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What to Expect from IFA Berlin 2018

By Annette Zimmermann | August 03, 2018 | 0 Comments

What are the key themes at IFA 2018?

New product (hardware) announcements all embedded in the theme of Artificial Intelligence will dominate the headlines. Starting with the long expected Bixby-enabled smart speaker by Samsung over smartphones as well as connected home gadgets will drive the conversation. Samsung’s smart speaker is a milestone for the company entering this important space however more enhancements are needed for the VPA itself in order to make an impact in users’ homes. Most established vendors such as Huawei and LG will continue to push their AI theme with enhancements in their respective products (Kirin 980 and LG ThinQ respectively). Despite the hype around AI, all the leading device vendors have developed significant in-house capabilities in AI as this is too important an area to rely on third-parties for the most part.

We will continue to M&A activity and hence it also always worthwhile to look beyond the large vendors and pay attention to Hall 26 where we find IFA NEXT, the start-up scene. From personal assistant robots to AI’s that can also sense your emotions, we will find a diverse set of vendors dealing with such capabilities. Nevertheless, there is still a lot of work to be done in terms of cutting through the AI-hype and look deeper into the vendors’ real AI capabilities.

There is a lot of new hardware (including new smartphone models) expected to debut at the show albeit challenging market conditions. How will vendors tackle these challenges?

Problem: smartphone vendors face challenging market conditions as users lengthen replacement cycles notably by up to six months (G00368274) and the opportunity for double digit growth is faltering. Gartner forecasts currently only 3-5% annual smartphone growth for the next five years with mature markets such as North America and Western Europe exhibiting nearly no growth. Hence, vendors are responding to these market conditions with a two-pronged approach:

1) The top vendors such as Huawei, Samsung, Apple and LG selling high-end smartphones in the “luxury price segment” (800 Euros and above) are shifting their focus towards profitability by increasing their price tags in order to keep average sales price up.

2) Android vendors focused on the mid-tier segment such as Oppo, Vivo and Xiaomi will continue to offer an increasingly rich feature set at very aggressive price points in order to drive replacements.

With regards to strategy #1, Apple has already done this a few times and Huawei and Samsung are going the same path.  This is of course a tricky business as raising the price for consumers needs to come with top-notch innovation, or why would users really want to pay more? Vendors need to focus their innovation effort towards technology that presents direct value to the user, including camera technology as well as new user experiences such as AI-based VPA’s. At the same time we can expect vendors to revisit and possibly rationalize other technology features that bring less value and help improve the bottom line when slashed.

The Gartner Blog Network provides an opportunity for Gartner analysts to test ideas and move research forward. Because the content posted by Gartner analysts on this site does not undergo our standard editorial review, all comments or opinions expressed hereunder are those of the individual contributors and do not represent the views of Gartner, Inc. or its management.

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