M+E Daily

Tech and the 2016 Holidays went Hand in Hand

While TVs — especially 4K ones — were widely seen as the top-selling consumer electronics products over the Thanksgiving and Black Friday holiday weekend, artificial intelligence (AI)-based digital assistants (namely Amazon Alexa ones) have emerged as a break-out seller through the rest of this holiday season.

Analysts at NPD and the Consumer Technology Association (CTA) pointed to the significant declines in 4K TV pricing and aggressive promotions of Ultra High-Def (UHD) TVs in retailer ad circulars as the main drivers of TV sales over the holiday weekend.

But video game consoles — especially the widely sold-out Nintendo Classic Edition — have been in heavy demand throughout the holiday season. At only $59.99, the Nintendo product proved to be the perfect, affordable Christmas and Hanukkah present for many consumers — at least those who were lucky enough to find one and/or willing to wait in line outside of retail stores for hours to nab one.

There were, however, also increased demand and even sell-outs seen this month in the emerging product categories of digital assistants, drones and virtual reality (VR) headsets, the CTA said in a news release Dec. 27.

The entire digital assistant category, including products by Amazon and Google, “sold well in the final months of 2016,” Shawn DuBravac, CTA chief economist, told the Media and Entertainment Services Alliance (MESA) by email.

But the stand-out digital assistant in December has clearly been Amazon’s voice-controlled Echo smart speaker and smart home control device that features the company’s Alexa digital assistant. Although it went into limited release in late 2014 and made widely available in mid-2015, strong demand for Echo didn’t start kicking in until 2016, when Amazon, Google and other companies introduced new digital assistant products and finally made digital assistant devices a true, full-blown product category in time for the 2016 holiday season.

Echo and the new, smaller Echo Dot (another affordable holiday gift at $49.99), along with the new version of the Amazon Fire TV Stick featuring Alexa voice control and the Amazon Fire tablet, were the best-selling products for Amazon this holiday season across all product categories, it said Dec. 27. Samsung Gear VR, meanwhile, was among the best-selling wearable devices, Amazon said.

This was the “best-ever season” for Amazon and customers bought and “gifted a record-setting number of devices from the Amazon Echo family with sales up over 9 times compared to last year’s holiday season and millions of Alexa devices sold worldwide this year,” it said in a news release. Dec. 23 was the biggest day ever for Amazon Prime Now deliveries globally and members ordered three times more items compared to last year with one and two hour delivery worldwide, it said, adding Echo, Echo Dot and Fire TV Stick were among the most popular items ordered that day in the U.S.

“Echo and Echo Dot were the best-selling products across Amazon this year,” according to Jeff Wilke, CEO of worldwide consumers at Amazon. But he said: “Despite our best efforts and ramped-up production, we still had trouble keeping them in stock.” Although the Dot was in stock Dec. 27 at Amazon.com, Echo won’t be in stock again until Jan. 26, the site indicated. The availability status of the Fire TV Stick with voice remote was even worse than Echo. The Fire TV Stick was “currently unavailable” and “we don’t know when or if this item will be back in stock,” according to the site.

It was a similar case at several U.S. retail stores, including Best Buy, Sears and Abt Electronics in Glenview, Ill. All models of the Echo and Echo Dot were sold out Dec. 27 at Abt.com.

“The Echo and Google Home alike are becoming more and more popular simply because as a society we want information as quickly and efficiently as possible,” Chad Taylor, Abt product manager, told us by email. “Now because of these products you are able to do almost anything including ordering products, getting the weather all over the world, listen to music, [or] hear a joke,” he said, adding: “Abt has been assorting the Echo now for 2 years, since the original release,” and it saw “strong holiday sales for all the Amazon and Google products” this holiday season.

“Voice-activated digital assistants are changing the way we live our life in small, subtle ways,” DuBravac told us by email. “The aggregate sum of these changes is pronounced. The benefits of the technology outweigh the cost of the device. And for those of us who have it, we want others to experience the same benefits. At the same time, those who are coming into contact with the technology for the first time find it interesting enough to bring it into their own lives,” he said.

DuBravac added that the technology “passed an important threshold” in 2016. “While we have a long way to go, voice recognition has gotten to the point that it is a usable and viable technology for the average consumer,” he said.

Asked why he thought digital assistant sales soared in late 2016, he said: “During the holiday season we like to give … gifts and we like to receive a gift. It is not uncommon for young technologies to see the majority of their annual sales materialize in the last 8 to 12 weeks of the calendar year. Where mature categories will have sales more evenly distributed throughout the calendar year, new technologies have a significant share of their annual sales materialize in the final few months of the year.”

DuBravac went on: “Many of the services and devices that we subscribe to or own are tying into” hub devices now. “Voice computing, which is ultimately what these devices are offering us, is quickly becoming the glue that binds our technologically infused lifestyle,” he said, pointing to the fact that consumers are using voice computing to control smart door locks, get Fitbit fitness and health stats, and even get the balances on their Capital One accounts.

The surging popularity of digital assistants was part of an overall positive report that the CTA gave Dec. 26. Its Index of Consumer Technology Expectations (ICTE), which measures consumer expectations about technology spending, jumped 11.3 points in December to 89.1, it said.

“As predicted, consumer sentiment toward technology spending bounced back in December following a temporary deviation last month,” DuBravac said in a news release. “We’ve seen a healthy appetite for tech over the course of the 2016 holiday season thanks to a strong performance for perennial strongholds. That includes strong sales of televisions over Black Friday Week and increasing interest in” the emerging categories, he said. Over the course of the entire holiday season, CTA projected tech spending would increase 3.1 percent over 2015, driven mostly by an increase in online and mobile spending.

The popularity of Echo was also cited by research company Futuresource Consulting as a factor in why the home audio category is performing so well now. Global demand for home audio devices “continues to gather momentum, with the category outperforming the wider CE market and on track to finish 2016 at 102 million units shipped and close to $11 billion in trade value,” it said Dec. 22.

“Over the last few years home audio has been the go-to growth category for CE, but 2016 is pushing expectations even further,” Rasika D’Souza, a Futuresource senior market analyst, said, adding: “Against a backdrop of activity from soundbars and Bluetooth speakers, and the success of Amazon’s Echo and Alexa, it’s been a record year that is also building firm foundations for future growth.”

During 2016, voice personal assistant speakers “have taken [center] stage due to the success of Amazon Echo and the debut of Google Home speakers,” Futuresource said, adding the category “will quickly be extended, as Microsoft teams up” with soon-to-be-Samsung-owned Harman to provide a speaker powered by Windows 10’s Cortana: “just one of the Cortana hardware solutions that Microsoft will likely unveil in 2017.”