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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See how clients have used our analytic solutions to solve their business challenges in our Analytic Solutions Case Study Library.
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.
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.
Year-Over-Year Connected Digital Fitness Device Growth Continues with a 40 Percent Dollar Increase in the First Quarter of 2016, According to NPDAccording to global information provider, The NPD Group, the connected digital fitness device category has continued to see growth in the first quarter of 2016 (January – March) as dollar and unit sales of the devices grew 40 percent and 27 percent, respectively, versus Q1 2015*.
52 Percent of Millennial Smartphone Owners Use their Device for Video Calling, According to The NPD GroupAs consumer preferences and habits for smartphone usage continue to shift, Millennials are driving the increased usage of video calling as a preferred application among smartphone users. In fact, according to The NPD Group’s Connected Intelligence Application and Convergence Report, more than half (52%) of smartphone users age 18-34 say they now use their smartphones to conduct video calls, representing an increase of 10 points year-over-year.
Smartphones and Voice Commands Vie for Control over the Rapidly Growing Smart Home Market, According to The NPD GroupAs the desire to create intuitive home spaces continues to increase, so too do the opportunities for devices and technologies to gain share in the smart home market. According to The NPD Group Connected Intelligence Connected Home Automation Report, nearly two-thirds (64 percent) of smart home product owners used a smartphone to control or monitor their home automation devices. Additionally, 73 percent of smart home owners already use voice commands, with 61 percent of those consumers expressing an interest in wanting to use voice to control more products in their homes.
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
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
Windows 10 launched with the key promise of creating a user experience that transcends the phone, tablet and PC. While this should, at least in theory, help drive the appeal of Windows-based phones, the reality is that it may be too little, too late for the mobile component. According to NPD’s Mobile Phone Track, Windows-based phones accounted for just 2.8 percent of U.S. smartphone sales in Q1 2015.
We live in a world dominated by Android and iOS – both hardware and apps. The Android and iOS platforms each offer more than one million apps but Microsoft is lacking apps and this remains their main challenge in offering a relevant third ecosystem choice for two reasons. Firstly, they are late to get new apps, being lower down in line for any developer; secondly, sometimes they are so low down that the app never comes. Think of last year’s key app, Flappy Birds. It came, got everyone hooked and vanished all without touching the Windows Phone world. And that is hardly a one-time issue: Windows Phone is lacking key apps in three top-tier categories; video, social, and gaming. In the video space, for example, Windows Phone has less than half the apps that can be found on Android and iOS, and both Amazon Instant Video and HBO GO missing.
In an effort to help boost app development, Microsoft recently launched the ability to more-easily port code from iOS over to the Windows platform. While a good step along the path, it is not necessarily the crux of the issue. Building an app is one thing; supporting it is quite another, and to justify the level of support needed (ensuring that it remains current with Android and iOS versions, for example) typically requires far more effort.
Microsoft’s greatest chance of gaining mobile users is converting them from its two biggest businesses - the PC and Xbox user bases. Xbox Live is built into Windows 10 and allows multi-player gaming across multiple platforms. Further, synergy between the PC environment and mobile has significant benefits within the work environment (think unified email and related communications) which can help to drive greater interest in the mobile platform. Time will be the only tell for Microsoft to know if the changes made to Windows 10 and its new cross-device development are enough to drive up phone adoption, which in turn could create a more competitive platform for developers to invest in.
I remember getting my first cell phone like it was yesterday. It was my 15 th birthday and the phone I was thrilled to receive was dumb, heavy and oh so cool all at the same time. I could make phone calls, text (by triple-tapping the numeric keypad) and play the one pre-installed game – Snake. Thirteen years later, I’ve had my share of ever-evolving phones from the Motorola Razr, to the very first iPhone, and so on. I have games galore, messaging apps and yes, I can still make the occasional phone call.
But is it any more exciting, or even as “cool” as I used to think it was? Smartphones seem to have peaked, with longer life-spans and slower sales, as there seems to be less and less to differentiate the old from the new. In other words, we’ve hit a level of maturity and with it, a tinge of dullness. This has resulted in the murmuring of a retro vibe: hipsters now sneer at smartphones, opting instead for flip phones. And a new “Motorola” ad suggests the Razr may be brought back later this month… I hope so, if only to shake up the market.
Not that I want to regress to the flip phone of my past, but we need a new take on the smartphone market; a new niche or “wow factor” to recapture user interest and justify expense. After all, the average cost of a smartphone is around $500 and can quickly head far higher than that, now that subsidies are (almost) a thing of the past. Simply put, the current design focus of “bigger, faster, lighter” is, in many ways, the enemy of true innovation and is limiting the appeal of the latest generation of devices. How fast do I really need a phone to be? Can I make mine last longer if it’s still running the apps without the processor choking?
One approach that is teetering on the edge of emergence is that of a modular smartphone. Conceptually the idea of modular smartphones is great: when your battery level is critically low, just pop in a new one (of course, my original flip phone could do that too…). Want a better picture? Snap in the higher megapixel lens. Broke the screen again? Click in a new one and be on your way. However, with this flexibility also comes a lot of responsibility. Where do we keep the many auxiliary pieces? Do we drag them around with us at all times? Or does it come down to dressing up our phone for the day ahead before walking out the door in the morning - not a bad idea in concept, but I’m not convinced that we will still be “dressing” the phone after the first week.
Time will be the only indicator of whether or not this concept will take a foothold in the market. Until then, the one main feature I would like to see come out of the mobile world in the next year is a smartphone with longer battery life. Forget “bigger, faster, lighter”; give me “longer.” But ideally, give me that with a cooler outer shell. Something that shouts that it is different in the way the original Razr did. Maybe Motorola is on to something…
Last week I read an excellent post from our own Industry Analyst, Steve Baker, talking about the Computing market south of the border. He spoke of a changing Computing landscape, the decline of the Tablet market and how what we view as a Computing device is much different than many years ago. I couldn’t agree with him more as the Canadian market is experiencing a similar trend however as I read through his post I couldn’t help but compare some of the US trends to our own business and making note of some of the key differences.
Yes through the first four months of 2016 the combined Tablet and Notebook market is showing similar volume decline, around 16%, and just like the US market it is the Slate Tablet that is driving the majority of this decline. Traditional Notebooks, like in the US, are faring better with unit volume down 7% while at the same time generating more revenue this year than the previous year. After comparing those initial market comments I thought Canada and the US are following the same path however after reading further it became apparent that although at the highest level the markets seemed similar there are some key differences that make Canada distinct.
Steve talked about the sub $300 market in the US growing, now representing almost 40% of traditional Notebook sales, with low-cost Windows and Chromebook devices showing increase presence in the market. Here in Canada this is not the case as we are dealing with a market where the low-end market has diminished significantly in importance. Chromebooks within Canadian retail is a very small portion of the market overall, securing less than 2% of sales, while in general the “value” market represents less than 15% of Canadian sales and is in steep decline. So far in 2016 we see not only this “value” market in decline but expanding that view to Notebooks priced at less than $600 and we continue to see both unit and revenue declines in these lower priced markets. We know that higher prices being driven by a less than favorable exchange rate is impacting what consumers are being asked to spend however throughout the years I have always seen a Canadian market less dependent on lower price segments.
Similar to the US, here in Canada the Premium price market is showing tremendous growth, including the 2-in-1 market. While in the US there is mention of high-end PC’s beginning at the $700 level here in Canada at $700 we are still thinking about mid-priced devices. Our high-end or Premium market can be considered $1,000 plus for a device. Within the Notebook market this Premium market represents 40% of the volume and close to 60% of the revenue. Which means we are asking Canadian consumers to shell out more of their hard earned dollars to purchase a premium priced device. So far Canadians seem to have little issue opening up their wallets as this Premium market shows no sign of slowing down as they continue to purchase not only traditional Notebooks but also 2-in-1 devices at these high price levels.
So while on the surface it seems as if both regions are following the same path, as we look further into the Canadian market we discover some very unique nuances that can change how we market and sell our devices. In this example the price difference is evident across borders – furthermore the competitive brand set and those who are leading or following is different as well.
The news today is full of doom and gloom about the future of the PC. Undoubtedly, there are plenty of challenges ahead for the category, but there is also plenty of room for optimism. While we celebrate so many things in tech that have been reimagined or disrupted we have given short shrift to the reinvention of the PC; in fact, we have given little notice to it at all. The numbers tell a great story of redemption and reinvention, but like all great tales that have to do with data, it is all in how you organize and interpret the data.
The consumer PC market isn’t dead. It looks a little different than it did in 2007, but the world looks different, too. While the business was slow to adjust, it’s now fair to say that it has adjusted, at least in the U.S. consumer market, which is where we focus. Using a modern, updated definition of a PC (and calling it a large screen computing device instead of a PC), the numbers don’t look like what some have come to expect.
For the first four months of 2016, unit volume of computing devices (tablets and notebooks) in U.S. retail fell 11 percent from the prior year. A weak showing for sure, but one tempered by the fact that the decline came solely from slate form factor tablets. The tablet market dropped by more than 30 percent as consumers either decided they didn’t need a new device or, when in the market for something, chose to step-up to the new hybrid 2inOne market. That decline represented a drop of over 1.2 million units in sales in just a four month period.
Traditional notebook PCs fared slightly better during this period, but still struggled as sales volumes fell by 7 percent versus the prior year. In the first four months of 2016, clamshell notebooks actually outsold plain vanilla slate tablets by nearly 1 million units. Notebook sales growth came from two segments - both very interesting for their representation of what the new reality of personal mobile computing has become. The leader in the segment was the entry-level notebook PC. Basic Chromebooks and low-cost Windows notebooks have taken the market by storm over the last couple of years. Sales for notebooks under $300 jumped 12 percent and now represent almost 40 percent of the traditional PC notebook market. The other growth area in traditional computing is high-end PCs. Sales for Windows notebooks above $700 grew by 10 percent during the first four months over the same period in 2015 (and exceeded the growth in Mac OS based notebooks); and at the end of the period they accounted for 18 percent of all high-end notebook sales - a new high for Windows.
At least some of the improvement in Windows can be attributed to the halo effect of the star segment in the personal mobile computing, which is the hybrid 2inOne. Sales in this segment, which includes products like the Yoga, Microsoft’s Surface products, and the iPad Pro, soared by 76 percent over the previous year and represented almost 20 percent of all mobile computing devices. This is the new face of personal computing: hybrid devices that are part tablet and part productivity tool. While the iPad Pro has been a runaway success, accounting for 18 percent of sales for the first four months of the year, it should be noted that the remainder of the market grew by more than 40 percent. That other segment was led by Microsoft’s Surface products, although they accounted for just 10 percent of hybrid sales with the remaining 70 percent made up of a mixture of traditional PC OEMs that now have an entree into a more compatible tablet like space that sits adjacent to the PC, and new low-cost providers like Nextbook.
Far from collapsing, a re-examination of the mobile computing market shows that while there are challenges, as there are for all consumer electronics devices in the highly-saturated U.S. CE marketplace, the mobile computing industry has successfully reinvented itself, propelled by a mixture of premium and entry-level traditional products, as well as a growing interest in the hybrid 2inOne space.
There is a perception that viewers are cutting the cord in droves, similar to the chopping down of Truffula trees to produce Thneeds. I, a tree hugger, am becoming a cord hugger, though a far cry from the Lorax of the cable industry. In this regard, my TV habits represent the majority as cord cutting is just starting to proliferate. This is my story; one about switching from Fiber Optic TV and re-subscribing to cable despite much consideration around cutting the cord.
The decision point arose when the two-year promo rate ended, ratcheting up the cable bill somewhere north of $200 a month. Do we need pay TV? Maybe a skinny bundle would be sufficient? Should I construct my own over-the-top bundle to replace a pay TV subscription? Would it include Sling TV, Netflix, HBO NOW, and Showtime? How much would Internet cost without the Triple Play discount? While it’s fairly easy to never plug in, cutting the cord can be quite an arduous task. Ultimately, cable provided the content our household wanted at a price that was unachievable with a la carte services. As an analyst covering digital video distribution, the evaluation process proved educational.
The first thought was to keep a pay TV subscription and lower the rate by dropping TV channels; simple, right? Not really. Skinny bundles, as they are more commonly called, are generally promo rates, and, for existing subscribers, no less expensive than the discount they were willing to extend for my existing TV package.
Option two was to cut the cord - and so began the process of determining what must be given up to go over the top. The idea was to make Sling TV the foundation. At $20 per month, with robust kids programming, this appeared to be a homerun. That is, until I realized it meant subscribing to two full-priced Sling services to get televised access to my last place NY Yankees and Disney channels. Sling just started offering YES Network, but as part of a beta package that does not include the Disney channels. Being a fan since the early 80s I wanted to stick with my team, which meant subscribing to the beta service and standard service to get the right channel mix. As is the case for many fans, access to in-market game day coverage throws a monkey wrench into the cord cutters dream. But this alone did not ensure coaxial cable kept running through the house. The real problem was that Sling does not authenticate all TV Everywhere apps. That’s a non-starter for the kids, who are more likely to use the Disney XD app than the linear channel.
And so, barely into the pursuit of a cut cord, the dream had fallen apart. I never made it to the math, but looking at the rates for Internet without TV, I doubt the over-the-top cocktail of services would have cost any less. While cord cutting and un-authenticated streaming apps are becoming more common, it still requires compromising content and services. Ultimately, the regional cable operator offered more channels than I had before, a faster Internet connection and a three-year rate lock at the price I was paying before my promo expired.
Back with cable only days after a two-year tour with Fiber optic TV, viewing changes are occurring. When you’ve had cable since the early 80s you know the channels and that means browsing is back. It remains to be seen how long this new found love for browsing lasts as frustration with the ads is already setting in. More importantly, in a couple of weeks a new season of Peaky Blinders will be available on Netflix, pulling us back in to the (sort of) cordless world. But only partially; the cable cord will remain part of our household.
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