90 Years of Tech Adoption Rates

By admin_45 in Blog 90 Years of Tech Adoption Rates

If you Google the phrase “tech adoption rates” most of the first-page results will feature a chart that shows what percent of US households had everything from a landline telephone or a car (back to 1900) all the way to a smartphone and a social media account (up to 2016). The commentary around the data looks something like this:

Adoption rates for new tech-enabled goods and services are much faster now than in the 20th century.
For example, it took just over 40 years for automobile/home vacuum ownership to breach 50%.
Compare that to just 6 years for social media usage and 5 years for smartphone ownership.
The explanation: technology today leverages pre-existing infrastructure like electricity and cellular networks, making adoption cycles run faster than before.

While we agree with that premise, we also think it misses several important factors. For example:

#1. Cyclicality can impact adoption rates, especially for discretionary purchases or those requiring large infrastructure upgrades.

The percent of US homes with electricity stopped growing in 1929 at 68% after seeing quick adoption rates the prior 3 decades (10% in 1903). It took FDR creating the Tennessee Valley Authority in 1933 and several years of further government investment before adoption rates started to rise again.
Household ownership of automobiles peaked in 1930 at 59% and dropped to 50% in 1933 as the Great Depression took its toll. It would not see a new high until 1951 as the nation’s industrial output returned to civilian products after World War II.
Likewise, the ownership of vacuum cleaners stagnated at 49-50% from 1933 to 1947.

The lesson for today: technology that is expensive and/or competes with cheaper substitute goods can see adoption rates stagnate during economic downturns. We thought about that a lot as we read the Uber and Lyft prospectuses; demand for private car transportation is clearly cyclical and often has cheaper alternatives like public transportation.

#2: The most notable exception to that rule is media and entertainment, and radio/cable TV are an excellent case study.

A quick scan through 1930s print advertisements for home radios shows prices of $23 for a simple table-top set to $139 for an elegant console unit. The later was available for just $5 down (some things never change…).
Inflation adjusted, that would be $350 - $2,115 today – real money for 99% of households, in other words.
Home radio adoption rates were 10% in 1925 and 80% in 1940, with no year in between seeing a drop.
The same holds true for cable TV adoption rates in the 1970s-1980s. The 1973/1974 recession saw adoption rates stagnate at 16%, but after that they rose consistently through the recessions of the late 1970s/early 1980s and again in 1990.

The lesson for today: now you know why Disney and Apple are fine spending billions of dollars to compete with Netflix in the steaming video market. A hundred years of history says the demand will be there if the content is good enough.

#3: Large-scale social trends can also affect adoption rates, as was the case with American women entering the workforce in the decades after World War II.

From 1950 to 1990, US labor force participation for women went from 33.5% to 57.9%, an increase of 73%.
Social norms of the time meant many women still needed to take care of household chores on top of their work-outside-the-home duties.
In 1950, only 18% of American homes had washing machines and dishwashers were a true rarity at 2% adoption. Vacuums were more common, at just over half of households (57%).
In 1970, washing machine ownership was 59%, dishwashers were in 24% of homes, and vacuums were nearly ubiquitous (92%).

The lesson for today: technology that enables personal productivity is always a “killer app”, especially when a large population has new demands on their time.

One final thought: we think tech adoption rates are faster now because of globalized supply and demand.

Smartphones, for example, went from nowhere in 2007 to everywhere in 2019 because of low cost Chinese manufacturing and worldwide demand.
This allowed the technology to move quickly down the cost curve as it scaled, increasing its available market.
And, to our prior points, smartphones came of age in a period of economic recovery, provided a new form of entertainment, and allowed for greater personal productivity.

Source:
See the full tech adoption rate graph here: https://www.visualcapitalist.com/rising-speed-technological-adoption/