The Business of Consumer Tech is Increasingly… Business
Stephen Baker, Vice President, Industry Analyst ;
Many years ago the latest and greatest tech in the IT market always went to businesses first. They needed the power and the advanced features that current hardware offered and could spend the extra money to get those attributes in ways that a normal consumer could not. Around the turn of the century, when traditional CE and IT technologies began to merge, the best technology, the newest, the coolest and the most cutting-edge started to go to consumers first. Consumers had money to spend, the volumes were large and business channels became more conservative as tech became a tool and their needs plateaued. Today we believe the paradigm is shifting back again towards business, with the newest and most interesting technology seeing the fastest opportunity for awareness and adoption, as well as the easiest path to financial success through the commercial B2B market and not with the consumers. This shift has significant implications for a consumer tech business plagued by stagnant growth and saturated markets as manufacturers, brands and developers of hardware turn their attention away from consumers (who frankly have turned much of their attention away from hardware) and back towards B2B applications.
It is a fascinating exercise to scroll through today’s hottest tech categories and think about the opportunities for selling to consumers (and through consumer channels) vs. targeting B2B markets and the B2B channels that service them.
3D printing is one of the most exciting and disappointing technologies in consumer tech. To-date the consumer market has showed virtually no interest in the technology, as the challenges with value proposition and potential market size far offset the cool-factor for mainstream consumers. In business markets, the potential for 3D printers is well established and the expectation is that most of the activity in the category will eventually be in B2B markets and channels.
AR/VR products are launching throughout 2016. And while certainly there are significant sales projections for consumer markets and consumer channels, there are just as many heady forecasts for B2B applications. Real estate, design applications and medical applications are all being touted as key opportunities. So while there will be significant consumer sales, it’s equally likely that sales volumes, dollars and profits for the category will be influenced as much by the rate of corporate adoption as consumer uptake.
Smart Home technologies offer a myriad of possibilities to B2B channels, in addition to an exciting long-term consumer outlook. Security is one of the fastest growing spaces in B2B and the potential for installing cameras everywhere inside and out has the B2B channel salivating over the potential market opportunity. Add that to easier physical security that can be ported from home applications, in addition to HVAC opportunities, and it’s apparent that the B2B market size for Smart Home applications (and the Big Data and IoT implications) is virtually limitless.
Drones appear likely to evolve to be more like the AR/VR market. Lots of consumer applications and volumes in the short term, but likely much less long-term consumer potential then the B2B markets offer. Markets such as broadcasting, security, deliveries and physical inspection all represent huge important markets for the drone business, with the ability to sell higher-end, more sophisticated and cutting edge products to the B2B channels than we are likely to see in consumer.
Finally the health and fitness segment of the wearables market is one that probably has the biggest potential for commercial applications, all the while still exploiting the exciting consumer applications as well. Insurance companies and health monitoring are areas that should see very high ROI for wearables without the pain of consumer pricing or consumer margin compression.
By no means are we dismissing the compelling consumer sales potential in these next generation markets. We simply believe it’s best to recognize that these categories have a more all-encompassing market opportunity that needs to be recognized and nurtured as they mature, not just a place to revisit once the consumer market has plateaued. The next generation of hardware is, like the first generation, ready to serve both the consumer and the business markets.
Interested in reading more about the applications of VR/AR technology?
Click here to read more about the consumer applications from Ben Arnold
Click here to read more about the commercial applications from Michael Diamond