CAMBRIDGE, Mass.--(BUSINESS WIRE)--Jan. 3, 2006--The same consumer
technology industry that is selling digital devices at a record rate
is failing miserably at selling the additional products, services, and
content that bring those devices to life. The result, according to a
new report from Forrester Research, Inc. (Nasdaq: FORR), is that
consumer technology companies are leaving $3.8 billion in lost revenue
on the table today. Forrester's advice to the consumer technology
industry: Stop selling standalone products and start selling digital
experiences that integrate products, services, and content in a way
that's easy for consumers to buy, install, and use. This strategy has
the potential to provide an additional $13 billion in revenue in 2010.
Forrester's data illustrates the staggering gap between owning a
device and powering it with services and content:
-- 80 percent of the 18 million Web-enabled mobile phone
households don't buy data services. The revenue gap by 2010:
$5 billion.
-- 50 percent of consumers who own HDTV sets don't subscribe to
HD programming. The revenue gap by 2010: $3.4 billion.
-- Only one in four consumers who own an MP3 player buys music
online. The revenue gap by 2010: $3 billion.
-- One in three digital camera owners doesn't print these
photographs anywhere. The revenue gap by 2010: $1.6 billion.
"Consumer technology sales are broken," says Ted Schadler, Vice
President at Forrester Research. "Consumers are being forced to
assemble the different components of their digital lifestyle
themselves, and they're not equipped to do it. Retailers' traditional
approach of lining up racks of products at the lowest price isn't
cutting it. Digital experiences are too complex, and technology is
changing too rapidly."
Today, Apple Computer, with its highly successful and tightly
integrated iPod and iTunes, is the only consumer technology company
that has perfected the digital experience playbook. And while Apple is
unique in being able to control software, hardware, and content,
Forrester sees companies like AT&T, Best Buy, Hewlett-Packard,
Tweeter, and mobile retail newcomer IMO beginning to offer other
digital experience solutions.
"Apple's legacy is not just about cool products; it's about
recognizing the need for an end-to-end digital experience," says
Schadler. "The iPod's impact is reverberating across every sector of
the consumer technology industry."
Forrester believes that the most promising opportunity for selling
digital experiences lies with companies that can assemble solutions at
the point of sale. But most big-box retailers' strategies rely on
offering consumers the widest selection of products at the lowest
price. That opens the door for a new kind of nationwide retail
specialist that Forrester calls a "solution boutique."
What is a solution boutique? Think Starbucks, not Wal-Mart.
Solution boutiques -- whether online or offline -- will offer
consumers the opportunity to get an education about what digital
products, services, and content make the most sense for their
lifestyle, resulting in a complete solution. Profitability at a
solution boutique comes from the higher-margin service contracts,
in-home installation, product upsells, and service bounties.
Apple's retail stores represent the quintessential solution
boutique for PC digital entertainment experiences, but retailers in
other consumer tech industries are copying the Apple blueprint. In the
home electronics space, Best Buy's Magnolia subsidiary and Tweeter
install custom solutions. Meanwhile, mobile retail startup IMO, which
recently opened its first store in Columbus, Ohio, helps consumers
wade through the dizzying selection of mobile phone brands, service
plans, and applications.
"Every consumer technology company -- manufacturers, service
providers, installers, and retailers -- has a role to play in
delivering end-to-end digital experiences," says Schadler.
"Product-service bundles, global media and technology standards, and
nonprofit certification groups that implement and test standards are
all critical to bringing digital experiences to life for all
consumers."
More details on this subject can be found in the Forrester report
"Sell Digital Experiences, Not Products," which is available to
WholeView 2(TM) clients and can be found at www.forrester.com.
About Forrester Research
Forrester Research (Nasdaq: FORR) is an independent technology and
market research company that provides pragmatic and forward-thinking
advice about technology's impact on business and consumers. For 22
years, Forrester has been a thought leader and trusted advisor,
helping global clients lead in their markets through its research,
consulting, events, and peer-to-peer executive programs. For more
information, visit www.forrester.com.
(C) 2006, Forrester Research, Inc. All rights reserved.
CONTACT: Forrester Research, Inc.
Jon Symons, 617-613-6104
jsymons@forrester.com
SOURCE: Forrester Research, Inc.
