CES 2011: The End of Dumb

The 2011 Consumer Electronics Show signals a new era in consumer electronics as nearly every TV, mobile devices, and gadgets and household items take advantage of sensors, chips, and software to bring a new level of complexity, control, and personalization to even the most mundane of devices. Simply put, nearly all consumer electronic devices suddenly have a brain.
Research analysts with the Consumer Electronics Association (CEA) made a presentation to the plethora of bloggers, consumer, and trade press that descend on CES tauting the four key trends at this year’s show. And none of them are expected to be 3D related.
Ben Arnold, CEA senior research analyst, says that last year the big story in TV sets was 3D first and then Internet connectivity. This year, he says, expect the market to focus on Internet TVs and then 3D and, by 2014, half of all sets sold will have Internet connectivity.
“Processors, connectivity, and apps will make devices smarter and change the user experience,” he says. Also look for TVs to get bigger and thinner.
CEA research, however, points to some challenges with Internet-enabled TV sets, despite the bullish numbers. A study of those who own an Internet-enabled TV found that only 8 percent download content and 6 percent access the Internet (12 percent view photos and only four percent do email via their TV). However those small numbers point to a still relatively nascent app development community that will no doubt grow as the capabilities become more well known to consumers and more widely adopted.
“Apps used in different platforms have jumped and become a trend all by itself,” says Arnold. “A year ago it was smartphones and TVs and now its tablets, printers, game consoles, and a variety of other devices that use apps.”
What are consumers looking for in apps? While sports lagged at about 15 percent more than 45 percent want to watch live TV via an app, a sweet spot for sports broadcasters and leagues. More than 40 percent also want apps that work across all types of mobile devices.
“Hardware and apps are two pieces of a solution,” says Arnold. “And they’re both useless without each other.”
So what about 3D? Expect the news at CES to concern developments in displays that work with passive glasses or don’t require glasses. And 3D on moble devices will also be on display at the show.
Just don’t expect CE makers to place all their chips on 3D this year. Last year only 1 million 3D sets were sold and this year an additional two million will be sold.
That lags greatly behind the biggest game changer at this year’s CES: tablets. Apple’s iPad jump started a market that is poised to explode with more than 100 tablet devices expected to be introduced at CES. And more than 30 million will be sold in 2011 worldwide (also expect 19 million eReaders to be sold as well).
Shawn Dubravac, CEA chief economist, however, is quick to add that many of the tablets being introduced will most likely never see the light of day in a retail environment. Tablets, unlike eReaders, are not sold for a price below cost because they don’t drive electronic book revenue streams. Prices may fall, but it will because of competition, not subsidies.
“There will be a lot of competition [in tablets] playing out in the next four days,” says Dubravac. “It will be a key theme at this year’s show and we will finally see a lot of experimentation taking place.”
What is that consumers will be looking for in their tablet? First, according to CEA they want a tablet priced around $350-$425 and Dubravac says the actual market price points are in line with those demands, pointing to an estimate of 30 million tablet sales in 2011 (expect another 19 million eReaders to be sold).
As for what consumers want from their tablets, current needs include browsing the Internet (94 percent), streaming video at 73 percent, and gaming at 68 percent.
One market segment to watch next year is whether or not the tablet and eReader markets collide, coexist, or come together. CEA research, so far, shows that they can, in fact, coexist as consumers embrace both a tablet and a dedicated eReader.
So for tablet developers the key to success is differentiation. Form factor, the operating system, pricing, and, most importantly, use case scenarios are all important.
Use case scenarios of tablets and nearly every other device rely on another theme at this year’s show: the ubiquitous nature of sensor technology. Ten years ago sensors for features like cameras, GPS, or remote control operations where just coming to market. But now the true power of sensors is felt in products like the iPhone, iPad or Microsoft’s Kinect gesture-based control system for the xBox 360 gaming console.
“The iPhone is crowded with sensors that allow third-party developers to create a unique user experience,” explains Dubravac. “And sensors are now showing up in every device.”
Tablets, mobile devices, cameras, and even ski goggles will take advantage of sensor technologies. “Sensors create the data and then intelligence in software can do things with that data,” says Dubravak.
Sports networks are already taking advantage of these developments. ESPN3, for example, is available to xBox owners who have Verizon Fios. Sports fans using the Kinect controller can use gestures to pull up statistics, highlights, and even live games literally with the wave of a hand.
And consumers are believers.
“Microsoft sold 2.5 million Kinect devices in the first 25 days and it is nothing but a box of sensors with four mics, three cameras, and an accelerator,” explains Dubravac. “And it isn’t whether or not there are sensors in a device but how many sensors that is the revolutionary trend because more sensors allows software developers to create new experiences.”
In the coming days many of the trends highlighted by CEA will come to life at CES. Look for future reports from the show all this week from SVG.

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