TP-Link He has been leading the sales of smart plugs and light bulbs in Spain in stores like Amazon, PcComponentes or MediaMarkt. Its Tapo P-100 plug or its LED bulb are two of its flagship products. In both cases, for just 10 euros you have very useful connected devices that you can control from your mobile. It is clear that it is a technological candy for the user, but can an international manufacturer make a living selling products in this price range?
we sit with Nelson Qiaocountry manager of TP-Link Spain and Portugal, to talk about the company’s strategy, next steps and the connected home market.
The “Juan Palomo” strategy in the face of an adverse market
xataka: After the pandemic, we are living in difficult times due to the war and the energy crisis, but there is also a shortage of chips. Does this scenario affect TP-Link?
Nelson Qiao: Yes, I think it is a situation that is affecting the industry globally, but from TP-Link’s point of view, I think we are doing a very good job for two reasons, and the first is globalization. We sell products in over 117 countries and have offices in over 44 countries, which helps us to have high volume, and in that sense we’re able to do a lot of vertical investment in terms of manufacturing. For example, we manufacture many components ourselves, and in terms of chips, thanks to the volume we handle, we have very good strategic partners, with manufacturers such as Qualcomm, Broadcom…
And the second thing I would say is, does it affect us? Rather to them, to our main competitors in the market. Our supply situation is quite good while there are still suppliers in the industry suffering from it. We take this shortage as a challenge, but it also identifies us as a company capable of significant growth. For example, in modems, which is one of our B2B solutions, we are growing more than 90%, as we are ahead of other providers that are experiencing supply shortages. But it is something that affects everyone, including us.
There are a lot of companies trying to grow in the connected home market. What is it like to compete against them? What would you say is the biggest advantage that TP-Link offers over the competition?
The first thing is that the connected home has been a hot topic for the last 10 years, and if we attend IFA or CES we will find many providers. First, there is the smart home situation, with more and more vendors coming to the market, we can be thankful, because we can educate the market together. And this is a huge market to penetrate.
The second thing, in terms of the key advantages that we offer, is that we are early adopters; we are not newcomers. We are an established brand, Tapo is already an established brand in this market, so this gives us a lot of value as we are first in terms of the users that we have. In Spain I think we have about 500,000 users already, so we are able to receive information on which are the most demanded devices or the functions that we must implement, so our understanding of this will be really good.
Another thing is that we have established very good relationships with the most important players in the channel. In Spain we are collaborators of Amazon and Google, so this gives us a good advantage to establish ourselves as a brand. The next thing we are really proud of is our vertical integration, we are able to manufacture most of our components and devices ourselves, and that allows us to be very good at quality control and cost control. And you already know that quality-price for the user is something key. This vertical integration enables us to provide very reasonable prices with very good quality.
We are capable of manufacturing most of our components and devices ourselves. This allows us to be very good at controlling quality and costs.
And also for issues as delicate as privacy and security, right?
NQ: Yes, and another important thing is that we are not only pure players in the connected home sector, but we are also players in the connectivity sector, because we are very strong in home networks that all devices must work with. . Connectivity and networks… we are sure that one hundred percent of our devices work with each other, avoiding potential problems with other providers. Our knowledge of the consumer is very important. As I was telling you, we sell our devices in more than 117 countries and that means we can gather data globally to find out what are the best practices in connected home solutions. It is very important to have a deep understanding of consumer behavior, consumer requirements, all of this is a key advantage that TP-Link has.
Beyond smart plugs
You have become known for smart plugs or home surveillance cameras. What other TP-Link products do you think can do well in the market?
I believe that products such as battery-powered outdoor cameras, which can provide security for our customers, will sell well in the coming season. And other new products that we have, related to energy monitoring (consumption); You know, the increase in the price of energy has been one of the hottest topics in Spain and in Europe; we have some products in that segment. Smart plugs with consumption monitoring are already best sellers. In terms of WiFi, MESH systems will be in high demand by consumers, who hope that this new and expensive technology will be better bought this Christmas, and so we expect high demand.
TP-Link Tapo P100 (4-Pack) – Mini Wi-Fi Smart Plug, optimal for scheduling on/off and saving energy, no HUB needed, compatible with Alexa and Google Home
Smart home technologies and devices often have unfriendly names. Probably, users do not know what “WiFi MESH” is, because it is not like an iPhone, which is a concept with more experience and perhaps easier to remember. How is that to sell products that people do not know what they are for or what they do?
I think that’s a very good question. From an industry standpoint, we’ve been talking about the connected home for 10 years, but from a consumer market standpoint, it’s still hard to understand. Media about technology, like Xataka in Spain, are really important for the consumer, to get that information and the benefits of that technology to them. That in the first place.
In second place is the role of online sellers, such as Amazon, or retailers, such as MediaMarkt, El Corte Inglés, Fnac… we make a lot of educational content, such as video. We invest a lot in platforms, in how to explain the benefits of a solution instead of a single product; For example, the connected home in London is more of a lifestyle, an ecosystem, we introduce this idea; the solution rather than a product, so that’s another really important aspect.
On the other hand, social networks are developing really fast, like TikTok, like YouTube, so as a TP-Link strategy, we are investing in working with a lot of influencers to spread that information, especially among the younger generation, who they use these platforms and are more accustomed to technology, they are early adopters in the connected home sector, so they understand them and play with these devices, fortunately for the market.
How will WiFi 7 change for users? Is a new WiFi standard really necessary?
WiFi is a structure, it’s like a highway and there is more and more traffic, so between WiFi 6 or WiFi 7, one of the most important improvements will be the speed at which devices can connect. Because, before, we were probably talking about a couple of devices per household, the type of laptop you used to work and little else. Today all smart home devices are connected devices, which require a connection. For this reason, from Wifi 6 to WiFi 7 there is a great leap in terms of speed, connectivity, number of connected devices, latency; the younger generation loves to play games, and for gaming, latency is very important, or stability. For this reason, going from WiFi 6 to WiFi 7 is a great leap in technological terms, to improve the experience in the work and entertainment environment.
But WiFi 7 also competes against Ethernet under optimal conditions. When can we forget about cables in our homes?
(Laughter) That’s very difficult to answer. The reality is that for hardware connections there are always requirements, and that is why they are still there. Spain has high penetration rates in terms of fiber connections, and I think that in terms of hardware connections it will still be around for a long time. It is not something that can be solved with WiFi 6 or WiFi 7 technologies.
Matter is one of the great advances of recent times. What does it contribute to an ecosystem like yours?
I think one of the difficulties or challenges in the smart home sector is the different platforms and protocols. You have Bluetooth, WiFi, ZigBee, Z-Wave… there are many. And then you have the providers, TP-Link, Xiaomi, Google… If you really want to establish a connected home environment, you’re probably going to have to use four or five providers and this means you’re always going to have four or five apps. It is a bit of a challenge and difficulty for the users.
We believe that Matter is a very good initiative and that in the long term it will be more than a trend, this type of open source trends or unified platforms will become more and more popular for users. Especially among the big (or giant) providers, like Samsung, or Apple, or potentially Google or Amazon. For our part, we believe that Matter is very important as a protocol. TP-Link is an early adopter, and we have already prepared a roadmap and will probably have products that support Matter very soon.
One last question, what technology do you think is going to be the next revolution, or that can change everything between smart home devices?
Once again, a very good question and a difficult one to answer (laughs). As I mentioned before, we are still in a very early phase of the connected home, and all the devices that we are talking about, like smart cameras, smart plugs, are making life easier for consumers, but none of these devices suppose A revolution. So I think the technology revolution is leading people to have lazier lives.
The concept of the smart home is to make people’s lives easier. But as a “game changer” it’s hard for me to give you an exact answer; I couldn’t tell you, but I think it will be related to the electrical appliances we have. For example, robot vacuum cleaners have been true game-changers for the past couple of years, making life much easier for consumers by sparing those who don’t want to clean the house, which is a nice improvement.
But, for example, something like the upcoming WiFi MESH? I’m thinking about these types of technologies… Do you have something in mind that could change our lives or our homes a lot?
I think that 5G can have a great impact on the industry and on consumers and users, because it can enhance the support of high speeds, giving support, for example, to automatic vehicles. It could be a good theme, although we’ll have to wait and see how things play out.
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