How Aging Millennials Will Affect Tech Consumption

Wait. How can Millennials be aging? They just got here.

We love to generalize about generational behavior. But what we are learning is not entirely comforting for the technology industry. While it is apparent that the older one gets, the more likely one is to purchase a relatively expensive iPhone, the reality is that most Millennials grew up the way the generation that came of age during the Great Depression and WWII did: in a time of uncertainty and relative want.

And, as the following article explains, it is already affecting their approach to consumption. Boomers, they aint. JL

Christopher Mims reports in the Wall Street Journal:

Many of the tech-related behaviors we associate with millennials—connecting over social networks rather than in real life, buying smartphones instead of cars—should be viewed as adaptations to difficult economic circumstances as much as an embrace of the shiny and new.
Last year, millennials gave birth to 85% of the babies in America, according to Goldman Sachs. GS 0.25 % Or in other words, they aren’t as young as you might have imagined.
Depending on how you define them—there is no official U.S. Census definition—they were born after 1980 (according to Goldman Sachs) or 1981 (Pew Research Center) or even 1983 (authors of various books and reports). Regardless, it is a fact of demographics that there are now more people age 24 in America than any other age, a consequence of the “baby boomlet” that happened once post-WWII baby boomers had children of their own.
And now, like some kind of giant, unstoppable ABC Afterschool Special, those kids are having kids, or at least thinking about it. The average age for a woman in the U.S. having a first child in 2015 is 26 years old. As the biggest generation in America spends the next five years racking up points for hitting various life milestones—children, car, home, debt—it’s worth asking what consequences it will have for consumer technology and the firms that create it.One way to look at this question is to ask what’s happened to people just a few years older than this cohort. Life stage is highly predictive of behavior, and if you have a child, buying diapers is as inevitable as replacing your Instagram selfies with baby pics.
I asked Carolina Milanesi, chief of research at Kantar Worldpanel ComTech, to sift data on generational differences in consumer-tech spending, and for the most part, each generation was remarkably like the one before it. For example, those over 30 are just as likely to be on family cellphone plans as those under 30—although obviously, those plans are probably linked to a different family.

One notable exception was how people spent on their smartphones, as exemplified by iPhone purchases. People who are age 30 to 34 are 20% more likely than 26-to-29-year-olds to buy an iPhone, according to Kantar. The skew is even larger when you look at data for the latest model, the iPhone 6. For Apple’s latest phone, 30-to 34-year-olds are almost twice as likely to have purchased one as their younger peers.

ENLARGE

Data from comScore suggest most switching between Android and iPhone is in favor of Apple, and iPhones have a significantly higher average selling price than Android. So we can assume that, all other things being equal, as millennials age and their earning power increases, their taste in consumer electronics will become more expensive.
This is good news for Apple—and others targeting the higher end of the product spectrum. It’s also fantastic news for pretty much the entire consumer-electronics industry and countless online retailers such as Amazon: A giant demographic bulge is about to enter 20 years of peak earning power. This is a generation that likes its on-demand services, which means the coming decades will almost certainly see more Uber rides and same-day deliveries than ever.
But it’s not all good news for the tech industry. There is a pretty big caveat to any assumption that as they age, millennials will become just like their Apple Watch Edition-wearing, Postmates for lunch every day-ordering elders. Millennials came of age during the greatest economic crisis since perhaps the Great Depression, and like countless generations before them, it has had a major impact on their outlook.
This is a generation with unprecedented levels of student debt, facing an employment landscape that is profoundly disrupted by the very mobile technologies millennials have so eagerly adopted.
The decimation of manufacturing employment in America previously funneled workers into service-sector jobs, and now, as embodied by Uber, Lyft, Instacart, TaskRabbit and their peers, they’re being pushed into what Danah Boyd, a principal researcher at Microsoft Research, calls the “piecemeal labor force.” The result is that many of the tech-related behaviors we associate with millennials—connecting over social networks rather than in real life, buying smartphones instead of cars—should be viewed as adaptations to difficult economic circumstances as much as an embrace of the shiny and new, argues Dr. Boyd.
“One thing I got from young people—they’d much rather get together in person but there were all these limiting factors that made it extremely difficult,” says Dr. Boyd, who spent a decade studying the on- and offline social lives of teens. “This cohort do not have consistent working hours and their peers don’t share them,” she adds.

 How the life-cycle increase in earning and spending power will interact with the uncertain economic situation of many millennials is anyone’s guess. But I’m going to venture two predictions: Many in this generation have already and will continue to embrace technology that is alien to their parents’ cultural norms, precisely because it helps them adapt to their changed economic circumstances. It’s not hard, for example, to do the math that will lead many young denizens of cities to conclude that even a substantial amount of ride-sharing is more affordable than owning a car.
My second prediction: Companies like Apple that are betting technology will increasingly become a means of display and social signaling are, paradoxically, also right. With growing economic inequality comes an all too human drive to sort out the haves from the have-nots, and technology is finally mundane and ubiquitous enough to have shed its geeky associations and be accepted for that purpose.
Plus, there’s the simple fact that new (and seemingly frivolous) technology is fun, a distraction from challenging times. For our post-9/11, post-Great Recession, post-Ferguson world, “tech becomes a relief valve,” says Dr. Boyd.