The analyst firm is advising the industry to start selling
digital experiences that integrate products, services and content
in a way that is easy for consumers to buy, install and use.
According to the report, Sell Digital Experiences, Not
Products, 80% of the 18 million web-enabled-mobile phone
households do not currently buy data services – a discrepancy that
will create a revenue gap of $5 billion by 2010. Half of those
consumers who own HDTV (High Definition TV) sets do not subscribe
to HD programming. The revenue gap in this sector will be $3.4
billion by 2010, says Forrester.
The report also looks at MP3 players. Only one in four consumers
who purchase an MP3 player actually buys music online – a missed
opportunity that could cost the industry $3 billion in revenue by
2010.
The position is the same in the digital camera sector. One in
three owners of digital cameras do not print their photos anywhere.
Failing to capitalise on this market could lose firms $1.6 million
by 2010, according to the report.
"Consumer technology sales are broken," said Ted Schadler, Vice
President at Forrester Research. "Consumers are being forced to
assemble the different components of their digital lifestyle
themselves, and they're not equipped to do it. Retailers'
traditional approach of lining up racks of products at the lowest
price isn't cutting it. Digital experiences are too complex, and
technology is changing too rapidly."
The report identifies Apple Computer, with its highly successful
and tightly integrated iPod and iTunes, as the only consumer
technology company that has perfected the digital experience
playbook. But while Apple is unique in being able to control
software, hardware, and content, Forrester sees companies like
AT&T, Best Buy, Hewlett-Packard, Tweeter, and mobile retail
newcomer IMO beginning to offer other digital experience
solutions.
"Apple's legacy is not just about cool products; it's about
recognising the need for an end-to-end digital experience," says
Schadler. "The iPod's impact is reverberating across every sector
of the consumer technology industry."
Forrester believes that the most promising opportunity for
selling digital experiences lies with companies that can assemble
solutions at the point of sale. But most big-box retailers'
strategies rely on offering consumers the widest selection of
products at the lowest price. That opens the door for a new kind of
nationwide retail specialist that Forrester calls a "solution
boutique."
What is a solution boutique? Think Starbucks, not Wal-Mart, says
Forrester. Solution boutiques – whether online or off-line – will
offer consumers the opportunity to get an education about what
digital products, services, and content make the most sense for
their lifestyle, resulting in a complete solution.
Profitability at a solution boutique comes from the
higher-margin service contracts, in-home installation, product
upsells, and service bounties, says Forrester.
"Every consumer technology company – manufacturers, service
providers, installers, and retailers – has a role to play in
delivering end-to-end digital experiences," says Schadler.
"Product-service bundles, global media and technology standards,
and non-profit certification groups that implement and test
standards are all critical to bringing digital experiences to life
for all consumers."
