The business of selling technology products into the commercial market is changing. Cloud services are displacing on-premises hardware and software. Employees are using their personal devices at work (BYOD). And there is more focus on services and less on ownership.
You can make sense of the shifts in this market using our commercial technology market research. It’s the industry’s authoritative resource for tracking and sales-out data in the total commercial channel. Tracking data from over 100 manufacturers, commercial resellers, and distributors makes us the only source for this information. Additionally, our monthly and weekly reports, available for key CE, BTO PC, storage, networking, and software categories, provide timely technology market research information and insights – including unmatched detail down to the item level.
Tap into the only source for total sales for the commercial channel. Monthly and weekly reports deliver timely information and analysis with unmatched, item-level detail. This aggregated sales data from the world’s leading IT distributors offers a precise view of distributor sales in all key CE, IT, and software categories. It includes information from members of the Global Technology Distribution Council (GTDC), with whom we have an exclusive North American partnership.
Explore the commercial purchasing of information technology products sold through national corporate resellers and direct marketers. This detailed, monthly market research information identifies the interests of corporate buyers and helps you understand and meet market needs. Our reseller point-of-sale data includes unmatched detail down to the item level.
VAR Service Invoice
There’s a new way to see exactly what’s happening in the VAR channel. It’s the VAR Invoice Service, and it provides new insights about the products and brands purchased together in the VAR channel. The service provides monthly POS reporting of commercial technology IT hardware subcategories within networking, computing, printing, storage hardware, and more. It tracks 1,400 brands and provides detail on sales for thousands of IT hardware items.
SMB Technology Monitor
Gain access to new B2B insights on anticipated purchase intentions and spending, brand perceptions, and services attached to PCs, networking equipment, storage systems, servers, software, mobile devices, and printers. You can use this information to understand small and medium business (SMB) buying behavior and make informed business decisions related to the commercial market. This quarterly report is based on an online survey of SMB technology decision-makers
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:
- What consumer segments should we target and why? How do we know if we’re successful over time?
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- What’s the sales potential and ROI for my new / revamped product idea?
- What is the optimal feature combination for my product?
- How do I monitor my performance in my sales territories, distribution areas, etc.?
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- Will my product category grow or decline? Why? What does this mean for my market share?
- What’s the competitive landscape and where are my best opportunities (Food)?
- What levers should we pull to increase sales and market share?
- Why are some of our stores performing better than others?
- Why do consumers choose our brand? Our competitors’ brands?
- How effective is our advertising? How can we improve it?
- What products should we develop?
- What products should we sell?
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- Which people should we target? Why?
- How do we know if we are successful over time?
See how clients have used our analytic solutions to solve their business challenges in our Analytic Solutions Case Study Library.
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.
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.
49 Million U.S. Internet Homes Now Own a Connected TV or Attached Content Device, According to The NPD GroupMore than half (52%) of all U.S. Internet homes have at least one TV connected to the Internet, representing an increase of six million homes over the past year, according to The NPD Group Connected Intelligence Connected Home Entertainment 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
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.
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
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.
In the past, consumers had pretty simple requirements for buying headphones – the sound needed to be good, but not great. We dealt with wires, clunky designs and foam covered ear cups as we listened to music at home or on the go. Today’s buying criteria are much different. Shoppers place a larger emphasis on sound quality, mobility and of course design. Headphones have become more specialized, aligned with different listening occasions like travel, gym and office use. In fact, many consumers own multiple pairs- 2.1 on average, according to NPD’s Headphone Ownership and Application Study. Features like Bluetooth, in-line mics, volume controls and moisture resistant materials have come to the forefront, adding convenience as well as a new element to the user experience. All of these factors have contributed to continued growth in the headphone market, which, according to The NPD Group’s Retail Tracking Service, grew 7 percent (units) in the 12 months ending in February.
But just as new features are making headphone use more convenient, a new crop of products are looking to add another dimension to personal listening. Enter the hearable. While not a great term in my opinion (it doesn’t really describe anything) hearables, similar to wearables, is technology for your ears. Music listening is a component of the experience, but not the entirety of it. The idea revolves around adding features to personal listening devices like headphones that can change what’s being heard, provide audible data or feedback of some sort, or result in a biological response from the user.
Don’t we just want headphones that will reliably play What Does the Fox Say?when we queue up the song on Spotify? Sure we do. But just as sensors, apps and constant internet connectivity have transformed the way we use mobile phones, the same could occur in audio listening devices. One of the best examples of hearables is Doppler Labs’ ‘Here’ wireless ear buds. Described as an active listening system, Here’s ear buds have microphones built-in allowing the wearer to alter the sound of their surroundings. A companion smartphone app offers settings that control what is heard through the ear buds, giving the user the ability to tune out a crying baby on a cross-country flight or turn up the low talker at dinner. Here doesn’t currently play music stored on a smartphone, but it can alter how live music is heard, allowing for control of elements like bass, reverb and flange. To test Here I recently used a preset in the app to make the acoustics of live music in a concert hall sound like that of Carnegie Hall.
Here’s main use case is unique among the early field of hearable devices, but other products are looking to use their positioning on and around the ears to add unique features as well. Sony’s Smart B Trainer headphones add a personal trainer to workouts providing real-time audible feedback and encouragement in addition to tracking runs and selecting a playlist based on the user’s active heart rate. The Bragi Dash, like Here, is a wireless ear bud that tracks and provides feedback on workouts in addition to playing music via a 4GB hard drive built-in to the earphones. And rumors continue to swirl around new wireless headphone products that will streamline access to popular personal assistant apps like Google Now and Siri, aiming to make it easier to execute web queries and other commands on-the-go without pulling out a phone.
Aside from new offerings, companies have also begun studying the biological response to audio stimuli through technology. Last fall, Skullcandy announced theHuman Potential Lab, an initiative aimed at understanding how audio input impacts the body’s physiology and psychology. An effort like this has obvious applications for athletes, but could also benefit the everyday headphone user. For instance, NPD’s research shows a third of owners wear their headphones at the office and 41 percent listen to headphones while traveling. Can a better understanding of how the body responds to different types of audio make an office worker more productive or a skittish flier calmer on a plane?
New features and technologies are changing the way consumers use headphones, providing growth to this mature product category. Buyers are still looking for great sound and sleek designs, but developments in the hearables space have helped demonstrate that headphones are capable of even more. New sensors, Bluetooth and Wi-Fi connectivity, and companion smartphone apps are helping to create a more versatile future for the category- one that will become even more important as other personal technology products like drones and virtual reality demonstrate the need for unique audio experiences. The term hearables may not ultimately endure, but it’s clear headphones are quickly becoming a launching pad for innovation.
Two summers ago, my daughter Eleanor and I had a spirited back and forth about her favorite show, Peppa Pig. Basically, she wanted to watch the show through the Nick Jr mobile app, but our family iPad was already being used and our other devices didn’t have any power. I suggested we try and find it on the living room TV instead. Surprisingly, Eleanor agreed, walked over to our 55-inch TV and swiped her finger on the screen just as if she were unlocking an iPhone, thinking that would turn it on. Realizing what she had done, her sheepish grin said it all “Wait, how do you turn this thing on?”
Since this happened, we’ve cut the cord, coming to the realization that most of what we watch is from an online source and the programming we do watch on broadcast can typically be accessed online one way or another. But the devices we use to watch video also significantly impacted the decision. Like many families, we own several decommissioned iPhones, which have found new lives as video players, even becoming the preferred screen devices for my kids. According to NPD/Connected Intelligence’s Application & Convergence Report, TVs remain widely used but mobile devices figure prominently into the viewing equation among younger consumers. In fact, smartphone users 34 and under over-index for using smartphones to watch online video (31 percent compared to 20 percent overall) and tablets (41 percent compared to 30 percent).
The fact that younger viewers are more likely to turn to mobile devices to watch video is innocuous enough, but does it point to any challenges down the road for sales of TVs, Blu-ray players, or even soundbars? My cord cutting experience has taught me TV viewing habits are engrained in our psyches (I’m still adjusting to the new cord cutting era at my house) and by that reasoning, my kids are likely imprinting their habits on smartphones and tablets more so than the television, since they spend a majority of their viewing time on those devices. This is probably happening naturally in some homes that have cable but is even more pronounced in non-cable households like mine.
A few trends in hardware sales and usage may be pointing to a shift for young viewers. Even though tablet sales declined in 2015, NPD’s Consumer Tracking Service reports more tablets are being purchased for kids and teens – in both absolute terms and in unit share- which has increased from 13 percent in 2012 to 19 percent in 2015. Conversely, unit sales of smaller screen TVs (under 44 inches) intended for those under 18 have declined 50 percent since 2012 and now make up just 5 percent of all sales. And NPD’s recent Kids Share of Time and Wallet study, a national survey of moms about their children’s’ activities showed that while a majority (75 percent) report their kids 14 and under still watch traditional TV, 47 percent of kids also watch TV shows, movies, and videos on a mobile device during a typical week. Further, nearly a third added their children are spending more time watching video content on devices this year compared to last.
Obviously, these data points alone don’t say definitively that young people are turning away from TV in a manner that will impact sales. However, the data does reflect a preference for small, personal screen devices for video consumption. New generations of consumers are important to any industry but are particularly vital to technology since they are on the cusp of entering life stages like homeownership and parenthood where their need for new technology products is heightened. Today’s Millennial and younger generations are entering a favorable technology market where many products including big-screen TVs are more affordable than they’ve ever been. The question isn’t if they will ever buy a TV, because they probably will. Rather, the issue is when will they decide to buy one, how much will they pay, and how quickly will they buy another – all things that a heavy reliance on mobile devices could potentially disrupt. Bigger screens still provide a better viewing experience, but in Eleanor’s case, complete control over what, when, and where to watch is the biggest draw to watching video on an iPhone. And as the saying goes, old habits are hard to break.
2015 has been another banner year for the audio market. While sales of stereo headphones and soundbars have grown 18 percent and 13 percent, respectively, according to The NPD Group’s Retail Tracking Service, so too have wireless speakers. In fact, the wireless speaker market figures to eclipse $1.5 billion in volume by the end of this year as an array of pricepoints, features, and form factors offer consumers plenty of choice in the market. There are also options for consumers when it comes to how their speaker connects with an audio source. Bluetooth speakers, which access content from a Bluetooth-enabled device like a smartphone, tablet or PC, accounted for 84 percent of sales this year. Network speakers, on the other hand, which have the ability to stream music over a home Wi-Fi connection, accounted for 16 percent of sales. The advantages of these Wi-Fi connected speakers are most notably better sound quality and the ability to conveniently access content wherever it is saved- whether on a network connected device in the home or directly from a cloud music service.
The direct connection to the cloud points to the potential for network speakers to do more than just stream music and podcasts. Amazon’s Echo, a network speaker which offers access to several music streaming services, also features Amazon’s personal assistant, Alexa, and a microphone. It’s possible to ask Alexa to cue up a song, but you can also ask her what time The Force Awakens is playing at your local theater, read aloud the ingredients to your favorite recipe, or tell you a joke. According to Connected Intelligence’s Connected Home Automation Report, 42 percent of smart phone owners have used a personal assistant app like Siri or Cortana on their smartphone, but a speaker (or a couple of speakers) inside the home that can both play music and search for information on the web is a different user experience altogether. The Echo is a good sounding speaker, but music playback is hardly the lone use case for the device.
The Echo is the first in what proves to be a wider field of “smart” network speakers that can access services and information directly from the web. I’ve owned an Echo for about a week, and for me the most useful features so far have been setting timers (“Alexa, set a timer for 10 minutes”), getting the weather report, and being able to ask random questions such as “Alexa, how many millimeters tall is the Washington Monument?” (It’s 169,164 millimeters, by the way). Sonos also recently took steps towards smartening their line of speakers, updating the PLAY:5 by adding an accelerometer and a microphone. Both of these new components are officially aimed at tuning the speaker to match the acoustics of the room it’s in, though I expect the microphone on the PLAY:5 will soon be able to connect to a set of web services via a personal assistant, similar to the Echo. In a multi-room system, this capability could be powerful, allowing users to access the functionality anywhere there is a speaker in the home.
An even bigger opportunity exists when network speakers can control other connected products inside the home. The aforementioned Echo is compatible with several smart home platforms including Philips Hue, WeMo, SmartThings, and others. As the smart home market matures and users add more devices to their homes, control and monitoring capabilities will likely need to migrate to other places. According to NPD/Connected Intelligence, control of smart home products is primarily done via smartphones (64 percent of smart home owners report this) and tablets (34 percent), but inevitably there will be times when a mobile device isn’t nearby or convenient to use. Being able to ask a bedroom speaker to turn on the hallway light in the middle of the night, if done correctly, could lessen our reliance on these handheld devices while inside the home and make the experience of using and controlling smart home products a little more natural.
While one can argue the term smart has become overused in today’s technology lexicon, network speakers have the potential to become pretty darn smart. But really, this connectivity powered by voice control could be incorporated into other consumer technology products. In addition to smartphones, we’ve seen a few TV manufacturers dabble in voice control and media streaming devices like Roku, Apple TV, and Amazon’s Fire TV products also support voice-enabled search. Consumers are getting used to using personal assistant applications like Siri and Google Now and as the applications become more refined and support a greater number of web-based services, expect them to become essential to how we interface with some connected products in our homes. On the surface, smart speakers seem like yet another technology product we’ve connected to the Internet, but with access to a diverse range of web services and content controllable via voice, they have the potential to be so much more.
After struggling through a very soft Back to School period where revenue results for the Technology market were down -7 per cent from the previous year, many were looking towards the next key buying period to help bolster the industry. Historically, Back to School has been a harbinger for Black Friday. This year, Black Friday has come and gone it appears that remains true. Despite the efforts of retailers and manufacturers alike, revenue results show the market to be off 12 per cent vs. an already disappointing 2014 which came in at -6 per cent. Much of this on the backs of sustained aggressive pricing tactics.
For those of you who have heard me speak on the subject of Black Friday you know I am not an advocate of this US based shopping holiday. Since 2012, when Black Friday first showed an increased presence in Canada, we have continued to see those weeks in-between Black Friday and Boxing Week diminish in importance. Last year alone those 3 weeks saw a decrease of over $70 million dollars for Technology products. At the same time we are not seeing overall holiday sales in general increase with the addition of Black Friday. Each year since this event came to Canada the size of the market has decreased. Maybe just maybe, Black Friday is working against Holiday sales for the industry instead of helping; it would seem the Technology market was much healthier before Black Friday showed up.
That said, there were some bright spots this year during Black Friday that included categories where revenue was stronger than last year. Included on this list are Monitors up +28 per cent, Networking Devices +8 per cent, Laser Multi-function printers +35 per cent and Keyboards +23 per cent. However, the 3 key categories that make up the lion’s share of overall revenues, Tablets, Notebooks and Desktops, all finished Black Friday in a revenue declining position. These categories represent 70 per cent of the revenue for the industry and when the largest revenue category during Black Friday – Tablets – is showing revenue growth of -29 per cent it is difficult for the entire industry to deliver strong results.
Fingers crossed that when we hit Boxing Week in a couple weeks we will experience consumers flocking to buy and drive a strong finish to the calendar year.
Of all our Baker’s Dozen Holiday predictions the one I am most confident in is that notebook sales will soar during the holiday, but those gains will come at a considerable cost in ASP. While we thought this scenario might play out as the holiday unfolded, our weekly data shows this price war has already begun, and the implications and challenges around a new level of Windows notebook pricing will reverberate around the industry.
During the last three weeks of October (October 5th -October 25th) we saw the lowest Windows pricing ever. All three weeks ASPs were below $430, with the week of October 5th showing an incredible $415 ASP for Windows notebooks. In contrast, the ASP last year at this time was around $480- a monumental change in pricing for a category that had seen stable pricing for the last few years. Yet, as is almost always the case, giving away your product has brought out the customers in droves. Unit growth during those first three weeks in October was 16 percent, 13 percent, and 1 percent, respectively; and during the last week of the month, despite just a 1 percent gain, Windows was the only OS to show unit growth over the prior year. All of this momentum is coming from PCs under $300.Growth in the under $300 segment during the first three weeks of October was 124 percent, 68 percent, and 88 percent respectively, over the prior year, continuing a streak of 15 consecutive weeks of double-digit Windows notebook growth for the entry-level under $300 segment. Black Friday pricing has clearly come very early to the Windows notebook market.
The implications of a much more price aggressive PC market are enormous, and while many of them are positive, many are not. Much of the impetus for the aggressive price reductions has been the Microsoft Bing program, a back-end subsidy for Windows PC OEMs designed to make entry-level Windows PCs more competitive with Chromebooks. To some extent this has worked. Last year at this time Chrome had captured a unit share in the high 20’s of the entry-level notebooks market, this year that share is now below 20 percent. Of course we would be remiss in not pointing out that while Chrome’s share has declined it has continued to post mostly double- digit unit increases.
This seeming success for Microsoft does not come without collateral damage. The Windows notebook PC segment above $300 has been decimated, with sales down 10 percent over the past three weeks. This has impacted the uptake of touch in the Windows market as well. Basic clamshell notebooks with touch only accounted for approximately 25 percent of the Windows market over the past few weeks, in contrast to points earlier in the year when it was above 30 percent. It has also impacted the 2inOne market which remains stalled at just 11 percent sales penetration. Finally, it is likely to change the tenor and composition of both the brands in the PC market and the retailers as well. This type of pricing war is likely to drive increasing amounts of volumes to the largest retailers, such as Best Buy and Walmart, and the largest brands such HP, who can withstand an extended period of such aggressive pricing activity.
With a Windows market delivering pricing at clearly unsustainable levels the real question is what does the Windows PC market look like when we come out of the holiday season, and what would a permanent decline in notebook ASPs do to the market ahead of the launch of Windows 10? I suspect the answer is a significantly weaker PC business, less able to support Windows 10, less able to compete with a surging Macbook market, and less able to clearly differentiate what makes a PC a compelling choice against a tablet or a smartphone.
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