Smartphones, hesitant users

The U.S. leads the world in converting to mobile technology, but consumers aren’t totally comfortable with new functions.

The number of smartphones sold worldwide in 2011 for the first time exceeded the number of personal computers sold—and in a few years the number of mobile devices will dwarf the number of PCs, projected Henry Blodget, CEO, Business Insider, presenting at BI’s Ignition West: Future of Mobile Conference.

American consumers are farther ahead than the global pace in converting from dumb-phones to smartphones (46% have done so already, says Pew Research Center).  The conversion cycle has just begun internationally—835 million smartphone users compare with 5.6 billion dumb-phone users, said Mary Meeker, Kleiner Perkins and Morgan Stanley. Young adults with high incomes have the highest smartphone penetration rates in the U.S., reported Nielsen.

The seismic shift toward untethered communications includes tablets, of course, which Blodget and his analyst co-presenters Pascal-Emmanuel-Gobry and Alex Cocotas said would also surpass PC unit sales within two to three years.  Activities by mobile users (on smartphones and tablets) are surging, according to comScore data for audience growth in the 12 months ended December 2011:  online retail jumped by 94%, electronic payments by 80%, general reference by 74%, and health information by 134%, for example.  Nearly four consumers in ten (38%) have used smartphones to buy products or services, added comScore.

“The really interesting stuff people do on mobile is what they don’t do online—apps,” stated Blodget.  Apps have grown at a 100% annual rate to reach $10 billion in market value, estimated BI, Mary Meeker and Kleiner Perkins.

Despite mobile’s rapid penetration in the U.S., there are behavioral barriers to consumers’ full use of this technology.  Two out of five U.S. consumers (40%) said they have never scanned their mobile or smartphone for any reason, and 45% said they lack a scanning capability, according to findings of a Harris Poll conducted this winter.  Just 3% said they ever scanned their phone to pay for a convenience item such as coffee, for example.

There’s a lack of comfort with scanning, the findings suggest.  Just four out of ten (39%) said they are comfortable using a mobile app that would allow them to make purchases at a retailer or company as they would with a gift card; of those, only 15% said they were “very comfortable” and 24% said “somewhat comfortable.”  Another 47% expressed discomfort, and 14% weren’t sure, noted Harris.

Generations differ greatly in their comfort level with this scanning behavior:  Among Echo Boomers age 18-35, 48% said they are “very/somewhat comfortable.”  By contrast, 42% of Gen X age 36-47 felt this way; 35% of Baby Boomers age 48-66 said this; and just 24% of Matures (age 67+) said the same.

F3 believes these insights place the onus on retailers who want to attract mobile commerce to build confidence in their process—play up consumers’ control of purchases, easy return policies, security safeguards, and other positives.

The Harris Poll also asked if mobile would eclipse cash payments for most purchases.  While 30% said it would never happen, 3% said it would happen within one year, 13% within one to three years, 18% within three to five years, 21% within five to ten years, and 15% within ten years or more.