Why are global tech brands building ecosystems?
Author: Maria Alejandra Lopez
The recent Apple launch illustrates how global tech businesses are trying to build brand ecosystems to entice and retain consumers within their brand base. Apple TV+ streaming service has been launched and is being offered free for a year with the purchase of an iPhone, iPad, Apple TV or Mac highlighting how expanding into services and software is being used to help support hardware sales. Building brand loyalty across multiple devices and getting consumer ‘buy-in’ to the benefits to inter-connectedness are key strategies for businesses continuing to seek growth.
With the excitement surrounding tech launches we would be forgiven for thinking most people already own most tech hardware and that there is little room for growth. However, longitudinal tracking insight from Kantar shows that owning more than 3 devices in the US is still increasing year on year, whether this is smartphone, tablet, laptops or wearables, and ownership is just as high in UK. Kantar’s Global Client Director, Dominic Sunnebo comments «As the range of devices available increases we are seeing growth in multiple-device ownership with over a third of the US population (+4% yoy) and 42% of UK population owning 3+ devices. Almost 10% of the US/UK populations own all four types of device.»
With so many different device categories with multi-functional purposes available, it is important to understand how customers are using each device differently, their device activity preferences and where the overlap lies. Potentially the most obvious duplication of usage is between laptop and tablet. There has been much debate over whether tablets will replace laptops and if this is what consumers want. It seems that approximately half of all owners only own one device and half own both. Understanding the usage of their devices helps to explain what purpose each device serves to consumers. For those who own both devices tablet usage is skewed heavily towards entertainment (playing games/video calling/streaming tv & music), whilst the laptop is primarily used for online shopping and document editing. That said, iPad Pro, compared to other main competitors, stretches consumer usage, with a higher proportion of owners using their tablet for content viewing from Music to TV/ Films, creating/editing documents and shopping. Sunnebo adds, «In a nutshell, laptops are used as a productivity tool and tablets for entertainment. As innovation moves tablets closer towards enabling productivity activities; with detachable keyboards, bigger screen sizes and stylus utilization etc., the balance in multiple-device ownership is likely to shift in future».
Coming back to brand ecosystems, the big question is, can they really help build brand loyalty?
Comparing Operating Systems in the US and UK, Apple has the highest level of owners with 3+ devices in their OS Eco-system at 12% & 11% respectively vs. Android/Chrome OS at 2% & 1% respectively.
According to Sunnebo, «Kantar has identified that in order to achieve higher levels of 3+ device ownership within the same OS or Brand Ecosystem, the OS/brand must be one of the top brands owned in each category.»
He continues, «Kantar also identified that the tablet brand owned can act as a trigger of conversion in brand switching. For example, if a consumer owned Brand A tablet and Brand B smartphone, when they change their smartphone they go for Brand A smartphone and enter a brand Eco-system.»
As length of ownership increases for the most highly penetrated tech devices (smartphones) manufacturers need to think of new ways to tap in to customer spending and maximise the opportunities a loyal base of consumers can bring. Innovation needs to be purposeful & continue to engage consumers further through building seamless integrated solutions aimed at providing convenience and simplifying consumers lives. Apple has launched Apple Pay, Apple credit card, Apple TV and Apple TV+, so it seems big tech believes that building ecosystems is the future.