Welcome to “Ones and Zeroes,” Crain Communications’ weekly article that separates Silicon Valley’s winners and losers by the numbers. Taking a cue from the binary code that underlies the tech business, positive developments rate a “One,” while negative news earns a “Zero.”
Zero: Uncertain economic conditions take the shine off tech spending outlook this year
Technology markets are in for a “rocky ride” over the next 18 months because of unpredictable and rapidly-shifting economic conditions in various regions of the world, International Data Corp. stated in a press release.
Global spending on information and communications technology (ICT) is set to rise by 3 percent in 2017, IDC predicts. While up slightly from 2 percent growth in 2016, this rate of expansion represents a significant deceleration from the 5 to 6 percent annual increases maintained from 2012 through 2015, the market research firm noted.
Major market headwinds are blowing in from China, which is undergoing a phase of economic transition and restructuring. China’s tech spending will slow to 5 percent this year, down from 9 percent in 2016. IDC also cited the impact of Brexit on the U.K.’s tech spending as a factor contributing to market uncertainty.
On the plus side, rising spending in the key emerging markets of Brazil and Russia will propel the expansion of the business this year.
One: Video streaming demand flows in the United States
When it comes to their television-watching habits, U.S. consumers long have been loyal to paid-TV services, like cable and satellite. However, times are changing, with more and more viewers tuning in to an alternative form of entertainment: streaming video offerings from companies like Netflix and Amazon.
The trend now has reached a major milestone, with the percentage of streaming video subscribers in the United States virtually tying the number of paid TV subscribers in 2016, according to the Consumer Technology Association. A total of 68 percent of U.S. viewers subscribe to free or paid streaming video, compared to 67 percent for paid TV, the CTA said.
“More and more consumers are embracing the freedom of connectivity – in this case, the anytime/anywhere access to video content,” said Steve Koenig, senior director of market research for the CTA, in a press-release statement. “This is one of the driving trends of our time. We expect streaming subscribers to surpass paid TV services–and by a fair margin–in the next year or so.”
Zero: Most homes remain unconnected
Technology companies have been promoting the idea of the “connected home,” which consists of a suite of household devices and services that are linked together. Connected homes offer a technological experience, where devices can respond to preset instructions and can be remotely operated by mobile apps.
However, most consumers haven’t quite warmed up to the concept, with only about 10 percent of households in the U.S., the U.K. and Australia having connected home solutions in the second half of 2016, according to a survey conducted by Gartner Inc.
Gartner described the connected-home market as still being in an initial phase.
"Although households in the developed world are beginning to embrace connected home solutions, providers must push beyond early adopter use," said Amanda Sabia, principal research analyst at Gartner, in a press-release quote. "If they are to successfully widen the appeal of the connected home, providers will need to identify what will really motivate current users to inspire additional purchases."