Is Communications Spending Growing, or Not?

As a practical matter, it often is difficult to ascertain whether consumer or business spending on particular communications services or products, though up or down in nominal terms, actually represent growth or decline. The reason is that nominal increases in spending over time sometimes reflect broader price changes in the whole economy, rather than changes in demand or spending as a percentage of total spending.

Also, even nominal spending can be deceptive. If a flat dollar amount of spending over time also is accompanied by large decreases or increases of overall income, for example, the nominal spending can disguise “real” changes.

Ignore for the moment changes in product value or features over time that also complicate comparisons. If “X” amount of spending on any product also is accompanied by significant changes in a household or national budget, for example, then the implications can be quite significant.

As a percentage of spending, a flat amount automatically will represent a larger percentage of spending.

In other words, the product of a fraction always changes as either the nominator or denominator changes. That noted, it is possible that spending patterns are changing, for the first time in decades. There is evidence that between 2007 and 2010, for example, U.S. households were spending much more on “telephone equipment,” which has to represent purchases of mobile phones. That should, in principle, lead to higher spending on mobile communication services.

There also was a predictable increase in spending on “communication services,” which probably reflects increases in video subscription rates, plus some incremental spending on mobile services for all those mobile devices people seem to be buying.

Keep in mind that those percentage increases might, or might not, represent a significant change in the percentage of household spending on services or devices.

Logic might suggest that most people do not spend much, in any given year, on fixed line phones or fax machines, for example.

So a 16-percent change on a small base might not represent much actual sales volume. A four-percent growth of spending on “information processing” equipment, which presumably includes personal computers, tablets and possibly other personal mobile devices, might represent a bigger change in dollar volume. 

On the other hand, logic also would suggest that people are spending more on tablets and smart phones, which could mean they are maintaining spending on legacy products, and adding new devices (increasing spending overall), substituting new products for older products (substituting new products for older products), or cutting back someplace else in budgets to add the new products. 

Looking back at the 1990 to 2008 period, for example, one can note “huge” increases in nominal consumer spending on communications and information technology.  

Since 1990, though, those changes also  have been more than matched by broader increases in household income, holding the percentage of household spending on communications flat over the entire period.

One might also note that such figures also are not typically “inflation adjusted” to show changes in constant dollar terms.

Since 1990, consumer spending on information and communications technology has grown from $197 billion to $545 billion, 5.1 percent of national disposable income in 1990, peaking at 5.9 percent in 2000, and falling to 5.4 percent in 2008. Those figures include both recurring spending on services and product purchases.

Spending on communications services has tripled over the same period, from $77 billion to $243 billion, and at 2.3 percent of national disposable income, up from 1.8 percent in 1990 but below its peak of 2.5 percent in 2001.

Basically, the story is one of large increases in consumer value. Consumers are spending more on communications and information technology, but a steady percentage of disposable income. Yet consumer value has grown exponentially in the intervening years, one might argue.

The problem is that changes in product quality are not reflected in retail price metrics. That is a common “problem” where we look at software and computing devices, where a constant dollar amount buys more processing power and features every 18 months to 24 months.

U.S. communications expenditures as a share of national disposable income has been flat since 1997, but users have added over 100 million broadband and video connections and over 100 million wireless connections, according to the Bureau of Economic Analysis.

Such potential changes bear watching. It would be a very-big deal indeed if typical consumer spending on communications services and mobile devices were to deviate from their historical patterns in a markedly upward direction.

One might argue we already have seen a slight upward trend, measured as a percentage of total household spending. The other angle is that communications spending always will represent a very-small fraction of overall household spending, dwarfed by housing, food, medical care and other categories, for example.

Ultrabooks, Not Tablets, will be Center Stage at CES

The upcoming Consumer Electronics Show will likely be dominated more by "ultrabooks" than tablets, though some might say "ultrabooks" are the latest iteration of the notebook form factor and user interface, not a "distinct category" of devices.

That's okay. People clearly are getting used to devices that boot up fast, and a slim notebook that boots fast is a definite improvement. Others would note that "ultrabooks" draw inspiration from the Apple Mac Air, and that's okay as well.

Among the advantages tablets demonstrate to most users is that they boot up fast. CES


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People Like Siri, but Don't Use It

By my non-scientific survey of family members who use iPhone 4s, Siri is deemed interesting, but it doesn't get used. I find the same thing to be true of Google's "voice search" on my Androids. I think the speech-to-text function works remarkably well. I enjoy having the feature.

But I typically still type in Google search terms. I can't explain why all of us seem to be using text input where speech input is available. In my case I've had the feature for two years, and never have abandoned text entry when searching.

You might argue that Siri is a better, more natural way to "ask questions," rather than "a way to search." But it doesn't seem to have changed behavior much.

 

Growing Roles for Devices for Mobile Commerce, Content

A January 2012 Apple event will focus on the Apple iBooks platform, observers are speculating.

Robust Kindle Fire sales over the month of December (Amazon already has said it sold four million of the devices before the end of December 2011) illustrate both the role of content consumption and mobile commerce as lead applications for tablets and other mobile devices.

Separately, Apple says it will hold a media event in late January 2012, with speculation that it has something to do with either advertising or content. That would illustrate the growing content consumption role of devices in general, with a strong tie to mobile commerce.

The Kindle Fire interface, for example, features tabs for “Newsstand, Books, Music, Videos, Docs, Apps, Web.” That is perhaps the most-logical way to organize a content consumption device.

But each tab is a gateway to commerce, namely, the ordering of new content to put in user libraries.

Kindle Fire users seem quite happy with the product, in general, according to analyst Gene Munster.

Piper Jaffray analyst Gene Munster said half of the 8,529 Fire reviews he surveyed gave the tablet 5 out of 5 stars, compared with 48 percent of those polled who gave the tablet a 5-star review on 13 December and 47 percent who gave the tablet a 5-star review on December 8, 2011.

The point is that both content consumption and commerce are becoming defining features of most mobile devices. We have been fond of saying mobile phones have become "computers."

It might be more appropriate to say they have become content consumption and mobile commerce platforms.

Google+ Keeps Growing, Despite Skepticism

A reasonable person could have argued, and many did argue, that the "world does not need another social network" when Google+ launched.

Many predicted Google+ would fail. That doesn't seem to be happening. According to Experian Hitwise, Google+ not only has grown significantly since the summer 2011 launch, but has hit a record new peak of visitors in December 2011.

One hears almost nothing, in early January 2012, about Google+ "failing" to get traction.

Sprint Grants LightSquared 30-Day Extension

Sprint Nextel Corp. has given LightSquared a 30-day extension to a Dec. 31, 2011 deadline to get Federal Communications Commission clearance to operate its network. It isn't quite clear what the extension means, as Sprint could simply grant additional extensions. Nor do most believe LightSquared can get FCC approval that quickly. GPS industry interests are adamant in their claims that LightSquared will cause interference with some GPS receivers.

Getting FCC clearance is a condition of a 15-year spectrum-and-equipment-sharing deal between the two companies, allowing LightSquared to use the Sprint national network, and giving Sprint rights to user LightSquared spectrum. Sprint Grants LightSquared gets 30 more days

Tumblr Changed Blogging

If you have been blogging a while, you probably noticed Tumblr. Tumblr, though perhaps a better platform for visual content than for text content, nevertheless seems to have changed the way most of us think about blogs.

Expectations have shifted from text to images, while the use of "tiled" layouts also have become an issue. Tumblr made a difference It remains unclear to me whether Tumblr formats, though much better looking, as a rule, are as workable as more-linear text formats for text-rich content.

Most Tumblr content tends to consist of shorter text elements, with better use of images. That works fine for many purposes. I'm not so sure it works as well for content that is mostly narrative in scope, where search is helpful and when it might be useful to know, quickly, what other users have consumed.