Looking back at 2022 the consensus was that there had been strong consumer demand and there had been hopes that we’d see a managed return to normality after the traumas of Covid – however, the Russian invasion of Ukraine, soaring levels of inflation and continued and extensive lockdowns in China resulted in slowing global demand and the threat of recession.
According to Marina Koytcheva, VP, Forecasting, “While 2022 delivered a relatively strong performance the impact of the war in Ukraine and surging levels of inflation have meant that the ‘big picture’ isn’t a pretty one.
“CCS Insight’s monthly barometer of consumer attitudes – the Connected Consumer Radar – suggests that consumer confidence is falling, and household budgets are being cut. In fact, upwards of half of those surveyed expected to cut their spending on electronic devices through to 2024. We’ve seen spending on devices falling and, as an example, the wearables market has contracted for the first time and is expected to remain weak throughout the coming year.”
The weakness of the consumer space will have a knock-on effect and is likely to cause a slowdown in areas beyond device markets.
“Weak growth in 2022 and 2023 is likely to stall the adoption of 5G for at least 2 years,” suggested Koytcheva. “However, networks continue to be launched and we expect that over the course of this year 50 percent of countries will have 5G availability; but what we will also see is a slower roll out, some spectrum allocation delays and the slower upgrading of mobile phones by consumers.”.
The environment and sustainability are likely to remain key drivers in the consumer space but with costs rising and consumers struggling with tightened budgets there are concerns that sustainability will become less of a priority for companies operating in the consumer space.
“Greenness comes at a cost,” said Koytcheva,”but while it might become less of a priority for some, for others it highlights the importance of delivering much better levels of energy efficiency which will be particularly important when it comes to domestic appliances. We’ve also identified the recycling of older devices as a key trend over the course of 2023. In fact, we see it as a key differentiator among manufacturers and we’re likely to see it become a more important metric that’s likely to be shared in quarterly figures from these businesses.”
According to CCS while 2023 will be a difficult year for the sector, for those willing to take risks the returns will be significant, and they expect to see an Indian smartphone manufacturer break into the international market helped by a shift towards value for money among consumers, benefitting from economies of scale.
5G and satellite technology
At this year’s CES Qualcomm Technologies announced Snapdragon Satellite — the world’s first satellite-based two-way capable messaging solution for premium smartphones – reinforcing CCS Insight’s prediction that we’re likely to see growth in satellite coverage, complementing rather than rivalling new 5G networks.
Snapdragon Satellite is intended to provide global connectivity using mobile messaging from around the world, starting with devices based on the flagship Snapdragon 8 Gen 2 Mobile Platform.
Emergency messaging on Snapdragon Satellite is planned to be available on next-generation smartphones, launched in select regions starting in the second half of 2023.
Commenting Durga Malladi, senior vice president and general manager, cellular modems and infrastructure, Qualcomm Technologies said, “This new addition to our Snapdragon platform strongly positions us to enable satellite communication capabilities and service offerings across multiple device categories.”
According to Kester Mann, Director, Consumer & Connectivity, “We can expect to see a flurry of announcements around satellite this year - we’ve already seen Apple and now Qualcomm bringing satellite and cellular together to enrich the user’s experience and, in the case of Apple, making it free-to-use at the moment.”
Another trend identified by CSS was the development of the metaverse, which Leo Gebbie, Principal Analyst, Connected Devices, described as still being somewhat ‘nebulous’.
“When it comes to the metaverse you need to separate out fact from fiction. It’s more of a concept rather than anything concrete at present, but efforts are being made to make it more substantive. We are seeing users accessing a more spatial online environment and there have been improvements in devices and headsets. But the likes of Apple and Samsung still remain reluctant to talk about it.”
According to Gebbie when users come into contact and get to use virtual devices, they really enjoy the experience. However, its not just about the devices but also the supporting infrastructure – the networks and the connectivity that’s made available.
“Where it’s possible to provide users with a hands-on experience, the reaction has been very positive.”
Attempts are being made to make VR more accessible with the addition of hand-tracking technology and in the future neural sensors are expected to monitor brain activity that will enable users to control their technology.
“The user interface is being transformed,” according to Gebbie, “and we’re already seeing a shift towards gesture and actions.”
For telcos the metaverse could provide a great business opportunity but they will need to avoid generating too much hype and even for those like Meta that are looking to launch new services early leadership in this space may not be a win-win; while they have established recognition with consumers the costs have been immense as can be seen by the company’s recent financial results.
Going green
As suggested earlier sustainability and environmentalism remain important in the consumer space.
“In difficult times we still need to be green, it does pays off,” said Koytcheva, ”and that’s despite the pandemic, the energy crisis and recessionary clouds distracting our attention.”
Koytcheva makes the point that for most businesses, and most households too, a greater focus on sustainability will require standardised forms of measurement – the Cloud, for example, will need to be measured accurately and the importance of measurement could help to provide a clearer form of differentiation between businesses.
“Consumers are looking to embrace more sustainable behaviours and are becoming more willing to recycle devices. We’re moving towards a less throw-away society in which people want to repair and recycle their devices. For network operators they now need to be more focused on reducing energy consumption in order to control both costs and to trim burgeoning operational expenses. They’re increasingly turning to artificial intelligence to better manage their networks in order to lower their carbon footprint.”
Another growth area is expected to be in the development of the smart home, although Luke Pearce. Senior Analyst, Channel and Supply Chain, warned that the promise of ten years ago has yet to really deliver.
“To be honest ten years ago talk was about an integrated approach to smart homes but to date it hasn’t delivered, which is a disappointment. But with growing standardisation and the advent of the Matter standard in the autumn of 2022 it’s possible to see this space moving forward as the likes of Amazon, Apple and Google work closely together.”
Samsung is also now focusing on the sector and large telcos are starting to pay it more attention so CCS Insight believes it will become an increasingly important sector going forward.
The ongoing energy crisis has also helped to reshape the conversation too, with companies and consumers becoming increasingly cost conscious and looking to save money.
According to Pearce the average smart home can expect to see significant growth in the number of connected devices which are forecast to double with the likes of doorbells, vacuum cleaners, smart lights and food delivery apps driving demand.
“Home connectivity is becoming more reliable and with Alexa and similar voice assistants the foundation is being laid for devices to interact using a voice interface – it seems to be the logical way of users interacting with their devices.”
The voice interface is expected to become more conversational and interactive and in the next few years users will interact with their devices without having to use a ‘wake’ word to activate them.
“There’s also likely to be more contextual awareness and we expect to see these devices asking users whether they want to ‘turn the lights on’, for example, becoming, in the process, more like a digital companion.”
