Thinking forward from CES 2012

by Steve Blum • , , , , , ,

If CES 2012 produced one quote that might be remembered in years to come, it was from Ericsson CEO Hans Vestberg: “Anything that benefits from being connected will be connected in the future.” It says two very important things about the consumer electronics industry.

First, going forward, mobile telecommunications manufacturers and core technology companies will be the primary innovators. Computer companies provided much of the innovation for the industry in the past ten years, but they are all but gone from CES.

Second, the business of consumer electronics will focus less on physical products and more on services connected to those products. As technology becomes more capable and cheaper – and it will – the differences between hardware brands and devices will become diminishingly small. Services will be the primary differentiator for products and brands.

Arguably, the most influential consumer electronics company of the past ten years began the last decade as Apple Computer, and finished it as simply Apple, a music, cloud service and telecommunications company. They were so far ahead of the curve that they didn’t have to join the other computer-oriented companies in pulling out of CES. They weren’t there in the first place.

The first revolution in consumer electronics products equipped with wireless machine-to-machine (M2M) communications and tied to differentiated services will come from home health and fitness devices.

Qualcomm launched its Qualcomm Life subsidiary to provide a cloud platform that will support medical services delivered through mobile communications devices, including but not limited to those powered by the chipsets it makes. It’s also putting up $100 million in venture funding to back connected medical device and service start-ups.

But that’s small change compared to the amount of money that health insurance companies can bring to bear as they move into the networked personal health care space, and mandate such services for their customers. The digital media and automobile sectors will follow closely behind, providing more opportunities and platforms for the consumer electronics industry.

Vestberg believes there will be 50 billion mobile telecoms subscriptions by 2020, the vast majority for M2M networking. Each one of those subscriptions represents at least one device, and potentially multiple contracts for wirelessly delivered services. It will be boom times for the CE companies that can make the changes necessary to take advantage of this huge new market, and an ever declining legacy business for those that don’t.