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 \u2014 with no growth in these so-called \u201ctraditional\u201d 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 \u201cstagnating\u201d market for the various devices that are now associated with computing \u2014 with mobile phone shipments only growing in emerging Asia\/Pacific markets, for example, and the PC market \u201cjust reaching the bottom of its decline\u201d, as research director Ranjit Atwal puts it \u2014 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 \u2018hardware app\u2019 if I can put it like that.
\u201cWe\u2019ve done the market growth part in terms of those core devices, now it\u2019s a case of what other more dedicated devices do we build around that? And the ecosystem to enhance those capabilities across the board,\u201d says Atwal.
\u201cWe\u2019ve gone through the saturation of the existing markets \u2014 either we say, that\u2019s it; people are not going to buy anything else. Or there are these new markets.\u201d
The emerging categories that Gartner believes consumers are now looking to \u2014 for \u201cfresher experiences and applications\u201d \u2014 include head mounted displays (HMDs), and virtual personal assistant (VPA) speakers and wearables. So devices such as VR\/AR headsets, and \u2014 on the VPA front \u2014 Amazon\u2019s 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 \u2014 not least because of how battery life continues to constrain smartphone use.
\u201cWe\u2019ve seen that, over the last couple of years, people using voice capabilities more and more,\u201d he says, adding: \u201cThe trend here is really about how users are looking for different ways of interacting with their devices. And then providing a better experience.\u201d
\u201cThere\u2019s so much we do with the phone. And we\u2019re probably getting to the point where we would like supplementary devices that will take on some of that load,\u201d he continues. \u201cThe one device is good but it is getting overloaded in terms of having to get out your phone every time. So\u2026 a less frictionless way of meeting our desires and wants and needs.
\u201cThe Echo\u2019s an example of that where it\u2019s a direct, voice-driven capability that you can use, that you don\u2019t have to interact with in apps once you\u2019re set up\u2026 To really get the best out of these new capabilities there\u2019s got to be dedicated devices.\u201d
Unsurprisingly, Atwal is expecting to see lots more Echo-type devices unboxed at this year\u2019s 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\u2019s not a like for like comparison. Nor is VR or voice \u2014 at least not yet \u2014 a whole new computing paradigm.
\u201cThese newer devices will grow, but not at the same exponential rate that we saw with this core devices,\u201d he tells TechCrunch. \u201cThese are additional, supplementary, and we\u2019ll see them more services driven.\u201d
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 \u2014 with one example there being how Amazon has leveraged its ecommerce empire as the underpinning foundation for Echo.
\u201cAmazon has been working towards this the past 10 years,\u201d notes Atwal. \u201cThis is not their way in \u2014 this is additional avenues for them to build their existing revenue streams. But no doubt at CES we\u2019ll see a number of vendors bringing out VPA-enabled speakers, we\u2019ll see a number of vendors bringing out VR and AR capabilities.\u201d
Whereas many wearables, for example, have faltered by failing to have truly compelling services tied to them. \u201cWearables is an example of \u2018it\u2019s not going to stick straight away\u2019, and it\u2019s an example of \u2018you can\u2019t just provide devices that are just hardware based\u2019,\u201d he adds. \u201cIt\u2019s got to be more complicated, it\u2019s got to be solution, services driven, and it won\u2019t be necessarily the same vendors that we have at the moment.\u201d
Generally, Atwal says this add-on wave of connected devices is going to be more verticalized \u2014 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).
\u201cPeople 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\u2026 We have a lot of general purpose devices. We don\u2019t need more general purpose devices, we need dedicated devices that enhance the general purpose device,\u201d 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 \u2014 so that\u2019s 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\u2019s 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.
\u201cThe interesting revenue streams around this will be services,\u201d adds Atwal. \u201cThat\u2019s where the equation changes, and that\u2019s where the players who are doing this will be interesting to see whether they are still the traditional players \u2014 the hardware vendors \u2014 or whether there\u2019s opportunities for others.
\u201cSo for every Echo that Amazon sells how much more can Amazon get from the revenue stream from people buying through Amazon?\u201d<\/p>\n