2016 was a robust year for manufacturers and retailers, which was primarily driven by newer categories such as wearables and wireless speakers. Innovations in mature product categories like laptops and TVs prevented a downward spiral in sales. As the connected generation continues to expand, electronics companies and retailers will be looking to further engage consumers in 2017 through virtual reality (VR), augmented reality (AR), artificial intelligence (AI) and integrating mobile devices as the central control hub in the internet of things to stem a lengthening replacement cycle.
Global Retail Value Sales of Consumer Electronics 2015-2017
Experiencing virtual reality and augmented reality through the eyes of smartphones
Niantic’s Pokemon GO demonstrated the potential of AR on mobile devices. Over 2016, we also saw companies like Sephora, Wayfair and Lowe’s leveraging on AR or VR to enhance the shopping experience for their customers. Mobile phones are increasingly becoming the device of choice for digital purchases. For instance, in China, 65% of digital purchases were completed via a mobile device in 2016, far exceeding PCs and tablets. Providing a more immersive and seamless mobile shopping experience is becoming more critical than ever.
Smartphone manufacturers are also incorporating depth-sensing smartphone cameras, which will boost the accuracy of AR. This helps manufacturers to increase the perceived value of their smartphones amidst a slowdown in growth of smartphones in developed markets such as North America (0% growth in 2017 from 2016). With Google’s DayDream VR and Project Tango ready for mass consumption, we can expect an explosion of AR- and VR-ready smartphones in 2017, like the recently announced Asus ZenFone AR. Generating content that leverages on these technologies to drive sales will be key for retailers going forward.
Artificial intelligence becomes truly intelligent?
2017 will also be on making it easy for consumers to use their smart home products – and AI will be a key enabler. There will be an uptick in development in AI, particularly in enhancing voice control capabilities. 2016 marked a major step forward in AI development as more global technology giants like Apple and Facebook stepped up to share their learnings in AI research.
Technology companies like Alphabet, Samsung and Amazon are also investing in hiring experts from academia and snapping up artificial intelligence companies, such as Samsung’s recent acquisition of Viv Labs. 2017 will be about them integrating these capabilities into their products and generating a return on their investment. LG’s recent integration of its deep learning technology in several of its smart home appliances to better understand its users’ behaviour, thus driving greater automation of its appliances, provides a preview of what is to come in 2017.
Critical year for smart homes
Improved network infrastructure and high smartphone penetration rates are enabling the growth of the smart home and we can expect the adoption of connected appliances to pick up in 2017. Faced with a hectic lifestyle, consumers are increasingly willing to spend to free up time for more important and fulfilling activities in their lives.
In developed markets, consumer expenditure on electricity, gas and other fuels is set to see an absolute increase of USD22 billion in 2017 from 2016 to reach USD835 billion dollars. Time-saving connected appliances, such as robotic vacuum cleaners, and connected appliances that can bring about cost savings, such as air conditioners and fridge freezers, will be increasingly favoured by consumers.
With appliances companies like Samsung, Whirlpool and Midea, retailers like Amazon and Alibaba and software providers like Alphabet and Apple ramping up investment to get as many of their products out in the market, consumers’ awareness of connected appliances will be at an all-time high in 2017.