The months of November and December are an important time of year for consumer technology vendors — a time when a significant proportion of annual sales are made. The offers and discounting traditionally begin with "Black Friday" and "Cyber Monday."
Gartner research directors Annette Jump and Roberta Cozza share their thoughts on who might top the best-sellers' list and examine what challenger brands can do to compete.
Q: What device will be the hot tech gift during the holiday season?
A: Smartphones may not be a "must-have" new technology gift anymore, but they will still remain the top category in technology gifts over the holiday season in terms of sales volume. The smartphone market has slowed down, but the usage and time spent on these devices has increased as their functionalities continue to evolve. Apple's iPhone 7 is well-positioned to help the company dominate the premium smartphone segment this year, with a growing share of replacement users also showing interest in the Plus models. At lower price points, Chinese vendors will continue to do well and intensify competition in the midmarket, targeting users that want to upgrade from entry-level models, offering them better-quality smartphones with many desirable higher-end features, but at affordable prices.
We also expect hybrid computing devices, with PC and tablet functionality combined, will increase sales year over year, likely at the expense of traditional form factor PCs. Heavy discounting and bundles for Microsoft's Xbox and Sony's PlayStation gaming consoles are likely to make them a popular gift this season.
Early tech adopters will show growing interest in virtual reality (VR) devices such as Oculus Rift, Samsung Gear or Sony's PlayStation 4 VR headset, but this will still remain a small market for technology enthusiasts this year.
This may also be the year millennial consumers start to adopt smartwatches in greater numbers as the range of applications and use cases has expanded. Nevertheless, a recent Gartner user survey still shows big hurdles ahead for smartwatch providers to overcome consumer sentiment that these wearables do not offer a compelling enough value proposition to the owner.
Q: What do Chinese vendors need to do to improve their brand perception in developed markets?
A: Chinese vendors have increased their share of the smartphone market worldwide, and already the market share leader in the PC market — Lenovo — is a Chinese brand. Much of this growth, however, has come in developing markets as Chinese brands suffer from poor consumer perception in developed markets.
Gartner's recent consumer brand survey of nearly 10,000 consumers in developed markets shows Western consumers are far less likely to recommend a Chinese brand than other major technology brands — and this is predominantly a sentiment held by nonusers. Chinese brands such as Huawei, Oppo and Lenovo must concentrate on understanding their detractors and address ongoing perceptions of poor product quality and service levels.
As many Chinese brands are focused on price as a differentiator, they also have fewer loyal customers who are very likely to consider other brands (based on price) in their next equivalent purchase. Building a richer customer experience and higher brand awareness among millennials will help build vocal advocates of the brand who can help challenge perceptions of poor quality and build a more loyal customer base.