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4th Wave Consumer Study

• October 2013

to wallets. as well as scaling of WAN connected tablets (72% of postpaid gross adds with ATT). and even health care innovations are now becoming matter-of-fact solutions. simpler. We have seen accelerating adoption of point to point solutions. to home surveillance. The “Fourth Wave” of innovation has clearly become the talk of the tech industry. The results were surprising! For further inquiries. The “George Jetson” era has arrived. All respondents completed 3-question battery to ascertain early adopter or you can reach Dave directly at Dave@Sprosty. The Sprosty Network leaders have been working where disruptive connectivity meets the customer experience in the Fourth Wave arena for years. the consumer is now starting to embrace connectivity and adopt numerous “Fourth Wave” solutions. to garage door openers. as consumers expect instant access as a way of life and we see products becoming © 2013 The Sprosty Network 2 . the customer experience and expectation in connectivity has been revolutionized. to thermostats. • Quantitative surveys of mobile technology early adopters The methodology for defining for the survey participants as Tech Savvy’s: Ages 25 to 54 with at least $50K income with a mix of male and female. With the emergence of players in Connected Home.4th wave early adopter and tech savvy consumer surveys Over the past two years. so we are collaborating with Chetan Sharma Consulting to ask early adopters if they are ready for the next wave of solutions. We asked them what products they are likely to buy. The mobile phone has become the remote control for our lives and everything from door locks. 240 completed (59% completion rate) and participated in survey. Connected Car product domains for comparison and asked participants to rate their likeliness to buy if the pricing was right. the OS’s. M-Health. and the shopping experience? What do they see as the top stories? How did the predictions of our industry experts measure up against tech-savvy early adopters? This study with early adopters enables better understand their level of interest in the new products on the horizon to connect their lives. with new innovations in connectivity hitting the market from every direction as new players emerge. how happy are they with the operators. 410 respondents attempted battery. Connected Health and Wellness. connected and hopefully. Very Early and Early Adopters (Tech and Early Adopters who purchase technology prior to the curve with high ownership of numerous connected devices (Participants averaged 4 connected products each) 64% rated as very advanced mobile user and 22% rated as advanced mobile user and over 80% were tablet owners We broke down the fourth wave into Connected Home. Mobile Enablers and Connected Car. email info@Sprosty.

plumbing leaks. and when your children return from school. even early adopters have growing concerns regarding privacy and the backlash. allowing you to stay home when you are sick rather than take a trip to the hospital/doctor and connected and wearable fitness. and Ubiquitous Home Content (the ability to move content from device to tablet. there are also good signs for the future with car Wi-Fi and satellite radio. power outages. We also found that 70% of consumers disagreed very much or somewhat that the carriers are looking out after their best interest. Home Security and Surveillance (easy monitoring of windows/doors managed from your mobile phone or other devices. with over 70% interested and 34% very interested in auto diagnostics.g. consumer electronics. (Application that collects solution that collects your current and past workout information from you home exercise equipment) Average interest was in the 50% range. In Connected Health and Wellness. FOURTH WAVE SOLUTION INTEREST: There is encouraging interest in all solution domains of the fourth wave.. with Connected Home leading the pack. This includes knowing about: Power failures. Home Energy Management/Safety (Home energy function efficiency detection (e. © 2013 The Sprosty Network • • • • 3 . (Products that wirelessly monitor your parent's medical status so they can stay in their home longer as they age). natural gas issues. and locks (locked/open). They see this as the top story in mobile for the year on survey 1 and in survey 2. which includes solutions like Aging in Place. lights (on/off). Broken down individually. etc. which was surprising for such new value propositions that are not clearly understood by the market Connected Car had the top scoring individual value proposition. or trade off of data privacy was worth the value of offers for better managing their life. household appliances. doors and windows. inside temperature. You would personalize how you monitor these things by using your smart phone or tablet. Connected Home had strong interest in all four solution sets which included Automated Home (Connected wireless home services monitoring thermostat. water heater function. In Home Health Monitoring (Product that monitors your recovery progress from home by using mobile technology. to TV easily) +65% of tech savvy’s are likely or very likely to purchase a connected home product on average. HVAC. We introduced Completely Connected to the participants as the ability to have instant access to digital information about the most important things you have in your home and your day to day living. lights. nearly 50% of the group disagreed or disagreed very much that the value equation.Summary Findings • PRIVACY BACKLASH AND TRUST: Even with the advances in convenience with solutions such as Google Now.

followed by home improvement stores like Home Depot and Lowes.Summary Findings • SHOPPING EXPERIENCE FOR CONNECTED PRODUCTS: When we think about retail. Connected Health and Wellness had the biggest anomaly. The Bricks and Mortar channel winners were different by domain. How do customers prefer to interact with the complex product at point of sale? Customers still don’t really enjoy the process of purchasing a mobile phone. Brick and Mortar and Web/Mobile Commerce. NPS and Satisfaction: The level of satisfaction with carriers versus OEM’s is surprising. While Samsung beat Apple by 110bps in satisfaction and by 30 bps in willingness to recommend. such as Sears and CE stores like Best Buy. Tablets which are a simpler transection. Bricks and Mortar moved closer to 50% and Direct from Manufacturer was the top alternative in bricks and mortar. The need for consultative interaction may have driven the lead in preference in full line stores with installation. Even with Tech Savvy’s. were the inverse. Connected Home bricks and mortar preference was over 65% on average. validated by the point that over 50% of them disagreed or strongly disagreed that purchasing a mobile was a reasonably enjoyable experience. and what is their take on m-commerce and mobile at point of sale? First. how to they feel about the current complex sale in mobile. Where will the consumer prefer to purchase. Sub-Par Experience: Consumers do not like the experience they are getting at point of sale. where do customers prefer to purchase these “fourth wave” complex solutions? Bricks and Mortar is the optimal channel. © 2013 The Sprosty Network • • 4 . Full line stores took the top spot for bricks and mortar and usage based insurance was the only product where the web exceeded bricks and mortar for preferred channel. the real surprise was seeing their top box scores nearly double the operators. however. it is on two fronts. the preferred channel across domains was bricks and mortar stores over web sites. where the where the split of web vs. It is interesting that even tech savvy’s valued service as the #1 consideration even over price in the process of purchasing a complex mobile product that includes service in the selling process. • • • • Connected Car.

Privacy is the new hot button with consumers. Our price elasticity research (not shown) validates that people are willing to pay for connecting their life. 5. 7.Our top ten findings 1. but tech savvy’s do not yet understand the value equation of disruptive products like Google Glass enough to drive scale. battery life still rules! There are Apple lovers and a sizable segment of Apple “dislikers” The early adopters have trouble trusting the operators 10. Auto Diagnostics was the top “likely to purchase” “Connected” value prop Bricks and Mortar is the top channel for procurement of Connected Home The value equation for usage based insurance is still not enough to drive scale 6. © 2013 The Sprosty Network 5 . 8. likely due to recent publicity The early adopter is ready to open their wallets for new “Connected” products 3. 4. 2. Tech Savvy’s value service even over price in complex transactions like mobile Even with the plethora of new innovation in phones. 9.

I don’t mind that by knowing where I am now. and my upcoming calendar events. retailers. tech companies. and service providers can have ways of using data to find out my current circumstances and make offers for these circumstances based upon my recent purchases. make recommendatio 19% 23% 22% 32% Agree very much Agree somewhat Neither disagree nor agree Disagree Somewhat Disagree Very Much 0% 10% 20% 30% 40% 50% Will value propositions like Google Now overcome this growing concern? © 2013 The Sprosty Network 6 . retailers. can tell me I may need to leave to leave early and offer best route to take based upon traffic conditions. where I tend to go. etc.Privacy: use of mobile “big data” not a given 7% 25% 20% 23% 25% 4% I am fine with the fact that tech companies.

“Connected Home” leading the pack. Automated Home Home Security & Surveillance Home energy Safety/Cost Wellness Aging In Place M Health. Monitoring Wellness & Fitness Auto Diagnostics Usage based Insurance Ubiquitous Content © 2013 The Sprosty Network 7 .4th Wave Solutions intent to buy scored well with early adopters.

Website fared well in health and UBI Automated Home Home Security & Surveillance Home energy Safety/Cost Wellness Aging In Place M Health. Monitoring Wellness & Fitness Auto Diagnostics Usage based Insurance Ubiquitous Home Content © 2013 The Sprosty Network 8 .An aggregate of bricks and mortar was surprisingly the top connected channel.

Consumers continue to dislike the process of subscribing. confirmed by the rare demand for service over price Gaps in the activation and contract approaches could be driving the significant delta between tablets (price) and phones (service) Mobile Phone Retailer Tablet Retailer Question Procuring a phone is reasonably enjoyable/fun experience Disagree very much 22% Disagree somewhat 34% Agree very much 4% © 2013 The Sprosty Network 9 .

Consumers were tough on the carriers… 70% disagreed very much or somewhat that the operators are looking out after their best interest. Question I believe that mobile phone carriers are looking out for my best interest Disagree very much 36% Disagree somewhat 34% Neither agree nor disagree 20% Agree somewhat 8% Agree very much 1% © 2013 The Sprosty Network 10 .

but doubles them on “dislike” © 2013 The Sprosty Network 11 . it’s either love or hate relationship… Question Disagree very much Disagree somewhat Neither agree nor disagree Agree somewhat Agree very much I love Apple products I love Microsoft products I love Android system products 13% 6% 4% 9% 13% 9% 16% 31% 35% 30% 35% 33% 32% 15% 19% …as Apple clearly bests Android and Microsoft on the “love”.Tech savvy’s are not sitting on the fence with Apple.

Most desired phone improvements. increasing battery life was most chosen improvement across all OEM’s …Speed of data was a distant second © 2013 The Sprosty Network 12 . Battery life still rules Even with all of the advances in applications and features over the years.

The lack of a clearly defined value proposition makes it difficult to drive a mutually beneficial exchange of value in the eyes of the unaware consumer. © 2013 The Sprosty Network 13 .Willingness to purchase Google Glass lines up differently than wearables as a whole. which made the top 5 in study #2 Interest in shelling out $ Google Glass was low-moderate. Willing to purchase was 42% Top 2-box (8% Top Box) at $99 Somewhat Likely Very Likely While consistently low. as it typically occurs with products prior to launch. we saw only a 30bp difference when halving the price from $499 to $259 2% 4% 11% $499 8% 34% 16% $249 $99 Hypothesis: This is consistent with our other price elasticity studies. Seeing and touching this product may be essential.

© 2013 The Sprosty Network 14 .Fun Facts – Perceived category with most spend 2013 The perception amongst tech savvy’s is that they are spending more on apps than messaging or voice.

Fun Facts: Percentage of “paid for apps” for phone & tablet Mobile Phone Tablet Predictably. © 2013 The Sprosty Network 15 . They are more likely to pay for smartphone apps. customers have a mindset for free apps versus paid on tablets.

Incubation • • • • • • • Brand Positioning Channel Benchmarks Channel Management Ecosystem Positioning Strategic Partnerships Business Model Market Positioning • • • • • • • How do we do it? Why we’re different Our Services Go To Market & Distribution Customer Experience Transformation Customer Needs Integrated Solutions Experience Design Retail Op Model Connected Assortment Assortment & Solutions IT Integration • • • • • Industry Retail Focus CTIA LMS & Training Platform Industry Certification Train the trainer Industry Customer Focus Specialized Interim Talent • C Level • Officer Level • “Two in a box” on-thejob learning • Vendor Partnerships © 2013 The Sprosty Network 16 .The Sprosty Network: Building connectivity businesses Why do we exist? We thrive in the connected world and continually revolutionize how retailers and tech companies execute connected consumer solutions at all industry levels We are known for disrupting status quo by relentlessly focusing on the consumer POV and iterating quickly. We build connectivity businesses all the way to execution and run them. Product Development & Solutions Commercialization • • • • • • • Private Label Value Proposition Solution Development Business Requirements Product Roadmap Sourcing Strategy. we know what works. what doesn’t and have the relationships to accelerate scale. As operators. Our hands-on approach to commercialization and go-to-market gets to the money faster.

We are known for using customer data and employee insights to simplify the connected solution value chain Channel Fulfillment Platforms Security Home Monitoring Energy Mgt. Retail Footprint Telematics Customer Experience e and m commerce Applications Carrier M-Health Call Center / Chat MSO Solution Environment Truck Rolls Service Delivery © 2013 The Sprosty Network 17 .

We provide specialized wireless and mobile talent from manager to C level on an interim basis for companies that need help building a new business in the connected world Specialized Interim Talent © 2013 The Sprosty Network 18 . Leveraging customer data and insights. including Private Label. • Customer Experience Transformation: Product Development & Solutions Commercialization Customer Experience Transformation • Go to Market and Distribution: We identify the best of breed service providers and solutions companies to design product and services pipelines. and many other key • Specialized Interim Talent: players to assure that the Retail customer experience is always a consideration by gathering insights and building industry ordained Retail capabilities and training. we design customer value propositions. We create complementary assortments for profitable scaling across multiple channels and can run those channels their behalf. We see around the corner to transform and forklift in new integrated customer experiences. Go to Market Distribution Industry Retail Leadership • Industry Retail Leadership: We partner with CTIA. assortments and optimal operating models and can continually manage the business to success or turn it over. bundles and solutions together with partners. then build connected products. Our strength lies in our ability to execute on behalf of our clients to improve chances of faster scale Services based on customer needs • Product Development & Solutions Commercialization: We identify gaps in consumer assortments and design value propositions.Our Services build connectivity businesses We are operators who take your business all the way beyond execution to run the business.

Germany. Brazil. China. Peru. Canada.Thanks to John Tidwell • • • • • • • • • PhD in Psychometrics from University of Delaware Co-author of five publications in consumer behavior Over 20 years of experience in Market and Social research International mobile market research experience in Argentina. United Kingdom Over ten years experience in Mobile market research Seven years Director of Consumer Market Research at Nextel & Sprint Other experience in Financial Services and Manufacturing Adjunct professor in Statistics at Shenandoah University Masters degree in Public Policy from University of Delaware © 2013 The Sprosty Network 19 . Mexico.