In home, the car, and the office – consumer electronics are used everywhere, all the time. The devices consumers use are changing rapidly, as are consumers’ preferences. The features they want are converging. And it’s all happening in the midst of some of the highest device-ownership levels we’ve ever seen. To top it off, this is occurring in a mature market.
How do you make sense of it all and drive growth for your business? NPD has been tracking and analyzing trends in the consumer electronics market for more than 25 years, offering both retail and consumer information for all channels, including the Web. You can use this information to understand the rapidly-evolving product landscape and consumer electronics trends at the national and local market levels.
Beyond market measurement, we combine our robust data assets and industry expertise -- including your own data or third-party data, as needed -- to address specific issues at each phase of your business cycle from opportunity identification to marketing evaluation and pricing optimization.
The Retail Tracking Service monitors retail sales of consumer technology products. Data provided by our participating channel partners delivers a detailed picture of product movement down to the item level. National information is available weekly and monthly; local market information is available monthly.
Store-Level Enabled Retail Tracking
Store-Level Enabled Retail Tracking complements our national Retail Tracking Service– it can help you determine whether sales are distribution-driven or whether certain parts of the country are contributing more to national share or driving growth. The velocity measure set that is part of Store-Level Enabled Retail Tracking takes into consideration sales volume (Annualized Industry Volume or AIV) rather than considering store count alone, for a more meaningful read on where products are selling and how they are performing.
Account Level Reports
These reports enable retailers who choose this option to share their information with approved vendors, allowing vendors to analyze business performance at specific retailers down to the item level in many instances. By making this report available to their vendors, retailers can work together with them to optimize performance. These reports may only be made available with the express permission of the retailer.
Explore comprehensive market research on consumer behavior and attitudes across a wide array of industry sectors. This service provides a total market view, encompassing activity at all retailers including Walmart. It delivers critical insights into market trends, demographics, and customer satisfaction to help companies address the challenges of market sizing, competitive analysis and response, new product development, product positioning, and more.
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Get access to insights on shopping, browsing, and buying visits across all channels, retailers, categories, and demographics. View conversion rate and average spend measures and see how they vary by retailer, season, and demographic. Gain an understanding of where else your customer is shopping and buying.
Checkout Tracking℠ provides information on consumer buying behavior at the market basket level, based on receipts for brick-and-mortar retail purchases. You get precise, item-level purchase detail that is linked to buyers and their demographics. Data comes from large-scale longitudinal panels, making it possible to study the same consumers over time, analyze competitive market baskets, and identify purchase patterns.
You have opportunities. You face threats. What you need are smart, quantifiable methods of distinguishing one from the other and maximizing your chances of success. NPD’s Analytic Solutions Group includes a team of senior leaders with extensive experience developing and delivering analytic solutions that address strategic marketing, sales, and planning issues.
We combine NPD POS and consumer information, industry expertise, and custom survey research – then add state-of-the-discipline research techniques and methodologies to explain the "why behind the buy.” Through advanced modeling and analytic services, we offer insight into what will happen in the future, not just what has happened in the past, answering your most pressing business questions:
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The tablet market is beginning to mature after explosive growth following the device’s introduction. The tablet is now an integral part of the typical American household’s electronics inventory. Our new Tablet Accessory Inventory Report evaluates tablet accessory purchasing and ownership, providing fresh insights straight from consumers and our industry analysts.
Kids and Consumer Electronics, 2014 Edition delivers new insight on the significant role consumer electronics products play in children’s lives — and how it’s changing, with trended insights back to 2011. Looking at ownership and usage among kids ages 4 to 14, the report covers of a host of consumer electronics products — from smartphones and tablets to gaming consoles and TVs. Discover the frequency with which kids use these devices, the average age they begin using them, and more.
What's Driving Consumer Behavior? Our new consumer technology reports explore the products and market trends that matter to your business right now. These timely reports can help you navigate the fast-moving CE and IT landscape.
The VAR channel represents significant business potential. Now you can get a picture of this elusive technology market! Our VAR Tracking Service delivers detailed monthly sales information with views at the category, brand, item, and feature levels.
The Internet Surpasses Print and Broadcast Advertising as Preferred Source of Makeup Product Information, According to NPDDefining many of the most popular, growth-driving trends in makeup today from contouring to draping, the internet went from the least-frequented source of product information four years ago, to the fastest-growing in 2016, swaying both styles and sales, according to global information company The NPD Group’s Makeup In-Depth Consumer Report 2016. More women today are looking to the internet for information on makeup products and brands, up 11 percentage points versus 2014, or more than any other information source.
Safety and Security Are Lead Drivers in Smart Home Technology Interest, According to NPD Connected IntelligenceAccording to The NPD Group Connected Intelligence Connected Home Automation Report, security and safety top the list of reasons driving consumer interest in building a smarter home. Four-in-ten consumers who are at least somewhat interested in a smart home ranked making their home more secure and safe as the top reason driving their interest. As such, network connected cameras1 generated nearly two-thirds, 61 percent, of all U.S. home automation industry revenues in the 12 months ending June 20162.
Activity Trackers Continue to Lead in Fitness Tracking, Despite Smartwatches Working to Close the GapWhile activity tracker sales continue unabated, the smartwatch is becoming increasingly popular with consumers looking to monitor more advanced activities, according to The NPD Group Connected Intelligence Activity Trackers and Sports Report.
This time, our Market Intelligence team focuses on Bluetooth headsets. Where is consumers’ affinity strong? Where are your most promising opportunities?
The newly formed Technology Market Intelligence team is committed to providing actionable intelligence that helps you understand what's driving shifts and trends in your key categories. Through email communications called Tech Talks and Technology Topline, now we'll provide added insights in the categories that matter most to you. The Market Intelligence team will complement our current industry analyst program by focusing on more tactical strategies that are being deployed effectively in the U.S. channel.
Check out the first edition of Tech Talks, our new communication highlighting the latest insights about what is driving the shifts and trends in the industry.
Every journalist and student in America knows the so-called five Ws: who, what, when, where, and why. It turns out the same five Ws are also the most basic forms of consumer segmentation.
But relationships among the five Ws of shopping are a bit more complex than they are among the five Ws of writing. And the tales they tell are illuminating.
We shared online and brick-and-mortar, receipt-based data from our Checkout TrackingSM service with researchers from the Wharton School of The University of Pennsylvania. The study revealed the what and the why of consumer purchases are linked to the when of consumers’ lifestyles. In other words, when people have babies, they buy baby things. But the how and where of purchases are tied to who a consumer is by generation.
Even when the other four Ws are the same, it’s who we are – Boomer, Gen X, or Millennial – that makes all the difference.
Insights and Opinions from our Analysts and Experts
AT&T announced its intent to purchase Time Warner this weekend in a move that is sure to raise a few eyebrows at the FCC and DOJ. In theory, it’s a “vertical” acquisition, meaning that there is (almost) no overlap between the AT&T and Time Warner assets, and, typically, vertical deals meet with regulatory approval. But there is vertical, and then there’s the layering of content on top of mobile and fixed networks to form a competitive advantage. And that is where the fear sets in.
The competitive advantage in mobile is becoming harder to find: network coverage is becoming close to parity, the range of devices available on each network are the same, and this means that pricing becomes the only lever. That’s clearly not a great strategy as a race to the bottom ultimately helps no one. And so, the carriers are all looking to differentiate through content, while rapidly turning data services into a commodity. To be clear, this isn’t a new strategy for the carriers, which have tried many variations over the years. But with broadband data speeds now more than capable of supporting video, it is a strategy that is now working.
T-Mobile’s approach has been Binge-On; offering data-free access to a very broad range of video sources that the carrier has partnered with. Verizon and AT&T are taking a more aggressive stance, with both looking to take a content ownership approach, rather than just content partnerships. To that end, Verizon is in the throes of purchasing Yahoo! (and the related assets), developing the Go90 mobile service, while also offering exclusive NFL content for mobile.
But what AT&T is doing is bigger and bolder. Just last year, AT&T acquired DirecTV, which firmly moved AT&T from being a mobile company (plus enterprise communication) to being an entertainment provider. The key goal here was to begin to merge the home and mobile services to provide ubiquitous access to entertainment content across multiple platforms. DirecTV meant that AT&T had the opportunity to provide home-based entertainment service on a national basis, matching its mobile footprint. And, of course, DirecTV already has the distribution rights for this content.
Adding Time Warner to the mix is an interesting expansion that does not necessarily bring the “benefits” that much of the initial media fears and concerns have focused on. There are concerns that AT&T will have too much power across the entertainment “stack,” meaning that AT&T customers could gain early access to content (ahead of other cable providers) or could even make some content unique. Imagine a world where HBO’s “Game of Thrones” is only available if you subscribe to AT&T, for example. Now, having imagined this scenario, disregard it: not only would such an approach simply not be permitted by the regulators, it has little long-term benefits for AT&T.
Consider instead, the fact that AT&T will now have immediate digital rights to leverage the Time Warner content across both fixed and mobile networks. That does give AT&T, potentially, a head start in launching a true mobile-first entertainment strategy. Additionally, AT&T probably has some very strong ideas about how to migrate the movie content to a digital future that stretches beyond Ultraviolet and the other electronic variations of today. As such, the competitive threat from this deal lies exactly where one would expect it to be: faced squarely at the other mobile operators.
LeEco unveiled most of its U.S strategy Wednesday, announcing four TVs, two smartphones, a VR headset, a connected bike and the concept car that it previewed at CES earlier this year. The overall hardware strategy is to focus on high-end products with mid-tier pricing - in addition to the $2 billion Vizio acquisition the company announced this summer. But don’t mistake LeEco for a hardware company, as it is much more.
Rather, LeEco has historically been a content provider, delivering original content, a vast library of movies and live event streaming. The hardware play is really about providing multiple windows into the company’s content and while the majority of the existing content has been focused on the Chinese market, there are plans afoot to build a similar portfolio for the U.S. market. This content will be in-part through an array of partners – ranging from Lionsgate to the History Channel and many more – in addition to original content and increased event streaming.
But even this portrayal is not really accurate; what LeEco truly wants to be is a unifying ecosystem that allows content to move seamlessly between various devices allowing, for example, content to be switched from the phone to the TV (or to the car). And herein lies the boiling the ocean issue. To create an ecosystem of this size and scope takes an awfully long time and has several rather large, well known competitors such as Apple, Google, Amazon and Facebook, to name but four. In other words, this is a very bold strategy with long odds against its success.
But it could work. The company appears to have very deep pockets and knows that this will not be an overnight success. And, with that in mind, probably the best way to think of LeEco right now is as a hardware company first and foremost.
For the next couple of years, consumers will buy LeEco devices because they are well priced, with top-of-the-line features. The content alone – at least initially – does not differentiate the company enough to sway a consumer’s purchase decision. A year or two from now, with more compelling content, the company can enter Phase Two of the strategy and become far more of a content company. This will then slowly lead to Phase Three, when the company becomes an ecosystem.
The key to LeEco’s hardware strategy will be its mobile phone strategy. LeEco’s core target is the millennial, who is a phone-first user; however, the challenge here (and actually with all the hardware focus) is getting the devices into the hands of the audience. The initial focus is to sell via LeEco’s online LeMall, but a brick-and-mortar strategy will also be needed to ensure that consumers see the LeEco devices along with the myriad of alternatives. Best Buy, Walmart, and ideally, carrier stores will drive far more sales than an online-only strategy, even for the millennial market.
But it would be wrong to discount LeEco… at all. Yes, the retail strategy may need to be expanded, but that’s likely to happen over time. The theory behind LeEco’s strategy is a strong one, even if the pieces do not yet combine together to get the company there. If there is a possibility that an ocean could boil, I suspect LeEco would build the product suite necessary to at least start it all bubbling.
In August, Sonos announced that its line of multiroom speakers and soundbars would be compatible with Amazon’s digital voice assistant, Alexa, allowing users to cue up music on their speakers and soundbars by voicing a command to any of Amazon’s Alexa-enabled-devices. From a user experience point of view, this type of integration makes perfect sense. Voice, whether in controlling your lighting or simply finding out the weather forecast, is an easy way to access information quickly, but is also surprisingly natural for controlling audio. A year into owning an Echo, I’ve found voicing a command to Alexa to play music is a lot easier than flipping through pages of apps and menus on my phone.
The Sonos announcement is yet another sign that voice control, and by extension digital voice assistants, are quickly impacting how we use technology hardware. According to a recent NPD Omnibus study, 38 percent of consumers have used a digital voice assistant like Alexa or Siri. Most have become familiar with digital assistants via their phone, and in fact, 86 percent of those polled said they have used a digital assistant on their smartphone. The phone is a great device for voice assistant applications, but the use case for these applications differs depending on the devices they run on and where they’re located. So far, Amazon’s Echo speakers have focused on interoperability with smart home products in addition to the skills or voice apps they add each week. With this in mind, Alexa is most helpful at home if she can be accessed in multiple rooms. This is precisely why Amazon revamped their Dot speaker and dropped the price to $50. The goal for Amazon here is not necessarily to sell speakers, but to sell consumers on Alexa everywhere.
Interestingly, a symbiotic relationship exists between voice assistant applications and the smart home market. For wider adoption, digital assistants need to demonstrate they are useful for things other than setting timers and connected home products need to show they add real value to the home – not just connectivity for connectivity’s sake. Pairing the two together creates a scenario where consumers can experience the best aspects of both.
In the short time since the Echo went mass market, we’ve seen other devices integrate voice. In September, GE announced that its connected Monogram and GE-branded appliances would be controllable via Alexa, while camera and drone maker GoPro also added voice control to its new Hero 5 cameras. These products join Google’s forthcoming Home speaker and Jam Audio’s Jam Voice in a quickly growing field of voice enabled CE devices. Over the next 12 to 18 months, expect voice to become the newest ‘gotta have’ feature in consumer technology with TVs, cameras, and even A/V receivers potentially adding the feature. This is in addition to the numerous PCs, mobile devices, and smartwatches that already offer voice control. Whether the feature is built-in or arrives in the form of a connecting device like the Dot, voice control and digital assistants are poised to change the way consumers interact with technology products.
Yesterday Apple introduced the iPhone 7, which now lacks a 3.5mm headphone jack, ending several months of speculation that Apple would remove the port from the phone. There are likely several reasons for this design change. Eliminating the headphone jack would make room for a slightly larger battery and taking a port out of the phone helps protect the phone against water and dust damage. Additionally, Apple and Beats each announced their own Bluetooth products yesterday, and while eliminating the headphone jack from the iPhone will likely boost demand for Bluetooth headphones of any brand, Beats and Apple will certainly benefit.
Stereo headphone sales have been migrating towards Bluetooth for the past few years, so the removal of the headphone jack isn’t quite as sudden as it seems. In fact, for the 12 months ending in July, Bluetooth accounted for 45 percent of all headphone revenues and 13 percent of units, up from 31 and nine percent, respectively the year prior. In June and July of this year, Bluetooth sales even surpassed that of wired headphones, accounting for 52 percent of sales during those two months. The growth in Bluetooth is the result of increased affordability (today a third of Bluetooth units are priced $50 or under), the growth of the fitness headphone segment and an overall realization that Bluetooth provides a decent level of audio quality along with the convenience of eliminating wires.
Despite the make-up of the stereo headphone market naturally trending towards more Bluetooth, the iPhone 7 launch is likely to drive increased demand for Bluetooth headphones. A recent NPD study, fielded in the days leading up to the iPhone 7 announcement, found 60 percent of likely iPhone 7 purchasers (who expect to buy the phone within the next six months) already intend to buy a pair of Bluetooth headphones within that time frame. When these iPhone 7 buyers were then presented with a visual concept and explanation that the headphone jack on the phone would be removed (replaced with a pair of Lightning connector headphones and an adapter at purchase), their purchase intent for Bluetooth headphones rose to 78 percent- more than three times the purchase intent exhibited by smartphone owners (irrespective of their smartphone buying intentions or favored brand). According to these findings, most who expect to purchase the iPhone 7 consider buying Bluetooth headphones a near certainty.
As we’ve seen with the change from the 30 pin to Lightning connector on iPhones and iPods (which helped to launch the nearly $2 billion wireless speaker market), as well as the decline in USB ports and optical drives on Macs, Apple is not one to maintain the status quo when it comes to ports on devices. While yesterday's announcement seems extreme given the legacy of the 3.5mm input, smartphone design has always pushed boundaries. With Bluetooth now accounting for a majority of headphone sales, the elimination of the headphone jack in the iPhone 7 is more of an adjustment to how consumers are listening to music rather than a true shock to the system.
Over the past few years I’ve tried my fair share of smartwatches in various shapes and sizes, but none lasted on my wrist for more than a few days. The use case wasn’t compelling enough to justify the wrist space, particularly as each and every one of the devices felt like a compromise between tech and style. Ugly may be too strong a word, but certainly – for me at least – they did not look elegant or classy.
Instead, the smartwatch opened my eyes to the world of watches and I found myself dreaming of Rotary’s, Rolex’s and many other timepieces that I couldn’t possibly afford. If I was going to wear a watch beauty and elegance would take priority over functionality that may or may not even be of use to me.
And I’m clearly not alone. The watch industry is cautiously reaching for the champagne now that the smartwatch has failed to take over their world. While the smartwatch certainly impacted the $200-$500 watch business, many of the declines in the broader watch business are now, in hindsight, being blamed on economic and related issues, not the brash smartwatch upstart.
In the end, I embraced neither the classic watch, nor the smartwatch. Rather, my inner-nerd found a compromise and I chose a runner’s watch replete with GPS, notifications, waterproofing and (of course) step counting. But IFA 2016 has made me reconsider the smartwatch for a couple of reasons. Firstly, I may actually need a little more functionality than a sports watch can provide. I’m directionally challenged making running in new locations without Google Maps a recipe for disaster; and since I don’t run with a phone, the watch becomes a far more important tool.
But the second reason is more significant to the broader industry: the smartwatch is morphing into a device of beauty. At Samsung’s Gear S3 launch, there was far more emphasis placed on the exterior design of the device than on its innards. And it was justified - the device is a beauty. Samsung is not alone in this shift as more tech companies are taking the watch industry approach, recognizing that they need to build an elegant device first, and work on the technology second.
In that respect, it is surprising that it has taken the mobile industry a while to truly embrace this focus. After all, the mobile phone was always the eye candy that drove the mobile purchase. Few people wanted to carry an ugly phone, as Motorola proved when they launched the original Razr at the (then) ridiculous price of $500, and watched it sell out almost immediately because the device was so darn cool.
Mobile’s “cool” has now been transposed to “elegant” for the smartwatch market, and we can expect to see many more smartwatch launches that focus on the designer’s thought process, not the functionality of the product. As such, it may be a little too soon for the watch business to write off the smartwatch threat just yet.
Back in December 2013, a few brave NPDers ventured out into New York City’s chilly Times Square to find out what people thought about the newly launched smartwatch. Would the men and women of New York have any interest in this new-fangled device, or was it really just the domain of the tech-evangelist? The feedback was interesting with women in particular professing a desire to buy such a device. The people we asked saw the device as a time-saver, since it would save them from pulling their phone out of their bag to check the time. Yes, it’s true; the “killer app” for the smartwatch was tracking time, itself.
Of course, we knew such research was, at best, anecdotal and that it would take more than basic watch functions to drive the market forward. But it made for a funny story, especially as we were in Times Square with a plethora of dubious characters offering watches for couple of bucks on every street corner. Interestingly enough, to an extent, the feedback has so far proven itself to be directionally correct. While not the only function that consumers use their smartwatch for, checking time is still the most popular function; over 55 percent of users track the time on a very regular basis, compared to 41 percent tracking, for example, their steps.
Of course, the real need is about more than simply tracking the time, but rather the broader goal of tracking notifications. When we asked early smartwatch adopters about why they continued to wear the device, they would quickly confess that while they liked to talk about the cool apps, the real use case was that the watch vibrated when their phone rang, or when they got a text message. Forget reading the message; they knew something important had occurred and so they would reach for the phone to examine the event in more detail.
As the technology has improved, and the app world has expanded, so too has the range of use cases. Activity tracking has clearly become far more important, but notifications and the time remain front and center -- and these use cases have helped to evolve the customer base. Smartwatch adoption skews younger and lower income in many cases and while the natural inclination is to simply label this group as “early tech adopters,” the reality is a little different.
It appears that a successful target sector for the watch is the service industry, ranging from valets to bar staff and waiters. These are users that cannot stay glued to their phones while they are working, but still want access to “glanceable” information such as messaging notifications, alarms and (of course) how long they have left on any given shift. The ability to remain in contact without reaching for the phone is still the killer app.
This all bodes well for the newer generation of smartwatches, which can connect via cellular rather than just Bluetooth. The freedom to completely un-tether from the smartphone could become the next logical “killer use” as it means you can go for a run without carrying that ever-larger smartphone with you, for example, or range further in the restaurant without worrying about Bluetooth. Of course, cellular connections come with a fee, and success will no doubt be related to the correct balance between service fees and how important the untethering aspect of these devices proves to be.
The smartphone has fundamentally changed our lives, and how we interact with each other. It allows us to stay in contact while out-and-about through more than just voice calls; and it enables us to ignore the people right in front of us when we choose. Sure, it’s a mixed bag of good and bad behaviors, but with 70 percent of U.S. consumers carrying a smartphone (and some carting more than one) we take for granted many conveniences that caused major headaches before the smartphone.
Take, for example, the art of navigation. I remember buying my first car, and immediately rushing to the bookstore to pick up a Thomas Guide. Thomas Guide was the pre-GPS, street-level map that we all tried to navigate across California with, flipping pages as you moved along the route, and trying to make sure that you really were where you thought you were. It was part art, part science (at least for me) and added a sense of adventure to the trip. There was no navigation system to tell you exactly where you were, or when you would arrive. “Are we nearly there?” from backseat passengers couldn’t be answered exactly, as you probably weren’t quite sure how much farther you had to travel or what upcoming traffic would be like. Nowadays, the Thomas Guide seems like a quaint throwback (although it is still available) and even the thought of going to a bookstore seems odd to the many e-book readers among us. Instead, at least from a navigation perspective, more than half of smartphone owners use a navigation application such as Google Maps or Apple Maps on a regular basis.
And as for the bookstore, and retail shopping in general, the smartphone has had just as significant an impact. On the positive side, with navigation systems in our pockets, we can at least find the nearest mall while on a road trip. But we’re probably less inclined to make the detour when we can just buy everything from our smartphones and receive deliveries the next day (or even within the hour in some locations).
Pre-smartphone, the purchase involved an adventure with a balance between store visits and online price checking, all done with a team of two (my wife stayed home to price check while I visited stores). Of course, those were the days when you could choose to buy from a wide array of electronics retailers including Best Buy, Circuit City, CompUSA, Fry’s and Good Guys. Having so many purchase options was invaluable for consumers; retailers were forced to price match against a large number of competitors, which meant aggressive discounts.
Fast forward to the present and many of the above retailers have disappeared. More importantly, the market has moved increasing online, and has become far more mobile. According to NPD Connected Intelligence’s SmartMeter, the percentage of U.S. smartphone owners using the Amazon app doubled from 21 percent in the first quarter of 2015 to 42 percent in the same quarter of 2016. And Amazon is not the only retailer to see a growth in app usage: Walmart sees 20 percent use, followed by eBay (15 percent) and Target (10 percent) apps. Further, there’s a significant base of users who jump to the retailer’s website via the smartphone, as they haven’t yet committed to downloading the app.
This is somewhat of a challenge for the retailers, as they want to remain top-of-mind to the smartphone-toting consumer, which means having the app firmly on the smartphone, not just hoping for the occasional website visit. With an app retailers can send notifications, and there is the potential to update consumers on flash sales and other would-be bargains. To do this, the app needs to be more than just a sales-front for the products. Take, for example, grocery store apps. Many of them don’t include the ability to create a shared shopping list. This makes some sense as shopping lists typically reduce impulse purchases, the very thing that grocery stores hope for. But at the same time, the lack of a logical family-oriented list means there’s less chance that consumers will use the app on a regular basis.
Looking back at how the navigation world changed with smartphones, another logical addition to most retail apps would be more detailed in-store maps, allowing the consumer to find the product they want without too much aimless wandering. But again, this means changing the focus from encouraging shopper “drifting” in the hopes of impulse purchases to a more focused in-and-buy approach.
This means that many retailers need to change their mindset in this increasingly mobile world if they want to remain successful. Many are currently trying to embrace mobile without fully embracing mobile - they still want to protect the older model and are not quite ready to put it all on the table. It’s a smart short-term approach… until suddenly it’s not, and someone else has changed the model that the game is based on.
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
Although it is often best to take a skeptical view of the likely success of nascent technologies, virtual reality and augmented reality (VR/AR) are the exception to the rule. Government, military and entertainment verticals have been trying to harness the potential of VR/AR for years. Today the convergence of technology and demand are finally coming together to create a market for mainstream commercial and consumer adoption. Let’s look at where we see applications in the business-to-business market today and what we think that will look like in the future from a vertical market perspective.
Commercial applications, while not as widely talked about as consumer ones, are working to make themselves known. Currently, flight and military simulation are key applications but, undoubtedly, more are on the way.
In healthcare, we are seeing firms leveraging virtual reality to help patients deal with phobias such as fear of flying, claustrophobia and anticipatory anxiety via exposure-based cognitive-behavioral therapy. Another area where we are already seeing tremendous interest is in training simulations for situations that could arise in the ER, operating room or code blue emergencies.
For real-estate, VR is a natural opportunity (just like drones) to enhance showing commercial and consumer properties. For example, sites such as Youvisit.com and Sotheby’s offer 360-degree view or VR tour options. In the future, we believe that not only will you be able to view the property in VR, but you’ll have the option to adjust what season or time of day you’re in when inspecting room-by-room to see how the light in the house or property changes (a key decision when buying a property). VR can easily add interactive neighborhood statistics and augment the home tour with a Google Earth-like experience to allow the buyer to see the entire neighborhood, not just the home.
In hospitality and tourism, similar to the real-estate industry, firms are starting to leverage VR to show properties via virtual walk-throughs. For example, if you’re planning a soiree such as a wedding or corporate event, this technology could help to accelerate the process. Vacation planning would be easier too, allowing you to explore the scene ahead of time to make the most of your trip or venture to spots that are frequently missed.
Publishing may not be as advanced as other verticals, but a little vision could open the door for new products and services. YouTube, showed the potential of sharing videos and how-to’s on repair issues, creating a whole new category of publishing. VR can take that a step further by delivering a virtual reality repair manual for your car that could not only show you where to locate the problem, but also overlays the proper tools coupled with where to buy any needed parts. VR could also have applications for students studying subjects such as physics, science and history, allowing the student to see cause and effect or walk through a historical site in real-time – a virtual reality textbook.
VR/AR has the potential to reinvent the processes that are at the core of many of today’s key B2B verticals. While many of the examples above are consumer oriented in usage, the experience is powered by commercial applications coupled with the underlying hardware infrastructure. As more industries become interested in VR/AR strategies, support will be delivered through a channel partner that is well versed in the underlying challenges of supporting VR/AR (e.g., storage, networking, infrastructure and application software, etc.). The potential for VR/AR to remake many of today’s vertical markets is immense and that reinvention doesn’t have to leave the channel outside the opportunity. As the trend gains ground, we expect the channel to leverage its vertical and technological expertise and help unlock the potential opportunities for VR/AR.
Interested in reading about the consumer applications of VR/AR technology?
To read about today’s hottest tech categories and the opportunities for selling to consumers vs. B2B markets, check out this post by Stephen Baker, The Business of Consumer Tech is Increasingly… Business
When I was college in the 90’s, my campus had a virtual reality event. A huge semi-truck full of equipment pulled up to our student union and a crew assembled two structures they called VR booths. Users donned what basically amounted to a football helmet while standing inside the booths where we took part in a clunky fighting game against each other. Today’s virtual reality is worlds different from the demo I tested. While an enhanced and immersive visual experience remains the goal, the hardware has slimmed down, become more affordable and hosts many more applications than the kung fu simulator I demoed.
The consumer technology industry has seen products boasting of enhanced video experiences before, of course. Seven years ago, 3DTV was all the rage. At its height, 3D accounted for 40 percent of TV sales revenue, but consumers never embraced it. The experience of watching content in 3D was hit or miss and viewers never found a reliable source of content. Plus, you know, the glasses. By the time 3DTVs became affordable, interest had already waned. VR is similar in some ways. The glasses are back, but now they’re in the form of a larger face apparatus. Content needs to be shot or specially retrofitted for the format. It’s also being sold as an experience, much like 3D was.
But that’s where the comparisons end. Early on, the nascent VR headset market offers consumers multiple entry points into the technology. For those looking for a taste of virtual reality, mobile VR and Cardboard style headsets that employ a smartphone for the visual experience can be had for as little as $7. Enthusiasts looking for something more immersive will likely gravitate towards higher end PC connected products like the Oculus Rift and the HTC Vive. And game console owners can expect a surge of VR accessories in addition to the already announced PlayStation VR. The selection of products poised to impact the market indicates consumers with interest in the technology will have a number of ways to experience it regardless of budget or tech savvy.
That’s why mobile is key to VR’s success. Near ubiquitous smartphone ownership and a growing assortment of virtual reality apps found on the major mobile app marketplaces mean games, maps, videos, and anything else you can think to view in VR will be readily available. This is a stark contrast to the early days of 3DTV when owners had to rely on a smattering of cable and broadcast offerings and later, 3D Blu-ray for content. The result of this open access to VR devices and applications means the market is actually helping to nurture a growing segment of virtual reality enthusiasts, rather than pricing out aspirants who cannot yet afford it.
This dynamic is reflected in NPD’s Checkout TrackingSM data regarding online virtual reality headset buyers. While the age and gender profile of PC and mobile VR headset buyers is similar, differences exist in the affluence of these consumers. For the six months ending in April, 77 percent of mobile VR headset buyers had a household income under $125,000 while 42 percent of Oculus Rift owners had an income above $100,000. And while Oculus buyers on average spend more on technology throughout the year than mobile VR headset buyers ($1,897 vs. $1,154, excluding the VR purchase) combined, tech spending by VR buyers was more than three times the level of non-VR buyers. This helps confirm the notion that early VR purchasers tend to be technology enthusiasts and PC connected VR buyers have been more affluent than mobile based buyers so far.
But the Rift, Vive and other forthcoming PC connected VR headsets present unique, upgraded experiences- and from a market development perspective, the built-in step-up opportunity is a great thing for the category. Consumers who initially whet their appetite with mobile VR can upgrade to a more premium device should they want more. One might ask if the “good enough” mobile experience could win out- that’s certainly possible, but it may not be good enough for long. Qualcomm’s latest smartphone processor, Snapdragon 820, supports VR friendly features like 360 degree audio and computer vision capabilities and most expect the next version of Android, Android N, will support more intensive VR applications as well. Additionally, Lenovo has already announced their Phab 2 Pro, the first consumer smartphone using Google’s Tango augmented reality platform. With these developments, VR capabilities could become the next differentiating feature in smartphones or even allow for a new segment of phones designed specifically for VR enthusiasts – all the more reason mobile VR devices figure prominently in the category’s future.
As we continue through the post-PC era, it seems a little counter-intuitive to pin the future of virtual reality on devices that connect to desktop computers. For virtual reality to scale, it will need to tap in to the huge installed base of mobile phone users that includes VR enthusiasts, casual users, and everyone in between. Going forward, the biggest question is which form factor will be most dominant. Will improved smartphone technology accelerate growth in mobile VR headsets and applications, or will increased affordability drive sales of PC and game console connected VR? In either case, the visual experience must be outstanding to engage users, or else it’ll be 3DTV all over again.
Interested in reading about the commercial applications of VR/AR technology?
To read about today’s hottest tech categories and the opportunities for selling to consumers vs. B2B markets, check out this post by Stephen Baker, The Business of Consumer Tech is Increasingly… Business
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