Now that the US retail push around Black Friday and Cyber Monday has passed, there are some worthwhile comments to make about market trends. It is not so much that either of these days provide us any special, unique insight into consumer demands, but they are underscoring more and more an important consumer trend that is decidedly solidifying. Mobile shopping, not deep discounting alone, holds the real key to consumers' attention. Why should we care about this fact? Simply because how people shop IS now directly relevant to our industry growth and demand cycles.
Mobile still strong
Whether or not you want to debate the lifespan of smartphones and tablets, what you cannot discount after the past long weekend in the US is the fact that mobile devices were the leading driver of retail sales.
According to multiple analysts' reports on the US trends after the Thanksgiving weekend shopping, online shopping, especially from mobile devices, are driving retail sales with consumers showing definite increases year-over-year. According to Adobe's 2014 Digital Index Online Shopping data for Cyber Monday, online sales were up 16% year-over-year overall and among top retailers, the increase was even greater at 25% increase equaling nearly US $1.8 billion.
The value of this insight is that clearly there will be additional attention paid by retailers to improving their online and mobile application marketing. What that means for the semiconductor and electronics industry is an increased focus on enterprises' back-end (servers, data storage, etc.) in order to provide customized, online/in-app shopping experiences (read: real-time, big data analytics for more sophisticated, targeted email and in-app purchasing support).
Beyond the enterprise equipment and improvements opportunities for our industry, there is also the caveat that mobile devices (smartphones and tablets alike) may be in the hands of many, but their growing importance and dominance in how consumers now choose to shop (among other activities) is still on the increase. That opens the door to the debate as to whether smartphone demand has reached a saturation point or whether continuous improvements by device OEMs won't still tempt consumers seeking ever-improved mobile experiences and seamless SmartLife, ubiquitous computing.
Battleground firmly in consumers' hands
While we can read through the back-and-forth over what exactly various sales numbers were (or weren't – as many saw less than stellar numbers this year), and what that portends for retailers and different industries, for our purposes there were clear signs of new dominant trends. Rather than telling us of the fate of various consumer electronics devices themselves, the trends that are revealing focus on the significant increase in HOW consumers are shopping over what they are actually purchasing.
Clearly, consumers are showing their preference for bargain hunting through their mobile device apps over standing in lines and shuffling shoulder-to-shoulder in the cold to grab a deal. The trends are clearly showing that mobile sales are the present and the future. According to the Financial Times, "mobile sales increased by a whopping 29.3 per cent to account for one in five transactions, a trend echoed by figures released by Walmart, the world's largest retailer by sales."
What these data are telling retailers is that the effort in marketing and promotions is best rewarded through direct email and providing feature-rich mobile applications. As another Financial Times article cited Calvin Silva, senior retail analyst at Nasdaq Advisory Services, "The winners and losers of Cyber Monday this year will be defined by those who have invested in their online operations, be it targeted emails, personalised [sic] deals and greater attention to their mobile platforms. As apps get more advanced and screens get larger, sales conversions are soaring and this will only continue."
Future mobile growth positives
Beyond these US data and mobile outlooks, we are also seeing similar trends for increased mobile growth in emerging markets. As IC Insights reported in mid-November, cellphone subscriptions continue to grow and globally the numbers are expected to reach 7.5 billion. According to the report, the extremely high number is because of the many users who "purchase different SIM cards and therefore different phone numbers for cities they often visit (to get cheaper phone rates)." What this does underscore is the continued build-out of networks by service providers which will support growth in communications and network markets in the semiconductor and electronics industry.
On December 3rd, IC Insights released a new report underscoring the significant growth worldwide in IC sales through 2018, driven by IoT and cellphones.
The total production value of electronic systems is projected to increase 5% in 2014 to $1.49 trillion and climb to about $1.82 trillion in 2018, which represents a compound annual growth rate (CAGR) of 5.2% from $1.41 trillion in 2013, according to IC Insights [...]. the new 480-page report shows cellphones extending their lead over standard personal computers (desktops and notebooks) as the largest electronic systems market in 2014 after overtaking PCs for the first time in 2013. The report also shows the cellphone market extending its lead as the largest end-user IC application in 2014, accounting for 25% of total integrated circuit sales in 2014 versus standard PCs representing 21%.
Adding these data to the existing industry understanding of end-device markets and trends, there is strong reason to be very positive about the 2015+ forecast for mobile, whether for devices, network infrastructure, extended connectivity across more devices (M2M), or service (includes servers and back-end support) providers both for connectivity as well as retailer service providers. The IoT growth is rooted in mobile devices, especially smartphone and tablet devices, as the central point through which consumers engage and govern their SmartLife experiences. With that in mind, the boost to IC sales as well as related component categories is significant, as IC Insights and other analysts herald.