My trend spotting predictions for 2016!
In my, admittedly long, set of predictions I think there will be a change in the laptop market structure, from many devices at many price points, to high priced high end devices, and very cheap low end devices. I explain my thinking in depth on laptops, but the first paragraph sums up my thinking. I also go on to predict why 2016 will not be the ‘Year Of’ some technologies which are currently widely spoken about, and I suspect will be the subject of many blog posts on 2016 trends.
I predict there will be a change in the pricing structure of the laptop market. There will be a movement from the ‘every laptop for every budget’ towards two price points. A high end £1000 price, and a low end sub £200 price. This will be driven by the currently low profit margins in laptops, weak consumer spending, and also a strategic push by Microsoft. The benefits will lead to consumers getting a clearer, easier to understand market. With the low end receiving significant savings, and power users getting higher quality machines.
Manufacturers will be looking for a new model to try to boost profitability. Currently the only big player who makes significant profit off laptops is Apple. They have a very specific model which, while cannot be emulated entirely by Windows device makers, can show some ways to improve profitability. By reducing the number of models, and the number of price points offered it will focus resources, reducing r&d and manufacturing costs if done correctly. Rather than a manufacturer having to produce 50 slightly different computers using ever so slightly different components they can focus on much fewer devices with fewer components. This would reduce time on development. Reduce individual component cost due to economies of scale. It would also allow for more considered design to take a greater emphasis since the human resources would have fewer devices to focus on. This would create much higher quality, but expensive, laptops. These would have higher profit margins, and more importantly be a significantly more interesting offer to consumers than current offerings.
On the low end all the previous advantages of reducing cost can be amplified with cheaper materials on the low end devices. This would allow for a significantly lower price point than currently offered. This would increase sales, and therefore revenue for the manufacturers. Alongside this if a low end device is successful it increases brand awareness leading people to consider the same manufacturer when looking to buy a powerful device. This is the direction the market will take for two reasons. Operating system vendors ie Google, and Microsoft are pushing low priced machines to sell their services. Consumers needs have changed significantly in recent years allowing previously under powered devices to be adequate for their needs today.
Moving on to Microsoft. Since Satya Nadella became the CEO it has changed tactics away from making money through selling Windows and Office licences to an aim of having their products on every device, in front of every consumer. This has led to dramatic changes such as Windows 10 free upgrade, Office 365 subscription with free Office on small devices, and most importantly free Windows 10 on small screened devices. This final point is to compete with Googles Android, and Chrome OS which allow for sub £200 laptops, and tablets. For Google this gets their services in front of consumers, and therefore not Microsoft services. The free copy of Windows for small devices means that Microsoft is pushing cheap Windows devices, while providing an incentive for manufacturers to create them. Since these new devices are significantly cheaper, while also being adequate enough, they will appeal to consumers looking for a casual, ‘cheap and cheerful’ device.
The third factor pushing this change in the market over 2016 is the currently relatively weak consumer spending. The PC market has been in decline of the past few years with the economy not doing brilliantly, and incomes stagnating. Therefore, consumers have been putting off upgrading for longer than they used to. Alongside this is the change in their habits, using smartphones, and tablets to do their basic computing tasks such as email, reading, and web browsing. This has created a casual user base with less need for a ‘full high powered laptop’, greater price sensitivity, but still a desire to have a device with more traditional input, and control. This opens a market for the low end sub £200 prices devices. As a product it creates the familiar PC user experience but at a price point where consumers have little deliberation to do about it.
Power users however have continued to be less price sensitive, however now demand much higher quality products outside the traditional specs race. This means an emphasis on clever design, quality of hardware, and customer support. Currently their options in laptops are limited. There is the traditionally solid choice of Macbook Pro which comes with all those options, and which a power user is able to install Windows on if they chose. If they look at Windows vendors their options are limited as design, and detail focus has usually taken a back seat. However, there is signs of this changing with products such as the Dell XPS 13, and Lenovo Yoga Pro series.
With the need for greater profitability for manufacturers it makes sense to clearly divide the market into two price points. Doing so will allow each type of customer to be better served. It will focus resources much more efficiently, perhaps even allowing for greater innovations to occur. With the reduced costs, and greater profit margins possible from changing the market model it would be in everyone’s interests for it to happen. Furthermore, I expect it to happen in 2016 as it does not require every vendor to change. If just one does they will see the benefits, as the losses incurred from dropping mediocre mid-market models will be offset by the much larger profits from the high-end. Once one move in this direction, I suspect others will also begin to change.
While my main prediction is the changing shape of the laptop market I also want to counter many likely predictions made on the web. This section is more specifically about what 2016 will not be. 2016 will not be ‘The Year Of’ the following:
4K will not be a game changer this year as it has many problems still to be conquered. First where is the 4K content? The only commonly accessible content is Netflix originals. No BBC, ITV or Channel 4. There isn't even much in the way of 4K films a consumer can buy. Games consoles are not even in 4K, games on PC are, but the commonly owned consoles are maxed at 1080p. Secondly who can create the content? Sony has released a 4K camcorder, and Samsung made a phone which can make 4K film, and that’s pretty much it for normal consumers. The vast majority of cameras, and smartphones are all 1080p. Enthusiasts can make 4K but this then brings us to the final problem. What can you watch it on? 4K TVs, and PC monitors exist but are far out of most budgets. Only power users will buy them. Average consumers won’t as they can’t afford it, and even if they did buy it they gain nothing from owning it as there is nothing on TV to watch. 2016 will not be the year of 4K.
The VR market has done what I predict will happen to the laptop market in 2016. There is a very high end, and a very low end. Oculus Rift at the top end, and Google Cardboard at the bottom end. While I think this is good for the laptop market it is not helping VR, and will not mean VR suddenly explodes in 2016. VR suffers the same content issues as 4K. Other than enthusiasts, and very specific applications little has been produced for VR. Have you seen a video of someone demoing a VR headset? You need an entire empty room to get the full benefits. Average consumers tend to fill their rooms with furniture which gets in the way. While it will make interesting developments, and be closer to wider consumer adoption, I don’t think it will be ready for 2016.
Smartwatches, and Internet of Things.
I've grouped these together as they have potential to work together best. While I love my smartwatch I struggle to recommend it to anyone who is not a technology enthusiast since there is little use for it. What does it do?! The answer is it puts my phone notifications on my wrist, and tell the time. To most consumers that does not warrant a £200 or more expenditure. Unfortunately, currently no manufacture has produced a compelling reason for an average consumer to own one. With the IoT it suffers also from not having a compelling reason to own the devices. Most consumers see IoT as a talking fridge, and an over designed thermostat. While this is parodying the devices somewhat, it does go some way to explain why consumers have not suddenly added internet access to everything, as some predicted last year. What I do predict for 2016 and these two categories is greater integration between them. If manufacturers can design devices which make people’s lives better in their home, then the advantage of smartwatches becomes clearer as people can use them to control their smart home. My favourite use of my smartwatch is controlling music in my home. Having music set up with a Chromecast through my phone allows me to change volume, tracks, and browse all from my watch. Knowing how useful, and futuristic, this feels makes me predict that the future of these categories lies in integration between them. However, this again is further away from 2016 than some may predict.
Thanks for reading this far! I hope you thought my predictions were interesting, even if you disagree. I'm curious as to what you think will happen in 2016?