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.
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