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.

7

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?

8

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.

9

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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