EE Times’ Chief International Correspondent Junko Yoshida recently interviewed Yorbe Zhang, EE Times China’s editor-in-chief, focusing on China’s electronics industry and its outlook for 2017. Zhang singled out connected devices for the home as among the top five areas of interest for Chinese consumers in 2017.
To get another perspective on Zhang’s IoT outlook, we followed up with Sunray Liu, the chief analyst of New Synergy Consulting, a consulting partner of Silicon Labs. Liu has more than 25 years’ experience in the semiconductor industry and co-founded New Synergy in 2005 as a professional marketing consultancy in China.
Sunray, how does the EE Times’ opinion on Chinese consumer interests reflect what New Synergy is seeing in the market?
I agree with Yorbe’s points about the top five electronic products, especially the IoT products. Actually, the consumption/demand for smart phones and passenger cars are still strong, but the growth rates are starting to flatten around to single digit in China. These markets will move gradually into a red sea situation unless there are disruptive innovations. The evidence is that the companies like Huawei are focusing on profit now, not just scale of business. Huawei is asking its consumer business group to set profitability as its first priority, even though the group shipped 140 million smart phones in 2016.
IDC announced its research on global smartphone market, which only grew about 2% in 2016 with total shipment about 1.47 billion phones.
What do you think about connected devices at home being included?
The best future opportunity is still in the IoT, specifically for areas like the connected home. Yorbe mentioned that large OEMs like Haier, Huawei and others are betting big on the connected home market. I also very much agree with this point. I have believed for some time that the final winners in the networked home market are more likely to be these big OEMs. The small companies and a few makers will be winners in areas like standalone device markets, especially in the stage of early adoption of new IoT devices.
Why do you think big OEMs will win out in connected home market?
Large OEMs will win due to the nature of the IoT market. It will gradually become a technology + service market instead of the pure device market. For example, many Chinese customers would like to hire a locksmith to change or repair their mechanical locks in China. They will definitely not buy a Bluetooth-connected lock from an e-commerce site or store and install it themselves. So the big OEMs will win the most pieces of the pie because they have widespread sales and service channels in China.
As we analyzed in our 2017 marketing proposal, IoT businesses should include four layers: consumer-served devices such as watches, professional-served markets including the smart home, system integration businesses like building the wireless factory, as well as fully-customized IoT systems for the business model or customer operations. The value of services is climbing along all four layers, so the IoT service is as crucial as development of the IoT product itself. And services are highly relevant to the future business of chip vendors.
How will chip vendors win in future service-driven IoT market sectors?
Because the IoT service professionals are becoming an important part of whole industry, so we believe that we should extend marketing efforts beyond design engineers and product managers to include service professionals. These professionals may accelerate the growth of market because they will promote products to end consumers. They’ll make these recommendations based on two factors: first, the channel compensation or service fee from the OEMs, which is out of our control; and second, the technologies and products they know best, which means they can easily introduce and install products with higher efficiency. Time is money for these people.
China will need a lot of IoT product design engineers and much more IoT service people to meet this demand, right? Where are they from?
They should come from the top technology universities like Tsinghua and my university, the University of Electronics Science and Technology of China, as well as more colleges. A packaged IoT education program covering wireless technologies, MCUs, development tools, embedded OS and sensors will be very important for the future successes of IoT chip vendors. We describe this kind of university program as a strategic marketing approach for IoT vendors and believe that it’s still an important opportunity for all of us. Our company recently worked with an HTML 5 development platform vendor to publish a textbook and to cooperate with 15 colleges in China.
About Sunray Zhaohui
Sunray Zhaohui Liu is thechief analyst of New Synergy Consulting in Beijing, China. Mr. Liu started his career as assistant analyst for China’s Ministry of Electronic Industry in 1990. Then he joined CMP Media as China Bureau Chief of EETIMES. On this position, he wrote a lot of news reports on China’s electronic industry and semiconductor market. After coming back from his MBA education in the US, Mr. Liu worked as director of operation or director of marketing in technology companies in Beijing and Shanghai. In 2005, he co-founded Synergy Consulting Co. Ltd. It provides strategic marketing consulting and public relations service for clients along with electronics value chain. New Synergy was a member of Global Semiconductor Alliance. Sunray is a speaker and a freelancer for events and media in and out of China. New Synergy Consulting has conducted many research projects for industry and government. Mr. Liu got MBA from University of Illinois and BS EE from University of Electronics Science and Technology of China
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