Half of consumers to use wearables for payment by 2018

Approximately half of all consumers in mature markets are expected to use smartphones or wearables to make payments by 2018, a new prediction by Gartner says.

This is just one of many innovations impacting customer preferences in the personal technologies market, the company said, adding how mobile payment is gaining acceptance among consumers in North America, Japan and some countries in Western Europe.

"Innovation in apps, mobile devices and mobile services are impacting traditional business models, particularly in the way people use personal technology for productivity and pleasure," said Amanda Sabia, principal research analyst at Gartner. "Product managers must understand who their customers are for these new devices and services, and how the products are being used. Knowing your customer is imperative in order to capture a fair share of spending opportunities in this dynamic marketplace."

However, today’s means of mobile payment are limited, Gartner’s researchers say, as they require a large user base and lots of partnerships between retailers and financial organisations in order to work.

Cloud solutions could hold the answer.

"Any mobile payment wallets that are tied to the device will have limited adoption and only if the device has a huge installed base," said Annette Jump, research director at Gartner. "Instead, cloud-based solutions will have a better chance to succeed as they can reach a wider audience and can support many use cases beyond face-to-face or in-store options. Also, mobile payment and mobile wallet adoption requires a country-by-country rollout plan with an enabled payment infrastructure and agreement with major banks and retailers."

Gartner made two further predictions for the personal technologies market:

  • By 2018, 75 per cent of TV-style content will be watched through application-based services in mature markets

"The increasing prevalence of application-based TV-style viewing will be disruptive to the traditional pay-TV market. Consumers are already cutting back on premium pay-TV channels in favour of subscription video on demand (S-VOD) services such as Netflix and Hulu Plus," said Derek O'Donnell, senior research analyst at Gartner. "We expect that this phenomenon will continue to accelerate over the next three years, putting pressure on the revenue of pay-TV operators, particularly from premium channel subscriptions."

Pay-TV will have to rethink their strategy and provide application-based functionality for their content if they are to survive. As the mainstream market spends more time viewing TV through applications, more households will begin to "cut the cord" entirely.

  • By 2019, less than 20 per cent of users in mature markets will subscribe to mobile data-only connections

Since the launch of 3G and even more so since 4G has become the new standard for mobile broadband in mature markets, mobile data consumption has been increasing. Most of it still takes place on smartphones, but communications service providers (CSPs) have been promoting mobile data-only connections as a complement to fixed broadband accessed through Wi-Fi, when consumers need the flexibility to use their data-centric devices on the go.

"In markets where fixed broadband and Wi-Fi is widely available, and where CSPs' offerings are allowing tethering as part of their mobile offerings, the value-add of a stand-alone mobile data-only connection is harder to demonstrate," said Stephanie Baghdassarian, research director at Gartner.

"Also, when focusing on tablets specifically, it has to be noted that cellular-enabled tablets are noticeably more expensive than Wi-Fi-only versions. This is yet another inhibitor to mobile data-only connectivity uptake."

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