Sector analysis: Constant technology evolution

This report from Nielsen is presented in connection with the Asia's Top 1000 Brands report.

As the appetite for all-things-connected continues unabated, the rate at which the industry is innovating to keep up with demand is astounding. The ability to bring new ideas to life is happening at a rapid pace, hitting the ground with faster turnaround at the product development stage, while improving affordability.

This shortened product development cycle and improved affordability has created an unprecedented level of connected device ownership around the world. Globally 3.6 billion consumers have a mobile connection and it’s expected this number will increase by a further one billion by 2020. And Asia plays a significant role in this demand and growth.

Around half of the world’s mobile subscriptions are in Asia, and while voice is the dominant service in the larger and more developed regional markets, data usage is rising (up almost 30 per cent annually) particularly in the emerging markets in Southeast Asia, and it’s these markets which the industry is watching closely. Smartphone ownership in the region is driving overall growth – penetration varies from 30 per cent to 80 per cent across Southeast Asian markets and it is now at the heart of the new digital ecosystem.

With the exception of the region’s few remaining greenfield markets, such as Myanmar and Laos, finding growth in near-saturated Asia is challenging. Demand for voice services is shrinking while, conversely, data usage is increasing rapidly and there is expected to be eight times more data traffic by 2020. Voice still accounts for between 40 per cent and 60 per cent of the existing revenue mix, and with new over-the-top (OTT) players, operators are struggling to maintain their revenue share from voice and SMS.

Although Asia’s device market continues to be dominated by a handful of brands, a number of new brands have entered the market in recent years and are challenging the traditional heavyweights, with the battle being fought on price, product differentiation and channel availability. Flush with choice, consumers are enjoying a wider variety of product and pricing options, which is placing pressure on manufacturers to constantly evolve in order to remain in contention.

When it comes to technology innovation, the big brands’ investment in developing wearable technology has been leading the way of late, and the annual growth of wearable technology sales (up 100 per cent year-on-year) reflects this. What began as a foray into devices that provide health and fitness metrics has morphed into something far beyond. And the outlook is even more fantastic with discussions around wearable technology integrated into fabrics, self-recharging wearable technology and even the use of wearable drones.

As technology innovation charges onward, the next evolution is shaping up to be around connected machines – the ‘smart home’ of the future where everything from fridges, washing machines and air-conditioners to security and watering systems are connected to each other and the internet.

Off the back of such significant smartphone adoption, reliance on apps is growing. Today you can find an app to do anything from calling a taxi to buying the groceries or ordering a coffee. With such a vast array of apps available today, consumers are leveraging them more and more to free-up their time and improve their lives.

In among all of this evolution and innovation one thing remains constant – in the pursuit for tech brand dominance product innovation is now, and will continue to be, where the battle is fought and won.

Sagar Tamang is managing director, telecom and technology, Southeast Asia, North Asia and Pacific at Nielsen