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RBC Capital Markets survey: despite economic concerns, consumer budgets continue to include technology


Majority say brand and country of origin not important in purchasing decision

SAN FRANCISCO and NEW YORK, August 9, 2006 — Consumer appetite for new technology products remains healthy, according to a nationwide survey released today by RBC Capital Markets. Americans cited their top-five wish list in order of priority as a flat screen TV, notebook or laptop computer, TV recorder, portable music player, and PDA. Those who have cut back on tech expenditures point to higher energy costs and concerns about the economy, and also describe themselves as not understanding many of the new technologies.

The survey found that the younger the consumer, the greater the propensity to maintain spending levels on personal technology products, with males aged 18-24 the most likely to not cut back on spending. As well, the survey showed that U.S. consumers are not overly concerned about brand or a product’s country of manufacture when buying technology products.

“Consumers who understand new technologies are the early adopters,” said Marc Harris, RBC Capital Markets’ director of U.S. Equity Research. “So it follows that companies that include education in their new product introduction strategies will help ensure rapid and widespread acceptance of their products. There is a whole new generation of technology products depending on consumer support to lay the foundation for the next round of new products.”

The survey of 1,000 Americans was released today in conjunction with RBC Capital Markets’ annual North American Technology Conference, to be held in San Francisco on August 8-10.

Consumer Understanding of New Technologies Key to Rapid Product Acceptance
Knowledge is key to prompting consumers to make discretionary technology purchases: for example, the majority of people (41 per cent) who say they understand technology began text-messaging more than two years ago, while 56 per cent of those who say they do not understand many of the technologies began text-messaging within the past year. Consumers who understand technology are more interested in new trends like “mobile wallets” or cell phones with functionality such as credit/debit cards (34 per cent vs. 20 per cent), identify verification (45 per cent vs. 34 per cent), security passes and unlocking capabilities (40 per cent per cent vs. 26 per cent).

Brand Not Paramount in Buying Decisions
Six out of ten U.S. consumers said they don’t care about a company’s country of origin when buying one of its technology products. 64 per cent said they don’t need to know the company’s name before buying a new product they like - and a virtually identical proportion said they did not need to buy technology products from large, established brand-name companies.

Expanded use of PC’s
The overwhelming majority said they use their home PCs to make purchases or conduct research on things they want to buy. And more than 25 per cent of Americans use their work PC for purchases or to research possible purchases. Close to half (48 per cent) of those surveyed now pay a majority of their bills online.

Of those who owned or want to own a PDA, 53 per cent said they would be interested in a single mobile device, such as a cell phone or PDA, as a “mobile wallet” that would act as credit and/or debit card. Overall, more than half said they would be more likely to use their cell phone or PDA as a mobile wallet if there were financial incentives to do so, such as frequent flyer mileage, cash reimbursements or fee discounts.

Internet & Electronic Communications Remain Strong
The survey confirmed the continuing growth of the Internet as a mainstream entertainment technology, as more than half of the respondents (58 per cent) said they were spending much more time on the Internet than they were a year ago, including 86 percent of respondents between the ages of 18-24.

Blogs and Social Networks
Young Americans’ adoption of new uses of technology far exceeds that of their elders: of those aged 18-24, 31 per cent have a blog (versus 13 per cent of all respondents), and 58 per cent visit social networking Web sites (versus 24 per cent of all respondents).

Although only one in four surveyed said they used photo-sharing Web sites, more than half (55 per cent) said they look at photos on their computer more frequently than they did a year ago. But, when asked if they would store personal photos or documents on a third-party Web site, more than half of those surveyed (56 per cent) said no.

Banks Seen as Most Secure
When asked how they would prefer to receive “mobile wallet” functions via a cell phone or PDA, more than half (56 per cent) said they would prefer to receive it through a bank or credit union, with telecommunications or cell phone companies a distant second at 18 per cent.

Digital Music
More than half of those surveyed said they now listen to music on their laptop or desktop PC and an equal number said they now use their home PC to listen to music.

The RBC Capital Markets survey was conducted during the last two weeks in July of 2006 and included 1,000 online respondents. Stamford, CT-based InsightExpress assisted RBC Capital Markets in the survey. The margin of error was plus or minus 3.09 percent.

About RBC Capital Markets
RBC Capital Markets is the corporate and investment banking arm of RBC and is active globally in fixed income, foreign exchange, infrastructure finance, structured products, metals and mining, and energy. Its North American equity underwriting; sales, trading and research business dominates the Canadian market and supports a significant and growing franchise in the US middle market. The firm’s international fixed income, structured products and treasury businesses are managed from London, which is the centre of a 24-hour trading platform with major hubs in Toronto, New York and Sydney.


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