Premium products continue to power powering broad segments of the market for consumer electronics, whether it’s for smartphones, mobile computing, TVs or wearables, the first IFA Tech Trends report has found.
IFA Berlin executive director Jens Heithecker commented: “The market for consumer electronics is more dynamic than it’s ever been. However, amidst all the product launches and industry events, it’s easy to lose sight of the big trends. Most importantly, it’s easy to lose sight of real consumer behaviour. That’s why we have launched the IFA Tech Trends, to offer a timely reality check that shows what’s really happening on the ground, in shops online and in brick-and-mortar stores offline.”
Smartphones continue to set sales records
In 2017, manufacturers sold 1.478 billion smartphones with an average price of $323 (USD). In terms of numbers, it’s countries in Emerging Asia and Central and Eastern Europe that are driving sales, while customers in North America, Western Europe and Developed Asia are snapping up premium phones – with larger screens, more data storage and processing power, longer battery life, faster charging, and features like better water and shock protection.
However, don’t write off features phones just yet: in developed markets, feature phones specifically designed for the elderly are hugely popular, while in markets like Russia and India, sales of cheaper smartphones continue to gain importance.
2017 was the year when wearables started to gain traction. Leaders of the pack are Smartwatches, which are beginning to take over from more basic fitness trackers. One category to watch are “earables” – in-ear headphones that also carry sensors and plenty of memory for music double up as fitness coaches. Another popular segment are locators with inbuilt connectivity and GPS, to find children or seniors (that’s especially true for Asia, where every third wearable device sold is a locator). In Europe, demand for wearables is up more than 23% (and 35% in terms of value), with similar growth rates in Asia.
Jens commented: “Smartphones still rule supreme, but 2018 could also be the year of the wearables, as these devices reach the right balance between cost, features and usability. The most fascinating aspect of this markets is that so many different industries are offering their take on the category – from mobile phone manufacturers to healthcare specialists to traditional watchmakers and many in-between.”
TVs are going large, but it’s not US consumers leading the trend
US consumers like their television screens large, but they are not the world champions when it comes to screen size. Right now, that accolade belongs to Chinese consumers. The average size of TV screens sold in the United States is expected in 2020 to be over 52 inches, while Chinese consumers will push their country’s average even higher, to a whopping 54.1 inches. To compare, just across the sea Japanese television viewers are expected to buy new TVs with an average screen size of 40 inches. The size preference of European consumers is closer to the US market, with an average screen size of 48.9 inches for TVs bought in stores and online.
TVs are not only getting larger, but also smarter. 68% of all TVs sold are now ‘smart’ TVs, while 32% can deliver Ultra-High Definition or 4K images.
Jens commented: “Size, picture quality and ‘smarts’ are they key drivers of consumer demand. It’s obvious: mobile devices complement TVs, they will not kill them. Given today’s TV experience, I’d say cinema has lost its technological edge. TV is the new cinema.”
GfK senior vice president for consumer global consumer electronics POS service Juergen Boyny added: “Besides smartphones, TVs continue to be the top product of choice for consumers in the digital world. The approach from the consumer is to have both: a small screen that is the smartphone and a big screen that is the TV.”
Consumers are discovering the Smart Home
Smart appliances and Internet of Things devices for the Smart Home are seeing triple digit growth rates, as consumers are finally starting to believe the industry vision for the connected home. That’s especially true in the United States, which is – despite consumer scepticism – still the largest market for smart devices.
However, you should also look East, because when it comes to buying smart appliances for the home, it’s consumers in China, Korea and Japan that are setting the pace, especially when compared to shoppers in Western Europe. A surprise market to watch is Iran, where smart refrigerators and washing machines are extremely popular.
This may not come as a surprise, as even two years ago GfK saw that consumers in China are most enthusiastic about the promise of the Smart Home, with 75% saying that it will make an impact on their life. In the United States, just 51% of consumers shared this optimism, while in Japan a mere 19% believed the Smart Home promise.
Jens Heithecker noted: “The technology industry still has a lot of explaining to do. A measly 16% of consumers say that they ‘know a lot’ about Smart Homes. However, we at IFA believe that – just as with smartphones some 5 or 6 years ago – the technology is about to reach an inflection point, where we can really expect it to take off.”
GfK senior vice president for global telecom PoS service Arndt Polifke added: “The introduction of devices with artificial intelligence (AI), in particular, could be a real game-changer for the smart home landscape. Alongside the more comfortable way of controlling devices from anywhere, AI also allows for easier installation and state of the art connections. Additionally, with big brands and tech giants entering this space, consumers will be more confident and enthusiastic about investing in this technology.”
VR/AR: a market in search of its consumers
The market for Virtual Reality and Augmented Reality continues to tread water, as consumers wait for the killer content and applications that make owning the technology a “must”. The market is also highly polarised – split between cheaper VR Headmounts where users insert their smartphone for the experience, and much more expensive VR Head-Mounted Displays that are tethered to a powerful PC or games console.
Intriguingly, the main customers for either technology are businesses, who buy these devices for highly specific business usage. Another startling insight is that the main sales channel is not online but the real world – offline retail stores. It suggests that for VR, it’s the immediate real-life experience of the technology that lures buyers into the virtual reality. So far, AR is still too small a market to provide any insights on consumer behaviour.
“VR has a chicken-and-egg problem,” explained Jens. “Consumers will rush to buy once there’s great content to enjoy, while content production is slow as long as consumers are not buying in large numbers. While the consumer market is treading water, business applications are likely to be the main drivers of the market.”
GfK global analyst for new products Dr. Jan Wassmann added: “Vendors need to get their price points right. Looking at the average prices for the HMD blockbuster, devices are still quite prohibitive. Once the prices of premium models move below EUR 400, they will have a huge impact on unit sales as the drop from EUR 800 to 700 is not as big.”