Consumerization

Until the 1990s, you would see the most cutting-edge technology in the office. Companies could afford expensive computers, private individuals usually could not. Today it’s often the other way around: the phone in your pocket is newer and faster than the computer at your workplace. This exact reversal is what the term consumerization refers to, literally meaning something like “becoming a consumer product.” It means that technology is developed for private individuals first and only afterwards finds its way into companies and government agencies. The pressure comes from below: employees want to use the same tools at work that they use at home.

Why corporate IT lost control

For companies, this is an uncomfortable development. In the past, the IT department decided which devices and programs were allowed. It could set everything up centrally, secure it, and monitor it. But when employees bring their own private phones and use private chat services to coordinate work, that control is gone.

Experts refer to this as shadow IT: software that is used within a company without the IT department knowing about it. This is a genuine security problem. Company data suddenly ends up in private accounts with providers the company has no contract with. In the event of a data breach, the company is still liable.

Conversely, consumerization also has clear advantages. Tools that people voluntarily use in their private lives are usually easier to operate. Training takes less time, and acceptance is higher. Many companies have therefore stopped blocking such tools and instead set up rules for their use.

The path from personal phone to enterprise

The process is roughly the same in almost every example. A provider builds a product for the mass market, because that’s where millions of customers are waiting. The price is low, and usability is kept as simple as possible. As a result, the product spreads very quickly.

In the next step, employees simply bring it to work. They don’t ask anyone for permission, because it’s convenient and works right away. Once enough people do this, the IT department can no longer push back. It gives in and allows use under certain conditions. This is called “bring your own device,” or BYOD for short: you’re allowed to use your own device, but you have to allow the company’s management software to be installed on it.

In the final step, the provider builds a business version. It can do the same things as the consumer version, but additionally comes with contracts, data protection guarantees, and centralized management. It is sold at a significantly higher price. For manufacturers, consumerization is therefore no accident, but a sales strategy.

From the iPhone to ChatGPT

The best-known example is the iPhone, launched in 2007. It was designed as a consumer device, not for businesses. The market leader in the business segment at the time, BlackBerry, disappeared almost entirely within just a few years. Something similar happened with cloud storage services like Dropbox: at first individuals used them for vacation photos, and later entire project folders ended up stored there.

The most recent example is AI. ChatGPT was released at the end of 2022 as a free offering for everyone. Millions of people tried it out, many of them for work-related tasks as well. Only afterwards did business versions with data protection guarantees come onto the market. This is precisely why the term consumerization currently comes up so often in business news.

A common misconception is that consumerization simply means “technology gets cheaper.” That’s not quite right. What matters is the direction of adoption: from private users to organizations. Some technology remains expensive nonetheless, such as specialized AI chips for data centers. It never reaches private individuals, and is therefore not a case of consumerization.