Aug. 10, 2001 — The appeal of the consumer market for the MEMS industry is obvious — from tens of millions of digital cameras, and hundreds of millions of CD and DVD players, to a billion or so cell phones — the potential unit volume is astounding.
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| Bourne |
So who’s buying all of this stuff or encouraging Mom and Dad? Teens.
The global marketplace is in the throes of a youth explosion. The average age worldwide is about 25. Those ranging in age from 10-24 years account for about one-fifth of the world’s population, or more than 1 billion people.
The U.S. baby boomlet of 1977-94 produced 72 million children, which is roughly equal to the number of people born during the original baby boom of 1946-’64. Following on the heels of Generation X, this group of kids has recently been referred to as generation Y – as in Y’rless.
For the most part, these kids have money to spend and tremendous influence in terms of how, when and where that money is spent. Because they have grown up with computers and portable electronics of all kinds, they are intrinsically different from other generations.
How? While baby boomers have adopted technology, their children use it intuitively.
Think about it. Those who are 18 or 19 today:
- Were born the year the Sony Walkman was introduced;
- Were born one year before the CD was introduced;
- Have always had an answering machine;
- Have always had cable;
- Have always had VCRs (and have no idea what Beta is or was).
As a result, these kids wield enormous power in the family when it comes to purchasing decisions that are technological in nature – never mind that they have significant disposable incomes themselves. It is estimated that U.S. teens will spend some $200 billion in 2001 alone.
What are they spending it on? The basics of teen life – food, clothes, and entertainment. Staying in touch with one’s friends is of paramount importance. As a result, the introduction of pagers (and more recently, cell phones), have had a tremendous impact on how teens communicate.
Pagers have become an ubiquitous part of the teen scene and cell phones are coming on strong. In fact, 90 percent of youths in Finland own a cell phone. In-Stat forecasts that 50 percent of U.S. teens will own one by 2004. Given how important communication is to teens, one would expect cell phones to be permanently glued to their ears. However, the current rage (first emerging in Asia) is “texting” — communicating via text messaging, rather than talking on the phone itself.
What does this all mean for MEMS? It’s helpful to understand what’s driving an important market — who’s ultimately buying the product in which MEMS have been integrated, and how that product is or will be used. Generation Y’rless as a market force should not be underestimated — they are very discerning consumers. Their use of technology is second nature to them; more importantly, they want stuff that’s both cheap and chic.
As a result, much like automotive, the consumer market is very price driven. Technological advances are all well and good, but pricing is the name of the game. MEMS may offer an elegant approach that’s years ahead of the competition, but if it’s not cost-effective, it won’t fly. Not on a mass scale anyway. This is probably why it has taken so long for MEMS solutions to come to fruition for use in the consumer market.
The good news is that’s finally changing. There are all sorts of existing devices now being integrated into consumer products, and even a number of never-before-seen things being developed.
Most prevalent is the use of sensors. This includes accelerometers in video game joysticks, gyros in camcorders (goodbye shaky pictures!), and biometric sensors in keyboards and mice. Mirror arrays have found their way into digital TV and home theater, and relays will soon be integrated into cell phones. What’s new? MEMS-based storage chips for use in MP3 players, or optical pick-ups in CD-ROMS and DVDs.
Virtually no major consumer electronics category will go untouched. In addition, other applications within this market, and in which teens wield a strong influence, include sporting goods (a strong but niche oriented segment), and toys (which is emerging, albeit very slowly).
Unfortunately, MEMS’ impact will remain largely unnoticed by the public in this market. While MEMS will not directly influence the chic factor of say, a PDA, its ability to improve existing product functionality bodes well. In fact, MEMS may help product usage evolve in ways the manufacturer never originally intended or foresaw. The unforeseen popularity of “texting” is a good example. Much of this will come about as a direct result of who’s buying these products.
Next Month: The Commercial Market
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Marlene Bourne is a senior analyst with Cahners In-Stat Group. Her primary area of coverage is MEMS. She can be reached at: [email protected].