How the Smartphone is Revolutionizing 10 Industries
By IBISWorld Senior Analysts Kevin Culbert and Caitlin Moldvay
Whether used for web browsing, shopping, directions or entertainment purposes, smartphones are becoming increasingly intertwined with people’s daily lives. The advent of smartphones in mainstream usage has ushered in a new era for many US industries, particularly the 10 identified by IBISWorld in this report. Whether an industry is helped or harmed by this trend, smartphone use is on the rise and it’s here to stay. So as consumers increasingly look to smartphones for everyday tasks, companies will need to make adjustments to keep up.
According to Pew Research’s 2012 “Digital Differences” study, 46.0% of Americans have a smartphone device, making them more commonly owned than basic cell phones. Smartphones are increasingly becoming ubiquitous, with brands like iPhone, Android and Blackberry quickly becoming household names. Consumers aged between 18 and 29 are the most likely to have a smartphone, with two-thirds of this age bracket owning one. Furthermore, ownership rates increase among adults living in urban settings and those earning higher incomes.
In the five years to 2012, IBISWorld estimates that the number of mobile internet connections has increased at an annualized rate of 57.6% to 155.6 million. Although growth in the number of mobile internet connections has started to slow as the market approaches saturation, the ways in which industries have started to use and leverage mobile technology has not slowed.
Online Shoe Sales and Women’s Clothing Stores
The retail sector, in particular, has been revolutionized by the rising use of smartphones. For many, the memory of waiting in line to check out or get help is becoming a thing of the past. Instead, shoppers are increasingly going online to find the latest brands and discounted items. With e-commerce making up a greater share of the retail sector, internet users are increasingly turning to their mobile devices to access their favorite stores in the palms of their hands. As such, Online Shoe Sales and Women’s Clothing Stores are two industries benefiting from this change. For example, online shoe sales more than doubled in size over the past five years, growing at an annualized rate of 17.4% to an estimated $7.8 billion in 2012. According to a 2010 survey by Nielsen, shoes, clothing and accessories are some of the most popular items purchased online. And in addition to their computers, consumers are increasingly shopping for these items on their phones. A 2012 Nielsen report found that 29.0% of smartphone owners partake in mobile shopping activities, the most popular of which are comparing prices, browsing products and reading reviews. Mobile purchases ranked fifth in terms of popularity, with 22.0% of owners making purchases on their phones.
The Commercial Banking industry is also transforming itself to adapt to greater internet and mobile phone use, offering its customers online and mobile banking services. Instead of visiting and waiting in line at their local bank, consumers can access their accounts online within common activity for Americans. In fact, Pew Research reports that 61.0% of adult internet users engage in online banking, making it about as popular as social networking. Mobile banking, however, is still relatively new, with only 21.0% of mobile owners using their phone for banking activities, according to the Federal Reserve’s 2012 “Consumers and Mobile Financial Services” study. The main reasons hindering usage include consumer comfort with existing methods and concern regarding banking security on smartphones. Therefore, continued growth of mobile banking will depend on increases in smartphone ownership and improvements in secure content and threat management for mobile platforms.
The Online Dating industry has also experienced some changes in line with the widespread use of smartphones. According to mobile analytics firm Flurry, in 2011, Americans spent a greater share of time on mobile dating apps than they did on dating websites. This signals a marked shift from 2010, when users spent nearly twice as much time on dating websites. Today, the vast majority of online dating companies have a mobile app. In addition to features similar to the dating websites, some mobile dating apps allow users to identify potential matches near their current location. The advent of this location-based feature is enabling users to take advantage of proximity and convenience and facilitate real-life meetings.
Social Network Game Development
While social networking isn’t anything new, the Social Network Game Development industry only came into existence in 2007. And in the five years since, revenue is estimated to grow at an impressive annualized rate of 397.0% to $4.5 billion in 2012. Rising adoption of social networking websites has driven the surge in revenue for the gaming industry, connecting people virtually through profiles and content sharing. These websites paved the way for further connectivity as companies developed games where users can interact with the people in their online social network. Market research company NPD Group estimates that one in five Americans aged older than six participates in some form of social gaming. Similar to social networking, social gaming has allowed companies to target relatively untapped demographics. For example, the largest and fastest-growing market is women aged 40 and older, who traditionally have low participation rates with video games. But social gaming has helped bridge the gap, with this segment increasingly looking to social network games for entertainment.
Real-Time Traffic Information Providers
Real-time traffic information providers are catering to the growing number of busy Americans who are tied to their smartphones. The ability for commuters to check traffic in real time, at all times, has caused more consumers to rely on the industry for their daily commute. In the five years to 2012, revenue for the Real-Time Traffic Information Providers industry is expected to grow 48.2% annually to $506.7 million. Technological advancements and falling prices have boosted demand by allowing more types of mobile devices to use the industry’s technology. Real-time traffic information has quickly moved from the radio, to home computers, to tablet computers and smartphones. Consequently, what was once a novelty has become a necessity for many Americans. The impact of GPS-enabled mobile devices has been twofold for the industry: Providers have been able to license out their information to more companies, and the accuracy of the information has improved as more data points are being connected on a daily basis.
Not all industries have been positively impacted by the development of the mobile trend. For example, the Postal Service industry’s revenue is expected to decline 2.5% annually to $69.6 billion in the five years to 2012. Postal services have been deeply affected by internet penetration. The subsequent move toward mobile communication and computing has dealt an additional blow to the postal service as more consumers opt to use e-mail instead of traditional snail mail. Consumers can now perform tasks on their mobile phones that previously required a trip to the mailbox or post office, such as paying bills. In order to stay relevant, the Postal Service industry has boosted incentive programs for commercial mailers. These incentives include 2011’s Reply Rides Free program, which temporarily increased the weight limit for direct mail with a business reply card, and this year’s 2nd Ounce Free program, which allows commercial mailers to send up to two ounces of mail for the price of one ounce.
In the five years to 2012, revenue for the Direct Mail Advertising industry is expected to fall at an annualized rate of 1.6% to $12.9 billion. Like the Postal Service industry, direct-mail advertisers have also felt the sting of an increasingly online world. Companies have been directing more advertising dollars toward e-mail inboxes rather than mailboxes, a trend that has only accelerated with the proliferation of mobile media. Although direct mail allows advertisers to target specific demographics by zip code, mobile advertising allows marketers to take a step further, targeting a consumer based on demographics and current location. As more consumers switch to smartphones, direct-mail advertising will feel the effects.
In the five years to 2012, revenue for the Newspaper Publishing industry is expected to decline at an annualized rate of 10.3% to $29.3 billion. Online and mobile news outlets have surpassed their print predecessors, providing consumers and advertisers with direct, more convenient and cheaper substitutes. Furthermore, more consumers are turning to blogs and special-interest websites, many of which offer targeted news for free. As a result, newspaper publishers have faced steep declines in readership and advertising revenue over the past five years. And all the industry has been falling steadily for the past two decades,, a particularly precipitous decline has occurred in recent years. According to the Newspaper Association of America, newspaper circulation was about 58 million in 2004; by 2009, that number decreased to about 46 million. A portion of this decline is the direct result of mobile media, which allows consumers to read and share news in real time on the go. In December 2008, the changing media landscape became evident when the Tribune Company, publisher of the Los Angeles Times and the Chicago Tribune, filed for Chapter 11 bankruptcy to restructure $13.0 billion in debt. Since then, many publishing companies, including Time Inc., have announced large layoffs. These events signal the continued and fundamental shift away from traditional media.
Revenue for the Photofinishing industry is expected to fall 4.5% annually on average to $2.0 billion in the five years to 2012. The industry’s face has been entirely altered since high-quality digital cameras have become more affordable. Now, photofinishers face even stiffer competition from camera-equipped smartphones. Smartphones now feature the same advanced technologies that are used in point-and-shoot cameras, including higher-resolution photos, stabilization features and face detection. And some third-party mobile apps allow users to touch up and manipulate photos directly on the smartphone. High-quality camera phones have contributed to the demise of photo printing by allowing people to share photos faster and easier through mobile text messaging, e-mailing and social networks. Similarly, mobile apps like Instagram have been developed to satiate rising consumer demand for photo sharing. This factor is expected to continue the industry’s decline over the next five years, with revenue forecast to fall at an annualized rate of 7.0%.
To download full research reports for the industries discussed in this article, click on the report titles below.
Online Shoe Sales, Women’s Clothing Stores, Commercial Banking, Online Dating, Social Network Game Development, Real-Time Traffic Information Providers, Postal Service, Direct Mail Advertising, Newspaper Publishing, Photofinishing
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