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Top 7 take-aways about CE in multipolar world

Posted: 08 Jan 2008     Print Version  Bookmark and Share

Keywords:Consumer Electronics Show  multipolar world  emerging market 

From China to Brazil, Russia to Mexico, India to Turkey and many places in between, consumers want instant voice and data connections from their handhelds on every street corner, easier access to more music and high-definition (HD) video and the ability to harness the collective intelligence and aspirations of their communities.

This phenomenon is playing out in an evolving, multipolar world for consumer electronics. In this world, economic, cultural and political powers are growing rapidly in emerging nations, starting to unlock their potential. China and India are the obvious examples, but progress in Mexico, Russia, Brazil as well as the emerging economies of Eastern Europe are less familiar. All are crucial to understand the evolving nature of the consumer electronics industry in a multipolar world.

Initially, globalisation was a concept exported to the emerging world by dominant economies like the United States. Now, emerging economies have grasped globalisation, packaged it and are sending new versions of it back to the West.

It is against this backdrop that the industry heads to the Consumer Electronics Show (CES) in Las Vegas. This year's CES will be more about this multipolar world than ever before. Below are my "Top 7 Take-Aways about Consumer Electronics in a Multipolar World."

  • Two paths to high performance
    CE companies around the world need to decide which of two possible paths to high performance they want to pursue—lone path focuses on developing ground-breaking products that define new markets, the other offers a broad portfolio of products characterised by the leading combination of quality, functionality, price and service.

    If you are a "market definer," stay focused on the consumer experience, not scale. Likewise, if you are a global player with scaling efficiencies, don't attempt to become an iconic product developer. Stick to what you do best.

  • The emerging consumer
    By 2010, the emerging markets of China, India, Brazil and Russia, South Korea and Mexico, will account for approximately 50 per cent of the world's gross domestic product. About 100 crore new consumers from emerging countries will enter the global marketplace, driven largely by high economic growth rates, positive demographics and greater access to credit. India and China together will have about 12.3 crore middle-class households, more than the total number of U.S. households.

    CE companies need to think about how they will serve consumers in emerging markets, both through products and price points tailored to local needs. They also need to excel at market focus and positioning, which are key attributes of high-performance businesses.

  • Winning talent
    The competition for talent is driven by growing supply and demand imbalances and improvements in the skills of employees in emerging economies. Businesses must focus on recruiting and retaining talented workers. Companies that retain traditional headquarters-centric structures will find themselves at a disadvantage in attracting talent needed to win in local markets.

  • The new map of innovation
    The new map of innovation is characterised by geographically-diffused centres of R&D excellence stretching from China and India to the Czech Republic and Brazil. While the U.S., Europe and Japan have traditionally led in patent applications, China and South Korea are catching up fast. CE companies must tap local markets to deliver product innovations offering distinctive capabilities rather than relying on centralised R&D functions.

  • Battle for resources
    World energy demand is soaring, driven largely by increased consumption in emerging markets. Although new energy supplies are being sought, the battle to control known energy sources escalates. This same problem applies to other resources such as water and minerals.

    CE companies must focus products and internal operations to address consumers' environmental concerns. "Green" programs will encompass everything from power consumption to ease of recycling aimed at reducing the carbon footprint of vast global supply chains.

  • Emerging market multinationals
    Large domestic markets in emerging economies will provide a springboard for the expansion of emerging multinationals. There are now 70 emerging market multinationals in the Fortune Global 500, compared to just 20 in 1995, according to the "2007 Fortune Global 500" report. Expect selected emerging multinationals to become dominant regional consumer electronics players through a deep understanding of domestic consumer needs and cost structures matched to local market realities.

  • Consumers value the product—and the experience
    The global consumer electronics industry continues to grow at a healthy clip, largely driven by demand for mobile phones, HDTVs and PCs. Innovation continues to be the growth engine. Consumers are looking for products that enhance their lifestyles. Industry leaders must address the full range of consumer needs, from entertainment to health care to education.

    In the end, achieving high-performance status as a consumer electronics company remains—and will for the next several years—all about delivering compelling consumer experiences.

    - Kumu Puri leads Accenture's consumer technology industry program working with executives in the consumer electronics, media, and communications industries on their strategic initiatives.

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