2022 Predictions: Devices

Join Senior Analyst Eric Costa for an exclusive review of our 2022 devices edition, Top 3 Predictions for Devices, during which our subject-matter expert will discuss the unsustainability of current PC market growth levels, tablet market revenue growth deceleration, rapid growth in Device as a Service, and more.

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Top 3 Predictions for Devices in 2022

Devices demand to decelerate in 2022

Devices market will see growth return to pre-pandemic levels throughout 2022

Many thought the initial surge in devices demand would quickly fade after the start of the COVID-19 pandemic, but that has not been the case. Revenue growth across the ecosystem, especially in PCs and tablets, has been much higher in recent quarters than traditional single-digit growth. However, this current elevation is unsustainable.

Over the past two years, the devices market has seen a major industry shift in supply and demand that has reshaped the ecosystem and has led to strong and consistent growth from most device vendors. It began with factory closures that hurt early 2020 supply chains and revenue growth, followed by a major spike in demand for devices used to entertain, work and learn from home during the pandemic. A shortage of components has led to this demand being unmet as of the end of 2021, leaving TBR to question whether vendors will be able to maintain revenue growth, unit sales and average unit revenues in the long term.

TBR expects a drop in demand and revenue growth by the end of 2022 due to these unsustainable conditions; however, other factors will emerge to help stabilize the devices market at pre-pandemic levels. These trends include continued revenue growth, albeit at a decelerated, low-single-digit pace rather than the 20%-plus year-to-year growth seen since mid-2020, as well as vendors’ releases of Windows 11 PCs and additional 5G device enhancements to drive refreshes in the coming year.

2022 devices predictions

  • PC market growth unsustainable, will return to single digits in 2022
  • Tablet market revenue growth set to decelerate in 2022
  • DaaS will lead all PC services in revenue growth through 2022

Learn more in our webinar 2022 Predictions: Devices

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Telecom Business Research’s 2022 Predictions is a special series examining market trends and business changes in key markets. Covered segments include cloud, telecom, devices, data center, and services & digital.

COVID-19 changes everything: What’s next for devices and IoT?

In pandemic recovery, IoT will contribute to organizations’ resilience, while PC sales will suffer from saturation

The COVID-19 outbreak has had two effects on pre-existing trends: In many cases, such as the migration to remote working, it has accelerated them, and in others, like the deployment of voice solutions in workplace environments, it has interrupted them. Where trends are accelerated, we can expect a slowdown or temporary rebound as the economy recovers from the impacts of the pandemic, followed by a resumption of the trend. Where trends are interrupted, resumption will often be delayed until later in the recovery, when there is less uncertainty.

Under these circumstances, it is worthwhile to look back at last year’s predictions:

  • There will be less talk of IoT, as it will be increasingly viewed as one technique among many for delivering digital transformation.

This trend was accelerated by the pandemic, as organizations focused on operating in the crisis and preparing for greater uncertainty during and following the recovery. In a sense, once IoT was better understood by customer organizations, including IT, operational technology (OT) and business management, it no longer required special attention. The focus shifted from the enabling technology, IoT, to the problems to be solved using all techniques including IoT.

  • AI in IoT will increasingly be encapsulated in specific functions like recognition and detection.

This trend was also accelerated by the pandemic, as organizations focused on point solutions that included IoT and strategic solutions that incorporated data from all sources, including from IoT. At the edge, AI is aimed at improving operations by increasing efficiency and reducing errors as well as recognizing things like anomalies and patterns that imply a need for service. IoT-generated data contributes to AI-enabled business analysis, but that is as part of a larger body of data, including data from other sources, and is typically done either in the cloud or in on-premises data centers.

  • Conversational user interfaces, based on voice or typed communication, will play an increasing role in business solutions.

Many natural language processing (NLP) projects have been deferred or slowed due to pandemic constraints as well as organizations diverting attention and dollars to more pressing needs or to husbanding resources for a more uncertain future. A minority of NLP projects, especially ones already in use, have been accelerated because they reduce dependency on human operators. While conversational solutions remain in the digital transformation tool kit, TBR believes NLP will remain a lower priority for the first stages of recovery, as organizations look to solutions that increase resilience and transparency.

This focus on digital transformation for resilience and transparency, giving organizations the flexibility to adapt to changing conditions in the pandemic recovery and economic unpredictability, is, TBR believes, the next phase in the evolution of commercial IoT. At the same time, the PC industry faces a saturation-driven reduction in demand following a pandemic-driven surge in 2020.

2021 Devices & Commercial IoT Predictions

  • The emergence of the chief data officer role will increase organizational clarity, accelerating IoT adoption
  • Packaged solutions and components will become more important
  • Despite enjoying an increase in TAM, PC vendors suffer from market saturation, a weak global economy and demand for resale units

Technology Business Research 2021 Predictions is a special series examining market trends and business changes in key markets. Covered segments include cloud & software, telecom, devices & commercial IoT, data center, and services & digital.

COVID-19 changes everything: What’s next for devices and IoT?

The COVID-19 crisis has accelerated some trends and slowed others. In IoT, the emphasis has shifted to a more strategic approach to achieve greater resilience and transparency, while projects largely aimed at increasing operational efficiency have be put on the backburner. At the same time, the crisis has accelerated a maturation in customer organizations that makes it easier to build IoT into digital transformation strategies. In devices, especially in PCs, the 2020 surge in consumer demand will be followed, TBR believes, by market saturation, reducing revenue and driving down margins.

Don’t miss:

  • The new division of labor in IoT customer organizations     
  • Specialized packages and bundles simplify vendors’ go-to-market strategies
  • How the increased PC total addressable market will affect the near-term PC market

Mark your calendars for Wednesday, Jan. 6, at 1 p.m. EST,
and REGISTER to reserve your space.

TBR webinars are held typically on Wednesdays at 1 p.m. ET and include a 15-minute Q&A session following the main presentation. Previous webinars can be viewed anytime on TBR’s Webinar Portal.

For additional information or to arrange a briefing with our analysts, please contact TBR at [email protected].

Predicting the unpredictable: COVID-19 is changing the IT devices business

The devices business is sensitive to how and where people work, communicate and play

The COVID-19 crisis is changing how and where people work and how they spend their free time, all of which directly affects the PC business, adjacent devices and services businesses, in addition to networks, data centers and cloud businesses. Many of these changes are opportunities for device vendors, but the global recession, and buyers’ conservatism in the face of uncertainty, will negatively impact vendors until a recovery is underway. The novel coronavirus illness and consequent control measures are influencing the supply and delivery chains as well as sales and servicing processes. Even after recovery from both the pandemic and the recession, some of the changes in working patterns are likely to be permanent as institutions and people find benefits in remote work, accelerating and institutionalizing a growing trend. Similarly, the movement toward using technology to improve health and healthcare is being greatly accelerated by the crisis.

The global crisis has many moving parts, all affecting devices and how they are used

There are several different components to the changes brought about by the COVID-19 pandemic.

  • The illness itself is changing the lives of many people and directly affecting the global workforce as people become ill and others are caring for them.
  • The measures taken to slow the spread of the disease are drastically reducing economic activity, and devices sales are closely tied to economic activity.
  • Most importantly for the devices business, many more people are working remotely and many are relying more heavily on home-based communication and entertainment.
  • The implosion of the travel and hospitality businesses, as well as other personal services and retail businesses, is causing a rapid decrease in global economic activity, exacerbated by the downstream consequences of direct impacts to business.
  • It is possible that the virus and its mutations will impose a long-lasting threat, resulting in long-term changes to patterns of living and working.
  • Some of the changes brought about by the pandemic are accelerations of existing trends, such as working remotely, adoption of cloud-based solutions, and telemedicine; as such, these will remain in place after the crisis subsides.
  • The severity and the duration of the current crisis is indeterminate, undoubtedly leading to long-term consequences.
  • It is likely that as some geographic areas recover, other areas, especially rural areas, will experience new pandemic-based limitations on social interaction.

COVID-19 creates pain, change and even pockets of opportunity for the IT industry

There is still a fog of uncertainty around COVID-19’s impact. What is clear, however, is this outbreak is unlike any event in living history. The long-term health crisis, economic disruption and social disruption are occurring at levels that were unfathomable just months ago. These changes are taking place in a world that is much different from when the last widespread pandemic, the Spanish flu, hit more than 100 years ago. Technology has become such an integral part of our lives since that time and, as such, will be deeply ingrained in many of the short-term and long-term effects of the COVID-19 virus. In this report, TBR will provide a high-level overview of the impact these recent events will have across the hardware, software, cloud, telecom and services markets we cover. While most of the market effects will be painful due to the economic disruption occurring, many will lead to changes in long-held business strategies and create opportunities as technology needs shift for both individuals and organizations.

Social distancing challenges core of IT services industry

Pain: At the core, IT services and professional services are human-centric businesses, delivered by humans and intended to improve employees’ efficiency or accelerate their ability to connect with clients and enable growth. Changes in travel and personal interaction as well as business disruption all challenge the existing IT services business model. Additionally, many of the largest IT services providers will have new leadership tasked with managing these disruptions. In 2019 TBR noted a large number of C-level changes at the largest IT services vendors and consulting firms, as well as their technology partners. Those leaders will be tested in the coming months, and TBR anticipated more positive than negative reviews. More significantly for the long-term business impacts will be the performance of those leaders at the team and business group level, the equivalent of squad leaders and company commanders in a military organization. Adjusting to COVID-19 safety measures; managing people remotely; delivering to clients and managing their expectations, particularly in a tough economy; and continuing to lead — those will be massive challenges for team leaders. How well prepared they are, how well their companies have trained them, and how agile and flexible they can be in an ever-changing business climate are the factors that will distinguish high-performing IT services vendors and consultancies from struggling ones in 2020. The CEOs and top leadership will set the tone, but execution at the lower levels will become exponentially more difficult with this pandemic. 

Change: TBR has already spoken with consultancies and IT services vendors grappling with changes to their business models, particularly around collaborative design sessions in the early stages of digital transformation engagements. Vendors with pilot projects to enhance global coordination and project management have accelerated those efforts and expect to invest heavily in the infrastructure needed to perform at speed and at scale. Vendors have also begun evaluating their technology alliances and resetting expectations around large-scale systems integrations. Also being mentioned are new engagements based on COVID-19, including technology consulting around delivering healthcare — and, critically, testing — through “drive-up” systems.

Opportunity: TBR expects that recent trends around automation, AI and platform-delivered services will be catalyzed by the spread of COVID-19 and imperatives to work remotely and with minimal in-person contact, resulting in a few knock-on effects across the broad IT services and consulting space. Most significantly, those companies that have invested most heavily in automation and remote delivery will see the least impact on their engagements, even if clients begin to freeze or reduce spend in line with a broader economic slowdown. Second, consultancies and IT services vendors with experience in online, remote training and upskilling will be able to both continue their own digital transformations and provide offerings around human capital training and management based on their own lessons learned and best practices. Third, vendors that anticipated a global economic slowdown and prepared to take advantage of lower costs for acquisitions and new opportunities to assist clients in distressed markets — while they likely did not anticipate this virus — are best positioned to provide consulting and IT services throughout the pandemic.

IoT settles in for the long haul

Insights from TBR’s 2020 Devices & Commercial IoT Predictions

Join Principal Analyst Ezra Gottheil and Analyst Eric Costa for a presentation on TBR’s predictions for 2020 and beyond, concerning both devices and commercial IoT. IoT is playing an increasing role in the application of IT to business, and in IT spending, but it is not drawing as much attention as it once did. The role of AI in IoT is somewhat less than first expected, but it is still important. In the world of devices, voice interfaces and other conversational interfaces are due for explosive growth.

Don’t miss:

  • How customers and vendors are treating IoT, and how treatment has changed
  • The more purposeful role of AI in IoT
  • How the conversational interface, and smart speakers, have only begun to demonstrate their relevance

TBR webinars are held typically on Wednesdays at 1 p.m. ET and include a 15-minute Q&A session following the main presentation. Previous webinars can be viewed anytime on TBR’s Webinar Portal.

For additional information or to arrange a briefing with our analysts, please contact TBR at [email protected].

TBR 2020 Devices & Commercial IoT Predictions: IoT settles in for the long hual

IoT becomes part of the digital transformation family, and conversational user interfaces become more common

IoT continues to mature. This is reflected in more powerful and easier-to-implement IoT software and cloud services as well as in a greater understanding of what IoT is and what it is good for. Vendors and customers now better understand the role of IoT and the more common use cases and expect IoT to be used where appropriate.

For most vendors, IoT is no longer a differentiating headline; instead, it is included as one of the techniques or technologies, either as part of larger offerings or as specific IoT-oriented components. An increasing number of offerings are complete packaged solutions or customizable bundles that include or feature IoT. Though IoT is maturing and growing as a percentage of vendor revenue, it is less often standing alone as a spotlighted capability.

TBR’s IoT predictions from 2019 were confirmed, and these trends will continue through 2020 and beyond:

The IoT ecosystem will sort itself out; vendors will find their niches

Increasingly, vendors are messaging their specific offerings as requiring the integration of other vendors’ offerings to create complete solutions, or they are joining with other vendors’ offerings to deliver bundled and packaged solutions.

Packaged and bundled IoT solutions will proliferate

There is an increasing number of bundled and packaged solutions on the market, offered by component vendors, integrators and operations technology (OT) vendors. One type of packaged solution is enhancements to existing software packages that tap IoT as an extension of their capabilities.

Not all data is valuable: Data economics will drive design

Several vendors, including Dell Technologies and a prominent India-based systems integrator, reported that most of the data generated in IoT solutions is discarded shortly after it is analyzed and used. We believe the challenge over the next several years will be identifying data worth keeping, condensing and summarizing, and then storing it, socializing it and discarding it according to a data life cycle plan.

In the past, IoT was intimidating to both vendors and customers, as the opportunities appeared endless while there were few demonstrated use cases. As a landscape of use cases emerged, as IoT component and platform offerings matured, and as vendors gathered experience in IoT, it has become easier for customers and vendors to identify opportunities for IoT, and to design and deploy solutions. IoT describes one broad class of use cases among the variety of possible non-IoT situation-specific solutions and has become part of the vast number of available digital transformation solutions.

2020 Predictions:

  • There will be less talk of IoT as it will be increasingly viewed as one technique among many for delivering digital transformation
  • AI in IoT will increasingly be encapsulated in specific functions like recognition and detection
  • Conversational user interfaces, based on voice or typed communication, will play an increasing role in business solutions

Register for TBR’s 2020 Devices & Commercial IoT webinar, IoT settles in for the long haul, Feb. 5, 2020.

Technology Business Research 2020 Predictions is a special series examining market trends and business changes in key markets. Covered segments include telecom, cloud, devices & commercial IoT, data center, and services.

Device market disruptors

AR, VR, smart speakers and AI chips are part of the digital transformation story

New technologies have driven growth in the consumer device market. Smart speakers are ubiquitous, and adoption of these devices has grown faster than for any new product since smartphones. AR and VR adoption is growing more slowly but the technology is important in entertainment and gaming. Most new smartphones include specialized AI chips. TBR believes all of these technologies are beginning to affect the enterprise and that their influence is growing. Join Ezra Gottheil as he discusses how these new technologies are playing an evolving and growing role in the commercial market.

  Don’t miss:

  • How the conversational interface of smart speakers will drive data utilization          
  • How AR and VR will improve training and performance
  • How new AI chips will spread machine learning in business

TBR webinars are held typically on Wednesdays at 1 p.m. ET and include a 15-minute Q&A session following the main presentation. Previous webinars can be viewed anytime on TBR’s Webinar Portal.

For additional information or to arrange a briefing with our analysts, please contact TBR at [email protected].