IFA2016 at the Intersection of US and Asia

Believe it or not despite my numerous 3GSM, MWC, CES and CeBIT shows, this was my first IFA show in my 16 years of covering the consumer electronic market. With over 300 exhibitors spread over 25 different halls, IFA is the trade show that gives you a taste for what the hot products for the holidays will be. Over the past couple of years, more and more vendors have decided to use the show as their launch platform for the products that will see them through the last calendar quarter of the year. This year was no different and we saw several phones, wearables, laptops as well as appliances and accessories being launched in the days before the show floor officially opened.

Making a Break for European Companies is Harder

At every show I go, I always make a point to attend a Showstoppers event, not just because it is the best way to reconnect with many industry friends and have some food and beverages but because it is a great way to see many companies all in one location and come away with a feel for what the show will be about. At the IFA Showstoppers this year, I came away with a sense of how much harder it is for a European company to make a break in the market. While there were European companies both at Showstoppers and at IFA, you clearly felt the American and Asian companies, in particular, Chinese and Korean, are the ones running consumer tech. Of course, if you follow the market, this is not news to you. As a European transplant in Silicon Valley, I saw for the first time the price of being a startup or a well-established but small company in Europe dealing with country specific languages, privacy regulations and tax and trade laws. Not many of the companies I spoke to sold in the US or even across the whole of Europe. This is a considerable disadvantage when you think of the market access a US startup has by just selling to Americans or a Chinese vendor has within its home market.

The sad realization of the market dynamic comes from the fact IFA is often dubbed the European CES and it started out as a showcase for home-grown talent. European talent was not missing as I spoke to Finnish, German, Swiss and Italian companies but clearly, many saw little opportunity to make it past their country’s border.

With so many companies from overseas at the show, it was also obvious that Europe, as a market, continues to matter a lot. The strong presence of regular consumers at the show underlines that the interest in this sector remains strong with the biggest crowds to be found around VR, Gaming, TVs, Smartphones and connected Home Appliances booths.

As you hear announcement after announcement of products and you look at stand after stand there were a few key themes that I think are worth focusing on.

Wearables Were not the Belle of the Ball

The growth in interest in IFA seems to be directly proportional to the growth in attention for the wearables market. Despite the Gear S3 announced here by Samsung and products by Fossil, Withings, Jabra, TomTom and others, it did not seem much attention was paid to this category this year. As it was the case at CES and MWC, the longest lines of people were at stands where one could try a virtual reality experience. When it comes to the wearable devices announced at the show, there was a common thread: make consumers forget about the tech. Aside from Apple Watch, smartwatches have not really sold in large volumes. Consumers remain skeptical about the need for a device that, in their eyes, replicates many of the functions they find on their smartphone. Apple was the only vendor that, from the start, tried to position smartwatches more like jewelry than tech. As tech has not been selling very well, vendors have started to focus more on design and making their smartwatch look as close as possible to a traditional watch. This is more a case of hiding the technology under the hood than actually stripping out functionality in an attempt to appeal to a wider number of people. While design matters, of course, price points are more of an inhibitor and no vendor thus far seems to be wanting to address that.

Chinese Smartphone Players Go Lower to Aim Higher

Another apparent trend at IFA2016 seems to have been the focus on the larger Chinese brands of Huawei and ZTE to lower their prices of the mid-tier so they can aim for higher market share. Huawei launched Nova and Nova Plus priced at 399 and 499 Euros respectively. Adding these products to the existing Honor line, which was meant to be more affordable, shows an increasing pressure on the number one Chinese brand (to get to the second leading smartphone spot fast) but also pressure in the home market to become more price competitive as vendors such as Vivo and Oppo are growing share.

ZTE launched the Axon 7 Mini a 5.2” smartphone with 3GB of RAM running on the Qualcomm Snapdragon 617 priced at 299 Euros that focuses on a younger demographic and their love for music. ZTE has grown in share in the both Europe and the US but it seems the biggest progress was made in their communication, brand image, and quality of partners as they announced Dolby as a partner for their new device as well as their sponsorship of German football team Borussia Monchengladbach, adding to their sponsorship of Spanish team Sevilla FC. Over the years, ZTE has suffered from similar identity crises to HTC as the needle between brand focus and carrier focus kept on swinging but it seems now settled with ZTE really wanting to invest in its own brand, at least in markets like Europe where direct channel is more of an option than in the US.

Make PCs Sexy Again!

PC vendors were very busy at the show trying to make PCs of all shape and sizes sexy again with some more successful than others in giving consumers a legitimate reason to buy.

Lenovo announced the Yoga Book, a new addition to the popular Yoga family that does not make you choose between typing and writing as it adds a keyboard that lights up when in notebook mode and turns into a tablet when the device is opened like a book, mirroring what is written on the screen so it can be saved. Users can choose to write on the slate or on a normal paper pad as the pen is also a normal pen with an ink cartridge. Offered in an Android and Windows variant and priced at $499 and $599 respectively, the Yoga Book is certainly a highly mobile device that could marry content consumption and creation with the added benefit of the pen and paper effect for people who think better when they write.

It was much harder for me to see the value of the Acer’s Predator 21 X (the X is for EXTREME), a notebook aimed at gamers that weighs 17 pounds and features a 21-inch curved display. While the size of the display (for a notebook) and the fact it is curved deserves a “wow”, it is really hard to see how many people will actually carry it around. And if mobility is not a priority, then why not buy a desktop? If the design was not enough to raise concerns of how big the addressable market will be, Acer also said that it will cost in excess of $5000.

Trying to get consumers to pay attention to the PC market with VR headsets, AI enabled speakers or curved TVs hitting the market is hard but it will not PCs that sport technology for the sake of technology that will get them to reach for their wallet.

Immersive is the next Mobile

Finally, either from a visual or audio point of view and across products such as VR, phones, TVs, tablets, vendors were focused on pitching an “immersive” experience. As mobile is gone from the hottest attribute to use to describe a device to a necessary one, immersive seems to be replacing it in many product descriptions. From quality of sound for headphones, phones and tablets to curved TVs and Quantum Dot technology, to 360 degree cameras and the ultimate experience of VR, vendors seem to want us to escape our reality and be fully immersed in whatever content we want to consume. Considering how things are going in the world at the moment, this does not actually seem like a bad bet.

Published by

Carolina Milanesi

Carolina is a Principal Analyst at Creative Strategies, Inc, a market intelligence and strategy consulting firm based in Silicon Valley and recognized as one of the premier sources of quantitative and qualitative research and insights in tech. At Creative Strategies, Carolina focuses on consumer tech across the board. From hardware to services, she analyzes today to help predict and shape tomorrow. In her prior role as Chief of Research at Kantar Worldpanel ComTech, she drove thought leadership research by marrying her deep understanding of global market dynamics with the wealth of data coming from ComTech’s longitudinal studies on smartphones and tablets. Prior to her ComTech role, Carolina spent 14 years at Gartner, most recently as their Consumer Devices Research VP and Agenda Manager. In this role, she led the forecast and market share teams on smartphones, tablets, and PCs. She spent most of her time advising clients from VC firms, to technology providers, to traditional enterprise clients. Carolina is often quoted as an industry expert and commentator in publications such as The Financial Times, Bloomberg, The New York Times and The Wall Street Journal. She regularly appears on BBC, Bloomberg TV, Fox, NBC News and other networks. Her Twitter account was recently listed in the “101 accounts to follow to make Twitter more interesting” by Wired Italy.

3 thoughts on “IFA2016 at the Intersection of US and Asia”

  1. “And if mobility is not a priority, then why not buy a desktop?”

    A1. So you can take it to LAN parties?

    A2. A desktop means the screen, keyboard, and mouse are always there – you have to give it dedicated, permanent space in the room. A laptop, no matter how big and clunky, can be folded shut and then stowed away. Which is A huge advantage in a small apartment or dorm room. I think this, more than actual mobility, is why laptops have eaten up most of the desktop market in homes. And it’s why the bottom end of the laptop market continues to be full of big, thick, and heavy machines – they’re stowable computers, rather than actual ‘take with you’ computers.

Leave a Reply

Your email address will not be published. Required fields are marked *