Technology Trends next 5 years

technology trends shaping ecommerce today and technology trends that raise ethical issues
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Published Date:13-07-2017
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2016 Edition Special Supplement to It Is Innovation (i3) Magazine CTA PRESIDENT AND CEO • AN EYE ON THE FUTURE Gary Shapiro • DRONES AT A CROSSROADS SENIOR VICE PRESIDENT Jeff Joseph • WHA T’S ON THE HORIZON FOR VIRTUAL REALITY? SENIOR DIRECTOR, PUBLICATIONS • IT’S ALL ABOUT CONTEXT Cindy Loffler Stevens • THE NEW FACE OF RETAIL MANAGER, PUBLICATIONS Mark Chisholm • HOME IS WHERE THE SMART IS COORDINATOR, PUBLICATIONS • THE TECH TRANSFORMATION OF HOLLYWOOD Justin Siraj SENIOR GRAPHIC DESIGNER • THE RISE OF SMART CITIES Ian Shields SENIOR PRODUCTION COORDINATOR Mark Zacepilo CTA MARKET RESEARCH AND LIBRARY CONTRIBUTING WRITERS: Bill Belt ™ Consumer Technology Association (CTA) Mark Chisholm Jack Cutts Shawn DuBravac Rick Kowalski Brian Markwalter Justin SirajAN EYE ON THE FUTURE By Gary Shapiro utting-edge technology defines the dynamic 285 billion U.S. consumer technology industry. The industry is in constant flux as new technologies, products and services build on top of the generation before them. And groundbreaking technologies like autonomous Cvehicles, robotics, 3D printing and unmanned aerial vehicles (drones) are redefining the world. Because the marketplace is always changing, each year the Consumer Technology Association’s (CTA)™ Five Technology Trends to Watch publication selects five top trends to explore how these promising areas could impact our future. For the 2016 edition, we focus on contextual awareness, the future of retail, the connected smart home, how tech is transforming Hollywood, and smart cities that will enrich lives and engage residents. Our forward section reveals how some technologies we discussed in past issues are faring today like drones and virtual reality. For example, CTA projects that the smart eyewear market, overwhelmingly composed of virtual reality (VR) and augmented reality (AR) devices, will total more than 500 million by the end of 2016. To learn more about the vibrant innovations enhancing our lives, I invite you to come to CES 2016 on January 6-9, the world’s innovation showcase, to get a glimpse of a glorious future. New products and technologies are solving real problems and improving the world for global citizens. I love the future I see at CES Drones will deliver medicine to remote places or search for missing people. Cars will avoid accidents. Wearables already tell us about our health, sleep and exercise and will help the elderly stay at home longer. Sensors are telling farmers how much to fertilize or water. 3D printers in our homes soon will make almost anything we can imagine. To see innovation in action, visit the CES 2016 Innovations Awards that honor outstanding achievement in product and engineering design, the CES Marketplaces that mirror new technology growth areas and Eureka Park where entrepreneurs and startups debut their ideas to the world. For more information, visit See you in Las Vegas. Gary Shapiro President and CEO 3DRONES AT A CROSSROADS By Bill Belt hen constructing modern airports, designers must be traveled roadways, government facilities and stadiums. Updated aware of a host of external factors. Among many other regulations are needed. Wconsiderations, prevailing winds and the availability of buildable land helps determine whether runways are aligned Privacy concerns also weigh heavily in discussions related to the in parallel or whether runways are intersecting. Often, parallel future of drones. Individuals have an expectation of privacy in runways work best for getting the maximum number of aircraft many aspects of their lives, and rules must be crafted to ensure landed for a given period of time (all else being equal). In contrast, drones to not interfere with our desire for privacy. Sensible regula- intersecting runways are more common at older airports, and at tions can help address many privacy concerns. smaller airports. Security technologies can similarly impact safety and privacy Intersecting runways lead to converging flight paths, producing concerns. For example, settings that limit maximum altitude can a virtual “intersection in the sky.” The risk of air travel in these be incorporated into drones. Geo-fencing can prevent drones from intersections is slightly increased. The development of low-cost, flying into sensitive airspace. “Sense and avoid” technologies can high-quality consumer drones has produced a new category of minimize the chances of mid-air collisions. products and potential services unthinkable even a few short years ago. But like intersecting runways at an airport, the technology The “right” regulatory environment will combine progressive regu- and the underlying policies governing its use are at a dangerous lations with technology solutions without sacrificing the benefits crossroads. Safety, security, and privacy concerns are all converg- of this new technology. This is a billion dollar technology industry ing in a way that will shape the future of this technology for many literally just waiting to take off. Drones will produce a dynamic years to come. market with tremendous growth potential, especially once final FAA rules are established. Continued industry and FAA coopera- In May, CTA predicted that the U.S. will reach one million un- tion to achieve low-risk drone use will be achieved by combining manned aircraft flights per day within the next 20 years, given the technology solutions with the right regulatory structure. right regulatory environment. In contrast, over-regulation will have a dramatically negative effect More recently, a Federal Aviation Administration (FAA) spokes- on the potential of the drone marketplace. Worst of all, a patch- man predicted that one million drones could be sold during the work of local laws is already developing, threatening to further 2015 holiday season. Good news, indeed, for manufacturers and confuse the regulatory landscape. Like intersecting runways at an retailers, but likely raising additional concerns and pressures for airport, the convergence of safety, security and privacy concerns those tasked with protecting airspace and the security and privacy will have a huge impact on the future of drones. n of critical infrastructure and individuals. This year has seen a rash of news stories raising concerns – from drones flying too close to airports, drone flights hampering firefighting in national forests, Drones at CES 2016 and even a few personal injuries. The pressure to contain risks is • CTA’s Drone Policy and Innovation conference track at CES increasing just as the public is becoming more fascinated by the explores the rules needed regarding the safe operation of technology and its potential. unmanned aircraft in the national airspace, and new systems for managing drones must account for security and privacy. So what is the “right” regulatory environment that can balance Hear from experts and innovators about how these challeng- safety, security and privacy between existing concerns and the fu- es are being met as drones take flight globally. ture benefits to the drone marketplace? The FAA is developing new rules to govern recreational drone use. For example, the FAA must Find out more at review airspace rules and procedures to ensure they are up-to-date and account for drone use. Limits on flying height and strict rules for flying near airports are critical to protecting other flight opera- tions. Other infrastructure must also be protected such as power stations, water treatment facilities, correctional facilities, heavily ™ Consumer Technology Association (CTA) 4WHAT’S ON THE HORIZON FOR VIRTUAL REALITY? By Jack Cutts hen most people think of the future of virtual reality assuredly preparing digital content to make use of the full sensory (VR), their minds immediately jump to video gam- experience that VR offers. Early players in the VR space, namely Wing as the future of the technology. Indeed, much of Oculus and Samsung, also offer fully immersive movie theater ex- the current hype and investment surrounding the world of VR periences. Current owners of Samsung’s Gear VR, for example, can deals with gaming as the first product likely to make it to market. load up some movies on their device and find themselves sitting in However there are a number of alternative uses for virtual reality a 360-degree virtual movie theater with their chosen content play- – and its sister technology augmented reality (AR) – that portend ing on the screen in front of them. Early demos have also featured a bright future as “the next big thing” in consumer technology, 360-degree concert experiences. enterprise IT and computing in general. In fact, CTA projects that the smart eyewear market (overwhelmingly composed of VR and In order to enable the best VR entertainment experience possible, AR devices) will be more than 500 million by the end of 2016. a small industry of 360-degree cameras (like those seen at the 2015 CES from 360fly, Ricoh and Blackloud) has popped up to fill the Among the market leaders in the augmented reality space is future demand for content that can be viewed in all its glory. While Microsoft with its HoloLens product. First introduced in early VR gaming experiences are rendered in software, movies and other 2015, the HoloLens’ defining feature is that, rather than subsum- video content viewed in 360 degrees must be filmed in 360 degrees, ing the user’s entire field of vision a la virtual reality, the device necessitating complicated camera rigs and software to help stitch allows the wearer to see through the lenses while overlaying other reality back together in digital form. content onto the physical world. Imagine an editorial team at a magazine, for example, editing copy virtually, together with pages When it comes to virtual and augmented reality, the consumer and photos overlaid on the walls of a conference room. Beyond a technology industry is doing what it does best: pushing the simple overlay, however, objects viewed through HoloLens can be envelope of what we think is possible. The hundreds of uses for made interactive. So a medical student looking at a 3D model of a this promising technology (and those that haven’t been dreamed human kidney can walk around it or open the kidney to see it from up yet) ensure that everyone will get to experience the technology the inside out. first-hand very soon. n Other players in the augmented reality space include Google with its Glass product, first introduced in 2013. Glass is a more tradi- Virtual Reality at CES 2016 tional take on augmented reality, focused specifically on overlay- ing information onto the physical world. Developers for the Glass • See where gaming, virtual reality and augmented reality con- platform have dreamed up hundreds of unique uses for the device nect in the Gaming & Virtual Reality Marketplace at CES Tech East. Whether it’s the launch of the next wave of immersive including instant facial recognition, life logging and virtual tours multimedia for virtual reality systems and environments for prospective home buyers to enter a home without actually be- or gaming hardware, software and accessories designed ing there. for mobile, PC’s or consoles, these exhibitors will energize, empower and excite. While virtual reality-based gaming is the most popular near-term use for the immersive technology, there are other potential block- Find out more at buster markets out there. Purveyors of adult entertainment are 5IT’S ALL ABOUT CONTEXT By Rick Kowalski ur smart devices are getting smarter. University, created the definition of context-aware comput- ing that most computer scientists use today. According to Dey, OAs sensors and chips are added to more devices, they context is “any information that can be used to characterize the are forming a digital representation of the world around us. situation of an entity. An entity is a person, place or object that Each connected sensor can collect and communicate data is considered relevant to the interaction between a user and an enabling other devices to act on that data to predict patterns in application, including the user and applications themselves.” our lives. Dey further says that “a system is context-aware if it uses The apps on our phones, once a fragmented collection of context to provide relevant information and/or services to the independent programs, are becoming more accessible from user, where relevancy depends on the user’s task.” These broad our device home page. Mobile phones can quickly connect to definitions encompass the capabilities of technologies available information contained deep within our apps easily launching today, namely: embedded sensors and the Internet itself. programs with quick vocal commands. The concept of context-aware computing has been around for There have also been recent advances in how information is a couple of decades. Screensavers, autocorrect and motion- connected across the Internet. Experts in machine learning and detection lights, as simple as they are, can be considered early artificial intelligence are building vast databases of structured examples. Increasingly helpful implementations began to knowledge about the world that can be tapped into by our emerge when smartphones hit the market; location-based devices in an instant. applications were probably the most impressive demonstration. Using GPS chips and compass sensors, smartphone owners Developments in natural language processing – a field which soon discovered how easy it is to navigate without a paper map. helps computers better interpret the ambiguities in human It’s hard to imagine living without navigation systems now. expressions – are driving more robust voice recognition on devices and are helping convert search inquiries into meaning- Waze, a smart navigation app purchased by Google in 2013, ful answers. adds several new dimensions to its context-awareness. It uses traffic and location data, along with user-submitted tips on Collectively, these trends are making it easier to interact with driving conditions, to optimize driving routes and alert drivers. our devices more fluidly. Smart devices are getting more intel- It also learns new routes based on observations of drivers in the ligent because they are gaining a better ‘understanding’ of the area. By incorporating a variety of contextual cues, Waze can context in which they operate. With this increased intelligence, map a route that might be able to outperform the most experi- these smarter devices can proactively deliver relevant informa- enced taxi driver in your area. tion quicker than before, and make it simpler for us to program them to suit our needs. Many mobile device keyboards now come with context-aware solutions. Pre-QWERTY text messaging required mastery of This intelligence boost comes with good timing. A number of the alphabet via a nine-digit keypad. T9 texting introduced new devices on the market require us to interact with them predictive elements that would recommend full words to select in novel ways. Smart watches, with their smaller screens, are from as you typed, basing its recommendations on a database pushing us towards vocal interaction rather than touch control of the most common words and letter combinations. Today, and typing. Connectivity in cars also demands a better vocal in- QWERTY keyboards can learn vocabulary from your common terface for the sake of safety. There are even screen-less devices expressions and will actively incorporate multi-word expres- now in which all interaction is vocal. sions in its database. Context-Aware Anticipatory context-awareness is beginning to emerge now. In The key tech trend that will improve our interactions with the case of typing on smartphones, software is predicting what devices is context-aware computing. Anind K. Dey, director of you will want to do in the next second or two. Newer devices the Human-Computer Interaction Institute at Carnegie Mellon will predict what you would like to do in the next several days. ™ Consumer Technology Association (CTA) 6Smart thermostats, such as Nest, gather information about Top Desired Tasks For Virtual a person’s presence in the home during the day using mo- Personal Assistants tion sensors. Using the time of day and a few extra inputs by the user (desired temperature and times to stay off), the Nest Any (Net) 78% builds a contextual model of when heating and cooling may be needed. The thermostat learns the typical patterns of presence Reporting the news or weather 39 in the home and times the optimal temperature based on a person’s arrival and departure. Performing calling or texting 38 functions by voice command The predictive power of context-aware computing is one of Providing dining and entertainment 28 the features that make it useful. The idea is that devices can recommendations based on location accurately act on our behalf in a way that saves time and effort. Scheduling and time management 22 Software developers are beginning to build predictive features into personal digital assistants on our mobile devices. Answering questions about music, 21 movies or TV shows Many of the examples mentioned above are sensor-driven ac- Providing shopping recommendations 17 tions. However, there are more examples on the horizon which and deals pertaining to the recommended retailers include sensor data with the information on our devices as well as on the Internet. Personal assistants such as Siri, Google Now Summarizing trends and 5 conversations on your social and Cortana are making natural language processing, voice media accounts interaction and information delivery relevant to context-aware None of these 21 computing in big ways. 2 Don’t know/Refused Enter the Assistants People are increasingly looking at their tablets and smart- phones for answers. According to comScore, more than 18 bil- Source: CTA Market Research lion searches were performed on mobile devices in the fourth quarter of 2014 in the U.S., a 20 percent increase from the prior assistant to provide dining and entertainment recommenda- year. In May 2015, Google announced that most searches in the tions, while 22 percent would like it to handle scheduling and U.S. take place on mobile devices. time management tasks. Mobile operating systems are paying attention to this trend In the summer of 2015, Apple, Google and Microsoft made and there are a few reasons why they should. First, if they can major announcements about their respective personal assistant improve the search experience for users, they can increase programs for their operating systems. They address some of the customer satisfaction and loyalty for their platform. Second, top desired tasks in the CTA survey, but also add a few more they also stand to win business from marketers and retailers if items to their skillsets. Many of the new features promise seam- they can more efficiently deliver customers to their sites and less integration of content contained within the apps on your phone. The new features also demonstrate better understand- content. Third, they are the first interface that a consumer sees ing of natural language and voice commands. before diving into the Internet, creating an opportunity to sway consumers towards their respective ecosystems of content and software offerings. Siri In June 2015, Apple announced that its personal assistant, Siri, The race for better search interfaces is on, and developers see was being upgraded with iOS Proactive Assistant software to make it smarter. Siri will know when you get in your car or personal assistants as the main focus. Many consumers are when you go to the gym, and it will trigger certain functions or already familiar with using the personal assistant on their notifications without you having to touch the phone. You can phones, with four out of 10 cellphone users reporting that they program Proactive Assistant to play certain playlists or pod- have used it at some time and 13 percent saying that they use casts based on location. Siri is improving its natural language it daily. These rates will likely increase as personal assistants processing as well. If you tell it to show you photos of Vegas last improve at delivering information and completing tasks. winter, it will know which photos were taken near Vegas and when, and it will display them. What do consumers want out of a personal assistant? Roughly four in 10 cellphone users (39 percent) want personal assistants Siri will also be able to grab information buried within your to report the news and weather, and a similar number want apps. Ask it for a recipe, and it will pull from your cooking app. them to perform calling and texting functions by voice com- When asked a question, Siri will look for a local resource (an mand. Twenty-eight percent of respondents want a personal app) for the answer. 7of 92 percent and 95 percent, respectively, in their voice-to-text Cortana transcription. Similar to autocorrecting features in texting apps, Microsoft’s personal assistant, Cortana, hit mobile devices these transcribers are capable of correcting their interpretation in 2014. The software company has big plans in store for its of your spoken words in context of your other words as you are personal assistant in the rollout of Windows 10. Cortana will be speaking. This is a smart feature, but closing the last 10 percent featured on every new device running Windows. gap in accuracy will be an important goal for developers. Cortana offers similar features and functionality as Siri, but in One limitation of voice transcription is that it currently func- an effort to increase personalization, Microsoft has included tions at the phrase- or single-sentence level of analysis. This a notebook in which you can add your favorite places, food, doesn’t offer a great deal of context with which to conduct an people and news items. Cortana can draw upon this notebook accurate search. Software engineers have addressed this prob- to better cater to your activities and lifestyle. Further, Cortana lem by allowing the assistant to ask follow-up questions, such will learn more about your preferences as you interact with it. as “Did you mean…?’’ By adding two-way communication to For instance, if Cortana notices that you search for a news topic the interface when ambiguity is detected, personal assistants or a band often, it will ask you if you want alerts on that topic. can get more contextual hints when necessary. While vocal search is geared towards shorter inquiries, analysis Google Now on Tap of larger bodies of text is becoming possible. Each of the new Apple and Microsoft have chosen to give their personal assis- versions of mobile personal assistants can access the text on the tants names, which lends to a notion of a personal interaction mobile screen and use that as a hint to guess your next action with the device. While the Android operating system sports its on the phone. This can include analysis of text in an email in own human voice, it does not have a human name. But there order to identify key topics of interest. is plenty of intelligence on display in the upcoming version of Android, named “Marshmallow.” The ability to derive meaning from larger bodies of text has other implications. Given more than a single phrase, a computer Google Now was introduced in 2012 as an Android feature with can begin to recognize tone, sentiment, communication style predictive and contextual capabilities. The latest upgrade to this and intent. Crystal Project Inc. is taking advantage of real-time software is called Google Now on Tap, named after the simple text analysis to help people write better emails. Crystal assigns tap of the home button which allows you to find information personal communication styles to each person in your network and apps related to whatever you are currently doing on the and will recommend revisions to your emails to better comple- phone. For example, if you get an email from somebody about ment the recipient’s style. This is incredibly helpful in busy a new band or movie, you can tap and hold the home button work environments where emails are easily overlooked. and Google will determine the primary context of your con- versation and pull up relevant information about that band or It is feasible to share a great deal of verbal and written material movie, either drawing from other apps on your phone or from with our devices in order to enrich context-awareness. But how the Internet. much are we comfortable with sharing? Apple says all data min- ing will happen on the phone only, and won’t be shared outside When viewing photos, you can tap and hold and it will tell you of the device. For this type of computing to be valuable, it will where that photo was taken. You can ask it to show you more need to have some information about you and your activities. pictures of that location by simply saying “show me more pic- Users will have to determine the balance between the informa- tures of this place,” and it will show you top search results for tion they give versus the value they will receive in return. that location without you having to explicitly say the name of the place. It understands the context of what you are doing on your phone at the moment and works that into its search and Structured Knowledge Bases results algorithms. Devices can derive context at the local level, but they are also able to take the wealth of information available on the Internet These are early glimpses of a new wave of context-aware appli- as input. But the Internet is a messy and chaotic place; inac- cations on our devices. They show promise in quickly retriev- curate information abounds. When you search for something ing the information we seek with little effort on our part. But online, it’s not in a personal assistant’s best interest to deliver they also show a trend in proactive assistance from our devices. a list of Web pages in which to get lost. It needs to give you an There are several major developments in computing that are answer – and hopefully the right one. Devices will make use contributing to these capabilities. They aren’t without their of custom-built knowledge bases in order to best answer your challenges. Developers will have to work out a few kinks. questions. Google’s Knowledge Graph hopes to provide all the answers. Natural Language Processing Voice processing and natural language processing will be Knowledge Graph goes beyond the function of a search engine. crucial technologies for ensuring positive and meaningful Instead of merely determining website relevancy by the concur- interactions with our devices. Voice-to-text was a major first rency of search terms on a page, it uses machine learning to step in this area. Google and Apple now claim accuracy levels apply structure to the information held within Web pages and ™ Consumer Technology Association (CTA) 8correlates entities and facts across those pages. If you have run a Expect these companies to make more deals and acquire tal- Google search and seen a box at the top or right of your results ent in the artificial intelligence (AI) arena. Google’s purchase that answers your question before you have to click on a results of AI startup DeepMind in 2014 is just one indication of this link, then you have seen the power of this database. trend. Apple is usually secretive about its acquisitions, but they confirmed reports of a late 2013 purchase of automatic speech There are a couple of competitors to Knowledge Graph. Diffbot recognition company Novauris Technologies. Microsoft’s claims to offer a larger knowledge base than Google, and is deep-learning project, Adam, is an in-house effort to improve currently used by Bing and Duck Duck Go for certain types of computer tasks such as image recognition while reducing the searches. Grafiq (formerly known as FindTheBest) is another required processing power. These are just a few examples of company offering a large database of structured information. how companies are analyzing and making sense of user-gener- The billions of facts contained within these repositories will ated content and data. greatly enhance context-awareness in our personal devices. Engineers just need to figure out the best way to incorporate Facebook could very well look to make a move in this space as real-time information about our activities and location with well. The company is now test running a messaging assistant these databases. called ‘M’ which can book reservations and purchase items on the user’s behalf. The small trial currently relies on people to carry out the final transaction, but it uses AI to find the best Choose Your Own Context information and services. Time will tell whether the service is Much of the push behind context-aware computing is to be scalable. With nearly a billion daily active users, it is likely that able to predict and stay one step ahead of the user, anticipat- the social media giant will try to tap into the potential of help- ing needs at any given time. Mobile platforms can gather a ing handle transactions on the Web. good amount of data on how users search for information, so in some cases they can easily create proactive elements to their software. But form factors and use-case scenarios are ever- The Future in Context changing, especially with recent developments in smart watches Context-aware applications will proliferate on computing and in-vehicle integration of mobile devices. Software develop- devices such as PCs, mobile phones and tablets. According to ers will need to observe how people are using their devices in CTA Market Research, worldwide smartphone shipments will these situations. rise from an astounding 1.3 billion units in 2015 to 1.7 billion units in 2019. PCs of all shapes and sizes will maintain a steady Developers must also be aware that users may not find context- stream of shipments, rising from 430 million units in 2015 to aware actions useful, and in some cases they may even find 437 million in 2019 worldwide. them confusing or unwanted. Albrecht Schmidt, professor of human-computer interaction at the University of Stuttgart, Smart Watch Shipments, Worldwide recommends adding elements of transparency when imple- Unit Sales to Dealers (thousands) menting context-aware triggers. Take the example where Siri chooses a fast-paced playlist for you when you visit the gym. A transparent action would let the user know why it chose that playlist, and may allow you to change the default action. To some extent, developers will have to make users aware of the 25,954 contexts that can trigger actions on their devices. Web startup IFTTT has created a growing community of users who real- 24,032 ize how useful context-triggered actions can be. IFTTT allows 19,632 users to set up ‘recipes’ that trigger an action on one Web-based 15,101 service when something happens on another service. Collec- 11,186 tively, users have created millions of productivity tasks through 3,925 the site. Mobile developers may be able to tap into this type of enthusiasm and help facilitate context-triggered actions, put- 2014 2015 2016 2017 2018 2019 ting the power in the hands of the user. Source: CTA Market Research Key Players Overseeing the leading operating systems, Microsoft, Apple and The context-aware trend will likely branch out to other devices, Google are leading the charge in context-aware computing. The as TVs, smart watches and cars include personal assistant magnitude of each of these ecosystems allows for each company interfaces. On the wearable front, smart watches are a great to monitor and learn from a huge amount of data generated by opportunity for context-aware keyboards and voice interaction. those using their platforms. But to make sense of that data, they Worldwide shipments of smart watches are expected to grow will likely have to tap the market for specific skills in computer from 11 million units shipped in 2015 to nearly 26 million science. units in 2019. 9Solutions that help integrate smartphones into the vehicle is in programming itself, consumers will likely be given more may also impact the success of context-aware software. The options to set up triggered actions to suit their needs. hands-free nature of voice interaction lends itself to a safer driving experience. While some car manufacturers are building You may just want to introduce yourself to your personal as- proprietary personal assistant software into their newer models, sistant now, because one thing is for sure: if you haven’t met others are also including screen-mirroring technology to pull yet, you will soon. They are coming to your device before long, smartphone interactions into the vehicle’s main screen and ready to assist and show off their new abilities. n audio system. Sensors at CES 2016 Screen Projections in Vehicles Installed Base, Cars With Android Auto, • The Lifestyle Technology conference track allows attendees Apple CarPlay, or MirrorLink (millions) to dive deeper into the evolution of sensors and wearables. 85 • The Internet of MEMS and Sensors conference track, pre- sented by MEMS Industry Group, features sessions related to the growth and future trends for sensor technology. Find out how MEMS/sensors technology is advancing user func- tionality in new and existing classes of applications fueling consumer demand. Find out more at 2.6 2015 2020 Source: IHS These solutions are just beginning to take hold. IHS says that 2.6 million vehicles will have screen projection capabilities in 2015, which includes Android Auto, Apple CarPlay and Mirror- Link. They forecast this to rise to 85 million vehicles in 2020. Consumer Outlook Our devices are now connected to a vast network of human knowledge, real-time data, and artificial intelligence capabili- ties. Developers are in the midst of integrating these resources while exploring new applications and use-case scenarios. The personal digital assistant appears to be the face of these new technologies, here to improve our search experience by incor- porating more information about our world and our day-to- day activities. In the short term, consumers can expect fewer clicks, taps and swipes on the device screen (if the device even has one). The personal assistants now emerging will try to stay one step ahead of the user, making suggestions and recommendations as to where to go next to find an answer. Often this next step will point directly to information within an app on the device rather than supplying a list of links in a search engine. Users will see fewer Web pages altogether, as the device will attempt to deliver an answer immediately. Consumers will also likely see more options when it comes to customizing and personalizing their device’s actions based on specific situations. If the device notices that you often visit a particular location, it may ask you if you would like it to per- form an action the next time you go there. It may even recom- mend specific actions. Regardless of how proactive the device ™ Consumer Technology Association (CTA) 10THE NEW FACE OF RETAIL By Justin Siraj echnology is affecting every part of our life in one way The Connected Store or another. It has changed the way we interact with one Most of us have heard about the Internet of Things (IoT) and how Tanother, perform everyday tasks, track our activity and it involves everyday physical objects that connect to the Internet organize our daily lives. and talk to one other. A lot of what we hear about IoT has to do with smart homes, wearables and automobiles. But think about Over the past 20 years technology has shifted the way consumers leaving your personal boundaries and having your devices talk to interact with retailers. Many would think that the future of retail the world around you. For example, what if you passed a grocery is online and that soon brick-and-mortar stores will be phased store and your phone alerts you to pick up eggs because you ran out. That is not the case. According to the International Council out this morning. Or you pass your favorite clothing store and of Shopping Centers, 78 percent of consumers still prefer to shop receive a text that the shirt you have on your wish list was just put in-store, spending about 1,500 more per month in a brick-and- on sale. This is starting to happen now as retailers are changing the mortar location than online. way that they interact with consumers. However, online retail – or e-commerce – still continues to grow and play a huge role in the retail sector. According to estimates by What type of store would beacons the U.S. Commerce Department, online sales for e-retailers totaled be most useful in? more than 300 billion in 2015, up 15.4 percent from 2013. Not to 68% mention the growing popularity of “Cyber Monday” and Amazon’s 65 newly introduced Prime Day. 55 48 But what the future of retail has in store is not more separation between the two forms of retail we have grown accustomed to, it is the convergence of e-commerce and brick-and-mortar stores. The rise of the Internet of Things, ambitious entrepreneurs and general growth of the consumer technology industry has led to – and will 13 13 continue – the advancement of retail for both consumers and retailers. Mass merchant Electronics Home Office supply Other Don’t know stores (Target, stores improvement stores Developments in beacons and trackers are taking shopping to a Walmart stores whole new level for consumers and are providing retailers with vital information to accelerate productivity. Mobile payments are Source: CTA Market Research starting to become normal with the introduction of new services ® like Apple Pay and the evolution of Near Field Communication Beacons, defined by Bluetooth , are small objects that transmit (NFC) payments and Wireless Application Protocol. location information to smartphones and make use of a mobile wallet, mobile couponing and location-based services. This up- Customer service is being taken to the next level with artificial and-coming technology is transforming the retail space into a intelligence, personal assistants and virtual reality (VR). Most connected experience. According to Bluetooth, the retail space is importantly, what products are being sold at our favorite stores the first to envision a future for beacons, using them for everything is changing. New product areas are calling for shelf space and from in-store analytics to proximity marketing, indoor navigation soon products like drones and 3D printing will be as common as and contactless payments. televisions or computers in retail stores. The world we are living in is changing and it is changing fast. We are no longer just shopping “Parks Associates expects Bluetooth to play a much larger role in the mobile wallet ecosystem. Not only does Bluetooth Smart have for the latest technology. We are shopping in and with the greatest support from major players like PayPal and Apple, but it also en- innovations. We live and shop in an advanced world now, but it ables three crucial mobile wallet functions: payment from mobile is nothing compared to the totally immersive experience we are phone to point-of-sale terminal, passive transmission of marketing heading towards. 11messages, and the ability to detect a consumer’s location in-store,” According to CTA’s survey, 53 percent of respondents said they says Jennifer Kent, senior analyst, Parks Associates. have used a mobile payment service in the past. Further, 70 percent of respondents between the ages of 18-34 have used a form of Estimote Beacons and Onyx Beacons are prominent developers in mobile payment, while only 46 percent of respondents over the age the beacon space and provide both the shopper and retailer with of 35 have. This generational gap shows the trend of how the pay- benefits. It allows the retailer to build mobile interactions with the ment paradigm is shifting to more of a contactless setting. customer by giving a recommended route around the store catered to the shoppers needs, recommend products that a shopper might However, when respondents were asked if they were comfortable like or show specifications of a product that a customer is interact- with replacing all forms of payment with mobile payment, only 29 ing with on a display nearby. percent said yes, while 66 percent said no. As far as the generational gap goes, 35 percent of respondents between the ages of 18-34 Estimote also allows retailers to analyze what areas of the store cus- were comfortable with mobile payment taking over all forms of tomers are drawn to and what products they are interacting with payment, while only 27 percent of respondents 35 and over were. the most by placing beacons on the actual product. Onyx offers a This response shows that mobile payment is a convenience, not a content management system that allows micro location-enabled solution. But retailers must be willing to offer this convenience to apps to be built around beacons. On a larger scale, mall operators stay competitive, relevant and consumer friendly. can place beacons at mall entrances to notify visitors about the lat- est sales, movies or mall events. The Digital Mobile Payments Influence Study conducted by Appin- ions confirmed that there was a significant increase in the volume In a recent survey conducted by CTA, 68 percent of respondents of influential conversations in relation to mobile payments in said that beacon technology would be most useful in mass mer- 2014 following Apple CEO Tim Cook’s announcement of interest chant stores such as Target or Walmart. Close behind, 65 percent in mobile payment. Cook has since said that by the end of 2015 and 55 percent of respondents thought beacon technology would roughly 1.5 million locations in the U.S. will be able to accept be most beneficial in electronics stores (Best Buy or hhgregg) or Apple Pay. home improvement stores (Home Depot or Lowes), respectively. The study also found that the top companies that are influencing In August, Target announced it will be testing beacon technology the mobile payments conversation are OpenTable, Starbucks, Ama- in 50 locations nationwide. The goal is to serve up timely deals zon, eBay, Chipotle and Whole Foods. Some of the top payment and recommendations on nearby products. “We’re excited to start services that are influencing the mobile payments discussion are using beacon technology to offer real-time, relevant content and PayPal, LevelUp, Braintree, Venmo, Square and Clinkle. services that can help make shopping at Target easier and more fun,” said Jason Goldberger, president of and Mobile. “This is another way Target is bridging mobile and stores, and You are comfortable with the idea using digital to enhance the in-store shopping experience. We look of mobile payment... forward to seeing how our guests respond to what we’ve built.” 28 28 CVS recently unveiled its Digital Innovation Lab in Boston, which 27% provides smart device-driven apps and devices to improve health care. “At CVS Health, everything we do is to help people on their path to better health, and digital technologies are an amazingly ef- fective way to achieve this,” said Brian Tilzer, senior vice president and chief digital officer for CVS Health. 10 5 According to Hilary Milnes of, CVS’ beacon tech- nology can remind users if a prescription is ready or in need of a refill. Tilzer added, “Digital technologies are ubiquitous and highly Strongly agree Somewhat Neutral Somewhat Strongly configurable – a powerful combination, because it allows us to agree disagree disagree empower our customers anytime and anywhere.” Source: CTA Market Research A Contactless World Starbucks offers a great example of how mobile payment is inte- As a society we have moved from carrying cash, to checks, to cards grating its way into retail stores. The popular coffee company of- and now to…nothing. We are trending towards a future where the only possession we need to do almost anything is our smartphone. fers a number of ways to pay using a mobile device which includes The ubiquity of mobile devices is changing the way retailers do a Starbucks app and Square Wallet. The app allows customers to business with customers, because more options need to be avail- scan a barcode on the apps screen to make a payment, offers digital able and more technology is needed to accommodate different tipping through push notifications and features a loyalty program forms of payment. With the introduction of services like Apple for customers who use the app. Square Wallet can also be used to Pay, Google Wallet, PayPal, Venmo, Square and Stripe, the options link to a debit or credit card. Customers just tap “pay here” and a are endless for sending or receiving payment. QR code appears that customers can scan at Starbucks. ™ Consumer Technology Association (CTA) 12Grocery giant Whole Foods followed in Starbucks’ footsteps and higher disposable incomes and the opportunity to provide more partnered with Square to let customers pay through iPads and personalized experiences through loyalty schemes. smartphones. “Whole Foods Market and Square share a focus on A main concern of mobile payment is security and having personal supporting local sellers and creating amazing shopping experi- information shared in the “cloud.” The advantage that contactless, ences,” said Jack Dorsey, co-founder and CEO of Square. “With or NFC, transactions have is that a unique code is produced and Square, Whole Foods Market will enable commerce in more parts sent to the merchant. This way the credit card number is never of their stores with easy, accessible tools that showcase the best of given to the merchant and the unique code is only good for that what’s achievable in the service of retailers and customers.” Ac- specific transaction. For even more security, a fingerprint, eye scan cording to a press release, several Whole Foods Markets will serve or heart rate sensor can provide additional protection. as test locations in order to enhance the experience and meet the needs of shoppers. Robots and Virtual Reality Mobile payment and beacons are not the only things changing the shopping experience. The introduction of robotics and VR is You are comfortable using beacons while shopping making its way out of homes and into the retail space. These tech- Don’t Know nologies are ushering in a new era of retail customer service that is 4% more interactive, intuitive and helpful than ever before. Strongly Agree In a recent interview with It is Innovation (i3), Lowe’s Innovation 16% Strongly Labs’ Executive Director Kyle Nel talked about how Lowe’s is rede- Disagree fining the retail experience. “We are living in an exponential world 30% Somewhat Agree where things are changing at faster rates because of Moore’s Law in 28% business and society,” says Nel. “To stay relevant, and hopefully to grow, you have to become an exponential organization to ride that Somewhat curve.” Disagree Neutral 13% 9% Lowe’s recently partnered with robotics startup Fellow Robots to build the OSHbot, a retail robot that is fully autonomous. “They Source: CTA Market Research roll up to you and talk in a fully natural way and say, ‘Hi I’m OSH- bot, can I help you?’” says Nel. “You could say, ‘Yes, I’m looking for hammers’ and the robot can autonomously navigate you to that spot.” The OSHbot also has a 3D sensing camera so it can recog- You are comfortable replacing all forms of payment nize products held up to it, speaks English and other languages, with mobile payment and has obstacle avoidance. Nel believes that with technology the shopping experience will become more intuitive in the next five Don’t Know 2% years. “It will also allow people to interact in the store,” says Nel. “The robot is the best example of something dramatically new and Strongly different that will open up a whole new realm of possibilities where Agree 15% they just didn’t exist before.” Somewhat Agree Strongly Disagree 14% But robots can work for more than just customers; they can also 50% be a huge assistance to employees. According to a whitepaper by Neutral Somewhat 4% Dr. Swagat Kumar, Head of Robotics Research Group, TCS, the Disagree 15% use of robots can extend to supporting faster order fulfillment, minimizing out-of-stock scenarios, ensuring planogram compli- ance, and mitigating shrinkage and theft. Kumar says that Amazon Source: CTA Market Research has installed 15,000 robots across 10 warehouses in the U.S. to get packages out more quickly, but that doesn’t mean that it can only A study by Juniper Research shows that mobile wallets using con- be used by big box retailers. “A medium-sized retail store may pre- tactless tech is predicted to rise to 200 million by the end of 2016. fer using a simple robot for basic monitoring and stock assessment Deloitte predicts that by the end of 2015, five percent of 600 to 650 on shelves,” the whitepaper states. “On the other hand, a big box million NFC-equipped phones will be used at least once a month retailer may opt for services that offer special capabilities such as to make contactless payments in a retail outlet. According to interacting with customers through speech and vision.” Deloitte, NFC phone payments offer continuity and improvement to financial institutions’ business models. Deloitte says retailers Along with robotics, VR and AR are also changing the customer should consider four benefits: reducing the need to protect cus- service and retail shopping scene by creating an immersive shop- tomer data, the higher speed of contactless transactions compared ping atmosphere merging the brick-and-mortar experience with to other forms of payment, the ability to attract customers with the e-commerce experience. According to data from Juniper 13Research, 60 million users across smartphones, tablets and smart Before our eyes, the world is transforming into a totally interactive glasses used augmented reality apps in 2014 and this number is environment where we can engage with our surroundings. The expected to more than triple to 200 million unique users by 2018. metamorphosis of retail can also be best described as a rebirth. As brick-and-mortar stores and ecommerce have been growing apart In the auto space, companies like Volvo and Jaguar Land Rover in the past, new technology is merging both aspects of retail to are using VR to give their shoppers an engaging experience. Volvo maximize profit, customer service and demand. We no longer have introduced its Google Cardboard test drive, which lets people take to wait for the future, the future is happening right now. n a Volvo on a test drive regardless of location. All that is needed is a smartphone and the app to experience the test drive, which also works without Google Cardboard. Jaguar Land Rover introduced Retail at CES 2016 its Virtual Experience, an interactive digital vehicle showroom. Ac- cording to a press release, “using a touchpad screen, the customer • The eCommerce Marketplace, presented by MasterCard, will can select model, equipment grade and feature preferences, which show innovative solutions that disrupt the traditional shop- Virtual Experience renders as an ultra-high resolution, real-time ping experience. Mobile payment apps, shopping platforms, 3D image and leveraging a ground breaking five million polygons.” mobile concierge services and cloud solutions showcase what’s next. Lowe’s and Azek are using virtual and augmented reality to make • T oday’s technology is challenging, sophisticated and specific home improvement projects easier for consumers. Lowes’ Holo- to different markets. Check out the Creating and Selling room is a 3D augmented reality virtual room that allows shoppers Tech conference session and hear from industry insiders as to design a room and literally walk into it while working with a they reveal the new ways we are creating, using and selling trained sales associate for assistance. According to a case study technology. done by Marxent, “The experience of designing and stepping into • The fir st Digital Money Forum conference track at CES a 3D Augmented Reality room builds enthusiasm for the purchase, explores cashless payment systems, virtual currencies and and the 3D view helps shoppers confirm their product selections. paper currencies demise. Custom Holoroom analytics allow Lowe’s to drive future decisions based on user behavior.” Find out more at Similar to the Lowe’s Holoroom, Azek is an augmented reality home improvement app that lets users visualize and plan a home improvement project on a tablet. According to Marxent, “AZEK 2.0 expands upon the initial 2D/3D Augmented Reality visualiza- tion tools in the AZEK 3D AR home improvement app with added Shelf Space wood selections, finishes and railings.” Both of these tools allow for real-world visualization in a digital setting. One of the hottest and most popular technology products on the market right now are unmanned systems, or drones. According Companies like Magic Mirror and MemoryMirror are using aug- to CTA’s 2015 U.S. Consumer Electronics Sales and Forecasts, mented reality to show how clothes fit. This virtual dressing allows total sales for unmanned systems in 2014 were 299 million shoppers to send a photograph to share with friends for a second and are expected to reach 363 million by the end of 2015. opinion. This technology lets customers try on clothes that are dif- ferent colors, shapes, sizes and styles, while taking pictures which Best Buy recently announced that it would add more drones to are easy to compare and contrast. These “mirrors” can also be used its inventory and also increase promotion of drones as the in- for more than just digital fitting rooms; they can also be used for dustry grows. CTA estimates that more than 400,000 drones will be sold in 2015 at a price of 149 per unit. Seems like consum- digital signage to engage with customers. ers would mostly buy drones online, but they are now finding their way into brick-and-mortar stores. VR is also making it possible for retailers to test out different store layouts. Kantar Retail Virtual Reality is VR software that shows According to Frank Bi of Forbes, eBay has sold more than retailers different layouts, marketing displays, product packaging 127,000 drones worth 16.6 million since last March. Un- and customer flow within the store. It makes the marketing process manned Systems are slated to earn 443 million in 2016, more efficient and lets teams weigh different options or take sug- says CTA. gestions from customers for instant feedback through the software. What Does it all Mean? The growth, emergence and adaption of retail technology is pro- pelling the retail industry as well as fostering the consumer tech- nology industry. In-store beacons, mobile payment, robots, virtual reality and drones once sounded like distant, futuristic words. They are now part of our everyday vocabulary and we have the pleasant opportunity to use these technologies in our daily lives. ™ Consumer Technology Association (CTA) 14HOME IS WHERE THE SMART IS By Mark Chisholm he world of divided, individually connected devices in locks on the front door. Through an app equipped with security the home has fallen away. It has been replaced by a new options, using a thumb print or security code, you unlock the door Tage of the smart home, complete with an array of de- before reaching the front steps. Should you have forgotten your vices connected not only to the user but to the cloud, as well as security code or if your phone had run out of batteries you also other sensors and devices found throughout the home. This new could either use a traditional key or access your security system interconnected reality is made possible by the spread of broadband or intercom, equipped with a camera and an Internet connection. connections in homes and in our pockets, the emergence of the Another family member can view a video stream of the front porch cloud and the explosive growth of sensors that now surround us in on their mobile device, verify your identity and hit a button to nearly every aspect of our lives. unlock the doors for you, no matter whether they’re home or not. With all of these factors in place, the stage is set for the truly smart, As you enter the home, your phone receives a push notification. Not only has your inconsiderate family member stolen your spot connected home. Disparate, connected devices throughout the in the garage, but they’ve left the refrigerator door open. Thanks home can communicate both with each other and users, through to your connected fridge, you’re notified and stop by the kitchen a smart home controller or hub. Thanks to their ability to access to close the door. Part of you wonders how long the refrigerator information obtained from the cloud (through a home network), door has been open – you asked the system to only notify you or from other smart devices in the home – a form of connectivity when you’re within a reasonable range – and you remind yourself which has become known as the Internet of Things (IoT) – these that you could change that setting at any time. When you run to new additions to the smart home can enhance the consumer’s the grocery store later, the fridge will send you a reminder of your experience by taking control of their own home ecosystem. grocery list thanks to your smart home. Open House at the Smart Home Glancing out the kitchen window into your backyard, you wonder Imagine you are commuting home from work. Thanks to the why your automated sprinklers haven’t watered the lawn today. A quick check on a wall-mounted panel informs you that your con- GPS sensor on your smartphone – which has made a note of your nected sprinkler system was notified of emergency drought relief standard daily routine – the phone in your pocket begins making in your area, and that lawn watering is currently limited to two preparations for your arrival at home. First, it may decide to access days per week. Override at your own peril Another quick glance at your HVAC system through a connected thermostat – which has the panel informs you – thanks to your Parrot Flower Power smart opted to turn off your A/C to save power while you’re at the office flower pots – that your plants’ temperature, fertilizer, sunlight and – in order to tell it to bring the temperature down to a comfortable moisture needs are still being met. 70 degrees. Thanks to the thermostat being connected to the home network, your smartphone needs only a data connection to the In the bathroom, a smart water leak sensor keeps an eye on your greater Internet to contact the device – removing the need to be plumbing and a connected scale analyzes your weight and body within a certain range. mass index, and if you allow it, reports it to a physician or personal trainer. This data is subsequently used to formulate recommended Next, as you approach your home a smart garage door opener is dietary changes, which are then sent to your refrigerator’s gro- activated, allowing you access without the need to press a button. cery list. In the children’s bedroom, connected vital sign sensors Previously, garage door openers operated on unlicensed wireless are found anywhere from a baby’s sock (see Owlet’s Smart Baby spectrum known as “white spaces”, greatly reducing their range. Of Monitor, launched at the 2015 CES) to a stuffed companion (see course, your new connected garage door opener still can operate Teddy the Guardian, also launched at CES). These vitality sensors on such frequencies, but why wait for a click of the button when can convey information on a child’s well-being directly to your your home is aware of your location? mobile device. Another part of your home is looking out for your little one’s health as well: connected motion sensors surrounding Today, however, the garage door doesn’t open. It has recognized your outdoor pool help to put you at ease – no playing by the pool that another family member has arrived home first and is aware without adult supervision. Should a child wander into the pool that the garage is already full. No worries, after parking in the area, alerts simultaneously will pop up on your smart TV, com- driveway, you reach for your smartphone and activate your smart puter, connected stereo and smartphone. 15In your bedroom, sleep trackers in the form of wearables or Home Technology Shipments embedded in the mattress itself can measure and analyze sleep Dollar Sales to Dealers (millions) patterns, communicate with your alarm to wake you at the best 2012 2013 2014 2015e 2016p part of your sleep cycle and even tell your mattress to adjust the Home Technologies 1,529 1,700 1,844 1,757 1,845 firmness in order to help you sleep soundly. Keeping all safe within the home, of course, is a connected smoke, carbon monoxide and Connected Home Technologies 98 230 734 967 1,095 humidity detector. Home Security Solutions 3,915 3,994 4,114 4,464 4,687 Home Technology Total 5,542 5,924 6,692 7,188 7,627 This home knows who you are, where you are (whether inside Connected home technologies include IP/Wi-Fi cameras, connected thermostats, the home or out), what you want and what you need. This is the smart smoke detectors and carbon monoxide detectors, smart home systems, smart smart home of today, not tomorrow. All of these applications are locks, connected switches, dimmers and outlets. already available, and as CTA and Parks Associates explained in Source: CTA Market Research their recent study, Smart Home Ecosystem: IoT and Consumers, they In the Smart Home study, CTA also found that when respondents “represent the beginning, not the end, of a transformation in the management of systems and devices in the home.” were asked to cite three brands for smart home service providers, ADT and AT&T had the highest rates of unaided awareness as There is much to come. As the capabilities and applications of con- smart home service providers. “Among current owners of smart nected devices expand, each application has the potential to create home devices, methods of buying new products are diverse. There a multitude of others as each device and sensor begins communi- is a low rate for retail purchase and a relative high rate for acquisi- cating via the IoT. As the study states, “The potential breadth of ap- tion from security or broadband providers,” the study states. plications is nearly unlimited with available applications increasing routinely.” Connected Home Device Purchase Location Establishing the Smart Home Each of the elements for the smart home of today is here waiting From a security firm, such as ADT, 38% to be connected. Finding their way into the home is a challenge Protection One, etc. rooted in consumer education, ease of use and installation and In a retail store 30 industry standardization. CTA predicted in its U.S. Consumer Electronics Sales and Forecasts, July 2015 that connected total dol- lar sales to dealers of home technology will reach 7.63 billion in Online 13 2016, a modest six percent increase from the estimated total of 7.19 billion in 2015. The lion’s share of this total – 4.69 billion From a custom installer 11 – can be attributed to home security solutions, but looking back over the last five years, a dramatic increase in what CTA refers to as 8 Don’t know/Refused connected home technologies can be seen. Connected home technologies accounted for a meager 98 million Source: CTA Market Research in sales to dealers in 2012 (just 1.8 percent of the home technology total), but are forecast to reach 1.1 billion in 2016 (14.4 percent of 2016’s total). In the recent study, Smart Home Ecosystem: IoT and While purchase from a security firm remains the most popular Consumers, CTA states that 10 percent of all U.S. households have option, 38 percent remains a small figure, suggesting that consum- at least one smart home device. “Once a household has one smart ers may be unfamiliar with where to buy home technologies, or device, there is, on average, a 1-in-2 chance that same household intimidated by the perceived difficulty of installation. Awareness will acquire another device within a year,” the study states. The of smart home technology itself is low, as CTA notes in its Smart likelihood of adoption is also affected by the age of the user. The Home study; “consumers struggle even more when asked to name recent survey conducted for Five Technology Trends to Watch found product manufacturers, unaided.” that adoption or interest in connected home devices fell with age, with the 18 to 24-year-old age group being the most likely to pur- Purchasing a smart home device at retail was the second most chase a connected home device. popular response. Lutron’s Co-Chief Executive Officer, Michael Pessina, had some advice for selling smart home devices at retail As more IoT applications arrive, we can expect to see connected locations, and for creating smart home displays, which he gave home technologies claim a larger piece of the total, but consumer during a recent interview with CTA’s It Is Innovation (i3) magazine. familiarity and suitable sales channels remain elusive for the time “We at Lutron are very involved in displays, and how our prod- being. In CTA’s survey, 38 percent of respondents said that they ucts are presented. Once a person experiences lighting control, would purchase a connected home device from a security firm they get it. But, it’s harder to explain that experience on a box, in such as ADT or Protection One, followed by retail locations at 30 an online message, or in a printed advertisement. There are a few percent. ™ Consumer Technology Association (CTA) 16things we consider to be essential for a successful retail operation: recent years. The Z-Wave Alliance, a group of 325 companies (as of 2015), has certified more than 1,350 products as compatible with The first is how you present the product; the second is what the the standard. Some of the Z-Wave Alliance’s principle members in- product looks like in a presentation; the third is the sales associate’s clude ADT, Ingersoll rand, FAKRO, LG Uplus and Sigma Designs. level of product knowledge.” Both ZigBee and Z-Wave take advantage of what is known as a Once consumers understand the technology, it still may take some “mesh” network, allowing one compatible device to relay the wire- time for them to become comfortable with smart home technol- less signal to another compatible device, extending the range of ogy. Connecting personal, everyday items to the Internet opens up the network. Not to be ignored in the wireless home networking privacy concerns (when devices like baby monitors equipped with discussion is Bluetooth Low Energy (BLE), marketed as Bluetooth video cameras come into play), and even security concerns when Smart, which is now being included in more products. considering technologies such as smart locks. CTA’s survey sug- gests that consumers are concerned about smart home technology, As can be seen by this long – but still incomplete – list of smart though perhaps not as concerned as one might expect. home protocols, there is some work to be done with making all the pieces of the smart home fit. Protocol Soup Not surprisingly, the most ubiquitous of wireless technologies, Wi- Another challenge for getting connected technology into the Fi has become a popular option for the smart home. While Wi-Fi home lies in the vast (and still growing) number of smart home is commonly the “backbone” of the smart home, as the devices will technologies. The earliest smart home protocols were based on access the home Wi-Fi network to communicate with the cloud powerline communication, meaning the data is carried on a physi- and devices outside the home, it is also an option for transmission cal wire that is also used for A/C electric power transmission. X10, of data between devices within the home. Wi-Fi, however, because a standard developed in 1975 by Pico Electronics, is an example of of its widespread nature, comes with bandwidth and interference a powerline protocol. Despite the development of a wireless radio- concerns as the home network gets more crowded. Wi-Fi also has a based version, this standard has become dated, as the data rate of higher power requirement than other protocols, making it unsuit- 20 bit/s remains low and installation is difficult. UPB, or Universal able for smaller, battery-powered smart home devices. Another Powerline Bus, is a powerline-based protocol with a higher data unavoidable downside to Wi-Fi as a smart home protocol is the rate of 480 bits/s, but the majority of recent protocols are wireless reality that broadband connections, and therefore Wi-Fi-based in nature. home networks, are subject to service outages. INSTEON, a smart home technology developed by Smartlabs Inc., Major players are stepping into the ring to unite these disparate is one protocol that looks to bridge the gap between wired and protocols for the benefit of consumers and manufacturers alike, wireless smart home technologies, as it is compatible with X10. including CTA’s TechHome Division which represents the channel Two of the biggest names in wireless smart home tech are ZigBee for home control, entertainment and networking products, includ- and Z-Wave. ZigBee, a specification first conceived by IEEE in 1998 ing installers, distributors and manufacturers. CTA developed and standardized in 2003, is a low-power wireless protocol with a the TechHome Rating System, which lays out the technological data rate of up to 250 kbit/s and a range of up to 100m. Z-Wave infrastructure that needs to be installed in a home in order to fulfill is a similar but comparatively new protocol – operating on the a homeowners’ digital wish list. R10 standards committee – a com- 908.42 MHz frequency – that has gained a great deal of traction in mittee comprised of CTA and CEDIA members, strives to establish bulletins and standards for design and installation of residential systems. Outside of CTA, another group looking to deliver stan- Level of Comfort Using Smart Home Products dards as well as open source solutions is the Open Interconnect Consortium, which includes such big names as Broadcom, Intel and Samsung Electronics. Connected security system 57% (with camera) New Category Revenue Projections and Growth Impact Connected security system 56 (Revenue in millions) (without camera) 2014 2015e 2016p Wi-Fi-enabled smoke, carbon 56 monoxide or humidity sensors Connected Thermostats 187 222 249 Wi-Fi-enabled thermostat or lighting IP Cameras 65 76 84 54 Source: CTA Market Research Digital or Wi-Fi-enabled door or 45 garage entry control “A major barrier to realizing the full promise of the Internet of Wi-Fi-enabled appliances (such as Things is the absence of a unified community and universal 43 washer, dryer, refridgerator or oven) framework that prioritizes intelligent interoperability across electronic devices and systems regardless of transport layer, plat- form, OS or brand,” states the website for AllJoyn. This software Source: CTA Market Research framework was first developed by Qualcomm then passed on 17to the Linux Foundation. The AllSeen Alliance – comprised of members including but not limited to Canon, Electrolux, Haier, Mark of Excellence LG, Microsoft, Panasonic, Qualcomm and Sony – is focused on the AllJoyn open source project, which is described as a “transport- CTA’s Mark of Excellence awards recognize the best in custom layer-agnostic”. integration and installed technology. Each year, manufacturers, distributors and systems integrators enter to compete in more AllJoyn supports transports including BLE, ZigBee and Z-Wave, than 30 award categories for this honor. The award categories not to mention Wi-Fi and Ethernet. At its booth at the 2015 CES, range from security, energy management, health and wellness Qualcomm had a mock smart home, all connected via the AllJoyn and home theater. platform. An AllJoyn app on a mobile device brings all areas of the smart home together in one place, as opposed to the scenario of a Manufacturers can enter award categories that recognize new number of smart devices separated by their own dedicated apps. products and technologies for the custom installation chan- nel. Mark of Excellence recognizes Integrators with the Project That’s a lot of big names, but there’s still more to come. Microsoft Awards covering 14 distinct project categories as well as the has touted AllJoyn support as a major feature of Windows 10, and TechHome Integrator of the Year Award celebrating a profes- Apple and Google have also shown interest in being a part of the sional who exhibits outstanding business success, resource uti- smart home landscape. Apple created the HomeKit database for lization, comprehensive technical skills, and shows exceptional developers to make software that can communicate with and con- quality in their professional installations. trol the smart home. In the HomeKit scenario, an AppleTV could function as the smart home “hub” with Siri serving as the smart The Mark of Excellence Awards program culminates with the home assistant, responding to smart home requests. HomeKit is announcement of the winners at the Mark of Excellence Awards fairly new, however, and at the time of writing only slightly more reception held during CES 2016. Winners are judged by inde- than a dozen accessories are available. However, given the popu- larity of Apple products, expect to see HomeKit become a major pendent experts within the industry. player in the home. Google clearly has its eyes set on the smart home, something that could be seen as far back as its 2014 purchase of Nest Labs – maker of the Nest connected thermostat – for 3.2 billion. In August, Google announced the Google OnHub Wi-Fi router that will serve not just as a home router, but as a smart home hub. In addition to CTA Adds New Smart Home Members Wi-Fi, the OnHub also includes Bluetooth 4.0 (supporting BLE) and ZigBee support. OnHub will function off a low-power An- • Coldwell Banker Real Estate: The oldest and most estab- droid “derived” operating system dubbed Project Brillo by Google. lished residential real estate franchise system in North Project Brillo, announced in May, uses a protocol known as Weave America – has joined CTA as a new member, establishing to enable communication – both locally and through the cloud – itself as a leader in home technology. between devices on different transports. • Fibaro: Allows users to monitor, manage and automate a Through cooperation, working groups and standards-setting, home or work environment through Z-Wave wireless mesh companies are working to make the smart home easier to digest. technology. Fibaro wirelessly controls your existing devices This area will be interesting to watch going forward to see if the to improve daily comfort and safety. differing smart home technologies can play nice, and if not, who • NEEO: Makes a smart system that communicates and con- will come out on top. One thing is evident: the smart home is here trols the devices in your home. and as consumers become aware of these devices, the devices will return the favor. n • UniKe y: Creates smart locks and smart access control. Unlock the Kevo lock with your smartphone. Simply touch your lock and walk in. The Smart Home at CES 2016 • Zendo: Focuses on creating smart home products and apps on Apple’s HomeKit technology. The Zendo Home app pro- • The Smart Home Marketplace, presented by Bosch and vides one-touch control over all HomeKit certified devices Coldwell Banker showcases technologies from basic security monitoring to more customized access to appliances, light- from any manufacturer. ing, window coverings, irrigation and entertainment systems. “CTA’s TechHome division is looking forward to working with • The CONNECTIONS™ Summit conference track, sponsored all our new home technology members to develop valuable by Park Associates, is a research and industry event focused on the smart home, Internet of Things (IoT), and connected resources for CTA members and further educate consum- entertainment. It also looks at trends and implications for ers about the amazing things smart home technology can do connected consumers as well as opportunities for companies for them as they select systems for today’s digital homes,” to build new revenue models. said Dan Fulmer, chairman of CTA’s TechHome division, and founder and president of FulTech Solutions Inc. Find out more at ™ Consumer Technology Association (CTA) 18TECH IS TRANSFORMING HOLLYWOOD By Brian Markwalter The 2002 futuristic thriller Minority Report gave us one vision Apparently we like to eat, even more than we like to be stylish. of the way in which we might interact with and use technology. Yuya’s number one position among style channels lands her at number seven among top food and cooking channels on YouTube The movie’s gesture-based input with large, transparent screens in terms of estimated earnings. Number one among food chan- and layers of information are within our grasp today. Hollywood, nels is “charliscraftykitchen,” which brings in almost 128,000 almost since its inception, has shown us future worlds shaped by per month on 29 million views. It’s so easy a kid could do it – as advances in technology. proven by Charli – who is eight years old. Less obvious is the manner in which the technology we use as But don’t quit your day job to start your career as a YouTube consumers is transforming Hollywood. We can now watch any- star just yet. There are now 300,000 ad-supported channels on thing from a six-second Vine video, probably on a smartphone, YouTube. Major brands have created their own YouTube channels. to a weekend-busting full season binge of our favorite TV show Professional production and marketing is part of the equation. on the latest 4K Ultra HDTV (UHD). The business of Hollywood Yes, there is money to be made but the competition is high. Take is adapting to meet these demands. The immutable laws–that Smosh for example. Smosh was Ian Hecox and Anthony Padilla, content comes from Hollywood, that TV shows are viewed on TV two teenagers lip-syncing to the Pokemon theme song until for- at an appointed hour, and that there are 500 channels but nothing mer Disney executive Barry Blumberg of Defy Media came along. to watch–have been upended. Through the collaboration with Defy Media, Smosh became an established brand supported by a team of 50 writers, producers and editors creating content for more than 35 million subscribers. Contents May Have Settled Like other parts of our lives, content creation has been “democra- Despite the rise of consumer-generated content, the majority of tized” by technology. In a recent CTA national survey, 42 percent viewing, and therefore money, still goes toward professionally pro- of consumers said they have uploaded video content for public duced entertainment. Long form content, for both television and viewing. Chances are none of the more than 1000 respondents movie distribution, requires investment that is beyond the reach are attempting to make a living as content creators, but the stats of the average person. Television programming costs roughly 2 underscore the ease with which we can capture and share video. million per episode by some estimates. Most movies cost between YouTube is the runaway winner as the place where these videos 40 and 100 million to produce, and that is before marketing find their home, with 92 percent of uploaders indicating they had and promotion costs. Even though most movies and TV shows are placed videos on YouTube. being produced by familiar names, the buyers and distributors are changing. Sites like YouTube and Vimeo make it as easy to watch as it is to The movie Veronica Mars is a great example of the changing upload video. The effortless nature of these sites means that a dynamics and is unique for two reasons. Rob Thomas produced lucky few can convert their creativity into millions of viewers and and directed the Veronica Mars television series on UPN/CW. After eventually a way of life. PewDiePie is the current king of YouTube the show was canceled, Thomas and Kristen Bell, the show’s star, with 38 million subscribers and nine billion views. He earns an launched a Kickstarter campaign to fund the movie. They knew estimated 4.7 million per year from YouTube advertising alone. their audience well. Not bad for a Swedish video gamer with a pet pug. The Kickstarter campaign set the record for fastest project to reach For a more realistic measure of money making on YouTube, take 1 million, the fastest to reach 2 million and the largest success- a look at the top channels among the popular cooking or beauty ful film project to date on Kickstarter. The campaign closed with and style genres. Yuya (lady16makeup), number one among 5.7 million in pledges. With the strength of that backing, Warner beauty and style channels, earns more than 41,000 per month on Brothers Digital Distribution agreed to support the film’s produc- 35 million views. Michelle Phan, number eight on the list, earns tion. Warner Brothers Pictures agreed to widespread national re- 15,000 per month, but more importantly, has already parlayed lease of the movie, and, in the other first for Veronica Mars, agreed her Internet fame into a brand of its own, including her Ipsy mail to simultaneous release for home rental or purchase through video order business that she says generates 100 million per year. on demand and online platforms. 19“The goal is to become HBO faster than HBO can become us,” Crowdfunding is one way people can vote with their wallets, but crowdfunding will not cause a big shift in the way media projects Ted Sarandos, Netflix chief content officer, told GQ in a 2013 are greenlighted. CTA’s consumer research shows that only five interview. That quote was prescient and framed up the battle percent of survey respondents have contributed to a crowdfund- taking place among media companies. This year HBO launched ing platform, such as Kickstarter or Indigogo, to help fund a HBO Now, its standalone streaming service. All the content of the movie or album. There is an indirect way that people are spending original, premiere cable channel is now available, without a cable their money that is having a big impact on television production. subscription. Consumers have embraced subscription streaming video services wholeheartedly and in doing so shifted the balance of power in It is not entirely true (or maybe remotely true) to say that content Hollywood. Netflix and Amazon are converting consumer spend- no longer comes from Hollywood. Hollywood is the place that ing on subscription video to purchases of original TV series. has the infrastructure to produce movies and TV shows. But the buyers are changing, and Netflix is a big buyer. Netflix either has Netflix’s story is well known, but it is still worth looking at released or has plans to release 48 originals in 2015, including the how the company changed its business model to coincide with third season of Orange is the New Black and the sequel to Crouch- consumer preferences and technological capabilities. Netflix was ing Tiger, Hidden Dragon. founded in 1997 in the heyday of video rental stores. Reed Hast- ings was slapped with a 40 late fee after renting Apollo 13 and The Appointed Hour decided there had to be a better offering. Netflix’s first approach Appointment television is all but gone. Some would argue sports was simply rental by mail, replacing the trip to the video store with are the last domain of watching “live” TV. We can thank TiVo for home delivery. On September 23, 1999 Netflix began its subscrip- giving us the “peanut” remote control and making time-shifting tion rental service. Consumers loved it, propelling Netflix to one incredibly easy. TiVo’s innovation was recording to a hard disk million subscribers by February 2003. and making an excellent user interface. Content still got to “God’s machine,” as then FCC Chairman Michael Powell called it during Streaming was still four years away. An engineering professor once a 2003 CES interview, through cable, satellite or an antenna. TiVo “de-linearized” linear TV. We could now break our appointments said “Never underestimate the bandwidth of a station wagon full with prime time television. of magnetic tapes going down the highway.” Or, in Netflix’s case, never underestimate the bandwidth of a postal delivery truck car- Where TiVo brought us time-shifting, Sling brought us place- rying DVDs in red mailing envelopes. In 2003 available technology shifting; answering the question: “Why can’t I watch what I have precluded a viable Internet movie streaming service due primarily paid for when I am out of the house?” Where TiVo did not require to slow access speeds. At that time Internet access in the U.S. just an Internet connection for content, Sling did require one for mov- exceeded 50 percent of homes. It was not until the end of that year ing the content from your home to where you wanted to watch. that broadband subscribers finally outnumbered dial-up homes. Admittedly, an Internet connection was useful for TiVo updates Only 25 percent of homes had an “always on” connection. and subscription management. But Americans were falling in love with broadband. By 2007, Sling has come full circle to answer the question: “Why is it so hard to watch a few channels I want, on the device I want?” DISH among those with Internet access, 70 percent had a broadband Network, the satellite TV service provider, announced Sling TV at connection, and only 23 percent still used dial-up. Overall, nearly the 2015 CES. Was another Internet streaming video service really 50 percent of adults had a broadband connection. It was in this newsworthy? Well yes, and the numbers are starting to prove it. environment that Netflix launched its streaming service in 2007. First, Sling TV is positioned as “Live TV without the cable com- Despite the botched attempt to split the DVD business into a pany” and is priced at 20/month for the Best of Live TV package. separate company called Qwikster in 2011, the streaming business Without saying so, Sling TV is clearly aimed at cord cutters and grew steadily. Qwikster never saw the light of day. cord nevers. The pitch is about simplicity. Sign up online, down- load the app, sign in and start watching. No credit checks and cancellation can be done online. Netflix is a big buyer. Netflix either has released or has plans to release Roger Lynch, Sling TV CEO, in a recent speech discussed some 48 originals in 2015, including the of what they have learned in their first months of operation. The pitch to millennials and cord cutters appears to be working. More third season of Orange is the New than 90 percent of Sling TV customers are also Netflix custom- Black and the sequel to Crouching ers. “We way overindex with Netflix,” according to Lynch. And for Tiger, Hidden Dragon. those fearful that digital natives would never pay for entertain- ment, Lynch also indicated that young adults, ages 22 to 33, are willing to pay for the right kind of service. By creating an “app The last big, disruptive step taken by Netflix was to create its own like” service and keeping it tailored, Sling TV has attracted its scripted original series, releasing Lilyhammer in 2012. The follow- intended subscriber base with a very low acquisition cost. ing year Netflix resurrected Arrested Development, a Fox series that aired for three seasons from 2003 through 2006. In true Netflix In addition to the 20 Best of Live TV base package, Sling TV fashion, all 15 episodes of season four were released at one time. offers add on “Extras” for 5-7 per month, including Sports, Netflix proved that Veronica Mars need not be the only death- Deportes, Kids, Hollywood, Peliculas and Novelas, World News, defying TV series in this age of change. Lifestyle, Espana and Columbia. HBO can be added to Sling TV ™ Consumer Technology Association (CTA) 20

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