and enterprise markets will blur
- Lockdown will have laid the groundwork for new, social realities
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- Figure 22: Oculus Rooms, 2016
- Greater local focus will give new direction to digital services
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- Figure 23: Nextdoor app
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- Figure 24: Facebook Shops
- Maps can turn local focus into direct revenue opportunities
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- Figure 25: Activities done through mapping apps/websites, January 2020
- Attitudes to tech’s role in healthcare will have changed…
- …creating business opportunities build around our health data
What Can We Learn from Previous Slowdowns?
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- Technology cycles can counteract economic influences
- Mobile phones market shrank in 2009 but bounced back quickly
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- Figure 26: Value of mobile phone sales, 2008-13
- Laptop sales dip was delayed by people trading up from desktops
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- Figure 27: Value sales of desktop and laptop computers 2006-11
- Digital switchover saw TV sales grow in 2008-09 despite the recession
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- Figure 28: Value and volume sales of televisions, 2007-12
- What will be different in the post-COVID recession?
- Supply chain shortages and store closures will hit tech markets hard
- High unemployment will mean more dropping out rather than trading down
- Technology cycles will again help mitigate the impact of economic factors
- Emerging technologies will continue to improve and attract new market entrants
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- Figure 29: Household ownership of voice-controlled speakers, December 2017-April 2020
- Wearable tech should grow, despite the recession
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- Figure 30: Personal ownership of smartwatches and fitness bands/sports watches, October 2017-April 2020
Lessons from Other Markets
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- Looking to China as it emerges from lockdown
- March saw a rapid bounce back in sales in some tech sectors…
- …driven by the shift to homeworking and enthusiasm for smartphones
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- Figure 31: China - Nominal growth by retail sales of consumer goods, January-April 2020
- High-end tech products not in the firing line as much as other luxury categories
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- Figure 32: China: changes in desire for luxuries after COVID-19, 26 Apr-2 May 2020
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