Report on Consumers and Convergence

Consumers & Convergence IV

KPMG INTERNATIONAL

November 2010

© 2010 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any

such authority to obligate or bind any member firm. 2

Overview

• The fourth iteration of the Consumers & Convergence study in the past five years

• Objective: To gain a better understanding of consumer trends related to mobile technology,

including:

– Technology used

– Security and privacy

– Mobile payments

– Mobile banking

– Cloud computing



Methodology

• Survey conducted with consumers in 22 countries worldwide

– ASPAC: China, India, Japan, South Korea, Australia

– EMA: U.K., France, Germany, Ireland, The Netherlands, Russia, Spain, Sweden, Czech Republic, Hungary,

Poland, Romania, Slovakia, South Africa

– Americas: U.S., Canada, Brazil



Methodology

• Global analysis based on 5,627 respondents

• Canadian analysis based on 300 respondents

– All respondents had to own either a mobile phone or

PDA/smartphone

– Data weighted based on estimates of the mobile phone subscriber base in each country surveyed

Key Findings



• Consumers are adopting mobile apps at ever-faster rates however Canadian consumers indicate

lower usage of mobile devices for purchasing and banking

• Privacy continues to be an important issue

• Consumers are willing to give up information in return for something of value

• Canadians continue to seek free content and are relatively advertising adverse

• Consumers are redefining trust, value, privacy and security

• While ahead of global and US respondents, Canadian consumers appear less aware of cloud services

and its potential for business usage

Key FindingsOverview



Key Findings:Consumers have a paradoxical view of privacy

• Consumers are more anxious than ever about the privacy of their personally identifiable information (PII)

when using their mobile phone:

7

6% 7%

67%

28%

59%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Security Privacy

Not at all concerned Somewhat concernedVery concerned

Global

7

12% 12%

63%

25%

58%

0%

10%

20%

30%

40%

50%

60%

70%

Security Privacy

Not at all concerned Somewhat concernedVery concerned

Canada



Key Findings:Consumers have a paradoxical view of privacy

• But consumers also appear more willing to have their PII tracked if they get something of value in

return

– 58% say they’d be willing to allow their online usage and personal profile

information to be tracked if it resulted in lower costs



Key Findings:The rise of the converged consumer

• Mobile banking catches fire with consumers globally

• Canadian consumers indicate lower usage of mobile devices for financial transactions

38%

28%

34%

72%

55%

29%

16%

61%

20%19%21%

7%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Not at all Comfortable Somewhat Comfortable Very Comfortable

Global Canada Canada (2008) US




• The growth of m(obile)-commerce

– The percent of consumers who say they’ve used an online retailer’s site from a mobile phone nearly tripled to 28% from

10% in 2008

– In ASPAC, 40% say they’ve made purchases over their mobile device

– In Canada, consumers slower to make retail purchases using mobile sites

– Younger consumers more readily engage with m-commerce than older ones




• Mobile and online consumers are more willing to receive ads

– Half of online consumers* and 4 in 10 mobile device users say they’ll accept ads in exchange for free or

bargain pricing of services and content

* Online consumers: consumers who access online content/ services with their personal computer


such authority to obligate or bind any member firm.

Key Findings:Canadians continue to seek free content

121212

16%

27%

57%

9%

5%

85%

15%

76%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Yes, I would be willing to pay foraccess to the content of the entire

site

Yes, I would be willing to pay foraccess to the site content, but only

for specific situations

No, I would not be willing to pay foraccess to the site content and

would look for the same or similarcontent elsewhere through a 'free'

site

Global Canada US

If an online or mobile content site you frequently visit begins

charging for access to content, would you be willing to pay to

gain access to the content? device?



Key Findings:Identifying “Information Sharers”

• Emerging group of consumers who say they are ready to share their information

– Willing to exchange PII for cheaper/free content

– Comfortable doing banking on a mobile device

– Comfortable accessing personal medical info on their mobile device

• The segment represents 10% of the survey sample



Key Findings:Identifying “Information Sharers”

• Who are the “Information Sharers?”

– More likely to come from China or India; less likely to come from North America

– More likely to be employed full time

– More willing to accept tailored ads on mobile devices

– More willing to receive ads in exchange for free or cheaper services or content

– More comfortable using a mobile device to browse the Web

– More likely to buy goods via their mobile device

– More likely to use mobile banking daily



Key FindingsInfrastructure and access: Don’t drop that landline…yet

• Are consumers ready to drop their landline and go mobile?

– Globally, 81% of landline subscribers plan to keep their landline phone connection

– 90% of cable, satellite and Internet protocol TV (IPTV) subscribers plan to keep their services

NO!



Key FindingsInfrastructure and access: Don’t drop that landline…yet

• Why are they keeping their landline?

For an Internet connection.

– More than half want to keep their landline for the Internet

– Voice usage takes a secondary role



Key Findings:Not ready for unlimited voice and data

• Consumers are not yet willing to commit to unlimited voice and data plans

– Slightly more than a quarter (28%) have adopted these globally



Key Findings:Not ready for unlimited voice and data

• Network quality/coverage, costs, and quality of service are reasons consumers would consider changing

mobile carriers



Key Findings:Positive forecasts for the cloud

• Two-thirds (66%) of consumers use some type of cloud services

– Canadians are avid users of cloud services (72%)

– Spain (89%) and India (88%) have greatest cloud penetration

– Just 51% of U.S. consumers use cloud computing services

– Lowest cloud penetration is in Germany (27%)

Global

66%

34%

Yes

No

Canada

72%

28%



Key Findings:Positive forecasts for the cloud

• Consumers most comfortable using the cloud for photos,

e-mail, contacts, and video

• Few are ready to put their medical or financial information on the cloud

21%19%

12%

1%

38%

2%

14%

33%

21%

7%

42%

35%

11%

5%1%

41% 41%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Concernedabout the

privacy of mydata

Concernedabout thesecurity of

my data

Concernedabout theability to

retrieve mydata

Other Not aware ofsuch

services

No need forsuch

services

Global Canada USMain reasons for not using Cloud Services

Possible

Implications



Possible Implications:For service providers

• No single online-access plan trumps alternatives for in-home or mobile activities

• Consumers demand a choice of service offerings, particularly from mobile operators

• Unlimited voice and data plans are not an unqualified success with either consumers or, it seems,

providers

• Quality of service and price are the main reasons consumers consider changing providers

• Users are willing to juggle a mix of access technologies to get the best value



Possible Implications:For content providers

• The majority of consumers believe most content should be free

• Not all content is equal in the minds of consumers, and those that will pay for content prefer to pay for parts

of a site, not the whole thing.

• Generic news and information are considered commodities

• There is value in targeted information and content, but consumers may be more likely to provide PII rather

than money.

• Entertainment content, such as games, video, and music have perceived premium allure.

• Regional and national demographics play a huge role in the perception of content.



Possible Implications:For cloud computing companies

• Consumers view cloud computing primarily for services such as email, photos and video

• Most consumers are not yet ready to put medical or financial data on the cloud

• Users see personal benefits from these services

• There is surprisingly low use of social networking services by those 24 and younger on mobile devices



Possible Implications:For financial and retail companies

• Consumers are willing to experiment with and ultimately embrace new mobile services

• While more consumers are comfortable using their mobile phones for banking or retail purchases, the

majority still are not, and efforts need to be made to reach these consumers

• Security and privacy remain strong forces, but they’re not immovable

• Regional and age demographic preferences need to be considered

• Financial services firms have an opportunity to create business, attract/retain customers, control costs,

and gain other advantages by deploying mobile apps



Possible Implications:For marketing and advertising

• Online marketing opportunities are expanding

• Consumers generally prefer targeted PII-based ads

• Anxiety over privacy means consumers demand transparency; lose their trust and you risk their business

• Users are willing to exchange lower cost or free services and content for advertising

• There’s still little tolerance for mobile advertising

Insights



Conclusion: Convergence is becoming a reality

• Consumers are willing to accept ads in exchange for cheaper basic services

• They continue to embrace a broad range of mobile

and cloud-computing applications, BUT …

• are reluctant to store sensitive personal information on the cloud

• They are ready to use their mobile phones for financial transactions and to purchase goods and services,

BUT….

• are increasingly concerned about privacy and security when using their mobile phones

• They are willing to suspend those anxieties and will offer personal information for something of value

Q&A

Consumers & Convergence IV

KPMG iNTERNATIONAL

November 2010

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