Category Archives: Connectivity

Window Shopping and Shopping on Windows

A running theme over the last few years in business news in the US and elsewhere is the terminal decline of the physical retail store. Many of the big name chains once thought of as bastions of the high street have fallen victim to the online juggernauts, on what seems like a weekly basis. The finger of blame is most often pointed at Amazon, whose profits continue to soar to such extents that some financial analysts are now claiming that their share price is overvalued and based upon forecasted earnings of massive proportions.

It is possible that President Trump may attempt to curtail Amazon’s growth through trust-busting legislation – something which could be motivated by his feud with The Washington Post and its owner/Amazon exec Jeff Bezos – however there is little legal ground to challenge the etailer simply because their business model and disruptive technology offers a better deal for consumers as things currently stand. It’s true that few retailers can take on Amazon based on pure pricing, however there are still assets which Amazon does not yet have: a large high-street presence and refined customer service.

I was speaking to a colleague recently whose wife works as a beauty consultant in London’s West End. She was upset that although their footfall was good and plenty of customers wanted to try out products, very few actually bought anything, and many could be seen price-checking and purchasing on Amazon before they even left the store. Let’s be honest: many of us do this every time we shop. Her general feeling was that they shouldn’t even bother stocking anything in-store. This remark was borne of bitter resignation, but some retailers have done exactly that, using a sophisticated omnichannel model to remove the need for significant store inventory.

There are certain categories where consumers will always want to try products in person, and which if prove unsatisfactory can result in a glut of expensive return logistics. Clothing and fashion is an obvious candidate; US brand Bonobos recently posted a $60m increase in revenue over the past five years, driven by their Guideshop setup. Consumers visit physical stores to see the new lines, try on clothing, then pay to have clothes delivered when and where they wish. The store itself does not hold large stock or inventory. Bonobos’ system challenges the assumption that most consumers want to leave with the product in hand, and has allowed them to reinvest logistical savings in staff training and a high service-level.

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This phenomenon is also seeing green shoots for technology sales, with showroom setups such as London’s Sandbox offering hands-on experience with new categories including VR. Like Bonobos, Sandbox’s function is to give consumers the chance to try room-scale VR, something Context’s 2016 VR consumer survey showed to be a key factor in purchasing VR. At this stage in the category’s lifecycle relatively few consumers have tried room-scale VR, and would therefore be unwilling to part with the daunting initial upfront cost.

These kinds of demonstrations are arguably more important for VR marketing than traditional advertising. VR can be a revelatory experience, but selling it to someone who has never tried it is an uphill struggle. It is also fair to say that many consumers shop online to avoid feeling pressured by a salesperson, and at present very few retailers can offer truly excellent face-to-face customer service. By removing the onus of making the purchase then and there, and potentially allowing for price reductions to compete with Amazon, Bonobos’ solution, or a modified omnichannel setup could be the saviour of the high street, not to mention a huge boom time for the distribution channel and drop shipments.

The art of window-dressing has a long and proud history, once a place of hubris for serious-minded shop attendants and source of satire for comedians, but now the whole store offers a window into (Microsoft) Windows.

by JW

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Filed under Connectivity, Retail, Retail in CONTEXT

TCG Retail Summit – Top Themes for Future Retail Success

Guest blog by Chris Petersen, IMS

The TCG Summit represents a very unique gathering of top European Executives from across Europe. This year’s TCG summit, which was held at the end of March in Berlin, was particularly noteworthy in terms of the dominant recurring themes for future retail success, not only for technology, but all categories of retail. Even though the audience was primarily technology retailer and vendor leaders, innovations highlighted were less about the application of technology in the retail store, and much more about adapting to the most disruptive force in retail today – the omnichannel consumer.

Omnichannel is the New Normal
The underlying theme present in most of the presentations and panel discussions was omnichannel.   The TCG Summit in fact kicked off with Christophe Biget’s presentation focused on “innovation throughout the customer’s journey”.   From “walking in the customers shoes” to “customer centricity”, thought leaders were squarely focused on today’s consumer as a driving force of change in today’s retail.

If anyone had any doubts about omnichannel, it was key topic in almost every presentation and follow up panel discussion. The consensus in many discussions seemed to be that retailing is now moving beyond “omnichannel”.

“Experience is your product”
A top theme of both the presentations and panel discussions was focus on the customer experience as a key differentiator.   Jeffrey Sears from the Modernist group perhaps captured it best with his concept that “your [retailer] experience is your product”.   For traditional bricks and mortar retailers, the DNA now required is creating exceptional store experience as the new differentiator producing disruptive results. Despite all of the disruption from omnichannel, no one was predicting the demise of the retail store anytime soon. Many of the discussion panelists called out the need for new levels of partnership between vendors and retailers to “bring products to life”, particularly in stores.

Indeed, smart home products were frequently mentioned as the “poster child” for requiring hands on customer experience in store.   Smart home products are the growth category of the future that technology retailers are poised to lose … IF retailers don’t deliver an exceptional experience that connects products to the consumer’s life style.

Engagement – Yes we can!
The other underlying theme for future retail success is that retailers must develop internal DNA focused on customer engagement.   In the product centric past, it was enough to build stores, run ads and wait for consumers to come shop.   In today’s omnichannel world, consumers are very proactive and in control of their journey.   To be successful, retailers must focus on innovative ways to move from a passive display to proactive ways to engage customers where they are and how they want to purchase.

Perhaps the highlight presentation of the TCG 2017 Summit was from Nilesh Khalkho, CEO of Sharaf DG. Khalkho provided an amazing visual journey of Sharaf DG’s mantra of “Growing through Differentiation” in an omnichannel environment.   This journey included numerous examples of how retailers, especially technology retailers, will survive and prosper by truly differentiating on customer experience, engagement, and service.   The Sharaf DG story was a highlight that became a “Yes we Can!” rallying cry for what is possible in transforming technology retailing.

The Bottom Line – Results still Count
It is one thing for an executive team to say they are transforming to omnichannel, it is quite another to be able to execute omni-presence, experience and service 24/7/365.   There were a number of speakers and commentaries on the tremendous investments required to be able to create the experience and engagement demanded by today’s consumers.ETCG-Flashback-2017-43-2

As Adam Simon from CONTEXT highlighted, investors in tech retail are still looking for a return on their investment.   But achieving that return will require more than fiscal, operational expertise.   The successes, and the future of technology retail will require innovation on how to leverage talent in new ways that generate connected, customer relationships based upon a differentiated customer experience.

The bottom line for the future retail success – future success will not depend upon the sales transactions made today, but rather upon the customer relationships earned through engagement and services that will generate customer lifetime value.

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

Peddle Faster to Fly Your Unicorn: Could VSports Cause Unintentional Fitness?

In three decades of video gaming there have been some very odd on-screen instructions. The Grand Theft Auto series introduced a controversial healing mechanic, and in PS3’s 2010 title Heavy Rain players were encouraged to “press x to Jason [sic]”, however being instructed to pedal in order to start your unicorn must now be a close contender. It’s also fair to say that very few eSports or sit-down video games will draw much more than nervous perspiration, or perhaps the dreaded Nintendo Thumb some of us used to suffer when attempting to finish seemingly impossible titles like Battletoads (which if played with two players was actually impossible). The Nintendo Wii was the first mass-market gaming platform to show the potential for video games to help users truly exercise, and the motion controllers and uses beyond sedentary gaming were a major selling-point over seemingly superior competing products. The majority of users eventually grew to see the Wii Fit as a novelty workout video with interaction, and slowly consoles were retired in garages, ignored and eventually abandoned like so many gym memberships. Few of those Wii Fit owners have looked back since.blog1

As the VR industry has grown over the last two years a new form of exercise has emerged – Vsports. In this instance, the user is immersed in a 360 degree 3D world, transforming a session on an exercise machine into a totally different experience. Often complaints of reluctant joggers is that running through the streets of Balham is hardly exciting, and thudding on a treadmill whilst watching Simon Cowell’s latest autotuned starlet in the gym is drastically worse. What about running along the banks of the River Tiber whilst chasing rogue legionnaires, or indeed, flying a pedal-powered unicorn? The latter has been made possible by VirZOOM, a company so sure of its product that they are targeting their marketing directly at lapsed gym bunnies. My own aversion to jogging is the lack of competition and the abstract nature of lonely cardio exercise, however a gameplay element and opponents, both virtual and real, will push me the extra mile. Interestingly, in a 2016 CONTEXT survey of EU consumers, sport was the gaming category which excited them the most for VR, with 1 in 5 respondents expressing an interest; this could now mean sport in a very physically-active sense.

For those of us in the ICT industry who have been lucky enough to try VSports at events such as CES, general consensus is that this could be a big category for VR, both at home and in larger installations. As an analyst, I am frequently asked where the opportunities for VR lie for the channel, and VSports offer both a B2B and consumer market. Health technology is persistently strong in terms of sales, and the industry is accustomed to disruptive technology and wearables. Moreover, gyms have long been a customer of AV installers and resellers: almost all gyms contain dozens of TVs and LFDs. The sanitary aspect of VR headsets has not been missed by start-ups, with companies such as VR Cover popping up to sell washable VR peripherals.

Perhaps the most interesting example of the convergence of games, VR, and VSports is the phenomenon of accidental exercise. My own serendipitous encounter with VSport was whilst playing Knockout League on the Oculus Rift/Touch recently. After over an hour of shadow boxing I removed my headset to discover the sort of sweat I’d expect after a 5km run. I’m not the only industry professional to accidentally work out during a normal gaming session: Job Stauffer, Telltale’s head of creative communications recently announced that he’d lost over 50lb playing a VR game, in this case Sandboxing. For those of you in the channel who have routes to the healthcare verticals and are also lucky enough to be distributors or resellers of one of the high-end VR HMDs, my advice is to start some serious conversations about the new categories of VR Fitness Devices and Accessories.

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by JW

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Filed under Connectivity, gaming, Mobile technology, virtual reality

CeBIT 2017 Points the Way to VR and Smart Device Growth

With 200,000 participants flocking to Hanover this year, the week-long CeBIT show can be an intimidating prospect. Over 3,000 exhibitors set up shop at the world’s biggest technology expo. And while this is not a show for big name product launches, it still provides a very useful snapshot of what’s hot in the tech industry from one year to the next.

This year, as we predicted, there was plenty of buzz around smart devices, the Internet of Things and Virtual Reality (VR)/ Augmented Reality (AR). These, after all, will be the technologies that in years to come delight consumers and power the next generation of European businesses.

VR/AR catches the eye
CeBIT 2017 had a bigger focus on VR/AR than ever before, highlighting the growing maturity of this burgeoning technology. If you were in any doubt of the scale of interest in this space, half of Hall 17 – one of the show’s aircraft hangar-sized expo spaces – was devoted entirely to firms exhibiting VR-related tech. As we predicted at the end of 2016, gaming will continue to drive forward interest in VR on the consumer side. But, as evidenced by its exposure at the business-centric CeBIT show, more and more companies are exploring corporate applications.

Examples included the “Virtofy” VR presentation system, which offers companies an opportunity to demo products and showcase projects to prospective clients/customers. Another interesting use case developed by engineers at the Zwickau University of Applied Sciences incorporates integrated data goggles into the helmets worn by steel workers – designed to flash up safety warnings and the like.

In Hall 2 Intel, in cooperation with Microsoft, presented the dataflow the companies expect in the near future. Based on the BMW i8, Intel presented with the Microsoft AR Hololens how cameras and sensors scan the environment of a future car in order to drive autonomously. Intel predicts that approximately 4000 GB of data will be tracked, processed and uploaded from cars in the future, which creates brand new business scenarios in this market.

IoT everywhere
As we mentioned in December, the Smart Home market is really heating up, with Apple, Google, Amazon, Samsung and Microsoft set to battle it out for hearts and minds in 2017 and beyond. True to form, the Internet of Things formed a major part of CeBIT 2017, with over 270 exhibitors from 29 countries participating. The IoT also had its own spin-off summit at the conference – a first for the organisers and again illustrative of the growing interest in smart products.

The IoT, of course, extends far beyond the smart home. In fact, attendees were treated to demos of everything from smart shirts and dog collars from Telefonica Deutschland, to Toshiba’s industrial applications for the energy sector.

Drones are taking off
The smart device revolution also increasingly extends up into the sky. As evidenced by the buzz at CeBIT, drones are fast carving out an IoT niche of their own. A large outdoor area sponsored by Intel drew many of the crowds, with much attention drawn to the bright orange H520 hexacopter from Chinese firm Yuneec. When combined with an on-board camera and Intel RealSense tech, it’s able to detect movements and distances like the human eye – enabling it to avoid obstacles in flight.

The Drone Park even drew the interest of German Chancellor Angela Merkel and Japanese Prime Minister Shinzo Abe.

by AD

 

 

 

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Filed under Connectivity, gaming, Home automation, IoT, Mobile technology, Retail, Smart Home, Smart Technology, virtual reality, Wearables

How PC Gaming Is Driving AI, Cars, and the UK Treasury’s Technology Policy

At CES 2017 back in January, Jen-Hsun Huang, CEO of Nvidia announced that “GPU-powered deep learning is driving the ability for computers to perceive the world… But one day, AI researchers met the GPU and the big bang of AI occurred.” Up until more recently, when most ICT analysts thought of Nvidia, the first thing to come to mind would have been gaming, and for a good reason. The core of Nvidia’s business is still PC Gaming where they continue to dominate the GFX hardware market. Jen-Hsun went on to explain that the “GPU had the benefit of being fuelled by the largest entertainment industry in the world, video games.” Indeed, PC gaming is one of the most processing-intensive activities a PC can be asked to perform, and that industry has gone from strength to strength over the past few years. Jen-Hsun was right to tout the success of PC gaming: CONTEXT’s data shows that sales of high-end VR-ready PCs shot up 1057% in terms of revenue y/y for the top 6 EU economies in Q4 2016, and figures from the Entertainment Retailers Association put gaming as contributing more to the UK economy in 2016 than either music or video sales at £2.96bn.

Several thousand miles away from Sin City, the importance of AI and driverless cars was being carefully noted by strategists and civil servants in Whitehall, culminating in the most recent budget announcement. The British government has promised £270m in funding for disruptive technologies such as driverless cars, AI, and robotics. Given the current hard-Brexit policies being pursued by Teresa May’s administration they are wise to support such green shoots; CONTEXT’s figures for professional GPUs back both this decision and Jen-Hsun’s assertion. Screen Shot 2017-03-16 at 13.21.25Sales of professional GPUs in the UK reversed a previous decline in Q3 2016, with Nvidia’s own Quadro series of GFX cards enjoying +25% y/y growth in revenue. More and more GPUs are being purchased to power deep learning and AI for large datacentres, rather than in their more traditional roles for 3D modelling and computer aided design.

It’s not uncommon for devices to be developed with one purpose in mind then being very successfully appropriated for another. Even Atari’s failed Jaguar gaming console ended up being cannibalised and used in dental equipment. The GPU is also the critical lynchpin of another emerging technology: Virtual Reality. In one profound statement, Jen-Hsun declared that “…all gaming was Virtual Reality,” and in many cases this rings true where a player inhabits a virtual world. It might not seem immediately obvious, but components built for PC gaming now power both AI and VR. As a result Nvidia’s share price has soared in recent months, finishing 2016 +224% up from the previous year, and promising to continue to rise as their partnerships and new ventures bear fruit, with professional visualization growing +11%, datacentre at +144% and automotive up +52% for Q4 2016.

This success eventually caused Nvidia’s shares to drop in February when the Q4 results were released as investors weighed up the risks of long-term returns (as driverless cars are still many years away from being commonplace), versus selling stock at an apex. To some extent, the UK government is taking a gamble on driverless cars becoming the norm, and this might reflect the modest £270 sum compared with much higher investment promised by other governments. Academic commentators have also welcomed this news due to the environmental benefits promised by AI-driven vehicles. The immediate future of AI and its importance to the UK economy is very encouraging, but much like Brexit, the longer-term outlook is beyond the most complex algorithm to accurately portend.

by JW

 

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Filed under Big data, Connectivity, gaming, IoT, Mobile technology, Smart Technology

Reflections on DISTREE EMEA 2017

When the IT channel gathers in Monaco for DISTREE in February it is always good to get some winter sunshine, not just from the balmy Cote d’Azur weather, but also the opportunity to meet up with panellists, clients and new tech companies.

This year there was a strong distributor focus, and the keynote, delivered by Chris Petersen , our strategic partner, was a look at what distributors need to do to benefit from the omnichannel revolution. Chris challenged the audience provocatively with a tombstone showing that on 14th February 2017, traditional retail died. What is the significance of this date? It was on this day that Warren Buffett, the legendary investor, sold almost all of his WalMart stocks. The WalMart stock has been languishing for years now, as the company is incapable of catching up with Amazon on ecommerce. Their total of $13bn online sales is equivalent to the growth which Amazon puts on every year.

Chris elaborated on 5 areas where distributors can contribute. Here are two key ones:

  • The last mile represents 40% of costs – how can distributors help with logistics support such as drop shipment, and inventory management.
  • The long tail is the chosen strategy of ecommerce and particularly online marketplaces, which are big competition for distributors. What can distributors do to help retailers increase the breadth and depth of categories which they hold.

In addition, CONTEXT had a workshop slot, and presented a deep dive on three emerging technology areas – Smart Home, VR and PC Gaming. There is a thirst for understanding all these areas, as evidenced by the full house of those attending the talk. Of all of them, the theme which cropped up throughout the three days was PC Gaming. In the CONTEXT presentation there was a very visual presentation of the need for deep analysis in this area, with a slide showing two Asus models. One was a Republic of Gaming model, evidently a gaming machine.

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Adam Simon, Global MD – Retail, CONTEXT

The other was a “business” laptop, but when you dig into the specifications you can see that it is also gaming capable. The channel needs to understand the total market if it is to develop the gaming category, and that is where the CONTEXT categorisation is very useful.

Finally, we were asked to take part in a panel on Brexit. All 4 UK participants had been pro-Remain and are all now pragmatic if concerned about the future. We are delighted to see additional investments recently announced by tech companies in the UK, and look for an interesting competition between the hardware strong France and the software strong UK.

by AS

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Filed under Connectivity, Home automation, omnichannel, Retail, Retail in CONTEXT, Smart Home, Smart Technology

Smart Home survey Latam unveiled

CONTEXT recently expanded its smart-home survey coverage to Latam and Howard Davies, our CEO, presented the results at the recent GTDC conference in Miami.

This category is still in its infancy in Latam but, since things are now moving in the US and the UK, accelerated by the arrival of voice control with Amazon Echo and Google Home, we are keen to establish a baseline.

Here are some interesting findings from the survey:

  • Timescales given in response to the question, “When do you envisage you will have a smart home?” are shortest in Mexico. Brazil and Argentina are next, and Chile is some way behind.
  • It is open season on smart home for the channels – none has established themselves as the natural go-to place: in two countries (Brazil and Argentina) online retailing leads, in two others (Chile and Mexico) DIY is in front. Specialist technology retailers lag throughout Latam, which is surprising.
  • Awareness of voice control is high, in particular Apple Siri. This makes these countries fertile ground for the launch of Amazon Alexa and Google Home although, at the moment, people prefer to use smartphones to access smart home. We think this will change when they see the ease of access voice control provides.
  • Thermostats, lightbulbs, smart plugs, smart doorbells and locks, and smart cameras are the products people are most aware of. Lightbulbs and plugs are the entry products, the ones people are going to buy (intention to purchase > 4%). Smart doorbells and smart sound systems cross this threshold too.
  • Interestingly, leading reasons for purchase differ by country – security in Brazil and Chile, automation and making life easier in Mexico, lowering energy costs in Argentina. “Because it’s just cool,” scores very highly in Chile and Argentina – is this coming from tech lovers, early adopters, or just people for whom image is important?
  • Lack of understanding of benefits and lack of knowledge of products are key barriers, and this is unsurprising. But the strong vote for products that work together should be a call to action for the industry. The importance of integrated offerings is supported by the number of people who say that they don’t understand how the smart home concept fits together. The manufacturer or retailer who really communicates and delivers this will be in a strong position.
  • People are more concerned about the physical risks of owning a smart home product than the cyber risks. Product malfunction is the top risk in all countries.
  • The only country where retailers are doing a reasonable job of explaining smart home is Mexico.
  • There is a three horse race for the hub – Amazon Echo leads in Brazil, Google Home in Chile and Apple Homekit in Mexico. In Argentina, Amazon Echo and Google Home are neck and neck.

Smart Home in 2017 is going to be a battle of the giants! For more information, please click here!

by AS

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Filed under Connectivity, Home automation, Smart Home, Smart Technology