The relationship the average consumer has with their technology is rapidly changing -- it has become critical to all of our daily lives. The rapid adoption of wireless networking, tablets and gaming systems has created a technology environment in the home that rivals large enterprises just a few years ago. Consumers are looking to have these technologies be maintenance free, secure and just work together – no one wants to waste their weekends getting their latest gadgets to work.
The owner of a small business is also facing dramatic changes. She no longer needs to invest in server or telephony infrastructure – she can get all of this cheaply in the cloud for a low monthly fee. The proliferation of ‘app stores’ and broadband connectivity enable more complex, PC-like functionality on smartphones and tablets. Remote monitoring and support services are allowing SMB owners to get help maintaining their critical technology from large trusted brands versus relying on the local geek.
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These major trends are creating a sizeable market opportunity for technology and tech services providers. Tablet shipments in the US is projected to growth at a 62% CAGR from 2010 - 2014 (IDC). Home monitoring and energy management systems expected to penetrate over 15M households in the US by 2015 (Parks). SMB Cloud services is estimated to be an $26-32B by 2015 accounting for nearly 2/3 of the overall cloud services market (Gartner). Waterstone’s internal estimates (see chart above) show the Consumer Tech Services (ala Geek Squad) market will be a $6.4B opportunity by 2013 and the mSMB (less than 20 employees) services market to be over $35B by 2013.
There are big implications for ISP, OEMs, ISV, retailers, and other companies providing technology and tech services to the consumer and small SMBs. Some of the strategic issues that need to be addressed include:
- Understanding changing customer needs, buying behaviors and attitudes toward technology and tech services
- Blending of offerings into bundles with compelling value proposition at optimal price points for these mass market segments
- Understanding the potential of new technologies and services -- adoption rates and usage rates – and refining offerings accordingly
- Transformation of channels (call centers, direct sales teams, web channels) from transactional selling to solution and relationship based selling
- Prioritizing which value chain activities need to be retained in-house for competitive differentiation vs. sourced from outside 3rd parties
Given our focus on the tech and tech services sector, Waterstone Management Group sees a large opportunity for tech brands to take advantage of these market disruptions. ISPs are entering new home security and tech services markets (AT&T Acquisition of Xanboo; Comcast launches Xfinity Signature Support) as growth in the core video, voice and data businesses slow. Hardware OEMs are offering additional for-fee value added services to improve the overall customer experience for SMBs (Apple Joint Venture). ISVs are offering expanded tech support services and building substantive new revenue streams (Norton Live).
Waterstone brings a unique blend of operating and consulting experience to tech companies looking to take advantage of the growing consumer and SMB tech and tech services opportunity. We have worked with some of the largest retailers, ISPs, OEMs and ISVs in the world on key issues like evaluating adjacent market opportunities, assessing the business potential of new offerings, launching new lines of business and sourcing 3rd party vendors. In most cases, we have worked from strategy development through late stages of execution where we have taken program management, product strategy or interim management roles (see case studies below for more information):
A summary of our offerings:
- Market and business opportunity evaluation
- Business plan development, financial analysis, and investment assessment
- Market research, customer segmentation, and service offering design
- Vendor sourcing and evaluation
- Channel strategy and development
- Investment evaluation, due diligence, and merger integration