REFLECTIONS FROM CES 2015
2
INTRODUCTION
REFLECTIONS FROM THE FLOOR AT CES 2015: CONNECTING PHONES, CARS, HOMES, CLOTHING, THINGS…EVERYTHING!
Once again, the Consumer Electronics Association spoke in superlatives; that the 2015 Consumer
Electronics Show was the “largest and most amazing CES in show history, breaking all records!”
2014 had seemed impossible to beat, with over 150,000 attendees, 35,000 international
visitors, 3,200 exhibitors, and 2 million square feet of exhibit space. But this year, it was 170,000
attendees (+13%), 45,000 international visitors (+29%), 3,600 exhibitors (+13%), and 2.2 million
square feet (+10%). If only our investment portfolios could increase at such rates year-on-year!
Oliver Wyman’s Communications, Media, & Technology (CM&T) practice again sent a
contingent to CES to draw impressions of what we saw on the floor and heard in related
discussions at and around the show. As usual, our intention is not to “out-blog the tech
bloggers;” they’ll still give you a much more comprehensive and, dare I say, expert perspective
on the most powerful frequency to control drones, winner of the sharpest contrast in 4k TV
battle, or which 3D printer makes the coolest Disney figurines. As with 2013 and 2014, we want
to focus on the business implications of what we saw – our reflections on what it means for you.
This year had many of the same categories as recent years; bigger/thinner/sharper TVs,
automotive electronics, personalized healthcare solutions, unmanned vehicles, connected
devices, 3D printers, gaming, and more. But we have seen some of these recurring
categories mature over the past years and reflect some real business thinking rather than
just bells and whistles. Furthermore, the record number of startups indicates the continued
shift in innovation from the electronics behemoths to the proverbial kids in their garages.
We did enjoy once again donning 3D glasses to watch whales and asteroids hurtling towards
us from the massive Sharp wall of TVs at the entrance to the Central Hall, and lining up to
experience the private 8k demonstration promised to be fun until we gave up and decided to
wait until next year when it would be more widespread. However, the true value for us is the
ability to quickly take the temperature of the innovations, advances, and investments that
could have a significant impact on comms operators and media distributors, content producers
and aggregators, device manufacturers, and the many other sectors that use technology in the
delivery of their products and services. Although, these days, are there any that don’t?
We have chosen six themes that struck us as interesting and relevant, not for their “coolness
factor,” but rather for the business implications we feel they could have, and we’ve
summarized some of the strategic questions that one might pose. We’ve also gone back to
see how things have changed: were we totally off-base in what we thought in 2013 and 2014?
The first piece does a port-mortem on our previous musings – the jury is out!
If you don’t agree with our thoughts or the implications we draw – excellent! Let’s get together
and debate; any of us would be delighted to expand upon any of these topics.
Happy reading on behalf of all our colleagues.
We have seen
some of these
categories
mature over the
past years and
reflect business
thinking rather
than just bells
and whistles.
Martin Kon & Rafa Asensio
Communications, Media & Technology Practice
Oliver Wyman
3
CONTENTS
DOES WHAT HAPPENS IN VEGAS STAY IN VEGAS?
Looking back on what we thought in past reflections 4
INTERNET OF EVERYTHING, TRADESHOW OF EVERYONE
Not just tech firms; non-traditional players reveal upcoming
changes in our lives 6
TURN LEFT IN 300FT…OH, AND YOUR HOUSE IS ON FIRE
Can the car do things that the phone can’t? 8
WHAT DOES 35,000 SQUARE FEET GET YOU AT CES?
1½ flashy Samsung booths, or 372 hungry startups – did we
see the next Nest? 11
IF THIS, THEN WHAT?
The complexity of connectiong the home 13
THE GREAT UNBUNDLING – $20 FOR 12 BASIC CHANNELS
Is Sling TV the next big thing or the most expensive basic TV bundle yet? 15
EVERYONE, EVERY-WEAR
Wearables on the brink of mass adoption; will we soon all be James Bond? 19
4
DOES WHAT HAPPENS IN VEGAS STAY IN VEGAS?
LOOKING BACK ON OUR PAST REFLECTIONS
This is the third CES at which Oliver Wyman’s
Communications, Media, & Technology
practice has reflected on the latest
developments and their implications.
We thought it would be interesting to
revisit some of our earlier observations
and thoughts, and confront them with
today’s reality.
CES 2013 was an opportunity to look for
emerging trends and not just the profusion
of gadgets that catch the attention of the
media. At CES 2014, we felt the focus was
put on the integration of technologies into
consumers’ lives. Both themes were still
very present at the 2015 show, where the
trend to connect everyone and everything
everywhere is effectively changing
customers’ expectations and therefore
driving the efforts of the industry.
On the video side, we questioned if 4K/
Ultra HD would indeed revolutionize TV and
allow manufacturers to boost their profits,
as the advance was not as transformational
as the initial HD TVs, which also brought
a huge advance in form factor that
prompted everyone to replace their old CRT
sets – super thin flat-screens. We felt 4K
would be more incremental, and consumers
would replace their 2K sets in a typical rather
than an accelerated upgrade cycle. The
good news is 4K is here to stay, with UHD
becoming a real standard. Content is already
available, sooner than expected, even for
streaming platforms through Netflix and
Amazon. The bad news is this new standard
has indeed happened at the cost of industry
profits, as CE manufacturers have made
aggressive price decreases to spur adoption
and move inventory.
We also mentioned the next generation of
over-the-top devices which would challenge
traditional TV delivery. They have indeed,
and there is no doubt that video distributors
are looking for ways to face or embrace
this increased competition. Most realize
one cannot ignore cord cutting forever,
even if it is not happening as fast as some
industry pundits claimed. Traditional
players are now dabbling – companies like
HBO, CBS, Disney, and Dish have launched
OTT services which for the first time are or
will be untethered from traditional linear
subscriptions. However, new entrants like
Aereo, which we thought could revolutionize
the industry – recreating the cable TV model
without the infrastructure costs – were not
able to survive the litigious backlash from the
industry. TV manufacturers who were eager
to enter the service provision and throw off
their mantle of “dumb displays” for others’
set top boxes seem to be focusing on screen
quality, and delegating the “Smart” aspects
of their TV sets to non-proprietary standards
like Android or Roku. It seems like the
traditional players have heeded the wakeup
call from innovators and are beginning to
challenge the status quo themselves or, as
we like to say, “cannibalize yourself before
someone else does.”
At home, the Internet of Everything
continues to be a major pole of attraction.
Everything seems to make more sense
when connected, from bulbs to dog
collars. However some devices still look
a bit gimmicky, and this market does not
appear to have reached maturity yet. We
commented in years past on the need for
standards for any mass-market adoption to
happen, and the platform war for control
of the connected home looks more like a
The trend
to connect
everyone and
everything
everywhere
is effectively
changing
customers’
expectations
and therefore
driving the
efforts of the
industry.
5
guerrilla war than a head on battle of the
titans like the famous Betamax vs. VHS or
BluRay vs. HD-DVD wars. Large players are
entering the race, from home improvement
retailers, showing surprising presence in
Vegas, to Internet giants like Google, who
since our last edition purchased Nest.
3D printing is still vibrant, with a lot of small
companies, potentially with a few lucky ones,
which, like Nest, could become targets for
HP or Canon. However, in 2015, we are still
wondering when there will be a consumer
market for this technology, especially as it
takes hours to print even the smallest of toys.
Who other than some professionals will need
to 3D print their own custom prototypes?
There is still a huge benefit to mass-
production for most consumer categories.
On the go, the connected car concept
continues to expand and the presence of car
manufacturers is bigger each year at CES.
Automotive manufacturers are sealing deals
with media and technology partners like
Uber and Spotify. They also keep identifying
new use cases for connected cars (e.g. push
firmware updates by Tesla). Once science
fiction, initiatives like autonomous cars are
quietly but surely gaining in reliability. Our
previous skepticism that the OEMs would
define proprietary connectivity systems
instead of leveraging the ubiquitous mobile
phone seems to have been well-founded.
Reflecting on our articles on laptops and
tablets, the hybrid form has been a success
and is bringing a great value proposition
for mass consumers looking for a good
compromise. In 2013, we also wrote about
touch technology that we expected to be
everywhere. Two years later, its presence is
expanding, but it is still not a core feature in a
lot of laptops, as the use-cases remain quite
distinct. The logic of maintaining separate
devices still holds; laptops for productivity,
tablets for entertainment.
Still on the personal device front, on a very
similar question, we also wondered about
the future of phablets. A couple of years
later, phablets are here to stay. Apple has
finally entered the race, and has exceeded
expectations with the success of its iPhone
6+. Android manufacturers no longer have
this powerful way to differentiate, and
Samsung’s leadership is threatened.
Beyond phones and computers, we will
clearly start to carry more electronic devices.
Last year, we reported on the explosion of
wearables. This continues to gain momentum
and the trend to connect more devices to
more people (and pets!) everywhere will
certainly continue. It is also maturing, with
not only cool uses of sensors but now also
meaningful responses to specific needs.
Google’s elitist glass project was discontinued
this year, still unable to find a killer app among
its early adopters, while Tim Cook claims he
can no longer live without his Apple watch, to
be released in April this year.
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INTERNET OF EVERYTHING, TRADESHOW OF EVERYONE
NOT JUST TECH FIRMS; NON-TRADITIONAL PLAYERS REVEAL UPCOMING CHANGES IN OUR LIVES
Much has been made in recent years of the
decision by Microsoft and Apple to skip
CES in favor of holding their own events.
Many (us included!) have remarked on the
increasing presence of auto manufacturers
on the floor. Chinese exhibitors are also
growing exponentially; 14 of the 124
pages of this year’s exhibitors guide is full
of companies beginning with “Shenzen.”
Most of them are looking to serve device
makers for mass production of lower-tech
components (cables, casings, etc.), but
some are definitely showcasing the latest
integration advancements which could be
used by tomorrow’s startups.
But looking a bit deeper than these
headlines reveals some surprising exhibitors;
as technology marches steadily towards
ubiquity, so too is CES playing host to
companies and organizations of all kinds.
Continuing a trend from previous years, a
number of brick-and-mortar retailers were
present. As noted in our Connected Home
article, Lowes again exhibited its connected
home platform (though competitor Home
Depot was notably absent). Barnes &
Noble returned to host “Gary’s Book
Club” featuring prominent technology
authors – and of course provide the option
to buy featured books on your Nook or other
tablet device.
CES has also grown in recent years as a
media, advertising, and marketing trade
show, and most of the major players in that
space were present. We still remember
only a few years ago remarking at the New
York Times having a booth at an electronics
show. Well, now there are a huge number
of media companies in attendance. The
expected online blog sites were joined
by the Wall Street Journal and USA Today.
NBC Universal and 20th Century Fox Home
Entertainment also had suites. Of course,
whatever happens on the manufacturers’
side – such as the rise of smart TVs – is highly
intertwined with these companies. For
example, Dish Networks was here again, not
so much to present their set top boxes’ latest
innovations but to announce the launch of
Sling TV, their over-the-top linear TV service.
These companies are now a mainstay of CES,
but what were clothing companies doing
here? Sketchers was in fact showcasing
a colorful light-up games-in-shoes called
Game Kicks. Under Armour announced a
unified platform to aggregate fitness and
wellness data from other companies’ various
trackers. Adidas and New Balance have just
joined the CES organizing group CEA, so we
expect to see them on the floor next year as
well. Or how about global beauty company
L’Oreal? They were showcasing “The world’s
first virtual make-up tester” of course!
Another newcomer to CES, Better Homes
& Gardens, used the show to announce its
first ever Editors’ Choice Innovation product
list. Here is a brand we never used to think
of as a technology influencer, now reaching
over 40 million Americans with practical
advice on how home and connected
technology fits into the American home
this year. Then there’s the Girl Scouts – yes,
those Girl Scouts – announcing the launch
of Digital Cookie, an online platform for
selling the famous cookies as well as
educating Scouts about business and
technology. AARP had members walking the
floor in search of the most senior-friendly
Everyone is in
the tech game
and the latest
disruptive
innovations
may come from
where we least
expect them.
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technologies. Even USPS was getting into
the game, showcasing a new augmented
reality app to add new dimensions and
functions to mail when viewed through your
smartphone’s camera – in a booth that was
widely considered one of the best of the
entire show.
Everyone is in the tech game and the latest
disruptive innovations may come from where
we least expect them. Players outside of
the traditional tech space may well leverage
their brands, existing customer bases, and
traditional assets to be the actual “king
makers.” Moreover, innovation is happening
at the intersection of disciplines. That’s
how Information Technology was born, as
a mixture of logical maths and electronics.
This holds true as more industries bring their
challenges but also unique answers to the
world of consumer electronics.
Behind the presence of these companies, we
have identified a series of industry-specific
questions worth exploring. They will be
developed in the following chapters.
CARS
Auto and accessories makers were
ubiquitous at CES. Indeed, cars are no
longer dedicated to driving, but are also a
moving space where personal needs like
entertainment and communication must
co-exist with navigation tools. What do
players of this changing ecosystem have to
bring and who was in the best position to
take control of this market?
STARTUPS
Innovation is always present at CES but
we could not help noticing the increased
presence of early stage startups,
sometimes with only prototypes to
show. Crowdfunding is creating more
opportunities for small companies’
innovative ideas to catch the attention
of consumers. How can these startups
compete with corporate global R&D
departments? Or perhaps more
importantly, should their agility and ability
to disrupt status quos be inspirational to
larger firms?
HOME
Remote control, 24/7 security, safety
monitoring, and energy efficiency were
once limited to the commercial sector
but have now made their ways into our
homes. As a consequence, a number of
new players and well established home
improvement businesses are placing bets on
the Internet of Things. As with cars, who is
best positioned to win in this enormous and
growing market?
VIDEO
Faster internet connections combined
with the explosion of mobile devices is
changing the way we consume video. The
success of streaming video services shows a
transformation is in progress, but how fast it
will happen and what the winning model for
the future of TV will be is still unclear. Dish
Network’s announcement to launch Sling TV
brings an innovation to the US market where
linear TV and OTT subscriptions have until
now been discrete. What can we anticipate
from this market play?
WEARABLES
Wearables of all forms had a massive
presence in CES this year. Most technologies
on display were already visible last year,
but products and applications are gaining
in maturity, and specific customer value
propositions are starting to be served. These
are signals the industry is moving towards
mass market. Given this context, what does
it take to lead as a manufacturer? Will there
be a space for infrastructure players to
support and monetize this market?
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TURN LEFT IN 300FT…OH, AND YOUR HOUSE IS ON FIRE
CAN THE CAR DO THINGS THAT THE PHONE CAN’T?
Auto manufacturers are clearly a mainstay
of CES now, with basically the entire North
Hall dedicated to cars and the electronics
that go in them. Whereas in years past,
this was mostly aftermarket gadgets
and the stuff of audiophile fantasies, this
year just about every OEM was not only
present, but presenting a loud message
around the importance of technology to
the vision of cars for the future. Mercedes,
BMW, and Audi rivalled one other on the
sexiness and coolness of their stands, which
looked like auto dealerships of the future,
and showcased their concept cars and
prototypes as well as the electronics and
internet connectivity built into standard
models. Indeed, in some cases it was
unclear if the intention was to demonstrate
new technology or just show off the latest
metal. But the fact that the keynote speaker
was Ford’s CEO Mark Fields wasn’t lost on
anyone – connectivity in the car is going
mainstream. The question is how will that
connectivity be provided and who will
capture value from this use occasion.
At shows past, we’ve sensed a battle
emerging between OEMs establishing in-car
operating systems with open developer
platforms and built-in 4G connectivity on the
one side, and the smartphone itself simply
providing the connectivity and intelligence
in every environment, including in the car,
on the other. As we’ve said in the past, the
car is indeed an increasingly important
usage occasion for internet connectivity, but
we’re skeptical that the car itself will provide
the intelligence and connectivity, rather than
acting as a display and perhaps control for
the intelligence and connectivity of the much
newer, faster, more frequently upgraded,
and ubiquitous smartphone that every driver
(and passenger) carries everywhere they
go. Remember the OEM’s answer to the
mobile phone to allow drivers to insert SIM
cards into their dashboards to turn it into a
car-phone? How many people ever used that
once Bluetooth emerged and they could just
keep using their regular phones?
Now, many manufacturers seem to be
focusing on a seamless integration of the
smartphone and its apps into the much
bigger in-car displays and the unique in-
car environment. However, we certainly
didn’t see the killer app or game-changing
interface in our time on the floor. For
example, Ford’s Sync system showcased an
open API and SDK that allows smartphone
apps to be translated onto the dashboard
display within a standard template/GUI
when the smartphone is connected. The
booth hosts proudly spoke of the 70 apps
that had been made available for the car;
however we see three issues with this:
1. 70 apps is 0.00583% of what’s available
on the iOS App Store – will developers
really want to create discrete versions
of their apps for every OEM’s system
when just keeping up with both iOS
and the countless Android instances
(not to mention Windows Mobile and
Blackberry) is already onerous?
2. While Ford’s design department has
really done an impressive job with their
latest car models, we’re not sure they will
ever be the leaders in GUI innovation for
media applications.
3. We tried to set up Spotify on this
in-car system, and suffice it to say
that it was not the most seamless and
enjoyable experience we’d had. We’d
much rather just use our phones as the
interface themselves.
We’re skeptical
that the car
itself will
provide the
intelligence and
connectivity,
rather than
acting as a
display and
perhaps
control for the
intelligence and
connectivity
of the much
newer, faster,
more frequently
upgraded, and
ubiquitous
smartphone.
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Ford has spoken about making their
Sync AppLink platform available to other
car manufacturers in an attempt to set
a standard, but GM is also doing similar
things with their OnStar platform (the
first connected car well before wireless
internet was ubiquitous), and we’re not
sure that an OEM will win the platform wars
against Google or Apple. Indeed, Apple’s
Carplay (not on view at CES as Apple is
never present), is partnering with a huge
number of OEMs to dock the driver’s iPhone
and enable a version of iOS specifically for
in-car usage with the phone as the “brain.”
Android Auto is also following the same
operating model. We think there’s still a ways
to go to figure out how to serve drivers and
passengers in the in-car environment.
Ford’s Mark Fields told visitors to his booth
that Ford was doing lots of experiments
to see what worked and learn on the fly.
Indeed some of these experiments looked
like technology for technology’s sake,
without thinking about the customer need
or pain point that it would address. One
engineer proudly showed off a collaboration
with Nest, whereby the car would sense
that the homeowner is driving away
from the house and turn down the Nest-
controlled thermostat to save energy,
and then the reverse when he/she nears
home. When asked why Nest’s current
smartphone app couldn’t do exactly the
same thing – including if the homeowner
decides to cycle, walk, or skateboard away
from home instead – the engineer thought
creatively and replied that it would save the
homeowner from reaching into their pocket
if they were sent a carbon monoxide alert
indicating their house was on fire. In our
mind, the flames coming out of the windows
when he/she pulls into the driveway might
be indication enough, and an automatic
call from Nest to the fire department might
be a more valuable innovation than car
integration (NB. Nest already does this).
Point being – with many (most?) of the
experiments we saw, it simply wasn’t
clear what the customer hassles were
that they would address. This is why most
breakthrough apps have been developed
by three kids and their dog in a garage: they
start with a problem that needs to be solved
rather than asking themselves “how can we
use this technology?” Large corporations
are most successful when they follow the
same principle.
10
ECOSYSTEM CONSIDERATIONS AND STRATEGIC QUESTIONS FOR:
NETWORK OPERATORS • With the multitude of devices that consumers
increasingly have, virtually all connected to the
internet, how should access providers think about
data plans – discrete, device-specific plans (as
currently with tablets)? Universal plans across all
devices of an individual? Household? Based on
metered usage/data consumption? What is the
optimal offer design portfolio to efficiently provide
connectivity and capture value?
• How can access providers be at the center of
consumers’ “multimodal” travels, proving seamless
connectivity, consistency, and simplicity?
• Fixed line providers are using mesh wifi networks
to provide coverage that approaches 4G – can this
be relevant for the in-car use-case to compete with
wireless carriers?
• What will be the use-cases/applications for in-car
connectivity, and thus the bandwidth requirements
and network demands?
• What are the triggers for consumers to consider
switching providers or upgrading their tier of
service? Could a car purchase or use of new features
be one of them, in the same way that purchasing a
new TV leads to reconsideration of Pay TV package/
provider? Therefore, are car dealerships the “Best
Buy” of the future in terms of PoS channel?
CONTENT OWNERS & AGGREGATORS • What kind of content and services will be attractive in
the car environment? How to identify hassles or pain-
points in the car to create things that consumers
really need?
• With many “freemium” models on the internet (e.g.,
Spotify, NY Times, etc.), does the car environment
provide a viable upgrade trigger for premium tier of
service, much like the mobile phone did in the past?
• How do formats, navigation, control, aggregation,
search and discovery have to be rethought for the car
environment compared to current home and mobile?
DEVICE MANUFACTURERS • Will the car begin to compete with other devices for
usage and spend? Or can other devices be made
car-friendly and the car becomes merely another
peripheral display?
• Will the car become another distinct and equally
important environment alongside the home, with its
own versions of dedicated devices and integration of
portable devices?
• Do consumers want functionality “invisibly”
integrated in cars or prefer to “slot” functionality
modules into cars (remember the evolution of
car stereos from aftermarket “slide-ins” to fully
integrated into the dashboard)?
11
WHAT DOES 35,000 SQUARE FEET GET YOU AT CES?
1 ½ FLASHY SAMSUNG BOOTHS, OR 372 HUNGRY STARTUPS – DID WE SEE THE NEXT NEST?
A swarm of innovation at Eureka Park
Startups and other small dynamic companies
and exciting product and service innovations
have long been a presence at CES, sitting
as little marvels amongst the much larger
traditional titans of consumer electronics.
This year, however, it really felt like we hit
an inflection point in the role of startups at
the show and in the industry more broadly.
In 2015, the Eureka Park area, an incubator
of sorts at CES set aside to house startups,
showcased 372 companies, a 59% increase
from 2014. While not all 372 of these
companies will make it, we found that most
presented more mature and commercially-
ready products than we’ve seen from this
group at past shows, and the swarming buzz
of activity and energy packed more overall
“raw awesomeness” than anywhere else on
the floor.
The difference in scale in the media and
consumer electronics industry between
the behemoths and the startups is orders
of magnitude, and the ecosystem brought
together at CES was a wonderful opportunity
to experience this first hand. Let’s compare
and contrast what you could experience at
CES within very similar footprints:
The behemoths: This year, the booths of
Samsung and Sony clocked in at 25,000
and 22,000 square feet respectively. The
Samsung experience ushered visitors
through an app-enabled tour of everything
marvelous around phones, televisions,
media and audio. Sony was not to be
outdone with new HD audio, screens,
and cameras. If you wanted to see prime
commercial concepts with high production
value, there was more this year than
ever before.
The startups: In a similar sized space, 35,000
square feet, an astonishing 372 startups
were packed side-by-side into the Eureka
Park area. In just one small stretch of space,
we were able to talk to the founders of
products ranging from an inch-level indoor
positioning system (BeSpoon), a maker
of face recognition software (Smart Me
Up), a carbon fiber drone that looks like a
paper airplane (Carbon Flyer), an innovative
manufacturer of motion-based generators
(Enerbee), a designer of “Bluetooth Smart
baby pacifiers” (Blue Maestro), plus
hundreds more. These are tiny companies,
many still pre-funding or mid-Kickstarter
campaign, many run out of dorm rooms and
with the co-founders (and in some cases only
employees) leading the presentations.
Elsewhere on the floor sat many other
somewhat larger startups, many graduates
of Eureka Park in prior years of CES. If you
came to CES looking for the brightest lights,
sexiest demos, star-studded speeches, or
best marketing images, this was not the
place for you; but if you came looking for
ideas that focused on consumer needs and
with explosive growth potential, the startup-
side of CES is off the charts.
A growth industry, all grown up
It’s pretty clear, to us at least, that the
startups here at CES this year represented
a real step change in the startup landscape.
None of the underlying trends are new, but it
seems like we are hitting an inflection point.
Here’s what seems to be changing:
Being a startup
now means that
you have real
products, real
customers, and
have validated
consumer
demand by
getting them
to finance your
vision, all before
the institutional
money starts
flowing.
12
Being a startup now means that you have
real products, real customers, and have
validated consumer demand by getting
consumers themselves to finance your
vision, all before the institutional money
starts flowing. Many of the leaders of the
pack in startups have now been validated
through rounds of Kickstarter and
Indiegogo, and vetted through endless
startup competitions. Take for example
AirDog, a Latvian startup that in just fall of
2014 won a $1.3 million Kickstarter campaign
for its award-winning drone. That is a direct-
from-consumer vote of confidence you just
can’t argue with!
The VC money is back. Cash rained down
on startups in 2014, as venture capitalists
poured a whopping $48.3 billion into new
US companies – levels not seen since before
the dot-com bubble burst in 2001. Strong
technology IPOs are luring investors who are
chasing the next big return.
The ecosystem around the startup growth
machine has continued to evolve as well.
Here at CES alone, we saw a wide range
of competitions, judging funnels, etc.;
Hardware Battlefield (AOL TechCrunch),
Extreme Tech Challenge (with Sir Richard
Branson), a Shark Tank “open call” for
entrepreneurs, special contests for the
University Innovations Marketplace, the
Kimberly Clark Digital Innovation Lab (D’Lab)
Startup Challenge, the Startup stage,
and many more. There is now a well-oiled
machine to nurture and scale startups that
just didn’t exist at this level even three or four
years ago.
So, did we see the next Nest, and who was it?
From this “pit of 372,” one or two winners will
likely emerge in a big way. Just remember,
Nest was a startup only four years ago, but
was purchased for $3 billion by Google. Did
we see the next one at CES? We don’t know
(or we already would have invested!), but just
based on the volume of what we’ve seen this
year, we might expect a winning startup to
be a wearable connected device, compatible
with many open protocols, consumer health
and wellness-focused. We’ll see next year
who’s broken out of Eureka Park onto the
main stage.
KEY QUESTIONS FOR THE NON-STARTUP CES COMMUNITY:
• As innovation is increasingly being driven by startups
rather than tech titans, what is the right measure
for employee creativity and innovation? If you were
to apply such a measure in comparing the large CE
companies with startups, what would it tell you?
• What is the right mix of incentives and autonomy for
a development team at a large tech company looking
to act like an innovator? What is the right formula to
harness entrepreneurialism? Is it indeed possible to
compete with thousands of “three kids and their dog
in a garage” all around the world?
• What should be the “build vs. buy” ratio for your
company? Can innovation be outsourced to the
thousands of garages out there?
• If you are in the market for acquiring startups and/
or startup talent, where will be most fruitful? Besides
Silicon Valley, where is innovation happening? Are
there pastures with less intense scrutiny, but perhaps
more raw talent and potential, outside the Valley?
• Does your organization have an active network
in the startup space? Do you meet regularly with
entrepreneurs for opportunities and inspiration?
Are your competitors well-networked in the
startup space?
13
IF THIS, THEN WHAT?
THE COMPLEXITY OF CONNECTING THE HOME
If CES is anything to go by, the steady
march towards a world in which everything
connects to everything else (even if it may
not actually need to for any apparent reason)
continues apace. As in previous years, the
home continues to be the epicenter of
converged connectivity. Last year, exhibitors
seemed to have finally turned their attention
from connecting devices with functional
gimmicks (remember Samsung’s Tweeting
fridge?) to actually making consumers’ lives
a little easier – Samsung’s 2014 fridge was
now more sensibly using texting to let you
(and not your Twitter followers) know if your
food had passed its best-by date.
In the context of the connected home (we
still think it’s far too early to use the word
“smart”), it’s becoming increasingly evident
that there are three broad areas of value
to consumers:
Making the home and chores more efficient
In our connected future, our homes will save
us both time and money. The chief benefit
touted by smart appliance manufacturers
continues to be the time-savings offered by
ovens that can set themselves depending
on the recipe or fridges that can send you a
photo of their shelves. Energy efficiency has
been the domain of smart thermometers
for the past few years, but Samsung also
showcased a supposedly highly efficient,
flame-free Chef Collection Induction Slide-In
range (though thoughtfully the designers
included a virtual flame so consumers can
tell it’s working).
Keeping the home safe and secure
Unsurprisingly with the success of Nest,
we saw countless smart smoke, carbon
monoxide, and flood detectors. Connected
locks and security cameras were also
ubiquitous. We were again surprised by the
large presence of security and monitoring
service provider ADT, cleverly leveraging
consumer perceptions of their experience
and reliability to stake out a foundational
position in this category from which to
branch out further.
Making the home more fun and personal
This was by far the most diverse category.
We saw televisions that could welcome you
home, internet routers that would shut off
until your fitness tracker confirmed you’d
been for a run, and even disco balls tuned
specifically to your personal playlists.
Connected and efficient lightbulbs (like
Philips’ ever-growing Hue line) were
everywhere. Connected cameras had a
significant presence this year – Netatmo’s
latest HD offer has built-in facial recognition
to detect family members in each room.
Many exhibitors (from manufacturers
like Panasonic, to alliances like Z-Wave
and Qualcomm’s Alljoyn) showcased
applications across all three of the above.
However, very few seemed to have a
compelling explanation of how they could
meet the very different performance
expectations for the use cases above.
Indeed, to enter Qualcomm’s connected
home exhibit, attendees had to turn
their phones to airplane mode – hardly
reassuring if one is considering installing a
new carbon monoxide detector or security
camera system!
But the bigger challenge, as we highlighted
last year, remains how, in the context of
nothing short of an explosion of connected
devices, the industry can promote the
development of an open ecosystem that
provides the simplicity, convenience, and
value that consumers need. Put another way,
how can consumers most simply and flexibly
enable their own smart home?
How, in the
context of an
explosion of
connected
devices, can the
industry can
promote the
development
of an open
ecosystem
that provides
the simplicity,
convenience
and value that
consumers
need?
14
Many propose to place this burden on
the consumer. Your Smart Home will know
exactly how to set the temperature, dim the
lights, and prioritize internet bandwidth for
a perfect night of Netflix binge-watching at
home – provided you’ve bought the right
devices and then invested the time to connect
all the devices, program the right logic for
each one, and set it to your personal profile.
To be sure, many exhibitors were showcasing
home standards, platforms, hubs, and
gateways to connect the hundreds of
appliances, wearables, switches, gadgets,
and widgets. Qualcomm’s aforementioned
AllJoyn connectivity platform is striving to be
as open as possible and can already support
devices from over 100 partners through a
programmable “smart gateway.” We remain
skeptical that many consumers will want
to (or be able to) take on that burden. ADT,
on the other hand, is more closely curating
the devices and applications for their Pulse
platform. And of course, Apple’s HomeKit
is expected to fall somewhere in between
(though as in previous years, Apple was not
present at CES).
A quick visit Lowe’s CES booth (yes, the
hardware retailer) is all it takes to see how
complex this world of devices and competing
standards is going to be for consumers, with
even retailers getting into the connected
home game – in this case curating the “best”
devices through their ISIS ecosystem.
KEY QUESTIONS FOR:
DEVICE MANUFACTURERS • Which smart devices and applications can deliver
actual value that results in consumer acceptance (i.e.
make life easier, better, or cheaper)? How much real
improvement to life’s costs and hassles is required to
penetrate the mainstream?
• Is it better to provide devices across consumer
applications or focus on becoming best-in-class in one
(e.g. security)?
• What are the most critical touchpoints to master to
ensure a good end-to-end experience from choosing
to buying to learning to using?
• What is the right prioritization between ensuring
compatibility with as many platforms as possible
(e.g. Z-Wave, HomeKit) vs. owning and ensuring the
best end-to-end experience (but perhaps sacrificing
some reach)?
• How can device manufacturers collaborate to advance
in the definition and implementation of smart home
standards (e.g. radio interfaces, gateway protocols,
user interfaces)? How will legacy connected devices
and dumb devices be integrated?
• What is the role of retailers (e.g. Home Depot) in the
adoption of new smart home products and services?
What is the role of legacy trusted brands (e.g. ADT)?
• Regarding security and privacy issues, what
mechanisms will instill trust in consumers and
navigate compliance with international regulations?
How can new players and startups build trust and
credibility around personal data protection?
NETWORK OPERATORS • What role will network service providers play in the
smart home? Is there a role to help consumers wade
through the complexity and simplify the adoption of
new devices and services? Could network providers
become a connected home platform themselves?
Or, is the role more limited to infrastructure and
connectivity services?
• What smart home offerings should be targeted
by network providers? Will this require a set of
capabilities not currently in place? If so, should
they partner with industry players or try to
develop themselves?
• As critical services (e.g. security) will rely on
broadband connectivity provided by carriers, what
operational and liability implications exist regarding
availability of service (e.g. outages, latency)? How
can network providers credibly claim to provide the
required uptime and other performance metrics?
15
THE GREAT UNBUNDLING – $20 FOR 12 BASIC CHANNELS
IS SLING TV THE NEXT BIG THING OR THE MOST EXPENSIVE BASIC TV BUNDLE YET?
The pure-OTT multichannel operator the
industry has been talking about for years.
Every year at CES we are reminded that the
world of TV and video has been undergoing
profound change, driven by a whole gamut
of time shifting and anywhere/anytime
solutions, and increasingly a whole host of
traditional MSOs, device manufacturers, and
other tech innovators vying to control the
future of video content.
The contenders for next generation media
distribution we’ve profiled in the past
include quite a list.
Device manufacturers such as Samsung,
Panasonic, Apple TV, ChromeCast, Roku,
Sony, Xbox, and many others have all been
vying to replace the set top box with new
interfaces and a promise of consumer self-
aggregation.
Not to be outdone, the incumbent cable
and satellite operators have finally begun
to impress consumers with a slew of new
interfaces and “off-TV” functionality.
Comcast X1 has appeared the most
promising thus far of “homespun” services
from this group, but there are many others
both in the US and internationally. In the
UK, operators like BT and TalkTalk have
partnered with Youview, whose technology
integrates both aerial and a web connection.
It not only offers on demand, Netflix and
advanced discovery, but also the ability to
seamlessly scroll through a TV guide to play,
pause, and rewind linear TV through catch
up streams. We were impressed last year
by TiVo’s integration of Netflix and Amazon
Instant Video directly into their industry-
leading navigation and time-shifting
capabilities for a seamless experience to find
“delightful” content regardless of delivery
platform.
New content players, with Netflix first to lead
the way, have offered consumers compelling
streaming content, with a mix of catalog
movies and TV shows along with now Golden
Globe-winning hits such as “Orange is the
New Black” and “House of Cards.”
But despite all this, and a perennial
promise of “cord cutting,” the truth is that
the vast majority of consumer-paid video
consumption in America has been controlled
by traditional multichannel operators,
with consumers purchasing packaged
bundles from their cable companies, who
in return managed all billing, servicing, and
merchandising.
Because video consumption has always been
about having the content that people really
want, until just now, the majority of that
content was only available through a cable
bundle. But now, a new wave of unbundling,
with Sling TV as the poster child, promises to
reshape, or at least stir up, the landscape.
We can already sense ourselves speaking
nostalgically about the pre-unbundling era:
“Back in 2014, if you wanted to watch ESPN
or HBO you needed to subscribe to a bundle
with Comcast/Verizon/etc…” The truth was,
that if you wanted to get your favorite ESPN
sports, Game of Thrones, or other premium
network show onto your own television,
there really were no other options (legal
ones at least). We have long spoken about
the rise of the “Virtual MCV Operator” or
“DTH/Cable Mirror” that delivers a more
comprehensive lineup of linear channels
and SVoD libraries by piggybacking on
a broadband connection. We have seen
What we are
starting to
see is the
emergence of
“post-television
TV,” and overall
it promises to
be a healthy
development in
how consumers
engage with
content.
16
this emerge in European markets such as
Scandinavia with Modern Times Group’s
ViaPlay OTT service offered alongside (and
to some degree competing with) their ViaSat
DTH service. We have not seen that in the
US. Well, that is changing.
One of the biggest announcements at CES
came from Dish and Sling TV. Twelve live
streaming channels for $20 per month and
no contract! For $5 more each, subscribers
can add a small “News” package or “Kids”
package. It can stream to any of the
compatible devices: Amazon Fire TV, Google
Nexus, Xbox, Roku and all mobile devices
via apps. This is the core of a “Virtual MCV
Operator” or the “Cable Mirror” that we have
long spoken of. The cord cutter’s dream has
finally come true. Or has it?
Sling TV itself is clearly still a v1 product,
but we seem now to be well into a shift that
could transform how video is packaged and
monetized.
Among nice features offered by Sling TV
are the ability to flip between channels
just like a standard linear set, pausing and
rewinding, and the ability to watch any show
from the previous three days. On the down
side, video quality is not on par with regular
TV, and there is no cloud DVR as could be
expected. Also while it can stream on any
device, Sling TV is limited to a single stream,
indicating perhaps a shift from household
orientation of traditional video services
to an individual orientation. Enabling all
members of a household to watch on
different devices at the same time would be
an expensive proposition.
From the content perspective, again, a
resounding “yes and no.” The price point is
low indeed, it is live TV and it includes ESPN.
That alone is sufficient to make the offer
appealing to some. However, for someone
already subscribing to other OTT services,
it is still a significant outlay. Netflix is only
$8 per month and has carried relevant
enough content to drive some cord cutting
and shaving thus far. Dish’s own basic
package is currently at $27 per month for
a two year commitment and it carries 55
channels. Indeed, a rough metric shows
Sling TV at $1.67 per channel whereas
Dish’s TV packages range from $0.30 to
$0.60 per channel. On social networks,
even supporters of Sling TV feel other cable
channels like USA, FX, AMC or Fox News
would need to be added before they would
consider it as a real substitute to traditional
TV. And these channels are not cheap.
However, Disney breaking from tradition
and offering their most valuable channels in
linear format in pure unbundled, over-the-
top format is certainly groundbreaking, and
we expect other cable networks will follow.
This is clearly still a v1 service, but consumers
are lining up; just weeks into launch, the
waiting list is already in the high six digits.
This is just the beginning. The future of
television is becoming much clearer.
Others aren’t far behind. DirecTV is likely
to strike a similar deal with Disney. Sony
has internet rights to Viacom’s channels,
which include MTV and Nickelodeon.
And technology companies like Apple
and Amazon are in the mix, too. Leaders
in traditional media distribution are also
taking steps to provide similar OTT services.
Verizon recently purchased some critical
technology from Intel, and Comcast has
led the pack investing in its new X1 IP-
based cable platform as well, which they
are now offering to third party operators
in addition to their own tens of millions of
cable households.
What we are starting to see is the emergence
of “post-television TV,” and overall it
promises to be a healthy change in how
consumers engage with content:
• Cheaper subscriptions, many offering
fewer channels: At $20, the Sling TV
price point is expensive compared with
$8 for Netflix, but a seeming bargain for
consumers used to spending $40+ on a
traditional package.
• Finally, programming guides that are
intuitive: The days of linear channels
17
(e.g. “tune to station #540 for ESPN2”)
are numbered – no pun intended.
New services are organized around
helpful categories, with increasingly
intuitive and helpful features search,
personalized discovery.
• Moving towards personalized
consumption: For years, the “quantum”
of consumption for television was the
household. New services now focus on
the consumer. For example, Sling TV
allows for one and only one stream at a
time. Netflix allows for multiple streams,
but packages this as a benefit for
multiple consumers, with each consumer
having their own profile.
• Anywhere/anytime: The living room
television remains the biggest screen,
but is no longer a unique one. Services
such as Sling TV, Comcast X1, etc. don’t
really care whether you want to watch
on a phone, tablet, VR headset, or
anywhere else.
• Bundling and rebundling: In the future
video marketplace, you can start to think
of Netflix as just another TV channel,
just as you think of ESPN or CBS today.
Devices such as Roku and Xbox (or
the smart TVs themselves) could start
playing the role of enabling “consumer-
led bundle” that has up to now been
the territory of the cable MSO and DTH
satellite operators.
• Blending of the long tail with the
standard, premium content: If you
thought that the 400 channels available
from cable, telco, and satellite operators
are a lot, think about a future with tens
of thousands of available channels. We
are increasingly seeing everyone from
YouTube stars to GoPro launching their
own channels, which will be available
through many of these services as the
line between linear, SVoD, and user
generated content blurs.
One thing for sure is that 2015 will go down
in multichannel history as the year of the
great unbundling experiment.
The offering today from Sling TV is in
reality just an experiment, and we’d be
somewhat surprised if it takes off as currently
configured. But, looking out over the next
few years, we can see this playing out in a
few different ways.
Scenario 1: The consumer-led unbundling:
We are quickly entering a world where, to
get all the content he/she wants, a consumer
will now need to subscribe to a handful of
different media services. You could imagine
the consumer of the future managing a
handful of subscriptions: a big baseball
fan might choose a package from MLB for
watching the games, Sling TV for ESPN,
Netflix for the occasional movie, and maybe
Spotify for music.
Scenario 2: The MSOs strike back: Scenario
1 is great from the standpoint of consumer
choice, but do consumers really want to
manage a whole handful of subscriptions?
Wouldn’t it be great if someone could just
assemble bundles of content that consumers
wanted, and offer it to them in packages?
Isn’t that the role of MSOs today? We see a
scenario where multichannel operators re-
assert their role of bundlers and distributors
of media content, offering packages with
much greater breadth, integration, and value
than the “consumer-led” flavors.
Scenario 3: Rise of the virtual MSO. Sling
TV has maybe 12 channels today, but what if
they were to add an additional 50 channels
of content, get the video quality up, start
offering an on-demand library, etc., wouldn’t
they just be a multichannel operator at
that point? It won’t happen overnight: the
service will need to expand to a much more
compelling product, develop much stronger
subscription management capabilities, and
probably deal with some significant network
neutrality negotiations, but why not? This is
what we’ve referred to as the “Virtual MCV
operator” or “Cable/DTH Mirror.”
We look forward to seeing how this all
shakes out.
18
ECOSYSTEM CONSIDERATIONS AND STRATEGIC QUESTIONS FOR:
NETWORK OPERATORS • Is the unbundled Sling TV putting at risk further
acceleration of cord cutting, or is it an opportunity
to re-establish with consumers the appealing value
proposition of a full-breadth multi-channel offering?
• Sling TV’s single moderate-definition stream isn’t
yet really at the quality level of a multi-stream HD
or UHD offerings available through most providers.
How much bandwidth will a full-OTT world require?
What additional investments will operators need to
place into bandwidth? Will it trigger another round of
discussions on net neutrality and CDN agreements?
• How will cable operators react to this offer? Would
they be able to neutralize it with smaller basic
packages or should they instead push in the same
direction and embrace the move to OTT “Cable
Mirror” themselves?
• What does this mean for the broadband side of
the business? Is it dangerous to be relegated to
“dumb pipe” or will this in fact be the best way to
sustainably capture value through the connectivity
that everyone will require, rather than the murky
world of content rights? Will quad-play telcos like
AT&T, Verizon, Deutsche Telekom or Orange have a
competitive advantage in their ability to become true
ubiquitous video providers through their national
wireless presence in addition to fixed-line?
• How will consumers react to the notion of an
individual subscription vs. a family subscription? Is
there an opportunity to drive ARPU expansion by
selling into multiple parts of the household, or will
the proposition of a family plan allow distributors to
sell larger overall subscriptions?
CONTENT OWNERS AND AGGREGATORS • Are Amazon, Google, Roku (and maybe later Apple)
partners or competitors? Could they offer a similar
offer in the future? Is unbundling a good thing in
increasing the number of distribution options to
content owners and aggregators or is it a dangerous
thing in that it forces channels into individual rather
than bundled selling situation?
• Will the current system of very different rights and
thus content portfolios of the various OTT platforms
continue or will all providers get access to all
content, similar to traditional cable TV or emerging
subscription music model? Cord cutters keep a close
eye on their budget, so how much substitution will
there be? Will Netflix and HBO have to invest even
more in production?
DEVICE MANUFACTURERS • Will this accelerate adoption of and importance
of connected TVs? Does it mean that most “box”
solutions available on the market now (FireTV,
Chromecast, Roku, Apple TV) will mostly be
temporary fixes until all TV sets are smart?
• With several announcements each year with TV
manufacturers, will Roku be strong enough to
survive against Samsung, Sony, and LG? Can TV
manufacturers move out of their role as “dumb
displays” for cable set top boxes and establish a
role in the service provision itself?
19
EVERYONE, EVERY-WEAR
WEARABLES ON THE BRINK OF MASS ADOPTION; WILL WE SOON ALL BE JAMES BOND?
At the Sands, CES dedicated an entire
marketplace to “wearables,” defined in the
official show guide as “sensors, low energy
Bluetooth, cloud computing, 3D printing,
flexible membranes.” Quite an eclectic
collection – and notably also quite separate
from the most familiar wearable categories
of Smart Watches and Health & Wellness
and Fitness, which each had their own
dedicated space elsewhere. Our definition
is simply all products and applications using
components that can be worn – on or in
wrists, necks, heads, legs, shoulders, fingers,
ankles, feet, collars, torsos (e.g. shirts),
eyes, or under skin, and there were plenty of
examples of all of these.
For years now, wearable technology has been
the mainstay of Bond films, elite soldiers,
astronauts, and other professions requiring
peak human performance. The rest of us,
however, have stuck with our watches and
jewelry, and been content with a single piece
of wearable tech, the cell phone. With this in
mind, we can’t help but view this market with
a bit of skepticism.
But that said, the technology to enable an
explosion in wearables has now arrived
in a way that may just be a game changer.
4G enabled transmitters, low-battery
processors, Bluetooth connectivity, and
supporting app ecosystems are now
enabling a whole range of use cases that
just weren’t possible a few years ago. The
technology has arrived for wearables, but it’s
now up to the marketers to convince us that
we need a whole lot of additional devices on
our persons, and that job may prove much
more difficult. Clearly, many of the inventions
on the floor today will fail, but we also expect
a (perhaps limited) number of them will start
to gain critical mass over the course of the
next few years.
Health & Fitness remains the most promising
“killer app” for wearables. It was impossible
this year not to be overwhelmed by fitness
and wellness gadgets. If the exhibitors’
promotional materials are to be believed,
there has been unparalleled progress in
improving the ease of use and accuracy of
tracking your steps, counting your heart
beats and now measuring your blood oxygen
levels. That’s saying nothing of the number
of inventive attempts to most attractively
present your bio information on a tablet. Very
important to count steps and calories – we
get it. But will even the prettiest step counter
become an essential item to wear every day?
More interesting innovations included a
small wearable ECG from Qardio and a
fascinating pain reduction device from Quell.
It is worn on the upper calf and sends specific
electric signals to the brain, commanding
it to release endogenous opioids to reduce
pain. No prescription required!
Outside of the fitness set, there were a
number of impressive new technologies.
Connected shoes by Lechal allow users
to preset a journey on a phone and let
your left or right shoe vibrate each time
direction changes – perhaps a bit gimmicky,
but also perhaps of benefit to the blind or
directionally-challenged?
Despite these and other interesting
innovations, the real change from previous
years was not the new technologies
themselves. Rather, it was an overriding
impression that we’re on the cusp of an
explosion in the wearables space – they’re
about to touch us all, like the mobile phone
15 years ago. Three new factors in evidence
this year cement this impression.
1. First, manufacturers are focusing more
and more on the seamless integration
The technology
has clearly
arrived for
wearables, but
it’s now up to
the marketers to
convince us that
we need a whole
lot of additional
devices on our
persons, and
that job may
prove much
more difficult.
20
of their technologies into the everyday
lives of regular folks (not early adopters
who may be just interested in showing
off the latest new thing). Smart watches
and activity tracker manufacturers,
for example, once focused exclusively
on technical features, are now looking
for ways to seduce consumers beyond
early adopters. If form is as important as
function, the partnerships in evidence
between technology and fashion
companies are particularly interesting.
For example, Misfit collaborated with
Swarovski to showcase an activity tracker
pendent and Martian partnered with
Guess to come out with a full range of
connected watches.
2. Second, the applications themselves
are moving beyond gimmicks and data
collection for their own sake towards
aligning with broader consumer needs
and objectives. Kiqplan was presenting
a series of packs to achieve health goals
in 12 weeks: “Beer Belly Blaster” for men
or “Healthy Baby Bump” for pregnant
women. They were not selling a device,
but a recipe to make use of these activity
trackers. The Muse brainwave sensing
headband is presented as a tool to
continuously train ourselves to relax or
focus. The value proposition was not
to start tracking our activity until we
would be tired of doing it, but actually to
provide a way for our brains to do a few
cerebral push-ups every day.
3. And finally, more than ever, wearable
technologies are being explicitly
targeted at two large markets not
typically associated with the latest
technology: children and pets. HereO is
a simple smart watch for kids. No phone
call answering or blood concentration
measuring on this one. All it does is tell
time…and allow you to know where
your child is. The watch holds a GPS
tracking module. HereO has secured
an agreement with an MVNO for
subscribers to receive alerts when the
watch is detected outside of a pre-
defined safe-zone and provides real time
positioning in 120 countries. Paxie went
even further and showcased a wristband
that tracked not only location, but also
ambient temperature, steps, and heart
rate for parents who not only want to
know where their kids are, but also that
they are safe. Both services are for $10
monthly subscriptions.
We also saw a few stands presenting
wearables for pets. Tractive’s brochure
states there are 170 million dogs and
cats in the US, “with 50% of them
being obese”, hence the need for a pet
activity tracker which also measures
ambient temperature and light. They
also had a GPS tracker for a $7 monthly
subscription. Tagg’s is combining
activity and GPS tracking in collar-
attached devices.
And what about Sen.se’s Mother? It
could in a way be described as wearables
for objects. It comes in the form of
a smart box (the “Mother”) and tiny
devices called cookies which can be
attached to anyone or anything. Want
to be notified when kids return from
school? Each time you drink coffee? Each
time you do not take your medication?
Everything can be programmed.
21
ECOSYSTEM CONSIDERATIONS AND STRATEGIC QUESTIONS FOR:
NETWORK OPERATORS • With the explosion of connected devices, most
of them requiring a wireless connection, what is
the opportunity to create additional revenue for
network operators? Could we see the emergence of
new multi-device bundles, or will these innovations
simply ride on top of existing wireless/wifi access
with value accruing to the new innovators? Should
wireless providers start offering location tracking
services using devices other than phones to extend
to new markets?
• Is there a potential for a second renaissance of the
MVNO model for network operators, as a means to
drive additional revenue onto networks now plush
with the bandwidth to handle it?
• With safety and geo-location services expanding
to new, more emotion-driven targets (kids, pets)
there emerges the needs for even more ubiquitous
and reliable service. Can network operators without
wireless provide this? At what price?
• How should these new applications and services
be reflected in consumers’ buying decisions? Are
the purchase triggers discrete from those of TV and
connectivity decisions? Does this provide a new
way to shift share from competitors if the right value
propositions can be determined?
• Should consumers be excited or concerned about
technologies that allow us to track the wearer of a
pendant? When does all this technology start to feel
a bit too “big brother” for the average consumer and
more importantly, the average judge or regulator?
DEVICE MANUFACTURERS • Should manufacturers market to mass consumers
directly or continue building partnerships to be
technology partners of stronger fashion brands?
• With the explosion of wearable devices, do we
expect people will use a multitude of wearable
devices, each one for a unique purpose, or
multifunction, well integrated objects? Should there
be open standards for how these devices should
communicate to each other?
• Of course, on this topic again, everyone in the
industry will closely monitor what will happen in
Cupertino. How much room will there be for smaller
players when Apple Watch is released? What original
path will other manufacturers use to break into
this ecosystem?
22
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