Author Archives: CONTEXT

Is blockchain an answer for Smart Home and IoT security?

by Chris Petersen, IMS

Unless you have been hiding under a rock, you keep hearing about the concept and new technology of “blockchain”. Typically blockchain is associated with the trending topic of “bitcoin” and digital currency.   A lot of people have been talking about blockchain, but exactly what is it?   Why is it revolutionary?

More importantly what does blockchain offer in terms of security that might address the vulnerability of Smart Home and the billions of IoT devices that will permeate our lives?   Confused? You are certainly not alone.   Blockchain is more than a buzzword for millennials and something that we need to better understand at least a basic level. Continue reading

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Filed under IoT, Security, Uncategorized

Are eSports finally coming to the UK?

Last month, the BBC announced that it would be showing live eSports on BBC Three. The UK is not known for having a strong presence in the eSports world, but will this be a turning point, inspiring a new generation of competitive gamers? Continue reading

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Filed under gaming, Mobile technology, Retail

Q2 Round-up: New iPad Launch Softens Consumer Slate Sales Slump

With unrivalled insight into the Western Europe ICT supply chain, CONTEXT has been following with interest the evolution of the PC and mobile computing market. In many ways, Q2 saw a continuation of trends, with PC volume sales continuing to fall and consumer tablet demand remaining weak as buyers divert their spending to smartphones.

However, as always, there were some interesting caveats behind the headline statistics, not least the impressive performance of the new iPad launched in March.

Tablets and detachables
It’s true that overall consumer tablet demand remained weak during the second quarter. Shoppers continued to shift their budgets to other technologies that have come to represent the content consumption devices of choice in this market segment. Larger screened smartphones in particular have become popular for activities like writing emails and using apps as they’re always on and close-at-hand for consumers.

However, year-on-year volume decline was softened somewhat thanks to the launch in March of Apple’s seventh generation iPad. The 9.7in tablet is more powerful than the iPad Air 2 but also heavier and lacking several of the latter’s features such as a Smart Connector, and fully laminated, anti-reflective screen. However, its relatively low-price tag seems to have attracted consumers in large numbers and it sold well in Q2.

This is not unusual for Apple products, which often see strong initial sales. But if consumers continue to flock to the model, it would seem to suggest there’s a need for a high-quality iPad option with a price point more in line with current market trends.

Elsewhere, business detachables continued to grow year-on-year in Q2, dominated by Apple and Microsoft products but with Lenovo making impressive inroads. New products such as Apple’s iPad Pro with a 10.5in screen and Microsoft’s fifth generation Surface Pro helped drive this growth. Business detachables still aren’t selling in huge volumes, but it was one of the few segments to post growth in the quarter.

PC Average Selling Prices continue to rise
On the face of it, the PC market overall saw a bigger than expected drop of -15% year-on-year in terms of volume sales. However, there’s more to this trend than meets the eye. For one, Q2 2017 had fewer trading days than the same period last year and some April sales had been brought forward to March in anticipation of rising prices.

Despite weak demand in some segments, the quarter fared better from a revenue perspective, down just -2% year-on-year as average selling prices (ASPs) continued to rise. The growth in ASPs year-on-year continues to be driven by a blend of currency, component costs and a richer product mix; with the shift to high-end models a welcome continued trend.

Weaker-than-expected sell-through meant that inventory levels are a bit higher than desired, but not worryingly so. It’s likely that the “back-to-school” period will be used to get rid of extra stock, driving a reduction in pricing quarter-on-quarter.

by MCP

 

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Filed under Enterprise IT, IT Pricing, Mobile technology, PCs

Service is at the heart of Dixons Carphone’s long-term ambitions

While positive short-term results may grab the headlines, the real story is how longer-term transformation positions Dixons Carphone for future success

Positive financials are the backdrop
Given the potential pricing and downward margin pressures of BREXIT, investors were pleased at the end of June with Dixons Carphone producing an enviable set of retail results. Much focus was on the impressive growth in profit before tax of 10%, to above £500 million, with 4% increase in like-for-like revenues.

The other bottom line from the CEO: “Customer relationships are everything”
While the top line numbers headline the financial achievement of Sebastian James and team, it is the long-term transformation plans of Dixons Carphone which capture the imagination, and forecast the pillars of future success. Sebastian James highlighted transformation strategies focused on building a long-term future for Dixons Carphone:

  • Channel agnostic
  • Service as core offer and differentiator
  • Transition from ownership to consumption
  • Lifetime value relationships

Personalisation for consumption + differentiate services = Lifetime Value
The commentary highlighted the transformation of how service is now a core offering, not just an attach to the sale of a product. Services such as warranty, maintenance, and repair are creating a predictable, profitable revenue stream and a deep ongoing relationship with consumers.

Whilst mobile and phones were highlighted as one of the most challenging categories due to the rise of SIM free phones, James’s commentary emphasised how there is an aggressive plan for both financing and leasing to increase phone replacement.

To differentiate service, Dixons Carphone will roll out same day phone repair services. Plans also indicate a breakthrough 7-day repair promise compared to 28-day market standard. These strategies not only differentiate Dixons Carphone, but create positive lifetime relationships beyond the sale of a handset. A NPS (Net Promoter Score) in the 90s is particularly noteworthy and evidence of positive customer response.

Last year Sebastian James pledged to increase service income from £500mn to £1 billion. We did not hear any specific numbers on the investor call on progress towards this goal. At £1bn, services revenue would represent 10% of today’s revenues, and would outstrip Best Buy currently at 7%. Clearly both national tech retailers are seeing a bright future in services both as a differentiator and profit stream to offset product margin pressures.

Dixons Carphone is well positioned to profit as the “Digital Plumber”
One of the most exciting and innovative long-term developments is Dixons Carphone’s journey to becoming the digital plumber of the nation in its joint venture with SSE, briefly referred to in the presentation. It is all about occupying a place of trust in people’s homes, making life easy for the customer through leveraging the Knowhow expertise of Dixons Carphone and supporting SSE’s 5 million smart-meter customers. If the two companies can make this work, they will have moved the point of sale from the store and the smartphone into the home, a new offline revolution for tech retail.

The store as destination for new technology
There is one area where Dixons Carphone is lagging the market, and that is making the store a destination for experiencing new technology. Given that Oculus Rift and HTC Vive were launched at the end of last year, not enough has been done to create experiences for customers. The price-point of Virtual Reality is evidently beyond the purse of most consumers, but customers are looking to retailers to take a lead in demonstrating this and other new technology such as smart home. We did note, however, that in next year’s plans Dixons Carphone will be introducing a new in store gaming proposition and look forward to seeing what they do for this growing category.

Positive short-term results complimented by strategy with promising trends
Beyond the top line numbers, reaching more than £1 billion in online electrical sales is a significant milestone. The projected 24% average annual growth in home delivery, and one day delivery coming in the next year, Dixons Carphone is strategically positioned i) to capitalise on one of the largest customer bases ii) to be more profitable than a pure play business, with the capability to leverage its personalised “My Account” approach iii) to sustain customer relationships that translate into profitable life time value.

by AS

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Filed under Connectivity, IT Distribution, Market Analysis, PCs, Retail, Retail in CONTEXT, Smart Technology, Tablet PCs

A Take On Tech

Becky Connolly is an A-Level student who is doing work experience at CONTEXT. Given the recent survey results showing the passion of 18-24 year-olds for Smart Home products, we asked her to give her perspective on technology as a member of Generation Z.

Having come to my work experience at CONTEXT, I joined armed with nerves, excitement and my Mac. That’s right, I’m part of the BYOD generation (Bring Your Own Device), where we bring our beloved laptops, phones and tablets in fear of the unknown technology that may be lying ahead of us. Our Generation is famous for its insatiable appetite for the latest and greatest technology- the most popular connotations of Generation Z being a square-eyed teenager (often looking like a zombie) completely fixated by their devices; be it phone, laptop or television screen. But how does our perspective differ to that of older people, including millennials?

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Importance of technology
Technology has captivated our lives. I use technology in any way possible which will enhance features of my life in a few types and swipes which nowadays is becoming easier and easier.

Technology is not only used for social media, despite the heavy connotations (having said that, I am an avid Snapchat user). A large influence of technology is instilled in us from childhood, via the use of technology in classrooms; seeing as 77% of teachers use it for instruction as 81% of teachers believe that it can enrich classroom learning. Having adapted to technology through my education I have become not only more adept to technology but dependent on it for my studies; apps such as Quizlet and SimpleMind contained the sources of my revision for eight out of my ten GCSE subjects. Needless to say, technology was VERY important to me during this course.

An environment that appeals to younger generations
As the technology world blossoms, develops and shuttles into full speed, so do the minds of Generation Z. The answer is this; to attract the younger generation, the workplaces have to advance much further in an attempt to keep up with technology. If you have “dinosaur” computers which are inexplicably slow and missing out on features which are now just the “basics” paired with caveman wifi, the appeal (no matter how cool the job) will be gone, for example- if I were offered two jobs (and I liked both) and in one office there were state-of-the-art Macs and iPads dotted around everywhere, and the other used the same technology that Shakespeare used to write Macbeth, let’s just say I’d go for the former- wouldn’t you?

Furthermore, if your job entails a flair of creativity that initially could not be expressed through technology but now can be, it is essential for the young, talented recruits to have access to the advanced technology so that they can use it and develop their skills to the highest standard. Using the latest technology would also enable flexibility of the workplace. Technology-based work ensures that one can access their work in the office, at home or even abroad. This creates a sense of continuity for the worker and the company and assures that work is accessible from anywhere.

Technology investments worth making
Alongside many people of Generation Z, my prize possession is my phone; this is not uncommon, seeing as 88% of teenagers own phones, and 84% of them are smartphones. This shows that teenagers are willing to invest more in their technology for the better features. Right now, the favoured model is an iPhone; their perfect compatibility for the demands of Generation Z including social media, video streaming and education means that the price of £599 is often met and in high demand. It seems extortionate, but their dependability, fast-response and daily use make them a more worthy investment than a holiday, which would only last a few days.

As far as hopes are concerned, one cannot even begin to hope or imagine how far technology will develop over the years; if somebody told me that I’d be buying my latte via my thumbprint a few years ago… let’s just say technology is astonishing, awe-inspiring and unimaginable, really.

 

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Filed under Mobile technology, PCs, Retail, Smart Home, Smart Technology

The Facebook Generation are leading new technology adoption

I went on to Facebook in 2008 to check up what people could see about my aspiring 17-year-old daughter who wanted to be a doctor. That was when the deluge started –the year after I joined, Facebook went from 100 million to 300 million members. That same daughter is now 26, and is part of the millennial generation, who surprisingly, at first sight, are dropping behind the younger Generation Z in driving technology adoption. Continue reading

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Filed under Connectivity, Home automation, Market Analysis, Mobile technology, Retail, Smart Home, Smart Technology

Is Amazon’s bid for Whole Foods a big blunder, or another brilliant Bezos strategy?

In the past couple of weeks, the news from the United States has been filled with headlines about Amazon’s pending acquisition of Whole Foods.

Amazon’s current bid for Whole Foods is the largest acquisition deal attempted by far. CEO Jeff Bezos is paying a premium price ($13.7bn USD) for a marginally profitable retailer who has not been growing. And the price may go higher if other suitors consider higher offers for Whole Foods in order to block Amazon’s acquisition of a nationwide retail food store chain.

As omnichannel shoppers continue to seek convenience of home delivery, a major obstacle has been the vexing problem of the “last mile” – moving quality fresh food from the warehouse to the customer’s house. Will this be the magic marriage that enables Amazon to leapfrog the competition? Or is Amazon’s move to owning stores a recipe for failure by reaching too far beyond its core business?

In this piece, we explore the pros and cons of the Amazon deal with a perspective by Context’s Global Managing Director Adam Simon, and omnichannel strategist Chris Petersen.

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Reasons why Amazon’s acquisition of Whole Foods is a recipe for failure – Adam Simon

  1. Amazon’s business model is ecommerce, not running stores

Amazon has built a tremendously successful model based upon online ecommerce. It specializes in warehouse, distribution and logistics to deliver items directly to consumers. Aside from a couple of pilot stores, it has no experience, team or systems in place to turn around a chain of 440 bricks and mortar stores with relatively flat growth and marginal profitability. Rather than be saddled with a retailer’s legacy systems and real estate, Amazon would be better off growing its own version. Or it could have acquired a chain with smaller format stores which would have better fitted the click and collect model.

  1. Whole Foods is upscale pricing and not consistent with Amazon’s strength for the masses

The standing cliché is that when people shop at Whole Foods they spend their whole paycheck. By design, Whole Foods offers very unique items and fresh organic foods at premium prices. Amazon is aggressively competing with Walmart in the US who is focused on the mainstream and value pricing. Whole Foods product range and high prices do not offer Amazon a competitive advantage in acquiring stores with broad customer appeal. Whole Foods brand and pricing is also inconsistent with Amazon’s own “Fresh” approach already in market.

  1. Mixing Amazon and Whole Foods cultures are like oil and water

Previous Amazon acquisitions like Zappos were designed to expand categories (shoes and apparel) but were also consistent with and built upon Bezos philosophy of “customer first” and ease of use. It’s not that Whole Foods is anti-customer, but the stores and culture were built around product differentiation and segmentation. The management philosophy and pay scales of Whole Foods are quite different from Bezos’ empire in Seattle.

Why Amazon’s acquisition of Whole Foods is brilliant retail disruption – Chris Petersen

  1. Bezos is investing for 2024 … the play for Whole Foods is not about grocery stores

If you follow Jeff Bezos the CEO of Amazon, he operates with a long-term vision. He has discussed how teams are in the process of planning the first half of 2024 today. Dennis Berman from the Wall Street Journal perhaps best summarized the Whole Foods acquisition:

“Amazon did not just buy Whole Foods grocery stores. It bought 431 upper-income, prime-location distribution nodes for everything it does.”

To underscore the value of an Amazon total integrated play, Whole Foods 440 stores gives Amazon to refrigerated warehouses within 10 miles of the about 80% of the US population. That kind of reach goes a long way of delivering fresh food the last mile to your door.

  1. Whole Foods enables Amazon to rapidly disrupt with its ecosystem

The Whole is greater than the sum of the parts [pun intended] and the parts of the Amazon ecosystem are formidable. Amazon has 100 million Prime members. Imagine what they could offer Prime subscribers in terms of preferred discounts and services in 440 stores. Amazon just announced a $20 version of an Alexa device built for ordering food and getting recipes … a perfect recipe for the Whole Foods concept and persona of fresh and organic.

  1. A core category of all households and the Prime subscription model is “food”

Half of Walmart’s core business is food and consumables, and it drives more than 100 million customers through its doors every week. It makes perfect sense why Amazon would buy grocery stores as opposed versus another type of retailer. As far as Whole Foods notoriously high prices, Amazon is the world’s best at shrinking supply chain costs and negotiating with suppliers. What better way to launch retail stores than to go after a category that drives weekly traffic and is synonymous with a subscription model augmented by Alexa and Dash reorders.

The future of retail is “hybrid”. Bricks and mortar retailers have been racing to build an online presence. Ecommerce realises the need to build a physical presence to complete the customer experience and establish an outpost for the last mile, especially in categories like food.

Will the Amazon big bet of 13.7 billion USD on grocery stores pay off? Chances are we won’t have to wait 7 years to find out. The “food wars” are already underway and we have a ring side seat.

It’s a great time to be a consumer! A very challenging time to be a retailer bridging both the digital and physical world.

 

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Filed under omnichannel, Retail, Retail in CONTEXT