i3 | February 22, 2019

Top Distributor Shares Market Insights

Steve Smith

As CES 2019 opens, the new year will feature many challenges and opportunities. That is the view of Fred Towns, president of New Age Electronics, a division of leading consumer technology distributor, SYNNEX.

Distributors are at the crossroads of the consumer technology business, dealing with retail customers and the suppliers they represent. Towns, who has spent 14 years with New Age, and has held leadership roles with Panasonic and Kodak, has a unique perspective on how consumers will approach challenges such as tariffs or new technologies like 8K resolution and artificial intelligence (AI). 

Consumers have luckily avoided paying higher prices for high-tech products but due to tariffs expected to be implemented this year, retailers, manufacturers and consumers will now have to adjust. “Many of the everyday products that consumers use for their daily jobs, tasks and schoolwork will be impacted,” Towns said. Families may buy more products meant to be shared, like a desktop PC or notebook. 

“The consumer will have to justify paying an extra 25 percent, and that’s a big change,” Towns noted. “If you want the ‘newest and greatest,’ some consumers will think how badly they need that product at a higher price. They will ask if it is time to pay a premium.” 

On the manufacturing side, “They will see what new technologies they are willing to take a risk on [and introduce],” he said. “A 25 percent price increase is a lot and will challenge manufacturers.” 

But Towns added that some, like “the shopper looking for business travel tech,” will be willing to pay more for higher-end products. “The typical road warrior will pay more for something that is smaller and lighter,” he said. However, more typical consumers may hold off on a new technology based on budget, waiting until it’s perfected. 

Towns said that during CES, 5G will be a highlight, as well as AI, augmented reality (AR) and virtual reality (VR). “Brands that have these technologies will show and talk about it [during CES],” he said. “And true gurus of technology will buy those technologies because, like the automotive industry, those who can afford premium luxury cars have no budget restraints and will pay a premium.” 

Towns said that when it comes to AI, AR and VR consumer interest will “depend upon applications.” Since many of the devices with those technologies are peripherals, price may be a factor, but if you are using it with a smartphone or gaming PC, the cost may be justified. 

“Since some applications are more business-centric, with smaller and midsized businesses shopping at top-tier retail stores or Microsoft locations for business sales,” retailers will benefit from the interest in these categories, Towns said. 

  CES Highlights Innovation

“What we are learning is that a few years ago, many thought of the ‘whizbang’ state-of-the-industry products only come from a supersized manufacturer,” he said. “We are seeing more and more that technologies coming from smaller companies and much younger entrepreneurial-spirted people have great ideas and solutions.

“You have to open your eyes and be broad-minded going to CES,” he continued. “It is about the interconnection of devices. LG, for example, has a message, that ‘We work with all the digital assisted brands. We are compatible.’ They have created an environment that they are welcoming, their products will connect. It is a brilliant marketing message.”

As for emerging companies, Towns says they are “coming up with brilliant solutions” such as a maker bot area. And what is his advice to his staff attending CES?

“To see what is new and what are the next ideas that will interact with our customer base,” he said. That’s good advice for anyone at CES this year. 

January/February 2019 i3 Cover Issue

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