Bay Area Leads USA On Technology Issues: Market Segmentation Survey By PSB

TECHNOLOGY BY THE BAY VIEWS ON THE FUTURE OF TECH

05.25.2010

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METHODOLOGY Objectives:

To assess Bay Area residents’ understanding of tech innovations and expectations for the future of technology, compared and contrasted to those of other Americans.

Methodology:

Penn, Schoen & Berland Associates (PSB) conducted 501 online interviews from May 10-13, 2010.

Audience:

251 Bay Area residents (living in or within 20 miles of San Francisco, Oakland or San Jose) and 250 Americans not from the Bay Area.

Margin of Error: Overall, the margin of error is +/- 4.38%. The margin of error for the US and Bay Area subgroups is +/-6.2%. All numbers shown in percentages unless otherwise noted.

If numbers do not add up to 100, it may be due to rounding, inclusion of multiple responses or exclusion of don’t knows.

1

BAY AREA LEADS THE UNITED STATES ON TECHNOLOGY ISSUES Bay Area residents are more excited by technology – they want to know what’s next and have the newest tech toys.

However, Americans are almost as inclined to be early adopters and have the same urgent need to be able to access tech.

Thinking about yourself and your personal opinions / habits, how much do you agree or disagree with each of the following statements?

Agree

Agree

I am excited to see what technology companies and groups come out with next

67

78

I like to have the newest and greatest technology available

50

60

I consider myself an early adopter of technology

49

51

I feel alone when I do not have complete access to technology

49

53

I want to be involved in making new technologies possible and accessible

49

57

2

BAY AREA RESIDENTS USE A WIDER RANGE OF TECH TOOLS AT HOME They use a broader variety of web browsers, do more detailed social networking, are more productive at home, and use their home tech setup more for entertainment Which of the following applications do you currently use at home? Please select all that apply.

Internet Explorer

74

68

Google Search

67

73

Facebook

52

62

Windows Media Player

50

53

Microsoft Office (e.g. Excel, PowerPoint, Word)

49

67

Mozilla Firefox

29

45

Microsoft Outlook

28

31

Bing

26

30

Gmail / Gchat

20

39

Twitter

20

17

iTunes

18

44

Google Chrome

16

24

Pandora

9

11

Google Docs

7

17

LinkedIn

5

18

iWork (e.g. Pages, Numbers, Keynote)

2

6

iLife (e.g. iPhoto, iMovie, GarageBand, iWeb, iDVD)

2

7

3

ADVANCEMENT OF TECHNOLOGY IS KEY TO IMPROVING JOB CREATION, EDUCATION AND THE ECONOMY The top three issues in America today are job creation, the economy and education.

6 in 10 Americans think the advancement of technology is very important to improving each of these in the future.

How important do you think the advancement of technology is in terms of improving each of the following?

Job creation / unemployment Education The economy Terrorism / homeland security The environment / energy policy Immigration

Important Important 92 89 91 88 90 90 86 86 82 86 68 69 4

TECHOLOGY EXPECTED TO OVERCOME HUMAN LIMITATIONS Nationwide, many expect fully functional prosthetics (49%), hearing aids for the fully deaf (38%) and vision assists for the blind (31%) to be available in the next decade Interestingly, Bay Area respondents were much more optimistic about health-related and biotech innovations. 27% even believe human cloning is within reach over that time (versus 15% other US).

What other technology do you think will become reality by the year 2020?

Fully functional prosthetics Alternate light sources Hearing aids for the fully deaf Sight aides for the fully blind A cure for cancer Personal servant / assistance robots Human cloning

All 49 48 45 40 33 28 21

51 47 40 37 29 24 15

48 49 50 44 37 31 27

Vehicles that hover rather than using tires that touch the ground Personal flight devices / jetpacks Cities on other planets / moons

20 12 10

19 12 12

20 12 8 5

THE DEVICES WE USE ARE CHANGING In five years, computers are expected to be more important to daily life than televisions. But technologies that were cutting edge just 10 years ago are fading. • •

1 in 4 think that traditional cell phones will be obsolete within 5 years But TVs are not expected to go anywhere -- only 2% expect them to become obsolete

Which of these do you expect to be obsolete or no longer used in five years? Please select all that apply.

Cellular phone (primarily used for voice and / or text messaging) Desktop computer Video game console (hand held) Digital book readers (e-reader) Portable digital media player (e.g. iPod, Zune) Cable / Satellite TV receiver Video game console (in-home) DVR / TiVo Digital video camera/ Camcorder Tablet computer (e.g. iPad, Slate) Home speaker system 3D TV DVD / Blu-Ray player Netbook computer Blu-Ray player GPS navigation device Digital camera Laptop computer Flat Panel / Screen Television Smartphone

26 25 18 15 13 11 10 10 9 9 9 8 7 7 5 5 4 3 2 2

23 26 11 18 6 9 13 12 8 8 7 10 11 9 9 4 5 5 2 2

6

WE WANT FUNCTIONALITY TO CONVERGE ON OUR DEVICES 54% of both groups want one device that does everything they need, versus 35% who prefer to have multiple so they can choose the best one for each need. •

Virtually identical percentages of people want to use their device to make a phone call (26%) as to read a book (28%) or watch TV (23%)

Which of the following is closer to your view?

All

I want one device that does everything I need

54

54

54

I want multiple devices so I can choose the best one for each need

35

34

37

Don’t know

11

12

9

7

MANY EVEN WANT THEIR HOME APPLIANCES TO CONNECT About two-thirds expect their security system, lighting and thermostat to be networked together in the near future. •

34% expect their alarm clock to be included in that home network!

What home appliances do you expect to become networked or wirelessly connected to other devices in the near future? Please select all that apply.

Security system Lighting Thermostat (heating & air conditioning) Alarm clock Refrigerator Coffee maker Fitness equipment Electric toothbrush Don’t know None of these Other

All 72 61 60 34 28 27 15 9 8 3 2

66 53 55 33 23 22 13 8 11 5 2

78 68 65 34 32 32 17 11 6 2 1

8

BUT MANY RESPONDENTS DO PREFER SEPARATE DEVICES FOR WORK AND PERSONAL USE Even as we move towards single, all-powerful devices, not everyone is convinced on whether they want work and play to converge: 51% would prefer having separate devices for their work and personal activities.

Bay Area residents are split, but more receptive than other Americans: 41% prefer one device for both home and work, 43% want to keep them separate.

Which of the following is closer to your view?

All

I would prefer having separate devices for my work and personal activities

47

51

43

I would prefer having a single device for both my work and personal activities

37

32

41

Don’t know

17

17

17 9

BAY AREA RESIDENTS EXPECT CONSUMER ELECTRONICS TO FOCUS ON MOBILE DEVICES Computers are great, they say – but the real action is in phones, which are getting smaller and faster and including touch technology •

Some brave souls are even looking forward to implants!

What do you think will be the next big breakthrough in consumer electronics products?

US

Bay Area 10

CONFUSION SURROUNDS THE CLOUD Only 18% of Americans can accurately describe or define the online Cloud. • Though 23% if Bay Area residents know what it is.

Which of these do you think most accurately describes the Cloud in terms of online and internet use?

Storage and applications based on the internet

18

23

A brief outage or blockage in internet connectivity

11

6

An online security setting that helps prevent identify theft

11

6

A social networking group that creates a fad / trend and then disbands

7

9

A new type of hard drive that does not use a spinning disc

2

7

None of these accurately describe the cloud

10

11

Don’t know

41

39 11

THE CORE CONCEPT OF THE CLOUD IS MORE APPEALING TO BAY AREA RESIDENTS Despite low understanding of the terminology, once briefed on what the Cloud is 8 in 10 Bay Area residents are interested in using it for storage, syncing and apps. •

Indicating an opportunity for a company who can clearly and accessibly communicate these benefits to consumers.

-

Other PSB research on Cloud computing reveals that concerns about the security of these technologies have not been effectively ameliorated.

How interested would you be in using the Cloud for each of the following? (responses given once briefed on proper definition)

Interested

Interested

Using web-based programs / applications

65

81

Backing up your computer or phone’s hard drive

64

72

Storing and syncing digital content (e.g. photos, music, documents, contacts)

60

65

Collaborating on shared documents with others

51

66

12

AND CLOUD USES – LIKE STREAMING ONLINE VIDEO – HAVE GONE MAINSTREAM Online video is preferred over physical discs (i.e. DVD, Blu-Ray).

• 32% of Bay Area residents would prefer to get all of their video by stream or download vs. 18% opting for a disc.

If you had to choose one of these to get all of your videos and movies from now on, which would you prefer?

Stream online (e.g. Netflix, YouTube, Hulu)

27

32

Physical disc (e.g. DVD, Blu-Ray)

21

18

Download a video file (e.g. iTunes, Xbox Live)

13

14

Mail delivery service (e.g. Netflix)

12

15

Video store (e.g. Blockbuster, Hollywood)

11

9 13

OUR CONSUMPTION PREFERENCES FOR MOVIES VERSUS AUDIO ARE VERY DIFFERENT Consumers prefer to download music, but stream movies. Possibly because of: •

Download requirements for larger movie files

•

Storage needs for these files

•

Mobility – movies tend to be a sedentary activity compared to music

If you had to choose one of these to get all of your music from now on, which would you prefer?

AM/FM Radio

23

21

Download an audio file (e.g. mp3, iTunes, Zune)

22

33

Physical disc (e.g. CD)

18

11

Satellite Radio

17

18

Stream online (e.g. Pandora, GrooveShark)

11

8

14

BAY AREA RESIDENTS EXPECT ENTERTAINMENT TECH BREAKTHROUGHS ONSCREEN Bay Area residents identify the computer and phone as key venues for the future of entertainment – in addition to the TV •

And they’re noticing the rush to 3D taking place in Hollywood.

What do you think will be the next big breakthrough in entertainment technology?

US

Bay Area 15

THANK YOU!

NEW YORK • WASHINGTON • DENVER • SEATTLE • LOS ANGELES • SAN FRANCISCO • AUSTIN• LONDON • HONG KONG • BEIJING • DUBAI © P E NN, S C HO E N & B E R L A ND A S S O C I A T E S , L L C .