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On Saturday I covered the China – New Zealand Year of Tourism Launch for the NZ Herald. The last session at the event was a fascinating panel discussion about the need for tourist operators to understand the importance of technology to a Chinese visitor and how to work with their needs.

Some highlights from the panel session:

Lisa Li managing director of China Travel Services New Zealand
Lisa Li

“Technology has a huge impact on their travel choices. From seeking information, making booking arrangements and paying. They do everything on their mobile phones.”

Lisa Li managing director of China Travel Services New Zealand, talking about young Chinese millennial vistors to New Zealand
Rebecca Ingram

There’s research showing the overwhelming majority of that millennial group has not picked up a single piece of paper media in over a year.

Tourism New Zealand general manager Rebecca Ingram

“Just over two years ago we signed an agreement with Alibaba Group.

“We wanted to get value from the Chinese market while also ensuring Chinese visitors had a good experience in the country. Part of that was us supporting a roll-out of Alipay.

…only 13 percent of Chinese visitors have credit cards. If they weren’t able to transact in the way they are used to, we would be leaving money on the table and they’d have a poorer experience when they came. “

Justin Watson, Christchurch Airport chief commercial officer

“This is the first generation that has grown up with a smartphone since the age of ten. So everything they do revolves around their phones.

“If you are in the tourism business and you’re not driving visitor experiences through that channel you are going to miss out.”

Liverton CEO Justin de Lille

“In China, there can be an app that doesn’t exist one day, it launches and three months later there are 100 million people onboard.”

Tourism New Zealand general manager Rebecca Ingram

Read the full version of Technology enhances the visitor experience at the NZ Herald.

I’m not an early adopter.

Early adopters must own the latest devices. They run ahead of the pack. They upgrade devices and software before everyone else.

Early adopters use the latest phones. They buy cars with weird features. They queue up in the wee small hours for iPhones, iPads or games consoles. Back in the day they’d go to midnight store openings to get the newest version of Microsoft Windows a few hours earlier.

Their computers never work because they are awash in beta and alpha versions of software screwing things up.

And some of their kit is, well, unfinished.

Computer makers depend on early adopters. They use them as guinea pigs.

Early adopters first to benefit

Marketing types will tell you early adopters will buy a product first to steal a march over the rest of humanity. They claim they will be the first to reap the benefits of the new product. It will make them more productive or live more enjoyable lives.

This can be true. Yet early adopters often face the trauma of getting unfinished, unpolished products to work. Often before manufacturer support teams have learnt the wrinkles of their new products.

There’s another reason computer makers love early adopters — they pay more for.

New products usually hit the market with a premium price. Once a product matures, the bugs eliminated and competition appears, profit margins are slimmer.

Companies use high-paying early adopters to fund their product development.

Being an early adopter is fine if you enjoy playing with digital toys. If productivity isn’t as important to you as being cool. If you have the time and money to waste making them work.

I don’t. I prefer to let others try things first. Let computer makers and software developers iron out the wrinkles while the product proves its worth. Then I’ll turn up with my money.

In technology the early bird pays the bill.

Gartner says New Zealand technology spending will be $11.8 billion in 2017. That’s up 2.7 percent from 2016. It’s also a lot higher than last year’s forward looking forecast from Gartner. The total spend is forecast to pass $12 billion in 2018.

Communications services is the top technology category in New Zealand. Customers will spend a total of NZ$4.4 billion this year.The category includes consumer fixed and mobile voice and data services, enterprise fixed and mobile voice and data services. It may be the biggest sector, but shows next to no growth.

Gartner expects software to be the star performer over the next year, with IT services also showing respectable growth. Sales of devices and data centre systems will be flat.

Australians spend more however you cut it

New Zealand’s numbers compare with a total IT spend of A$83 billion in Australia, almost eight times the amount spent here. Australia’s communications services sector is around six times the size of New Zealand’s at A$26.8 billion.

Gartner expects both New Zealand and Australia to increase spending in the next year by more than the worldwide 2.4 percent forecast.

IT Spending Forecast Q2 2017

In part the difference between Australia and New Zealand can be put down to population size. Yet there’s more to the numbers than how many people live in each country. New Zealand’s spend amounts to around NZ$2,500 per person, while Australia’s is almost A$3,500.

One possible explaination for some of the difference is that some Australian IT companies wrap New Zealand revenue into local income. And there’s a tendency on the other side of the Tasman to gold-plate projects. Yet you can’t escape from thinking Australians appear more willing to invest in technology.

New Zealand: IT Spending Forecast (Millions of NZ$)

Segment 2016 2017 2018
Devices     1,659     1,734     1,724
Data Centre Systems         344         342         347
Software     1,363     1,499     1,647
IT Services     3,764     3,840     3,920
Communications Services     4,355     4,383     4,437
 
Grand Total   11,484   11,798   12,074

 

Abstract, Jackson Pollock

Gartner says NZ IT spending will reach NZ$11.4 billion in 2017. That’s up 2.3 percent on last year.

This is less than the expected 2.7 percent rise in global IT spending.

The reason for New Zealand’s underperformance is that nation’s biggest IT spending category is fixed and mobile communications services. It accounts for almost 40 percent of all NZ IT spending.

Gartner says growth in this sector is likely to be flat over the next two years.

In 2016 we spent NZ$4.36 billion on fixed and mobile communications services. Gartner’s projection puts 2017 spending at NZ$4.38 billion. That’s a rise of about 0.6 percent. The estimate for 2018 is NZ$4.43 billion.

Meanwhile spending on software will rise from NZ$1.4 billion last year to NZ$1.5 billion in 2017 and will reach almost NZ$1.7 billion in 2018.

Segment 2016 YR 2017 YR 2018 YR
Devices     1,541     1,572     1,556
Data Center Systems         400         402         398
Software     1,421     1,541     1,674
IT Services     3,442     3,518     3,599
Communications Services     4,355     4,383     4,432
Total   11,159   11,417   11,659
Gartner – all numbers in thousands of NZ dollars

Australia’s largest sector is IT services. Gartner says software will be the fastest growing sector in 2017 for both New Zealand and Australia.

Global spending is set to total US$3.5 trillion in 2017. Gartner says the year was set to see a rebound for the industry. It originally forecast 3 percent growth. However political uncertainty means the analyst company has dialled back its optimism.

Gartner research vice president John-David Lovelock says the uncertainty means there’s a wait-and-see mood with many enterprises forestalling IT investments.

Cloud, blockchain, AI all trending

He identifies the big trends as cloud, blockchain, digital business and artificial intelligence.

The analyst expects worldwide spending on devices, PCs, tablets and phones to stay flat at US$589 billion.

Gartner says a PC replacement cycle, strong pricing and functionality will help drive growth in 2018.

We’ve seen similar optimistic projections before now. Some from Gartner. It’s hard to know where that replacement cycle will come from. Technology sales have been falling for years now. Even if it does kick-in, the industry needs more than replacements to see a fresh wave of growth.

Things are strong in the IT services market. Gartner expects the global market to grow 4.2 percent in 2017. It says this will come from investments in digital business, intelligent automation and services optimisation. The report goes on to warn buyers remain cautious.