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Accenture 'Digital Home' Study Reveals Significant Barriers Limiting Consumer Adoption of Converged Solutions (25/7/2005)

Cost and complexity of solutions continue to hold back the development and adoption of converged digital home solutions, according to a survey released today by Accenture (NYSE: ACN).

As part of the survey, 2,600 consumers in five countries - the United States, the United Kingdom, France, Germany and Japan - were asked about their preferences for the converged digital home - a home with computing, communication and entertainment capabilities linked into a single, integrated system.

The survey findings indicate that more than three-quarters (80 percent) of consumers cite cost as the number one barrier to purchasing a digital home solution. Additionally, more than two-thirds (70 percent) of consumers would prefer a single provider or aggregator for the content, services and digital devices that comprise what they envision as the digital home of tomorrow.

"Despite strong consumer desire for a single aggregator for converged or complete digital home packages, many companies in this space provide only a portion of the content or services that comprise the complete digital home," said Al Delattre, a partner in Accenture's Communications & High Tech practice. "In order to truly meet consumer needs, stronger collaboration and partnerships among hardware, content and service companies is imperative."

Four different types of digital home formats were presented to survey respondents: home entertainment, home heathcare, home management and virtual office offerings. Home entertainment was the most popular, with 42 percent of respondents expressing strong interest in such an offering, versus 37 percent for family care and 28 percent each for home management and virtual office.

When asked what benefit would most encourage them to buy a converged digital home solution, The greatest number of respondents, 56 percent, said, "save money," followed by, "make life easier" (46 percent), "improve home energy efficiency" (41 percent), "save time" (40 percent) and "make my life at home more fun" (34 percent).

Though consumers from all countries said that a solution that helps them save money was the most important benefit, the perception of other benefits varied both by gender and geography. Generally, women respondents focused on the lifestyle benefits, while men focused on the technical and control capabilities. From a geographic perspective, examples of differences in preferred benefits include consumers in Japan placing more importance than those in other countries on having access to multiple providers of content, and "More fun at home" was a bigger preference in the United States and Japan than in Europe.

While there is strong consumer interest in the concept of the digital home, the study indicates that challenges remain before the development and adoption of such solutions become reality. After cost, other prevalent concerns were data privacy and security, selected by 40 percent of respondents, complexity of installation (selected by 35 percent), equipment becoming outdated quickly (selected by 33 percent), and the need to replace current home equipment (selected by 32 percent).

Only 4 percent of all respondents said they could afford converged digital home service now, while 48 percent said such a service would be affordable in one to five years. Nearly one-quarter (24 percent) of all respondents said they believed they would never be able to afford such a service.

Despite this, consumers expressed a willingness to pay additional fees each month for services designed to enhance ease of use and convenience. For instance, 65 percent of respondents noted a strong desire to pay for digital home services and content in a subscription or leasing model, and those respondents indicated that they would be willing to pay between US$20 and US$50 additional per month for automated, value-added services such as guaranteed data backup, system support, and specialized content such as medical data collection.

Another potential barrier to realizing the digital home is customer perception regarding availability of a converged digital home service that bundles content and devices. Only 18 percent said they believe that these solutions are currently available, while 51 percent said they expect availability in one to three years.

"Consumers will increasingly become more of a development driver for digital home solutions," said Delattre. "But it is clear that the technology itself is just one piece - business models and customer support are almost as important as the product itself. Without demonstrated and specific consumer preferences to drive adoption of the digital home concept, it will continue to be just that - a concept."

About the Study

To better understand consumer preferences for the converged digital home - a home with computing, communication and entertainment capabilities linked into one solution -- Accenture hired Research International to conduct a survey of 2,600 persons in five countries during the early part of 2005. The survey was designed to be representative of the full consumer population in each country surveyed. Of the 2,600 respondents, 1,000 were from the United States, and the remaining 1,600 were divided evenly between the United Kingdom, France, Germany and Japan.

www.accenture.com