2012 Consumer Electronics Show (CES) Executive Summary


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2012 Consumer Electronics Show (CES) Executive Summary

  1. 1. 2012 CONSUMER ELECTRONICS SHOWEXECUTIVE SUMMARY The 2012 Consumer Electronics Show marked the 45th meeting of electronics manufacturers, and the show set records in terms of attendance (153,000), exhibitors (3,100), and floor space (1.85 million square feet). Marketers descended upon Las Vegas in droves, with nearly 500 attendees from VivaKi agencies and their clients alone. This solidified the importance of the show as not just a venue to showcase new products, but as a key stop for marketers to identify future consumer trends, consider their long-term strategies, and to meet with media owners and content creators. Key Trend: Universal Connectivity This year’s show was not marked by any new standout devices, such as the 3D televisions showcased in 2010, or the overwhelming number of tablets presented in 2011. Instead, the key theme of in 2012 was a simple idea that is far more difficult to achieve: the concept of Universal Connectivity. Universal Connectivity is the ability to access content on virtually any device. The ecosystem that drives Universal Connectivity requires three key components: Devices that can talk to each other and provide a consistent, familiar consumer experience from one to another; A common operating system that works on multiple platforms; and Services that enable consumers to access content seamlessly as they move from one device to the next. The idea of Universal Connectivity has been years in the making, and despite the seemingly obvious importance of making devices, operating systems, and services consumer-friendly, the concept still has yet to be fully realized due to differing approaches from technology companies as they attempt to build their own proprietary ecosystems. At VivaKi’s sneak peek event which took place the day before the show opened, CNET Editor-at-Large Brian Cooley called out five key companies that are arguably dominating the landscape today: Amazon, Apple, Facebook, Google, and Microsoft. Each is taking a slightly different approach to the development of an ecosystem, but Cooley predicted that the market will only be able to support 2 to 3 of these long-term. As Universal Connectivity grows in importance, marketers should pay attention to four key implications that will affect their business in the future: Content is migrating across devices, so it’s important to follow the consumer; Interoperability among devices creates an opportunity for consumers to participate with brand messages, so marketers should provide value in exchange for consumer interaction; Content is increasingly delivered using internet protocol (IP) technology, which creates a one-to-one connection with the consumer and the opportunity to address messaging to individuals in a more relevant way; and Data is powering the new ecosystem, so marketers must establish a data strategy that ensures future success. Page 1
  2. 2. 2012 CONSUMER ELECTRONICS SHOWEXECUTIVE SUMMARY Notable Nuggets from the Floor 3D and smart televisions were at the core of LG’s presence at the show, and while we still believe 3D will struggle to achieve mass consumer adoption, the smart (or connected) TV will become a central component of a consumer’s multiplatform experience. LG showcased a new Google TV set, which runs on the Android operating system, has a full QWERTY keyboard, and also takes advantage of LG’s new Magic Motion remote, which has similar functionality to a Wii remote but also includes voice search. The device is an example of the drive toward an ecosystem that works across platforms, as the television integrates seamlessly with Android smartphones and tablets, allowing consumers to control the TV from another Android device. It should be noted that Google is making a second go of the Google TV platform after lackluster performance in 2011. While the user interface may be much improved, the central question about the availability of premium content through the platform still lingers. LG has also partnered with digital ad network YuMe to represent ad inventory on its line of connected TVs. Partnerships like this give advertisers an opportunity to tap into the burgeoning connected TV space, which combines the ten-foot experience of television with the measurement capabilities of digital. For pure lust factor, LG’s super-thin 55-inch Organic Light-Emitting Diode (OLED) connected television with 3D capability won the Best of Show award. Slated to ship in Q3, the device is only 4MM thick, has virtually no frame, and has a 100 million to 1 contrast ratio, which is 50 times greater than current LED models. A price tag has not been established, but some experts LG’s Magic Motion remote uses gesture have estimated the cost to run as high as $10,000. technology and voice recognition for search True to form, Samsung delivered a stylish and navigation. experience for attendees. Like LG, TVs were a core component in the booth. Always known for Samsung is making a design, Samsung unveiled gorgeous new play for ad dollars connected TVs and an OLED set as well, but the through its connected most interesting development is Samsung’s push TV app marketplace. to develop its own proprietary app marketplace (branded SmartHub), which includes advertising opportunities. On the app home page and within apps, brands can deliver 2D or 3D videos as well as LG won Best of Show for its high definition interactive advertisements into the living connected TV that is room. Advertisements will be dynamic, about the thickness of a allowing audiences to click to access credit card. video content, to download new applications, or to visit an advertiser’s website via a browser. Samsung has established partnerships with YuMe as well as Rovi to represent ad inventory. The so-called 4K, an ultra high definition television, drew lots of excitement in the Samsung booth. The resolution of a 4K set has four times the number of pixels of today’s highest resolution sets, so the individual pixels are virtually invisible. The problem? No programming exists in 4K resolution yet. Page 2
  3. 3. 2012 CONSUMER ELECTRONICS SHOWEXECUTIVE SUMMARY Samsung has also embraced the Android operating system, and is often the first original equipment manufacturer (OEM) to deploy the latest version of Google’s operating system. The Galaxy Nexus smartphone is the first to run Android 4.0 (also known as Ice Cream Sandwich). The 4G device has a 4.65-inch high definition display, can record video in 1080p high definition, and includes a Near Field Communications (NFC) chip, which allows for payments through the device. With a five-inch screen, The introduction of the Samsung Galaxy Note the Samsung Note blurs the line between a also spurred much discussion among show smartphone and a tablet. attendees. The Note is indicative of the increasingly blurred line between tablets and smartphones. The device has a 5.3-inch The Samsung Galaxy display, making it larger than most phones, but Nexus is the first certainly smaller than most tablets. It functions like smartphone to run a smartphone, but also includes a stylus in an effort Google’s Android 4.0 operating system. to make content creation a bit easier on the device. The key theme for Microsoft was an increasingly integrated interface (UI) first developed for phones, Microsoft is moving consumers can expect the tile-based experience to towards a more consistent look and become more prevalent across all Windows feel across devices devices. We have already seen a revamp of the with the deployment Xbox 360 UI, and other devices including PCs and of the Windows 8 tablets will begin to adopt the same experience. operating system. This approach supports the notion that consumers want a consistent experience across devices. Satellite TV operator DISH showcased an amazing set top box (STB) called Hopper. Also a central home server-like STB, Hopper offers online- streaming content, applications such as The Weather Channel, a new graphical user interface, and the ability to deploy smaller boxes to other TVs (called “thin clients”) that can access the Hopper from anywhere in the house. On top of all this, DISH is offering a service called Primetime Anytime that automatically records all primetime content from each of the four broadcast networks Monday-Friday. This is great for consumers, but has severe implications for advertisers as recording linear TV becomes easier and automatic, and could result in increased ad-skipping. While a connected car was just a concept a few years ago, mobile technology has become a standard feature across all auto brands and car models. The lengthy car product development cycle and lifecycle seemed like an unavoidable detour from the autobahn to Los Angeles in rush hour. However, top auto manufacturers created a mobile HOV lane by separating mobile from the rest of the in-vehicle technology product. The focus has shifted to support Page 3
  4. 4. 2012 CONSUMER ELECTRONICS SHOWEXECUTIVE SUMMARY of the integration of the owner’s current mobile device and the numerous hardware and software upgrades that occur during a car’s product lifecycle. This approach allows immediate access to tens of thousands of developers that can quickly create hundreds of thousands of applications specifically for in-vehicle use. No individual auto brand could offer the scale and scope of applications that a publisher community can produce. Mercedes Benz’s mbrace and Ford’s Sync were featured as branded telematics systems that offer industry-leading integration of owners’ mobile devices with the cars’ in- vehicle technologies. This strategy instantaneously aligns the auto brands with the value proposition and positive perceptions mobile devices enjoy. As both a marketer and technology leader, Intel exemplified the Mercedes and Ford were among the automakers mobility trends from several perspectives. Inundated with unrelenting showcasing technologies crowds, their enormous booth was busting at the seams. Attendees that connect to the internetwere unanimously surprised and delighted by the demonstrations of through an on-board Intel chip powered mobile devices. The booth represented a larger service or through a user’s long-term strategy to reposition Intel as a consumer brand again. smartphone. After the Pentium II processor, Intel stopped marketing directly to consumers and focused on building partnerships with PC manufacturers. However, consumers are rapidly shifting computing PC partners. Intel is responding by shifting its strategy to become a consumer brand and product again. The major challenge of this repositioning is that the consumer will never understand what Intel’s chips do or how they do it. Focusing on mobile not only aligns with new consumer purchase behaviors, but also creates opportunities to communicate their value proposition. Intel’s booth exceeded attendees’ expectations because it aligned their brand and product with a trove of mobile experiences that consumers value and emotionally identify with. The demonstrations focused on removing loading time delays while browsing mobile sites or playing mobile videos, displaying HD quality video resolution, and transferring large files seamlessly, wirelessly, and instantly from a mobile device to any connected device. As a leader in the technology industry, Intel also focused their messaging on the chips’ ability to decrease product development time for manufacturers and prices for consumers. Motorola Mobility seems to be in a holding pattern, waiting for direction from Google, its soon-to-be new owner. Google has publicly stated intentions to make Motorola an independent business unit. However, an acquisition of this magnitude requires a higher return than Motorola was generating on its own. Like a game of chess, Motorola appears to be another pawn to protecting Google’s search and display kingdom. With Motorola, Google will not have to rely on manufacturer partners. Like Apple, they can control and create software and hardware to consistently launch high-end, niche, and low cost mass-market devices in time for key shopping seasons. Google isn’t looking to profit from hardware sales. Their recent gift of patents to HTC, to Page 4
  5. 5. 2012 CONSUMER ELECTRONICS SHOWEXECUTIVE SUMMARY help them with a lawsuit filed by Apple, shows Google’s willingness to give away non- advertising intellectual property. This investment will ensure continued market share leadership of Google’s acquisition of their Android operating system. The Android OS provides access to Motorola Mobility is the billions of mobile devices, and Google will be able to collect first entry into the valuable user data and distribute new products that drive ad hardware business for revenue on mobile devices. This strategic investment will continue the search giant. the rapid pace of technology advances, while also increasing adoption by creating better product selection at lower prices. While many Motorola products will likely be abandoned in favor of existing Google technology, one product aligns with the overarching strategy. Motorola devices will have a native settings function called Smart Moves. UsersEricsson wowed audiences identify a series of contextual events towith its futuristic approach automatically trigger a device command. For example, if a device is near to connectivity – a the user’s gym at a certain time day, a branded work out playlist andtechnology that allows the exercise program guide would launch. Simultaneously, phone calls would human body to serve as the conduit to complete a be sent directly to voicemail. network. Ericsson is pushing the idea of Universal Connectivity even further. The company that invented Bluetooth showed off its Connected Me technology, which allows a user to transfer information—a photograph, for instance— from a mobile device to a computer screen just by touching both devices. Connected Me does this through capacitive coupling technology, which uses the human body as a conductor between the two electronic devices. In the future, consumers themselves could be the connector that enables data to move from place to place. Imagine a world where your car starts when you put your hands on the steering wheel, your hotel room door unlocks through a handshake. All of these concepts sound futuristic, but Ericsson is refining the capability in the lab today. Conclusion In years past, almost every electronics manufacturer made an annual announcement about their new product line at CES. Apple helped change that tradition by holding its own events to both avoid sharing headlines with competitors and to increase the frequency of its product announcements. Over the last five years, others have followed suit, choosing to unveil new products on their own terms. Microsoft announced just prior to this year’s show that it won’t return to the convention in the future. But, like Amazon, Apple, Facebook, and Google, Microsoft is still likely to have a noticeable presence as an integral part of other device makers’ presence at the show, even without their own booth. But even as the number of January announcements has dwindled, the number of attendees and exhibitors has exploded. The true value of the conference now comes from the trends revealed by an unprecedented concentration of attendees, industry leaders, and devices. Seeing, discussing, and understanding the underlying trends impacting our consumers and our businesses is invaluable. Page 5