Last year, consumers spent $2 trillion (out of a global GDP of $70 trillion) on communication and entertainment services and products, according to market research firm Gartner Inc.
The biggest chunk, $1.2 trillion was spent on “paying the bills” — phone bills, broadband bills, cable bills etc.. while only $600 billion was spent on buying devices — mobiles, laptopos, TVs etc..
Content and software (other than what is included in routine subscription such as cable TV) made up the remaining $200 billion. Out of this, half was purely video and the other half comprised of software, music, books, apps etc., it said.
The spending will rise by 5% this year to $2.1 trillion, Gartner added.
In its report, Gartner advised firms who concentrate on just one segment — such as mobile operators or gadget-makers — should take advantage of evolving technology to move in to others.
“While a vendor can be a leader in specializing within just one segment of the consumer wallet, there are a mounting number of examples that suggest diversification may be the optimal path forward in the consumer electronics industry,” said Amanda Sabia, principal research analyst at Gartner.
“Vendors that diversify their offerings across multiple consumer spending segments earn revenue across the full ecosystem and take legacy services to transform to newer products and services.”
“The challenge to vendors choosing to be hyperfocused on one wallet spending segment is the relentless pursuit of innovation required to maintain segment sales leadership in this one specific segment,” Mikako Kitagawa, principal research analyst at Gartner, said.
“There are two ways to achieve leadership in this instance: by diversifying the portfolio suite of offerings and by expanding the target audience or usage model of the products and services.”
Vendors choosing to diversify into other consumer spending segments can benefit from the fact that consumers are increasingly using alternative services that will move their spending from one segment to the other, such as fixed voice to mobile voice; fixed broadband to mobile broadband; physical content, such as CDs, DVDs and books to online/digital version, it pointed out.