CONSUMER ELECTRONICS

Big Appliances Are Getting Smarter, Slowly

  • Why it matters

    Why it matters

    Challenges ranging from privacy concerns to long equipment lifespans have been a drag on manufacturers eager to cash in on smart large appliances.

  • Facts

    Facts

    • German companies produced more than 17 million large appliances in 2016, but just a fraction of them were Wi-Fi-enabled.
    • Last year, makers of large appliances in Germany had revenue of €5.7 billion ($6.8 billion), according to the ZVEI Electrical and Electronic Manufacturers’ Association.
    • Nearly three-quarters of Germans who are interested in voice-control technology want to use in smart-home systems, according to consultants.
  • Audio

    Audio

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washing machines, smart appliances, ifa berlin
Ready for a new cycle. Source: Rainer Jensen/dpa

Europe’s largest consumer electronics fair is a major showcase for the latest in all things smart and small — gadgets from touchscreen watches and fitness bracelets to wireless headphones with real-time translation capabilities.

What doesn’t always grab the spotlight at IFA are the big-ticket items: They’re still “smart” but a lot larger — think stoves, refrigerators and washing machines.

When IFA kicks off Friday in Berlin, Siemens, Miele, Bosch and other German producers of major appliances are keen to make an impact. Unlike the makers of smaller smart devices, the manufacturers have a lower threshold of how many internet-connected machines they can reasonably expect to sell.

Even though larger appliances have much longer lifespans, customers are willing to buy, says Timm Lutter, head of Bitkom’s consumer electronics division. “And the market is growing — albeit slowly.”

Manufacturers of major appliances generated revenue of €5.7 billion ($6.8 billion) in Germany last year, according to the ZVEI Electrical and Electronic Manufacturers’ Association. Yet among the more than 17 million units sold, just a fraction were wifi-enabled.

The German market for smart appliances has yet to catch up to the rest of Europe. Many analysts believe privacy concerns are to blame for German reluctance to embrace these gadgets.

“We Germans are more skeptical and cautious when it comes to data security,” said Markus Miele, managing director of the large electronics producer that shares his name. “That’s something we have to pay attention to before we launch our products.” Mr. Miele said he is convinced, however, that customers are ready to invest in smart-home technology if it reduces their workload and provides added value.

Major appliance makers appear to be less focused on absolute sales figures than they are on the potential for growth driven by younger buyers. “The generation that grew up with digitization is just now reaching the age when they buy a washing machine or refrigerator for the first time,” said Matthias Ginthum, chief markets officer for BSH, which sells household appliances built by Bosch and Siemens.

Saving time will be the key to selling smart appliances. Manufacturers say future machines will be able to accomplish even more than the products on offer right now, which already do a lot. Today’s wifi-connected washing machines can be switched on remotely and alert users when the detergent reservoir is empty. The newest refrigerators have cameras that allow customers to see what’s inside via an app. Some models even use picture recognition to suggest what to cook using the food already available. Smart ovens regulate temperatures automatically; the cook need only select what’s for dinner.

german electronics market

Many customers still want more, however. Over 70 percent of Germans who expressed an interest in voice-control technology said they would want to use it as part of a smart-home system, according to a study by consultants at Deloitte conducted on behalf of Bitkom.

Friedemann Stöckle, a market researcher for GfK, described voice-enabled devices as an important trend. But for smart-home technology to really take hold, it must be simple to use: “The consumer wants to plug in the appliances and ideally have them start working right away,” he told Handelsblatt.

Manufacturers are also troubleshooting how to build wifi-enabled machines that will last for a decade or longer, the typical lifespan of many large appliances. That will require regular software updates as well as integration with smart home systems. These platforms allow users to control multiple devices, from a range of manufacturers, at a time. Apple, Google and Amazon are producing such systems, as is Deutsche Telekom, which developed its own smart-home platform Qivicon.

All of these strategies are pointless, however, if customers don’t have high-speed internet — a lesson the team at BSH learned early on. “If customers don’t have fast internet at home, or if the wifi doesn’t work in the kitchen or basement,” Mr. Ginthum said.

These concerns prompted the advisory board for small- and medium-sized enterprises, a part of Germany’s ministry for economic affairs, to write a letter to Transport Minister Alexander Dobrindt. Its main argument: “The sluggish expansion of data networks is forestalling a healthy economic future.”

 

Ina Karabasz reported this story for Handelsblatt. Amanda Price in New York City adapted this story to English for Handelsblatt Global. To contact the author: karabasz@handelsblatt.com

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