Trade a cell phone for a loaf of bread?
OK, it’s a little bit of gallows humor, but the idea is somewhat thought-provoking. Is technology now so embedded in the way we consumers go about our lives that we’d give up other more basic needs to get and keep it? What a difference a year makes…last Christmas, I shared some ideas for your holiday shopping, and the list was long and somewhat extravagant. 2008 brought a whole new host of gadgets and services into our lives, such as early versions of wireless HD TV’s, VoIP and Video-on-Demand for the Wii (taking advantage of the estimated 40% of the 35 million Wii consoles sold that are linked to the Internet); wireless SD cards for your digital camera for effortless photo-sharing with friends and family, streaming video from Netflix to Blu-ray disc players and Xbox 360 gaming consoles (and with CES starting today, there are clearly more new toys to come – LG video wristphone, anyone?).However, this year, we are surrounded by the wreckage of a globally challenged economy. Clearly, consumers are cutting back their spending across the board, as evidenced by early sales figures from this past holiday season. But while consumer spending during this past holiday season was down significantly, the CEA notes that for the full year, 17% of total consumer spending on durable goods went to electronics, such as cell phones (including smart phones), TVs and laptops. This total has grown significantly from the single digits in the 1970s, indicating our steadily increasing reliance on technology as a staple of modern life.Another interesting nugget is from a recent McKinsey article highlighting the effect of recessions on different categories of consumer goods. Analysis of consumer spending during the last two recessions shows that, rather than making across-the-board cuts to their spending, consumers were more likely to change their spending priorities. In particular, while some daily amenities – eating out, personal-care products and services, and apparel – tended to suffer, other categories that substituted for more expensive options, such as groceries and reading materials, actually benefited from higher spending. Given the severity of the current recession, there is clear evidence that consumers are also cutting back, but re-prioritization is still happening as well. Recent data from Parks and Associates shows that the top 3 areas where consumers are trimming their spending include dining out, travel, and out-of-home entertainment.In our increasingly connected world, where technology is growing in importance and home entertainment options continue to multiply, one might wonder if there is a potential revenue boost for service providers, in spite of the current economic challenges. As consumers cut back on going out to dinner and a movie, might they spend instead on video-on-demand (including HD) services and programming? The digital cut-over in February offers another incentive for consumers to consider investing in new entertainment options as part of their migration, especially if offered as a bundle.Might revenue per subscriber for smart phones or broadband not slow as much as previously thought, also due to a substitutionary effect? In the current economic environment, think about the effect technology can have on increasing efficiency and reducing costs in the home. Using the Mobile Internet, I can check for the best prices while out shopping. Or I can maintain close relationships with family and friends who are far away by using immersive video services, instant messaging and social networking, instead of paying for plane tickets and hotels. I can access new job opportunities or compare mortgage rates with the click of a mouse.So, what would you give up before your cell phone or your broadband connection? What part of the Connected Life can you not live without?