16 Global Retail Tech Trends For 2016 - fbicgroup Global... · 2016-09-06 · Global Retail Tech Trends for 2016 Virtual reality, robots, mobile payments, 3D printing and 12 other

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DEBORAHWEINSWIG,EXECUTIVEDIRECTOR–HEADOFGLOBALRETAIL&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.

Global Retail TECH Trends 2016

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Virtual reality | p. 3

PARTNERSHIPS | p. 5

ROBOTs | p. 6

WEARABLES | p. 8

DRONES | p. 10

CONNECTED HOMES | p. 11

STREAMING | p. 12

CYBERSECURITY | p. 14

AUTONOMOUS VEHICLES | p. 16

MOBILE PAYMENTS | p. 17

SMART CITIES | p. 19

FACIAL RECOGNITION | p. 25

3D PRINTING | p. 21

VOICE RECOGNITION | p. 26

AI PERSONAL ASSISTANTS | p. 23

O2O IN CHINA | p. 27

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Global Retail Tech Trends for 2016 Virtual reality, robots, mobile payments, 3D printing and 12 other techtrendswillinfluencetheretailindustryandplayalargerroleineverydaylifein2016.Inthisreport,ouranalystsidentifyandoutlinethemostimportanttechtrendsfor2016andsharetheirthinkingonwhattowatchforandwhy.

VIRTUAL REALITY: RETAIL REALITY

Virtual reality (VR) technologies will move further into the mainstream,boostedbythefirstconsumershipmentsoftheOculusRiftinMarch.VRwillbeused selectively to enhance the in-storeexperience andhelp shopperschooseamongcustomizationoptionsforbigger-ticketpurchases.

WhatItIs

The concept of being transported to another reality has been around fordecades, but the technology has only recently caught up with the idea.Today, increasingly affordable technology allows viewers to “enter” 3Dsimulations and experience and interact with an environment via VR.Movies that use VR are entering the mainstream, too, and YouTube isplanningtosupportVRmoviesinitsservice.

PhilcodevelopedoneofthefirstVRheadsetsinthe1960s,andsecurityandmilitary initiatives were behind much of the funding of early VRdevelopment. In the past few years, however, as the technology hasbecome more widely available and affordable, the entertainment,marketing,mediaandretailsectorshavebeguntoadoptVR.Forexample,The New York Times distributed Google Cardboard VR headsets free ofcharge to its Sunday subscribers in an effort to broadenVR’s acceptance.Retailershavebegunexperimentingwithin-storeuseofVR,andconsumerinterestinithasbeengrowing.TheinitialproductionrunoftheOculusRiftVRheadsetsoldoutinlessthanaday,despitethedevice’s$599pricetag.

ResearchfirmStatistaconductedasurveyof1,013USindividualsaged19–49 in June 2015, and found that 44% of respondents said they are “veryinterested”inVR,whileanother26%saidtheyare“quiteinterested.”ThosepolledsaidtheyweremostinterestedinVRbecauseitallowsthemtofeelas if they are jumping into anotherworld; they cited that sensationmorefrequentlythanfactorssuchasinterestinthetechnologyitselfandinterestinanintensegamingexperience.

AccordingtoforecastsfromTracticaandCCSInsight,weestimatethatthecombined AR/VR market of was $1.2 billion in 2015, growing at a 122%CAGRto$12.7billionin2018.

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Digitallyfocusedluxurybrandsandhigher-endretailersarelikelytobeamongtheretailleadersinVRin2016.

Virtual reality | p. 3

PARTNERSHIPS | p. 5

ROBOTs | p. 6

WEARABLES | p. 8

DRONES | p. 10

CONNECTED HOMES | p. 11

STREAMING | p. 12

CYBERSECURITY | p. 14

AUTONOMOUS VEHICLES | p. 16

MOBILE PAYMENTS | p. 17

SMART CITIES | p. 19

FACIAL RECOGNITION | p. 25

3D PRINTING | p. 21

VOICE RECOGNITION | p. 26

AI PERSONAL ASSISTANTS | p. 23

O2O IN CHINA | p. 27

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FigureX.AugmentedRealityDeviceForecast($Bil.)

FigureX.AnnualVRHardwareandContentRevenuebySegment,WorldMarkets($Bil.)

WhyItIsaTrend

VR entered mainstream retail in 2015. British mass-market travel agentThomasCook,forexample,launchedaVRtrialusinganOculusRiftheadsetinaLondonstore.Theheadsetallowedcustomersto“trybeforetheybuy”bytakingavirtualtourofthecompany’sSENTIDOresortsandThomasCookAirlines planes. Bookings increased by 190% when customers used VR,accordingtoVisualise,theVRproductionfirmthatworkedontheproject.

Automaker Audi uses VR for marketing and retail. A marketing programallows customers to “drive” the famous Silverstone circuit, home of theBritishGrandPrix,andtakevirtualtoursofSingaporeasitlookedin1965.Inretail sales, Audi uses VR to allow customers to experience personallyconfigured cars—they choose a model, color and interior. The servicelaunched in selected dealerships in late 2015, and Audi expects toeventually use VR outside the showroom, allowing salespeople to use a“dealershipinabriefcase”topresenttoprospectivecustomers.

Hologram technology, which overlays images or data onto the physicalworldviaaviewer’sheadset, is relatedtoVR.Volvo isexperimentingwithholograms using Microsoft’s HoloLens technology. Volvo states that theprogram “will allow people to experience the technology in our cars in amore tangible way.…HoloLens could also one day enable people toconfigureacarandseechangesofcolor,trimorwheeldesigninthemostrealisticwaypossible.”

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WhattoExpect

Weexpecttoseecontinued,butslow,adoptionofVRtechnologyinseveralsectorsthisyear.Retailersandbrandsthatsellgoodsandserviceswithhighaveragesaleprices(suchascarsandholidaypackages)willleadthechargein VR adoption. For these categories, options for adapting the purchaseabound, and firsthand virtual experiences can help drive up conversionratesbygivingshoppersgreaterconfidence intheircustomizationchoices.In apparel, early adopters such as Tommy Hilfiger have led the way; thecompanyusedVRheadsetstoallowvisitorstoviewits2015catwalkshowin selected stores. And for companies focused on experiences, such ashotels, VR could offer a natural progression from the 360-degree virtualtoursofferedbyGoogleStreetViewandotherplatforms.

PARTNERSHIPS: LINKS ACROSS THE IOT As the Internetof Things (IoT) expands,partnershipsbetweenbrandsandtechfirmswillgrowandbusinesseswillsearchfortherightdevicestomeetcustomers’digitaldemands.

WhatItIs

Not since “B2B” and “cloud computing” became part of the businessvernacularhavesomanycompaniesbeenasexcitedaboutatechmemeasthey are about the IoT. The term encompasses everything from fitness-trackingwristbandstosupplychainlogisticstosensortechnology.AccordingtoCisco Systems, 50billiondeviceswill be connected to the IoTby 2020.Digitization and the expansion of the IoT are catalysts for growth, drivingneweconomicmodelsandnewgrowthopportunitiesacrossawiderangeofindustries.AsfirmsracedtodigitizetheirofferingsandcompeteintheIoTindustryin2015,unprecedentednumbersofpartnershipswereestablished.

WhyItIsaTrend

ManypartnershipswereannouncedattheCES2016tradeshowinJanuary:

• Samsung said its current partners include the Samsung SDI division;Corning, the maker of Gorilla Glass, which is found in most of theworld’ssmartphones;Microsoft,whichprovidestheoperatingsystemfor Samsung’s new tablet; Goldman Sachs, which is partnering withSamsung on security software; and BMW, which Samsung iscollaboratingwithonsmartcars.

• Intel announced it would partner with New Balance to work on anAndroidWearfitnesswatchthatisdueoutbynextholidayseason.

• IBM is partnering with sports apparel company Under Armour on aprojectforUnderArmour’sConnectedFitnessplatform.IBM’sWatsoncognitive-computing softwarewill processuserdata fromConnectedFitnessinordertoprovidereal-timehealthandfitnesscoaching.

• PanasonicannouncedthatitwaspartneringwithenergyproviderXcelEnergy, the City of Denver (on smart city initiatives), Facebook (onoptical data archiving), SunTrust Stadium (on digital signage), and

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CiscoSystemspredictsthat50billiondeviceswillbeconnectedtotheInternetofThingsby2020.

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variousauthoritiesanddevelopersontheupcomingOlympicGamesinRiodeJaneiro.

• Qualcomm said that Audi had selected its chip, which combinesintelligence, wireless connectivity and machine learning, for itsinfotainmentandadvanced-driver-assistanceplatform.

• Monster said that it has partnered with AllHipHop.com, luxuryautomobilemakerBentley,andprofessionalathletesShaquilleO’NealandCristianoRonaldoonnewproducts.

• FordannouncedapartnershipwithAmazon thatwill integrateEcho,Amazon’ssmart-homedevice,intocars.Thecollaborationwouldallowa person sitting in his living room to ask Amazon’s Alexa, Echo’spersonalassistant,tostarthiscarinthegarage.

• Volvo is partnering with Microsoft to enhance its connected-carstrategies and technologies. A Volvo owner can now press and holdtheactionbuttonontheMicrosoftBandinorderto issuecommandssuchas“Volvo,starttheheaterofmycar.”

WhattoExpect

TheexpansionoftheIoThascatalyzedgrowthacrossindustries,andweexpectthistrendtocontinue.MorecompanieswillformpartnershipsinordertoadvancetheirIoTinitiativesastheylooktodeveloptherightplatformfortheirtechnology.Furthermore,almostalloftoday’smodernmarketingtechniquesarebuiltonthenewgoldcurrencyofourera:data.Mergingcustomerdatawithprospectingdata,sothatbrandsandretailerscanreachpeoplewithmorepersonalmarketing,willresultinasignificantwaveofnewpartnerships.

ROBOTS: HELPERS AND COLLEAGUES As retail and other industries face increasing pressure to boost efficiencyandreducecosts,robotswillbeusedinmorewarehousesandfactories,onmore sales floors and in more homes—and humans and robots willincreasinglyworksidebyside.

WhatItIs

Robotswereoncethestuffofsciencefictionmovies,buttheyhavebeeninactualuse inmanufacturingsince the1960s.Wenormallypicture them inautomatedcarfactories—wherehugeroboticarmsdartaroundandsparksflyastherobotsweldanautomobilechassis—buttheyareincreasinglyusedinmanyotherkindsofworkplaces.TheInternationalFederationofRoboticsestimates that theglobalmarket for industrial robotswill totalnearly$12billionthisyear,andgrowatan8.3%CAGR,to$24billion,by2025.Amongretailers, Target and Lowe’s are furthest ahead in robot use. Target isworkingonusingrobotstoimprovethecustomerexperienceandLowe’sistestingrobotsthatcanlocateandretrieveitemswithinastore.

Theadvantagesofusingrobotsarewelldocumented:theycanwork24/7,theydonottakeholidaysorvacationdays,andtheycanofferthroughput,qualityandrepeatabilityatratesthatsurpassthoseofhumanworkers.Thedrawbacksofusingrobotsarealsowellknown:theyhaveahighinitialcost,

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Anewbreedofrobotsunderstandsandrespondstohumanlanguagecommands.

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theyseemhardtosetup,theyrequiredifficultandcostlymaintenance,andthey have the potential to cause human injury or death if they have amassivefailure.

Figure2.WorldwideSpendingonIndustrialRobotics(USDBil.)

Source:InternationalFederationofRobotics/JapanRobotAssociation/MinistryofEconomy,TradeandIndustry/euRobotics/companyreports/BostonConsultingGroup

WhyItIsaTrend

Roboticshasbenefited fromthesame trends thatboosted theelectronicsindustry:thecostofcomputinghasdecreased,owingtoMoore’sLaw,andincreasedcomputingpowerhas, in turn, increasedthepowerofsoftware.Simultaneous advances in image processing and artificial intelligence (AI)havealsoacceleratedtheuseof low-costrobots.Robotsarenowusedforwarehouse tasks, for cleaning homes, for entertaining consumers (in theformofdrones),andasgreetersandcustomerserviceagentsindepartmentstores. Forexample, iRobotoffers theRoomba robot,whichautomaticallycreates a floorplan and vacuums floors, and the company offers otherrobotsforfloormoppingandgutterandwindowcleaning.

Still, therearemanymorerobotson thehorizon,asevidencedbyhealthylevels of venture capital investment. Fundingof robotics startups grewbyan average of 13.8% from 2011 through 2013 and jumped 36%, to $341million, in 2014, according to Hizook.com and TechCrunch.com. Excludinginvestmentsindronemakers,thefinancingofroboticscompaniesincreasedby 24% in 2014. The robotics landscape also includes several globaltechnology conglomerates, which are developing a variety of automatedsystems, including autonomous guided vehicles, robot arms, storagesystems,andconveyorbeltsandotherindustrialsystems

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WhattoExpect

We expect an explosion in the deployment of robots in the workplace,wheretheywillworksidebysidewithhumans.Amazonexpectstoachievesavingsof$400–$900millionbyusingKivaSystems robots,whichwork incombination with humans in fulfillment centers, rather than replacinghuman workers. Amazon’s success has encouraged several startups todeveloprobotsandautomationsystemsforuseinwarehouses,particularlyine-commercefulfillmenthouses.

Specialty gift catalogs have long featured robots that serve cocktails, andJapanesedepartment stores andbankshavebeenusing robot greeters.Anew breed of robots, however, understands and responds to humanlanguage commands. At CES 2016, IBM demonstrated how its WatsonsupercomputercouldbeusedwithPepper,arobotdevelopedbySoftBankofJapan.Pepperisabletorespondtospokencommandsaswellasproducehuman-like emotional responses and physical gestures. IBM is offering itsWatson technology to enterprises seeking to deploy robots in retail andcustomerserviceenvironments.

Toallayfearsthatrobotsmightrunamokandinjureorkillhumans(astheyoftendo insciencefictionmovies),robotmakersareworkingfeverishlytoprevent accidents. For example, German technology company Bosch hasdeveloped sensors that detect contact with human skin; these can beemployedtostoparobot’smotionortriggerashutdown.

Oneofthebiggestfearsworkersfaceintheageofroboticsis,ofcourse,theloss of their jobs. Technological advances are leading to more and moreworkersbeingreplacedbyautomatedmachines,andjobsthatrequirealowlevelof social interaction,creativity,ormobilityanddexterityare likely tobe the first to be replaced. Although many people know that a shift iscomingandthatcertaintypesof jobswillbeunder immensethreat inthecoming years, most companies are currently underprepared to face theinevitablechanges.

WEARABLES: ALL ABOUT WELLNESS Fitbits, smartwatches and other wearables are leading the way in thewellnessmarket, and sales of these products are projected to grow from$20billionin2015toalmost$70billionin2025.

WhatItIs

Wearables encompass a wide range of products, including fitness bands,smartwatches, heart rate monitors, clothing with sensors, eyewear,headgear, footwear and even skin patches. Broadly speaking, they areelectronic gadgets that are worn on the body and that communicateinformation to an outside network. Advances in the miniaturization ofelectronics and wireless communication technology have enabled thesedevicestomonitorawearer’shealthandfitness,andtopredictcatastrophichealth problems. Market research firm IDTechEx estimates that thewearablesmarketwillgrowfrom$20billionin2015toalmost$70billionin2025,ata13.3%CAGR.

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Mostwearableswillfocusonwellness,helpingwearerstrackandimprovetheirfitness,nutritionandsleep.

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WhyItIsaTrend

Wearables have shown strong but uneven growth across categories. Forexample, fitness-tracker wristbands have become hugely popular, buttechnology limitations regarding the size of sensors have slowed thedevelopment and adoption of smart clothing. Early versions of smartclothing, such as Ralph Lauren’s sports shirts, have been widely adoptedonlybyseriousathletes.Thesetypesofwearablegarmentswillcontinuetolag in terms of popularity until manufacturers can place sensors in themthatdonotcausediscomfortforthewearer.

Despite mixed consumer reviews, total shipments of wearable fitnesstrackersreached21millioninthethirdquarterof2015,accordingtoIDC,amarket intelligence firm. The Fitbit topped the list, with 4.4 million unitsshipped, followed by the AppleWatch’s 3.6 million units. North Americawas the leading wearables market in 2015 in terms of shipments andinnovation,followedbyChinaandEurope.

WhattoExpect

In 2016, most wearables will focus on wellness, in areas such as fitness,nutrition and sleep. The more popular products will provide a one-stop,integratedsolutionformonitoringmanyaspectsofpersonalhealth,notjustthewearer’sactivitylevel. Inthefuture,wemayseefurtherintegrationofwearables,andthedatatheycollect,withpersonalhealthinsuranceplans.If fitness devices help customers meet health goals, their insurancepremiums may be reduced. A few companies already use data collectedfrom a device tomake recommendations and predictions for thewearer.UnderArmour’sHealthBoxincludesasportsband,aheartratemonitoranda connected scale for a retail priceof$400. iFit hasdevelopeda seriesofproductsthatincludefitnesstrackers,equipmentmodulesandworkoutSDcards.

AtCES2016,anumberofproducts that tracksleeppatternsandpromotehealthy sleep were on display, including monitors and smart mattresses.This subcategory should see continued growth and innovation. SleepNumber introduced its smart mattress, called the “it” bed, at CES. Themattress adjusts to a person’s preferred firmness levels based on datagatheredthroughtheSleepIQapp.

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Finally, as more advanced technologies are integrated into consumerwearables, we expect to see more product development partnershipsbetween traditional technology companies and retail fashion companies:IBM,forexample,hasalreadydevelopedvoice-controlledfitnesssunglassesinpartnershipwithfashioneyewearcompanyLuxottica.

DRONES: FROM TOYS TO TOOLS No longer just curiosities andplaythings,droneswill beput toevenmorepracticalcommercialandindustrialuses.

WhatItIs

Once purely a tool of the military, drones generated a good deal ofattentionatCES2010andreappearedinheadlinesinDecember2013,whenAmazonboasted that itwas testing them for residential packagedelivery.Since then, drones have become a popular consumer electronics productand at the same time a nuisance to airports and sensitive facilities. Theycomeinallshapesandsizes,withvaryingnumbersofpropellers,andwithorwithout cameras. The consumer dronemarket is expected to hit $953million(and2.9millionunits)thisyear,upfromabout$450millionin2015,growing at a rate of 115%, according to the Consumer TechnologyAssociation.

WhyItIsaTrend

Droneshaveundergonethefullhypecycleduringthelastfiveyears,firstasinnovativeproductsandthensteadilygrowingintoablockbusterconsumerproductcategory.Estimatesofdronesalesduringthe2015holidayseasonreached 1 million units, and revenues for leading drone maker DJI wereexpectedtohit$1billionin2015.

Alongsidetheirmeteoricriseinpopularity,droneshavebeenthecenterofcontroversy in a number of incidents. They have been used to snoop onmovie locations and flown into airspacedesignated for airports andothersecurity installations. One hapless operator even inadvertently landed hisdrone on the White House lawn. Drones’ ability to encroach on others’airspaceledtheFAAtodraftrulesinDecember2015requiringthatdronesflybelow400feetandthatownersregisterthem.

Drone technology continues to improve, including in terms of battery lifeandintelligence.AtCES2015,droneswereabletoavoidbasicobstacles;atCES 2016, they showed improved functionality, including cameras thatenabled them to follow their owner. To comply with growing regulation,drone maker DJI said that it was adding geolocation capabilities to itsdronestokeepthemoutofairportsandothersensitiveareas.

Droneshavealsobeenputtopracticaluse,suchasfordeliveringmedicinein regions of rugged terrain or military conflict, but there are potentialcommercial uses in developed areas as well. In San Francisco, QuiQui isplanningtoofferaerialdeliveryofpharmacyitemsintheMissionDistrictofthecity.AdronedemonstratedatCES2016isevencapableoftransportingahuman,i.e.,functioningasaremote-controlledhelicopter.

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Dronesareespeciallywellsuitedforreachingpeopleandsitesinremotelocations.

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WhattoExpect

Dronesaregraduallyevolvingfrombeingjusttechnicalcuriositiesandtoysintobeingcommerciallyuseful.Amazonrecentlyreleasedavideoshowinghomepackagedeliverybydrone,althoughmanytechnicalandoperationalchallengesremain.Giventhattheyarebynatureaerialvehicles,dronesareespeciallywellsuitedforreachingpeopleandsitesinremotelocations.Thebestusesof drones in thenear termare likely commercial and industrial,andincludesurveyingrealestate,electricallinesandoilpipelines.

Major drone makers are likely to add geolocation functionality to theirproducts to keep them out of trouble and mitigate regulators’ fearssomewhat, although thereare stillmanynewwaysdrones (likeanyothertechnology)couldbeusedforill.Still,dronetechnologyisinitsinfancyandwilllikelyevolveascompaniesfindnewapplicationsforit.

CONNECTED HOMES: THE COMPETITION HEATS UP More retail and technology companies will join the race to helphomeowners control everything from alarm systems to heating systemswithjustataponasmartphone.

WhatItIsInaconnectedhome,orsmarthome,keyelectricalappliancesandsystemsare interconnected and may be remotely accessed, controlled andmonitoredviaanetworkmanipulatedbyasmartphone,tabletorcomputer.Ahomeautomationhuborplatformallowsuserstocontroldevicessuchasheaters, air conditioners and lights through a single device thatcommunicates with their smartphone. Examples of smart devices includePhilipsHue lights and theNest LearningThermostat. Revenue from smarthome products is expected to hit $1.2 billion (and 8.9 million units) thisyear, up 18% from about $1 billion last year, according to the ConsumerTechnologyAssociation.Twokeyfactorshaveslowedtheadoptionofsmarthometechnology:theinabilityofthesedevicestocommunicatewitheachother seamlessly (consumers often need different apps to control them)andtheirhighcost.

WhyItIsaTrend

Theconnectedhomemarkethasbeenteemingwithsmartdevicesforsometime. Nearly every home appliance now comeswith smart capabilities orcouldbemade“smart”withtheuseofasmartswitch.

Home security is the most sought-after functionality among smart homeadopters.Connected-homesecuritydevicesandsystemsallowuserstonotonly make their homes safer, but to keep track of elderly occupants,childrenandpetsthroughremotemonitoring.

AtCES2016,Panasonicdemonstrated itsÔrahome-control system,whichfeaturesasinglesoftwareplatformthat letsownerscontrolhomedevicesremotely, allowing them to open locks, operate appliances, monitor petsandturnonmusicevenwhentheyarenotathome.

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Nearlyeveryhomeappliancenowcomeswithsmartcapabilitiesorcouldbemade“smart”withtheuseofasmartswitch.

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WhattoExpect

Threefundamentaltrendscouldtakeshapethisyear.First, themarketforhubs and platformsmay getmore competitive as themost popular hubs,suchasGoogle’sNestandApple’sHomeKit,allowawidersetofdevicestowork together.Thiswillmakesmarthomeadoptionmorepocket-friendly,because consumers will not have to buy different hubs for devices fromdifferent brands. Second, the home security segment will boost theconnected-homemarket.Finally,connectedhomesandconnectedcarswillconverge,withcarsfunctioningasanextensionofthesmartdevicesintheuser’shome.

Several companies that unveiled devices at CES this year noted thoseproducts’compatibilitywithparticularplatforms.Thiswillbean importantmarketing point, as consumers are looking for such compatibility. LG, forexample, announced it was partnering with Google to develop smartdevices, andmany of Google’s smart products are alreadymarketedwiththe“WorkswithNest”tagline.

In the smart security segment, two broad developments will boost theconnected-home market. First, more big companies will join the smarthome security race this year, following the many startups and smallercompanies thathavecomeoutwith innovativeandpopularproducts.Thebigguns,suchasSamsungandGoogle’sNest,alreadyoffersuccessfulsmartsecuritycameras,locksandotherproducts,andLGrecentlyuppeditsgamebyunveilingitsownsmartsecuritysolution.

Second, the bigger security services companies that enter the race willintroduce more integrated products or refine their existing securitysolutions in order to work better with other home systems. LG’s newsolution has integrated a large-field-of-view security camera, a hub, anenvironmentalmonitorandasirenintoonedevicethatcanworkseamlesslywithasmarthome’sotherdevices.

STREAMING: TIME TO CUT THE CORD Widespread use of devices such as Apple TV and services such as Netflixsuggest that thiswill be “theyearof streaming.”Viewers areexpected tofinallyabandoncabletelevisionsubscriptionsindroves.

WhatItIs

The Internet has democratized access to TV and video content. Cable nolonger has a monopoly on first-run premium content—Netflix, AmazonPrimeandothershaveemergedasstrongcompetitors.DevicessuchastheAppleTV,AmazonFireTV,RokuandsmartTVsnowofferamultifunctionalwirelessalternativetotheTVset-upbox.Asaresult,consumersincreasinglyexpecttopayforonlythecontenttheywant,deliveredwhentheywant.Inotherwords,theInternetisbringingdowntheoldcableTVbundlemodel.

AdvancesinmobileandInternettechnologyhavealsomadetheInternetamore stable vehicle for accessing high-quality video—and viewing deviceshavebecomecheaper. Inaddition,Netflix announcedatCES2016 that itsservice isnowavailable inover130countriesworldwide.Thus,thisyear isset to be a big one in terms of consumers cutting the cable cord andabandoning their cable subscriptions. PwC estimates that the streaming

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FacedwithdecreasingnumbersofcableTVsubscribers,distributorsandTVnetworkswilllookforwaystorebalancetheirrevenuestreams.

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videomarketwill beworth $11.2 billion this year andwill grow at a 20%CAGR,to$19.2billion.Inaddition,wecalculatethatthesubscriptionmusicservicesmarketwilltotalmorethan$400millionthisyear,andgrowto$1.5billion by 2019, based on estimates frommusic industry association NewMusicSeminar.

Figure3.EstimatedGlobalElectronicHomeVideoMarket(USDBil.)

Source:PwC

WhyItIsaTrend

Pay TV distributors in the US, such as AT&T, Dish Network, TimeWarnerCableandVerizon,arelookingforwaystorebalancetheirrevenuestreams.Onewayforthemtodothatistofocusmoreontheirbroadbandbusiness,whichremainsessentialtoconsumerswhostillneedtoaccesstheInternet.Anotherwayistoventureintoover-the-top(online-only)TVservices.

• DishannouncedSlingTVatlastyear’sCES.SlingTVisacheaper,liveTVonline bundle package that includes several sports channels. It wasestimatedtohaveabout400,000subscribersasofNovember2015andwasexpectedtocontributearound$100milliontoDish’srevenueslastyear. Even though Sling TV subscriptions have grown “according toexpectations,” there are doubts about the service’s ability to attractandretainnewsubscribers.

• TimeWarner Cable launched a Roku trial for its TWC TV app in NewYork City in November 2015. However, the service still requirescustomerstosubscribetothecompany’straditionalcableTVserviceinadditiontoitsbroadbandservice.

TVnetworkshavealsomovedto leverage the Internet inorder todirectlyaccessviewersandcounterthegrowthofNetflix,AmazonPrimeandHulu.

• HBO launched its over-the-toponline streaming service,HBONow, in2015.Showtime,CBSandLifetimealsoallannouncedorlaunchedover-the-topvideoservices.

• NBCUniversallaunchedadigitalcomedychannel,Seeso,earlythisyear.It offers a mix of original series, NBC late-night shows and archivedcontent.

At the same time, the big aggregators—Netflix and Amazon Prime—havemade even bigger bets on original content. Netflix plans to double its

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original programming in 2016. Based on an estimated 74 millionsubscribers,wecalculate thatNetflix streamedapproximately40exabytes(40x1018bytes)ofdata(assuming45Gbofconsumptionpermonth)inthefourthquarterof2015,ascomparedto31exabytesintheyear-agoquarter.

Lastly,thebigonlinevideocompaniesforuser-generatedmedia—YouTubeand Vimeo—are moving to play a greater role in the new landscape.YouTube is adding support forVR and360-degree video, anticipating thatuser-generatedcontentwillmoveinthatdirection.SnapchatandFacebookarealsoputtingvideoattheforefrontoftheirstrategies,bettingthatitwillbe the way users engage with the Internet going forward. At CES 2016,ChineseconsumerelectronicsmakerTCLannounceda lineof4KUHDTVswithintegratedstreamingfunctionsfromRoku.

WhattoExpect

The traditional broadcast TV model is increasingly being replaced by thecloud. There is no reason to think that viewers will stick with cable,especiallywhen cable fees continue to climb. Themajor providers, AT&T,Comcast,DishandTimeWarnerCable,areallplanningtoincreasepricesin2016.WithsubscriptionfeesafractionofthecostofcableTVserviceintheUS,streamingservicesareamoreattractiveoffering formanyconsumers.FacedwithdecreasingnumbersofcableTVsubscribers,distributorsandTVnetworkswill continue to roll out streaming services. But theymight findtheyaretoolate,giventhatNetflixandAmazonarealreadyexcellinginthespace. The proliferation of streaming options will make the market a lotmore confusing for consumers, but the increased competition will bringaboutmoreflexibilityatlowerprices.

CYBERSECURITY: KEEPING THE BAD GUYS OUT The cybersecurity market will continue to grow as the number of wayscriminals can invade digital systems increases alongside increased use ofmobiledevicesandmobilepayments.

WhatItIsCybersecurity refers to thetoolsandtechniquesusedtokeep informationthieves, trespassers and vandals out of IT systems, which consist ofhardwareandsoftwareandthedatathatresideonthem.Systemsneedto

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be protected against unauthorized access, the unauthorized retrieval ofdata, and the insertion of foreign data and computer code.We calculatethat thecybersecuritymarketwill growataCAGRofnearly18%over thenextfouryears,basedonresearchfirmGartner’sestimatesthatthemarketwasworth$75billionlastyearandwillgrowto$170billionby2020.

Examples of cybersecurity breaches include spam (unwanted, unsolicitedemail), malware (malicious software) and phishing (fraudulent email thatattempts to trick the victim into opening an attachment that launchesmalwareorlinkstoafakewebsitethatstealspersonalinformation).Onceacomputerisunderthecontrolofmalware,itcanbecontrolledremotelytosend spam, spreadmalwareor forotherpurposes. If unable to gainentrythrough one of these ways, miscreants can just flood a server witherroneousdatarequestsinaDoS(denialofservice)attack.

WhyItIsaTrendHackershaveobtained internal, customerand/or creditcarddata inmanywell-publicized data incursions. Target was hacked in 2013, as wereJPMorganChase,HomeDepot,StaplesandSonyPictures in2014. In2015,criminals used Social Security numbers, birth dates, addresses and otherpersonal information to obtain tax returns and other filings, which werethenused to file fraudulent returnswith theUS InternalRevenueService;theagencysentnearly$50millioninrefundsbeforedetectingthebreach.

At the same time, greater consumer use ofmobile payments and greateruse of mobile devices for commerce have only increased the number ofopportunities for cybercriminals. Many of the publicized hackings havedemonstratedthattheweakestlinkinthesystemisoftenthehomeserveroraccountingsystemwherecustomerinformationissaved,ratherthanthepoint-of-saleterminalorpaymentsystem.

Although we typically think of cybersecurity in terms of corporate andfinancial information, nearly all devices with a processor andcommunicationcapabilitiesneedsafeguards.Inademonstrationlastyear,aGeneralMotorsvehiclewashackedthroughitsdiagnosticportandforcedtodrive off the road, highlighting the vulnerability of Internet-connected carsystems.

Given the huge growth in digital and mobile commerce, devices, andtechnologies, cybersecurity isnowakeyconcern forenterprises, retailers,network operators, electronic device manufacturers, communications-protocoldesignersandconsumers.

WhattoExpect

With the increasing digitalization of our lives and greater reliance on e-commerce and mobile commerce, the number of platforms and entrypoints through which criminals can invade our IT systems is poised toincrease exponentially. Moreover, the increasing adoption of mobilepayment systems, which fuse mobile computing technology with creditcardsandothertraditionalpaymentsystems,offersanattractivetargetforcriminals.

In addition, the IoT is awindfall for the bad guys,with 50 billion devicesexpectedtobeconnectedshortly,offeringanadditional50billion(ormore)

Cybersecurityhasbeenelevatedtooneofthekeyconcernssharedbyenterprises,retailers,networkoperators,electronicdevicemanufacturers,communications-protocoldesignersandconsumers.

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access points for hackers. Many of these devices will be storing andtransmitting a great deal of personal information, including health andmedicaldata, in addition to traditionalpayment information.At the sametime,thenumberoftechnologiesanddevicesusedtoaccesstheInternet—including smartphones,wi-fi devices, smart TVs andBluetoothdevices—isexploding.Thecoverageofcybersecuritywillhavetobeexpandedtosecuretherapidlygrowingnumberofconnecteddevicesandinterfaces.

AUTONOMOUS VEHICLES: THE JETSONS ARE FINALLY COMING Thedriverlesscarmarketwillbecomemorecrowdedascompaniesworktoperfect driverless cars that can conserve energy, reduce accidents, andtransportthedisabledandelderly.

WhatItIs

Science fictionmovieshave longpresenteda futurewhere roboticdriversoperate cars. Today, a host of companies—including the major automanufacturersandmanymajorUSandforeigntechnologycompanies—arehardatworkmaking this visiona reality.Autonomousvehicles could saveresources and energy, free commuters from the need to concentrate ontheir driving, reduce automobile accidents and fatalities, and offer newtransportationoptionsfortheelderlyanddisabled.Thegloballight-vehiclemarketisestimatedtototalabout95millionvehiclesthisyear,accordingtoKPMG.Insideevs.comestimatesthat116,548electricvehicleswereshippedin2015; ifwemultiply thatnumberbyanassumedpriceof$100,000pervehicle, then the market for autonomous vehicles could exceed $11.5billion.

WhyItIsaTrend

Afewcompanieshavealreadydemonstrateddriverlesscars.At lastyear’sCES,forexample,AudidemonstratedadriverlessvehiclethathaddriventoLas Vegas from Silicon Valley. However, these vehicles are still at least acoupleofyearsawayfromgeneralavailability.Teslaappearstobe leadingthe field. Recent software updates enable its vehicles to offer driver-assistedservicessuchasautomatedlanechanging,highwaydrivingandself-parking. Other companies, including Audi and Bosch, have announcedcapabilitiesforpiloteddrivingandautomatedparking.

Googlealsoappearstohaveasubstantialtechnologyleadovercompetitors.It road tested its second generation of driverless cars in the streetssurroundingitsSiliconValleyheadquarterslastyear,andpostedtheresults

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Consumerelectronics,softwareandchipmakercompaniesmustallfindpartnerswithexperiencemanufacturingreliablevehicles.

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onablog.AfterbeingmumonthetopicofdriverlesscarsatCES2015,Fordannouncedthisyearthatitsvehicleshadmovedfromtheresearchphasetothe advanced-engineering phase. There are also reports that Apple has ateamof1,000engineersworkingonitsownautonomouscarproject.

This year’s CES featured many interesting demonstrations of connectionsbetweenthesmarthomeandthesmartcar.Fordsaidit ispartneringwithAmazon to enable drivers to turn on the lights or open the garage doorusing Amazon’s Echo device andAlexa personal assistant. The connectionwill alsoallowFordowners touseEcho to instruct their car to startor toturnonitsheater.

WhattoExpect

The driverless car market will become even more crowded: it is alreadyhuge and attractive, comprising approximately 94 million units and $2trillion dollars, according to IHS and Marketline estimates. Companiesinvolved in themarket includeUS carmakers Ford,GMand Tesla; foreigncarmakers, including the German, Japanese and South Koreanmanufacturers; technology giants such as Apple, Google, Qualcomm andNvidia;andChinesetechnologycompanies, includingInternet leaderBaiduandasecretivestartupcalledFaradayFuture,whichisbackedbyaChinesebillionaire.Samsunghasalsosaidthat it isestablishingateamtoresearchdriverlesscars.

Abrutalshakeoutislikely,duetothetoughtechnologicalhurdlesthatmustbeovercomeinordertoproduceadriverlesscar.Suchacarmustprovidereliable transportation, and its image-processing system must respondcorrectly (and safely) to a wide variety of driving conditions, includingweather, unforeseen obstacles and objects in the road. Safety is theparamount concern,particularly for legal reasons, as lawsuits arising fromaccidentscouldquicklybankruptacarmaker.Clearly,consumerelectronicsandsoftwarecompanies,aswellaschipmakers,mustfindpartnerswithexperience manufacturing reliable vehicles. The strengths of the traditionalcarmakers have not historically focused on image processing and AIsoftware,soasignificantdegreeofconsolidationorpartnershipisessential.

MOBILE PAYMENTS: CASH IS DEAD North American consumers will increase their use of mobile paymentsystems like Apple Pay, following the path already taken by shoppers inEuropeandAsia.

WhatItIs

Mobile payments are transactions performed from or through a mobiledevice. Instead of paying with cash, check or credit card, consumers cannow use a mobile phone to pay for a wide range of goods and services.According to a recent Accenture survey, 52% of North Americans are“extremely aware” of mobile payments, but only 18% make them on aregularbasis.Unsurprisingly,millennialsandhigher-incomehouseholdsleadthepack,with23%and38%ofthesegroups,respectively,usingcontactlesspaymentservicesatleastonceaweek.

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$4 $9$27

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2014 2015 2016 2017 2018 2019

Mobile wallets have struggled to find favor in the US, where consumershavebeen slower toadopt the technology than consumers inEuropeandAsia have been. China is the leadingmobile paymentsmarket, andmanyChinesecompaniesoffersomedegreeofmobilecommercesupport.

Figure4.EstimatedUSProximityMobilePaymentTransactionValue(USDBil.)

Source:eMarketer

WhyItIsaTrend

TheuseofmobilepaymentsintheUSisexpectedtorampupaggressively,accordingtoeMarketer.Totaltransactionvaluewilltriplein2016duetoagrowing user base, broader merchant acceptance and consumers usingtheirphonesmorefrequentlytomakepoint-of-salepaymentsformedium-andhigh-pricedproducts.eMarketerfurtherestimatesthatthetotalvalueof USmobile payment transactionsmore than doubled in 2015 from theyearbefore,reaching$8.7billion.Thefirmalsoanticipatesthat2016willbea watershed year for mobile payments in the US, with transaction valuetripling, to $27.1 billion and growing at a rate in excess of 80% through2019.

Mobilepaymentprogramsinclude:

• SamsungPay:SamsungplanstoexpanditsmobilepaymentserviceintheUSthisyear,allowinguserstoshoponlineandwithmoremodelsof smartphones that will support its electronic wallet. Lower-pricedSamsungphoneswill likelyofferthemobilewallet in2016,accordingto company statements. Samsung Pay already leads itsmajor rivals,AppleandAndroid,havinglauncheditsUSserviceinSeptember2015withtechnologythatiswidelyusedatmoststores.

• ApplePay:Appleannounced inDecember2015that itwould launchits new Apple Pay electronic payment service in China in earlyFebruary 2016. The company has struck deals recently with China’sfour big state-run banks that will allow Apple Pay users to link theservice with their local bank accounts. Apple Pay could still faceregulatory hurdles in China, where banking and e-commerce areoverseenbyanumberofgovernmentagencies.ApplePayiscurrentlyliveintheUS,theUK,CanadaandAustralia,butAppleplanstobringitto Hong Kong, Spain and Singapore in 2016. Apple Pay willundoubtedlyfacestiffcompetitionfromthemoreestablishedmobilepaymentservices inChina, includingTencent’sWeChatandAlibaba’sAlipay.

Chinaistheleadingmobilepaymentsmarket.

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• Alipay: Created by the Chinese e-commerce juggernaut Alibaba andlaterspunoff,Alipayisadigitalwalletthatshoppers(mostlyinChina)usetobuyproductsonline,ontheirphonesandeveninstores.Alipayis a phenomenon that is difficult to fathom outside China. InNovember,onChina’sversionofBlackFriday,Alipayhandledarecord$9.3billionintransactions.Itissobigthatithas350millionregisteredusers—almosttriplethenumberof itsclosestUSrival,PayPal.Alipaycontrolsaround80%ofonlinepaymentsinChina.

• WeChat Pay:WeChat Pay is an app on Tencent’s popular WeChatmessagingservice thatcanbeused inavarietyofshops inChina forcashless transactions, much the same way as Apple Pay is used.WeChat Pay does not aim to compete with the existing onlinepayment systems or to replace Tencent’s other payment system,Tenpay.WeChatPay is somethinga littledifferent, a creationof theWeChat social network and another step in commercializing theWeChat platform. Inmid-November, Tencent announced that it hadmadeWeChatPayavailable inmore than20 countries.According toXinhua,60%ofWeChatusershaveactivatedthepaymentservice,andsince the service’s launch less than two years ago, more than 200million users have bound their credit cards to their accounts. InFebruary2015,WeChataddedafunctionthatletsuserssendavirtualred envelope (hongbao) or “luckymoney,”which is a customary giftfor children and others in China, in time for the traditional ChineseNewYear/SpringFestival.

WhattoExpect

AdoptionratesofmobilepaymentsystemssuchasApplePaywill increasefrom their current, slow pace. Over time, consumers will likely see theadded value these services provide (the loyalty benefits offered byStarbucksareoneexampleof this).Mobilepayment systemswill likelybemorepopularthancreditanddebitcardsasearlyas2020.

Mobile wallets will become standard on newer smartphones, and moreretailerswill accept proximity payments from systems such as Apple Pay,AndroidPay andSamsungPay. Therewill alsobe significant consolidationamong the hundreds of mobile wallet providers currently in the market;theremaybesomeacquisitionactivity,butmostserviceswill justceasetoexistastheindustrymatures.

SMART CITIES: AIDING URBAN GROWTH Asurbanpopulationsgrow,morecitieswilllookfortechnologicalsolutionstoimproveservices,updateinfrastructureandenhancequalityoflife.

WhatItIs

Asmartcityusesinformationandcommunicationtechnologiestoenhancethequality,performanceandinteractivityofurbanservices,toreducecostsand resource usage, and to improve contact between citizens and thegovernment. Smart city technology has been developed for government

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services, transport and traffic management, energy, healthcare, water,innovativeurbanagricultureandwastemanagement.

The growth in urbanpopulations is driving the smart citiesmarket. Thesepopulations are growing exponentially, and by 2030, 5 billion people willhavesurged intocities,accordingtoaUnitedNationsreport.By2050,6.3billion of the world’s populationwill live in cities, and nearly 90% of thisincrease in urban population will occur in Africa and Asia. These globaltrendshighlight theneed tomodernize cities’ infrastructures anddevelopsmartcitytechnologies.

The smart cities sector, which includes everything from revamping theenergy grid to digitizing government processes, is estimated to become a$1.5trillionmarketby2020,accordingtoconsultingfirmFrost&Sullivan.

WhyItIsaTrend

In2016,morecitieswillbe smart cities—eitherhavingbeenbuilt so fromscratch, like Songdo in South Korea, or as a result of upgradedinfrastructure,likeAmsterdam.

• Singapore has wholeheartedly embraced smart city technology. Tobringitsvisiontofruition,thegovernmentcreatedavirtual3DcopyofSingaporeandwiredupasingleprecinct—theJurongLakeDistrict—touseasa testbed fora rangeofurbandigitalexperiments,deployingover1,000sensorstomonitoreverythingfromtraffictostreet lights.New data hubs, known as Above Ground Boxes, provide high-speedfiberconnectivityandpoweratthestreetlevel,andaccommodateallthe sensors. An automated sanitation system, built by TemasekPolytechnic and ZWEEC Analytics, is being tested to determine thecleanliness of public areas; it relies on advanced video analytics andsmart bins. A driverless buggy built by the National University ofSingapore and the Singapore-MIT Alliance for Research andTechnologyCentreisalreadyferryingpassengers.

• AT&T has launched a series of alliances with other technologycompanies aimed at providing IoT solutions to cities, with Atlanta,Chicago and Dallas the first to benefit. Cisco Systems, Deloitte,Ericsson, GE, IBM and Intel have partnered with AT&T to providesmart city technology across countrieswhere AT&T has a presence–primarilytheUSandMexico.

• Panasonicannouncedthat ithas teamedupwiththecityandcountyofDenver to transformDenver intoa smart city tohelp saveenergyand better manage resources. The company said that its PanasonicCityNowprojectwillincludegearsuchasInternet-connectedsecuritycamerasandasmartsolargrid.

Thesmartcitiessector,whichincludeseverythingfromrevampingtheenergygridtodigitizinggovernmentsystems,isestimatedtobecomea$1.5trillionmarketby2020.

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• Boschlaunchedsensor-basedproductsformonitoringandcontrollingtraffic, street illumination, air quality and parking in cities. The newBosch Retrofit eCall Plug is a smart device that uses accelerationsensors and intelligent, embedded algorithms to detect an accidentand then send data to a smartphone app via Bluetooth. This data issent to a back-end IT system that can determine actions, such ashavingacallcentercallthedrivertoprovideassistanceor,inextremecases, making an emergency call. The company has also developedsafety information systems thatwarnabout conditions suchasblackiceandwrong-waydrivers,anditisdevelopingotherproductstohelpreducetheeffectofhumanerrorinaccidents.BoschisalsodevelopingfullyautomatedparkingsystemsandworkingwithTomTomonmoreaccuratemaps.

WhattoExpect

Growing awareness and adoption of smart city technologies will spurcountriesandcitiestocreatepoliciesthatprioritizefundinganddocumenttechnicalandbusinessguidelines.Atthesametime,thesewillbringuniquenewchallenges.Asdigitalinterconnectionevolvesinsmartcities,therewillbeacorrespondingneedtoensurethesafety,stabilityandreliabilityofthistechnology. We expect a greater emphasis on security, with smart cityauthorities implementingdigitalsecuritypracticesthatprotect informationandpreventinterruptionstoservice.

Information from social media, crowdsourcing and sharing economycompanieswillhaveagreater impacton smart city technology.TheWazetraffic app is a great example of this: it provides crowdsourced trafficinformation for commuters. If integrated with systems in a city’stransportationmanagementcenter,such informationcouldhelpoperatorsupdate digital signs, adjust traffic signals and dispatch responders morequickly.

3D PRINTING: FOR INDUSTRY, CRAFTS AND…DINNER? A third industrial revolution will take root as 3D technology allows smallretailersandindividualconsumerstodesignandproducegoods.

WhatItIs

3Dprintingrepresentsamajordisruptioninmanufacturing:itenablessmallshops and individuals to design and produce their own objects, andessentially moves manufacturing away from factories, portending a thirdindustrial revolution. The technology builds on the ink-jet printing of the1970s,butitisnotprintingperse.Rather,3Dprintingreferstotheprocessmachinethatextrudessuccessivelayersofmaterial,typicallyaplasticresin.Itistypicallyathree-stepprocess:modeling(inwhichtheitemisdesigned),printing and finishing (if necessary). Apart frommanufacturing, there aremany applications of the technology for consumer use, including inmedicine, education, art and design. The market for printer hardware,materialsandservicesisexpectedtogrowfrom$4.3billionin2015to$17.7billionin2020,ata33%CAGR,accordingtomarketresearchfirmContext.

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Researchersareworkingonprintingfoodusingorganicinputs,andonprintingtextiles,whichcouldhavehugeimplicationsfortheapparelindustry.

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WhyItIsaTrend

3D-printing technology has numerous applications in design andmanufacturing, including product development, the visualization of three-dimensionaldata,rapidprototypingandmanufacturing,especiallyforsmallquantities.Moreover, 3D printing can help companies accelerate productdevelopment,developnewmanufacturingprocessesandlocatenewprofitsources. There have been well-publicized examples of 3D printing beingused in ways that benefit humanity, such as to create prosthetic limbs.Otherapplicationsincludevehicleparts,construction(evenofhomes),andothertypesofmedicalandbiomedicalpartsanddevices.Aswithanynewtechnology, this one can be used for good or ill, and plans for the 3DprintingofplasticfirearmsarealreadyavailableontheInternet,leavinglawenforcementagenciesscramblingtorespond.

Forconsumers,3Dprintingenablesindividualstoexplorethelimitsoftheircreativity and imagination, and subcultures of “makers”—individuals whoprefer tomake their ownobjects—have formed. They assemble atmakerfairs, where they share and discuss their creations. Consumers can alsodownload or purchase designs on the Internet andmanufacture items athome.Althoughmany3Dprintershavepricetagsabove$1,000,therearealsosomethatsell forseveralhundreddollars less,puttingthemsolidly inthereachofmostconsumers.Intheartsandcraftsarena,thereareseveralsub-$100, pen-based 3D printers. We estimate that, within 10 years, 60million households could own a 3D printer, constituting a $39 billionmarket.

Publicly traded makers of 3D printers include 3D Systems—which wentpublic in2013and isexpectedtoshedsomeproductsandtechnologiestonarrowitsfocusandcutcosts—andStratasys,whichwentpublicin1994.

WhattoExpect 3D printers are used mostly by makers and designers today, but someenvision a future where much manufacturing moves from overseas to acornermaker center or to individuals’ homes. Given consumers’ appetitefor ever-faster shipping, it is likely that somewill realize they can get thespeediestdeliveryby just licensinganddownloadingtheplans foran itemandmanufacturingitthemselvesathome.Researchersareevenworkingonprinting food using organic inputs, and on printing textiles, which couldhavehugeimplicationsfortheapparelindustry.

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There ismuch excitement about HP’s upcoming Fusion 3D printer, whichcouldenergize theconsumersegmentof themarket.HP’s low-cost ink-jettechnology revolutionizedprinting forconsumers,and it couldalsoenable3D printers at new, lower price points for consumers. According to theWohlersReport,theconsumer3D-printermarketisexpectedtogrowfrom$5.5billionin2015to$21.2billionin2018,ata31%CAGR.

AI PERSONAL ASSISTANTS: “MAY I HELP YOU?” Breakthroughsintheabilitiesofdigitalpersonalassistantswillbegintoalterthewaybusinessesinteractwithcustomers.

WhatItIs

AI personal assistants are basically software that has been developed toperform tasks for the user. Most of these assistants can now answerqueries,schedulemeetingsandmaptravelroutes.Moreadvancedpersonalassistantscanprovideinformationmoreproactivelyandmakesuggestions.Theycantellauserhowmuchextracommutingtimeshemightneedduetoinclementweather, for instance, or remindherwhat timeher favorite TVshowwillair.ThemarketfordigitalassistantsisexpectedtogrowataCAGRof 30%, from $585 million in 2014 to $8.1 billion in 2024, according toSiemens.

These products are powered by two core AI technology components:languagerecognitionsoftwareandpredictive learningcapability.Languagerecognition includes speech recognition and natural language processing,which enable the software to understand human languages and interactwith a user. Predictive learning technology enables the software toproactivelyprovideinformationtotheuserandmakesuggestionsbasedonuserinputanddata,suchasfrequentsearchqueries,emails,pastmeetingsandlocationsthattheusercommonlyvisits.

WhyItIsaTrend

Tech giants have spent a fortune developing AI personal assistants. Forexample, Google paid $400million to acquireDeepMind, a company thatfocusesonmachine learningandsystemsneuroscience,whileApplespentover $50million to acquire VocalIQ, a speech technology startup. And in2014,investorsfundedAIstartupstothetuneof$309millionacrossmorethan40deals.

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AIpersonalassistantswillmovefrombeing“nicetohave”featuresonsmartphonestobeingessentialpartsofeverysmartdevice.

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Google andApple arenot theonly companies developing theseproducts:Facebook, Microsoft and several startups have also designed AI personalassistants.Assistantsalreadyonthemarketorindevelopmentinclude:

• Apple Siri—Integrated into multiple devices, including the iPhone,iPad,iPodTouch,AppleWatchandAppleTV

• FacebookM (in trial)—Useshuman intelligence to trainand improveAI

• GoogleNow—Reliesonpredictivetechnologytoanticipatetheuser’sinformationneeds

• Hound by SoundHound (in development)—Comprehends naturallanguage;iscapableofhandlingsophisticatedcommands

• IBM Watson—Uses natural language processing; integrated in thePepperrobotandinCogniToys

• MicrosoftCortana—Employsprogressiveintelligence;thesystemaskspermissionbeforeaccessingauser’s informationonadevice, insteadofautomaticallyrecordinginformation

• Mobvoi—A Chinese AI personal assistant available on iOS, Androidanditsownsmartwatch

WhattoExpect

Since Apple’s Siri launched in 2011, the AI personal assistant market hasdeveloped rapidly and assistants’ capabilities have expanded to includemore advanced tasks, such as making recommendations based onpredictivetechnology.AIpersonalassistantsarebecomingan integralpartoftheIoT,whichoffersexcitingnewcapabilitiestointerconnectintelligentsystems.Additional breakthroughsare likely in thenext fewyears, andAIpersonal assistants will move from being “nice to have” features onsmartphones to an essential part of every smart device. This wouldrevolutionizenotonlyhow thedevicesareused,butalsodecision-makingprocesses.Itwouldhavegreatimplicationsforretail,andothersectors,too,andcouldultimatelychangethewaybusinessesoperate,especiallythewaytheyreachandinteractwithcustomers.

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FACIAL RECOGNITION: SECURITY AND MORE Facial recognition technology will be used for applications that go wellbeyondsecurity,includinghealth,wellnessandbeauty.

WhatItIs

Facialrecognition,atypeofbiometricidentification,hasmanyapplications,includingconfirminganindividual’sidentity.Onebranchofthetechnology,facial mapping, has particularly broad potential in the beauty industry.Advancesincomputingspeedandimage-processinghardwareandsoftwarehave made facial recognition technology more widely available for bothcommercialandconsumeruse.

WhyItIsaTrend

Casinos pioneered the development and use of facial recognitiontechnology in order to identify criminals and trespassers, as well as tomonitor ongoing table games and help identify card counters. The sametechnologyhasbeenavailabletoretailersforidentifyingshopliftersand/orsignificantcustomers.Consumers,however,arenotespeciallycomfortablewiththetechnology’suseinretail.

• In 2015, Walmart tested a facial recognition system developed byFaceFirsttoidentifyshoplifters,butthecompanyhasnotdeployedthetechnologyfurtherduetoprivacyconcerns.

• According to a study by software firm CSC, 74% of stores use sometypeof technologytotrackcustomersand30%ofretailersuse facialrecognitiontechnologytotrackcustomersinstores.

• The global facial recognition technologymarket will grow from $2.8billion in2015 to$6.2billion in2022,ata17.4%CAGR,according toMarketsandMarkets, amarket research firm.Basedon these figures,themarketshouldbeworthabout$3.3billionthisyear.

In theconsumersphere, Intel introduced itsRealSense3Dcameramoduleat CES 2015. The module enables the recognition of faces and handgestures, and allows for background removal, depth sensing, 3D scanningandotherfunctions.Attheshow,Intel’sCEOparticipatedinalivedemoinwhichthecamerarecognizedaface,whichallowedadoortobeunlocked.The camera was also demonstrated in consumer PCs in a module thatauthenticates the user and eliminates the user’s need to rememberpasswords.

Inthefuture,accurateandsecurefacialrecognitiontechnologywilllikelycompletelyeliminatetheneedforphysicalkeys,passwordsandcreditcards.

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Facialrecognitiontechnologyisalsobeingusedtoidentifyhumanemotions.ResearchersandcompaniessuchasAffectivahavedevelopedsoftwarethatcandetectaperson’sreactionstovariousstimuli.Suchdatacanbeusedtodetermine consumers’ reactions to products and audiences’ reactions toentertainmentandotherevents.

WhattoExpect

Facial recognition technology has moved beyond the commercial sphereintotheconsumerarena,andweexpectitsusestomultiply.Inthefuture,accurate and secure facial recognition technology will likely completelyeliminatetheneedforphysicalkeys,passwordsandcreditcards.

Inaddition, thetechnologyhasa largenumberofpotentialapplications inhealth,wellness andbeauty, fromhelping todiagnose certain ailments todetermining the optimal shade, thickness and application of makeup. ApresentationatCES2016notedthatfacialrecognitionmightevenbeusedtohelppatientswithAlzheimer’sdiseaseidentifyrelativesandvisitors.

VOICE RECOGNITION: MOVE OVER, SIRI The success of Apple’s Siri and the growing accuracy of voice recognitionsoftwarewillpavethewayforwiderconsumerandcommercialuseofthetechnology.

WhatItIs

The idea of voice recognition technology existed even before talkingcomputers were featured regularly in science fiction movies. Althoughspeech recognition (dictation) software has been around formore than adecade, it never reached the mainstream, likely because it is not veryaccurate.Withrecentimprovementsintranslationsoftwareandtheadventof Apple’s Siri and other voice-controlled digital assistants, however, auniversaltranslatorismovingfromtherealmofsciencefictiontoreality.Ascomputers’ ability to recognize human speech has improved, using aperson’s unique voiceprint as a form of biometric identification is now adistinctpossibility.

WhyItIsaTrend

Apple’s launch of its Siri digital assistant spurred other technologycompanies to offer their own voice-controlled digital assistants; theseinclude Google Now, Microsoft Cortana, Facebook M, Hound bySoundHoundandtheChinesepersonalassistantMobvoi.

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Voiceandspeechrecognitiontechnologywilleventuallybeusedforeverythingfromsimpledictationtotheautomatictranscriptionofconferencecallstocompletevoicecontrolofallhouseholdappliances.

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TherewereseveraldemonstrationsofvoicerecognitiontechnologyatCES2016.Luxottica’sOakleydivisiondebutedsportsunglassesthatrespondtovoicecommandsanduseAItoactasavirtualcoach,encouragingathletestomeet their targets. The Pepper robot, produced by SoftBank of Japan,usesnaturallanguageprocessingandIBM’sWatsonAIplatformtorespondto voice commands and show emotion. The robot responds to Japaneselanguage commands and has been used to sell coffeemachines atNestléshopsinJapan.AtCES2016,PepperalsorespondedtoEnglishcommands.

FordsaidatCES2016thatitspartnershipwithAmazonallowsFordownerstotelltheircarstosendamessagetotheirAmazonEchodevice,orderingitto turn on the lights in the house or unlock the front door. Similarly,consumerscantelltheirAmazondevicestoinstructtheircarstostartortoturnontheheat.

Lexifone,an Israeli startup,offersaplatform for the translationof regularcalls, video conference calls and call center calls using best-in-class voicerecognitionandtranslationsoftwareoneachend.

IBMstatedatCES that the leadingvoice recognition technologyhada5%errorrate.Googlehadrecentlystatedthisfigureas8%,downfrom23%in2013.Despitesuchsubstantialprogress,therecognitionlevelsstilltrailthe4% error rate for humans. According tomarket intelligence firm Tractica,the speech and voice recognition market is expected to grow from $249millionin2015to$5.1billionin2024,ata40%CAGR.

WhattoExpect

Voice and speech recognition technology will eventually be used foreverything from simple dictation to the automatic transcription ofconferencecallstocompletevoicecontrolofallhouseholdappliances.Thetechnologycouldbeusedinmultiplewaysthatbenefitsociety;forexample,it could enable the disabled and elderly to perform household tasks andoperateappliancesanddevices.

Translationsoftware isanareathatstillneeds improvement.Thedifficultyofunderstandingthenuancespresentineverylanguagemakesdevelopingsuperiortranslationsoftwareextremelychallenging.Still,technologiessuchasnaturallanguageprocessingofferthepotentialforhugeimprovement.

O2O IN CHINA: SINGLES’ DAY CHANGES THE GAME BuoyedbyChina’s Singles’Day2015 sales,which surpassed thecombinedsales for Black Friday and Cyber Monday in the US, domestic andinternational brands will expand within or enter the Chinese market viaonlineplatformssuchasAlibaba’sTmallandTencent’sWeChat.

WhatItIs

Singles’Day,China’sversionofBlackFriday,fallsonNovember11andhasbecome one of the leading days for retail sales in the world. The namederives from the 1s in the month and day, representing singles. It waslaunched by Alibaba in 2009, when the company began offering special“11/11” deals through a heavy marketing push to young, single people.Despite the slowdown in China’s economic growth, Singles’ Day sales in

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Morethan6,000brandsarenowsellinginChinathroughTmall,withouthavingsetupoperationsinthecountry.

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2015soared,to$14.3billion,breakingtherecordof$9.3billionsetin2014.The2015salesfigureevenexceededthecombinedBlackFridayandCyberMondaysalesintheUSin2015.

WhyItIsaTrend

These record-breaking sales figures for Singles’ Day 2015 suggest a newtrendfore-commerce inChina:whilemanyestablishedfirmsandstartupsare exploring the online-to-offline model, other brands are working theoffline-to-online angle, using Alibaba’s marketplace. More than 30,000brands are now available on Alibaba’s marketplace, including 16,000internationalbrands.About5,500 internationalbrandsofferedpromotionsduringtheSingles’Dayshoppingevent,andabout33%ofshoppersmadeapurchase from one of those brands, helping to drive up the total salesfigure.

Apart from the brands that have had a presence in China for some time,suchasNike,manynewbrandsaresellingthroughTmallGlobal,Alibaba’scross-border e-commerce marketplace. More than 6,000 brands are nowselling in China through Tmall, without having set up operations in thecountry.

WhattoExpect

The success of Singles’ Day has made many brands more confident inadopting theoffline-to-onlinemodel,andbothdomesticand internationalbrands will take further advantage of online platforms such as Alibaba’sTmall and Tencent’s WeChat in 2016. That does not mean brands willcompletely change how they operate—they will maintain their physicalstores in major cities—but they will build on the success of these onlineplatforms in order to capture sales. Selling via theonlinemalls could alsohelpsomeretailersexpandtheircatchmentareatolower-tiercities,whereconsumers’ purchasing power is increasing but sales volumes are not yetstrongenoughtosupportaretailoutlet.

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16 Global Retail Tech Trends For 2016 - fbicgroup Global... · 2016-09-06 · Global Retail Tech Trends for 2016 Virtual reality, robots, mobile payments, 3D printing and 12 other