2 in 1s and Gaming PCs lead profitability pathway
2017’s CES showcased the upcoming success stories of the technology industry, with Virtual Reality, Smart Home, and Internet of Things ecosystems at the forefront of the agenda. Growing popularity and demand for Gaming and 2 in 1 devices paved the way for innovative launches. Both markets, dominating PC news, are key value-return opportunities for manufacturers and retailers alike.
2016 saw ~25% YoY volume growth for 2 in 1 devices (Convertible Notebooks and Hybrid Computing Tablets), a trend that began its emergence in 2015. Q4 2016 saw these devices sell with an average price (GBP) 21% higher than other Mobile Computing devices (such as Non-Convertible Notebooks), highlighting their value opportunity. As a result their value share has grown to approach a fifth of Total Mobile Computing.
Current and upcoming offerings fuse impeccable design with the latest (and thinnest) bezel-free, battery enduring, high-speed processing technology. Educating consumers to boost awareness of both the functionality and benefits of 2 in 1 PCs will only drive further growth as the premium spend becomes justified for the consumer.
Alongside the profound emergence of Virtual Reality, Gaming PCs, defined as devices with NVIDIA GTX, AMD Radeon R9 or Radeon RX GPUs*, are experiencing dramatic growth. 2016 saw 54% and 60% year-on-year volume and value growth, respectively, for Gaming Desk & Tower PCs, while Gaming Notebooks grew at rates of 54% volume and 49% value for the year. With the average price of a Gaming PC (Desk & Tower and Notebook) over 150% higher than non-Gaming PCs (Q416), the premium opportunity is vast. Gaming Notebooks in isolation sell at average prices 18% higher (Jan-Dec 2016) than their non-portable counterparts, cementing their position as an opportunity product for value return.
Average selling prices of Notebook PCs have shown consistent year-on-year declines since 2014, with manufacturers and retailers battling for the most competitive consumer offering. Uncertain economic times ahead, alongside a declining market forecast, makes overcoming the challenge of maintaining profit margins a strategy to tackle head-on.
The many opportunities within the Technology industry are undoubtedly ready to be exploited, to ensure manufacturers and retailers maintain profit margins against a backdrop of Brexit negotiations, the decline in the value of the sterling, and the prospect of higher inflation impacting consumer purchasing power. It is essential, however, to effectively communicate a product’s benefits and differentiation to secure consumer willingness to spend. As online consumer purchasing and digital marketing campaigns become more prevalent, innovative and creative means to achieve this are required.
Now more than ever, a comprehensive understanding of the return from your marketing spend, consumer purchase journeys, and price elasticity is imperative to success throughout the year ahead. Get in touch for the answers to your key business questions in 2017.