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Live from CES, Friday, 9 January 2009 9 January 2009

Posted by Steve Blum in Tellus Venture Associates.
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OK, she can ride. But can she swim and run?

OK, she can ride. But can she swim and run?

Last to first, real-time tweets from Las Vegas

  • On my way home, via Virgin America. An excellent CES, could have stayed longer.
  • TEC seminar takeaway: development needs financial, institutional, information & energy infrastructure.
  • Chambers’ development keynote devolved into a tacky Cisco sales pitch.
  • Cisco CEO John Chambers, standard corporate stump speech, interesting but generic.
  • Windmill powers mobile phones & radio, info gained lets farmer grow & sell crops efficiently.
  • Mobile phones primary IT platform in developing countries.
  • William Kamkwaba from Malawi read library books, built windmill, powers village.
  • Technology can help with 2 critical needs in developing world: finance & energy.
  • 5 types of capital: financial, institutional, knowledge, human, cultural.
  • Barrett finishes, room empties. Development panel will be more interesting but not a big draw.
  • Barrett: small deeds done are better than great deeds planned.
  • Kiva.org: microcredit powered by web, supports low tech entrepreneurs.
  • Telemedicine & health education applications, including learning games.
  • Technology & Emerging Countries seminar at CES. Intel chair Craig Barrett speaking now.
  • Murata Manufacturing showing a robot that rides a miniaturized bicycle. Interesting proof of technology.
  • CEATEC breakfast interesting. Nissan car is tricked out with all kinds of detectors, called a “non-collision vehicle.”

    • Tweets from Showstoppers at CES, 8 January 2009 8 January 2009

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    fyre

    Ask yourself: what would Mick Jagger do?

    Live from CES, 8 January 2009 8 January 2009

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    Ho-Hum IPTV is Software Dev Opportunity 8 January 2009

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    Internet protocol television is the it’s-good-to-be-boring story of CES 2009. Everyone (or nearly so), from Netgear to Sony, integrates some kind of IPTV functionality in their consumer product lines. It’s going from being a distinct and geeky category to just being a standard feature of mainstream television products.

    It’s good news for software developers and component manufacturers. Drive manufacturers, to pick one example, have an opportunity to sell their products into television sets, more set top boxes (not just DVRs), and home media centers.

    There’s a window of opportunity opening briefly for software developers. No one has completely solved the twin problems of navigating and storing content. Boxee offers an open source users interface. It could turn into a common development platform, but only because it’s open source.

    "Linksys by Cisco" is company's latest consumer branding strategy. It doesn't exactly trip off the tongue, but it's a start.

    "Linksys by Cisco" is company's latest consumer branding strategy. It doesn't exactly trip off the tongue, but it's a start.

    Storage isn’t a technical problem. Hard drives are big and cheap, and solid state drives are rapidly heading in that direction. The problem is finding and accessing your stuff, once you’ve downloaded it to one device and you want to access it on another.

    Cisco introduced a home media hub, that they say can catalog all the media on your local network, plus manage Internet media sources. It includes a big hard drive, which you can use to store your stuff, but that’s almost incidental. If it really works — for ordinary consumers, not just for technophiles — it’s a big step forward in solving the navigation and storage problem.

    A real killer app has yet to appear, though. Most manufacturers are simply adding IPTV extensions to whatever content navigation and management platforms they already deploy. Any bets on whether that will be enough?

    Cisco is here to help. But whom? 7 January 2009

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    Cisco builds stuff for service providers. They’re at CES primarily to talk about their latest effort to extend their brand into the consumer realm, but there’s no doubting they’re network guys to the core.

    Interesting comment from their service provider group SVp & GM Tony Bates: they’re deploying technology that makes service provider networks video aware. Of course, it’s with the consumer’s best interests in mind. If a service provider knows that video is streaming through it’s network, it can take steps to optimize the consumer’s experience.

    Yes. Absolutely true. On the other hand, they can take steps to downgrade the experience or charge more for it. From a technological capability perspective, anyway.

    If mobile carriers are in fact under siege from consumer electronics manufacturers determined to sell mobile gizmos without the blessing of carriers, then Cisco could be in a position to craft a defense.

    Cisco also makes a tethering product for T-Mobile, allowing consumers to sign up for wireless data service in the home. The product and attached service are under the control of T-Mobile, but it’s a more generous offering than most. So maybe there is a middle ground. Or maybe when you’re at the back of the pack, you’re willing to take more chances.

    Still more to come from CES.

    Mobile Carriers’ Walled Garden Under Siege 7 January 2009

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    The Consumer Electronics Association identified four major trends that will drive the consumer electronics in 2009. Two depend on the wireless data industry to make it happen: mobile devices that provide the same user experience as in-home or in-office gizmos, and devices with embedded Internet capability. (The other two are evolving display and control technology and anything that’s green. Anything.)

    In the long run, it’s good news for Clearwire. They see themselves as providing connectivity to the growing ecosystem of wireless-capable gadgets. Unfortunately, the CE guys aren’t thinking of Clearwire. They want to sell millions of units now. That means going with the lowest common denominator: a 3G, or even 2G, data modem. But it’s not such great news for the current mobile phone business model.

    This little beauty ties a 3G modem (this one is running on the Verizon network) to a WiFi router. Lots of people can share one mobile data connection, all at the same time. Netgear thinks they're doing a favor for the mobile phone carriers. Oddly enough, they don't have relationships with any yet.

    This little beauty ties a 3G modem (this one is running on the Verizon network) to a WiFi router. Lots of people can share one mobile data connection, all at the same time. Netgear thinks they're doing a favor for the mobile phone carriers. Oddly enough, they don't have relationships with any yet.

    From the point of view of a mobile carrier, you plug your wireless data modem into one device, such as your laptop, and that’s it. If you want to use a second device at the same time, you get a second modem, pay for a second data subscription plan and away you go, playing happily inside the walled garden.

    The CE industry isn’t thinking along those lines. The very concept of a walled garden is foreign to them: the last thing they want is to have to sell a separate data subscription for every device they sell. They treat the mobile market the same way they treat the fixed data market. You pay for a connection, run it to a router, then load up on the gizmos.

    It’s early days yet at CES — the show floor doesn’t even open until tomorrow. But judging from the press conferences and product previews, consumer electronics manufacturers (at least the ones who aren’t already playing in the mobile phone sector) are moving full steam ahead on a couple of assumptions:

    So far, I haven’t spoken with any CE manufacturers who have a deal with a mobile carrier (again, except for the guys who are already selling phones and modems to carriers) . They plan to push the products into consumers’ hands, and let the market sort things out. We saw a preview of that approach at the CTIA show in San Francisco last year, when TapRoot Systems demonstrated WalkingHotSpot.

    Mobile carriers control access to their walled gardens via technology and subscriber contracts. They’ve been able to control the technology so far, because they buy the devices from the manufacturers. But that control will break down as consumers buy their own products and ignore the contracts. Carriers might be faced with a choice: cripple or even eliminate generic data modem service, introduce some kind of packet filtering, or cede control of bandwidth usage to consumers.

    Given the rough time that terrestrial ISPs have managing consumer bandwidth usage, I don’t expect mobile carriers to have much success filtering or metering usage. Third party technology providers will work hard to defeat any such efforts. Regulators always keep at least one eye on populist sentiment, and judges are none too enthusiastic about holding ordinary consumers to the impenetrable fine print of terms of service.

    Easy, widespread mobile data access is a golden ray of hope in an otherwise dismal outlook for the coming year. It’s an opportunity for CE manufacturers to sell consumers a new version of a gizmo (any gizmo!) they’re already buying, using and loving, by making it mobile. Any manufacturer who is outside the walled garden right now will do whatever it can to break down the walls.

    Carriers will fight it. But they’re facing powerful forces: CE manufacturers, content providers (who love the trend), consumers and, likely, regulators.

    As Damon Runyon wrote: “the race isn’t always to the swift, nor the battle to the strong, but that’s the way to bet.”

    Live from CES Unveiled, pre-press day, Tuesday 6 January 2009 6 January 2009

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    Last to first, real time tweets from Las Vegas…

    Recession Can’t Hurt Consumer Electronics Retailers. They’re Already Dead. 3 January 2009

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    Thoughts before heading out to MacWorld and the Consumer Electronics Show…

    21st Century retailing will be governed by a new Iron Triangle:irontriangle

    Online retailers have inexhaustible information and limitless volume. Consumers save time and money.

    Big box retailers have as much volume, and a physical presence that allows consumers to touch and feel products however they choose, and have the instant gratification of an on-the-spot purchase. Customers stay in control.

    Manufacturers can sit back and enjoy the ride, or they can build the value of their brands by combining their ultimate control of information with a physical and/or virtual presence that promotes a direct personal relationship with consumers.

    CES and MacWorld have sprung leaks, with attendance expected to be down. MacWorld’s survival is in doubt. CES will ride out the storm, but even old salts are looking green around the gills.

    The two shows suffer from exactly opposite problems. MacWorld is the victim of Apple’s retail success, while CES is being battered by the failures of consumer electronics retailers. Circuit City’s financial meltdown and Best Buy’s preemptive self-cauterization are just the beginning of what will be, for many, a wrenching disruption of the consumer electronics retailing model.

    The major CE chains are headed for extinction, killed by the same trends that created them. In the 1980’s, televisions, VCRs, and audio gear became more reliable, easier to use and increasingly compliant with nascent industry standards. The need for hands-on sales, support and service expertise fell. At the same time, logistics and inventory management were transformed from back office, seat-of-the-pants jobs into scientific disciplines with seats on the board.

    The less expertise required of sales and other customer-contact personnel, the less the salaries. A small team of number crunchers, transportation specialists and information technologists could run national chains of CE superstores. It didn’t matter how much money they made. In fact, the more they were paid, the farther superstore chains pulled ahead.

    With size came the ability to take advantage of ever growing brand building tools. Customers might not have known exactly what they wanted, but they knew where to find it.

    The superstores, however, carried the seeds of their own destruction. In a shipping container and a computer, an SKU is just an SKU. From the forklift operator on the loading dock to the clerk at the checkout register, boxes flowed through CE stores in an ever growing torrent.

    The problem, for superstores, was that once the expertise required of the customer contact personnel dropped below a second threshold, it didn’t matter what was in the boxes. It could be a television or a washing machine. Or disposable diapers, or children’s clothes, or potato chips. At the same time, there was explosion upon explosion in the information available to consumers. Increasingly, consumers knew what they wanted before they ever set foot in a store.

    Now, the not-so-super CE stores look like 98-pound weaklings next to the real big box retailers. The big box guys took even better advantage of the same trends and technologies that fueled the growth of CE superstores.

    But they aren’t the only ones who successfully rode these giant waves. Manufacturers did too, taking ruthless advantage of new communications technology and advertising media to leap over distributors and retailers, and establish direct relationships with their millions – billions – of customers. The more that manufacturers spoke directly with consumers, the less they needed retailers. Except to drive forklifts and ring up sales.

    For that, you don’t even need a bricks and mortar retailer. The Internet changed the game. If you’re Consumer X, and you have a personal relationship with Manufacturer A(pple), it’s a lot easier to go online, google “iStuff” and click on the lowest price.

    If you don’t know what you want yet, you go to the A(pple) store if one is nearby, and look at the iStuff and talk to sales people in black shirts who have actually had a day and a half of training. If that’s not enough, you can have an audience at the geek altar, I mean, a conversation at the G(enius) B(ar).

    CE superstores tried to optimize volume, information and physical presence, and did so successfully for a while. But only a while. Bigger players who are maximizing their advantages in just two ruling factors are circled around those erstwhile optimizers, and are rapidly crushing them. There’s no telling how long this new Iron Triangle will rule consumer electronics retailing – the world is not done changing – but it’s clearly in command now.