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Using The Crystal Ball For 2016 Shows Consumers Going Mobile

8/08/2011 12:01:00 AM Eastern

NEW YORK — Many things can happen in five years,
so asking analysts to peer a half-decade into the
future means we have to take their prognostications
with a grain of salt.

That said, TWICE quizzed several industry watchers,
asking them what the CE industry will look like
and what categories will be driving sales in 2016.

The most popular response was not a surprise:
mobile devices. The analysts, and most of
those who responded to a similar question
on the TWICE 25th Anniversary Survey, all pointed to mobility as being
king in 2016.

But just because everyone says so does
not necessarily make it a lock.

Stephen Baker, industry analysis VP for
The NPD Group, noted that making predictions
for technology is a dubious activity at
best.

“I think it is impossible to predict what
product categories or types will drive the market
in five years. After all, if you go back five years, we
would not have predicted either netbooks or tablets,
we had no iPhone, and 3D and smart TVs were not
really on the radar,” he said.

However, Baker was willing to make some general
observations, and the first one led right back to the
most popular pick.

“Mobile devices, in some shape or form, with some
type of connectivity, will dominate the marketplace,”
he said, adding that these devices will have even more
access to content, without which they are useless.

For Steve Koenig, industry analysis director at
the Consumer Electronics Association (CEA), three
words describe the future: mobile connected devices.

“These products are carrying the industry
now and are pretty much the reason we are
hitting a new all-time revenue peak of $190
billion this year,” he said.

Other categories, such as television, are
less likely to undergo paradigm shifts over
the next half-decade.

Paul Gagnon, DisplaySearch director
of North America TV research, pointed
out that flat-panel TVs will not be a major
income source in the coming years as
they continue to become commoditized
with fewer new reasons for people to replace their
current TV.

“In the end, TVs are a very mature category of CE
and unlikely to drive any more revenue growth going
forward. The fundamentals are still important, but
adding value will continue to be a challenge, especially
if other (cheaper) devices can deliver similar
benefits,” he said.

Gagnon blamed this situation on the changing
face of the TV market and how vendors are trying to
control this cycle.

“The TV market was driven by an upgrade cycle,
mainly by trading up to a larger size and
better picture quality. Only in the last two
to three years have innovations focused
on something other than these two items,
specifically connected TVs, LED backlights
in LCD TVs and 3DTVs,” Gagnon said, “All
of these are gaining in adoption, but not because
consumers are demanding them, but
rather because manufacturers and retailers
are pushing them.”

Gagnon sees this trend continuing in five
years, but with a minor twist. The new features will
continue to be a secondary or tertiary reason for buying
a new TV, while the old desire for a bigger screen
and better picture quality will remain the primary
reason people buy something new.

Tamaryn Pratt, principle, Quixel Research, said she
is doubtful the TV industry in next five years could
possibly contain the same level of innovation that took
place over the past decade.

“The market will see incremental
changes and feature adoptions,”
she said, adding, “Almost all TVs will
be connected to the Internet and
networked in some way — the convergence
of the three Cs [computers,
communications and consumer electronics]
will finally take over here.”

Other features Pratt sees being
incorporated are 4K resolution, the
ability of a TV to run apps, and the
TV becoming much more PC-like.
She expects LCD to drive the market with plasma being
marginalized and used primarily for larger screen
sizes.

The PC segment will see a different type of
change. For the most part, hardware will remain consistent
with what is seen now, but content will shift off
the device and into the Cloud.

Chris Connery, DisplaySearch’s VP of the PC and
large-format commercial display market research
group, sees Cloud computing as the focus for the PC
industry as hardware vendors look to move away from
including larger hard drives, faster processors and
more memory in computing devices.

“Local storage and processing power is no longer
the game. This has been the cornerstone of personal
computing for the last 15 to 20 years in
that consumers have been up-sold to new
PCs every three to five years in order to
get more processing power, better operating
system, more storage capacity for their
videos, pictures, music, etc.,” he said.

Connery also believes the computing
experience will remain very personal as
tablet PCs and a developing category that
he called a “net or Cloud monitor” keeps
the customer connected to the web. He described
these devices as having a 30-inch
or so screen with just one cable supplying power and
connection to the web.

“These Cloud monitors will be ‘smart-monitors’
which will have a big viewable image display and will
be stationary — so they might look like an all-in-one
PC on the surface — and will connect to the Internet
for email, pictures and web browsing,” he said.

Another change for the consumer will be cost.
Instead of paying more for hardware, they will instead
shell out for Cloud storage.

While taking a gander at what might be coming
down the pike is intriguing, so is figuring out which of
today’s hot products will fade away.

The Cloud will also play a serious role in
pushing some now-popular products onto
the back burner.

Koenig noted, “As we move decidedly
more toward the Cloud, physical media
will begin to yield. This trend seems to be
happening faster than we think. Witness
the success of streaming media (music and
video). iTunes and MP3s have changed
how we buy music forever. CDs are passé.
Soon Blu-ray, which is enjoying success today, will
struggle to stay relevant. Already we have options for
1080p streaming movies via Vudu.”

NPD’s Baker thinks point-and-shoot cameras, MP3
players, DVD, Blu-ray and DVRs will be less important
in five years, while accessories and printing will
remain strong sales drivers.

Connery does not expect to see a dramatic shift in
how people interface with the Internet, particularly for
PCs. Voice recognition will not take over
from the keyboard, mouse and touchscreen
display for all-in-one computers.

Getting ready to replace some of these
soon-to-be-relegated to the dust bin of history
technologies are others that are just
now gaining in popularity.

Koenig sees Internet radio, which has
been around for awhile but has remained
under the radar, striking it big in the autosound
area. Apps for head units are now
appearing.

Baker pointed to home automation as possibly
being on the brink of experience explosive growth.
These will include lighting and health, and will give
appliances and devices the ability to tell users how
well they are working.

The other impact technology will have centers on
how consumers will shop. Again, the impact mobile
devices are starting to have on the shopping experience
will only increase in five years.

Baker sees the in-store experience becoming even
more important, and he stated the current retail shopping experience will be clearly recognizable to any
consumer five years down the road.

The major addition will again come via mobile
devices, and the role they will play is in gathering
pre-purchase data through location services, social
media and mobile advertising.

“The in-store experience will remain crucial, if not
central, to the consumer’s buying process. Even today,
all these new services depend, for the most part,
on physical distribution to provide them a marketing
partner,” he said.

The CEA is also studying this issue, Koenig said,
particularly the impact of consumer’s increasing
product knowledge.

“One of the trends we’re talking about now is consumer
empowerment. That is, consumers armed with
massive retail and pricing intelligence to help them
make informed business decisions. This is really pressuring
retailers and more sales are going online.”

One downside of the technological jump that will
be made in the next five years is it will leave some
people behind, said Quixel’s Pratt. This could create
a situation where vendors develop and deliver
products that will never be understood by a certain
segment of the population.

“What will develop in the next five years is a ‘digital
ghetto’ for those who struggle to use and understand
networked CE products (including their TV) as well
as those that cannot afford to connect or afford
someone to set up their network,” said Pratt.

The silver lining to this situation is the even greater
need for tech services like the Geek Squad, Pratt
said.

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