Can Startupland bridge the smartphone generation gap?

The fastest growth in developed countries' smartphone penetration will be amongst the over-55s this year, says Deloitte. But to cash in, we'll need new apps.
Written by Stilgherrian , Contributor

January is prediction season, when every consulting and analyst firm on the planet emerges from its silly season stupor, fires up PowerPoint, and creates an endless series of graphs that run relentlessly up and to the right — larded liberally, of course, with plenty of those magic words "million", "billion", and, these days, "trillion".

One of the more reputable presentations — let's face it, more than a few of these annual chartfests are little more than graphically slick statements of the bleeding obvious with bonus hand waving — is Deloitte's Technology, Media & Telecommunications (TNT) Predictions.

It has footnotes.

It doesn't try to look too far ahead, either — and as a result, Deloitte claims that 80 percent of its 2013 predictions were spot on.

Its 2014 TMT Predictions report was launched on Thursday, filled with plenty of big-growth gadget goss.

Global sales of smartphones, tablets, PCs, TV sets, and games consoles — what Deloitte lumps together as "the converged living room" — will surpass $0.75 trillion in 2014, for example, although the rate of growth is starting to slow. Smartphones and tablets are where the action is: During 2013, their combined factory revenues exceeded everything else in the consumer electronics market put together.

Mobile instant messaging (MIM) will end up delivering 50 billion messages a day, twice the volume of messages as SMS, at 21 billion. But SMS will still deliver revenue to the telcos, some $100 billion of it, which is 50 times the revenue from MIM.

But in amongst the predictions for wearable technology and phablets and even "eVisits" to your doctor, there's one prediction that represents a huge market opportunity — if only the mobile app developers and entrepreneurs of Startupland can get their heads around it.

It's also worth remembering that 55 isn't actually that old. In most developed countries, you're still good for another 20 to 30 years. That's longer than most of the children who run Startupland have been alive.

There's a smartphone generation gap, says Deloitte.

During 2014, the biggest growth demographic in smartphone penetration, at least in developed countries, will be the over-55s. By the end of the year, smartphone ownership should rise to between 45 and 50 percent. That's still significantly lower than the 70 percent penetration rate for 18- to 54-year-olds, but it represents a 25 percent increase from 2013. The gap is expected to narrow steadily, pretty much vanishing by 2020.

"But a few things need to be sorted out before that gap's going to be closed," Mason Davies, a partner within the Deloitte Digital Consulting practice, told journalists in Sydney on Thursday. "As penetration goes up, the use of data and the monetisation of that group potentially isn't changing."

There are significant differences in the way the over-55s are using their new smartphones.

Actually, a lot of the time they're not new. Many older users get their first smartphones as a hand-me-up, including Davies' mother. "All of her technology has been supplied by myself or my sister. As we have moved from iPhone 4 to 5, we've passed our technology on to her as her phone's dying, and her old PC's dying, and now she's Apple wall to wall — with all second-generation products."

When smartphones are bought new, that's often because it's hard to find anything else. Tried buying a feature phone lately?

In a survey of smartphone users in developed countries conducted in mid-2013, Deloitte found that amongst those aged 55 to 64, only 35 percent had used social networking in the previous seven days, and only 32 percent has used instant messaging. For those aged 65 and over, the figures were even smaller: Only 25 percent used IM, and only 28 percent used social networks.

The over-55s are actually huge users of social networks — on their desktop computer. Their adoption rate for mobile apps is low. Some 22 percent of the 55- to 64-year-olds had never downloaded an app at all, ever, and 28 percent of the over-65s had never done so. In 2014, Deloitte expects that a quarter of over-55 smartphone owners won't download a single app.

Why? "It can be a lack of experience with dealing with downloading apps," Davies said. With more than 2 million apps in the various app stores, it's hard to search and hard to know what might be useful. Plus, there's a nervousness about data usage and the risk of bill shock.

"As you're coming into smartphone use for the first time, actually, that's quite a difference from what you're used to, Davies said. "With a feature phone, you know what a phone call costs, you know what a text message costs, and when you're not using it, it doesn't cost you any money." And all the features came with the phone to start with.

While vendors are now providing less-cluttered modes that are intended to make smartphones easier for newcomers, a lot more can be done.

"It's a great opportunity for the carriers and for the software providers, the app providers, the app store users as well, to encourage smartphone adoption, to make them more accessible," Mason said — perhaps by collaborating to create a suite of apps that come with all-you-can-eat data plans — just as some carriers already do for Facebook and Twitter.

The key to being able to tap this huge market — in developed countries, a quarter of the population is 55 or older — is understanding that it's a different market.

"They are designed by, typically, young designers for the youth market, for the social market, and often don't have necessarily the same user interface appeal to different age groups," Davies said.

As the report puts it:

Apps developed for older consumers tend to focus on health and wellness; some remind these individuals of their diminishing faculties. There is no obvious reason why older consumers should not enjoy the same breadth and depth of services as other generations — they should just be customised to be easier to use, or at least more intuitive for older generations with application and functionalities brought to their fingertips.

It's also worth remembering that 55 isn't actually that old. In most developed countries, you're still good for another 20 to 30 years. That's longer than most of the children who run Startupland have been alive.

"This is really an area for key opportunity," said Stuart Johnston, Deloitte Australia's TMT team leader. "If you're sitting in the marketing area, or the strategy area, of a wealth management organisation or a health insurer, you'd be thinking about 'How could I tap into this untapped market?'"

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