Smart speakers have been the hot category this year, but what will be the ones to watch for 2018? Futuresource Consulting principle analyst Jack Wetherill gives his predictions
At this time of year, analysts such as ourselves at Futuresource Consulting look beyond the Christmas and New Year festive sales binge (we hope!) and consider what exciting new trends and technologies will emerge to fuel sales of consumer electronics in 2018.
Will the hot sellers of 2017 maintain their momentum in 2018, or will new categories emerge that divert consumer spend elsewhere?
Surely the headline act in 2017 has been smart speakers – and interest in these will continue well into 2018. Amazon has led the way, with Google and now an avalanche of brands releasing products that combine the convenience of a Voice Personal Assistant with the functionality of a wireless speaker.
High-street retailers will be hoping that the arrival of more traditional audio brands, such as Sonos, Sony, Panasonic and LG, coming into the market to target a more discerning audio consumer will enable them to take a bigger share of the pie than they have to date. Beyond audio quality, we expect the voice interface on smart speakers to become more intuitive thanks to the rapid advances in artificial intelligence. This might include recognising the voice of individual members of the household and responding accordingly.
Smart speakers will also feed the growing upsurge of interest in smart home technology. Consumer research conducted by Futuresource has shown that people who purchased smart speakers did so primarily to listen to music, but they increasingly experiment with using them as hubs to control their homes.
To help emphasise the benefits of home automation to consumers, Amazon’s new Echo Plus is being bundled with a Philips Hue light bulb. The Echo Plus features the Zigbee communication protocol, which means that there will be no need for a dedicated Philips Hue hub, removing a significant (£50) barrier to Hue adoption.
While lighting is the fastest-growing smart-home category, Futuresource also foresees value growth in excess of 40 per cent for climate control devices, such as those from Nest and Netatmo, and more than 20 per cent for security and monitoring devices, as more households acquire multiple indoor and outdoor cameras and smart monitoring systems. These categories carry the attraction of economising on fuel bills and the peace of mind brought by better security. Forty per cent of smart-home device owners in the UK say that their first installation is of a security device.
It is highly probable that we will see Voice Personal Assistants integrated into a wider range of CE devices during 2018. Confined mostly to the wireless speakers currently, the interface we use with TVs, set-top boxes and media streamers will increasingly be opened up to voice interaction. This, however, will likely be an additional feature bundled in by vendors keen to differentiate their products, rather than something that will prompt mainstream consumers to upgrade for this feature alone.
Two categories that have proved to be a slower burn than the industry hoped are virtual reality headsets and smartwatches. Neither has yet really got beyond the early tech adopter phase, but Futuresource believes both have potential for growth in 2018 – and beyond.
VR adoption continues to increase, with sales of headsets in the UK forecast to more than double to reach 0.5 million units this year. High hardware costs, limited content availability and low consumer awareness have hindered uptake, but commitment from the hardware community is strong with continued investment and innovation by Facebook, Microsoft, Google, Sony, Dell and Samsung. The content industry continues to experiment in creating for VR, while figuring out business models. In the short term, the mobile sector, spearheaded by Google Daydream, Samsung and Oculus, will help drive adoption to the mass market. Retail can play a key role in establishing VR with in-store demonstrations to educate consumers about VR.
Another category that has struggled to find its feet, but is set for a ramp-up in sales in 2018, is smartwatches. Apple is the key brand driving uptake, with Apple Pay an increasingly attractive service. Consumers also appreciate the freedom offered by models that are not tethered to a smartphone. New releases from fitness-focused brands such as Garmin and Fitbit will also help drive sales by a third year-on-year to more than two million smartwatches.
Add to this mix products, such as iPhones 8 and X, a multitude of wireless headphones and the small, but growing and lucrative, category of OLED TVs, and there should be plenty for consumers to get excited about in 2018.