As expected, the Federal Communications Commission moved ahead last week with a plan to rewrite the rules for network operators – cable, telephone and satellite – that deliver television channels to consumers, requiring them to allow third parties such as consumer electronics manufacturers and software developers to access their programming streams. The shorthand way of explaining it is to say that the set top box market will be open to competition – anyone would be able to license the necessary technology, build a box and sell it to consumers.
It’s both simpler and more complicated than that. It’s simpler because it’s not about the box. It’s about opening up proprietary programming streams to any device with the right licenses, content protection and all the other management functions that are included in today’s boxes. Might be another box, might be an app, might be technology embedded in another product such as a television set.
It’s more complicated because cable, direct broadcast satellite and telco platforms such as Uverse or FiOS are 1. largely mutually incompatible and 2. designed specifically to prevent third party devices (or apps) from gaining access. An elegant technical solution is impossible, but a workable one would be within reach if network operators cooperate. Which won’t happen. The last thing cable, telephone and DBS companies want is to open the gates of their walled video gardens. So regardless of what the FCC ultimately does, expect a long and messy battle to fully integrate traditional linear television channels with other video sources such as social media, games and over-the-top service like Netflix.
As soon as the FCC’s proposed regulations are formally published in the federal register, there will be two months for public comment and another month for rebuttals. As with last year’s network neutrality decision, the final rules could end up looking a lot different.
It’ll all look the same.
Opening up the currently closed set top box market will disrupt, and perhaps kill, the network business models that rely on it. On Thursday, the Federal Communications Commission is set to launch a process that to write new rules requiring cable, satellite and other flavors of multichannel video programming distributors (MVPDs) to give third party manufacturers direct access to their television transmission streams, including on-screen guide data. With all due respect for license limitations, such as recording rights, of course.
Video distributors’ set top boxes are quickly becoming anachronisms. While wandering the exhibit floor at CES last month, I was struck by the diminishing number of traditional consumer electronics products. Functions that were once the job of separate boxes – recording, storage and play back, to name three examples – are either built into video screens and smart phones or shuffled off onto to remote, Internet-connected servers. Gaming is still an exception to the trend, but even there the creative and marketing energy is going into connected toys, rather than game consoles.
Once video distributors unlock their programming streams, though, navigation, decoding and recording capabilities can built into television sets (or smart phones or tablets or desk top computers or whatever the next cool gizmo will be). Linear television programming can be seamlessly blended with over the top content, personal video recordings, social media, games and anything else human imagination can create.
It’s not about boxes. It’s about pulling linear television onto the level and highly competitive playing field occupied by other content distribution and access technologies. Owning the pipes will no longer mean controlling the content that flows through them.
A lonely outpost.
This year’s rebranding of the tech extravaganza formerly known as the Consumer Electronics Show saw “International” dropped from the name. It’s now just CES, although it still bills itself as a “global technology event”.
Looking just at attendees and media, it certainly is an event with global pull. But the products on display overwhelming come from companies based in developed or near-developed countries, even though the actual manufacturing is often done in the developing world. China is well represented, of course, and there’s ample room to debate which category it falls into, but nevertheless it is exceptional in every sense of the word.
Every year brings a handful of exhibitors from ASEAN nations. This year, the total dropped significantly, with only 13 companies attending, including 10 from wealthy Singapore. Two were from Thailand and only one from Malaysia, Nationgate Solution, a contract manufacturer. Last year there were 15 from Singapore and five from the rest of the region. That’s out of more than 3,600 exhibitors total.
India held more or less steady with six exhibitors, one less than last year but the same as 2014. South America was barely present with one exhibitor, Student Genius from Colombia; past years have fluctuated between zero and two. Last year there was one African manufacturer, this year there were none on the show floor. One publisher from South Africa, IT News Africa, set up a stand though. It’s a good read and worth a look if you’re interested in following the African tech scene.
One thing the Consumer Technology Association could do would be to set up a special forum – there are plenty already – for contract manufacturers and similar providers of outsourced services. Among the 150,000 or so attendees, there are thousands of entrepreneurs, many of whom are on the hunt for someone to make their stuff.
Now cats can post people pictures on the web.
“A maturing of nascent ecosystems” is one way of describing CES 2016. It was in fact one of the predictions made by Shawn DuBravac, the chief economist for the show’s organiser, the Consumer Technology Association. Translated, it means “you won’t see a lot that’s new, but you will see a lot more of what was new last year”. Spot on.
Home automation control is increasingly decentralised. There are plenty of platforms vying to integrate all your gizmos into a unified control scheme, but it’s optional. You can just as well operate individual devices via a dedicated smartphone app or put controller hubs into everything – as Samsung is beginning to do – and do what you need to do on whatever device happens to be in front of you. A television or a refrigerator for example. If you want devices to work together, Stringify’s third party meta-platform can take care of it.
I didn’t see any mobile power supply innovations. The three wireless charging consortiums at last year’s show have consolidated into two – the AirFuel Alliance and the Wireless Power Alliance – and both have an impressive and non-exclusive list of partners. 2016 probably won’t be the year wireless charging features become commonplace in mobile phones, but it’ll be more common than last year, and next year even more so.
Virtual reality headsets will be the hot new toy, followed closely by drones and hoverboards; television screens will be bigger, with sharper pictures and fuller sound. There will be a compact, wearable device for every purpose, and some for no apparent purpose at all. Any product you can imagine, from toilets to flower pots to bicycles, will have embedded processors and, increasingly, be monitored and controlled via a network connection. Dogs and cats will have their own Internet-enable appliances.
All of that was on the CES show floor this week and will be available in stores and online later this year.
“I’ve read the emails of terrorists, I know what they’re doing, I know how they work”, Edward Snowden told a rapt audience in a CES booth yesterday. “Terrorists are already using encryption. Everybody in the world is using encryption”.
He was being interviewed by serial entrepreneur Peter Diamondus – X-Prize, Singularity and, yesterday, Human Longevity, Inc. – via a BeamPro telepresence robot made by Palo Alto-based Suitabletech. It was a promotionally convenient necessity since Snowden is a fugitive, living in exile in Russia after blowing the whistle on the National Security Agency’s massive data trawling operation.
Snowden has no regrets about what he did, saying “I volunteered to go to prison”. Still, he’s in no hurry to get there and believes that the law enforcement agencies chasing him are on the wrong track. “I don’t think it’s right to act as deterrent against people trying to do the right thing”, he said.
Restricting or weakening legal encryption technologies wouldn’t deter terrorists and criminals – they wouldn’t restrict themselves to legal means – and in any event they also use open communications techniques. French police were able to gather a tremendous amount of information about the recent Paris attacks from unencrypted data on mobile phones used by the killers, enough to track down the people who organised the mass murders, he said.
Giving law enforcement officials a back door to everyone’s private information is an even worse answer, he believes.
“They think they need to restrict our freedom to keep us safe”, Snowden said. But the only existential threat comes from measures we take against ourselves. It’s “the only way to lose an open society”.
“Are we ever going to correct our government?” he asked. “It’s not a fight, it’s an ongoing struggle, it’s a process”.
Virtual reality is ready for a break out into the mass market, but augmented reality is not offering a compelling product to consumers yet. It was hard to find a gee-whiz proposition while wandering through the Las Vegas Convention Center today at CES, or indeed much of anything that was significantly different from last year. Except for the virtual reality headsets and the long lines of (mostly) guys waiting for their turn to try one out.
Occulus seems to be emerging as the gold standard in the market. Compatibility with the platform was widely touted by VR entrants looking to generate some quick credibility, much like companies with new home automation products did with Nest last year.
The Consumer Technology Association – the rebranded host of CES – is predicting that virtual reality will be a $540 million product category this year, with 1.2 million units sold.
I tried Samsung’s Gear VR demo, which involved a $99 headset adaptor that turned one of their top end mobile phones into a VR player. It was fun surfing in Tahiti for a couple of minutes. If you already have a new Galaxy 6, it’s a no brainer add on. It’ll run Occulus games and interactive content, such as a day hanging out with LeBron James, that Samsung is producing. As far as I know, it’s the first time that Samsung has dipped a toe in the content creation world.
Augmented reality, on the other hand, was a non-starter. The prevalent application was previewing home improvements and decorating options. I didn’t see any applications or consumer-friendly products that would appeal to a mass audience.
The highlight of the day was stumbling on a live celebrity interview with Edward Snowden, the fugitive nemesis of the National Security Agency, via a Suitabletech telepresence robot. Peter Diamondus, of X-Prize and Singularity fame, had a friendly and fascinating conversation with him. More on that tomorrow.
Twentieth century government and twenty-first century entrepreneurship do not mix well. That was the top line consensus at a CES panel discussion this afternoon. Moderated by Julie Samuels from Engine, a tech policy advocacy group, it included two company reps – Laurent Crenshaw from Yelp and Marco Zappacosta from Thumbtack – and Arun Sundararajan, a business professor at New York University.
“Taxes are not the issue, small businesses care much more about regulation”, Zappacosta said. As businesses expand, so does the regulatory burden. “This is a big fear that causes businesses not to grow as much as they should”.
The problem is that the assumptions that drove the development of labor laws in the twentieth century no longer apply. The model then was that most people had a career job with a company, that provided a basic social safety net, such as disability, retirement and medical benefits. But now, “that will not necessarily be the best model for organising economic activity”, Sundararajan said.
“Atomisation of work is coming into tension with our regulatory state that assumes a lump of work”, said Zappacosta. “The path we see forward is to refashion our safety net so that it can be managed through individuals”.
There was little optimism that government regulations or regulators will adapt by themselves. But online communities can be self regulating. “Platforms like Yelp and others that basically create a feedback loop between the user and the business owner create a scenario that lets the business itself function ahead of the regulations”, Crenshaw said.
Those online communities can also apply political pressure. “We’re going to see a wide variety of new collectives that are giving consumers a new seat at the table”, said Sundararajan. “They’ll sit at the table in the same way that labor unions did in the past”.
“We’re having these fundamental questions in America about what is the nature of work and what is the social safety net and who is going to provide it”, said Samuels as she wrapped the panel up.
Huawei knuckles down on smartphones.
From barely a blip on the radar – 3 million units – five years ago, Huawei broke out of the pack in 2015 with 108 million smartphones sold and a 10% share of the global market. That keeps it in third place worldwide, behind Apple and market leader Samsung, which has a 28% share. Speaking at the company’s press conference at CES this morning, consumer business group CEO Richard Yu said they’re aiming to pass Apple – currently with a 12% global smartphone share – and move up a notch into the number two spot within two years. Overall, Huawei’s consumer division did more than $20 billion in business last year.
From relative anonymity three years ago, Huawei has built brand awareness to the 76% level and ranks 88th on the list of the world’s most valuable brands, according to Yu.
It’s not doing it with low end, mass production products alone. The head of Huawei’s handset business, Kevin Ho, demoed a $750 smartphone and a $450 tablet at the event.
Battery life is Huawei’s primary product differentiator, it seems. It’s leveraging its chipmaking capability to focus on extending big screen smartphone use time to two days, making it possible to spend a long, intensive day on power hungry 4G networks without recharging. Ho said that Huawei’s Kirin 950 ARM-based, 16 nanometer system-on-a-chip is optimised for power efficiency.
Huawei still lags in the U.S. market, but from a global perspective that’s becoming less and less important. It’s partnering with Google on Nexus devices, and focusing the launch of the latest version of its flagship phone – the Mate 8 – on an eclectic list of a couple dozen countries where it’s gained more traction.
4K televisions and home automation, two product categories that are particularly tied to broadband demand, grew significantly in 2015 and the trend is expected to continue into 2016, according to market research presented yesterday at CES in Las Vegas, by the show’s organiser, the newly rechristened Consumer Technology Association.
Home automation accounted for about 9 million units. The $1.2 billion in revenue that generated is an 18% bump over 2014.
On the other hand, CTA researcher Steve Koenig said it looks like 13 million 4K sets sold world wide – outside of China – in 2015. The 4K forecast for the world, again outside of China, is 19 million units in 2016, a growth rate just under 50%.
The real story, though, is what’s happening inside China. Koenig said that 29 million 4K televisions will be sold in China alone in 2016, bringing the global total to 48 million sold this year. In 2015, 27 million 4K sets were sold in China, an even bigger proportion of the global total. Part of the reason is undoubtedly due to economic growth simply making it possible for more Chinese households to buy televisions. Even if 4K sales represent a small fraction of the total, it’s still a lot in absolute terms.
“It’s a numbers game”, Koenig observed. But it’s also a matter of government policy.
“There’s a wish on the part of the central government in China to drive these technologies into the market”, he said.
It also hints at something about broadband availability in China. Even if the selling proposition were mostly about the status symbol, at least the promise of sufficient content has to exist for China to account for three out of five 4K televisions sold worldwide. It’s not just televisions that upwardly mobile Chinese are buying. They’re buying new homes, too. And when those homes are built, it’s also government policy to connect them with fiber.
Correlation doesn’t prove causation, but it does offer clues for policymakers to ponder.
Keeping it mainstream, says Blasko.
You can bid to buy pretty much anything on eBay, at least anything legal, but you need a straight up credit card or bank account to do it. And you can find sites on the dark web that auction off pretty much anything illegal, where you can pay with bitcoin or other alternative cryptocurrencies. At least until the FBI shows up. The difficulty comes when legal buyers and sellers try to negotiate online and settle up with bitcoin.
That’s where Crytpomarket.co comes in. The website, which is scheduled to go live in two to three months, has a simple proposition: duplicate eBay’s core auction functionality and combine it with an alternative currency exchange. Sellers post items, buyers submit bitcoin-denominated bids. When the deal is made, Cryptomarket holds the virtual money in escrow until the goods arrive. And those goods have to be legal.
“No drugs, we’re not going to go to jail for this”, said Jim Blasko, the company’s chief cryptographer at the Startup Debut showcase event at CES last night. The company will cooperate with law enforcement requests for information, at least to the extent that any online company must under U.S. laws. It will offer about the same degree of anonymity, or lack thereof, as eBay.
The one glaring weak spot in the business model is that eBay could decide to start accepting bitcoin payments at any time. To guard against that, Blasko says they’re expanding beyond bitcoin and will include lesser known and more lightly traded alternative cryptocurrencies such as litecoin or UnbreakableCoin. Cryptocurrency’s secret sauce is, Blasko thinks, the relationship it will build with the core alt coin community, which will at least ensure a sustainable niche for the long run.
Cryptomarket is the first hatchling from bCommerce Labs, a bitcoin focused incubator, which was featured at last year’s version of Startup Debut. Blasko said that they’ve raised about $50,000 – enough for the basic auction site development work and bitcoin integration – and are aiming for $500,000 in the next round.