ADD-ONS: Peripherals: no longer a sideline sale

ADD-ONS: Peripherals: no longer a sideline sale

It would be easy for PC resellers to get depressed about the state of the market. According to the latest research from IDC, PC shipments in Australia for Q4 2001 were down 5.8 per cent on the previous year.

But as the PC market becomes more and more saturated, the peripherals market is going from strength to strength. Recent advances in technology have failed to provide a compelling reason for consumers to upgrade their PCs en masse. While this lift to the market will certainly come, it is not yet a reality. Users are choosing instead to buy peripherals which allow them to get more out of their current system.

So for many resellers, the peripherals market has become increasingly important in maintaining profitable growth, and this trend will continue. This is the main reason that everyone is searching for the killer peripheral that will change how we communicate with PCs forever and open a new market for the channel. But where is it going to come from? Is the future going to be driven by speech? By the type of games we play? Maybe it will be wireless technology, or perhaps even virtual reality?

Where now for the PC?

The PC market is set for a number of changes. Voice access will almost certainly become a huge growth area for the peripherals market. The latest operating systems and software, notably Windows XP, have been specifically designed to incorporate voice access functionality. VoIP (voice over Internet Protocol) promises huge savings on phone bills, although its progress to date has been dogged by regulatory and charging issues. However, once these are resolved, Internet telephony is likely to be a notable growth area. This will lead to a big market for products such as headsets and microphones, which are rarely bundled with a new PC.

Consumers are also looking for the freedom to develop and edit their own images on their PCs, which has resulted in increased sales of digital cameras and webcams. The category is expanding dramatically as high-class software applications move out of the studio and office and into the home. The arrival of broadband Internet access is also likely to drive this category, as a significant barrier to sharing multimedia files over the Net is removed.

Storing and listening to music through a PC is experiencing rapid uptake - and there was a strong reference to this in the launch advertisements for Windows XP. Music downloads are creating a high level of debate but consumer demand should see credible business models evolve. MP3 downloads will become increasingly popular and production software more advanced, creating a demand for high-class speaker systems.

A potential new category is digital pens. These have emerged recently as a possible competitor to tablet PCs. Digital pens aim to combine the natural experience of writing with the digital world. They allow users to input text or drawings with a pen and then to store them on a PC or send them via a mobile phone. The concept is very appealing and intuitive. Some products are likely to be on the market by the end of the year. If the first commercialised devices are as promising as some analysts and early demonstrations suggest, this category will establish itself as a whole new area in much the same way that PDAs have.

The wireless lifestyle

Increasingly, consumers are looking for greater freedom and flexibility in the way they work and live. Cordless peripherals such as mice and keyboards are already a booming market. With the growth of wireless LANs, peripherals that can interact with desktop PCs both in the office and home will become another new category. These Bluetooth and WiFi (wireless LAN) technologies will branch out from the PC to incorporate other devices around the office and home. While these new radio standards are likely to take a few years to work themselves out, consumers will be given a chance to digest their place and ability.

Developments in mobile communications will be among the greatest technological advances to be made over the next five years. On the hardware side, convergence will be a major theme. Mobile phone and PDA hybrids are already appearing on the market but to date have not proved as successful as predicted. Still, device manufacturers have invested a considerable amount in this area and it is likely that convergence will eventually become standard in three to four years.

This will create a new potential market for "after-market" peripherals such as keyboards and headsets, similar to what is currently emerging with mobile phones.

The gaming opportunity

The role of the peripheral in gaming has always been a huge factor in performance and subsequent enjoyment and this is definitely set to continue. The appearance of Xbox and GameCube and the continuing success of PlayStation 2 has opened up huge markets for enhanced versions of existing peripherals as well as for entirely new products. Game design is becoming ever more advanced in order to deliver a "real" experience and the gamer's physical interface will need to keep up with these developments.

In the near future, consoles will offer Internet capabilities creating an immense opportunity for peripheral vendors. It will become normal to have a variety of games devices for these "connected consoles". The standard game pad will suffice for many titles, but specialised products that allow voice commands, motion control or Internet chatting and full Web surfing, will also become common. Online gaming via the PC is already very popular among the gaming community and has created good revenue streams from the sale of headsets. As the new wave of consoles makes this style of gaming more accessible, we can expect to see a boom in the headset market.

The brand is still king

With these new markets and opportunities comes increased competition. To succeed, each company will need to offer innovative products that people can easily understand how to use. The winners will be those who can remain faithful to what consumers expect them to offer while also ensuring that they have a steady stream of ideas and products to take advantage of the exciting developments ahead.

Marco Manera is general manager of Logitech Australia.

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