Analyst Gartner is projecting flat growth for worldwide device shipments; it says the combined shipments of PCs, tablets, ultramobiles and mobile phones will total just 2.3 billion in 2017, the same as 2016 estimates — with no growth in these so-called “traditional” computing devices expected until 2018.
As of the end of 2016, nearly seven billion of these gadgets were in use globally, by its reckoning.
But while Gartner sees a “stagnating” market for the various devices that are now associated with computing — with mobile phone shipments only growing in emerging Asia/Pacific markets, for example, and the PC market “just reaching the bottom of its decline”, as research director Ranjit Atwal puts it — the analyst has a more positive outlook for supplementary connected devices which offer a more dedicated vs general computing purpose. So the rise of the ‘hardware app’ if I can put it like that.
“We’ve done the market growth part in terms of those core devices, now it’s a case of what other more dedicated devices do we build around that? And the ecosystem to enhance those capabilities across the board,” says Atwal.
“We’ve gone through the saturation of the existing markets — either we say, that’s it; people are not going to buy anything else. Or there are these new markets.”
The emerging categories that Gartner believes consumers are now looking to — for “fresher experiences and applications” — include head mounted displays (HMDs), and virtual personal assistant (VPA) speakers and wearables. So devices such as VR/AR headsets, and — on the VPA front — Amazon’s voice-driven Echo speaker (pictured above) which houses its Alexa voice assistant and can be commanded to do things like play music, tell you the weather, or buy stuff on Amazon.
And while Gartner does not yet have any solid device forecasts for these nascent categories, Atwal says it has conducted surveys that indicate growing consumer use of voice-driven functionality on smartphones. In turn, it reckons that indicates a trend towards consumers actively seeking to separate out some of the capabilities found in their phones and PCs into standalone devices — not least because of how battery life continues to constrain smartphone use.
The trend here is really about how users are looking for different ways of interacting with their devices. And then providing a better experience.
“We’ve seen that, over the last couple of years, people using voice capabilities more and more,” he says, adding: “The trend here is really about how users are looking for different ways of interacting with their devices. And then providing a better experience.”
“There’s so much we do with the phone. And we’re probably getting to the point where we would like supplementary devices that will take on some of that load,” he continues. “The one device is good but it is getting overloaded in terms of having to get out your phone every time. So… a less frictionless way of meeting our desires and wants and needs.
“The Echo’s an example of that where it’s a direct, voice-driven capability that you can use, that you don’t have to interact with in apps once you’re set up… To really get the best out of these new capabilities there’s got to be dedicated devices.”
Unsurprisingly, Atwal is expecting to see lots more Echo-type devices unboxed at this year’s CES. However given how dedicated in functionality these additional devices are, the analyst is not expecting the same exponential shipments growth as was seen with mobiles and PCs. It’s not a like for like comparison. Nor is VR or voice — at least not yet — a whole new computing paradigm.
“These newer devices will grow, but not at the same exponential rate that we saw with this core devices,” he tells TechCrunch. “These are additional, supplementary, and we’ll see them more services driven.”
Supplementary devices are also more demanding, in terms of the services that must be slickly integrated with them. Which Atwal notes might give advantages to different players here vs traditional hardware vendors — with one example there being how Amazon has leveraged its ecommerce empire as the underpinning foundation for Echo.
“Amazon has been working towards this the past 10 years,” notes Atwal. “This is not their way in — this is additional avenues for them to build their existing revenue streams. But no doubt at CES we’ll see a number of vendors bringing out VPA-enabled speakers, we’ll see a number of vendors bringing out VR and AR capabilities.”
Whereas many wearables, for example, have faltered by failing to have truly compelling services tied to them. “Wearables is an example of ‘it’s not going to stick straight away’, and it’s an example of ‘you can’t just provide devices that are just hardware based’,” he adds. “It’s got to be more complicated, it’s got to be solution, services driven, and it won’t be necessarily the same vendors that we have at the moment.”
Generally, Atwal says this add-on wave of connected devices is going to be more verticalized — pointing out this is now happening in the wearables space, where health and fitness is emerging as the most compelling use-case (vs earlier attempts to offer a more multifaceted proposition).
“People have a lot of general purpose devices. The phone is general purpose, the PC is general purpose, the tablet to a large extent is. TV… We have a lot of general purpose devices. We don’t need more general purpose devices, we need dedicated devices that enhance the general purpose device,” he adds.
How big is this supplementary devices market? While the volumes of devices shipping is projected to be far less than the levels of traditional, general purpose computing devices, by 2020 Gartner is expecting that a fifth of the total spend on all devices will be going towards these newer types of gizmos — so that’s across the board spend, from VR to connected speakers to wearables.
So 20 per cent of a $700 billion market goes some way to explaining the frenzy of specialized devices being demoed right now at CES.
And that’s just the hardware tip of course. The real scramble here is the potential for services revenue that vendors are hoping will flow from the sensors attached to these devices.
“The interesting revenue streams around this will be services,” adds Atwal. “That’s where the equation changes, and that’s where the players who are doing this will be interesting to see whether they are still the traditional players — the hardware vendors — or whether there’s opportunities for others.
“So for every Echo that Amazon sells how much more can Amazon get from the revenue stream from people buying through Amazon?”
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