Consumer Devices Survey Technology Enthusiasts

December 2017 Contents

. Survey Respondents . Smartwatches . Virtual Reality Headsets . Smart Speakers . Smart Home Devices . Fitness Trackers . Other Devices . Future Purchase Intentions

Consumer Devices Survey, Technology Enthusiasts © CCS Insight 2 Survey Respondents

Consumer Devices Survey, Technology Enthusiasts © CCS Insight 3 Research Conducted in the US, UK and Germany

Total Respondents 2,192

US UK 1,097 548 . Online survey . Conducted in October 2017 Germany 547

Consumer Devices Survey, Technology Enthusiasts © CCS Insight 4 Research Sample Targeted Technology Enthusiasts

. Goal: identify technology enthusiasts, identify devices they own and how they use them . To be included, respondents were required to own at least two of the following devices: . Smartwatch . Virtual reality (VR) headset . Fitness tracker . Streaming video device (for example, Amazon Fire TV, Google Chromecast or Apple TV) . Smart home device (for example, Phillips Hue lights, Nest thermostat or Ring smart doorbell) . Smart speaker (for example, Amazon Echo or Google Home) . Other criteria: – About 50% of the sample in each market own a smartwatch – Sample includes at least 100 VR headset owners across the three countries . We emphasise that this sample's adoption and usage of these devices do not reflect the total market

Consumer Devices Survey, Technology Enthusiasts © CCS Insight 5 Summary of Findings

. Higher than expected ownership of devices in the technology enthusiast sample – On average, 7.2 different individual types of device were owned by respondents . General satisfaction with smart devices was high in all three countries – US respondents were the most satisfied, followed by those in the UK and Germany . We believe cultural differences contributed to this variance . Abandonment was very low among the technology enthusiasts we identified – Less than 10% of owners of smart devices stopped using their devices . For the leading brands in smartwatches, fitness trackers and VR headsets, physical retail stores remain an important channel in the US and UK – Online channels were more dominant in Germany . Potentially an opportunity for key players such as Apple to expand their retail coverage there

Consumer Devices Survey, Technology Enthusiasts © CCS Insight 9 Summary of Findings

. Many technology enthusiasts still do not see any point in owning smartwatches or VR headsets – Only 10% of non-smartwatch owners plan to buy a smartwatch; 12% of non-owners plan to buy a VR headset – Concerns about technological capabilities such as battery life were very low . Main points of contention were not knowing what they would use them for and the price . Despite being identified as technology enthusiasts, two out of three respondents had to try a VR headset before buying it – Emphasises importance of "try before you buy" for this type of product, particularly when selling to a wider audience beyond technology enthusiasts . Half of respondents owned a smart speaker – Amazon Echo devices accounted for over three-quarters of smart speakers in our sample – An average user had 1.5 smart speakers in their household and daily usage was very high . 28% of our total sample owned a smart home device – Each of those respondents on average owned 2.6 smart home products – Control and convenience are the most important reasons to buy such devices

Consumer Devices Survey, Technology Enthusiasts © CCS Insight 10 Smartwatches

Consumer Devices Survey, Technology Enthusiasts © CCS Insight 11 Smartwatches: Summary of Findings

. In the US and the UK, more than half of the smartwatch owners had an Apple Watch – Ownership is more evenly split in Germany, where Samsung, Garmin and Polar brands are stronger . About a fifth of all smartwatch owners in three countries have a Samsung Gear smartwatch . Apple has a significantly higher attach rate for smartwatches than other smartphone brands . Physical retail stores remain an important channel for smartwatch sales in the US and the UK . Apple Watch and Samsung Gear owners were the most engaged users of smartwatches; US respondents were the most engaged, followed by the UK and Germany – Engagement was based on usage, with high engagement equating to use every day or most days . Apple's focus on sports and activity tracking has driven usage of its smartwatches – However, this signals the challenge of selling smartwatches to less-active members of the population . Only 4% of the 1,105 smartwatch owners we spoke to have stopped using their smartwatch . Most non-smartwatch owners remain unconvinced about smartwatches – Only 10% of non-smartwatch owners plan to buy one

Consumer Devices Survey, Technology Enthusiasts © CCS Insight 12 Virtual Reality Headsets

Consumer Devices Survey, Technology Enthusiasts © CCS Insight 28 VR Headsets: Summary of Findings

. Two out of three of the technology enthusiasts we spoke to had to try a VR headset before making a decision to buy one – Emphasises the importance of letting people try VR before purchase – Strong sales in the US appear to reflect owners having tried the technology in store . Gaming remains the low-hanging fruit for VR, particularly for dedicated VR headsets like Oculus Rift . The majority of VR sessions last from 5 to 30 minutes – Lower than expected VR content "snacking" indicates users are very engaged when gaming . Samsung Gear VR has surprisingly high engagement levels similar to more-expensive dedicated headsets – This is a testament to the work Samsung and Oculus have done with the product . Almost 80% of dedicated VR headset owners have purchased some form of VR content – Half of Cardboard-based VR headset owners have never paid for VR content . Most technology enthusiasts do not see the point of owning a VR headset – Only 12% plan to buy one; we believe this figure could be improved if they tried the technology

Consumer Devices Survey, Technology Enthusiasts © CCS Insight 29 Smart Home Devices

Consumer Devices Survey, Technology Enthusiasts © CCS Insight 54 Smart Home Devices: Summary of Findings

. 28% of our total sample (613 technology enthusiasts) own a smart home device – On average, each of them owns 2.6 devices – Smart heating solutions and smart lights were the most popular device categories . Beyond these, there was a relatively even ownership split across smart home devices

. Control when away from home and convenience are the most important reasons for purchase – Savings on utility bills and security are also important considerations

. On average, each respondent plans to purchase two more smart home devices in the next 12 months – We observed no significant difference between markets – There are clear opportunities in multiple smart home device categories

Consumer Devices Survey, Technology Enthusiasts © CCS Insight 55 Smart Home Device Ownership

Which smart home device do you own?

Smart heating thermostat 50% Smart lights 45% Smart doorbell 23% Smart smoke alarm 23% Smart camera 21% Smart burglar alarm 20% Smart meter 20% Smart plug 20% Smart weighing scales 17% Smart door or window locks 16% Other 5%

. Beyond smart heating and smart lights, smart home device ownership is very evenly split

Base: All respondents who own at least one smart home device (613). Q: Which smart home device do you own?

Which smart home device would you buy within the next 12 months?

Smart door or garage locks 23% Smart doorbell 23% Smart burglar alarm 22% Smart camera 21% Smart lights 21% Smart heating thermostat 21% Smart meter 19% Smart smoke alarm 19% Smart plug 17% Smart weighing scales 11% Other 3% I am not planning to add any 17%

. On average, existing smart home device owners plan to buy two more smart home devices within the next 12 months – The even split of interest across multiple device categories is extremely positive for smart device makers – There is no significant difference between markets

Base: All respondents who own at least one smart home device (613). Q: If you are planning on expanding your smart home, which devices do you plan to add within the next 12 months?

Technology enthusiasts' intentions to buy devices they do not already own

Base: 1,097 Base: 548 Base: 547 Smart home device 12% 9% 11% Smart speaker 10% 13% 10% Smart TV 9% 9% 6% Virtual reality headset 7% 9% 9% Smartwatch 6% 7% 6% Action camera 4% 5% 6% Drone 4% 4% 6% Fitness tracker 4% 4% 6% E-book reader 3% 2% 4% Tablet 3% 2% 3% Streaming video devices 2% 2% 3% Laptop 2% 1% 0% Smartphone 1% 1% 1% . Strong interest in smart devices for the home: smart home device, smart speaker, smart TV

Base: All respondents (2,192). Q: You told us that you don't own these devices. Which of them do you think you will buy next?