Tag Archives: consumer electronics

Consumer electronics is smart phones and dumb TVs, and the rest is bits

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The consumer electronics technology market is congealing into two products: smart phones and televisions. And even the television segment is showing weakness. That’s what the raw numbers say, although there’s more to it.

The first caveat is that sales figures are measured in U.S. dollars, and the dollar is getting stronger relative to currencies in key consumer electronics markets, particularly China. So products made and sold in China for yuan will be undervalued on a year over year basis if reckoned in U.S. dollars. So in absolute terms, the market isn’t as soft as it might first appear.

But comparing product category to product category is fair game. On that basis, smart phones are the only major segment that’s still showing growth on both a dollar and unit sales basis.

Steve_Koenig, the senior director for market research at the Consumer Technology Associations, which produces CES, [gave his annual analysis of the market yesterday](), focusing, as he does, on the Magnificent Seven – the top seven consumer electronics technology segments.

That is a sufficient number of segments to find the beginning of the long tail. Smart watches displaced dumb mobile phones for seventh place, with a forward looking sales estimate of $12 billion in 2017. Cameras are increasingly absorbed into smart phones. Desktop computers, laptops and tablets are slipping in both unit and dollar sales terms. All three categories are down individually and show an aggregate decline from 515 million units in 2014 to 380 million units projected for 2017.

That leaves smart phones and televisions. Smart phone unit volumes are up and expected to near 1.5 billion units sold in 2017, although the dollar value is expected to only nudge up slightly.

But TVs are softening, with 2016 and 2017 projections nearly the same and down significantly from their peak in 2014. A big part of the reason is that people are watching video on a variety of devices. In the U.S., barely half – 51% – of video viewing was on a traditional TV in 2016, according to CTA’s research, down from 62% in 2016. Smartphone and tablet viewing is up. Computer viewing is flat, although there’s a distinct shift from desktops to laptops. Smart phones are making the big dent in TVs share of eyeballs though, accounting for 21% of U.S. video viewing in 2016, versus 16% in 2012.

Big screen you can hang on your wall. Small screen you can put in your pocket. Everything else is apps and content.

Lower cable bills won’t follow new set top box rules

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You still need, and need to pay for, one of these.

When – or if – the Federal Communications Commission adopts new rules that loosen restrictions on the hardware consumers can use to watch video from cable companies and other pay TV providers, it won’t mean the end of equipment fees tacked on to your monthly bill.

The FCC’s preliminary notice of proposed rule making focused on opening up the market for competing hardware, but that provoked a firestorm of protests and intense lobbying efforts by the industry. So instead of allowing consumers to buy a set top box that could plug in directly to a cable company’s network, or set top box functionality built in to a television or other device, FCC chair Tom Wheeler – a former top cable lobbyist himself – shifted to what’s been characterised as an app-based approach.

Wheeler is keeping the plan secret, at least from the public, and has only released a vague talking point summary. The gist of it is that you could install an app, provided by your cable company for free, onto, say, your smart TV and watch the cable channels you subscribe to or buy pay-per-view movies.

What the summary doesn’t say is how your smart TV (or mobile phone or Roku box or whatever) gets access to the programming stream that the free app would decode. There are two options: over the public Internet or via a direct connection to the cable network.

If the latter, then you’ll still need some kind of interface device between the cable outlet on your wall and your TV. The whole point of the app based approach is to prevent third party devices from connecting directly to cable systems on a hardware level. Cable companies won’t have to give you that interface for free.

Of course, it could be built into a cable modem, which you’d still need if you’re buying Internet service from your cable operator. You’d be charged for the modem, although it’s likely the new rules will require those charges to be itemised on your bill so you know how much you’re paying and for what. Even if you can access the programming stream via the public Internet, you’ll still need an ISP. Given the disparity between telco and cable broadband speeds, you’d be even more likely to opt for cable modem service.

If you despair of figuring out how to hook it all up or how to run a cable company’s app – do you think you think they’ll make it easy for you? – then you’ll still have the option of paying a monthly fee, amounting to hundreds of dollars a year, to rent a set top box: nothing changes.

For now, this is all speculation. The FCC’s new set top box rules are bogged down in a dispute over how apps are approved and licensed for use – a scheduled vote on Thursday was cancelled. The secrecy and back room lobbying that infests the FCC’s decision making process means we don’t know what the draft rules actually say, or even what the final rules will be until after – perhaps weeks after – a vote is taken. But there’s no reason to think that the result will be less expensive video service or fewer boxes and cables in your living room. Or the end of extra monthly equipment charges.

FCC delays vote on secret set top box rules

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Just give me a little more, um, time.

A plan to require cable companies (and other pay TV operators) to open up their systems to third party set top boxes hit a wall this morning, as the Federal Communications Commission pulled the item from its monthly meeting agenda, just minutes before it was supposed to begin.

As crafted by FCC chairman Tom Wheeler, the plan would have required cable (and satellite and telephone) companies to build apps that would run on boxes made and purchased and installed by pretty much anyone. The apps would provide access to the all the video programming and services offered by the company. An ill-defined committee – apparently made up of industry representatives and supervised by the FCC – would review and approve apps and iron out disputes over programming rights.

This industry panel provoked fierce criticism, not least because many believed that the FCC doesn’t have the authority to arbitrate copyright licensing disputes. That’s an area of the law that comes under the jurisdiction of other federal departments and courts. Objections came from the usual suspects in the industry – i.e. pretty much everyone – and congress critters on both sides of the aisle. And from one very important person: FCC commissioner Jessica Rosenworcel, who openly bucked fellow democrat Wheeler, saying she “has problems” with the licensing scheme. With both republicans opposed to Wheeler’s plan, her vote was essential.

Wrangling over the plan continued, but half an hour before the meeting was supposed to begin, Wheeler, Rosenworcel and Mignon Clyburn – the third democrat on the commission – issued a statement saying that new set top box rules would be a wonderful thing, but “we are still working to resolve the remaining technical and legal issues and we are committed to unlocking the set-top box for consumers across this country.” Just not right now.

There’s more to the dispute than the rules themselves. The secrecy that surrounds the plan has also been sharply criticised. The FCC doesn’t publish draft decisions and final versions aren’t made public until sometimes weeks after a vote. But Wheeler is free to negotiate the details with whomever he chooses. So discussions with industry lobbyists – who have deep pockets full of political cash to contribute – continued behind closed doors while only a happy happy, joy joy summary of the plan has been released by Wheeler’s office. That’s business as usual in Washington, and particularly for Wheeler, who has turned the chairman’s role into that of lobbyist-in-chief.

We deserve better.

Back to the (secret) drawing board for FCC set top box plan

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Shhhh. No one else is supposed to know.

FCC chairman Tom Wheeler’s plan to set up an industry licensing board to review apps created by pay TV providers that will allow third-party set top boxes to access their programming is slowing down, if not dead in the water. The senior republican and democrat on the house judiciary committee – Bob Goodlatte (R – Virginia) and John Conyers (D – Michigan) – released a joint statement yesterday blasting the plan, saying “there are many unresolved questions about this proposal, not the least of which is the fundamental question of whether the Federal Communication Commission even has the authority to create such a regime”.

That follows sceptical comments about the licensing scheme from three of Wheeler’s fellow commissioners, republicans Ajit Pai and Michael O’Rielly and democrat Jessica Rosenworcel.

Even Wheeler himself backpedaled, telling a congressional committee that the policy, at this point, is only “90 percent there” and discussions with stakeholders – industry lobbyists, in other words, continues.

Part of the problem is no one outside of the FCC knows what’s actually in the proposed set top box rules. No one except, apparently, the stakeholders who are negotiating with Wheeler. Conyers and Goodlatte have a problem with that, too. They sent him a letter asking him to make his draft plan public…

While much remains unknown, what is clear at this point is that the proposal would benefit from more public process. Different versions of this proposal have circulated for many months now, and while staff for both committees has held numerous discussions with Commission staff and other stakeholders, we have received conflicting accounts about this proposal. Absent a public vetting of the Commission’s proposal, it is unclear what the Commission is planning, let alone its impact.

Without further delay, we request that you release the text of the proposal.

That’s not the way business is done at the FCC, though. Draft decisions are kept secret until after – sometimes long after – approval by commissioners. A vote on the set top box plan, whatever it is, is scheduled for 29 September 2016.

FCC set top box plan takes app-based approach

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The Federal Communications Commission has backed off from requiring pay-TV companies – cable, telco, satellite – to open up their networks and allow consumers to buy and use a set top boxes made by third party companies. Instead, the FCC is pushing a hybrid plan – given the litigious response from the industry, I wouldn’t call it a compromise – that would have pay TV operators create apps that can run on third-party boxes.

The FCC has only released a summary of the proposed new rules. It’s the commission’s standard practice to keep the actual text of decisions secret until after a vote is taken, although the veil of secrecy seems permeable if you’re sufficiently well connected. Or if the chairman wants to write an op-ed piece about it. As Tom Wheeler did yesterday in the Los Angeles Times.

According to the summary, pay TV apps have to deliver the same level of programming access as an in-house box…

The new rules will require pay-TV providers to offer to consumers a free app, controlled by the pay-TV provider, to access all the programming they pay for on a variety of devices, including tablets, smartphones, gaming systems, streaming devices or smart TVs…

While consumers will still pay their monthly subscription fees for the service, they will be able to download an app to devices they purchase or already own to access pay-TV service, so they are no longer forced to rent boxes from their pay-TV provider. Of course, a consumer may choose to keep their set-top box and enjoy their pay-TV programming as they do today…

Pay-TV providers must provide their apps to widely deployed platforms, such as Roku, Apple iOS, Windows and Android. Doing so will spur competition in the marketplace to develop new competitive products like next-generation streaming devices, smart TVs and tablets.

Pay TV companies will have two years to deliver the apps. Published reports indicate the plan also includes some kind of oversight board that will, in some way, be answerable to the FCC but will otherwise be driven by the industry.

Commissioners are scheduled to vote on the proposal at their 29 September 2016 meeting. Two other rumored items – regulation of middle mile broadband services and new consumer privacy rules – will have to wait until a later meeting.

Video tape era comes to an end

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Play it while you can.

The last known manufacturer of video cassette recorders is throwing in the towel. According to Nikkei, Funai Electronics will stop making VCRs next month at the one plant, in China, where it still makes them. The units are sold in the U.S. under the Sanyo brand.

In 2015, Funai sold 750,000 VCRs, mostly as VCR/DVD combos. There was actually some growth in that particular product line – it was cited as one of Funai’s strong points in its annual report – but the overall trend is down, as are Funai’s sales overall. It experienced a 23% drop in revenue last year.

One of the problems cited was a lack of parts – the level of demand is below the point where component manufacturers can make them economically and existing stocks are running out.

VCR tapes are still being made, and likely will be for some time. But if you treasure anything that’s still on tape, you better digitise it soon – it won’t be too many years before the means to play it is gone.

Don’t expect a retro-VCR revival. While there’s an aesthetic and sound quality argument to made on behalf of vinyl records, it’s a lost cause for even advanced versions of the VHS format. Even for Betamax – Sony stopped making tapes last year, long after it shut down its hardware line.

The VCR had a 40 year run. It was the original fair use battleground in the video age. The supreme court’s Betamax decision made it legal for consumers to record material for personal use; without it, the digital world would be a very different place.

Google makes stupid move with smart home product

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If you bought a home automation hub from Revolv, sorry, it’s about to be bricked. Google bought Nest, which in turn bought Revolv, and then decided to turn off the servers that make its gizmos work

So we’re pouring all our energy into Works with Nest and are incredibly excited about what we’re making. Unfortunately, that means we can’t allocate resources to Revolv anymore and we have to shut down the service. As of May 15, 2016, your Revolv hub and app will no longer work.

Thank you for your support and believing in us.

Sucker.

Oops. I said that. They didn’t. Not exactly. But that thought probably passed through the mind of anyone who bought a Revolv hub. With justification.

From a high tech, living-in-dog-years point of view, there’s nothing wrong with what Google did. And yes, I know, Nest is owned by Alphabet, which is now the new name for the Company Formerly Known As Google. And from a high tech, living-in-dog-years point of view, there’s nothing wrong with that.

There’s just one problem.

Consumers don’t care. They give credit or blame to the brand they know, and don’t give a damn what the suits or the geeks say (full disclosure: I used to be both and I’m still a geek). They don’t obsess over light switches, doorbells or coffee pots. They just want the freaking things to work and leave them alone for ten or twenty years.

Shutting down the Revolv servers is a mistake, but by itself it won’t make much difference. If Google and other tech-driven companies keep pulling this same dumb move, though, consumers will shrug off their brands and, eventually, the whole home automation category.

Free advice to Google: don’t confuse a light switch with Orkut.

Bipartisan support for simplicity at the FCC

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The Federal Communication Commission’s decision to move ahead with writing new rules for set top boxes was made on a party line 3 to 2 vote. But that’s not the way the vote on the final rules will necessarily go.

FCC chair Tom Wheeler is all for the draft rules as written – no surprise, his office wrote them. So is Mignon Clyburn, a fellow democrat. The third democrat, Jessica Rosenworcel is not as enthusiastic, though

This rulemaking is complicated…The most successful regulatory efforts are simple ones. More work needs to be done to streamline this proposal, because in the end for consumers to enjoy the bounty of what we have proposed—execution is all.

So what we have here may not be the precise way forward. But something has got to give. I support Chairman Wheeler’s effort to get this proceeding started.

On the other hand, Ajit Pai, a republican, says he wants to push it even further

Our goal should not be to unlock the box; it should be to eliminate the box. If you are a cable customer and you don’t want to have a set-top box, you shouldn’t be required to have one. This goal is technically feasible, and it reflects most consumers’ preferences—including my own.

Pai’s objective is arguably within the scope of the draft rules, although you can find enough devils in the details to drag out the argument for decades. Which is the point Rosenworcel is making. The ultimate vote might be split between commissioners who want to flatten the playing field with simple rules that let anyone play, and those who prefer to keep the game complicated. And firmly inside Washington.

FCC approves, publishes draft set top box rules

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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.

Network ownership will no longer mean content control with new STB rules

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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.