A dynamic and interesting year is in store for the tech industry
Technology market forecasting has never been a boring job, but the past two years have been particularly fascinating. All signs are pointing to another dynamic year ahead, as continuous short-term uncertainty mixes with the emergence of important long-term trends.
After 2020, the year of universal turbulence, came 2021, the year of walking the uneven path to recovery, characterized above all by supply shortages. Now that we’ve stepped into 2022, here are three crucial questions about this year’s puzzle that we’ll keep in mind to produce solid and realistic forecasts for the consumer device markets we analyse.
When Will Supply Recover?
Shortages — mostly of chips, but also of some raw materials and other components — held back the growth of devices including mobile phones, laptops, computers and wearables in 2021. That’s not even mentioning the trials and tribulations of car-makers. The current expectation is for this constraint to ease by mid-2022, although smaller players will take longer to resurface than the major figures.
As supply fell short of demand in the last few months of 2021, our research shows prices of mobile phones sticking, as opposed to the decreases we’ve typically seen in the past. Prices being a mechanism for demand and supply to meet, we’ll be carefully watching their development in 2022. Just because demand outstripped supply in parts of 2021 doesn’t mean that this abundance of demand will continue, especially among more price-sensitive consumers and markets. This brings me to the second piece of the puzzle.
How Will Macroeconomic Uncertainty Affect Consumer Demand?
Uncertainty about the speed and pattern of macroeconomic recovery from the pandemic remains high. In volatile 2021, forecasts were swept between optimism and caution by each new development in the pandemic, supply shortages and inflation. Now, the mood of the most recent forecasts seems to be turning gloomy. The just-published World Economic Forum’s yearly Global Risks Report 2022 talks about “pervasive pessimism”. Of course, this could all change in a few months — experts continue to highlight uncertainty as a major part of the picture.
Customers’ willingness to spend is naturally affected by events in the news, including rising energy and food prices, shortages of certain products and changes in restrictions to freedoms. It’s important to observe the effect of this uncertainty on people, and to understand their intentions; for example, buyers experiencing financially difficult times have different financial goals than those who have accumulated savings over the past two years and can choose to release some of this money.
So, we need to continue to watch people’s immediate intention to purchase new technology products and services, as well as goods in different sectors. This is one of the main focus areas of CCS Insight’s Connected Consumer Radar, published every two months.
What Are the Long-term Changes in User Behaviour?
In addition to short-term volatility in spending intention, there are lasting shifts in customer behaviour. We live in a new reality, and there’s no going back: people have re-evaluated many aspects of their lives, including their attitude to tech.
Overall, the technology industry has benefited from the changes in the past two years, as people increasingly appreciate the benefits of being digitally connected in a world where physical distance has abruptly increased.
But equally, people have more sober views of devices, with the trend of holding onto gadgets for longer continuing. Many people want to use those devices for as long as they work well, and are open to prolonging their life through repairs. There’s also a growing openness to buying used or refurbished products over brand-new ones. These trends don’t ride only on economic uncertainty and financial difficulties, but on a growing awareness of the environmental impact of consumption. These are all trends we track closely in our Connected Consumer Radar.
So, our focus will be on these three questions over the next months. Of course, we’ll also continue to follow all innovation and events in an industry where disruption and change is a normal state of affairs — we’re always prepared to add more questions to the list!
If you want to know more about our market forecasts or our Connected Consumer Radar, please get in touch with us.
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