Europe’s largest consumer technology show, IFA 2019, has wrapped up for another year in Berlin. Although the show is based in Germany, its focus is global. That said, it is important to understand that while the show is global in scope, local market conditions are an important factor in any analysis of emerging technologies and trends.
So, let’s look at the German market, both because it is the host country and to draw attention to the uniqueness of Germany in the global consumer electronic market landscape.
Most consumer tech ecosystem players were on hand to showcase their latest creations, platforms, and products, giving press and the public a glimpse at the future of connected homes, entertainment, transportation, the latest in gaming technologies and, of course, the latest smartphones. Among announcements from nearly all major consumer electronics brands, several key themes emerged which showed what consumers can expect in the near future, both in Germany and globally.
The next-generation technology was omnipresent at IFA 2019. Discussions around the impact of 5G in 2019 have increased relevance, as numerous countries have launched services this year. And no two companies were more passionate in evangelising the advent of 5G than Huawei  and Qualcomm  in their respective opening keynotes.
While Huawei emphasised the all-encompassing power of 5G to connect everyone and everything, Qualcomm was eager to note the potential for fixed wireless access (FWA) that could be positioned to eventually replace traditional wired broadband internet configurations in the home and in the workplace.
The potential of 5G to replace fixed broadband is good news for operators and consumers alike: as household devices are increasingly connected, the bandwidth and speeds offered by 5G can enable a seamless smart home (or workplace).
And what does Germany look like on this front? Brand new data from the GSMA Intelligence 2019 Global Consumer Survey suggests only 21 per cent of German consumers intend to upgrade to 5G when it becomes available. Moreover, any attempt to transition to FWA 5G in the home will face fierce competition from legacy players in the fixed broadband market. To generate interest, some operators are considering bundling 5G services with IoT or gaming to entice consumers. Unfortunately, this initiative may have limited impact: found that in Germany, only 10 per cent of consumers would be likely to invest in a 5G subscription if IoT devices were bundled with the offer.
Nevertheless, one clear takeaway from IFA 2019 is that 5G is not only on its way, it is here to stay. Consumers can expect the rapid proliferation of 5G enabled devices in 2020 and beyond.
Ubiquitous connectivity in the home
IFA 2019 is a showcase for connected everything: washing machines, ovens, dishwashers, vacuums, and even a connected closet from Samsung. While each vendor in Berlin seemed fully invested in connected devices in the home, the Consumer Survey data indicates the German market is actually among the slowest to adopt connected smart home devices (see chart, below, click to enlarge).
While in markets such as the UK and the US, connected devices hover around a 50 per cent adoption rate, ironically, Germany, the host of IFA 2019, lags significantly behind. Among the reasons cited by German consumers for their reluctance to adopt connected devices in the home are privacy and security concerns (31 per cent), and a lack of understanding of the value of connected devices (54 per cent). Given consumers privacy concerns and their overall indifference to the smart home, vendors will have an uphill climb in growing the smart home market in Germany.
Another significant takeaway from the chart is that across all the markets shown, adoption of smart home devices has stagnated year-over-year, with no new uptake since 2018. This raises some concerns for vendors at IFA and beyond, which have invested heavily in their “connected everything”.
The slogans “works with Google Assistant” and “works with Amazon Alexa” may well be my most lasting impression of IFA 2019, mirroring the experience from CES for many people. These slogans were emblazoned across a seemingly unending array of product types, from coffee machines, to dishwashers, televisions and clocks.
When I asked Amazon if it hoped Alexa would be the default access point for connected devices inside and outside the home, my question was met with some equivocation. Yes, basic functionality could be accessed with Alexa-enabled devices, but for more granular instructions to different devices, the proprietary application included with the device in the home would need to be used. The fundamental problem here is obvious: as these connected devices proliferate, each with their own associated application, it will become extremely unwieldy to sort through a dozen applications to find the controls for the device or appliance that a consumer is looking for. This constitutes a major customer pain point.
Furthermore, there is the issue of a digital assistant usage patterns. Our survey showed the proportion of users accessing their digital assistants on a daily basis is, with the exception of the US, very low (see chart, below, click to enlarge).
For digital assistants to become the portal through which a consumer accesses connected devices, these numbers will need to increase in the coming years, which will perhaps be the inevitable consequence of the increasing number of partnerships between Amazon, Google, Apple and ecosystem vendors, as they embed their digital assistants into a multitude of new products.
As planned, IFA 2019 had something (insights, at least) for everyone. For operators, the prospect of FWA 5G as an alternative to fixed broadband is an enticing new revenue opportunity. For ecosystem vendors, while there remain significant hurdles in adoption for “connected everything”, the industry is nonetheless pursuing this objective, even in markets which are more resistant to new technology adoption such as Germany.
For us at GSMAi, IFA provided a lens through which to view our 2019 Consumer Survey results: look for more from that soon.
Jason Reed – lead analyst, Consumer and Survey Insights – GSMA Intelligence
The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.