Archive for January, 2013

Are New Players Forcing the Mobile Industry to Change?

Tuesday, January 22nd, 2013

As much as this year’s CES was about the influence of mobile at the center of consumer electronic growth and development, there was little that was outstanding from the perspective of new mobile device introduction.

Certainly Qualcomm, Samsung, Nvidia and Intel talked about enhanced chip set technology that has increased performance and graphics while cutting back on power consumption, and Samsung showcased their new flexible screen technology; but apart from the above, no real breakthrough or “wow” products were announced.

Most mobile device manufacturers tend to hold off until Mobile World Congress (MWC) in February to showcase their new product portfolios for the upcoming year. Increasingly a minority of the big guys have premier events before MWC. Apple has done this is past years and in all probability RIM is planning to introduce its new Blackberry this year. The audience at MWC is made up of global operators that provide the purchasing power and the ability to make or even break manufacturers with decisions to range their products and link them to new services and subsidy provision.

The dawning of a fundamental shift in the composition of the mobile industry may, however, have been observed at this year’s CES. The two major Chinese infrastructure manufacturers that have struggled to gain market position in the U.S. – and in one case is being actively barred – are working on building their customer brand and device portfolio. ZTE and Huawei both had large stands and comprehensive product offerings at CES, and the two companies showcased their new products that clearly targeted the Samsung S3 and Galaxy Note. ZTE launched its Grand S LTE unit and seemed determined to let everyone know that they are now the number 4 smartphone manufacturer worldwide. Huawei’s main product introductions, however, lack LTE capability which is a little surprising given the North American market focus on LTE growth. I am sure that there will be an announcement at MWC, or possibly later at CTIA in May that will address this hole in the U.S. portfolio. The real point is that these two companies are striving to build brand awareness and become household names; at the same time they are targeting Samsung which, together with Apple, is taking a 90% chunk of the profit currently generated in the smartphone market.

The Chinese are known for their long term strategic plays and it is likely that they will be the root cause of a complete shake-up of the mobile space that we are about to witness. The Apple’s and Samsung’s will undoubtedly survive but will be under increased pressure to maintain their brand and technology prowess, and at the same time sustain the margins that Wall Street has become accustomed to. Those manufacturers in the middle of the mobile market will find it a struggle. HTC, which showcased a star product at Mobile World Congress last year, now has non-existent profits and has failed to maintain its technology and brand presence. At CES this year, rumor had it that a major European / U.S. carrier was considering deranging and dropping HTC because they no longer offer hero products or have the brand to support them.

Amongst this turmoil, RIM will also face the challenge of re-establishing itself in the market, despite the introduction of its new Blackberry 10. Both LG and Sony may be forced into a niche, and Nokia could become to Microsoft what Motorola has become to Google – a hardware capability but with no direction or insight into how to recreate the Apple model.

Playing in the background are the major equipment manufacturers, such as Foxcomm, which build products for major smartphone, tablet and PC manufacturers. Within the last year Foxcomm has acquired the brand, Sharp, primarily for use in China but, one would suspect, ultimately as a potential global distribution channel.

With the stage set, the next 18 months could prove to be pivotal in terms of the strategic scenarios that play out. More significantly, the role of the mobile operator as orchestrator could once again be changing to the role of king-maker or breaker as they decide to support the upstarts or partner with the incumbents. Watch this space!

Steve Bell, President, KeySo Global

 

Can Small Innovators Take Center Stage at CES?

Saturday, January 12th, 2013

I’ve just returned from Las Vegas where, as an analyst, I attended the largest International Consumer Electronics Show ever. Having walked not only the 1.92 million square feet, or 37 football fields, of exhibition space but also the 1.6 miles between the Venetian and the LVH Convention Center every day, it quickly became apparent that it was going to be impossible for me to get to see all of the 3,250 exhibitors with their 20,000 new products.

In an exhibition of this size, three very different methods of announcing products and demonstrating innovation have had to evolve. The first approach that flagship brands adopt is to create a “wow factor” for their product reveal to keep it top of mind. Here the product is placed center stage on massive booths, features at the center of elaborate and expensive keynotes, and is the focus of high visibility “invite only” press launches and parties, examples of which have been hitting mainline media all week.

The second method of product announcement is to facilitate one of the many closed door discussions that take place in ritzy hotel suites across Vegas; high ranking company execs are ferried back and forth to meetings by retained limos, and a bizarre and almost ritualistic protocol determines who meets with whom, according to status. Whatever the end result, these movers and shakers have a full dance card for the entire time they are in Vegas and have little or no opportunity to see the third, and in some ways most interesting, type of product exhibition.

Here an ecosystem of small domestic and international manufacturers and innovators prevails. Their products and developments are displayed in the hope that the right buyer, scout, analyst or media representative will serendipitously stumble upon them. These displays are not the fancy booths of the larger players but are instead the pop-ups you find at the Venetian or the periphery stands in the big halls of LVH through which, sore feet allowing, you sometimes wander.

So if innovation is at the heart of CES, as their press release suggests, then maybe a rethink of the conference and exhibition format is needed in order to expose this tertiary ecosystem of small innovators, and enable them to become the powerhouse of growth for tomorrow’s consumer electronics industry.

Steve Bell, President, KeySo Global   

For additional perspectives on this year’s CES contact me at steve.bell@keysoglobal.com or at 847-478-1633. Visit our website at www.keysoglobal.com

How Networks and Components Have Forged the Growth of Mobile

Thursday, January 10th, 2013

Mobility at the core of consumer electronics industry growth has been a predominant theme of 2013 International CES in Las Vegas. Keynotes given by both Verizon and Samsung emphasized that the foundation for the growth of mobile is based on two intersecting forces:  the power of the network to connect and deliver data, and the integration of components such as application processors, solid state memories and displays into ever more efficient devices.

Both Verizon and Samsung stressed the need for partnerships in order to continuously evolve the consumer experience. In the case of Verizon, they showcased how their partnerships with the NFL have created increasingly compelling and interactive sporting experiences, with Ford they have developed a more seamless driver experience via the SYNC project, and together with the healthcare industry they have blended network bandwidth, secure cloud capability and data analytics to root out fraud.

Samsung talked about their cooperative development partnership with ARM to develop the Exynos 5 Octa chip which increases performance twofold and reduces power consumption by 50%, which in turn enabled their partner Electronic Arts to develop better games, such as “Need for Speed”, for mobile devices. They showcased their solid state memory for servers that HP is using to reduce power consumption in data centers by combining 2800 servers in a single rack. This will help cut the estimated 167 billion kilowatt hours per year that the 34 million servers on the planet consume by approximately 20%. The final, and most dramatic, technology that Samsung unveiled at CES has the potential to change the reality of design for devices as we know it: their new flexible OLED display technology allows screens to be bent back and forth, and means that device size will no longer be determined by the display. With this new technology, flat surface devices made of glass could very soon be a thing of the past!

All of these keynotes were part message and branding, and part showmanship and one-upping the competition. Samsung concluded their presentation by talking about their Hope for Children Foundation that is currently working to help 2.5 million children in Africa receive technology-enabled education. They referenced their cooperation with the Clinton Foundation and then introduced President Clinton as guest speaker. In his powerful address Clinton urged the industry to embrace technology and to take a lead in helping solve global issues, such as climate change and inequality, by breaking down boundaries and creating opportunities for a better world. An inspiring close and one that shows the reality of the global Digital Renaissance we are living and experiencing.

Steve Bell, President, KeySo Global

Qualcomm at the Birth of the Mobile Generation

Tuesday, January 8th, 2013

Paul Jacobs, CEO of Qualcomm, opened this year’s keynote “Born Mobile” at CES in Las Vegas by pointing out that this was the first time a mobile company has opened the show. Globally, mobile is at the heart and center of everything we do, transforming the way we live and giving rise to the new “Generation M”.  A survey of those people who have grown up “mobile” identified that 84% of them can’t go one day without their devices. Mobile is the largest technology platform in the history of mankind. There are 6.4 billion mobile connections worldwide and 1 million smartphones are added daily which is twice the global daily birth rate.

Qualcomm took the opportunity to share the platform with Steve Ballmer of Microsoft who has been the traditional opening keynote for many years. Ballmer showcased Qualcomm’s Snapdragon chipset used in the Windows-based Nokia Lumina 900 and HTC8X. Cementing their relationship, Ballmer thanked Jacobs for the opportunity to partner with Qualcomm and to experience being “born mobile”.  I would have to suspect that the famous “Wintel” partnership is in its sunset years… so what will the new partnership be called?

Jacob’s keynote offered insight into the new Snapdragon 800 chipset which will offer faster wireless connection in mobile devices by the second half of this year.  This quad core chip, operating at 2.5 Ghz, has 75% better performance and power efficiency than those of previous generations. These are coupled with enhanced graphics, next generation WiFi 802.11AC and LTE to provide online console gaming graphics capability.  Additionally, the chipset enables the playback and more importantly the capture and sharing of ultra-high definition video. This aspect is probably the most significant element in accelerating the penetration of ultra HD, which most thought would be constrained by the slow adoption of the TV industry. To demonstrate the power of the chip, Jacobs introduced the film producer, Guillermo del Toro, who previewed his upcoming ultra HD film “Pacific Rim”, played back on a Snapdragon device.

We were given a glimpse into many other exciting ways that Qualcomm is partnering to help interconnected devices, including sensors, facilitate the creation of a “digital sixth sense” that can gather information from the cyber world and bring it into the real world. One example given was an app being made available this summer called “Big Bird’s Words”. The Big Bird app from Sesame Street is devised as an early reading tool for children; it works on a device fitted with a camera and uses text recognition to enable children to point to words that Big Bird then repeats.

Overall, it was a high profile and powerful presentation that anchors Qualcomm at the center of the new “Generation M” world. To close, Adam Levine and two others from Maroon 5 played acoustic versions of some of their hits including “Pay Phone” – which Jacobs quipped should be renamed “Mobile Phone”!

Steve Bell, Principal, KeySo Global

www.keysoglobal.com

Consumer Electronic Trends to Watch – Live Report from CES in Las Vegas

Monday, January 7th, 2013

Shawn DuBravac,  Chief Economist and Director of Research for the Consumer Electronics Association (CEA) identified in his keynote address at the Consumer Electronics Show (CES) in Las Vegas yesterday four critical trends that will shape the future of the consumer electronics industry.

The Post Smartphone Era

Penetration of smartphones in the U.S. has surpassed the 52% mark but more significantly tablets have doubled their penetration in just 12 months, moving from 22% to 44%. In today’s digital world where multiple devices are commonplace in every household, these effectively act as hubs. They are mechanisms for accessing additional technologies, from door locks to health and fitness applications, and act as “second screens” for controlling security, domestic appliances, cars and TV’s. DuBravac referred to smartphones and tablets as “viewfinders into our digital lives”.

The Age of Algorithms

Prior to 2001 most information captured was analogue. With the continual reduction of cost for processing and sensors, more and more devices now have the capability to collect, communicate and share information digitally. In the U.S. there will be 350 million IP addressable devices sold in 2013 and about 1 billion worldwide. In reality, the cost curve of technology is enabling the “sensorization” of devices. The challenge in the future will be curating the enormous density of data-strings that will be generated as sensors proliferate.  Participating at this year’s CES are a record number of automotive companies, reflecting the growing interest of the industry in the role of sensors and connectivity. The fact that the Google car drove 300k miles last year and that Audi, Lexus, Ford and several others are focusing on this area of technology is an indication of how significant it could become. The Chairman of Continental has said that a driverless commercial solution is possible by 2025. In this age of algorithms, data is the new currency which raises ever more concern about security and privacy.

Contextual Connectivity

In recent years, the mood of the industry was captured by the advent of smart TV’s that could connect to the internet. Now the focus is on using intelligence received from sensors to make the interaction between the smart TV and the consumer more relevant and appropriate. One example is the use of cameras that monitor who is watching a program to ensure that appropriate advertising is screened when children are present; another are glass panes in store windows that display information tailored to the individual who is walking past that store, based on their smartphone details shared via social media, store card check-ins or through NFC payments.

Changing the Flow of the Story

The prevalence of “second screens” indicates that we are becoming digital omnivores who consume secondary information while watching a primary screen or previews prior to selecting a program. With household penetration of tablets and smartphones hitting 1.4 per household in the U.S. in 2012 (compared with 2.9 TV’s per household), the second screen is a real phenomenon.  In fact sales of small screen TV’s have declined 20 to 30% in the last 3 years. The concept that engagement starts on the second screen means that the paradigms for use-case scenarios are rapidly changing and need to be understood by the content providers, networks and advertisers. The story may not start on the big screen but when it reaches it the challenge is to maintain engagement and interaction on the second screen. Interestingly, sales of jumbo screen TV’s for main living spaces are on the increase in the U.S.

What becomes evident from these trends is that consumers’ rapid adoption of technology into their digital lives is changing their expectations and forcing business models to adapt accordingly. It appears that, even in the consumer industries, many large companies are being slow to respond and the bulk of innovative ideas and add-on products are being generated by hybrid start-ups.

Steve Bell, President, KeySo Global

www.keysoglobal.com