The dawn of a new year always brings hope: We make well-meaning resolutions and promise things will be better in the 12 months ahead. Consumer technology companies are the same way: They like to open the new year an upbeat note and promise great things are just around the corner.
But the sad fact is that most of us fail to follow through on our resolutions – and tech companies are the same, failing to bring about their bright visions for the future. The problem isn’t just making pie-in-the-sky product announcements at places like CES – although history has shown that’s pretty foolish. More often, entire industries shift, and companies that were once big names find themselves relegated to a niche, or desperately trying to hitch their horse to the “next big thing” – whatever that might be.
How many big names have a lot to worry about in 2014? More than you might think.
The old guard
Advanced Micro Devices has always had a rough go competing directly with Intel in the PC and server processor market, against Nvidia in the graphics space, and against ARM processors (from the likes of Apple, Samsung, and Qualcomm) in mobile. Unfortunately, AMD’s core market of inexpensive PC and server processors is shrinking, and the company hasn’t found many other takers for its chips. AMD’s latest mobile processors got a chilly response compared to Intel’s offerings (which haven’t found their way into many mobile devices either), and among non-gamers, dedicated graphics cards are increasingly tools of password crackers and virtual currency miners, since most folks find they can watch high-definition video just fine with integrated graphics.
It’s not all doom and gloom for AMD. AMD graphics chips and CPUs power the Xbox One and PlayStation 4, which will both sell plenty of units and stick around for a while. And thanks to the struggles of Windows RT, low-end Windows systems based on AMD chips don’t face much competition from ARM-based devices (that’s where AMD’s price advantage against Intel give it an edge). But AMD is in serious danger of slipping from being a consumer brand to a specialized chip designer familiar mainly to industry experts.
Hewlett-Packard is one of the most-storied brands in technology history – the template for companies starting in a garage and going on to dominate entire industries. While HP continues to make big bucks on government contracts and complex systems for other mega-corporations, it’s almost completely failed to keep a finger on consumer technology. Sure, HP makes Ultrabooks and convertible tablets, printers, a few Android devices, and just launched some gigantic Android “voice tablets” in India. It still makes PCs, and its all-in-ones are arguably some of the finest in the business. But HP is struggling to reach consumers: Even its price-friendly tablets seem more geared at its enterprise and government customers than everyday people. HP won’t be going away anytime soon – its businesses are too broad and well-established – but its relevance as a consumer technology brand continues to wane.
Acer and Asus
Like other PC makers, Acer and Asus have been struggling with the shrinking PC market. The rise of the tablet and fall of the netbook left both companies scrambling for ideas. Asus has raised some eyebrows with its PadFone line (essentially smartphones that turn into tablets that turn into laptops) but both companies have largely failed to develop products that resonate with consumers – including Ultrabooks, tablets, and convertible notebooks. Acer has seen its stock drop 82 percent since 2010 and is on its fourth CEO in three years; Asus is working so hard to bolster notebook sales its even getting into Chromebooks – low-cost, low-margin, but no Windows licensing fee. Expect both companies to bet heavily on Android – both are pushing phones and tablets and even Android on the desktop. But while those products may get some traction in Asia or Europe, both Acer and Asus may once again become unfamiliar names to North American consumers.
Sony makes everything from TVs to audio systems to computers to, well, movies. But with perhaps the sole exception of the PlayStation 4, Sony’s consumer products just haven’t been catching on. Why? In a word, price: Sony TVs have long been undercut by the likes of Samsung and Vizio, and Sony’s stylish computers and tablets are usually more expensive than competing products with similar features. Sony is continuing to tighten its belt ($100 million in recent cost-cutting), CEO Kazuo Hirai has been shaking up executive ranks, and the company hopes re-invigorate electronics with new phones and swanky 4K TVs. However, if Sony’s consumer electronics gear doesn’t catch turn around in 2014, its successful entertainment group may go its own way – including gaming, PlayStation network (which Sony says would land in the top five U.S. video providers), and Sony Pictures – currently riding high with American Hustle.
Going nowhere fast
The journey from consumer mainstream to niche product is perhaps nowhere better illustrated than GPS handheld devices. Once the must-have gizmos adorning the dashboards and windshields of the well-to-do, standalone GPS systems have mostly been supplanted by smartphones for day-to-day directions and traffic information, leaving companies like Garmin and TomTom off in the boonies.
The days of GPS units as a mainstream consumer product are over.
The once-young lions
At one point social-game maker Zynga was worth more than Electronic Arts, on paper, anyway. But now Zynga is having trouble keeping players interested: It recently admitted the number of people playing its games each month dropped 57 percent compared to the year before. In part, Zynga’s woes are tied to young people drifting away from Facebook. Facebook still accounts for about three quarters of Zynga’s business, but it has failed to transition smoothly to mobile games on tablets and smartphones. Zynga is now headed by former Xbox chief Don Mattrick, and has stopped losing money hand over fist, so Zynga is not likely to bleed out in 2014. But Zynga is well on the way to being just another game maker, rather than the gaming industry’s golden child.
In 2011 HTC dominated the U.S. market for smartphones-not-named-iPhone. In 2013, it found itself trounced by Samsung and can barely get anyone to buy its phones. Why? Maybe it’s bad marketing – like deciding to launch the HTC First “Facebook phone.” Maybe it’s dropping Android updates for flagship phones after just over a year. Maybe its supply constraints. Maybe it’s leadership shuffles and executives fleeing in droves. Maybe it’s employees (including design chief Thomas Chien) being indicted for taking kickbacks and leaking trade secrets. Probably it’s a lot of things. But HTC may be forced to return to manufacturing phones with someone else’s name on them – just like it did in the old days.
We could go on and on…
Many other well-known brands face major challenges in 2014. Pandora and Spotify are both being overtaken by the French online music service Deezer (which hasn’t even launched in the U.S. yet), and if Microsoft wants to be a consumer brand it must prove it can do something besides make game consoles and take away Start buttons. Geez.
But don’t be surprised if we start talking about some of these brands very differently come 2015 … if we’re still talking about some of them at all.