Tech lemmings are continuing to spend money on expensive digital toys

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But Gartners’ prognosis isn’t shared by everyone….

Despite growth slowing in many parts of the world, there is something of an expectation that people will keep on spending on tech related products and toys.

Eurozone countries are in recession, China’s lightning fast growth is slowing, and the US is unable to kickstart its economy, yet there is still an expectation among  analysts that the amount spent on smartphones, tablets and other consumer tech products is only set to increase, and increase at a faster rate.

According to analysts Gartner, the amount of cash spent on technology products and services by consumers will reach $2.1 trillion.   This means a $114 billion increase in the amount spent on consumer products and service compared to the previous year.

Buoyed by increased spending on mobile devices, and the services needed to support them, Gartner says that this figure is in fact likely to continue to grow at an increasing rate over the next five years.  By 2016 around $130 billion will be added to the amount spent on tech products, eventually hitting $2.7 trillion after five years.

This seems to fly in the face of the slowing global economy, and the tightening of belts seen in many countries.  Prime Minister David Cameron recently voiced the prevalent opinion that the end of the post-2008 recession won’t be reached until the end of this decade – so should we really believe analysts saying that consumer spending is set to increase against this backdrop of widespread austerity?

The picture in the UK has not been very positive, with consumer spending down in the past year, hurting high street retailers.

According to Carl West, at market research firm GfK, spending on consumer electronics was down 18 percent in the year up to May 2012, with almost £2 billion less spent on tech related products over that period.

“I don’t think tech spending will recover until next year,” West told ChannelBiz.  “As far as positive growth on a year on year basis we won’t see anything like that until next year.”

That is dependent on economic recovery staying on track, he says, but that once the economy emerges from recession demand will ramp up swiftly.

“As we come out of the recession the suspension of spend is to going to come back in a large way, because we will have all been saving every penny for the last four or five years,” West said.

While West predicts strong growth coming out of recession with such pent up demand, any exact timing on this is open for interpretation, with dithering in the Eurozone and indecision at the G20.

Of course the UK is just one market and many areas are in a better position, but there is no deny that many of the big contributors to tech spend are feeling the pinch.

However Quocirca analyst Clive Longbottom says that economic hardship does not necessarily have a bearing on the amount spent on tech products, though such grand figures can often veer towards conjecture.

“I always worry about such figures,” he says. “By the time the dust has settled and the figures are in, then no-one cares to check back on what was said, so they are pretty meaningless in the first place.”

But he does believe that the money spent in mature regions is to varying degrees left untouched by recession, and can make up for the shortfall seen in other areas.

With the masses of content and products, there are many ways to rack up a large personal spend on hardware apps and so forth.

“$2.1 trillion equates to around $300 per person on the planet – where a large proportion earn less than $1 per day,” he says.  “Does this make it impossible?”

Apple fans, as one example, more than make up for the spend seen in less affluent companies, just by say getting hold of the latest smartphone release, even before any other products or services that can be purchased are factored in.

As many can attest anecdotally, Apple is one company where people will seemingly spend money without consideration of their bank balance, or indeed much else.

This is also true to an extent for most tech related products, particularly as consumer technology continues to become ever more pervasive.

“The economic climate seems to have little impact on spend on this sort of stuff,” Longbottom says.

“In Maslov Triangle equivalents, the digital native sees their gadgets and content as being down there with water and food.”

“So, I see no reason why $2 trillion should not be possible – but it could be $1.5 trillion or it could be $3 trillion.”

All that matters for the tech industry, he says, is that the figure will be big.


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