Analysts cut 2023 techs spending predictions as consumers hold back

Predicting spending is a tricky business, especially in a period of economic uncertainty. Perhaps that’s why both IDC and Gartner have cut their fall predictions in the new year with Gartner now predicting modest 2.2% growth for 2023 with IDC a bit more optimistic at 4.4%.

In the fall, Gartner was predicting a far more robust 5.1% and IDC was looking at between 5% and 6%. Both companies look at a combination of business and consumer spending in their numbers.

Gartner says it’s the consumer side of the ledger that’s become a drag on their predictions, while the firm expects enterprise buyers to increase expenditures in the coming year.

“While inflation is devastating consumer markets, contributing to layoffs at B2C companies, enterprises continue to increase spending on digital business initiatives despite the world economic slowdown,” Gartner analyst John-David Lovelock said in a statement.

When we spoke to IDC analyst Rick Villars for an article on 2023 spending, he left some wiggle room in his prediction:

“Spending on core IT infrastructure, business software, professional services to implement and operate the systems — even if the economy stays flat, we expect to see continued healthy growth in the 5% to 6% range in aggregate for those spaces. It would take a more severe economic downturn from what we’re seeing for that to change,” Villars told TechCrunch.

Perhaps the squeeze on consumer spending is the source of the problem, although the Adobe Digital Price Index found prices for electronics, which include items like phones and PCs, were down over 12% for the year (with prices increasing 1.9% in December). But that was more than offset by groceries, which were up 13.5% year over year, a number more likely to have a much bigger impact on consumers overall.

Gasoline prices (which Adobe doesn’t measure) dropped 2% in December (per CNBC), but fuel oil was up a whopping 41%. The bottom line is that consumers probably aren’t feeling confident right now when it comes to buying new technology if basics are costing them so much more than the prior year.

The numbers bear this out as PC sales were down for the fourth straight quarter. That translated into a 28% drop for Q4 2022, numbers so low that Gartner reported it was the biggest single quarter drop since the firm has been tracking this data in the mid-1990s

Phone sales were similarly dismal with sales the lowest in a decade. Numbers were off 17% in Q4 2022,  down 11% for the year.

While consumers are clearly cutting back, enterprises are less likely to cut their spending as tech can help blunt the impact of an economic downturn, something Villars told us in the December article on IT spending:

“The main thing we’re hearing from CIOs is that technology is part of solving the business challenges that a recession brings. And if the focus is on just cutting technology investments, they’re not actually helping the company get through the recession or through these disruptions.”

Certainly, enterprises won’t be cutting back on cybersecurity as new data from Canalys shows. The firm is predicting that security spending will increase 13% in 2023.

Consumers will probably continue to think twice about buying electronics in the first part of the year if food and fuel prices don’t come down, and that will have a big impact on the numbers overall, but as these firms predict, business spending continues to look much brighter as companies see tech as a critical budget item.

Analysts cut 2023 techs spending predictions as consumers hold back by Ron Miller originally published on TechCrunch

Consumer spending in apps to reach $156B across iOS and Google Play by 2023

Consumer spending in mobile apps across both Apple’s App Store and Google Play will grow by 120 percent to reach $156 billion worldwide by 2023, according to a new report out today from app store intelligence firm, Sensor Tower. The forecast estimates that both stores will more than double their revenues during the next five years, with China, the U.S. and Japan leading the way on iOS and the U.S., South Korea and Japan leading on Google Play.

The report projects that Apple will reach $96 billion in worldwide consumer spending by 2023, an increase of 104 percent over 2018’s total of $47 billion. Google Play is set to grow by 140 percent over 2018 to reach $60 billion — closing the gap even further with Apple’s platform. However, Apple’s store will account for nearly 62 percent of all revenue generated by the two platforms, Sensor Tower says.

The firm’s estimates for 2018 are a little lower than App Annie’s data, which estimated iOS and Google Play stores topped $76 billion in consumer spend last year. (Sensor Tower says $72 billion). However, App Annie’s forecast was calculated before year-end. After the year wrapped, it estimated consumer spend grew to $101 billion in 2018 across Apple’s App Store, Google Play and third-party Chinese app stores. Sensor Tower doesn’t delve into third-party app store data.

Another trend in the new forecast is the projected growth for emerging markets. Africa and Latin America will see the largest revenue growth over the next five years, with the former poised for 296 percent growth to $420 million on the Apple App Store by 2023 and the latter with 239 percent growth to $2.4 billion.

Revenue growth from Google Play will be even larger, with Latin America reaching $2.8 billion in 2023, up 408 percent from 2018. African countries will grow 296 percent during this same time to reach $430 million by 2023.

These are still far smaller numbers than what’s predicted for top markets, of course.

The U.S., for example, is on track to reach $40 billion in consumer spend across both app stores by 2023, up 110 percent over 2018’s total of $19 billion. Apple’s App Store will account for $25 billion of that figure, and Google Play will account for the remaining $15 billion.

Other notable moves include Taiwan becoming a top-five App Store country by revenue in 2023 ($2.1 billion), and the U.S. overtaking Japan in Google Play revenue in 2019. Japan’s Google Play revenue was driven by top games in 2018 like Monster Strike and Fate/Grand Order, but is expected to slow this year.

Sensor Tower is also estimating the U.S. will briefly pass China in App Store revenue by 2020 — a figure that ties to Apple’s slower iPhone sales in China, which led it to cut its revenue forecast. China was also substantially impacted by the game-licensing freeze, which saw app downloads fall 4 percent between 2017 to 2018, after having grown 8 percent the year before. Consumer spending then grew only 14 percent in 2018, versus 60 percent the prior year.

China’s revenue is expected to recover with the renewal of mobile game licensing, but the U.S. is now projected to reach China’s levels over the next few years.

Thanks to subscriptions and the Entertainment category (e.g. streaming apps), revenue growth in non-game apps on iOS (24 percent) will pass growth of revenue in games (10 percent) over the next five years. This will lead non-game apps to accounting for 40 percent of App Store revenue in 2023, or $38.8 billion.

Games will continue to have a larger share on Google Play during this time, accounting for 86 percent of revenue by 2023, down from only 89 percent in 2017.

The full report is on Sensor Tower’s site.

Target expands its 1 percent back loyalty program, Target Circle, to more U.S. markets

Target is expanding access to its new loyalty program that rewards shoppers for returning to its stores by offering 1 percent back on their next trip, among other perks. The program, called Target Circle, is still in beta testing following its initial launch in March of last year. At the time, the program was called Target Red, but the company has since rebranded it. It was also previously available only in the Dallas-Fort Worth area.

Starting today, Target is opening up access to the beta to six other major U.S. markets, including Charlotte, Denver, Indianapolis, Kansas City and Phoenix. This will allow the retailer to test the program on a much larger scale with millions more shoppers.

In addition to the loyalty program’s name, the company also changed the marketing around the program.

Today, Target Circle is more heavily focused on promoting the 1 percent back on purchases – the piece designed to increase foot traffic in Target stores. The 1 percent is meant to lure in those shoppers who won’t sign up for Target’s store card, REDcard. The card, which comes in both a credit and debit version, provides 5 percent back at checkout and has seen decent adoption to date. As of Target’s last quarterly earnings, REDcard penetration was nearly 24 percent.

However, that figure has remained stagnant quarter-over-quarter. It’s not growing at all, and in some cases, even declining slightly. That’s a concern.

Target Circle, then, represents a different way to reach, engage with and reward customers for shopping at Target and getting them to return time and again.

While Target REDcard members can join Circle to receive the other perks, they’ll continue get their 5 percent back instead of earning the 1 percent back, Target notes.

The Target Circle beta website also now touts two other components to the program, including the ability to vote on Target’s local community giving initiatives and a “birthday surprise” feature, which is only one aspect of the program’s larger personalized feature set.

Unlike Cartwheel discounts, which are offered to all shoppers, Target Circle aims to personalize perks to individual consumers. For example, if you shop for baby items all the time, Target will send you a personalized discount for items in that department. You’ll also get a reward of some sort ahead of your birthday.

Retailers have been personalizing their offers without loyalty programs for some time, of course. In fact, Target once famously figured out a teen girl was pregnant before her father did, and sent her coupons for baby items much to the dad’s chagrin. Now, loyalty program members will opt in to this sort of data collection instead of having to figure out how to opt out. In return, they’ll get deals and discounts they may actually want.

Unmentioned on the rebranded Target Circle website are two other notable rewards which were also available when the program launched: a 50 percent discount on customers’ first-year Shipt membership and free next-day delivery of household essentials through Target Restock.

Target confirmed with TechCrunch these rewards are still included with Target Circle, but said it’s just choosing not to promote them at this time.

The retailer says the expansion of Target Circle to the half-dozen new markets follows the successful test in Dallas-Fort Worth. The program was well-received, it claims, and millions of customer transactions ran through the program since its debut. Target shoppers also directed around $250,000 in local giving.

The company hasn’t spoken much about the program during the testing. In November, it got a brief mention on the earnings call with investors, where Target CFO Catherine Smith (who announced her retirement earlier this year) said the program was seeing “really good sign-up and engagement.”

Customers in the newly added test markets can now join Target Circle by signing up at the website,, by downloading the Target mobile app, or by giving their phone number at checkout.