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Insight and imagination for tomorrow and beyond
INDUSTRYREPORT
Consumer Electronics
Use this guide to obtain a deeper understanding of the state
of the consumer electronics industry the trends impacting
its direction and the technologies that will influence how you
position market and sell tomorrow and beyond
Executive Summary
The industry snapshots shifts in consumer behavior and emerging technologies briefly illustrated in this guide have been included solely to provide you with actionable insight you can use to make data driven decisions that powerfully differentiate your brand and help you intelligently chart a strategic course for the future
Oh absolutely I wish we had switched to Shopify Plus
sooner Itrsquos just so easy Itrsquos heaven with Shopify man
ldquo
ldquo
BRIAN LIM
Founder of Emazing Lights
CONSUMER ELECTRONICS
4
01 Consumer Electronics
03 Industry Snapshot
06 Sales amp Growth Outlook
07 User Growth Margins amp Mix Growth by Region
14 Target Market Demographics
17 Industry Trends
45 Tomorrow amp Beyond
60 Technology Friend or Foe
65 The Replatforming Myth
68 Objections to Replatforming
70 When Technology Fades Away
Contents
01
Consumer Electronics
We had to make money right out of the gate and Shopify
was the tool we used to do that Shopify helped us
quickly scale in different parts of the world provides the
reporting we need to make data-driven decisions and has
been a great solution for us
ldquo
ldquoMARTIN CIESZEWSKI
Chief Marketing Officer of InteraXon
CONSUMER ELECTRONICS
03
Industry SnapshotAfter nearly a decade of turbocharged growth in a variety of segments the $285 billion
USD consumer electronics industry appears to be slowing on several fronts Despite
consumers telling pollsters that their smartphones are more important to them than
sex the smartphone market is maturing especially in developed markets which analysts
suggest will likely hamper overall industry growth barring major innovation
While industry growth in the US is expected to decrease from 46 in 2012 to 15 in 2016 demand for new electronics and technologies such as virtual reality wearables and the Internet of Things (IoT) is expected to increase dramatically though not fast enough according to research to offset stalling growth in traditional segments
CONSUMER ELECTRONICS
04
While the industry will continue to battle cannibalization such as tablets replacing laptop
computers high growth and high margin opportunities will likely exists as smart cars
smart homes and even smart cities become increasingly connected and personalized
Emerging markets such as China and India assuming manufactures can offer electronics
at affordable prices are expected to grow at double-digit rates in the coming years
However consumer electronics manufactures will also likely confront strong headwinds
currently impacting developed markets such as
Relatively short product life spans
Rapid price declines Economic employment and currency impacts on consumer spending
SOURCE STATISTA
CONSUMER ELECTRONICS
05
While large international brands with established distribution systems and robust ecommerce presences may be better positioned to take advantage of anticipated emerging market demand theyrsquoll likely be forced to innovate quickly or risk losing market share to smaller startup companies more narrowly focused on a nicheThe always-on connectivity demanded by tomorrowrsquos consumer of electronics is also
expected to nudge manufactures to more closely work with one another to create
ecosystems that allow consumers to remain seamlessly connected regardless of device
or platform choice and without performance sacrifices as they navigate among various
electronics in the home vehicle and beyond
The compound annual growth rate for global consumer electronics shipments is expected
to be 06 through 2018 down from a compound annual growth rate of 25 between
2014-15 This trajectory presents a relatively challenging environment for the last half
of the decade However opportunities exist to potentially exceed current projections if
the industry can find ways to creatively pair new technologies with shifts in consumer
behavior to create consumer electronics that add value to an increasingly omnipresent
IoT world
CONSUMER ELECTRONICS
06
Sales amp Growth OutlookWorldwide ecommerce sales of consumer electronics are expected to grow at a compound
annual rate of 102 through 2021 from more than $290 million USD in 2016 to more than
$472 million USD in 2021
in million US dollars
0
50000
100000
150000
200000
250000
300000
2021202020192018201720162015
$261966$290611
$327478$369208
$410062$445853
$472615
Global consumer electronics revenue Books Movies Music and Games
Consumer Electronics
SOURCE STATISTA
CONSUMER ELECTRONICS
07
SOURCE STATISTA
USER GROWTH in millions (worldwide)
User Growth Margins amp Mix Growth by RegionThe concern regarding margin pressure comes into focus when you
examine the industryrsquos revenue growth projections in the context of
exploding user growth Speci ically more than 850 million people are
expected to purchase consumer electronics in 2016 compared with
an estimated 11 billion in 2020
2015 2016 2017 2018 2019 2020 2021
78908500
9150
983310540
11221
11799
1000
750
500
250
0
1250
CONSUMER ELECTRONICS
08
Despite a dramatic increase in forecasted user the average revenue per person is
ultimately projected to plateau at the end of the decade from $267 USD per user in 2017
to $321 by 2021
Average revenue per userin US dollars (worldwide)
220
240
260
280
300
320
340
2021202020192018201720162015
$23402
$24801
$26794
$28906
$30582
$31674$32188
SOURCE STATISTA
CONSUMER ELECTRONICS
09
Similarly worldwide shipments of consumer electronics are expected to be relatively
flat during the second half of the decade down from $396 billion USD in 2007 to an
estimated $347 billion USD in 2018
SOURCE STATISTA
CONSUMER ELECTRONICS
10
Partially offsetting slowing growth in the maturing smartphone market are emerging
technologies including wearables drones 3D printers and connected homes
The mix of consumer electronics being sold is changing as well Industry sales leaders
include smartphones automobile electronics and flat panel televisions
SOURCE BUSINESS WIRE
SOURCE BUSINESS WIRE
2015 tech industry outlookSales leaders
CE SALESLEADERSSmartphones$53 billion in revenue177 million units
Tablets$226 billion in revenue73 million units
RIDING HIGH ON NEW VEHICLES
Automotive electronics$145 billion in revenue
TVrsquos larger than 40 inches will account for 6 of TV shipments in 2015 up 8
BIGGER IS BETTER4K ultra HD$52 billion in revenue44 million shipments expected
LCD flat panels$186 in revenue
$53B(+5)
$145B(+68)
$52B(+136)
2015 tech industry outlookEmerging technologies
WEARABLESA DEVICE REVOLUTIONFitness and activity trackersReach $18 billion in revenue in 2015 203 million units
WORLD CHANGERSDrones
$105 million in revenue700000 units
3D printers$210 million in revenue
CONNECTED HOME TECHNOLOGIES
$967 million in revenue
$18B(+20)
$967M(+32)
85 of consumers agree that using a fitness and activity tracker is motivating them to reach their fitness goals according to CEArsquos Wearable Activity Trackers Engaging Consumers to Monitor their Health
Drones could reach 1 Million US flights a day in 20 years according to CEA economic research
Includes smart thermostats smart smoke detectors and CO2 detectors Wi-Fi cameras smart home systems smart locks connected switches dimmers and outlets
CONSUMER ELECTRONICS
11
Growth By RegionThe United States is now the second largest market for consumer electronics with a user
base that is forecast to spend more than $55 billion USD in 2016 significantly less than
China which is forecast to spend more than $64 billion USD
SOURCE STATISTA
Revenue in the consumer electronics market2016 global comparison in million US dollars
Top Countries
China
United States
Japan
United Kingdom
Germany
647623
558504
160421
132156
129833
in mUSD
CONSUMER ELECTRONICS
12
However opportunities begin to take shape when you examine user penetration In the
US user penetration is just 525 which indicates additional growth opportunities exist
User penetration in the consumer electronics marketin percent in 2016 (worldwide)
Top Countries
United States
United Kingdom
Germany
Denmark
Japan
525
453
340
301
294
SOURCE STATISTA
CONSUMER ELECTRONICS
13
The biggest growth opportunity in the second half of the decade appears to be in
emerging markets where growing middle classes are developing alongside relatively
affluent upper classes in the Asia-Pacific region Interestingly though while China is the
largest emerging market for the tech industry India is actually growing the fastest
Whereas sales of tech devices in China are forecast to grow by $18 billion USD in 2015
tech device sales in India are forecast to reach $348 billion USD in 2015 an increase of
$48 billion USD Smartphones are driving growth in India as some manufactures have cut
prices to increase share
SOURCE STATISTA
CONSUMER ELECTRONICS
14
Target Market DemographicsSeveral economic tailwinds are expected to stimulate ecommerce and help consumer
electronics manufactures offset slowing growth overall These tailwinds include forecasted
increases in GDP per capita as well as internet and smartphone penetration
Additionally expect the industry to focus intensely on the 25-34 age demographic as it is
forecast to grow significantly between now and 2021
User by age groups in the consumer electronics marketin millions (worldwide)
2021202020192018201720162015
1250
1000
750
500
250
0
11799
78908500
91509833
1054011221
16-24
25-34
35-4445-54
55+
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
15
Specifically within the aforementioned demographic the projected number of male consumers
in the 25-34 age group is expected to be nearly double that of female users in 2016
By 2021 male consumers between 25-34 are again projected to be nearly double the size
of female consumers However the total addressable market between the age of 25-34 is
expected to grow to nearly 300 million
User by age groups and gender in the consumer electronics marketin millions in 2016 (worldwide)
250300 200 150 100 50 0 100 150 200 250 300
55+
45-54
35-44
25-34
16-24
50
Male
Female
User by age groups and gender in the consumer electronics marketin millions in 2021 (worldwide)
250300 200 150 100 50 0 100 150 200 250 300
55+
45-54
35-44
25-34
16-24
50
Male
Female
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
16
Regardless of age the majority of consumer electronics forecast to be sold in 2016 are
expected to be purchased by low and medium income consumers
User by age groups and income splitin millions in 2016
1967m
4464m
2069m
Low
Medium
High
Total
55+
45-54
35-44
25-34
16-24
SOURCE STATISTA
17
Industry Trends
PAGE 18 INTRODUCTION
PAGE 19 TREND 01
The Smartphone Matures
PAGE 22 TREND 02
Emerging Markets Drive Demand
PAGE 25 TREND 03
Home Automation Spikes as the loT Grows
PAGE 30 TREND 04
The Connected Car Evolves
PAGE 37 TREND 05
Commercial Drones Take (Test) Flight
PAGE 43 TREND 06
3D Printing Evolves Beyond Just Prototyping
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
18
The trends impacting the consumer electronics industry are creating opportunistic yet
challenging environments in which to operate Besides increased competition currency
concerns and economic headwinds in Europe and Asia-Pacific are making it increasingly
difficult for manufacturers of consumer electronics to grow their top lines while also
protecting margins
While demand for some traditional tech devices appears to be slowing demand for newer products in the car home and beyond is helping to offset some of the lost revenue How those trends combine with future technologies the ability to continue investing in RampD and whether the worldrsquos economies will position consumers to pay for expensive tech products will dictate how the following five trends play out the second half of the decade
CONSUMER ELECTRONICS
19
TREND 01
The Smartphone MaturesResearch suggests some people are more willing to go without sex rather than go without
their mobile phones In fact 26 of those surveyed said they could not live without their
phones versus 20 who said they couldnrsquot live without sex
SOURCE STATISTA
Source Harris Interactive
CONSUMER ELECTRONICS
20
Despite the opportunity emerging markets provide smartphone makers data indicate
the smartphone market is maturing In 2015 according to Accenture less than half of
smartphone owners plan to purchase a new one
Some analysts argue that phone and data service providers that no longer subsidize the
price of phones may be negatively impacting demand However smartphone makers may
also be victims of their own success and simply unable to innovate or add breathtaking new
features as quickly as consumers have been accustomed Nearly half of the consumers not
planning to purchase a new smartphone say theyrsquore happy with the device they have or
SOURCE ACCENTURE
SOURCE ACCENTURE
CONSUMER ELECTRONICS
21
The data indicate itrsquos not just smartphone demand thatrsquos slowing Consumer demand
for certain televisions laptops and tablets is also expected to be sluggish year over year
As was the case with smartphones consumers appear to be happy with what they
already have
The trend combined with other variables has negatively impacted 2015 holiday sales
at Best Buy prompted Samsung to warn of slower growth in 2016 and could result in
Applersquos first ever year-over-year decline in iPhone sales in Q2 2016 However on the Q1
2016 earnings call Apple CEO Tim Cook revealed the $691 (ASP) iPhone was taking share
from Android and sounded optimistic albeit cautious due to signs of economic strain in
Hong Kong regarding the companyrsquos prospects in emerging markets
SOURCE ACCENTURE
CONSUMER ELECTRONICS
22
Market analysts project sales of consumer electronics in emerging markets to grow at a
compound annual rate of 15 between 2015-2020 Growth is forecast to be most robust
in the Asia-Pacific region excluding Japan Increasingly the focus will be on China where
sales are forecast to grow by $18 billion USD in 2015
Forecasting a surge in the globalmiddle class
Poor
Middle ClassRich
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
9
8
7
6
5
4
3
2
1
0
TREND 02
Emerging Markets Drive DemandResearch suggests the world has lived through two middle class expansions since 1800
during the Industrial Revolution and after World War II Today research analysts argue
wersquore living through a third The data indicate that by 2030 two thirds of the global middle
class will live in the Asia-Pacific region up from just under one-third in 2009
SOURCE EY
CONSUMER ELECTRONICS
23
Lifting the lid on the Chinese consumer suggests consumer electronics manufacturers
may have room to sell products at higher price points Jean-Marc Bellaiche senior partner
and managing director at The Boston Consulting Group argues there are two drivers of
growth in the Chinese economy
1
2
The Emerging Middle ClassldquoAmong the emerging middle class the ldquoaspirational
massesrdquo also called the ldquotrendy metropolitanrdquo
comprises 330 million consumers and 25-27 percent
of the luxury market and the ldquorising middle classrdquo
made up of ldquothe proud business womanrdquo is 70
million consumers and 25-27 percent of the marketrdquo
An Increase In The Number of MillionairesldquoThere are also two types of millionaires new
money and old money New money also called ldquothe
loan traderrdquo or ldquothe Russian climberrdquo is 75 million
people and 30-35 percent of the luxury market
The old money crowd can be generalized as the
ldquonoble Italian entrepreneurrdquo This group is 25 million
consumers and 10-15 percent of the luxury marketrdquo
CONSUMER ELECTRONICS
24
In other words approximately one billion people in China or as much as 70 of the
population are projected to be middle class by 2030
Remember India is poised for explosive middle class growth as well Analysts at EY
recently projected
China total income by band 2010 and 2020annual income thousands of people
50+
30-50
15-30
5-15
0-5
2010 2020
112
2085
2388
933
3137
54
433
1619
499
US$
US$b
ldquoIndiarsquos global middle class meanwhile at around
50 million people or 5 of the population is much
smaller We expect this to grow steadily over the
next decade reaching 200 million by 2020 After
this we expect growth to really accelerate reaching
475 million by 2030 and adding more people than
the Chinese to the global middle class worldwide
after 2027rdquo
SOURCE EY
CONSUMER ELECTRONICS
25
Home automation
Ambient Asissted Living
Security
Energy Management
Home Entertainment
TREND 03
Home Automation Spikes as the loT GrowsThe second half of the decade is poised for explosive growth in the Smart Home market
segment To illustrate the growth potential in this segment wersquoll rely on data from Statista
as itrsquos a bit more conservative than other industry estimates
WARNING You can easily find research reports that contradict one another in terms of
how fast this segment is growing and is projected to grow through 2020 However the
productsincluded in the Smart Home segment varies which means yoursquore not always
comparing apples to apples
When we talk about the Smart Home segment wersquore including
CONSUMER ELECTRONICS
26
Not included in the data wersquoll highlight are devices like smartphones tablets and
television remote controls Herersquos Statistarsquos reasoning
ldquoDevices whose primary function is not for the
automation or remote control of household
equipment eg smartphones and tablets are not
included here Similarly devices whose reason for
purchase is only related to household connection
and remote control to a limited extent such as
Smart-TVs refrigerators or ovens are also not
includedrdquo
Whatrsquos important though is that a $7 billion dollar industry in 2015 is forecast to grow
to a more than $32 billion dollar industry by 2021
CONSUMER ELECTRONICS
27
Revenue in the smart home marketin millions US dollar
2021202020192018201720162015
32191
28468
24249
19495
14649
104327237
40000
30000
20000
10000
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy Management
Besides new products and a shift toward the IoT the Smart Home segmentrsquos relatively
small penetration rate between 1-18 depending on the segment is expected to
further drive growth
Smart home penetration ratein percent (US)
2020201920182017201620152014
80
60
40
20
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
28
Connected-home device shipments according to BI Intelligence will grow at a compound
annual rate of 67 over the next five years to 18 billion units shipped in 2019
Global connected-home device annual shipmentsin millions
2000
1800
1600
1400
1200
1000
800
600
400
200
0
2012 2013 2014E 2015E 2016E 2017E 2018E 2019E
We are here
67 CAGR2014-2019
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
29
Despite the fact that a sizable portion of the total addressable market has yet to adopt
Smart Home technology analysts suggest shipment growth is expected to peak in the
coming years While the following chart obviously doesnrsquot take into account the invention
of innovative new Smart Home products decelerating growth towards the back portion of
the decade may also pressure the average revenue per Smart Household
Average revenue per smart home in the smart home marketin US dollar
2021202020192018201720162015
450
400
350
300
250
200
150
100
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
CONSUMER ELECTRONICS
30
TREND 04
The Connected Car EvolvesIndustry estimates suggest more than 380 million connected cars will be on the road
by 2021 and have the ability to stream music surf the web alert drivers to traffic and
weather conditions and possibly even self-park Tech companies will play a significant
role as analysts who routinely upwardly adjust their forecasts for this segment expect
fully autonomous vehicles to be on the market in just a few years
Estimated connected car shipmentsin millions (worldwide)
2015E 2016E 2017E 2018E 2019E 2020E 2021E
50
100
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
31
In addition to autonomous vehicles the connected car market is defined by features
such as
bull Content amp Services
bull Safety amp Driving Assistance
bull Navigation Services
bull Diagnostics amp Maintenance
bull Connectivity
These technologies are forecast to more than double revenue in the connected car
market from more than $10 billion USD in 2017 to more than $21 billion USD by 2021
Revenue in the connected car marketin millions US dollar
21217
17026
13556
10376
80116109
4622
25000
20000
15000
10000
5000
0
Content amp Services
Safety amp Driving Assistance
Navigation ServicesDiagnostics amp Maintenance
Connectivity
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
32
While the definition of a connected car is likely to evolve in the years to come today there
are six categories of connectivity that are defining and driving this trend
SOURCE STRATEGYamp
Mobility Management Functions that allow the driver to reach a destination quickly safely and in a
cost-efficient manner
Examplesbull Current traffic informationbull Parking lot or garage assistance
bull Optimized fuel consumption
SafetyFunctions that warn the driver of external hazards and internal responses of the
vehicle to hazards
Examplesbull Collision protectionbull Hazard warnings
bull Emergency functions
Driver AssistanceFunctions invovling partially or fully
automatic driving
Examplesbull Operational assistance or autopilot in
heavy traffic in parking or on highways
Well-beingFunctions involving the driverrsquos comfort
and ability and fitness to drive
Examplesbull Fatigue detectionbull Automatic environment adjustments
to keep drivers alert
bull Medical assistance
Vehicle ManagementFunctions that aid in the driver in reducing
operating costs and improving ease of use
Examplesbull Vehicle condition and service remindersbull Remote operation
bull Transfer of usage data
EntertainmentFunctions involving the entertainment
of the driver and passengers
Examplesbull Smartphone interfacebull WLAN hot spotbull Music video internet social media
bull Mobile office
CONSUMER ELECTRONICS
33
Just 93 of vehicles manufactured in 2016 are considered connected cars However
demand is expected to increase in part when lower vehicle price points are implemented
as market research indicates that many of todayrsquos connected cars tend to be relatively
luxurious models with average selling prices of $55000 Consistent with that the
connected car penetration rate is projected to be 277 by 2020
34
61
93
131
176
225
277
Penetration rate in the connected car marketin percent (US)
0
5
10
15
20
25
30
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
34
However as the market becomes more saturated with connected cars average revenue
per connected car is projected to decline to $66685 USD by 2020
115029
84312
72679
6742065447 6668566075
Revenue per connected carin US dollars
1200
1100
1000
900
800
700
6002014 2015 2016 2017 2018 2019 2020
SOURCE STATISTA
CONSUMER ELECTRONICS
35
In addition to realigning automaker IT departments and creating user-friendly interfaces
that are IoT compatible and potentially even device agnostic analysts suggest connected
car manufacturers will have to overcome this challenge
Faster Product CyclesldquoThe typical product cycle in the passenger car
industry is about eight years in the consumer
electronics industry itrsquos less than a year To
successfully sell electronics products for connected
cars automakers will need to mimic the rapid
development cycles of the consumer electronics
companies The key for the automakers is to learn
to build perfectly functioning modular systems
into which updates and product developments can
be integrated quickly and with little effort Such a
modular infotainment building set would allow for
individual components to be updated through plug-
and-play technologies several times during a carrsquos
life cyclerdquo
CONSUMER ELECTRONICS
36
If yoursquore wondering why connected cars were included under consumer electronics
consider how the world will change when self-driving vehicles are status quo Google has
already logged more than 1 million autonomous vehicle miles and has been involved in
just 12 minor crashes in six years none of which were the fault of the driverless car
Once autonomous vehicles become part of our driving fabric expect next generation
connected cars to offer driverspassengers additional options in terms of the devices that
can interact with the vehicle
Smartphone temperature control amp bed-like seat adjustment applications and voice control of windows car hoods amp trunks and streaming music
Remote control or voice activated aftermarket add-ons that allow a passenger to plug in an electric car or pump gas remotely
Innovative cameras and real time editing software that allow for video conferencing that appears as if itrsquos being conducted in an office rather than a car
CONSUMER ELECTRONICS
37
TREND 05
Commercial Drones Take (Test) FlightWhile civilian use of drones may be what many first picture when they think of drones
itrsquos the military use of drones that has been driving demand Specifically military use of
drones has far outpaced civilian use of drones when measured by revenue Defense
spending on drones is projected to be robust through 2024
Global aerial drone marketin billions $14
$12
$10
$8
$6
$4
$2
$0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
DefenseCivilian
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
38
However research also suggests the civilian and commercial markets are expected to
grow significantly as drones are used in new and innovative ways Analysts at Grand View
Research describe future applications such as
ldquoAgriculture is expected to emerge as the dominant
application sector over the forecast period on
account of several benefits attained such as yield
increase due to crop monitoring Tech giants such
as Facebook Inc and Google Inc are planning
to use solar powered UAVs that hover around the
atmosphere of the earth providing internet access
to the remotest of places acting as flying internet
access points or hotspots In addition Amazon has
been working on Prime Air a drone delivery system
that promises goods delivered within 30 minutes
after order placementrdquo
CONSUMER ELECTRONICS
39
The list of potential drone applications includes
bull Agriculture
bull Law Enforcement
bull Ecommerce Delivery
bull Mapping amp Imagery
bull Wildlife Patrolling
bull Forest Fire Management
12000
10000
8000
6000
4000
2000
00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Agriculture
Energy
GovernmentMedia amp Entertainment
Others
US commercial drone market by application 2012-2022USD million
SOURCE GRAND VIEW RESEARCH
bull Vehicle Traffic Control
bull Marketing amp Entertainment
bull Energy amp Mining
bull Real Estate
bull News Gathering
bull Infrastructure Monitoring
CONSUMER ELECTRONICS
40
Research indicates sales of commercial and civilian drones will grow at a compound
annual rate of 19 between 2015 and 2020 The economic impact of the commercial
drone segment is forecast to grow to $51 billion by 2025
While some analysts argue package delivery will not be an early priority the impact
drones have on the delivery of consumer electronics may be relatively muted as only
a third of the people surveyed recently trust a drone to deliver consumer electronics
The economic impact of the commercial drone sectordirect economic impact from the UAV industry in the United States (billion US dollars)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$12
$23
$35 $36$38 $40
$42 $44 $4649
$51
SOURCE STATISTA
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
Use this guide to obtain a deeper understanding of the state
of the consumer electronics industry the trends impacting
its direction and the technologies that will influence how you
position market and sell tomorrow and beyond
Executive Summary
The industry snapshots shifts in consumer behavior and emerging technologies briefly illustrated in this guide have been included solely to provide you with actionable insight you can use to make data driven decisions that powerfully differentiate your brand and help you intelligently chart a strategic course for the future
Oh absolutely I wish we had switched to Shopify Plus
sooner Itrsquos just so easy Itrsquos heaven with Shopify man
ldquo
ldquo
BRIAN LIM
Founder of Emazing Lights
CONSUMER ELECTRONICS
4
01 Consumer Electronics
03 Industry Snapshot
06 Sales amp Growth Outlook
07 User Growth Margins amp Mix Growth by Region
14 Target Market Demographics
17 Industry Trends
45 Tomorrow amp Beyond
60 Technology Friend or Foe
65 The Replatforming Myth
68 Objections to Replatforming
70 When Technology Fades Away
Contents
01
Consumer Electronics
We had to make money right out of the gate and Shopify
was the tool we used to do that Shopify helped us
quickly scale in different parts of the world provides the
reporting we need to make data-driven decisions and has
been a great solution for us
ldquo
ldquoMARTIN CIESZEWSKI
Chief Marketing Officer of InteraXon
CONSUMER ELECTRONICS
03
Industry SnapshotAfter nearly a decade of turbocharged growth in a variety of segments the $285 billion
USD consumer electronics industry appears to be slowing on several fronts Despite
consumers telling pollsters that their smartphones are more important to them than
sex the smartphone market is maturing especially in developed markets which analysts
suggest will likely hamper overall industry growth barring major innovation
While industry growth in the US is expected to decrease from 46 in 2012 to 15 in 2016 demand for new electronics and technologies such as virtual reality wearables and the Internet of Things (IoT) is expected to increase dramatically though not fast enough according to research to offset stalling growth in traditional segments
CONSUMER ELECTRONICS
04
While the industry will continue to battle cannibalization such as tablets replacing laptop
computers high growth and high margin opportunities will likely exists as smart cars
smart homes and even smart cities become increasingly connected and personalized
Emerging markets such as China and India assuming manufactures can offer electronics
at affordable prices are expected to grow at double-digit rates in the coming years
However consumer electronics manufactures will also likely confront strong headwinds
currently impacting developed markets such as
Relatively short product life spans
Rapid price declines Economic employment and currency impacts on consumer spending
SOURCE STATISTA
CONSUMER ELECTRONICS
05
While large international brands with established distribution systems and robust ecommerce presences may be better positioned to take advantage of anticipated emerging market demand theyrsquoll likely be forced to innovate quickly or risk losing market share to smaller startup companies more narrowly focused on a nicheThe always-on connectivity demanded by tomorrowrsquos consumer of electronics is also
expected to nudge manufactures to more closely work with one another to create
ecosystems that allow consumers to remain seamlessly connected regardless of device
or platform choice and without performance sacrifices as they navigate among various
electronics in the home vehicle and beyond
The compound annual growth rate for global consumer electronics shipments is expected
to be 06 through 2018 down from a compound annual growth rate of 25 between
2014-15 This trajectory presents a relatively challenging environment for the last half
of the decade However opportunities exist to potentially exceed current projections if
the industry can find ways to creatively pair new technologies with shifts in consumer
behavior to create consumer electronics that add value to an increasingly omnipresent
IoT world
CONSUMER ELECTRONICS
06
Sales amp Growth OutlookWorldwide ecommerce sales of consumer electronics are expected to grow at a compound
annual rate of 102 through 2021 from more than $290 million USD in 2016 to more than
$472 million USD in 2021
in million US dollars
0
50000
100000
150000
200000
250000
300000
2021202020192018201720162015
$261966$290611
$327478$369208
$410062$445853
$472615
Global consumer electronics revenue Books Movies Music and Games
Consumer Electronics
SOURCE STATISTA
CONSUMER ELECTRONICS
07
SOURCE STATISTA
USER GROWTH in millions (worldwide)
User Growth Margins amp Mix Growth by RegionThe concern regarding margin pressure comes into focus when you
examine the industryrsquos revenue growth projections in the context of
exploding user growth Speci ically more than 850 million people are
expected to purchase consumer electronics in 2016 compared with
an estimated 11 billion in 2020
2015 2016 2017 2018 2019 2020 2021
78908500
9150
983310540
11221
11799
1000
750
500
250
0
1250
CONSUMER ELECTRONICS
08
Despite a dramatic increase in forecasted user the average revenue per person is
ultimately projected to plateau at the end of the decade from $267 USD per user in 2017
to $321 by 2021
Average revenue per userin US dollars (worldwide)
220
240
260
280
300
320
340
2021202020192018201720162015
$23402
$24801
$26794
$28906
$30582
$31674$32188
SOURCE STATISTA
CONSUMER ELECTRONICS
09
Similarly worldwide shipments of consumer electronics are expected to be relatively
flat during the second half of the decade down from $396 billion USD in 2007 to an
estimated $347 billion USD in 2018
SOURCE STATISTA
CONSUMER ELECTRONICS
10
Partially offsetting slowing growth in the maturing smartphone market are emerging
technologies including wearables drones 3D printers and connected homes
The mix of consumer electronics being sold is changing as well Industry sales leaders
include smartphones automobile electronics and flat panel televisions
SOURCE BUSINESS WIRE
SOURCE BUSINESS WIRE
2015 tech industry outlookSales leaders
CE SALESLEADERSSmartphones$53 billion in revenue177 million units
Tablets$226 billion in revenue73 million units
RIDING HIGH ON NEW VEHICLES
Automotive electronics$145 billion in revenue
TVrsquos larger than 40 inches will account for 6 of TV shipments in 2015 up 8
BIGGER IS BETTER4K ultra HD$52 billion in revenue44 million shipments expected
LCD flat panels$186 in revenue
$53B(+5)
$145B(+68)
$52B(+136)
2015 tech industry outlookEmerging technologies
WEARABLESA DEVICE REVOLUTIONFitness and activity trackersReach $18 billion in revenue in 2015 203 million units
WORLD CHANGERSDrones
$105 million in revenue700000 units
3D printers$210 million in revenue
CONNECTED HOME TECHNOLOGIES
$967 million in revenue
$18B(+20)
$967M(+32)
85 of consumers agree that using a fitness and activity tracker is motivating them to reach their fitness goals according to CEArsquos Wearable Activity Trackers Engaging Consumers to Monitor their Health
Drones could reach 1 Million US flights a day in 20 years according to CEA economic research
Includes smart thermostats smart smoke detectors and CO2 detectors Wi-Fi cameras smart home systems smart locks connected switches dimmers and outlets
CONSUMER ELECTRONICS
11
Growth By RegionThe United States is now the second largest market for consumer electronics with a user
base that is forecast to spend more than $55 billion USD in 2016 significantly less than
China which is forecast to spend more than $64 billion USD
SOURCE STATISTA
Revenue in the consumer electronics market2016 global comparison in million US dollars
Top Countries
China
United States
Japan
United Kingdom
Germany
647623
558504
160421
132156
129833
in mUSD
CONSUMER ELECTRONICS
12
However opportunities begin to take shape when you examine user penetration In the
US user penetration is just 525 which indicates additional growth opportunities exist
User penetration in the consumer electronics marketin percent in 2016 (worldwide)
Top Countries
United States
United Kingdom
Germany
Denmark
Japan
525
453
340
301
294
SOURCE STATISTA
CONSUMER ELECTRONICS
13
The biggest growth opportunity in the second half of the decade appears to be in
emerging markets where growing middle classes are developing alongside relatively
affluent upper classes in the Asia-Pacific region Interestingly though while China is the
largest emerging market for the tech industry India is actually growing the fastest
Whereas sales of tech devices in China are forecast to grow by $18 billion USD in 2015
tech device sales in India are forecast to reach $348 billion USD in 2015 an increase of
$48 billion USD Smartphones are driving growth in India as some manufactures have cut
prices to increase share
SOURCE STATISTA
CONSUMER ELECTRONICS
14
Target Market DemographicsSeveral economic tailwinds are expected to stimulate ecommerce and help consumer
electronics manufactures offset slowing growth overall These tailwinds include forecasted
increases in GDP per capita as well as internet and smartphone penetration
Additionally expect the industry to focus intensely on the 25-34 age demographic as it is
forecast to grow significantly between now and 2021
User by age groups in the consumer electronics marketin millions (worldwide)
2021202020192018201720162015
1250
1000
750
500
250
0
11799
78908500
91509833
1054011221
16-24
25-34
35-4445-54
55+
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
15
Specifically within the aforementioned demographic the projected number of male consumers
in the 25-34 age group is expected to be nearly double that of female users in 2016
By 2021 male consumers between 25-34 are again projected to be nearly double the size
of female consumers However the total addressable market between the age of 25-34 is
expected to grow to nearly 300 million
User by age groups and gender in the consumer electronics marketin millions in 2016 (worldwide)
250300 200 150 100 50 0 100 150 200 250 300
55+
45-54
35-44
25-34
16-24
50
Male
Female
User by age groups and gender in the consumer electronics marketin millions in 2021 (worldwide)
250300 200 150 100 50 0 100 150 200 250 300
55+
45-54
35-44
25-34
16-24
50
Male
Female
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
16
Regardless of age the majority of consumer electronics forecast to be sold in 2016 are
expected to be purchased by low and medium income consumers
User by age groups and income splitin millions in 2016
1967m
4464m
2069m
Low
Medium
High
Total
55+
45-54
35-44
25-34
16-24
SOURCE STATISTA
17
Industry Trends
PAGE 18 INTRODUCTION
PAGE 19 TREND 01
The Smartphone Matures
PAGE 22 TREND 02
Emerging Markets Drive Demand
PAGE 25 TREND 03
Home Automation Spikes as the loT Grows
PAGE 30 TREND 04
The Connected Car Evolves
PAGE 37 TREND 05
Commercial Drones Take (Test) Flight
PAGE 43 TREND 06
3D Printing Evolves Beyond Just Prototyping
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
18
The trends impacting the consumer electronics industry are creating opportunistic yet
challenging environments in which to operate Besides increased competition currency
concerns and economic headwinds in Europe and Asia-Pacific are making it increasingly
difficult for manufacturers of consumer electronics to grow their top lines while also
protecting margins
While demand for some traditional tech devices appears to be slowing demand for newer products in the car home and beyond is helping to offset some of the lost revenue How those trends combine with future technologies the ability to continue investing in RampD and whether the worldrsquos economies will position consumers to pay for expensive tech products will dictate how the following five trends play out the second half of the decade
CONSUMER ELECTRONICS
19
TREND 01
The Smartphone MaturesResearch suggests some people are more willing to go without sex rather than go without
their mobile phones In fact 26 of those surveyed said they could not live without their
phones versus 20 who said they couldnrsquot live without sex
SOURCE STATISTA
Source Harris Interactive
CONSUMER ELECTRONICS
20
Despite the opportunity emerging markets provide smartphone makers data indicate
the smartphone market is maturing In 2015 according to Accenture less than half of
smartphone owners plan to purchase a new one
Some analysts argue that phone and data service providers that no longer subsidize the
price of phones may be negatively impacting demand However smartphone makers may
also be victims of their own success and simply unable to innovate or add breathtaking new
features as quickly as consumers have been accustomed Nearly half of the consumers not
planning to purchase a new smartphone say theyrsquore happy with the device they have or
SOURCE ACCENTURE
SOURCE ACCENTURE
CONSUMER ELECTRONICS
21
The data indicate itrsquos not just smartphone demand thatrsquos slowing Consumer demand
for certain televisions laptops and tablets is also expected to be sluggish year over year
As was the case with smartphones consumers appear to be happy with what they
already have
The trend combined with other variables has negatively impacted 2015 holiday sales
at Best Buy prompted Samsung to warn of slower growth in 2016 and could result in
Applersquos first ever year-over-year decline in iPhone sales in Q2 2016 However on the Q1
2016 earnings call Apple CEO Tim Cook revealed the $691 (ASP) iPhone was taking share
from Android and sounded optimistic albeit cautious due to signs of economic strain in
Hong Kong regarding the companyrsquos prospects in emerging markets
SOURCE ACCENTURE
CONSUMER ELECTRONICS
22
Market analysts project sales of consumer electronics in emerging markets to grow at a
compound annual rate of 15 between 2015-2020 Growth is forecast to be most robust
in the Asia-Pacific region excluding Japan Increasingly the focus will be on China where
sales are forecast to grow by $18 billion USD in 2015
Forecasting a surge in the globalmiddle class
Poor
Middle ClassRich
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
9
8
7
6
5
4
3
2
1
0
TREND 02
Emerging Markets Drive DemandResearch suggests the world has lived through two middle class expansions since 1800
during the Industrial Revolution and after World War II Today research analysts argue
wersquore living through a third The data indicate that by 2030 two thirds of the global middle
class will live in the Asia-Pacific region up from just under one-third in 2009
SOURCE EY
CONSUMER ELECTRONICS
23
Lifting the lid on the Chinese consumer suggests consumer electronics manufacturers
may have room to sell products at higher price points Jean-Marc Bellaiche senior partner
and managing director at The Boston Consulting Group argues there are two drivers of
growth in the Chinese economy
1
2
The Emerging Middle ClassldquoAmong the emerging middle class the ldquoaspirational
massesrdquo also called the ldquotrendy metropolitanrdquo
comprises 330 million consumers and 25-27 percent
of the luxury market and the ldquorising middle classrdquo
made up of ldquothe proud business womanrdquo is 70
million consumers and 25-27 percent of the marketrdquo
An Increase In The Number of MillionairesldquoThere are also two types of millionaires new
money and old money New money also called ldquothe
loan traderrdquo or ldquothe Russian climberrdquo is 75 million
people and 30-35 percent of the luxury market
The old money crowd can be generalized as the
ldquonoble Italian entrepreneurrdquo This group is 25 million
consumers and 10-15 percent of the luxury marketrdquo
CONSUMER ELECTRONICS
24
In other words approximately one billion people in China or as much as 70 of the
population are projected to be middle class by 2030
Remember India is poised for explosive middle class growth as well Analysts at EY
recently projected
China total income by band 2010 and 2020annual income thousands of people
50+
30-50
15-30
5-15
0-5
2010 2020
112
2085
2388
933
3137
54
433
1619
499
US$
US$b
ldquoIndiarsquos global middle class meanwhile at around
50 million people or 5 of the population is much
smaller We expect this to grow steadily over the
next decade reaching 200 million by 2020 After
this we expect growth to really accelerate reaching
475 million by 2030 and adding more people than
the Chinese to the global middle class worldwide
after 2027rdquo
SOURCE EY
CONSUMER ELECTRONICS
25
Home automation
Ambient Asissted Living
Security
Energy Management
Home Entertainment
TREND 03
Home Automation Spikes as the loT GrowsThe second half of the decade is poised for explosive growth in the Smart Home market
segment To illustrate the growth potential in this segment wersquoll rely on data from Statista
as itrsquos a bit more conservative than other industry estimates
WARNING You can easily find research reports that contradict one another in terms of
how fast this segment is growing and is projected to grow through 2020 However the
productsincluded in the Smart Home segment varies which means yoursquore not always
comparing apples to apples
When we talk about the Smart Home segment wersquore including
CONSUMER ELECTRONICS
26
Not included in the data wersquoll highlight are devices like smartphones tablets and
television remote controls Herersquos Statistarsquos reasoning
ldquoDevices whose primary function is not for the
automation or remote control of household
equipment eg smartphones and tablets are not
included here Similarly devices whose reason for
purchase is only related to household connection
and remote control to a limited extent such as
Smart-TVs refrigerators or ovens are also not
includedrdquo
Whatrsquos important though is that a $7 billion dollar industry in 2015 is forecast to grow
to a more than $32 billion dollar industry by 2021
CONSUMER ELECTRONICS
27
Revenue in the smart home marketin millions US dollar
2021202020192018201720162015
32191
28468
24249
19495
14649
104327237
40000
30000
20000
10000
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy Management
Besides new products and a shift toward the IoT the Smart Home segmentrsquos relatively
small penetration rate between 1-18 depending on the segment is expected to
further drive growth
Smart home penetration ratein percent (US)
2020201920182017201620152014
80
60
40
20
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
28
Connected-home device shipments according to BI Intelligence will grow at a compound
annual rate of 67 over the next five years to 18 billion units shipped in 2019
Global connected-home device annual shipmentsin millions
2000
1800
1600
1400
1200
1000
800
600
400
200
0
2012 2013 2014E 2015E 2016E 2017E 2018E 2019E
We are here
67 CAGR2014-2019
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
29
Despite the fact that a sizable portion of the total addressable market has yet to adopt
Smart Home technology analysts suggest shipment growth is expected to peak in the
coming years While the following chart obviously doesnrsquot take into account the invention
of innovative new Smart Home products decelerating growth towards the back portion of
the decade may also pressure the average revenue per Smart Household
Average revenue per smart home in the smart home marketin US dollar
2021202020192018201720162015
450
400
350
300
250
200
150
100
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
CONSUMER ELECTRONICS
30
TREND 04
The Connected Car EvolvesIndustry estimates suggest more than 380 million connected cars will be on the road
by 2021 and have the ability to stream music surf the web alert drivers to traffic and
weather conditions and possibly even self-park Tech companies will play a significant
role as analysts who routinely upwardly adjust their forecasts for this segment expect
fully autonomous vehicles to be on the market in just a few years
Estimated connected car shipmentsin millions (worldwide)
2015E 2016E 2017E 2018E 2019E 2020E 2021E
50
100
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
31
In addition to autonomous vehicles the connected car market is defined by features
such as
bull Content amp Services
bull Safety amp Driving Assistance
bull Navigation Services
bull Diagnostics amp Maintenance
bull Connectivity
These technologies are forecast to more than double revenue in the connected car
market from more than $10 billion USD in 2017 to more than $21 billion USD by 2021
Revenue in the connected car marketin millions US dollar
21217
17026
13556
10376
80116109
4622
25000
20000
15000
10000
5000
0
Content amp Services
Safety amp Driving Assistance
Navigation ServicesDiagnostics amp Maintenance
Connectivity
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
32
While the definition of a connected car is likely to evolve in the years to come today there
are six categories of connectivity that are defining and driving this trend
SOURCE STRATEGYamp
Mobility Management Functions that allow the driver to reach a destination quickly safely and in a
cost-efficient manner
Examplesbull Current traffic informationbull Parking lot or garage assistance
bull Optimized fuel consumption
SafetyFunctions that warn the driver of external hazards and internal responses of the
vehicle to hazards
Examplesbull Collision protectionbull Hazard warnings
bull Emergency functions
Driver AssistanceFunctions invovling partially or fully
automatic driving
Examplesbull Operational assistance or autopilot in
heavy traffic in parking or on highways
Well-beingFunctions involving the driverrsquos comfort
and ability and fitness to drive
Examplesbull Fatigue detectionbull Automatic environment adjustments
to keep drivers alert
bull Medical assistance
Vehicle ManagementFunctions that aid in the driver in reducing
operating costs and improving ease of use
Examplesbull Vehicle condition and service remindersbull Remote operation
bull Transfer of usage data
EntertainmentFunctions involving the entertainment
of the driver and passengers
Examplesbull Smartphone interfacebull WLAN hot spotbull Music video internet social media
bull Mobile office
CONSUMER ELECTRONICS
33
Just 93 of vehicles manufactured in 2016 are considered connected cars However
demand is expected to increase in part when lower vehicle price points are implemented
as market research indicates that many of todayrsquos connected cars tend to be relatively
luxurious models with average selling prices of $55000 Consistent with that the
connected car penetration rate is projected to be 277 by 2020
34
61
93
131
176
225
277
Penetration rate in the connected car marketin percent (US)
0
5
10
15
20
25
30
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
34
However as the market becomes more saturated with connected cars average revenue
per connected car is projected to decline to $66685 USD by 2020
115029
84312
72679
6742065447 6668566075
Revenue per connected carin US dollars
1200
1100
1000
900
800
700
6002014 2015 2016 2017 2018 2019 2020
SOURCE STATISTA
CONSUMER ELECTRONICS
35
In addition to realigning automaker IT departments and creating user-friendly interfaces
that are IoT compatible and potentially even device agnostic analysts suggest connected
car manufacturers will have to overcome this challenge
Faster Product CyclesldquoThe typical product cycle in the passenger car
industry is about eight years in the consumer
electronics industry itrsquos less than a year To
successfully sell electronics products for connected
cars automakers will need to mimic the rapid
development cycles of the consumer electronics
companies The key for the automakers is to learn
to build perfectly functioning modular systems
into which updates and product developments can
be integrated quickly and with little effort Such a
modular infotainment building set would allow for
individual components to be updated through plug-
and-play technologies several times during a carrsquos
life cyclerdquo
CONSUMER ELECTRONICS
36
If yoursquore wondering why connected cars were included under consumer electronics
consider how the world will change when self-driving vehicles are status quo Google has
already logged more than 1 million autonomous vehicle miles and has been involved in
just 12 minor crashes in six years none of which were the fault of the driverless car
Once autonomous vehicles become part of our driving fabric expect next generation
connected cars to offer driverspassengers additional options in terms of the devices that
can interact with the vehicle
Smartphone temperature control amp bed-like seat adjustment applications and voice control of windows car hoods amp trunks and streaming music
Remote control or voice activated aftermarket add-ons that allow a passenger to plug in an electric car or pump gas remotely
Innovative cameras and real time editing software that allow for video conferencing that appears as if itrsquos being conducted in an office rather than a car
CONSUMER ELECTRONICS
37
TREND 05
Commercial Drones Take (Test) FlightWhile civilian use of drones may be what many first picture when they think of drones
itrsquos the military use of drones that has been driving demand Specifically military use of
drones has far outpaced civilian use of drones when measured by revenue Defense
spending on drones is projected to be robust through 2024
Global aerial drone marketin billions $14
$12
$10
$8
$6
$4
$2
$0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
DefenseCivilian
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
38
However research also suggests the civilian and commercial markets are expected to
grow significantly as drones are used in new and innovative ways Analysts at Grand View
Research describe future applications such as
ldquoAgriculture is expected to emerge as the dominant
application sector over the forecast period on
account of several benefits attained such as yield
increase due to crop monitoring Tech giants such
as Facebook Inc and Google Inc are planning
to use solar powered UAVs that hover around the
atmosphere of the earth providing internet access
to the remotest of places acting as flying internet
access points or hotspots In addition Amazon has
been working on Prime Air a drone delivery system
that promises goods delivered within 30 minutes
after order placementrdquo
CONSUMER ELECTRONICS
39
The list of potential drone applications includes
bull Agriculture
bull Law Enforcement
bull Ecommerce Delivery
bull Mapping amp Imagery
bull Wildlife Patrolling
bull Forest Fire Management
12000
10000
8000
6000
4000
2000
00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Agriculture
Energy
GovernmentMedia amp Entertainment
Others
US commercial drone market by application 2012-2022USD million
SOURCE GRAND VIEW RESEARCH
bull Vehicle Traffic Control
bull Marketing amp Entertainment
bull Energy amp Mining
bull Real Estate
bull News Gathering
bull Infrastructure Monitoring
CONSUMER ELECTRONICS
40
Research indicates sales of commercial and civilian drones will grow at a compound
annual rate of 19 between 2015 and 2020 The economic impact of the commercial
drone segment is forecast to grow to $51 billion by 2025
While some analysts argue package delivery will not be an early priority the impact
drones have on the delivery of consumer electronics may be relatively muted as only
a third of the people surveyed recently trust a drone to deliver consumer electronics
The economic impact of the commercial drone sectordirect economic impact from the UAV industry in the United States (billion US dollars)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$12
$23
$35 $36$38 $40
$42 $44 $4649
$51
SOURCE STATISTA
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
Oh absolutely I wish we had switched to Shopify Plus
sooner Itrsquos just so easy Itrsquos heaven with Shopify man
ldquo
ldquo
BRIAN LIM
Founder of Emazing Lights
CONSUMER ELECTRONICS
4
01 Consumer Electronics
03 Industry Snapshot
06 Sales amp Growth Outlook
07 User Growth Margins amp Mix Growth by Region
14 Target Market Demographics
17 Industry Trends
45 Tomorrow amp Beyond
60 Technology Friend or Foe
65 The Replatforming Myth
68 Objections to Replatforming
70 When Technology Fades Away
Contents
01
Consumer Electronics
We had to make money right out of the gate and Shopify
was the tool we used to do that Shopify helped us
quickly scale in different parts of the world provides the
reporting we need to make data-driven decisions and has
been a great solution for us
ldquo
ldquoMARTIN CIESZEWSKI
Chief Marketing Officer of InteraXon
CONSUMER ELECTRONICS
03
Industry SnapshotAfter nearly a decade of turbocharged growth in a variety of segments the $285 billion
USD consumer electronics industry appears to be slowing on several fronts Despite
consumers telling pollsters that their smartphones are more important to them than
sex the smartphone market is maturing especially in developed markets which analysts
suggest will likely hamper overall industry growth barring major innovation
While industry growth in the US is expected to decrease from 46 in 2012 to 15 in 2016 demand for new electronics and technologies such as virtual reality wearables and the Internet of Things (IoT) is expected to increase dramatically though not fast enough according to research to offset stalling growth in traditional segments
CONSUMER ELECTRONICS
04
While the industry will continue to battle cannibalization such as tablets replacing laptop
computers high growth and high margin opportunities will likely exists as smart cars
smart homes and even smart cities become increasingly connected and personalized
Emerging markets such as China and India assuming manufactures can offer electronics
at affordable prices are expected to grow at double-digit rates in the coming years
However consumer electronics manufactures will also likely confront strong headwinds
currently impacting developed markets such as
Relatively short product life spans
Rapid price declines Economic employment and currency impacts on consumer spending
SOURCE STATISTA
CONSUMER ELECTRONICS
05
While large international brands with established distribution systems and robust ecommerce presences may be better positioned to take advantage of anticipated emerging market demand theyrsquoll likely be forced to innovate quickly or risk losing market share to smaller startup companies more narrowly focused on a nicheThe always-on connectivity demanded by tomorrowrsquos consumer of electronics is also
expected to nudge manufactures to more closely work with one another to create
ecosystems that allow consumers to remain seamlessly connected regardless of device
or platform choice and without performance sacrifices as they navigate among various
electronics in the home vehicle and beyond
The compound annual growth rate for global consumer electronics shipments is expected
to be 06 through 2018 down from a compound annual growth rate of 25 between
2014-15 This trajectory presents a relatively challenging environment for the last half
of the decade However opportunities exist to potentially exceed current projections if
the industry can find ways to creatively pair new technologies with shifts in consumer
behavior to create consumer electronics that add value to an increasingly omnipresent
IoT world
CONSUMER ELECTRONICS
06
Sales amp Growth OutlookWorldwide ecommerce sales of consumer electronics are expected to grow at a compound
annual rate of 102 through 2021 from more than $290 million USD in 2016 to more than
$472 million USD in 2021
in million US dollars
0
50000
100000
150000
200000
250000
300000
2021202020192018201720162015
$261966$290611
$327478$369208
$410062$445853
$472615
Global consumer electronics revenue Books Movies Music and Games
Consumer Electronics
SOURCE STATISTA
CONSUMER ELECTRONICS
07
SOURCE STATISTA
USER GROWTH in millions (worldwide)
User Growth Margins amp Mix Growth by RegionThe concern regarding margin pressure comes into focus when you
examine the industryrsquos revenue growth projections in the context of
exploding user growth Speci ically more than 850 million people are
expected to purchase consumer electronics in 2016 compared with
an estimated 11 billion in 2020
2015 2016 2017 2018 2019 2020 2021
78908500
9150
983310540
11221
11799
1000
750
500
250
0
1250
CONSUMER ELECTRONICS
08
Despite a dramatic increase in forecasted user the average revenue per person is
ultimately projected to plateau at the end of the decade from $267 USD per user in 2017
to $321 by 2021
Average revenue per userin US dollars (worldwide)
220
240
260
280
300
320
340
2021202020192018201720162015
$23402
$24801
$26794
$28906
$30582
$31674$32188
SOURCE STATISTA
CONSUMER ELECTRONICS
09
Similarly worldwide shipments of consumer electronics are expected to be relatively
flat during the second half of the decade down from $396 billion USD in 2007 to an
estimated $347 billion USD in 2018
SOURCE STATISTA
CONSUMER ELECTRONICS
10
Partially offsetting slowing growth in the maturing smartphone market are emerging
technologies including wearables drones 3D printers and connected homes
The mix of consumer electronics being sold is changing as well Industry sales leaders
include smartphones automobile electronics and flat panel televisions
SOURCE BUSINESS WIRE
SOURCE BUSINESS WIRE
2015 tech industry outlookSales leaders
CE SALESLEADERSSmartphones$53 billion in revenue177 million units
Tablets$226 billion in revenue73 million units
RIDING HIGH ON NEW VEHICLES
Automotive electronics$145 billion in revenue
TVrsquos larger than 40 inches will account for 6 of TV shipments in 2015 up 8
BIGGER IS BETTER4K ultra HD$52 billion in revenue44 million shipments expected
LCD flat panels$186 in revenue
$53B(+5)
$145B(+68)
$52B(+136)
2015 tech industry outlookEmerging technologies
WEARABLESA DEVICE REVOLUTIONFitness and activity trackersReach $18 billion in revenue in 2015 203 million units
WORLD CHANGERSDrones
$105 million in revenue700000 units
3D printers$210 million in revenue
CONNECTED HOME TECHNOLOGIES
$967 million in revenue
$18B(+20)
$967M(+32)
85 of consumers agree that using a fitness and activity tracker is motivating them to reach their fitness goals according to CEArsquos Wearable Activity Trackers Engaging Consumers to Monitor their Health
Drones could reach 1 Million US flights a day in 20 years according to CEA economic research
Includes smart thermostats smart smoke detectors and CO2 detectors Wi-Fi cameras smart home systems smart locks connected switches dimmers and outlets
CONSUMER ELECTRONICS
11
Growth By RegionThe United States is now the second largest market for consumer electronics with a user
base that is forecast to spend more than $55 billion USD in 2016 significantly less than
China which is forecast to spend more than $64 billion USD
SOURCE STATISTA
Revenue in the consumer electronics market2016 global comparison in million US dollars
Top Countries
China
United States
Japan
United Kingdom
Germany
647623
558504
160421
132156
129833
in mUSD
CONSUMER ELECTRONICS
12
However opportunities begin to take shape when you examine user penetration In the
US user penetration is just 525 which indicates additional growth opportunities exist
User penetration in the consumer electronics marketin percent in 2016 (worldwide)
Top Countries
United States
United Kingdom
Germany
Denmark
Japan
525
453
340
301
294
SOURCE STATISTA
CONSUMER ELECTRONICS
13
The biggest growth opportunity in the second half of the decade appears to be in
emerging markets where growing middle classes are developing alongside relatively
affluent upper classes in the Asia-Pacific region Interestingly though while China is the
largest emerging market for the tech industry India is actually growing the fastest
Whereas sales of tech devices in China are forecast to grow by $18 billion USD in 2015
tech device sales in India are forecast to reach $348 billion USD in 2015 an increase of
$48 billion USD Smartphones are driving growth in India as some manufactures have cut
prices to increase share
SOURCE STATISTA
CONSUMER ELECTRONICS
14
Target Market DemographicsSeveral economic tailwinds are expected to stimulate ecommerce and help consumer
electronics manufactures offset slowing growth overall These tailwinds include forecasted
increases in GDP per capita as well as internet and smartphone penetration
Additionally expect the industry to focus intensely on the 25-34 age demographic as it is
forecast to grow significantly between now and 2021
User by age groups in the consumer electronics marketin millions (worldwide)
2021202020192018201720162015
1250
1000
750
500
250
0
11799
78908500
91509833
1054011221
16-24
25-34
35-4445-54
55+
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
15
Specifically within the aforementioned demographic the projected number of male consumers
in the 25-34 age group is expected to be nearly double that of female users in 2016
By 2021 male consumers between 25-34 are again projected to be nearly double the size
of female consumers However the total addressable market between the age of 25-34 is
expected to grow to nearly 300 million
User by age groups and gender in the consumer electronics marketin millions in 2016 (worldwide)
250300 200 150 100 50 0 100 150 200 250 300
55+
45-54
35-44
25-34
16-24
50
Male
Female
User by age groups and gender in the consumer electronics marketin millions in 2021 (worldwide)
250300 200 150 100 50 0 100 150 200 250 300
55+
45-54
35-44
25-34
16-24
50
Male
Female
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
16
Regardless of age the majority of consumer electronics forecast to be sold in 2016 are
expected to be purchased by low and medium income consumers
User by age groups and income splitin millions in 2016
1967m
4464m
2069m
Low
Medium
High
Total
55+
45-54
35-44
25-34
16-24
SOURCE STATISTA
17
Industry Trends
PAGE 18 INTRODUCTION
PAGE 19 TREND 01
The Smartphone Matures
PAGE 22 TREND 02
Emerging Markets Drive Demand
PAGE 25 TREND 03
Home Automation Spikes as the loT Grows
PAGE 30 TREND 04
The Connected Car Evolves
PAGE 37 TREND 05
Commercial Drones Take (Test) Flight
PAGE 43 TREND 06
3D Printing Evolves Beyond Just Prototyping
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
18
The trends impacting the consumer electronics industry are creating opportunistic yet
challenging environments in which to operate Besides increased competition currency
concerns and economic headwinds in Europe and Asia-Pacific are making it increasingly
difficult for manufacturers of consumer electronics to grow their top lines while also
protecting margins
While demand for some traditional tech devices appears to be slowing demand for newer products in the car home and beyond is helping to offset some of the lost revenue How those trends combine with future technologies the ability to continue investing in RampD and whether the worldrsquos economies will position consumers to pay for expensive tech products will dictate how the following five trends play out the second half of the decade
CONSUMER ELECTRONICS
19
TREND 01
The Smartphone MaturesResearch suggests some people are more willing to go without sex rather than go without
their mobile phones In fact 26 of those surveyed said they could not live without their
phones versus 20 who said they couldnrsquot live without sex
SOURCE STATISTA
Source Harris Interactive
CONSUMER ELECTRONICS
20
Despite the opportunity emerging markets provide smartphone makers data indicate
the smartphone market is maturing In 2015 according to Accenture less than half of
smartphone owners plan to purchase a new one
Some analysts argue that phone and data service providers that no longer subsidize the
price of phones may be negatively impacting demand However smartphone makers may
also be victims of their own success and simply unable to innovate or add breathtaking new
features as quickly as consumers have been accustomed Nearly half of the consumers not
planning to purchase a new smartphone say theyrsquore happy with the device they have or
SOURCE ACCENTURE
SOURCE ACCENTURE
CONSUMER ELECTRONICS
21
The data indicate itrsquos not just smartphone demand thatrsquos slowing Consumer demand
for certain televisions laptops and tablets is also expected to be sluggish year over year
As was the case with smartphones consumers appear to be happy with what they
already have
The trend combined with other variables has negatively impacted 2015 holiday sales
at Best Buy prompted Samsung to warn of slower growth in 2016 and could result in
Applersquos first ever year-over-year decline in iPhone sales in Q2 2016 However on the Q1
2016 earnings call Apple CEO Tim Cook revealed the $691 (ASP) iPhone was taking share
from Android and sounded optimistic albeit cautious due to signs of economic strain in
Hong Kong regarding the companyrsquos prospects in emerging markets
SOURCE ACCENTURE
CONSUMER ELECTRONICS
22
Market analysts project sales of consumer electronics in emerging markets to grow at a
compound annual rate of 15 between 2015-2020 Growth is forecast to be most robust
in the Asia-Pacific region excluding Japan Increasingly the focus will be on China where
sales are forecast to grow by $18 billion USD in 2015
Forecasting a surge in the globalmiddle class
Poor
Middle ClassRich
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
9
8
7
6
5
4
3
2
1
0
TREND 02
Emerging Markets Drive DemandResearch suggests the world has lived through two middle class expansions since 1800
during the Industrial Revolution and after World War II Today research analysts argue
wersquore living through a third The data indicate that by 2030 two thirds of the global middle
class will live in the Asia-Pacific region up from just under one-third in 2009
SOURCE EY
CONSUMER ELECTRONICS
23
Lifting the lid on the Chinese consumer suggests consumer electronics manufacturers
may have room to sell products at higher price points Jean-Marc Bellaiche senior partner
and managing director at The Boston Consulting Group argues there are two drivers of
growth in the Chinese economy
1
2
The Emerging Middle ClassldquoAmong the emerging middle class the ldquoaspirational
massesrdquo also called the ldquotrendy metropolitanrdquo
comprises 330 million consumers and 25-27 percent
of the luxury market and the ldquorising middle classrdquo
made up of ldquothe proud business womanrdquo is 70
million consumers and 25-27 percent of the marketrdquo
An Increase In The Number of MillionairesldquoThere are also two types of millionaires new
money and old money New money also called ldquothe
loan traderrdquo or ldquothe Russian climberrdquo is 75 million
people and 30-35 percent of the luxury market
The old money crowd can be generalized as the
ldquonoble Italian entrepreneurrdquo This group is 25 million
consumers and 10-15 percent of the luxury marketrdquo
CONSUMER ELECTRONICS
24
In other words approximately one billion people in China or as much as 70 of the
population are projected to be middle class by 2030
Remember India is poised for explosive middle class growth as well Analysts at EY
recently projected
China total income by band 2010 and 2020annual income thousands of people
50+
30-50
15-30
5-15
0-5
2010 2020
112
2085
2388
933
3137
54
433
1619
499
US$
US$b
ldquoIndiarsquos global middle class meanwhile at around
50 million people or 5 of the population is much
smaller We expect this to grow steadily over the
next decade reaching 200 million by 2020 After
this we expect growth to really accelerate reaching
475 million by 2030 and adding more people than
the Chinese to the global middle class worldwide
after 2027rdquo
SOURCE EY
CONSUMER ELECTRONICS
25
Home automation
Ambient Asissted Living
Security
Energy Management
Home Entertainment
TREND 03
Home Automation Spikes as the loT GrowsThe second half of the decade is poised for explosive growth in the Smart Home market
segment To illustrate the growth potential in this segment wersquoll rely on data from Statista
as itrsquos a bit more conservative than other industry estimates
WARNING You can easily find research reports that contradict one another in terms of
how fast this segment is growing and is projected to grow through 2020 However the
productsincluded in the Smart Home segment varies which means yoursquore not always
comparing apples to apples
When we talk about the Smart Home segment wersquore including
CONSUMER ELECTRONICS
26
Not included in the data wersquoll highlight are devices like smartphones tablets and
television remote controls Herersquos Statistarsquos reasoning
ldquoDevices whose primary function is not for the
automation or remote control of household
equipment eg smartphones and tablets are not
included here Similarly devices whose reason for
purchase is only related to household connection
and remote control to a limited extent such as
Smart-TVs refrigerators or ovens are also not
includedrdquo
Whatrsquos important though is that a $7 billion dollar industry in 2015 is forecast to grow
to a more than $32 billion dollar industry by 2021
CONSUMER ELECTRONICS
27
Revenue in the smart home marketin millions US dollar
2021202020192018201720162015
32191
28468
24249
19495
14649
104327237
40000
30000
20000
10000
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy Management
Besides new products and a shift toward the IoT the Smart Home segmentrsquos relatively
small penetration rate between 1-18 depending on the segment is expected to
further drive growth
Smart home penetration ratein percent (US)
2020201920182017201620152014
80
60
40
20
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
28
Connected-home device shipments according to BI Intelligence will grow at a compound
annual rate of 67 over the next five years to 18 billion units shipped in 2019
Global connected-home device annual shipmentsin millions
2000
1800
1600
1400
1200
1000
800
600
400
200
0
2012 2013 2014E 2015E 2016E 2017E 2018E 2019E
We are here
67 CAGR2014-2019
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
29
Despite the fact that a sizable portion of the total addressable market has yet to adopt
Smart Home technology analysts suggest shipment growth is expected to peak in the
coming years While the following chart obviously doesnrsquot take into account the invention
of innovative new Smart Home products decelerating growth towards the back portion of
the decade may also pressure the average revenue per Smart Household
Average revenue per smart home in the smart home marketin US dollar
2021202020192018201720162015
450
400
350
300
250
200
150
100
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
CONSUMER ELECTRONICS
30
TREND 04
The Connected Car EvolvesIndustry estimates suggest more than 380 million connected cars will be on the road
by 2021 and have the ability to stream music surf the web alert drivers to traffic and
weather conditions and possibly even self-park Tech companies will play a significant
role as analysts who routinely upwardly adjust their forecasts for this segment expect
fully autonomous vehicles to be on the market in just a few years
Estimated connected car shipmentsin millions (worldwide)
2015E 2016E 2017E 2018E 2019E 2020E 2021E
50
100
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
31
In addition to autonomous vehicles the connected car market is defined by features
such as
bull Content amp Services
bull Safety amp Driving Assistance
bull Navigation Services
bull Diagnostics amp Maintenance
bull Connectivity
These technologies are forecast to more than double revenue in the connected car
market from more than $10 billion USD in 2017 to more than $21 billion USD by 2021
Revenue in the connected car marketin millions US dollar
21217
17026
13556
10376
80116109
4622
25000
20000
15000
10000
5000
0
Content amp Services
Safety amp Driving Assistance
Navigation ServicesDiagnostics amp Maintenance
Connectivity
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
32
While the definition of a connected car is likely to evolve in the years to come today there
are six categories of connectivity that are defining and driving this trend
SOURCE STRATEGYamp
Mobility Management Functions that allow the driver to reach a destination quickly safely and in a
cost-efficient manner
Examplesbull Current traffic informationbull Parking lot or garage assistance
bull Optimized fuel consumption
SafetyFunctions that warn the driver of external hazards and internal responses of the
vehicle to hazards
Examplesbull Collision protectionbull Hazard warnings
bull Emergency functions
Driver AssistanceFunctions invovling partially or fully
automatic driving
Examplesbull Operational assistance or autopilot in
heavy traffic in parking or on highways
Well-beingFunctions involving the driverrsquos comfort
and ability and fitness to drive
Examplesbull Fatigue detectionbull Automatic environment adjustments
to keep drivers alert
bull Medical assistance
Vehicle ManagementFunctions that aid in the driver in reducing
operating costs and improving ease of use
Examplesbull Vehicle condition and service remindersbull Remote operation
bull Transfer of usage data
EntertainmentFunctions involving the entertainment
of the driver and passengers
Examplesbull Smartphone interfacebull WLAN hot spotbull Music video internet social media
bull Mobile office
CONSUMER ELECTRONICS
33
Just 93 of vehicles manufactured in 2016 are considered connected cars However
demand is expected to increase in part when lower vehicle price points are implemented
as market research indicates that many of todayrsquos connected cars tend to be relatively
luxurious models with average selling prices of $55000 Consistent with that the
connected car penetration rate is projected to be 277 by 2020
34
61
93
131
176
225
277
Penetration rate in the connected car marketin percent (US)
0
5
10
15
20
25
30
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
34
However as the market becomes more saturated with connected cars average revenue
per connected car is projected to decline to $66685 USD by 2020
115029
84312
72679
6742065447 6668566075
Revenue per connected carin US dollars
1200
1100
1000
900
800
700
6002014 2015 2016 2017 2018 2019 2020
SOURCE STATISTA
CONSUMER ELECTRONICS
35
In addition to realigning automaker IT departments and creating user-friendly interfaces
that are IoT compatible and potentially even device agnostic analysts suggest connected
car manufacturers will have to overcome this challenge
Faster Product CyclesldquoThe typical product cycle in the passenger car
industry is about eight years in the consumer
electronics industry itrsquos less than a year To
successfully sell electronics products for connected
cars automakers will need to mimic the rapid
development cycles of the consumer electronics
companies The key for the automakers is to learn
to build perfectly functioning modular systems
into which updates and product developments can
be integrated quickly and with little effort Such a
modular infotainment building set would allow for
individual components to be updated through plug-
and-play technologies several times during a carrsquos
life cyclerdquo
CONSUMER ELECTRONICS
36
If yoursquore wondering why connected cars were included under consumer electronics
consider how the world will change when self-driving vehicles are status quo Google has
already logged more than 1 million autonomous vehicle miles and has been involved in
just 12 minor crashes in six years none of which were the fault of the driverless car
Once autonomous vehicles become part of our driving fabric expect next generation
connected cars to offer driverspassengers additional options in terms of the devices that
can interact with the vehicle
Smartphone temperature control amp bed-like seat adjustment applications and voice control of windows car hoods amp trunks and streaming music
Remote control or voice activated aftermarket add-ons that allow a passenger to plug in an electric car or pump gas remotely
Innovative cameras and real time editing software that allow for video conferencing that appears as if itrsquos being conducted in an office rather than a car
CONSUMER ELECTRONICS
37
TREND 05
Commercial Drones Take (Test) FlightWhile civilian use of drones may be what many first picture when they think of drones
itrsquos the military use of drones that has been driving demand Specifically military use of
drones has far outpaced civilian use of drones when measured by revenue Defense
spending on drones is projected to be robust through 2024
Global aerial drone marketin billions $14
$12
$10
$8
$6
$4
$2
$0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
DefenseCivilian
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
38
However research also suggests the civilian and commercial markets are expected to
grow significantly as drones are used in new and innovative ways Analysts at Grand View
Research describe future applications such as
ldquoAgriculture is expected to emerge as the dominant
application sector over the forecast period on
account of several benefits attained such as yield
increase due to crop monitoring Tech giants such
as Facebook Inc and Google Inc are planning
to use solar powered UAVs that hover around the
atmosphere of the earth providing internet access
to the remotest of places acting as flying internet
access points or hotspots In addition Amazon has
been working on Prime Air a drone delivery system
that promises goods delivered within 30 minutes
after order placementrdquo
CONSUMER ELECTRONICS
39
The list of potential drone applications includes
bull Agriculture
bull Law Enforcement
bull Ecommerce Delivery
bull Mapping amp Imagery
bull Wildlife Patrolling
bull Forest Fire Management
12000
10000
8000
6000
4000
2000
00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Agriculture
Energy
GovernmentMedia amp Entertainment
Others
US commercial drone market by application 2012-2022USD million
SOURCE GRAND VIEW RESEARCH
bull Vehicle Traffic Control
bull Marketing amp Entertainment
bull Energy amp Mining
bull Real Estate
bull News Gathering
bull Infrastructure Monitoring
CONSUMER ELECTRONICS
40
Research indicates sales of commercial and civilian drones will grow at a compound
annual rate of 19 between 2015 and 2020 The economic impact of the commercial
drone segment is forecast to grow to $51 billion by 2025
While some analysts argue package delivery will not be an early priority the impact
drones have on the delivery of consumer electronics may be relatively muted as only
a third of the people surveyed recently trust a drone to deliver consumer electronics
The economic impact of the commercial drone sectordirect economic impact from the UAV industry in the United States (billion US dollars)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$12
$23
$35 $36$38 $40
$42 $44 $4649
$51
SOURCE STATISTA
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
4
01 Consumer Electronics
03 Industry Snapshot
06 Sales amp Growth Outlook
07 User Growth Margins amp Mix Growth by Region
14 Target Market Demographics
17 Industry Trends
45 Tomorrow amp Beyond
60 Technology Friend or Foe
65 The Replatforming Myth
68 Objections to Replatforming
70 When Technology Fades Away
Contents
01
Consumer Electronics
We had to make money right out of the gate and Shopify
was the tool we used to do that Shopify helped us
quickly scale in different parts of the world provides the
reporting we need to make data-driven decisions and has
been a great solution for us
ldquo
ldquoMARTIN CIESZEWSKI
Chief Marketing Officer of InteraXon
CONSUMER ELECTRONICS
03
Industry SnapshotAfter nearly a decade of turbocharged growth in a variety of segments the $285 billion
USD consumer electronics industry appears to be slowing on several fronts Despite
consumers telling pollsters that their smartphones are more important to them than
sex the smartphone market is maturing especially in developed markets which analysts
suggest will likely hamper overall industry growth barring major innovation
While industry growth in the US is expected to decrease from 46 in 2012 to 15 in 2016 demand for new electronics and technologies such as virtual reality wearables and the Internet of Things (IoT) is expected to increase dramatically though not fast enough according to research to offset stalling growth in traditional segments
CONSUMER ELECTRONICS
04
While the industry will continue to battle cannibalization such as tablets replacing laptop
computers high growth and high margin opportunities will likely exists as smart cars
smart homes and even smart cities become increasingly connected and personalized
Emerging markets such as China and India assuming manufactures can offer electronics
at affordable prices are expected to grow at double-digit rates in the coming years
However consumer electronics manufactures will also likely confront strong headwinds
currently impacting developed markets such as
Relatively short product life spans
Rapid price declines Economic employment and currency impacts on consumer spending
SOURCE STATISTA
CONSUMER ELECTRONICS
05
While large international brands with established distribution systems and robust ecommerce presences may be better positioned to take advantage of anticipated emerging market demand theyrsquoll likely be forced to innovate quickly or risk losing market share to smaller startup companies more narrowly focused on a nicheThe always-on connectivity demanded by tomorrowrsquos consumer of electronics is also
expected to nudge manufactures to more closely work with one another to create
ecosystems that allow consumers to remain seamlessly connected regardless of device
or platform choice and without performance sacrifices as they navigate among various
electronics in the home vehicle and beyond
The compound annual growth rate for global consumer electronics shipments is expected
to be 06 through 2018 down from a compound annual growth rate of 25 between
2014-15 This trajectory presents a relatively challenging environment for the last half
of the decade However opportunities exist to potentially exceed current projections if
the industry can find ways to creatively pair new technologies with shifts in consumer
behavior to create consumer electronics that add value to an increasingly omnipresent
IoT world
CONSUMER ELECTRONICS
06
Sales amp Growth OutlookWorldwide ecommerce sales of consumer electronics are expected to grow at a compound
annual rate of 102 through 2021 from more than $290 million USD in 2016 to more than
$472 million USD in 2021
in million US dollars
0
50000
100000
150000
200000
250000
300000
2021202020192018201720162015
$261966$290611
$327478$369208
$410062$445853
$472615
Global consumer electronics revenue Books Movies Music and Games
Consumer Electronics
SOURCE STATISTA
CONSUMER ELECTRONICS
07
SOURCE STATISTA
USER GROWTH in millions (worldwide)
User Growth Margins amp Mix Growth by RegionThe concern regarding margin pressure comes into focus when you
examine the industryrsquos revenue growth projections in the context of
exploding user growth Speci ically more than 850 million people are
expected to purchase consumer electronics in 2016 compared with
an estimated 11 billion in 2020
2015 2016 2017 2018 2019 2020 2021
78908500
9150
983310540
11221
11799
1000
750
500
250
0
1250
CONSUMER ELECTRONICS
08
Despite a dramatic increase in forecasted user the average revenue per person is
ultimately projected to plateau at the end of the decade from $267 USD per user in 2017
to $321 by 2021
Average revenue per userin US dollars (worldwide)
220
240
260
280
300
320
340
2021202020192018201720162015
$23402
$24801
$26794
$28906
$30582
$31674$32188
SOURCE STATISTA
CONSUMER ELECTRONICS
09
Similarly worldwide shipments of consumer electronics are expected to be relatively
flat during the second half of the decade down from $396 billion USD in 2007 to an
estimated $347 billion USD in 2018
SOURCE STATISTA
CONSUMER ELECTRONICS
10
Partially offsetting slowing growth in the maturing smartphone market are emerging
technologies including wearables drones 3D printers and connected homes
The mix of consumer electronics being sold is changing as well Industry sales leaders
include smartphones automobile electronics and flat panel televisions
SOURCE BUSINESS WIRE
SOURCE BUSINESS WIRE
2015 tech industry outlookSales leaders
CE SALESLEADERSSmartphones$53 billion in revenue177 million units
Tablets$226 billion in revenue73 million units
RIDING HIGH ON NEW VEHICLES
Automotive electronics$145 billion in revenue
TVrsquos larger than 40 inches will account for 6 of TV shipments in 2015 up 8
BIGGER IS BETTER4K ultra HD$52 billion in revenue44 million shipments expected
LCD flat panels$186 in revenue
$53B(+5)
$145B(+68)
$52B(+136)
2015 tech industry outlookEmerging technologies
WEARABLESA DEVICE REVOLUTIONFitness and activity trackersReach $18 billion in revenue in 2015 203 million units
WORLD CHANGERSDrones
$105 million in revenue700000 units
3D printers$210 million in revenue
CONNECTED HOME TECHNOLOGIES
$967 million in revenue
$18B(+20)
$967M(+32)
85 of consumers agree that using a fitness and activity tracker is motivating them to reach their fitness goals according to CEArsquos Wearable Activity Trackers Engaging Consumers to Monitor their Health
Drones could reach 1 Million US flights a day in 20 years according to CEA economic research
Includes smart thermostats smart smoke detectors and CO2 detectors Wi-Fi cameras smart home systems smart locks connected switches dimmers and outlets
CONSUMER ELECTRONICS
11
Growth By RegionThe United States is now the second largest market for consumer electronics with a user
base that is forecast to spend more than $55 billion USD in 2016 significantly less than
China which is forecast to spend more than $64 billion USD
SOURCE STATISTA
Revenue in the consumer electronics market2016 global comparison in million US dollars
Top Countries
China
United States
Japan
United Kingdom
Germany
647623
558504
160421
132156
129833
in mUSD
CONSUMER ELECTRONICS
12
However opportunities begin to take shape when you examine user penetration In the
US user penetration is just 525 which indicates additional growth opportunities exist
User penetration in the consumer electronics marketin percent in 2016 (worldwide)
Top Countries
United States
United Kingdom
Germany
Denmark
Japan
525
453
340
301
294
SOURCE STATISTA
CONSUMER ELECTRONICS
13
The biggest growth opportunity in the second half of the decade appears to be in
emerging markets where growing middle classes are developing alongside relatively
affluent upper classes in the Asia-Pacific region Interestingly though while China is the
largest emerging market for the tech industry India is actually growing the fastest
Whereas sales of tech devices in China are forecast to grow by $18 billion USD in 2015
tech device sales in India are forecast to reach $348 billion USD in 2015 an increase of
$48 billion USD Smartphones are driving growth in India as some manufactures have cut
prices to increase share
SOURCE STATISTA
CONSUMER ELECTRONICS
14
Target Market DemographicsSeveral economic tailwinds are expected to stimulate ecommerce and help consumer
electronics manufactures offset slowing growth overall These tailwinds include forecasted
increases in GDP per capita as well as internet and smartphone penetration
Additionally expect the industry to focus intensely on the 25-34 age demographic as it is
forecast to grow significantly between now and 2021
User by age groups in the consumer electronics marketin millions (worldwide)
2021202020192018201720162015
1250
1000
750
500
250
0
11799
78908500
91509833
1054011221
16-24
25-34
35-4445-54
55+
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
15
Specifically within the aforementioned demographic the projected number of male consumers
in the 25-34 age group is expected to be nearly double that of female users in 2016
By 2021 male consumers between 25-34 are again projected to be nearly double the size
of female consumers However the total addressable market between the age of 25-34 is
expected to grow to nearly 300 million
User by age groups and gender in the consumer electronics marketin millions in 2016 (worldwide)
250300 200 150 100 50 0 100 150 200 250 300
55+
45-54
35-44
25-34
16-24
50
Male
Female
User by age groups and gender in the consumer electronics marketin millions in 2021 (worldwide)
250300 200 150 100 50 0 100 150 200 250 300
55+
45-54
35-44
25-34
16-24
50
Male
Female
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
16
Regardless of age the majority of consumer electronics forecast to be sold in 2016 are
expected to be purchased by low and medium income consumers
User by age groups and income splitin millions in 2016
1967m
4464m
2069m
Low
Medium
High
Total
55+
45-54
35-44
25-34
16-24
SOURCE STATISTA
17
Industry Trends
PAGE 18 INTRODUCTION
PAGE 19 TREND 01
The Smartphone Matures
PAGE 22 TREND 02
Emerging Markets Drive Demand
PAGE 25 TREND 03
Home Automation Spikes as the loT Grows
PAGE 30 TREND 04
The Connected Car Evolves
PAGE 37 TREND 05
Commercial Drones Take (Test) Flight
PAGE 43 TREND 06
3D Printing Evolves Beyond Just Prototyping
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
18
The trends impacting the consumer electronics industry are creating opportunistic yet
challenging environments in which to operate Besides increased competition currency
concerns and economic headwinds in Europe and Asia-Pacific are making it increasingly
difficult for manufacturers of consumer electronics to grow their top lines while also
protecting margins
While demand for some traditional tech devices appears to be slowing demand for newer products in the car home and beyond is helping to offset some of the lost revenue How those trends combine with future technologies the ability to continue investing in RampD and whether the worldrsquos economies will position consumers to pay for expensive tech products will dictate how the following five trends play out the second half of the decade
CONSUMER ELECTRONICS
19
TREND 01
The Smartphone MaturesResearch suggests some people are more willing to go without sex rather than go without
their mobile phones In fact 26 of those surveyed said they could not live without their
phones versus 20 who said they couldnrsquot live without sex
SOURCE STATISTA
Source Harris Interactive
CONSUMER ELECTRONICS
20
Despite the opportunity emerging markets provide smartphone makers data indicate
the smartphone market is maturing In 2015 according to Accenture less than half of
smartphone owners plan to purchase a new one
Some analysts argue that phone and data service providers that no longer subsidize the
price of phones may be negatively impacting demand However smartphone makers may
also be victims of their own success and simply unable to innovate or add breathtaking new
features as quickly as consumers have been accustomed Nearly half of the consumers not
planning to purchase a new smartphone say theyrsquore happy with the device they have or
SOURCE ACCENTURE
SOURCE ACCENTURE
CONSUMER ELECTRONICS
21
The data indicate itrsquos not just smartphone demand thatrsquos slowing Consumer demand
for certain televisions laptops and tablets is also expected to be sluggish year over year
As was the case with smartphones consumers appear to be happy with what they
already have
The trend combined with other variables has negatively impacted 2015 holiday sales
at Best Buy prompted Samsung to warn of slower growth in 2016 and could result in
Applersquos first ever year-over-year decline in iPhone sales in Q2 2016 However on the Q1
2016 earnings call Apple CEO Tim Cook revealed the $691 (ASP) iPhone was taking share
from Android and sounded optimistic albeit cautious due to signs of economic strain in
Hong Kong regarding the companyrsquos prospects in emerging markets
SOURCE ACCENTURE
CONSUMER ELECTRONICS
22
Market analysts project sales of consumer electronics in emerging markets to grow at a
compound annual rate of 15 between 2015-2020 Growth is forecast to be most robust
in the Asia-Pacific region excluding Japan Increasingly the focus will be on China where
sales are forecast to grow by $18 billion USD in 2015
Forecasting a surge in the globalmiddle class
Poor
Middle ClassRich
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
9
8
7
6
5
4
3
2
1
0
TREND 02
Emerging Markets Drive DemandResearch suggests the world has lived through two middle class expansions since 1800
during the Industrial Revolution and after World War II Today research analysts argue
wersquore living through a third The data indicate that by 2030 two thirds of the global middle
class will live in the Asia-Pacific region up from just under one-third in 2009
SOURCE EY
CONSUMER ELECTRONICS
23
Lifting the lid on the Chinese consumer suggests consumer electronics manufacturers
may have room to sell products at higher price points Jean-Marc Bellaiche senior partner
and managing director at The Boston Consulting Group argues there are two drivers of
growth in the Chinese economy
1
2
The Emerging Middle ClassldquoAmong the emerging middle class the ldquoaspirational
massesrdquo also called the ldquotrendy metropolitanrdquo
comprises 330 million consumers and 25-27 percent
of the luxury market and the ldquorising middle classrdquo
made up of ldquothe proud business womanrdquo is 70
million consumers and 25-27 percent of the marketrdquo
An Increase In The Number of MillionairesldquoThere are also two types of millionaires new
money and old money New money also called ldquothe
loan traderrdquo or ldquothe Russian climberrdquo is 75 million
people and 30-35 percent of the luxury market
The old money crowd can be generalized as the
ldquonoble Italian entrepreneurrdquo This group is 25 million
consumers and 10-15 percent of the luxury marketrdquo
CONSUMER ELECTRONICS
24
In other words approximately one billion people in China or as much as 70 of the
population are projected to be middle class by 2030
Remember India is poised for explosive middle class growth as well Analysts at EY
recently projected
China total income by band 2010 and 2020annual income thousands of people
50+
30-50
15-30
5-15
0-5
2010 2020
112
2085
2388
933
3137
54
433
1619
499
US$
US$b
ldquoIndiarsquos global middle class meanwhile at around
50 million people or 5 of the population is much
smaller We expect this to grow steadily over the
next decade reaching 200 million by 2020 After
this we expect growth to really accelerate reaching
475 million by 2030 and adding more people than
the Chinese to the global middle class worldwide
after 2027rdquo
SOURCE EY
CONSUMER ELECTRONICS
25
Home automation
Ambient Asissted Living
Security
Energy Management
Home Entertainment
TREND 03
Home Automation Spikes as the loT GrowsThe second half of the decade is poised for explosive growth in the Smart Home market
segment To illustrate the growth potential in this segment wersquoll rely on data from Statista
as itrsquos a bit more conservative than other industry estimates
WARNING You can easily find research reports that contradict one another in terms of
how fast this segment is growing and is projected to grow through 2020 However the
productsincluded in the Smart Home segment varies which means yoursquore not always
comparing apples to apples
When we talk about the Smart Home segment wersquore including
CONSUMER ELECTRONICS
26
Not included in the data wersquoll highlight are devices like smartphones tablets and
television remote controls Herersquos Statistarsquos reasoning
ldquoDevices whose primary function is not for the
automation or remote control of household
equipment eg smartphones and tablets are not
included here Similarly devices whose reason for
purchase is only related to household connection
and remote control to a limited extent such as
Smart-TVs refrigerators or ovens are also not
includedrdquo
Whatrsquos important though is that a $7 billion dollar industry in 2015 is forecast to grow
to a more than $32 billion dollar industry by 2021
CONSUMER ELECTRONICS
27
Revenue in the smart home marketin millions US dollar
2021202020192018201720162015
32191
28468
24249
19495
14649
104327237
40000
30000
20000
10000
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy Management
Besides new products and a shift toward the IoT the Smart Home segmentrsquos relatively
small penetration rate between 1-18 depending on the segment is expected to
further drive growth
Smart home penetration ratein percent (US)
2020201920182017201620152014
80
60
40
20
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
28
Connected-home device shipments according to BI Intelligence will grow at a compound
annual rate of 67 over the next five years to 18 billion units shipped in 2019
Global connected-home device annual shipmentsin millions
2000
1800
1600
1400
1200
1000
800
600
400
200
0
2012 2013 2014E 2015E 2016E 2017E 2018E 2019E
We are here
67 CAGR2014-2019
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
29
Despite the fact that a sizable portion of the total addressable market has yet to adopt
Smart Home technology analysts suggest shipment growth is expected to peak in the
coming years While the following chart obviously doesnrsquot take into account the invention
of innovative new Smart Home products decelerating growth towards the back portion of
the decade may also pressure the average revenue per Smart Household
Average revenue per smart home in the smart home marketin US dollar
2021202020192018201720162015
450
400
350
300
250
200
150
100
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
CONSUMER ELECTRONICS
30
TREND 04
The Connected Car EvolvesIndustry estimates suggest more than 380 million connected cars will be on the road
by 2021 and have the ability to stream music surf the web alert drivers to traffic and
weather conditions and possibly even self-park Tech companies will play a significant
role as analysts who routinely upwardly adjust their forecasts for this segment expect
fully autonomous vehicles to be on the market in just a few years
Estimated connected car shipmentsin millions (worldwide)
2015E 2016E 2017E 2018E 2019E 2020E 2021E
50
100
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
31
In addition to autonomous vehicles the connected car market is defined by features
such as
bull Content amp Services
bull Safety amp Driving Assistance
bull Navigation Services
bull Diagnostics amp Maintenance
bull Connectivity
These technologies are forecast to more than double revenue in the connected car
market from more than $10 billion USD in 2017 to more than $21 billion USD by 2021
Revenue in the connected car marketin millions US dollar
21217
17026
13556
10376
80116109
4622
25000
20000
15000
10000
5000
0
Content amp Services
Safety amp Driving Assistance
Navigation ServicesDiagnostics amp Maintenance
Connectivity
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
32
While the definition of a connected car is likely to evolve in the years to come today there
are six categories of connectivity that are defining and driving this trend
SOURCE STRATEGYamp
Mobility Management Functions that allow the driver to reach a destination quickly safely and in a
cost-efficient manner
Examplesbull Current traffic informationbull Parking lot or garage assistance
bull Optimized fuel consumption
SafetyFunctions that warn the driver of external hazards and internal responses of the
vehicle to hazards
Examplesbull Collision protectionbull Hazard warnings
bull Emergency functions
Driver AssistanceFunctions invovling partially or fully
automatic driving
Examplesbull Operational assistance or autopilot in
heavy traffic in parking or on highways
Well-beingFunctions involving the driverrsquos comfort
and ability and fitness to drive
Examplesbull Fatigue detectionbull Automatic environment adjustments
to keep drivers alert
bull Medical assistance
Vehicle ManagementFunctions that aid in the driver in reducing
operating costs and improving ease of use
Examplesbull Vehicle condition and service remindersbull Remote operation
bull Transfer of usage data
EntertainmentFunctions involving the entertainment
of the driver and passengers
Examplesbull Smartphone interfacebull WLAN hot spotbull Music video internet social media
bull Mobile office
CONSUMER ELECTRONICS
33
Just 93 of vehicles manufactured in 2016 are considered connected cars However
demand is expected to increase in part when lower vehicle price points are implemented
as market research indicates that many of todayrsquos connected cars tend to be relatively
luxurious models with average selling prices of $55000 Consistent with that the
connected car penetration rate is projected to be 277 by 2020
34
61
93
131
176
225
277
Penetration rate in the connected car marketin percent (US)
0
5
10
15
20
25
30
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
34
However as the market becomes more saturated with connected cars average revenue
per connected car is projected to decline to $66685 USD by 2020
115029
84312
72679
6742065447 6668566075
Revenue per connected carin US dollars
1200
1100
1000
900
800
700
6002014 2015 2016 2017 2018 2019 2020
SOURCE STATISTA
CONSUMER ELECTRONICS
35
In addition to realigning automaker IT departments and creating user-friendly interfaces
that are IoT compatible and potentially even device agnostic analysts suggest connected
car manufacturers will have to overcome this challenge
Faster Product CyclesldquoThe typical product cycle in the passenger car
industry is about eight years in the consumer
electronics industry itrsquos less than a year To
successfully sell electronics products for connected
cars automakers will need to mimic the rapid
development cycles of the consumer electronics
companies The key for the automakers is to learn
to build perfectly functioning modular systems
into which updates and product developments can
be integrated quickly and with little effort Such a
modular infotainment building set would allow for
individual components to be updated through plug-
and-play technologies several times during a carrsquos
life cyclerdquo
CONSUMER ELECTRONICS
36
If yoursquore wondering why connected cars were included under consumer electronics
consider how the world will change when self-driving vehicles are status quo Google has
already logged more than 1 million autonomous vehicle miles and has been involved in
just 12 minor crashes in six years none of which were the fault of the driverless car
Once autonomous vehicles become part of our driving fabric expect next generation
connected cars to offer driverspassengers additional options in terms of the devices that
can interact with the vehicle
Smartphone temperature control amp bed-like seat adjustment applications and voice control of windows car hoods amp trunks and streaming music
Remote control or voice activated aftermarket add-ons that allow a passenger to plug in an electric car or pump gas remotely
Innovative cameras and real time editing software that allow for video conferencing that appears as if itrsquos being conducted in an office rather than a car
CONSUMER ELECTRONICS
37
TREND 05
Commercial Drones Take (Test) FlightWhile civilian use of drones may be what many first picture when they think of drones
itrsquos the military use of drones that has been driving demand Specifically military use of
drones has far outpaced civilian use of drones when measured by revenue Defense
spending on drones is projected to be robust through 2024
Global aerial drone marketin billions $14
$12
$10
$8
$6
$4
$2
$0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
DefenseCivilian
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
38
However research also suggests the civilian and commercial markets are expected to
grow significantly as drones are used in new and innovative ways Analysts at Grand View
Research describe future applications such as
ldquoAgriculture is expected to emerge as the dominant
application sector over the forecast period on
account of several benefits attained such as yield
increase due to crop monitoring Tech giants such
as Facebook Inc and Google Inc are planning
to use solar powered UAVs that hover around the
atmosphere of the earth providing internet access
to the remotest of places acting as flying internet
access points or hotspots In addition Amazon has
been working on Prime Air a drone delivery system
that promises goods delivered within 30 minutes
after order placementrdquo
CONSUMER ELECTRONICS
39
The list of potential drone applications includes
bull Agriculture
bull Law Enforcement
bull Ecommerce Delivery
bull Mapping amp Imagery
bull Wildlife Patrolling
bull Forest Fire Management
12000
10000
8000
6000
4000
2000
00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Agriculture
Energy
GovernmentMedia amp Entertainment
Others
US commercial drone market by application 2012-2022USD million
SOURCE GRAND VIEW RESEARCH
bull Vehicle Traffic Control
bull Marketing amp Entertainment
bull Energy amp Mining
bull Real Estate
bull News Gathering
bull Infrastructure Monitoring
CONSUMER ELECTRONICS
40
Research indicates sales of commercial and civilian drones will grow at a compound
annual rate of 19 between 2015 and 2020 The economic impact of the commercial
drone segment is forecast to grow to $51 billion by 2025
While some analysts argue package delivery will not be an early priority the impact
drones have on the delivery of consumer electronics may be relatively muted as only
a third of the people surveyed recently trust a drone to deliver consumer electronics
The economic impact of the commercial drone sectordirect economic impact from the UAV industry in the United States (billion US dollars)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$12
$23
$35 $36$38 $40
$42 $44 $4649
$51
SOURCE STATISTA
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
01
Consumer Electronics
We had to make money right out of the gate and Shopify
was the tool we used to do that Shopify helped us
quickly scale in different parts of the world provides the
reporting we need to make data-driven decisions and has
been a great solution for us
ldquo
ldquoMARTIN CIESZEWSKI
Chief Marketing Officer of InteraXon
CONSUMER ELECTRONICS
03
Industry SnapshotAfter nearly a decade of turbocharged growth in a variety of segments the $285 billion
USD consumer electronics industry appears to be slowing on several fronts Despite
consumers telling pollsters that their smartphones are more important to them than
sex the smartphone market is maturing especially in developed markets which analysts
suggest will likely hamper overall industry growth barring major innovation
While industry growth in the US is expected to decrease from 46 in 2012 to 15 in 2016 demand for new electronics and technologies such as virtual reality wearables and the Internet of Things (IoT) is expected to increase dramatically though not fast enough according to research to offset stalling growth in traditional segments
CONSUMER ELECTRONICS
04
While the industry will continue to battle cannibalization such as tablets replacing laptop
computers high growth and high margin opportunities will likely exists as smart cars
smart homes and even smart cities become increasingly connected and personalized
Emerging markets such as China and India assuming manufactures can offer electronics
at affordable prices are expected to grow at double-digit rates in the coming years
However consumer electronics manufactures will also likely confront strong headwinds
currently impacting developed markets such as
Relatively short product life spans
Rapid price declines Economic employment and currency impacts on consumer spending
SOURCE STATISTA
CONSUMER ELECTRONICS
05
While large international brands with established distribution systems and robust ecommerce presences may be better positioned to take advantage of anticipated emerging market demand theyrsquoll likely be forced to innovate quickly or risk losing market share to smaller startup companies more narrowly focused on a nicheThe always-on connectivity demanded by tomorrowrsquos consumer of electronics is also
expected to nudge manufactures to more closely work with one another to create
ecosystems that allow consumers to remain seamlessly connected regardless of device
or platform choice and without performance sacrifices as they navigate among various
electronics in the home vehicle and beyond
The compound annual growth rate for global consumer electronics shipments is expected
to be 06 through 2018 down from a compound annual growth rate of 25 between
2014-15 This trajectory presents a relatively challenging environment for the last half
of the decade However opportunities exist to potentially exceed current projections if
the industry can find ways to creatively pair new technologies with shifts in consumer
behavior to create consumer electronics that add value to an increasingly omnipresent
IoT world
CONSUMER ELECTRONICS
06
Sales amp Growth OutlookWorldwide ecommerce sales of consumer electronics are expected to grow at a compound
annual rate of 102 through 2021 from more than $290 million USD in 2016 to more than
$472 million USD in 2021
in million US dollars
0
50000
100000
150000
200000
250000
300000
2021202020192018201720162015
$261966$290611
$327478$369208
$410062$445853
$472615
Global consumer electronics revenue Books Movies Music and Games
Consumer Electronics
SOURCE STATISTA
CONSUMER ELECTRONICS
07
SOURCE STATISTA
USER GROWTH in millions (worldwide)
User Growth Margins amp Mix Growth by RegionThe concern regarding margin pressure comes into focus when you
examine the industryrsquos revenue growth projections in the context of
exploding user growth Speci ically more than 850 million people are
expected to purchase consumer electronics in 2016 compared with
an estimated 11 billion in 2020
2015 2016 2017 2018 2019 2020 2021
78908500
9150
983310540
11221
11799
1000
750
500
250
0
1250
CONSUMER ELECTRONICS
08
Despite a dramatic increase in forecasted user the average revenue per person is
ultimately projected to plateau at the end of the decade from $267 USD per user in 2017
to $321 by 2021
Average revenue per userin US dollars (worldwide)
220
240
260
280
300
320
340
2021202020192018201720162015
$23402
$24801
$26794
$28906
$30582
$31674$32188
SOURCE STATISTA
CONSUMER ELECTRONICS
09
Similarly worldwide shipments of consumer electronics are expected to be relatively
flat during the second half of the decade down from $396 billion USD in 2007 to an
estimated $347 billion USD in 2018
SOURCE STATISTA
CONSUMER ELECTRONICS
10
Partially offsetting slowing growth in the maturing smartphone market are emerging
technologies including wearables drones 3D printers and connected homes
The mix of consumer electronics being sold is changing as well Industry sales leaders
include smartphones automobile electronics and flat panel televisions
SOURCE BUSINESS WIRE
SOURCE BUSINESS WIRE
2015 tech industry outlookSales leaders
CE SALESLEADERSSmartphones$53 billion in revenue177 million units
Tablets$226 billion in revenue73 million units
RIDING HIGH ON NEW VEHICLES
Automotive electronics$145 billion in revenue
TVrsquos larger than 40 inches will account for 6 of TV shipments in 2015 up 8
BIGGER IS BETTER4K ultra HD$52 billion in revenue44 million shipments expected
LCD flat panels$186 in revenue
$53B(+5)
$145B(+68)
$52B(+136)
2015 tech industry outlookEmerging technologies
WEARABLESA DEVICE REVOLUTIONFitness and activity trackersReach $18 billion in revenue in 2015 203 million units
WORLD CHANGERSDrones
$105 million in revenue700000 units
3D printers$210 million in revenue
CONNECTED HOME TECHNOLOGIES
$967 million in revenue
$18B(+20)
$967M(+32)
85 of consumers agree that using a fitness and activity tracker is motivating them to reach their fitness goals according to CEArsquos Wearable Activity Trackers Engaging Consumers to Monitor their Health
Drones could reach 1 Million US flights a day in 20 years according to CEA economic research
Includes smart thermostats smart smoke detectors and CO2 detectors Wi-Fi cameras smart home systems smart locks connected switches dimmers and outlets
CONSUMER ELECTRONICS
11
Growth By RegionThe United States is now the second largest market for consumer electronics with a user
base that is forecast to spend more than $55 billion USD in 2016 significantly less than
China which is forecast to spend more than $64 billion USD
SOURCE STATISTA
Revenue in the consumer electronics market2016 global comparison in million US dollars
Top Countries
China
United States
Japan
United Kingdom
Germany
647623
558504
160421
132156
129833
in mUSD
CONSUMER ELECTRONICS
12
However opportunities begin to take shape when you examine user penetration In the
US user penetration is just 525 which indicates additional growth opportunities exist
User penetration in the consumer electronics marketin percent in 2016 (worldwide)
Top Countries
United States
United Kingdom
Germany
Denmark
Japan
525
453
340
301
294
SOURCE STATISTA
CONSUMER ELECTRONICS
13
The biggest growth opportunity in the second half of the decade appears to be in
emerging markets where growing middle classes are developing alongside relatively
affluent upper classes in the Asia-Pacific region Interestingly though while China is the
largest emerging market for the tech industry India is actually growing the fastest
Whereas sales of tech devices in China are forecast to grow by $18 billion USD in 2015
tech device sales in India are forecast to reach $348 billion USD in 2015 an increase of
$48 billion USD Smartphones are driving growth in India as some manufactures have cut
prices to increase share
SOURCE STATISTA
CONSUMER ELECTRONICS
14
Target Market DemographicsSeveral economic tailwinds are expected to stimulate ecommerce and help consumer
electronics manufactures offset slowing growth overall These tailwinds include forecasted
increases in GDP per capita as well as internet and smartphone penetration
Additionally expect the industry to focus intensely on the 25-34 age demographic as it is
forecast to grow significantly between now and 2021
User by age groups in the consumer electronics marketin millions (worldwide)
2021202020192018201720162015
1250
1000
750
500
250
0
11799
78908500
91509833
1054011221
16-24
25-34
35-4445-54
55+
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
15
Specifically within the aforementioned demographic the projected number of male consumers
in the 25-34 age group is expected to be nearly double that of female users in 2016
By 2021 male consumers between 25-34 are again projected to be nearly double the size
of female consumers However the total addressable market between the age of 25-34 is
expected to grow to nearly 300 million
User by age groups and gender in the consumer electronics marketin millions in 2016 (worldwide)
250300 200 150 100 50 0 100 150 200 250 300
55+
45-54
35-44
25-34
16-24
50
Male
Female
User by age groups and gender in the consumer electronics marketin millions in 2021 (worldwide)
250300 200 150 100 50 0 100 150 200 250 300
55+
45-54
35-44
25-34
16-24
50
Male
Female
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
16
Regardless of age the majority of consumer electronics forecast to be sold in 2016 are
expected to be purchased by low and medium income consumers
User by age groups and income splitin millions in 2016
1967m
4464m
2069m
Low
Medium
High
Total
55+
45-54
35-44
25-34
16-24
SOURCE STATISTA
17
Industry Trends
PAGE 18 INTRODUCTION
PAGE 19 TREND 01
The Smartphone Matures
PAGE 22 TREND 02
Emerging Markets Drive Demand
PAGE 25 TREND 03
Home Automation Spikes as the loT Grows
PAGE 30 TREND 04
The Connected Car Evolves
PAGE 37 TREND 05
Commercial Drones Take (Test) Flight
PAGE 43 TREND 06
3D Printing Evolves Beyond Just Prototyping
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
18
The trends impacting the consumer electronics industry are creating opportunistic yet
challenging environments in which to operate Besides increased competition currency
concerns and economic headwinds in Europe and Asia-Pacific are making it increasingly
difficult for manufacturers of consumer electronics to grow their top lines while also
protecting margins
While demand for some traditional tech devices appears to be slowing demand for newer products in the car home and beyond is helping to offset some of the lost revenue How those trends combine with future technologies the ability to continue investing in RampD and whether the worldrsquos economies will position consumers to pay for expensive tech products will dictate how the following five trends play out the second half of the decade
CONSUMER ELECTRONICS
19
TREND 01
The Smartphone MaturesResearch suggests some people are more willing to go without sex rather than go without
their mobile phones In fact 26 of those surveyed said they could not live without their
phones versus 20 who said they couldnrsquot live without sex
SOURCE STATISTA
Source Harris Interactive
CONSUMER ELECTRONICS
20
Despite the opportunity emerging markets provide smartphone makers data indicate
the smartphone market is maturing In 2015 according to Accenture less than half of
smartphone owners plan to purchase a new one
Some analysts argue that phone and data service providers that no longer subsidize the
price of phones may be negatively impacting demand However smartphone makers may
also be victims of their own success and simply unable to innovate or add breathtaking new
features as quickly as consumers have been accustomed Nearly half of the consumers not
planning to purchase a new smartphone say theyrsquore happy with the device they have or
SOURCE ACCENTURE
SOURCE ACCENTURE
CONSUMER ELECTRONICS
21
The data indicate itrsquos not just smartphone demand thatrsquos slowing Consumer demand
for certain televisions laptops and tablets is also expected to be sluggish year over year
As was the case with smartphones consumers appear to be happy with what they
already have
The trend combined with other variables has negatively impacted 2015 holiday sales
at Best Buy prompted Samsung to warn of slower growth in 2016 and could result in
Applersquos first ever year-over-year decline in iPhone sales in Q2 2016 However on the Q1
2016 earnings call Apple CEO Tim Cook revealed the $691 (ASP) iPhone was taking share
from Android and sounded optimistic albeit cautious due to signs of economic strain in
Hong Kong regarding the companyrsquos prospects in emerging markets
SOURCE ACCENTURE
CONSUMER ELECTRONICS
22
Market analysts project sales of consumer electronics in emerging markets to grow at a
compound annual rate of 15 between 2015-2020 Growth is forecast to be most robust
in the Asia-Pacific region excluding Japan Increasingly the focus will be on China where
sales are forecast to grow by $18 billion USD in 2015
Forecasting a surge in the globalmiddle class
Poor
Middle ClassRich
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
9
8
7
6
5
4
3
2
1
0
TREND 02
Emerging Markets Drive DemandResearch suggests the world has lived through two middle class expansions since 1800
during the Industrial Revolution and after World War II Today research analysts argue
wersquore living through a third The data indicate that by 2030 two thirds of the global middle
class will live in the Asia-Pacific region up from just under one-third in 2009
SOURCE EY
CONSUMER ELECTRONICS
23
Lifting the lid on the Chinese consumer suggests consumer electronics manufacturers
may have room to sell products at higher price points Jean-Marc Bellaiche senior partner
and managing director at The Boston Consulting Group argues there are two drivers of
growth in the Chinese economy
1
2
The Emerging Middle ClassldquoAmong the emerging middle class the ldquoaspirational
massesrdquo also called the ldquotrendy metropolitanrdquo
comprises 330 million consumers and 25-27 percent
of the luxury market and the ldquorising middle classrdquo
made up of ldquothe proud business womanrdquo is 70
million consumers and 25-27 percent of the marketrdquo
An Increase In The Number of MillionairesldquoThere are also two types of millionaires new
money and old money New money also called ldquothe
loan traderrdquo or ldquothe Russian climberrdquo is 75 million
people and 30-35 percent of the luxury market
The old money crowd can be generalized as the
ldquonoble Italian entrepreneurrdquo This group is 25 million
consumers and 10-15 percent of the luxury marketrdquo
CONSUMER ELECTRONICS
24
In other words approximately one billion people in China or as much as 70 of the
population are projected to be middle class by 2030
Remember India is poised for explosive middle class growth as well Analysts at EY
recently projected
China total income by band 2010 and 2020annual income thousands of people
50+
30-50
15-30
5-15
0-5
2010 2020
112
2085
2388
933
3137
54
433
1619
499
US$
US$b
ldquoIndiarsquos global middle class meanwhile at around
50 million people or 5 of the population is much
smaller We expect this to grow steadily over the
next decade reaching 200 million by 2020 After
this we expect growth to really accelerate reaching
475 million by 2030 and adding more people than
the Chinese to the global middle class worldwide
after 2027rdquo
SOURCE EY
CONSUMER ELECTRONICS
25
Home automation
Ambient Asissted Living
Security
Energy Management
Home Entertainment
TREND 03
Home Automation Spikes as the loT GrowsThe second half of the decade is poised for explosive growth in the Smart Home market
segment To illustrate the growth potential in this segment wersquoll rely on data from Statista
as itrsquos a bit more conservative than other industry estimates
WARNING You can easily find research reports that contradict one another in terms of
how fast this segment is growing and is projected to grow through 2020 However the
productsincluded in the Smart Home segment varies which means yoursquore not always
comparing apples to apples
When we talk about the Smart Home segment wersquore including
CONSUMER ELECTRONICS
26
Not included in the data wersquoll highlight are devices like smartphones tablets and
television remote controls Herersquos Statistarsquos reasoning
ldquoDevices whose primary function is not for the
automation or remote control of household
equipment eg smartphones and tablets are not
included here Similarly devices whose reason for
purchase is only related to household connection
and remote control to a limited extent such as
Smart-TVs refrigerators or ovens are also not
includedrdquo
Whatrsquos important though is that a $7 billion dollar industry in 2015 is forecast to grow
to a more than $32 billion dollar industry by 2021
CONSUMER ELECTRONICS
27
Revenue in the smart home marketin millions US dollar
2021202020192018201720162015
32191
28468
24249
19495
14649
104327237
40000
30000
20000
10000
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy Management
Besides new products and a shift toward the IoT the Smart Home segmentrsquos relatively
small penetration rate between 1-18 depending on the segment is expected to
further drive growth
Smart home penetration ratein percent (US)
2020201920182017201620152014
80
60
40
20
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
28
Connected-home device shipments according to BI Intelligence will grow at a compound
annual rate of 67 over the next five years to 18 billion units shipped in 2019
Global connected-home device annual shipmentsin millions
2000
1800
1600
1400
1200
1000
800
600
400
200
0
2012 2013 2014E 2015E 2016E 2017E 2018E 2019E
We are here
67 CAGR2014-2019
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
29
Despite the fact that a sizable portion of the total addressable market has yet to adopt
Smart Home technology analysts suggest shipment growth is expected to peak in the
coming years While the following chart obviously doesnrsquot take into account the invention
of innovative new Smart Home products decelerating growth towards the back portion of
the decade may also pressure the average revenue per Smart Household
Average revenue per smart home in the smart home marketin US dollar
2021202020192018201720162015
450
400
350
300
250
200
150
100
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
CONSUMER ELECTRONICS
30
TREND 04
The Connected Car EvolvesIndustry estimates suggest more than 380 million connected cars will be on the road
by 2021 and have the ability to stream music surf the web alert drivers to traffic and
weather conditions and possibly even self-park Tech companies will play a significant
role as analysts who routinely upwardly adjust their forecasts for this segment expect
fully autonomous vehicles to be on the market in just a few years
Estimated connected car shipmentsin millions (worldwide)
2015E 2016E 2017E 2018E 2019E 2020E 2021E
50
100
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
31
In addition to autonomous vehicles the connected car market is defined by features
such as
bull Content amp Services
bull Safety amp Driving Assistance
bull Navigation Services
bull Diagnostics amp Maintenance
bull Connectivity
These technologies are forecast to more than double revenue in the connected car
market from more than $10 billion USD in 2017 to more than $21 billion USD by 2021
Revenue in the connected car marketin millions US dollar
21217
17026
13556
10376
80116109
4622
25000
20000
15000
10000
5000
0
Content amp Services
Safety amp Driving Assistance
Navigation ServicesDiagnostics amp Maintenance
Connectivity
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
32
While the definition of a connected car is likely to evolve in the years to come today there
are six categories of connectivity that are defining and driving this trend
SOURCE STRATEGYamp
Mobility Management Functions that allow the driver to reach a destination quickly safely and in a
cost-efficient manner
Examplesbull Current traffic informationbull Parking lot or garage assistance
bull Optimized fuel consumption
SafetyFunctions that warn the driver of external hazards and internal responses of the
vehicle to hazards
Examplesbull Collision protectionbull Hazard warnings
bull Emergency functions
Driver AssistanceFunctions invovling partially or fully
automatic driving
Examplesbull Operational assistance or autopilot in
heavy traffic in parking or on highways
Well-beingFunctions involving the driverrsquos comfort
and ability and fitness to drive
Examplesbull Fatigue detectionbull Automatic environment adjustments
to keep drivers alert
bull Medical assistance
Vehicle ManagementFunctions that aid in the driver in reducing
operating costs and improving ease of use
Examplesbull Vehicle condition and service remindersbull Remote operation
bull Transfer of usage data
EntertainmentFunctions involving the entertainment
of the driver and passengers
Examplesbull Smartphone interfacebull WLAN hot spotbull Music video internet social media
bull Mobile office
CONSUMER ELECTRONICS
33
Just 93 of vehicles manufactured in 2016 are considered connected cars However
demand is expected to increase in part when lower vehicle price points are implemented
as market research indicates that many of todayrsquos connected cars tend to be relatively
luxurious models with average selling prices of $55000 Consistent with that the
connected car penetration rate is projected to be 277 by 2020
34
61
93
131
176
225
277
Penetration rate in the connected car marketin percent (US)
0
5
10
15
20
25
30
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
34
However as the market becomes more saturated with connected cars average revenue
per connected car is projected to decline to $66685 USD by 2020
115029
84312
72679
6742065447 6668566075
Revenue per connected carin US dollars
1200
1100
1000
900
800
700
6002014 2015 2016 2017 2018 2019 2020
SOURCE STATISTA
CONSUMER ELECTRONICS
35
In addition to realigning automaker IT departments and creating user-friendly interfaces
that are IoT compatible and potentially even device agnostic analysts suggest connected
car manufacturers will have to overcome this challenge
Faster Product CyclesldquoThe typical product cycle in the passenger car
industry is about eight years in the consumer
electronics industry itrsquos less than a year To
successfully sell electronics products for connected
cars automakers will need to mimic the rapid
development cycles of the consumer electronics
companies The key for the automakers is to learn
to build perfectly functioning modular systems
into which updates and product developments can
be integrated quickly and with little effort Such a
modular infotainment building set would allow for
individual components to be updated through plug-
and-play technologies several times during a carrsquos
life cyclerdquo
CONSUMER ELECTRONICS
36
If yoursquore wondering why connected cars were included under consumer electronics
consider how the world will change when self-driving vehicles are status quo Google has
already logged more than 1 million autonomous vehicle miles and has been involved in
just 12 minor crashes in six years none of which were the fault of the driverless car
Once autonomous vehicles become part of our driving fabric expect next generation
connected cars to offer driverspassengers additional options in terms of the devices that
can interact with the vehicle
Smartphone temperature control amp bed-like seat adjustment applications and voice control of windows car hoods amp trunks and streaming music
Remote control or voice activated aftermarket add-ons that allow a passenger to plug in an electric car or pump gas remotely
Innovative cameras and real time editing software that allow for video conferencing that appears as if itrsquos being conducted in an office rather than a car
CONSUMER ELECTRONICS
37
TREND 05
Commercial Drones Take (Test) FlightWhile civilian use of drones may be what many first picture when they think of drones
itrsquos the military use of drones that has been driving demand Specifically military use of
drones has far outpaced civilian use of drones when measured by revenue Defense
spending on drones is projected to be robust through 2024
Global aerial drone marketin billions $14
$12
$10
$8
$6
$4
$2
$0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
DefenseCivilian
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
38
However research also suggests the civilian and commercial markets are expected to
grow significantly as drones are used in new and innovative ways Analysts at Grand View
Research describe future applications such as
ldquoAgriculture is expected to emerge as the dominant
application sector over the forecast period on
account of several benefits attained such as yield
increase due to crop monitoring Tech giants such
as Facebook Inc and Google Inc are planning
to use solar powered UAVs that hover around the
atmosphere of the earth providing internet access
to the remotest of places acting as flying internet
access points or hotspots In addition Amazon has
been working on Prime Air a drone delivery system
that promises goods delivered within 30 minutes
after order placementrdquo
CONSUMER ELECTRONICS
39
The list of potential drone applications includes
bull Agriculture
bull Law Enforcement
bull Ecommerce Delivery
bull Mapping amp Imagery
bull Wildlife Patrolling
bull Forest Fire Management
12000
10000
8000
6000
4000
2000
00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Agriculture
Energy
GovernmentMedia amp Entertainment
Others
US commercial drone market by application 2012-2022USD million
SOURCE GRAND VIEW RESEARCH
bull Vehicle Traffic Control
bull Marketing amp Entertainment
bull Energy amp Mining
bull Real Estate
bull News Gathering
bull Infrastructure Monitoring
CONSUMER ELECTRONICS
40
Research indicates sales of commercial and civilian drones will grow at a compound
annual rate of 19 between 2015 and 2020 The economic impact of the commercial
drone segment is forecast to grow to $51 billion by 2025
While some analysts argue package delivery will not be an early priority the impact
drones have on the delivery of consumer electronics may be relatively muted as only
a third of the people surveyed recently trust a drone to deliver consumer electronics
The economic impact of the commercial drone sectordirect economic impact from the UAV industry in the United States (billion US dollars)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$12
$23
$35 $36$38 $40
$42 $44 $4649
$51
SOURCE STATISTA
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
We had to make money right out of the gate and Shopify
was the tool we used to do that Shopify helped us
quickly scale in different parts of the world provides the
reporting we need to make data-driven decisions and has
been a great solution for us
ldquo
ldquoMARTIN CIESZEWSKI
Chief Marketing Officer of InteraXon
CONSUMER ELECTRONICS
03
Industry SnapshotAfter nearly a decade of turbocharged growth in a variety of segments the $285 billion
USD consumer electronics industry appears to be slowing on several fronts Despite
consumers telling pollsters that their smartphones are more important to them than
sex the smartphone market is maturing especially in developed markets which analysts
suggest will likely hamper overall industry growth barring major innovation
While industry growth in the US is expected to decrease from 46 in 2012 to 15 in 2016 demand for new electronics and technologies such as virtual reality wearables and the Internet of Things (IoT) is expected to increase dramatically though not fast enough according to research to offset stalling growth in traditional segments
CONSUMER ELECTRONICS
04
While the industry will continue to battle cannibalization such as tablets replacing laptop
computers high growth and high margin opportunities will likely exists as smart cars
smart homes and even smart cities become increasingly connected and personalized
Emerging markets such as China and India assuming manufactures can offer electronics
at affordable prices are expected to grow at double-digit rates in the coming years
However consumer electronics manufactures will also likely confront strong headwinds
currently impacting developed markets such as
Relatively short product life spans
Rapid price declines Economic employment and currency impacts on consumer spending
SOURCE STATISTA
CONSUMER ELECTRONICS
05
While large international brands with established distribution systems and robust ecommerce presences may be better positioned to take advantage of anticipated emerging market demand theyrsquoll likely be forced to innovate quickly or risk losing market share to smaller startup companies more narrowly focused on a nicheThe always-on connectivity demanded by tomorrowrsquos consumer of electronics is also
expected to nudge manufactures to more closely work with one another to create
ecosystems that allow consumers to remain seamlessly connected regardless of device
or platform choice and without performance sacrifices as they navigate among various
electronics in the home vehicle and beyond
The compound annual growth rate for global consumer electronics shipments is expected
to be 06 through 2018 down from a compound annual growth rate of 25 between
2014-15 This trajectory presents a relatively challenging environment for the last half
of the decade However opportunities exist to potentially exceed current projections if
the industry can find ways to creatively pair new technologies with shifts in consumer
behavior to create consumer electronics that add value to an increasingly omnipresent
IoT world
CONSUMER ELECTRONICS
06
Sales amp Growth OutlookWorldwide ecommerce sales of consumer electronics are expected to grow at a compound
annual rate of 102 through 2021 from more than $290 million USD in 2016 to more than
$472 million USD in 2021
in million US dollars
0
50000
100000
150000
200000
250000
300000
2021202020192018201720162015
$261966$290611
$327478$369208
$410062$445853
$472615
Global consumer electronics revenue Books Movies Music and Games
Consumer Electronics
SOURCE STATISTA
CONSUMER ELECTRONICS
07
SOURCE STATISTA
USER GROWTH in millions (worldwide)
User Growth Margins amp Mix Growth by RegionThe concern regarding margin pressure comes into focus when you
examine the industryrsquos revenue growth projections in the context of
exploding user growth Speci ically more than 850 million people are
expected to purchase consumer electronics in 2016 compared with
an estimated 11 billion in 2020
2015 2016 2017 2018 2019 2020 2021
78908500
9150
983310540
11221
11799
1000
750
500
250
0
1250
CONSUMER ELECTRONICS
08
Despite a dramatic increase in forecasted user the average revenue per person is
ultimately projected to plateau at the end of the decade from $267 USD per user in 2017
to $321 by 2021
Average revenue per userin US dollars (worldwide)
220
240
260
280
300
320
340
2021202020192018201720162015
$23402
$24801
$26794
$28906
$30582
$31674$32188
SOURCE STATISTA
CONSUMER ELECTRONICS
09
Similarly worldwide shipments of consumer electronics are expected to be relatively
flat during the second half of the decade down from $396 billion USD in 2007 to an
estimated $347 billion USD in 2018
SOURCE STATISTA
CONSUMER ELECTRONICS
10
Partially offsetting slowing growth in the maturing smartphone market are emerging
technologies including wearables drones 3D printers and connected homes
The mix of consumer electronics being sold is changing as well Industry sales leaders
include smartphones automobile electronics and flat panel televisions
SOURCE BUSINESS WIRE
SOURCE BUSINESS WIRE
2015 tech industry outlookSales leaders
CE SALESLEADERSSmartphones$53 billion in revenue177 million units
Tablets$226 billion in revenue73 million units
RIDING HIGH ON NEW VEHICLES
Automotive electronics$145 billion in revenue
TVrsquos larger than 40 inches will account for 6 of TV shipments in 2015 up 8
BIGGER IS BETTER4K ultra HD$52 billion in revenue44 million shipments expected
LCD flat panels$186 in revenue
$53B(+5)
$145B(+68)
$52B(+136)
2015 tech industry outlookEmerging technologies
WEARABLESA DEVICE REVOLUTIONFitness and activity trackersReach $18 billion in revenue in 2015 203 million units
WORLD CHANGERSDrones
$105 million in revenue700000 units
3D printers$210 million in revenue
CONNECTED HOME TECHNOLOGIES
$967 million in revenue
$18B(+20)
$967M(+32)
85 of consumers agree that using a fitness and activity tracker is motivating them to reach their fitness goals according to CEArsquos Wearable Activity Trackers Engaging Consumers to Monitor their Health
Drones could reach 1 Million US flights a day in 20 years according to CEA economic research
Includes smart thermostats smart smoke detectors and CO2 detectors Wi-Fi cameras smart home systems smart locks connected switches dimmers and outlets
CONSUMER ELECTRONICS
11
Growth By RegionThe United States is now the second largest market for consumer electronics with a user
base that is forecast to spend more than $55 billion USD in 2016 significantly less than
China which is forecast to spend more than $64 billion USD
SOURCE STATISTA
Revenue in the consumer electronics market2016 global comparison in million US dollars
Top Countries
China
United States
Japan
United Kingdom
Germany
647623
558504
160421
132156
129833
in mUSD
CONSUMER ELECTRONICS
12
However opportunities begin to take shape when you examine user penetration In the
US user penetration is just 525 which indicates additional growth opportunities exist
User penetration in the consumer electronics marketin percent in 2016 (worldwide)
Top Countries
United States
United Kingdom
Germany
Denmark
Japan
525
453
340
301
294
SOURCE STATISTA
CONSUMER ELECTRONICS
13
The biggest growth opportunity in the second half of the decade appears to be in
emerging markets where growing middle classes are developing alongside relatively
affluent upper classes in the Asia-Pacific region Interestingly though while China is the
largest emerging market for the tech industry India is actually growing the fastest
Whereas sales of tech devices in China are forecast to grow by $18 billion USD in 2015
tech device sales in India are forecast to reach $348 billion USD in 2015 an increase of
$48 billion USD Smartphones are driving growth in India as some manufactures have cut
prices to increase share
SOURCE STATISTA
CONSUMER ELECTRONICS
14
Target Market DemographicsSeveral economic tailwinds are expected to stimulate ecommerce and help consumer
electronics manufactures offset slowing growth overall These tailwinds include forecasted
increases in GDP per capita as well as internet and smartphone penetration
Additionally expect the industry to focus intensely on the 25-34 age demographic as it is
forecast to grow significantly between now and 2021
User by age groups in the consumer electronics marketin millions (worldwide)
2021202020192018201720162015
1250
1000
750
500
250
0
11799
78908500
91509833
1054011221
16-24
25-34
35-4445-54
55+
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
15
Specifically within the aforementioned demographic the projected number of male consumers
in the 25-34 age group is expected to be nearly double that of female users in 2016
By 2021 male consumers between 25-34 are again projected to be nearly double the size
of female consumers However the total addressable market between the age of 25-34 is
expected to grow to nearly 300 million
User by age groups and gender in the consumer electronics marketin millions in 2016 (worldwide)
250300 200 150 100 50 0 100 150 200 250 300
55+
45-54
35-44
25-34
16-24
50
Male
Female
User by age groups and gender in the consumer electronics marketin millions in 2021 (worldwide)
250300 200 150 100 50 0 100 150 200 250 300
55+
45-54
35-44
25-34
16-24
50
Male
Female
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
16
Regardless of age the majority of consumer electronics forecast to be sold in 2016 are
expected to be purchased by low and medium income consumers
User by age groups and income splitin millions in 2016
1967m
4464m
2069m
Low
Medium
High
Total
55+
45-54
35-44
25-34
16-24
SOURCE STATISTA
17
Industry Trends
PAGE 18 INTRODUCTION
PAGE 19 TREND 01
The Smartphone Matures
PAGE 22 TREND 02
Emerging Markets Drive Demand
PAGE 25 TREND 03
Home Automation Spikes as the loT Grows
PAGE 30 TREND 04
The Connected Car Evolves
PAGE 37 TREND 05
Commercial Drones Take (Test) Flight
PAGE 43 TREND 06
3D Printing Evolves Beyond Just Prototyping
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
18
The trends impacting the consumer electronics industry are creating opportunistic yet
challenging environments in which to operate Besides increased competition currency
concerns and economic headwinds in Europe and Asia-Pacific are making it increasingly
difficult for manufacturers of consumer electronics to grow their top lines while also
protecting margins
While demand for some traditional tech devices appears to be slowing demand for newer products in the car home and beyond is helping to offset some of the lost revenue How those trends combine with future technologies the ability to continue investing in RampD and whether the worldrsquos economies will position consumers to pay for expensive tech products will dictate how the following five trends play out the second half of the decade
CONSUMER ELECTRONICS
19
TREND 01
The Smartphone MaturesResearch suggests some people are more willing to go without sex rather than go without
their mobile phones In fact 26 of those surveyed said they could not live without their
phones versus 20 who said they couldnrsquot live without sex
SOURCE STATISTA
Source Harris Interactive
CONSUMER ELECTRONICS
20
Despite the opportunity emerging markets provide smartphone makers data indicate
the smartphone market is maturing In 2015 according to Accenture less than half of
smartphone owners plan to purchase a new one
Some analysts argue that phone and data service providers that no longer subsidize the
price of phones may be negatively impacting demand However smartphone makers may
also be victims of their own success and simply unable to innovate or add breathtaking new
features as quickly as consumers have been accustomed Nearly half of the consumers not
planning to purchase a new smartphone say theyrsquore happy with the device they have or
SOURCE ACCENTURE
SOURCE ACCENTURE
CONSUMER ELECTRONICS
21
The data indicate itrsquos not just smartphone demand thatrsquos slowing Consumer demand
for certain televisions laptops and tablets is also expected to be sluggish year over year
As was the case with smartphones consumers appear to be happy with what they
already have
The trend combined with other variables has negatively impacted 2015 holiday sales
at Best Buy prompted Samsung to warn of slower growth in 2016 and could result in
Applersquos first ever year-over-year decline in iPhone sales in Q2 2016 However on the Q1
2016 earnings call Apple CEO Tim Cook revealed the $691 (ASP) iPhone was taking share
from Android and sounded optimistic albeit cautious due to signs of economic strain in
Hong Kong regarding the companyrsquos prospects in emerging markets
SOURCE ACCENTURE
CONSUMER ELECTRONICS
22
Market analysts project sales of consumer electronics in emerging markets to grow at a
compound annual rate of 15 between 2015-2020 Growth is forecast to be most robust
in the Asia-Pacific region excluding Japan Increasingly the focus will be on China where
sales are forecast to grow by $18 billion USD in 2015
Forecasting a surge in the globalmiddle class
Poor
Middle ClassRich
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
9
8
7
6
5
4
3
2
1
0
TREND 02
Emerging Markets Drive DemandResearch suggests the world has lived through two middle class expansions since 1800
during the Industrial Revolution and after World War II Today research analysts argue
wersquore living through a third The data indicate that by 2030 two thirds of the global middle
class will live in the Asia-Pacific region up from just under one-third in 2009
SOURCE EY
CONSUMER ELECTRONICS
23
Lifting the lid on the Chinese consumer suggests consumer electronics manufacturers
may have room to sell products at higher price points Jean-Marc Bellaiche senior partner
and managing director at The Boston Consulting Group argues there are two drivers of
growth in the Chinese economy
1
2
The Emerging Middle ClassldquoAmong the emerging middle class the ldquoaspirational
massesrdquo also called the ldquotrendy metropolitanrdquo
comprises 330 million consumers and 25-27 percent
of the luxury market and the ldquorising middle classrdquo
made up of ldquothe proud business womanrdquo is 70
million consumers and 25-27 percent of the marketrdquo
An Increase In The Number of MillionairesldquoThere are also two types of millionaires new
money and old money New money also called ldquothe
loan traderrdquo or ldquothe Russian climberrdquo is 75 million
people and 30-35 percent of the luxury market
The old money crowd can be generalized as the
ldquonoble Italian entrepreneurrdquo This group is 25 million
consumers and 10-15 percent of the luxury marketrdquo
CONSUMER ELECTRONICS
24
In other words approximately one billion people in China or as much as 70 of the
population are projected to be middle class by 2030
Remember India is poised for explosive middle class growth as well Analysts at EY
recently projected
China total income by band 2010 and 2020annual income thousands of people
50+
30-50
15-30
5-15
0-5
2010 2020
112
2085
2388
933
3137
54
433
1619
499
US$
US$b
ldquoIndiarsquos global middle class meanwhile at around
50 million people or 5 of the population is much
smaller We expect this to grow steadily over the
next decade reaching 200 million by 2020 After
this we expect growth to really accelerate reaching
475 million by 2030 and adding more people than
the Chinese to the global middle class worldwide
after 2027rdquo
SOURCE EY
CONSUMER ELECTRONICS
25
Home automation
Ambient Asissted Living
Security
Energy Management
Home Entertainment
TREND 03
Home Automation Spikes as the loT GrowsThe second half of the decade is poised for explosive growth in the Smart Home market
segment To illustrate the growth potential in this segment wersquoll rely on data from Statista
as itrsquos a bit more conservative than other industry estimates
WARNING You can easily find research reports that contradict one another in terms of
how fast this segment is growing and is projected to grow through 2020 However the
productsincluded in the Smart Home segment varies which means yoursquore not always
comparing apples to apples
When we talk about the Smart Home segment wersquore including
CONSUMER ELECTRONICS
26
Not included in the data wersquoll highlight are devices like smartphones tablets and
television remote controls Herersquos Statistarsquos reasoning
ldquoDevices whose primary function is not for the
automation or remote control of household
equipment eg smartphones and tablets are not
included here Similarly devices whose reason for
purchase is only related to household connection
and remote control to a limited extent such as
Smart-TVs refrigerators or ovens are also not
includedrdquo
Whatrsquos important though is that a $7 billion dollar industry in 2015 is forecast to grow
to a more than $32 billion dollar industry by 2021
CONSUMER ELECTRONICS
27
Revenue in the smart home marketin millions US dollar
2021202020192018201720162015
32191
28468
24249
19495
14649
104327237
40000
30000
20000
10000
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy Management
Besides new products and a shift toward the IoT the Smart Home segmentrsquos relatively
small penetration rate between 1-18 depending on the segment is expected to
further drive growth
Smart home penetration ratein percent (US)
2020201920182017201620152014
80
60
40
20
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
28
Connected-home device shipments according to BI Intelligence will grow at a compound
annual rate of 67 over the next five years to 18 billion units shipped in 2019
Global connected-home device annual shipmentsin millions
2000
1800
1600
1400
1200
1000
800
600
400
200
0
2012 2013 2014E 2015E 2016E 2017E 2018E 2019E
We are here
67 CAGR2014-2019
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
29
Despite the fact that a sizable portion of the total addressable market has yet to adopt
Smart Home technology analysts suggest shipment growth is expected to peak in the
coming years While the following chart obviously doesnrsquot take into account the invention
of innovative new Smart Home products decelerating growth towards the back portion of
the decade may also pressure the average revenue per Smart Household
Average revenue per smart home in the smart home marketin US dollar
2021202020192018201720162015
450
400
350
300
250
200
150
100
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
CONSUMER ELECTRONICS
30
TREND 04
The Connected Car EvolvesIndustry estimates suggest more than 380 million connected cars will be on the road
by 2021 and have the ability to stream music surf the web alert drivers to traffic and
weather conditions and possibly even self-park Tech companies will play a significant
role as analysts who routinely upwardly adjust their forecasts for this segment expect
fully autonomous vehicles to be on the market in just a few years
Estimated connected car shipmentsin millions (worldwide)
2015E 2016E 2017E 2018E 2019E 2020E 2021E
50
100
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
31
In addition to autonomous vehicles the connected car market is defined by features
such as
bull Content amp Services
bull Safety amp Driving Assistance
bull Navigation Services
bull Diagnostics amp Maintenance
bull Connectivity
These technologies are forecast to more than double revenue in the connected car
market from more than $10 billion USD in 2017 to more than $21 billion USD by 2021
Revenue in the connected car marketin millions US dollar
21217
17026
13556
10376
80116109
4622
25000
20000
15000
10000
5000
0
Content amp Services
Safety amp Driving Assistance
Navigation ServicesDiagnostics amp Maintenance
Connectivity
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
32
While the definition of a connected car is likely to evolve in the years to come today there
are six categories of connectivity that are defining and driving this trend
SOURCE STRATEGYamp
Mobility Management Functions that allow the driver to reach a destination quickly safely and in a
cost-efficient manner
Examplesbull Current traffic informationbull Parking lot or garage assistance
bull Optimized fuel consumption
SafetyFunctions that warn the driver of external hazards and internal responses of the
vehicle to hazards
Examplesbull Collision protectionbull Hazard warnings
bull Emergency functions
Driver AssistanceFunctions invovling partially or fully
automatic driving
Examplesbull Operational assistance or autopilot in
heavy traffic in parking or on highways
Well-beingFunctions involving the driverrsquos comfort
and ability and fitness to drive
Examplesbull Fatigue detectionbull Automatic environment adjustments
to keep drivers alert
bull Medical assistance
Vehicle ManagementFunctions that aid in the driver in reducing
operating costs and improving ease of use
Examplesbull Vehicle condition and service remindersbull Remote operation
bull Transfer of usage data
EntertainmentFunctions involving the entertainment
of the driver and passengers
Examplesbull Smartphone interfacebull WLAN hot spotbull Music video internet social media
bull Mobile office
CONSUMER ELECTRONICS
33
Just 93 of vehicles manufactured in 2016 are considered connected cars However
demand is expected to increase in part when lower vehicle price points are implemented
as market research indicates that many of todayrsquos connected cars tend to be relatively
luxurious models with average selling prices of $55000 Consistent with that the
connected car penetration rate is projected to be 277 by 2020
34
61
93
131
176
225
277
Penetration rate in the connected car marketin percent (US)
0
5
10
15
20
25
30
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
34
However as the market becomes more saturated with connected cars average revenue
per connected car is projected to decline to $66685 USD by 2020
115029
84312
72679
6742065447 6668566075
Revenue per connected carin US dollars
1200
1100
1000
900
800
700
6002014 2015 2016 2017 2018 2019 2020
SOURCE STATISTA
CONSUMER ELECTRONICS
35
In addition to realigning automaker IT departments and creating user-friendly interfaces
that are IoT compatible and potentially even device agnostic analysts suggest connected
car manufacturers will have to overcome this challenge
Faster Product CyclesldquoThe typical product cycle in the passenger car
industry is about eight years in the consumer
electronics industry itrsquos less than a year To
successfully sell electronics products for connected
cars automakers will need to mimic the rapid
development cycles of the consumer electronics
companies The key for the automakers is to learn
to build perfectly functioning modular systems
into which updates and product developments can
be integrated quickly and with little effort Such a
modular infotainment building set would allow for
individual components to be updated through plug-
and-play technologies several times during a carrsquos
life cyclerdquo
CONSUMER ELECTRONICS
36
If yoursquore wondering why connected cars were included under consumer electronics
consider how the world will change when self-driving vehicles are status quo Google has
already logged more than 1 million autonomous vehicle miles and has been involved in
just 12 minor crashes in six years none of which were the fault of the driverless car
Once autonomous vehicles become part of our driving fabric expect next generation
connected cars to offer driverspassengers additional options in terms of the devices that
can interact with the vehicle
Smartphone temperature control amp bed-like seat adjustment applications and voice control of windows car hoods amp trunks and streaming music
Remote control or voice activated aftermarket add-ons that allow a passenger to plug in an electric car or pump gas remotely
Innovative cameras and real time editing software that allow for video conferencing that appears as if itrsquos being conducted in an office rather than a car
CONSUMER ELECTRONICS
37
TREND 05
Commercial Drones Take (Test) FlightWhile civilian use of drones may be what many first picture when they think of drones
itrsquos the military use of drones that has been driving demand Specifically military use of
drones has far outpaced civilian use of drones when measured by revenue Defense
spending on drones is projected to be robust through 2024
Global aerial drone marketin billions $14
$12
$10
$8
$6
$4
$2
$0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
DefenseCivilian
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
38
However research also suggests the civilian and commercial markets are expected to
grow significantly as drones are used in new and innovative ways Analysts at Grand View
Research describe future applications such as
ldquoAgriculture is expected to emerge as the dominant
application sector over the forecast period on
account of several benefits attained such as yield
increase due to crop monitoring Tech giants such
as Facebook Inc and Google Inc are planning
to use solar powered UAVs that hover around the
atmosphere of the earth providing internet access
to the remotest of places acting as flying internet
access points or hotspots In addition Amazon has
been working on Prime Air a drone delivery system
that promises goods delivered within 30 minutes
after order placementrdquo
CONSUMER ELECTRONICS
39
The list of potential drone applications includes
bull Agriculture
bull Law Enforcement
bull Ecommerce Delivery
bull Mapping amp Imagery
bull Wildlife Patrolling
bull Forest Fire Management
12000
10000
8000
6000
4000
2000
00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Agriculture
Energy
GovernmentMedia amp Entertainment
Others
US commercial drone market by application 2012-2022USD million
SOURCE GRAND VIEW RESEARCH
bull Vehicle Traffic Control
bull Marketing amp Entertainment
bull Energy amp Mining
bull Real Estate
bull News Gathering
bull Infrastructure Monitoring
CONSUMER ELECTRONICS
40
Research indicates sales of commercial and civilian drones will grow at a compound
annual rate of 19 between 2015 and 2020 The economic impact of the commercial
drone segment is forecast to grow to $51 billion by 2025
While some analysts argue package delivery will not be an early priority the impact
drones have on the delivery of consumer electronics may be relatively muted as only
a third of the people surveyed recently trust a drone to deliver consumer electronics
The economic impact of the commercial drone sectordirect economic impact from the UAV industry in the United States (billion US dollars)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$12
$23
$35 $36$38 $40
$42 $44 $4649
$51
SOURCE STATISTA
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
03
Industry SnapshotAfter nearly a decade of turbocharged growth in a variety of segments the $285 billion
USD consumer electronics industry appears to be slowing on several fronts Despite
consumers telling pollsters that their smartphones are more important to them than
sex the smartphone market is maturing especially in developed markets which analysts
suggest will likely hamper overall industry growth barring major innovation
While industry growth in the US is expected to decrease from 46 in 2012 to 15 in 2016 demand for new electronics and technologies such as virtual reality wearables and the Internet of Things (IoT) is expected to increase dramatically though not fast enough according to research to offset stalling growth in traditional segments
CONSUMER ELECTRONICS
04
While the industry will continue to battle cannibalization such as tablets replacing laptop
computers high growth and high margin opportunities will likely exists as smart cars
smart homes and even smart cities become increasingly connected and personalized
Emerging markets such as China and India assuming manufactures can offer electronics
at affordable prices are expected to grow at double-digit rates in the coming years
However consumer electronics manufactures will also likely confront strong headwinds
currently impacting developed markets such as
Relatively short product life spans
Rapid price declines Economic employment and currency impacts on consumer spending
SOURCE STATISTA
CONSUMER ELECTRONICS
05
While large international brands with established distribution systems and robust ecommerce presences may be better positioned to take advantage of anticipated emerging market demand theyrsquoll likely be forced to innovate quickly or risk losing market share to smaller startup companies more narrowly focused on a nicheThe always-on connectivity demanded by tomorrowrsquos consumer of electronics is also
expected to nudge manufactures to more closely work with one another to create
ecosystems that allow consumers to remain seamlessly connected regardless of device
or platform choice and without performance sacrifices as they navigate among various
electronics in the home vehicle and beyond
The compound annual growth rate for global consumer electronics shipments is expected
to be 06 through 2018 down from a compound annual growth rate of 25 between
2014-15 This trajectory presents a relatively challenging environment for the last half
of the decade However opportunities exist to potentially exceed current projections if
the industry can find ways to creatively pair new technologies with shifts in consumer
behavior to create consumer electronics that add value to an increasingly omnipresent
IoT world
CONSUMER ELECTRONICS
06
Sales amp Growth OutlookWorldwide ecommerce sales of consumer electronics are expected to grow at a compound
annual rate of 102 through 2021 from more than $290 million USD in 2016 to more than
$472 million USD in 2021
in million US dollars
0
50000
100000
150000
200000
250000
300000
2021202020192018201720162015
$261966$290611
$327478$369208
$410062$445853
$472615
Global consumer electronics revenue Books Movies Music and Games
Consumer Electronics
SOURCE STATISTA
CONSUMER ELECTRONICS
07
SOURCE STATISTA
USER GROWTH in millions (worldwide)
User Growth Margins amp Mix Growth by RegionThe concern regarding margin pressure comes into focus when you
examine the industryrsquos revenue growth projections in the context of
exploding user growth Speci ically more than 850 million people are
expected to purchase consumer electronics in 2016 compared with
an estimated 11 billion in 2020
2015 2016 2017 2018 2019 2020 2021
78908500
9150
983310540
11221
11799
1000
750
500
250
0
1250
CONSUMER ELECTRONICS
08
Despite a dramatic increase in forecasted user the average revenue per person is
ultimately projected to plateau at the end of the decade from $267 USD per user in 2017
to $321 by 2021
Average revenue per userin US dollars (worldwide)
220
240
260
280
300
320
340
2021202020192018201720162015
$23402
$24801
$26794
$28906
$30582
$31674$32188
SOURCE STATISTA
CONSUMER ELECTRONICS
09
Similarly worldwide shipments of consumer electronics are expected to be relatively
flat during the second half of the decade down from $396 billion USD in 2007 to an
estimated $347 billion USD in 2018
SOURCE STATISTA
CONSUMER ELECTRONICS
10
Partially offsetting slowing growth in the maturing smartphone market are emerging
technologies including wearables drones 3D printers and connected homes
The mix of consumer electronics being sold is changing as well Industry sales leaders
include smartphones automobile electronics and flat panel televisions
SOURCE BUSINESS WIRE
SOURCE BUSINESS WIRE
2015 tech industry outlookSales leaders
CE SALESLEADERSSmartphones$53 billion in revenue177 million units
Tablets$226 billion in revenue73 million units
RIDING HIGH ON NEW VEHICLES
Automotive electronics$145 billion in revenue
TVrsquos larger than 40 inches will account for 6 of TV shipments in 2015 up 8
BIGGER IS BETTER4K ultra HD$52 billion in revenue44 million shipments expected
LCD flat panels$186 in revenue
$53B(+5)
$145B(+68)
$52B(+136)
2015 tech industry outlookEmerging technologies
WEARABLESA DEVICE REVOLUTIONFitness and activity trackersReach $18 billion in revenue in 2015 203 million units
WORLD CHANGERSDrones
$105 million in revenue700000 units
3D printers$210 million in revenue
CONNECTED HOME TECHNOLOGIES
$967 million in revenue
$18B(+20)
$967M(+32)
85 of consumers agree that using a fitness and activity tracker is motivating them to reach their fitness goals according to CEArsquos Wearable Activity Trackers Engaging Consumers to Monitor their Health
Drones could reach 1 Million US flights a day in 20 years according to CEA economic research
Includes smart thermostats smart smoke detectors and CO2 detectors Wi-Fi cameras smart home systems smart locks connected switches dimmers and outlets
CONSUMER ELECTRONICS
11
Growth By RegionThe United States is now the second largest market for consumer electronics with a user
base that is forecast to spend more than $55 billion USD in 2016 significantly less than
China which is forecast to spend more than $64 billion USD
SOURCE STATISTA
Revenue in the consumer electronics market2016 global comparison in million US dollars
Top Countries
China
United States
Japan
United Kingdom
Germany
647623
558504
160421
132156
129833
in mUSD
CONSUMER ELECTRONICS
12
However opportunities begin to take shape when you examine user penetration In the
US user penetration is just 525 which indicates additional growth opportunities exist
User penetration in the consumer electronics marketin percent in 2016 (worldwide)
Top Countries
United States
United Kingdom
Germany
Denmark
Japan
525
453
340
301
294
SOURCE STATISTA
CONSUMER ELECTRONICS
13
The biggest growth opportunity in the second half of the decade appears to be in
emerging markets where growing middle classes are developing alongside relatively
affluent upper classes in the Asia-Pacific region Interestingly though while China is the
largest emerging market for the tech industry India is actually growing the fastest
Whereas sales of tech devices in China are forecast to grow by $18 billion USD in 2015
tech device sales in India are forecast to reach $348 billion USD in 2015 an increase of
$48 billion USD Smartphones are driving growth in India as some manufactures have cut
prices to increase share
SOURCE STATISTA
CONSUMER ELECTRONICS
14
Target Market DemographicsSeveral economic tailwinds are expected to stimulate ecommerce and help consumer
electronics manufactures offset slowing growth overall These tailwinds include forecasted
increases in GDP per capita as well as internet and smartphone penetration
Additionally expect the industry to focus intensely on the 25-34 age demographic as it is
forecast to grow significantly between now and 2021
User by age groups in the consumer electronics marketin millions (worldwide)
2021202020192018201720162015
1250
1000
750
500
250
0
11799
78908500
91509833
1054011221
16-24
25-34
35-4445-54
55+
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
15
Specifically within the aforementioned demographic the projected number of male consumers
in the 25-34 age group is expected to be nearly double that of female users in 2016
By 2021 male consumers between 25-34 are again projected to be nearly double the size
of female consumers However the total addressable market between the age of 25-34 is
expected to grow to nearly 300 million
User by age groups and gender in the consumer electronics marketin millions in 2016 (worldwide)
250300 200 150 100 50 0 100 150 200 250 300
55+
45-54
35-44
25-34
16-24
50
Male
Female
User by age groups and gender in the consumer electronics marketin millions in 2021 (worldwide)
250300 200 150 100 50 0 100 150 200 250 300
55+
45-54
35-44
25-34
16-24
50
Male
Female
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
16
Regardless of age the majority of consumer electronics forecast to be sold in 2016 are
expected to be purchased by low and medium income consumers
User by age groups and income splitin millions in 2016
1967m
4464m
2069m
Low
Medium
High
Total
55+
45-54
35-44
25-34
16-24
SOURCE STATISTA
17
Industry Trends
PAGE 18 INTRODUCTION
PAGE 19 TREND 01
The Smartphone Matures
PAGE 22 TREND 02
Emerging Markets Drive Demand
PAGE 25 TREND 03
Home Automation Spikes as the loT Grows
PAGE 30 TREND 04
The Connected Car Evolves
PAGE 37 TREND 05
Commercial Drones Take (Test) Flight
PAGE 43 TREND 06
3D Printing Evolves Beyond Just Prototyping
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
18
The trends impacting the consumer electronics industry are creating opportunistic yet
challenging environments in which to operate Besides increased competition currency
concerns and economic headwinds in Europe and Asia-Pacific are making it increasingly
difficult for manufacturers of consumer electronics to grow their top lines while also
protecting margins
While demand for some traditional tech devices appears to be slowing demand for newer products in the car home and beyond is helping to offset some of the lost revenue How those trends combine with future technologies the ability to continue investing in RampD and whether the worldrsquos economies will position consumers to pay for expensive tech products will dictate how the following five trends play out the second half of the decade
CONSUMER ELECTRONICS
19
TREND 01
The Smartphone MaturesResearch suggests some people are more willing to go without sex rather than go without
their mobile phones In fact 26 of those surveyed said they could not live without their
phones versus 20 who said they couldnrsquot live without sex
SOURCE STATISTA
Source Harris Interactive
CONSUMER ELECTRONICS
20
Despite the opportunity emerging markets provide smartphone makers data indicate
the smartphone market is maturing In 2015 according to Accenture less than half of
smartphone owners plan to purchase a new one
Some analysts argue that phone and data service providers that no longer subsidize the
price of phones may be negatively impacting demand However smartphone makers may
also be victims of their own success and simply unable to innovate or add breathtaking new
features as quickly as consumers have been accustomed Nearly half of the consumers not
planning to purchase a new smartphone say theyrsquore happy with the device they have or
SOURCE ACCENTURE
SOURCE ACCENTURE
CONSUMER ELECTRONICS
21
The data indicate itrsquos not just smartphone demand thatrsquos slowing Consumer demand
for certain televisions laptops and tablets is also expected to be sluggish year over year
As was the case with smartphones consumers appear to be happy with what they
already have
The trend combined with other variables has negatively impacted 2015 holiday sales
at Best Buy prompted Samsung to warn of slower growth in 2016 and could result in
Applersquos first ever year-over-year decline in iPhone sales in Q2 2016 However on the Q1
2016 earnings call Apple CEO Tim Cook revealed the $691 (ASP) iPhone was taking share
from Android and sounded optimistic albeit cautious due to signs of economic strain in
Hong Kong regarding the companyrsquos prospects in emerging markets
SOURCE ACCENTURE
CONSUMER ELECTRONICS
22
Market analysts project sales of consumer electronics in emerging markets to grow at a
compound annual rate of 15 between 2015-2020 Growth is forecast to be most robust
in the Asia-Pacific region excluding Japan Increasingly the focus will be on China where
sales are forecast to grow by $18 billion USD in 2015
Forecasting a surge in the globalmiddle class
Poor
Middle ClassRich
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
9
8
7
6
5
4
3
2
1
0
TREND 02
Emerging Markets Drive DemandResearch suggests the world has lived through two middle class expansions since 1800
during the Industrial Revolution and after World War II Today research analysts argue
wersquore living through a third The data indicate that by 2030 two thirds of the global middle
class will live in the Asia-Pacific region up from just under one-third in 2009
SOURCE EY
CONSUMER ELECTRONICS
23
Lifting the lid on the Chinese consumer suggests consumer electronics manufacturers
may have room to sell products at higher price points Jean-Marc Bellaiche senior partner
and managing director at The Boston Consulting Group argues there are two drivers of
growth in the Chinese economy
1
2
The Emerging Middle ClassldquoAmong the emerging middle class the ldquoaspirational
massesrdquo also called the ldquotrendy metropolitanrdquo
comprises 330 million consumers and 25-27 percent
of the luxury market and the ldquorising middle classrdquo
made up of ldquothe proud business womanrdquo is 70
million consumers and 25-27 percent of the marketrdquo
An Increase In The Number of MillionairesldquoThere are also two types of millionaires new
money and old money New money also called ldquothe
loan traderrdquo or ldquothe Russian climberrdquo is 75 million
people and 30-35 percent of the luxury market
The old money crowd can be generalized as the
ldquonoble Italian entrepreneurrdquo This group is 25 million
consumers and 10-15 percent of the luxury marketrdquo
CONSUMER ELECTRONICS
24
In other words approximately one billion people in China or as much as 70 of the
population are projected to be middle class by 2030
Remember India is poised for explosive middle class growth as well Analysts at EY
recently projected
China total income by band 2010 and 2020annual income thousands of people
50+
30-50
15-30
5-15
0-5
2010 2020
112
2085
2388
933
3137
54
433
1619
499
US$
US$b
ldquoIndiarsquos global middle class meanwhile at around
50 million people or 5 of the population is much
smaller We expect this to grow steadily over the
next decade reaching 200 million by 2020 After
this we expect growth to really accelerate reaching
475 million by 2030 and adding more people than
the Chinese to the global middle class worldwide
after 2027rdquo
SOURCE EY
CONSUMER ELECTRONICS
25
Home automation
Ambient Asissted Living
Security
Energy Management
Home Entertainment
TREND 03
Home Automation Spikes as the loT GrowsThe second half of the decade is poised for explosive growth in the Smart Home market
segment To illustrate the growth potential in this segment wersquoll rely on data from Statista
as itrsquos a bit more conservative than other industry estimates
WARNING You can easily find research reports that contradict one another in terms of
how fast this segment is growing and is projected to grow through 2020 However the
productsincluded in the Smart Home segment varies which means yoursquore not always
comparing apples to apples
When we talk about the Smart Home segment wersquore including
CONSUMER ELECTRONICS
26
Not included in the data wersquoll highlight are devices like smartphones tablets and
television remote controls Herersquos Statistarsquos reasoning
ldquoDevices whose primary function is not for the
automation or remote control of household
equipment eg smartphones and tablets are not
included here Similarly devices whose reason for
purchase is only related to household connection
and remote control to a limited extent such as
Smart-TVs refrigerators or ovens are also not
includedrdquo
Whatrsquos important though is that a $7 billion dollar industry in 2015 is forecast to grow
to a more than $32 billion dollar industry by 2021
CONSUMER ELECTRONICS
27
Revenue in the smart home marketin millions US dollar
2021202020192018201720162015
32191
28468
24249
19495
14649
104327237
40000
30000
20000
10000
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy Management
Besides new products and a shift toward the IoT the Smart Home segmentrsquos relatively
small penetration rate between 1-18 depending on the segment is expected to
further drive growth
Smart home penetration ratein percent (US)
2020201920182017201620152014
80
60
40
20
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
28
Connected-home device shipments according to BI Intelligence will grow at a compound
annual rate of 67 over the next five years to 18 billion units shipped in 2019
Global connected-home device annual shipmentsin millions
2000
1800
1600
1400
1200
1000
800
600
400
200
0
2012 2013 2014E 2015E 2016E 2017E 2018E 2019E
We are here
67 CAGR2014-2019
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
29
Despite the fact that a sizable portion of the total addressable market has yet to adopt
Smart Home technology analysts suggest shipment growth is expected to peak in the
coming years While the following chart obviously doesnrsquot take into account the invention
of innovative new Smart Home products decelerating growth towards the back portion of
the decade may also pressure the average revenue per Smart Household
Average revenue per smart home in the smart home marketin US dollar
2021202020192018201720162015
450
400
350
300
250
200
150
100
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
CONSUMER ELECTRONICS
30
TREND 04
The Connected Car EvolvesIndustry estimates suggest more than 380 million connected cars will be on the road
by 2021 and have the ability to stream music surf the web alert drivers to traffic and
weather conditions and possibly even self-park Tech companies will play a significant
role as analysts who routinely upwardly adjust their forecasts for this segment expect
fully autonomous vehicles to be on the market in just a few years
Estimated connected car shipmentsin millions (worldwide)
2015E 2016E 2017E 2018E 2019E 2020E 2021E
50
100
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
31
In addition to autonomous vehicles the connected car market is defined by features
such as
bull Content amp Services
bull Safety amp Driving Assistance
bull Navigation Services
bull Diagnostics amp Maintenance
bull Connectivity
These technologies are forecast to more than double revenue in the connected car
market from more than $10 billion USD in 2017 to more than $21 billion USD by 2021
Revenue in the connected car marketin millions US dollar
21217
17026
13556
10376
80116109
4622
25000
20000
15000
10000
5000
0
Content amp Services
Safety amp Driving Assistance
Navigation ServicesDiagnostics amp Maintenance
Connectivity
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
32
While the definition of a connected car is likely to evolve in the years to come today there
are six categories of connectivity that are defining and driving this trend
SOURCE STRATEGYamp
Mobility Management Functions that allow the driver to reach a destination quickly safely and in a
cost-efficient manner
Examplesbull Current traffic informationbull Parking lot or garage assistance
bull Optimized fuel consumption
SafetyFunctions that warn the driver of external hazards and internal responses of the
vehicle to hazards
Examplesbull Collision protectionbull Hazard warnings
bull Emergency functions
Driver AssistanceFunctions invovling partially or fully
automatic driving
Examplesbull Operational assistance or autopilot in
heavy traffic in parking or on highways
Well-beingFunctions involving the driverrsquos comfort
and ability and fitness to drive
Examplesbull Fatigue detectionbull Automatic environment adjustments
to keep drivers alert
bull Medical assistance
Vehicle ManagementFunctions that aid in the driver in reducing
operating costs and improving ease of use
Examplesbull Vehicle condition and service remindersbull Remote operation
bull Transfer of usage data
EntertainmentFunctions involving the entertainment
of the driver and passengers
Examplesbull Smartphone interfacebull WLAN hot spotbull Music video internet social media
bull Mobile office
CONSUMER ELECTRONICS
33
Just 93 of vehicles manufactured in 2016 are considered connected cars However
demand is expected to increase in part when lower vehicle price points are implemented
as market research indicates that many of todayrsquos connected cars tend to be relatively
luxurious models with average selling prices of $55000 Consistent with that the
connected car penetration rate is projected to be 277 by 2020
34
61
93
131
176
225
277
Penetration rate in the connected car marketin percent (US)
0
5
10
15
20
25
30
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
34
However as the market becomes more saturated with connected cars average revenue
per connected car is projected to decline to $66685 USD by 2020
115029
84312
72679
6742065447 6668566075
Revenue per connected carin US dollars
1200
1100
1000
900
800
700
6002014 2015 2016 2017 2018 2019 2020
SOURCE STATISTA
CONSUMER ELECTRONICS
35
In addition to realigning automaker IT departments and creating user-friendly interfaces
that are IoT compatible and potentially even device agnostic analysts suggest connected
car manufacturers will have to overcome this challenge
Faster Product CyclesldquoThe typical product cycle in the passenger car
industry is about eight years in the consumer
electronics industry itrsquos less than a year To
successfully sell electronics products for connected
cars automakers will need to mimic the rapid
development cycles of the consumer electronics
companies The key for the automakers is to learn
to build perfectly functioning modular systems
into which updates and product developments can
be integrated quickly and with little effort Such a
modular infotainment building set would allow for
individual components to be updated through plug-
and-play technologies several times during a carrsquos
life cyclerdquo
CONSUMER ELECTRONICS
36
If yoursquore wondering why connected cars were included under consumer electronics
consider how the world will change when self-driving vehicles are status quo Google has
already logged more than 1 million autonomous vehicle miles and has been involved in
just 12 minor crashes in six years none of which were the fault of the driverless car
Once autonomous vehicles become part of our driving fabric expect next generation
connected cars to offer driverspassengers additional options in terms of the devices that
can interact with the vehicle
Smartphone temperature control amp bed-like seat adjustment applications and voice control of windows car hoods amp trunks and streaming music
Remote control or voice activated aftermarket add-ons that allow a passenger to plug in an electric car or pump gas remotely
Innovative cameras and real time editing software that allow for video conferencing that appears as if itrsquos being conducted in an office rather than a car
CONSUMER ELECTRONICS
37
TREND 05
Commercial Drones Take (Test) FlightWhile civilian use of drones may be what many first picture when they think of drones
itrsquos the military use of drones that has been driving demand Specifically military use of
drones has far outpaced civilian use of drones when measured by revenue Defense
spending on drones is projected to be robust through 2024
Global aerial drone marketin billions $14
$12
$10
$8
$6
$4
$2
$0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
DefenseCivilian
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
38
However research also suggests the civilian and commercial markets are expected to
grow significantly as drones are used in new and innovative ways Analysts at Grand View
Research describe future applications such as
ldquoAgriculture is expected to emerge as the dominant
application sector over the forecast period on
account of several benefits attained such as yield
increase due to crop monitoring Tech giants such
as Facebook Inc and Google Inc are planning
to use solar powered UAVs that hover around the
atmosphere of the earth providing internet access
to the remotest of places acting as flying internet
access points or hotspots In addition Amazon has
been working on Prime Air a drone delivery system
that promises goods delivered within 30 minutes
after order placementrdquo
CONSUMER ELECTRONICS
39
The list of potential drone applications includes
bull Agriculture
bull Law Enforcement
bull Ecommerce Delivery
bull Mapping amp Imagery
bull Wildlife Patrolling
bull Forest Fire Management
12000
10000
8000
6000
4000
2000
00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Agriculture
Energy
GovernmentMedia amp Entertainment
Others
US commercial drone market by application 2012-2022USD million
SOURCE GRAND VIEW RESEARCH
bull Vehicle Traffic Control
bull Marketing amp Entertainment
bull Energy amp Mining
bull Real Estate
bull News Gathering
bull Infrastructure Monitoring
CONSUMER ELECTRONICS
40
Research indicates sales of commercial and civilian drones will grow at a compound
annual rate of 19 between 2015 and 2020 The economic impact of the commercial
drone segment is forecast to grow to $51 billion by 2025
While some analysts argue package delivery will not be an early priority the impact
drones have on the delivery of consumer electronics may be relatively muted as only
a third of the people surveyed recently trust a drone to deliver consumer electronics
The economic impact of the commercial drone sectordirect economic impact from the UAV industry in the United States (billion US dollars)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$12
$23
$35 $36$38 $40
$42 $44 $4649
$51
SOURCE STATISTA
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
04
While the industry will continue to battle cannibalization such as tablets replacing laptop
computers high growth and high margin opportunities will likely exists as smart cars
smart homes and even smart cities become increasingly connected and personalized
Emerging markets such as China and India assuming manufactures can offer electronics
at affordable prices are expected to grow at double-digit rates in the coming years
However consumer electronics manufactures will also likely confront strong headwinds
currently impacting developed markets such as
Relatively short product life spans
Rapid price declines Economic employment and currency impacts on consumer spending
SOURCE STATISTA
CONSUMER ELECTRONICS
05
While large international brands with established distribution systems and robust ecommerce presences may be better positioned to take advantage of anticipated emerging market demand theyrsquoll likely be forced to innovate quickly or risk losing market share to smaller startup companies more narrowly focused on a nicheThe always-on connectivity demanded by tomorrowrsquos consumer of electronics is also
expected to nudge manufactures to more closely work with one another to create
ecosystems that allow consumers to remain seamlessly connected regardless of device
or platform choice and without performance sacrifices as they navigate among various
electronics in the home vehicle and beyond
The compound annual growth rate for global consumer electronics shipments is expected
to be 06 through 2018 down from a compound annual growth rate of 25 between
2014-15 This trajectory presents a relatively challenging environment for the last half
of the decade However opportunities exist to potentially exceed current projections if
the industry can find ways to creatively pair new technologies with shifts in consumer
behavior to create consumer electronics that add value to an increasingly omnipresent
IoT world
CONSUMER ELECTRONICS
06
Sales amp Growth OutlookWorldwide ecommerce sales of consumer electronics are expected to grow at a compound
annual rate of 102 through 2021 from more than $290 million USD in 2016 to more than
$472 million USD in 2021
in million US dollars
0
50000
100000
150000
200000
250000
300000
2021202020192018201720162015
$261966$290611
$327478$369208
$410062$445853
$472615
Global consumer electronics revenue Books Movies Music and Games
Consumer Electronics
SOURCE STATISTA
CONSUMER ELECTRONICS
07
SOURCE STATISTA
USER GROWTH in millions (worldwide)
User Growth Margins amp Mix Growth by RegionThe concern regarding margin pressure comes into focus when you
examine the industryrsquos revenue growth projections in the context of
exploding user growth Speci ically more than 850 million people are
expected to purchase consumer electronics in 2016 compared with
an estimated 11 billion in 2020
2015 2016 2017 2018 2019 2020 2021
78908500
9150
983310540
11221
11799
1000
750
500
250
0
1250
CONSUMER ELECTRONICS
08
Despite a dramatic increase in forecasted user the average revenue per person is
ultimately projected to plateau at the end of the decade from $267 USD per user in 2017
to $321 by 2021
Average revenue per userin US dollars (worldwide)
220
240
260
280
300
320
340
2021202020192018201720162015
$23402
$24801
$26794
$28906
$30582
$31674$32188
SOURCE STATISTA
CONSUMER ELECTRONICS
09
Similarly worldwide shipments of consumer electronics are expected to be relatively
flat during the second half of the decade down from $396 billion USD in 2007 to an
estimated $347 billion USD in 2018
SOURCE STATISTA
CONSUMER ELECTRONICS
10
Partially offsetting slowing growth in the maturing smartphone market are emerging
technologies including wearables drones 3D printers and connected homes
The mix of consumer electronics being sold is changing as well Industry sales leaders
include smartphones automobile electronics and flat panel televisions
SOURCE BUSINESS WIRE
SOURCE BUSINESS WIRE
2015 tech industry outlookSales leaders
CE SALESLEADERSSmartphones$53 billion in revenue177 million units
Tablets$226 billion in revenue73 million units
RIDING HIGH ON NEW VEHICLES
Automotive electronics$145 billion in revenue
TVrsquos larger than 40 inches will account for 6 of TV shipments in 2015 up 8
BIGGER IS BETTER4K ultra HD$52 billion in revenue44 million shipments expected
LCD flat panels$186 in revenue
$53B(+5)
$145B(+68)
$52B(+136)
2015 tech industry outlookEmerging technologies
WEARABLESA DEVICE REVOLUTIONFitness and activity trackersReach $18 billion in revenue in 2015 203 million units
WORLD CHANGERSDrones
$105 million in revenue700000 units
3D printers$210 million in revenue
CONNECTED HOME TECHNOLOGIES
$967 million in revenue
$18B(+20)
$967M(+32)
85 of consumers agree that using a fitness and activity tracker is motivating them to reach their fitness goals according to CEArsquos Wearable Activity Trackers Engaging Consumers to Monitor their Health
Drones could reach 1 Million US flights a day in 20 years according to CEA economic research
Includes smart thermostats smart smoke detectors and CO2 detectors Wi-Fi cameras smart home systems smart locks connected switches dimmers and outlets
CONSUMER ELECTRONICS
11
Growth By RegionThe United States is now the second largest market for consumer electronics with a user
base that is forecast to spend more than $55 billion USD in 2016 significantly less than
China which is forecast to spend more than $64 billion USD
SOURCE STATISTA
Revenue in the consumer electronics market2016 global comparison in million US dollars
Top Countries
China
United States
Japan
United Kingdom
Germany
647623
558504
160421
132156
129833
in mUSD
CONSUMER ELECTRONICS
12
However opportunities begin to take shape when you examine user penetration In the
US user penetration is just 525 which indicates additional growth opportunities exist
User penetration in the consumer electronics marketin percent in 2016 (worldwide)
Top Countries
United States
United Kingdom
Germany
Denmark
Japan
525
453
340
301
294
SOURCE STATISTA
CONSUMER ELECTRONICS
13
The biggest growth opportunity in the second half of the decade appears to be in
emerging markets where growing middle classes are developing alongside relatively
affluent upper classes in the Asia-Pacific region Interestingly though while China is the
largest emerging market for the tech industry India is actually growing the fastest
Whereas sales of tech devices in China are forecast to grow by $18 billion USD in 2015
tech device sales in India are forecast to reach $348 billion USD in 2015 an increase of
$48 billion USD Smartphones are driving growth in India as some manufactures have cut
prices to increase share
SOURCE STATISTA
CONSUMER ELECTRONICS
14
Target Market DemographicsSeveral economic tailwinds are expected to stimulate ecommerce and help consumer
electronics manufactures offset slowing growth overall These tailwinds include forecasted
increases in GDP per capita as well as internet and smartphone penetration
Additionally expect the industry to focus intensely on the 25-34 age demographic as it is
forecast to grow significantly between now and 2021
User by age groups in the consumer electronics marketin millions (worldwide)
2021202020192018201720162015
1250
1000
750
500
250
0
11799
78908500
91509833
1054011221
16-24
25-34
35-4445-54
55+
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
15
Specifically within the aforementioned demographic the projected number of male consumers
in the 25-34 age group is expected to be nearly double that of female users in 2016
By 2021 male consumers between 25-34 are again projected to be nearly double the size
of female consumers However the total addressable market between the age of 25-34 is
expected to grow to nearly 300 million
User by age groups and gender in the consumer electronics marketin millions in 2016 (worldwide)
250300 200 150 100 50 0 100 150 200 250 300
55+
45-54
35-44
25-34
16-24
50
Male
Female
User by age groups and gender in the consumer electronics marketin millions in 2021 (worldwide)
250300 200 150 100 50 0 100 150 200 250 300
55+
45-54
35-44
25-34
16-24
50
Male
Female
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
16
Regardless of age the majority of consumer electronics forecast to be sold in 2016 are
expected to be purchased by low and medium income consumers
User by age groups and income splitin millions in 2016
1967m
4464m
2069m
Low
Medium
High
Total
55+
45-54
35-44
25-34
16-24
SOURCE STATISTA
17
Industry Trends
PAGE 18 INTRODUCTION
PAGE 19 TREND 01
The Smartphone Matures
PAGE 22 TREND 02
Emerging Markets Drive Demand
PAGE 25 TREND 03
Home Automation Spikes as the loT Grows
PAGE 30 TREND 04
The Connected Car Evolves
PAGE 37 TREND 05
Commercial Drones Take (Test) Flight
PAGE 43 TREND 06
3D Printing Evolves Beyond Just Prototyping
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
18
The trends impacting the consumer electronics industry are creating opportunistic yet
challenging environments in which to operate Besides increased competition currency
concerns and economic headwinds in Europe and Asia-Pacific are making it increasingly
difficult for manufacturers of consumer electronics to grow their top lines while also
protecting margins
While demand for some traditional tech devices appears to be slowing demand for newer products in the car home and beyond is helping to offset some of the lost revenue How those trends combine with future technologies the ability to continue investing in RampD and whether the worldrsquos economies will position consumers to pay for expensive tech products will dictate how the following five trends play out the second half of the decade
CONSUMER ELECTRONICS
19
TREND 01
The Smartphone MaturesResearch suggests some people are more willing to go without sex rather than go without
their mobile phones In fact 26 of those surveyed said they could not live without their
phones versus 20 who said they couldnrsquot live without sex
SOURCE STATISTA
Source Harris Interactive
CONSUMER ELECTRONICS
20
Despite the opportunity emerging markets provide smartphone makers data indicate
the smartphone market is maturing In 2015 according to Accenture less than half of
smartphone owners plan to purchase a new one
Some analysts argue that phone and data service providers that no longer subsidize the
price of phones may be negatively impacting demand However smartphone makers may
also be victims of their own success and simply unable to innovate or add breathtaking new
features as quickly as consumers have been accustomed Nearly half of the consumers not
planning to purchase a new smartphone say theyrsquore happy with the device they have or
SOURCE ACCENTURE
SOURCE ACCENTURE
CONSUMER ELECTRONICS
21
The data indicate itrsquos not just smartphone demand thatrsquos slowing Consumer demand
for certain televisions laptops and tablets is also expected to be sluggish year over year
As was the case with smartphones consumers appear to be happy with what they
already have
The trend combined with other variables has negatively impacted 2015 holiday sales
at Best Buy prompted Samsung to warn of slower growth in 2016 and could result in
Applersquos first ever year-over-year decline in iPhone sales in Q2 2016 However on the Q1
2016 earnings call Apple CEO Tim Cook revealed the $691 (ASP) iPhone was taking share
from Android and sounded optimistic albeit cautious due to signs of economic strain in
Hong Kong regarding the companyrsquos prospects in emerging markets
SOURCE ACCENTURE
CONSUMER ELECTRONICS
22
Market analysts project sales of consumer electronics in emerging markets to grow at a
compound annual rate of 15 between 2015-2020 Growth is forecast to be most robust
in the Asia-Pacific region excluding Japan Increasingly the focus will be on China where
sales are forecast to grow by $18 billion USD in 2015
Forecasting a surge in the globalmiddle class
Poor
Middle ClassRich
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
9
8
7
6
5
4
3
2
1
0
TREND 02
Emerging Markets Drive DemandResearch suggests the world has lived through two middle class expansions since 1800
during the Industrial Revolution and after World War II Today research analysts argue
wersquore living through a third The data indicate that by 2030 two thirds of the global middle
class will live in the Asia-Pacific region up from just under one-third in 2009
SOURCE EY
CONSUMER ELECTRONICS
23
Lifting the lid on the Chinese consumer suggests consumer electronics manufacturers
may have room to sell products at higher price points Jean-Marc Bellaiche senior partner
and managing director at The Boston Consulting Group argues there are two drivers of
growth in the Chinese economy
1
2
The Emerging Middle ClassldquoAmong the emerging middle class the ldquoaspirational
massesrdquo also called the ldquotrendy metropolitanrdquo
comprises 330 million consumers and 25-27 percent
of the luxury market and the ldquorising middle classrdquo
made up of ldquothe proud business womanrdquo is 70
million consumers and 25-27 percent of the marketrdquo
An Increase In The Number of MillionairesldquoThere are also two types of millionaires new
money and old money New money also called ldquothe
loan traderrdquo or ldquothe Russian climberrdquo is 75 million
people and 30-35 percent of the luxury market
The old money crowd can be generalized as the
ldquonoble Italian entrepreneurrdquo This group is 25 million
consumers and 10-15 percent of the luxury marketrdquo
CONSUMER ELECTRONICS
24
In other words approximately one billion people in China or as much as 70 of the
population are projected to be middle class by 2030
Remember India is poised for explosive middle class growth as well Analysts at EY
recently projected
China total income by band 2010 and 2020annual income thousands of people
50+
30-50
15-30
5-15
0-5
2010 2020
112
2085
2388
933
3137
54
433
1619
499
US$
US$b
ldquoIndiarsquos global middle class meanwhile at around
50 million people or 5 of the population is much
smaller We expect this to grow steadily over the
next decade reaching 200 million by 2020 After
this we expect growth to really accelerate reaching
475 million by 2030 and adding more people than
the Chinese to the global middle class worldwide
after 2027rdquo
SOURCE EY
CONSUMER ELECTRONICS
25
Home automation
Ambient Asissted Living
Security
Energy Management
Home Entertainment
TREND 03
Home Automation Spikes as the loT GrowsThe second half of the decade is poised for explosive growth in the Smart Home market
segment To illustrate the growth potential in this segment wersquoll rely on data from Statista
as itrsquos a bit more conservative than other industry estimates
WARNING You can easily find research reports that contradict one another in terms of
how fast this segment is growing and is projected to grow through 2020 However the
productsincluded in the Smart Home segment varies which means yoursquore not always
comparing apples to apples
When we talk about the Smart Home segment wersquore including
CONSUMER ELECTRONICS
26
Not included in the data wersquoll highlight are devices like smartphones tablets and
television remote controls Herersquos Statistarsquos reasoning
ldquoDevices whose primary function is not for the
automation or remote control of household
equipment eg smartphones and tablets are not
included here Similarly devices whose reason for
purchase is only related to household connection
and remote control to a limited extent such as
Smart-TVs refrigerators or ovens are also not
includedrdquo
Whatrsquos important though is that a $7 billion dollar industry in 2015 is forecast to grow
to a more than $32 billion dollar industry by 2021
CONSUMER ELECTRONICS
27
Revenue in the smart home marketin millions US dollar
2021202020192018201720162015
32191
28468
24249
19495
14649
104327237
40000
30000
20000
10000
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy Management
Besides new products and a shift toward the IoT the Smart Home segmentrsquos relatively
small penetration rate between 1-18 depending on the segment is expected to
further drive growth
Smart home penetration ratein percent (US)
2020201920182017201620152014
80
60
40
20
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
28
Connected-home device shipments according to BI Intelligence will grow at a compound
annual rate of 67 over the next five years to 18 billion units shipped in 2019
Global connected-home device annual shipmentsin millions
2000
1800
1600
1400
1200
1000
800
600
400
200
0
2012 2013 2014E 2015E 2016E 2017E 2018E 2019E
We are here
67 CAGR2014-2019
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
29
Despite the fact that a sizable portion of the total addressable market has yet to adopt
Smart Home technology analysts suggest shipment growth is expected to peak in the
coming years While the following chart obviously doesnrsquot take into account the invention
of innovative new Smart Home products decelerating growth towards the back portion of
the decade may also pressure the average revenue per Smart Household
Average revenue per smart home in the smart home marketin US dollar
2021202020192018201720162015
450
400
350
300
250
200
150
100
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
CONSUMER ELECTRONICS
30
TREND 04
The Connected Car EvolvesIndustry estimates suggest more than 380 million connected cars will be on the road
by 2021 and have the ability to stream music surf the web alert drivers to traffic and
weather conditions and possibly even self-park Tech companies will play a significant
role as analysts who routinely upwardly adjust their forecasts for this segment expect
fully autonomous vehicles to be on the market in just a few years
Estimated connected car shipmentsin millions (worldwide)
2015E 2016E 2017E 2018E 2019E 2020E 2021E
50
100
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
31
In addition to autonomous vehicles the connected car market is defined by features
such as
bull Content amp Services
bull Safety amp Driving Assistance
bull Navigation Services
bull Diagnostics amp Maintenance
bull Connectivity
These technologies are forecast to more than double revenue in the connected car
market from more than $10 billion USD in 2017 to more than $21 billion USD by 2021
Revenue in the connected car marketin millions US dollar
21217
17026
13556
10376
80116109
4622
25000
20000
15000
10000
5000
0
Content amp Services
Safety amp Driving Assistance
Navigation ServicesDiagnostics amp Maintenance
Connectivity
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
32
While the definition of a connected car is likely to evolve in the years to come today there
are six categories of connectivity that are defining and driving this trend
SOURCE STRATEGYamp
Mobility Management Functions that allow the driver to reach a destination quickly safely and in a
cost-efficient manner
Examplesbull Current traffic informationbull Parking lot or garage assistance
bull Optimized fuel consumption
SafetyFunctions that warn the driver of external hazards and internal responses of the
vehicle to hazards
Examplesbull Collision protectionbull Hazard warnings
bull Emergency functions
Driver AssistanceFunctions invovling partially or fully
automatic driving
Examplesbull Operational assistance or autopilot in
heavy traffic in parking or on highways
Well-beingFunctions involving the driverrsquos comfort
and ability and fitness to drive
Examplesbull Fatigue detectionbull Automatic environment adjustments
to keep drivers alert
bull Medical assistance
Vehicle ManagementFunctions that aid in the driver in reducing
operating costs and improving ease of use
Examplesbull Vehicle condition and service remindersbull Remote operation
bull Transfer of usage data
EntertainmentFunctions involving the entertainment
of the driver and passengers
Examplesbull Smartphone interfacebull WLAN hot spotbull Music video internet social media
bull Mobile office
CONSUMER ELECTRONICS
33
Just 93 of vehicles manufactured in 2016 are considered connected cars However
demand is expected to increase in part when lower vehicle price points are implemented
as market research indicates that many of todayrsquos connected cars tend to be relatively
luxurious models with average selling prices of $55000 Consistent with that the
connected car penetration rate is projected to be 277 by 2020
34
61
93
131
176
225
277
Penetration rate in the connected car marketin percent (US)
0
5
10
15
20
25
30
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
34
However as the market becomes more saturated with connected cars average revenue
per connected car is projected to decline to $66685 USD by 2020
115029
84312
72679
6742065447 6668566075
Revenue per connected carin US dollars
1200
1100
1000
900
800
700
6002014 2015 2016 2017 2018 2019 2020
SOURCE STATISTA
CONSUMER ELECTRONICS
35
In addition to realigning automaker IT departments and creating user-friendly interfaces
that are IoT compatible and potentially even device agnostic analysts suggest connected
car manufacturers will have to overcome this challenge
Faster Product CyclesldquoThe typical product cycle in the passenger car
industry is about eight years in the consumer
electronics industry itrsquos less than a year To
successfully sell electronics products for connected
cars automakers will need to mimic the rapid
development cycles of the consumer electronics
companies The key for the automakers is to learn
to build perfectly functioning modular systems
into which updates and product developments can
be integrated quickly and with little effort Such a
modular infotainment building set would allow for
individual components to be updated through plug-
and-play technologies several times during a carrsquos
life cyclerdquo
CONSUMER ELECTRONICS
36
If yoursquore wondering why connected cars were included under consumer electronics
consider how the world will change when self-driving vehicles are status quo Google has
already logged more than 1 million autonomous vehicle miles and has been involved in
just 12 minor crashes in six years none of which were the fault of the driverless car
Once autonomous vehicles become part of our driving fabric expect next generation
connected cars to offer driverspassengers additional options in terms of the devices that
can interact with the vehicle
Smartphone temperature control amp bed-like seat adjustment applications and voice control of windows car hoods amp trunks and streaming music
Remote control or voice activated aftermarket add-ons that allow a passenger to plug in an electric car or pump gas remotely
Innovative cameras and real time editing software that allow for video conferencing that appears as if itrsquos being conducted in an office rather than a car
CONSUMER ELECTRONICS
37
TREND 05
Commercial Drones Take (Test) FlightWhile civilian use of drones may be what many first picture when they think of drones
itrsquos the military use of drones that has been driving demand Specifically military use of
drones has far outpaced civilian use of drones when measured by revenue Defense
spending on drones is projected to be robust through 2024
Global aerial drone marketin billions $14
$12
$10
$8
$6
$4
$2
$0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
DefenseCivilian
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
38
However research also suggests the civilian and commercial markets are expected to
grow significantly as drones are used in new and innovative ways Analysts at Grand View
Research describe future applications such as
ldquoAgriculture is expected to emerge as the dominant
application sector over the forecast period on
account of several benefits attained such as yield
increase due to crop monitoring Tech giants such
as Facebook Inc and Google Inc are planning
to use solar powered UAVs that hover around the
atmosphere of the earth providing internet access
to the remotest of places acting as flying internet
access points or hotspots In addition Amazon has
been working on Prime Air a drone delivery system
that promises goods delivered within 30 minutes
after order placementrdquo
CONSUMER ELECTRONICS
39
The list of potential drone applications includes
bull Agriculture
bull Law Enforcement
bull Ecommerce Delivery
bull Mapping amp Imagery
bull Wildlife Patrolling
bull Forest Fire Management
12000
10000
8000
6000
4000
2000
00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Agriculture
Energy
GovernmentMedia amp Entertainment
Others
US commercial drone market by application 2012-2022USD million
SOURCE GRAND VIEW RESEARCH
bull Vehicle Traffic Control
bull Marketing amp Entertainment
bull Energy amp Mining
bull Real Estate
bull News Gathering
bull Infrastructure Monitoring
CONSUMER ELECTRONICS
40
Research indicates sales of commercial and civilian drones will grow at a compound
annual rate of 19 between 2015 and 2020 The economic impact of the commercial
drone segment is forecast to grow to $51 billion by 2025
While some analysts argue package delivery will not be an early priority the impact
drones have on the delivery of consumer electronics may be relatively muted as only
a third of the people surveyed recently trust a drone to deliver consumer electronics
The economic impact of the commercial drone sectordirect economic impact from the UAV industry in the United States (billion US dollars)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$12
$23
$35 $36$38 $40
$42 $44 $4649
$51
SOURCE STATISTA
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
05
While large international brands with established distribution systems and robust ecommerce presences may be better positioned to take advantage of anticipated emerging market demand theyrsquoll likely be forced to innovate quickly or risk losing market share to smaller startup companies more narrowly focused on a nicheThe always-on connectivity demanded by tomorrowrsquos consumer of electronics is also
expected to nudge manufactures to more closely work with one another to create
ecosystems that allow consumers to remain seamlessly connected regardless of device
or platform choice and without performance sacrifices as they navigate among various
electronics in the home vehicle and beyond
The compound annual growth rate for global consumer electronics shipments is expected
to be 06 through 2018 down from a compound annual growth rate of 25 between
2014-15 This trajectory presents a relatively challenging environment for the last half
of the decade However opportunities exist to potentially exceed current projections if
the industry can find ways to creatively pair new technologies with shifts in consumer
behavior to create consumer electronics that add value to an increasingly omnipresent
IoT world
CONSUMER ELECTRONICS
06
Sales amp Growth OutlookWorldwide ecommerce sales of consumer electronics are expected to grow at a compound
annual rate of 102 through 2021 from more than $290 million USD in 2016 to more than
$472 million USD in 2021
in million US dollars
0
50000
100000
150000
200000
250000
300000
2021202020192018201720162015
$261966$290611
$327478$369208
$410062$445853
$472615
Global consumer electronics revenue Books Movies Music and Games
Consumer Electronics
SOURCE STATISTA
CONSUMER ELECTRONICS
07
SOURCE STATISTA
USER GROWTH in millions (worldwide)
User Growth Margins amp Mix Growth by RegionThe concern regarding margin pressure comes into focus when you
examine the industryrsquos revenue growth projections in the context of
exploding user growth Speci ically more than 850 million people are
expected to purchase consumer electronics in 2016 compared with
an estimated 11 billion in 2020
2015 2016 2017 2018 2019 2020 2021
78908500
9150
983310540
11221
11799
1000
750
500
250
0
1250
CONSUMER ELECTRONICS
08
Despite a dramatic increase in forecasted user the average revenue per person is
ultimately projected to plateau at the end of the decade from $267 USD per user in 2017
to $321 by 2021
Average revenue per userin US dollars (worldwide)
220
240
260
280
300
320
340
2021202020192018201720162015
$23402
$24801
$26794
$28906
$30582
$31674$32188
SOURCE STATISTA
CONSUMER ELECTRONICS
09
Similarly worldwide shipments of consumer electronics are expected to be relatively
flat during the second half of the decade down from $396 billion USD in 2007 to an
estimated $347 billion USD in 2018
SOURCE STATISTA
CONSUMER ELECTRONICS
10
Partially offsetting slowing growth in the maturing smartphone market are emerging
technologies including wearables drones 3D printers and connected homes
The mix of consumer electronics being sold is changing as well Industry sales leaders
include smartphones automobile electronics and flat panel televisions
SOURCE BUSINESS WIRE
SOURCE BUSINESS WIRE
2015 tech industry outlookSales leaders
CE SALESLEADERSSmartphones$53 billion in revenue177 million units
Tablets$226 billion in revenue73 million units
RIDING HIGH ON NEW VEHICLES
Automotive electronics$145 billion in revenue
TVrsquos larger than 40 inches will account for 6 of TV shipments in 2015 up 8
BIGGER IS BETTER4K ultra HD$52 billion in revenue44 million shipments expected
LCD flat panels$186 in revenue
$53B(+5)
$145B(+68)
$52B(+136)
2015 tech industry outlookEmerging technologies
WEARABLESA DEVICE REVOLUTIONFitness and activity trackersReach $18 billion in revenue in 2015 203 million units
WORLD CHANGERSDrones
$105 million in revenue700000 units
3D printers$210 million in revenue
CONNECTED HOME TECHNOLOGIES
$967 million in revenue
$18B(+20)
$967M(+32)
85 of consumers agree that using a fitness and activity tracker is motivating them to reach their fitness goals according to CEArsquos Wearable Activity Trackers Engaging Consumers to Monitor their Health
Drones could reach 1 Million US flights a day in 20 years according to CEA economic research
Includes smart thermostats smart smoke detectors and CO2 detectors Wi-Fi cameras smart home systems smart locks connected switches dimmers and outlets
CONSUMER ELECTRONICS
11
Growth By RegionThe United States is now the second largest market for consumer electronics with a user
base that is forecast to spend more than $55 billion USD in 2016 significantly less than
China which is forecast to spend more than $64 billion USD
SOURCE STATISTA
Revenue in the consumer electronics market2016 global comparison in million US dollars
Top Countries
China
United States
Japan
United Kingdom
Germany
647623
558504
160421
132156
129833
in mUSD
CONSUMER ELECTRONICS
12
However opportunities begin to take shape when you examine user penetration In the
US user penetration is just 525 which indicates additional growth opportunities exist
User penetration in the consumer electronics marketin percent in 2016 (worldwide)
Top Countries
United States
United Kingdom
Germany
Denmark
Japan
525
453
340
301
294
SOURCE STATISTA
CONSUMER ELECTRONICS
13
The biggest growth opportunity in the second half of the decade appears to be in
emerging markets where growing middle classes are developing alongside relatively
affluent upper classes in the Asia-Pacific region Interestingly though while China is the
largest emerging market for the tech industry India is actually growing the fastest
Whereas sales of tech devices in China are forecast to grow by $18 billion USD in 2015
tech device sales in India are forecast to reach $348 billion USD in 2015 an increase of
$48 billion USD Smartphones are driving growth in India as some manufactures have cut
prices to increase share
SOURCE STATISTA
CONSUMER ELECTRONICS
14
Target Market DemographicsSeveral economic tailwinds are expected to stimulate ecommerce and help consumer
electronics manufactures offset slowing growth overall These tailwinds include forecasted
increases in GDP per capita as well as internet and smartphone penetration
Additionally expect the industry to focus intensely on the 25-34 age demographic as it is
forecast to grow significantly between now and 2021
User by age groups in the consumer electronics marketin millions (worldwide)
2021202020192018201720162015
1250
1000
750
500
250
0
11799
78908500
91509833
1054011221
16-24
25-34
35-4445-54
55+
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
15
Specifically within the aforementioned demographic the projected number of male consumers
in the 25-34 age group is expected to be nearly double that of female users in 2016
By 2021 male consumers between 25-34 are again projected to be nearly double the size
of female consumers However the total addressable market between the age of 25-34 is
expected to grow to nearly 300 million
User by age groups and gender in the consumer electronics marketin millions in 2016 (worldwide)
250300 200 150 100 50 0 100 150 200 250 300
55+
45-54
35-44
25-34
16-24
50
Male
Female
User by age groups and gender in the consumer electronics marketin millions in 2021 (worldwide)
250300 200 150 100 50 0 100 150 200 250 300
55+
45-54
35-44
25-34
16-24
50
Male
Female
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
16
Regardless of age the majority of consumer electronics forecast to be sold in 2016 are
expected to be purchased by low and medium income consumers
User by age groups and income splitin millions in 2016
1967m
4464m
2069m
Low
Medium
High
Total
55+
45-54
35-44
25-34
16-24
SOURCE STATISTA
17
Industry Trends
PAGE 18 INTRODUCTION
PAGE 19 TREND 01
The Smartphone Matures
PAGE 22 TREND 02
Emerging Markets Drive Demand
PAGE 25 TREND 03
Home Automation Spikes as the loT Grows
PAGE 30 TREND 04
The Connected Car Evolves
PAGE 37 TREND 05
Commercial Drones Take (Test) Flight
PAGE 43 TREND 06
3D Printing Evolves Beyond Just Prototyping
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
18
The trends impacting the consumer electronics industry are creating opportunistic yet
challenging environments in which to operate Besides increased competition currency
concerns and economic headwinds in Europe and Asia-Pacific are making it increasingly
difficult for manufacturers of consumer electronics to grow their top lines while also
protecting margins
While demand for some traditional tech devices appears to be slowing demand for newer products in the car home and beyond is helping to offset some of the lost revenue How those trends combine with future technologies the ability to continue investing in RampD and whether the worldrsquos economies will position consumers to pay for expensive tech products will dictate how the following five trends play out the second half of the decade
CONSUMER ELECTRONICS
19
TREND 01
The Smartphone MaturesResearch suggests some people are more willing to go without sex rather than go without
their mobile phones In fact 26 of those surveyed said they could not live without their
phones versus 20 who said they couldnrsquot live without sex
SOURCE STATISTA
Source Harris Interactive
CONSUMER ELECTRONICS
20
Despite the opportunity emerging markets provide smartphone makers data indicate
the smartphone market is maturing In 2015 according to Accenture less than half of
smartphone owners plan to purchase a new one
Some analysts argue that phone and data service providers that no longer subsidize the
price of phones may be negatively impacting demand However smartphone makers may
also be victims of their own success and simply unable to innovate or add breathtaking new
features as quickly as consumers have been accustomed Nearly half of the consumers not
planning to purchase a new smartphone say theyrsquore happy with the device they have or
SOURCE ACCENTURE
SOURCE ACCENTURE
CONSUMER ELECTRONICS
21
The data indicate itrsquos not just smartphone demand thatrsquos slowing Consumer demand
for certain televisions laptops and tablets is also expected to be sluggish year over year
As was the case with smartphones consumers appear to be happy with what they
already have
The trend combined with other variables has negatively impacted 2015 holiday sales
at Best Buy prompted Samsung to warn of slower growth in 2016 and could result in
Applersquos first ever year-over-year decline in iPhone sales in Q2 2016 However on the Q1
2016 earnings call Apple CEO Tim Cook revealed the $691 (ASP) iPhone was taking share
from Android and sounded optimistic albeit cautious due to signs of economic strain in
Hong Kong regarding the companyrsquos prospects in emerging markets
SOURCE ACCENTURE
CONSUMER ELECTRONICS
22
Market analysts project sales of consumer electronics in emerging markets to grow at a
compound annual rate of 15 between 2015-2020 Growth is forecast to be most robust
in the Asia-Pacific region excluding Japan Increasingly the focus will be on China where
sales are forecast to grow by $18 billion USD in 2015
Forecasting a surge in the globalmiddle class
Poor
Middle ClassRich
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
9
8
7
6
5
4
3
2
1
0
TREND 02
Emerging Markets Drive DemandResearch suggests the world has lived through two middle class expansions since 1800
during the Industrial Revolution and after World War II Today research analysts argue
wersquore living through a third The data indicate that by 2030 two thirds of the global middle
class will live in the Asia-Pacific region up from just under one-third in 2009
SOURCE EY
CONSUMER ELECTRONICS
23
Lifting the lid on the Chinese consumer suggests consumer electronics manufacturers
may have room to sell products at higher price points Jean-Marc Bellaiche senior partner
and managing director at The Boston Consulting Group argues there are two drivers of
growth in the Chinese economy
1
2
The Emerging Middle ClassldquoAmong the emerging middle class the ldquoaspirational
massesrdquo also called the ldquotrendy metropolitanrdquo
comprises 330 million consumers and 25-27 percent
of the luxury market and the ldquorising middle classrdquo
made up of ldquothe proud business womanrdquo is 70
million consumers and 25-27 percent of the marketrdquo
An Increase In The Number of MillionairesldquoThere are also two types of millionaires new
money and old money New money also called ldquothe
loan traderrdquo or ldquothe Russian climberrdquo is 75 million
people and 30-35 percent of the luxury market
The old money crowd can be generalized as the
ldquonoble Italian entrepreneurrdquo This group is 25 million
consumers and 10-15 percent of the luxury marketrdquo
CONSUMER ELECTRONICS
24
In other words approximately one billion people in China or as much as 70 of the
population are projected to be middle class by 2030
Remember India is poised for explosive middle class growth as well Analysts at EY
recently projected
China total income by band 2010 and 2020annual income thousands of people
50+
30-50
15-30
5-15
0-5
2010 2020
112
2085
2388
933
3137
54
433
1619
499
US$
US$b
ldquoIndiarsquos global middle class meanwhile at around
50 million people or 5 of the population is much
smaller We expect this to grow steadily over the
next decade reaching 200 million by 2020 After
this we expect growth to really accelerate reaching
475 million by 2030 and adding more people than
the Chinese to the global middle class worldwide
after 2027rdquo
SOURCE EY
CONSUMER ELECTRONICS
25
Home automation
Ambient Asissted Living
Security
Energy Management
Home Entertainment
TREND 03
Home Automation Spikes as the loT GrowsThe second half of the decade is poised for explosive growth in the Smart Home market
segment To illustrate the growth potential in this segment wersquoll rely on data from Statista
as itrsquos a bit more conservative than other industry estimates
WARNING You can easily find research reports that contradict one another in terms of
how fast this segment is growing and is projected to grow through 2020 However the
productsincluded in the Smart Home segment varies which means yoursquore not always
comparing apples to apples
When we talk about the Smart Home segment wersquore including
CONSUMER ELECTRONICS
26
Not included in the data wersquoll highlight are devices like smartphones tablets and
television remote controls Herersquos Statistarsquos reasoning
ldquoDevices whose primary function is not for the
automation or remote control of household
equipment eg smartphones and tablets are not
included here Similarly devices whose reason for
purchase is only related to household connection
and remote control to a limited extent such as
Smart-TVs refrigerators or ovens are also not
includedrdquo
Whatrsquos important though is that a $7 billion dollar industry in 2015 is forecast to grow
to a more than $32 billion dollar industry by 2021
CONSUMER ELECTRONICS
27
Revenue in the smart home marketin millions US dollar
2021202020192018201720162015
32191
28468
24249
19495
14649
104327237
40000
30000
20000
10000
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy Management
Besides new products and a shift toward the IoT the Smart Home segmentrsquos relatively
small penetration rate between 1-18 depending on the segment is expected to
further drive growth
Smart home penetration ratein percent (US)
2020201920182017201620152014
80
60
40
20
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
28
Connected-home device shipments according to BI Intelligence will grow at a compound
annual rate of 67 over the next five years to 18 billion units shipped in 2019
Global connected-home device annual shipmentsin millions
2000
1800
1600
1400
1200
1000
800
600
400
200
0
2012 2013 2014E 2015E 2016E 2017E 2018E 2019E
We are here
67 CAGR2014-2019
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
29
Despite the fact that a sizable portion of the total addressable market has yet to adopt
Smart Home technology analysts suggest shipment growth is expected to peak in the
coming years While the following chart obviously doesnrsquot take into account the invention
of innovative new Smart Home products decelerating growth towards the back portion of
the decade may also pressure the average revenue per Smart Household
Average revenue per smart home in the smart home marketin US dollar
2021202020192018201720162015
450
400
350
300
250
200
150
100
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
CONSUMER ELECTRONICS
30
TREND 04
The Connected Car EvolvesIndustry estimates suggest more than 380 million connected cars will be on the road
by 2021 and have the ability to stream music surf the web alert drivers to traffic and
weather conditions and possibly even self-park Tech companies will play a significant
role as analysts who routinely upwardly adjust their forecasts for this segment expect
fully autonomous vehicles to be on the market in just a few years
Estimated connected car shipmentsin millions (worldwide)
2015E 2016E 2017E 2018E 2019E 2020E 2021E
50
100
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
31
In addition to autonomous vehicles the connected car market is defined by features
such as
bull Content amp Services
bull Safety amp Driving Assistance
bull Navigation Services
bull Diagnostics amp Maintenance
bull Connectivity
These technologies are forecast to more than double revenue in the connected car
market from more than $10 billion USD in 2017 to more than $21 billion USD by 2021
Revenue in the connected car marketin millions US dollar
21217
17026
13556
10376
80116109
4622
25000
20000
15000
10000
5000
0
Content amp Services
Safety amp Driving Assistance
Navigation ServicesDiagnostics amp Maintenance
Connectivity
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
32
While the definition of a connected car is likely to evolve in the years to come today there
are six categories of connectivity that are defining and driving this trend
SOURCE STRATEGYamp
Mobility Management Functions that allow the driver to reach a destination quickly safely and in a
cost-efficient manner
Examplesbull Current traffic informationbull Parking lot or garage assistance
bull Optimized fuel consumption
SafetyFunctions that warn the driver of external hazards and internal responses of the
vehicle to hazards
Examplesbull Collision protectionbull Hazard warnings
bull Emergency functions
Driver AssistanceFunctions invovling partially or fully
automatic driving
Examplesbull Operational assistance or autopilot in
heavy traffic in parking or on highways
Well-beingFunctions involving the driverrsquos comfort
and ability and fitness to drive
Examplesbull Fatigue detectionbull Automatic environment adjustments
to keep drivers alert
bull Medical assistance
Vehicle ManagementFunctions that aid in the driver in reducing
operating costs and improving ease of use
Examplesbull Vehicle condition and service remindersbull Remote operation
bull Transfer of usage data
EntertainmentFunctions involving the entertainment
of the driver and passengers
Examplesbull Smartphone interfacebull WLAN hot spotbull Music video internet social media
bull Mobile office
CONSUMER ELECTRONICS
33
Just 93 of vehicles manufactured in 2016 are considered connected cars However
demand is expected to increase in part when lower vehicle price points are implemented
as market research indicates that many of todayrsquos connected cars tend to be relatively
luxurious models with average selling prices of $55000 Consistent with that the
connected car penetration rate is projected to be 277 by 2020
34
61
93
131
176
225
277
Penetration rate in the connected car marketin percent (US)
0
5
10
15
20
25
30
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
34
However as the market becomes more saturated with connected cars average revenue
per connected car is projected to decline to $66685 USD by 2020
115029
84312
72679
6742065447 6668566075
Revenue per connected carin US dollars
1200
1100
1000
900
800
700
6002014 2015 2016 2017 2018 2019 2020
SOURCE STATISTA
CONSUMER ELECTRONICS
35
In addition to realigning automaker IT departments and creating user-friendly interfaces
that are IoT compatible and potentially even device agnostic analysts suggest connected
car manufacturers will have to overcome this challenge
Faster Product CyclesldquoThe typical product cycle in the passenger car
industry is about eight years in the consumer
electronics industry itrsquos less than a year To
successfully sell electronics products for connected
cars automakers will need to mimic the rapid
development cycles of the consumer electronics
companies The key for the automakers is to learn
to build perfectly functioning modular systems
into which updates and product developments can
be integrated quickly and with little effort Such a
modular infotainment building set would allow for
individual components to be updated through plug-
and-play technologies several times during a carrsquos
life cyclerdquo
CONSUMER ELECTRONICS
36
If yoursquore wondering why connected cars were included under consumer electronics
consider how the world will change when self-driving vehicles are status quo Google has
already logged more than 1 million autonomous vehicle miles and has been involved in
just 12 minor crashes in six years none of which were the fault of the driverless car
Once autonomous vehicles become part of our driving fabric expect next generation
connected cars to offer driverspassengers additional options in terms of the devices that
can interact with the vehicle
Smartphone temperature control amp bed-like seat adjustment applications and voice control of windows car hoods amp trunks and streaming music
Remote control or voice activated aftermarket add-ons that allow a passenger to plug in an electric car or pump gas remotely
Innovative cameras and real time editing software that allow for video conferencing that appears as if itrsquos being conducted in an office rather than a car
CONSUMER ELECTRONICS
37
TREND 05
Commercial Drones Take (Test) FlightWhile civilian use of drones may be what many first picture when they think of drones
itrsquos the military use of drones that has been driving demand Specifically military use of
drones has far outpaced civilian use of drones when measured by revenue Defense
spending on drones is projected to be robust through 2024
Global aerial drone marketin billions $14
$12
$10
$8
$6
$4
$2
$0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
DefenseCivilian
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
38
However research also suggests the civilian and commercial markets are expected to
grow significantly as drones are used in new and innovative ways Analysts at Grand View
Research describe future applications such as
ldquoAgriculture is expected to emerge as the dominant
application sector over the forecast period on
account of several benefits attained such as yield
increase due to crop monitoring Tech giants such
as Facebook Inc and Google Inc are planning
to use solar powered UAVs that hover around the
atmosphere of the earth providing internet access
to the remotest of places acting as flying internet
access points or hotspots In addition Amazon has
been working on Prime Air a drone delivery system
that promises goods delivered within 30 minutes
after order placementrdquo
CONSUMER ELECTRONICS
39
The list of potential drone applications includes
bull Agriculture
bull Law Enforcement
bull Ecommerce Delivery
bull Mapping amp Imagery
bull Wildlife Patrolling
bull Forest Fire Management
12000
10000
8000
6000
4000
2000
00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Agriculture
Energy
GovernmentMedia amp Entertainment
Others
US commercial drone market by application 2012-2022USD million
SOURCE GRAND VIEW RESEARCH
bull Vehicle Traffic Control
bull Marketing amp Entertainment
bull Energy amp Mining
bull Real Estate
bull News Gathering
bull Infrastructure Monitoring
CONSUMER ELECTRONICS
40
Research indicates sales of commercial and civilian drones will grow at a compound
annual rate of 19 between 2015 and 2020 The economic impact of the commercial
drone segment is forecast to grow to $51 billion by 2025
While some analysts argue package delivery will not be an early priority the impact
drones have on the delivery of consumer electronics may be relatively muted as only
a third of the people surveyed recently trust a drone to deliver consumer electronics
The economic impact of the commercial drone sectordirect economic impact from the UAV industry in the United States (billion US dollars)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$12
$23
$35 $36$38 $40
$42 $44 $4649
$51
SOURCE STATISTA
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
06
Sales amp Growth OutlookWorldwide ecommerce sales of consumer electronics are expected to grow at a compound
annual rate of 102 through 2021 from more than $290 million USD in 2016 to more than
$472 million USD in 2021
in million US dollars
0
50000
100000
150000
200000
250000
300000
2021202020192018201720162015
$261966$290611
$327478$369208
$410062$445853
$472615
Global consumer electronics revenue Books Movies Music and Games
Consumer Electronics
SOURCE STATISTA
CONSUMER ELECTRONICS
07
SOURCE STATISTA
USER GROWTH in millions (worldwide)
User Growth Margins amp Mix Growth by RegionThe concern regarding margin pressure comes into focus when you
examine the industryrsquos revenue growth projections in the context of
exploding user growth Speci ically more than 850 million people are
expected to purchase consumer electronics in 2016 compared with
an estimated 11 billion in 2020
2015 2016 2017 2018 2019 2020 2021
78908500
9150
983310540
11221
11799
1000
750
500
250
0
1250
CONSUMER ELECTRONICS
08
Despite a dramatic increase in forecasted user the average revenue per person is
ultimately projected to plateau at the end of the decade from $267 USD per user in 2017
to $321 by 2021
Average revenue per userin US dollars (worldwide)
220
240
260
280
300
320
340
2021202020192018201720162015
$23402
$24801
$26794
$28906
$30582
$31674$32188
SOURCE STATISTA
CONSUMER ELECTRONICS
09
Similarly worldwide shipments of consumer electronics are expected to be relatively
flat during the second half of the decade down from $396 billion USD in 2007 to an
estimated $347 billion USD in 2018
SOURCE STATISTA
CONSUMER ELECTRONICS
10
Partially offsetting slowing growth in the maturing smartphone market are emerging
technologies including wearables drones 3D printers and connected homes
The mix of consumer electronics being sold is changing as well Industry sales leaders
include smartphones automobile electronics and flat panel televisions
SOURCE BUSINESS WIRE
SOURCE BUSINESS WIRE
2015 tech industry outlookSales leaders
CE SALESLEADERSSmartphones$53 billion in revenue177 million units
Tablets$226 billion in revenue73 million units
RIDING HIGH ON NEW VEHICLES
Automotive electronics$145 billion in revenue
TVrsquos larger than 40 inches will account for 6 of TV shipments in 2015 up 8
BIGGER IS BETTER4K ultra HD$52 billion in revenue44 million shipments expected
LCD flat panels$186 in revenue
$53B(+5)
$145B(+68)
$52B(+136)
2015 tech industry outlookEmerging technologies
WEARABLESA DEVICE REVOLUTIONFitness and activity trackersReach $18 billion in revenue in 2015 203 million units
WORLD CHANGERSDrones
$105 million in revenue700000 units
3D printers$210 million in revenue
CONNECTED HOME TECHNOLOGIES
$967 million in revenue
$18B(+20)
$967M(+32)
85 of consumers agree that using a fitness and activity tracker is motivating them to reach their fitness goals according to CEArsquos Wearable Activity Trackers Engaging Consumers to Monitor their Health
Drones could reach 1 Million US flights a day in 20 years according to CEA economic research
Includes smart thermostats smart smoke detectors and CO2 detectors Wi-Fi cameras smart home systems smart locks connected switches dimmers and outlets
CONSUMER ELECTRONICS
11
Growth By RegionThe United States is now the second largest market for consumer electronics with a user
base that is forecast to spend more than $55 billion USD in 2016 significantly less than
China which is forecast to spend more than $64 billion USD
SOURCE STATISTA
Revenue in the consumer electronics market2016 global comparison in million US dollars
Top Countries
China
United States
Japan
United Kingdom
Germany
647623
558504
160421
132156
129833
in mUSD
CONSUMER ELECTRONICS
12
However opportunities begin to take shape when you examine user penetration In the
US user penetration is just 525 which indicates additional growth opportunities exist
User penetration in the consumer electronics marketin percent in 2016 (worldwide)
Top Countries
United States
United Kingdom
Germany
Denmark
Japan
525
453
340
301
294
SOURCE STATISTA
CONSUMER ELECTRONICS
13
The biggest growth opportunity in the second half of the decade appears to be in
emerging markets where growing middle classes are developing alongside relatively
affluent upper classes in the Asia-Pacific region Interestingly though while China is the
largest emerging market for the tech industry India is actually growing the fastest
Whereas sales of tech devices in China are forecast to grow by $18 billion USD in 2015
tech device sales in India are forecast to reach $348 billion USD in 2015 an increase of
$48 billion USD Smartphones are driving growth in India as some manufactures have cut
prices to increase share
SOURCE STATISTA
CONSUMER ELECTRONICS
14
Target Market DemographicsSeveral economic tailwinds are expected to stimulate ecommerce and help consumer
electronics manufactures offset slowing growth overall These tailwinds include forecasted
increases in GDP per capita as well as internet and smartphone penetration
Additionally expect the industry to focus intensely on the 25-34 age demographic as it is
forecast to grow significantly between now and 2021
User by age groups in the consumer electronics marketin millions (worldwide)
2021202020192018201720162015
1250
1000
750
500
250
0
11799
78908500
91509833
1054011221
16-24
25-34
35-4445-54
55+
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
15
Specifically within the aforementioned demographic the projected number of male consumers
in the 25-34 age group is expected to be nearly double that of female users in 2016
By 2021 male consumers between 25-34 are again projected to be nearly double the size
of female consumers However the total addressable market between the age of 25-34 is
expected to grow to nearly 300 million
User by age groups and gender in the consumer electronics marketin millions in 2016 (worldwide)
250300 200 150 100 50 0 100 150 200 250 300
55+
45-54
35-44
25-34
16-24
50
Male
Female
User by age groups and gender in the consumer electronics marketin millions in 2021 (worldwide)
250300 200 150 100 50 0 100 150 200 250 300
55+
45-54
35-44
25-34
16-24
50
Male
Female
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
16
Regardless of age the majority of consumer electronics forecast to be sold in 2016 are
expected to be purchased by low and medium income consumers
User by age groups and income splitin millions in 2016
1967m
4464m
2069m
Low
Medium
High
Total
55+
45-54
35-44
25-34
16-24
SOURCE STATISTA
17
Industry Trends
PAGE 18 INTRODUCTION
PAGE 19 TREND 01
The Smartphone Matures
PAGE 22 TREND 02
Emerging Markets Drive Demand
PAGE 25 TREND 03
Home Automation Spikes as the loT Grows
PAGE 30 TREND 04
The Connected Car Evolves
PAGE 37 TREND 05
Commercial Drones Take (Test) Flight
PAGE 43 TREND 06
3D Printing Evolves Beyond Just Prototyping
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
18
The trends impacting the consumer electronics industry are creating opportunistic yet
challenging environments in which to operate Besides increased competition currency
concerns and economic headwinds in Europe and Asia-Pacific are making it increasingly
difficult for manufacturers of consumer electronics to grow their top lines while also
protecting margins
While demand for some traditional tech devices appears to be slowing demand for newer products in the car home and beyond is helping to offset some of the lost revenue How those trends combine with future technologies the ability to continue investing in RampD and whether the worldrsquos economies will position consumers to pay for expensive tech products will dictate how the following five trends play out the second half of the decade
CONSUMER ELECTRONICS
19
TREND 01
The Smartphone MaturesResearch suggests some people are more willing to go without sex rather than go without
their mobile phones In fact 26 of those surveyed said they could not live without their
phones versus 20 who said they couldnrsquot live without sex
SOURCE STATISTA
Source Harris Interactive
CONSUMER ELECTRONICS
20
Despite the opportunity emerging markets provide smartphone makers data indicate
the smartphone market is maturing In 2015 according to Accenture less than half of
smartphone owners plan to purchase a new one
Some analysts argue that phone and data service providers that no longer subsidize the
price of phones may be negatively impacting demand However smartphone makers may
also be victims of their own success and simply unable to innovate or add breathtaking new
features as quickly as consumers have been accustomed Nearly half of the consumers not
planning to purchase a new smartphone say theyrsquore happy with the device they have or
SOURCE ACCENTURE
SOURCE ACCENTURE
CONSUMER ELECTRONICS
21
The data indicate itrsquos not just smartphone demand thatrsquos slowing Consumer demand
for certain televisions laptops and tablets is also expected to be sluggish year over year
As was the case with smartphones consumers appear to be happy with what they
already have
The trend combined with other variables has negatively impacted 2015 holiday sales
at Best Buy prompted Samsung to warn of slower growth in 2016 and could result in
Applersquos first ever year-over-year decline in iPhone sales in Q2 2016 However on the Q1
2016 earnings call Apple CEO Tim Cook revealed the $691 (ASP) iPhone was taking share
from Android and sounded optimistic albeit cautious due to signs of economic strain in
Hong Kong regarding the companyrsquos prospects in emerging markets
SOURCE ACCENTURE
CONSUMER ELECTRONICS
22
Market analysts project sales of consumer electronics in emerging markets to grow at a
compound annual rate of 15 between 2015-2020 Growth is forecast to be most robust
in the Asia-Pacific region excluding Japan Increasingly the focus will be on China where
sales are forecast to grow by $18 billion USD in 2015
Forecasting a surge in the globalmiddle class
Poor
Middle ClassRich
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
9
8
7
6
5
4
3
2
1
0
TREND 02
Emerging Markets Drive DemandResearch suggests the world has lived through two middle class expansions since 1800
during the Industrial Revolution and after World War II Today research analysts argue
wersquore living through a third The data indicate that by 2030 two thirds of the global middle
class will live in the Asia-Pacific region up from just under one-third in 2009
SOURCE EY
CONSUMER ELECTRONICS
23
Lifting the lid on the Chinese consumer suggests consumer electronics manufacturers
may have room to sell products at higher price points Jean-Marc Bellaiche senior partner
and managing director at The Boston Consulting Group argues there are two drivers of
growth in the Chinese economy
1
2
The Emerging Middle ClassldquoAmong the emerging middle class the ldquoaspirational
massesrdquo also called the ldquotrendy metropolitanrdquo
comprises 330 million consumers and 25-27 percent
of the luxury market and the ldquorising middle classrdquo
made up of ldquothe proud business womanrdquo is 70
million consumers and 25-27 percent of the marketrdquo
An Increase In The Number of MillionairesldquoThere are also two types of millionaires new
money and old money New money also called ldquothe
loan traderrdquo or ldquothe Russian climberrdquo is 75 million
people and 30-35 percent of the luxury market
The old money crowd can be generalized as the
ldquonoble Italian entrepreneurrdquo This group is 25 million
consumers and 10-15 percent of the luxury marketrdquo
CONSUMER ELECTRONICS
24
In other words approximately one billion people in China or as much as 70 of the
population are projected to be middle class by 2030
Remember India is poised for explosive middle class growth as well Analysts at EY
recently projected
China total income by band 2010 and 2020annual income thousands of people
50+
30-50
15-30
5-15
0-5
2010 2020
112
2085
2388
933
3137
54
433
1619
499
US$
US$b
ldquoIndiarsquos global middle class meanwhile at around
50 million people or 5 of the population is much
smaller We expect this to grow steadily over the
next decade reaching 200 million by 2020 After
this we expect growth to really accelerate reaching
475 million by 2030 and adding more people than
the Chinese to the global middle class worldwide
after 2027rdquo
SOURCE EY
CONSUMER ELECTRONICS
25
Home automation
Ambient Asissted Living
Security
Energy Management
Home Entertainment
TREND 03
Home Automation Spikes as the loT GrowsThe second half of the decade is poised for explosive growth in the Smart Home market
segment To illustrate the growth potential in this segment wersquoll rely on data from Statista
as itrsquos a bit more conservative than other industry estimates
WARNING You can easily find research reports that contradict one another in terms of
how fast this segment is growing and is projected to grow through 2020 However the
productsincluded in the Smart Home segment varies which means yoursquore not always
comparing apples to apples
When we talk about the Smart Home segment wersquore including
CONSUMER ELECTRONICS
26
Not included in the data wersquoll highlight are devices like smartphones tablets and
television remote controls Herersquos Statistarsquos reasoning
ldquoDevices whose primary function is not for the
automation or remote control of household
equipment eg smartphones and tablets are not
included here Similarly devices whose reason for
purchase is only related to household connection
and remote control to a limited extent such as
Smart-TVs refrigerators or ovens are also not
includedrdquo
Whatrsquos important though is that a $7 billion dollar industry in 2015 is forecast to grow
to a more than $32 billion dollar industry by 2021
CONSUMER ELECTRONICS
27
Revenue in the smart home marketin millions US dollar
2021202020192018201720162015
32191
28468
24249
19495
14649
104327237
40000
30000
20000
10000
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy Management
Besides new products and a shift toward the IoT the Smart Home segmentrsquos relatively
small penetration rate between 1-18 depending on the segment is expected to
further drive growth
Smart home penetration ratein percent (US)
2020201920182017201620152014
80
60
40
20
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
28
Connected-home device shipments according to BI Intelligence will grow at a compound
annual rate of 67 over the next five years to 18 billion units shipped in 2019
Global connected-home device annual shipmentsin millions
2000
1800
1600
1400
1200
1000
800
600
400
200
0
2012 2013 2014E 2015E 2016E 2017E 2018E 2019E
We are here
67 CAGR2014-2019
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
29
Despite the fact that a sizable portion of the total addressable market has yet to adopt
Smart Home technology analysts suggest shipment growth is expected to peak in the
coming years While the following chart obviously doesnrsquot take into account the invention
of innovative new Smart Home products decelerating growth towards the back portion of
the decade may also pressure the average revenue per Smart Household
Average revenue per smart home in the smart home marketin US dollar
2021202020192018201720162015
450
400
350
300
250
200
150
100
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
CONSUMER ELECTRONICS
30
TREND 04
The Connected Car EvolvesIndustry estimates suggest more than 380 million connected cars will be on the road
by 2021 and have the ability to stream music surf the web alert drivers to traffic and
weather conditions and possibly even self-park Tech companies will play a significant
role as analysts who routinely upwardly adjust their forecasts for this segment expect
fully autonomous vehicles to be on the market in just a few years
Estimated connected car shipmentsin millions (worldwide)
2015E 2016E 2017E 2018E 2019E 2020E 2021E
50
100
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
31
In addition to autonomous vehicles the connected car market is defined by features
such as
bull Content amp Services
bull Safety amp Driving Assistance
bull Navigation Services
bull Diagnostics amp Maintenance
bull Connectivity
These technologies are forecast to more than double revenue in the connected car
market from more than $10 billion USD in 2017 to more than $21 billion USD by 2021
Revenue in the connected car marketin millions US dollar
21217
17026
13556
10376
80116109
4622
25000
20000
15000
10000
5000
0
Content amp Services
Safety amp Driving Assistance
Navigation ServicesDiagnostics amp Maintenance
Connectivity
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
32
While the definition of a connected car is likely to evolve in the years to come today there
are six categories of connectivity that are defining and driving this trend
SOURCE STRATEGYamp
Mobility Management Functions that allow the driver to reach a destination quickly safely and in a
cost-efficient manner
Examplesbull Current traffic informationbull Parking lot or garage assistance
bull Optimized fuel consumption
SafetyFunctions that warn the driver of external hazards and internal responses of the
vehicle to hazards
Examplesbull Collision protectionbull Hazard warnings
bull Emergency functions
Driver AssistanceFunctions invovling partially or fully
automatic driving
Examplesbull Operational assistance or autopilot in
heavy traffic in parking or on highways
Well-beingFunctions involving the driverrsquos comfort
and ability and fitness to drive
Examplesbull Fatigue detectionbull Automatic environment adjustments
to keep drivers alert
bull Medical assistance
Vehicle ManagementFunctions that aid in the driver in reducing
operating costs and improving ease of use
Examplesbull Vehicle condition and service remindersbull Remote operation
bull Transfer of usage data
EntertainmentFunctions involving the entertainment
of the driver and passengers
Examplesbull Smartphone interfacebull WLAN hot spotbull Music video internet social media
bull Mobile office
CONSUMER ELECTRONICS
33
Just 93 of vehicles manufactured in 2016 are considered connected cars However
demand is expected to increase in part when lower vehicle price points are implemented
as market research indicates that many of todayrsquos connected cars tend to be relatively
luxurious models with average selling prices of $55000 Consistent with that the
connected car penetration rate is projected to be 277 by 2020
34
61
93
131
176
225
277
Penetration rate in the connected car marketin percent (US)
0
5
10
15
20
25
30
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
34
However as the market becomes more saturated with connected cars average revenue
per connected car is projected to decline to $66685 USD by 2020
115029
84312
72679
6742065447 6668566075
Revenue per connected carin US dollars
1200
1100
1000
900
800
700
6002014 2015 2016 2017 2018 2019 2020
SOURCE STATISTA
CONSUMER ELECTRONICS
35
In addition to realigning automaker IT departments and creating user-friendly interfaces
that are IoT compatible and potentially even device agnostic analysts suggest connected
car manufacturers will have to overcome this challenge
Faster Product CyclesldquoThe typical product cycle in the passenger car
industry is about eight years in the consumer
electronics industry itrsquos less than a year To
successfully sell electronics products for connected
cars automakers will need to mimic the rapid
development cycles of the consumer electronics
companies The key for the automakers is to learn
to build perfectly functioning modular systems
into which updates and product developments can
be integrated quickly and with little effort Such a
modular infotainment building set would allow for
individual components to be updated through plug-
and-play technologies several times during a carrsquos
life cyclerdquo
CONSUMER ELECTRONICS
36
If yoursquore wondering why connected cars were included under consumer electronics
consider how the world will change when self-driving vehicles are status quo Google has
already logged more than 1 million autonomous vehicle miles and has been involved in
just 12 minor crashes in six years none of which were the fault of the driverless car
Once autonomous vehicles become part of our driving fabric expect next generation
connected cars to offer driverspassengers additional options in terms of the devices that
can interact with the vehicle
Smartphone temperature control amp bed-like seat adjustment applications and voice control of windows car hoods amp trunks and streaming music
Remote control or voice activated aftermarket add-ons that allow a passenger to plug in an electric car or pump gas remotely
Innovative cameras and real time editing software that allow for video conferencing that appears as if itrsquos being conducted in an office rather than a car
CONSUMER ELECTRONICS
37
TREND 05
Commercial Drones Take (Test) FlightWhile civilian use of drones may be what many first picture when they think of drones
itrsquos the military use of drones that has been driving demand Specifically military use of
drones has far outpaced civilian use of drones when measured by revenue Defense
spending on drones is projected to be robust through 2024
Global aerial drone marketin billions $14
$12
$10
$8
$6
$4
$2
$0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
DefenseCivilian
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
38
However research also suggests the civilian and commercial markets are expected to
grow significantly as drones are used in new and innovative ways Analysts at Grand View
Research describe future applications such as
ldquoAgriculture is expected to emerge as the dominant
application sector over the forecast period on
account of several benefits attained such as yield
increase due to crop monitoring Tech giants such
as Facebook Inc and Google Inc are planning
to use solar powered UAVs that hover around the
atmosphere of the earth providing internet access
to the remotest of places acting as flying internet
access points or hotspots In addition Amazon has
been working on Prime Air a drone delivery system
that promises goods delivered within 30 minutes
after order placementrdquo
CONSUMER ELECTRONICS
39
The list of potential drone applications includes
bull Agriculture
bull Law Enforcement
bull Ecommerce Delivery
bull Mapping amp Imagery
bull Wildlife Patrolling
bull Forest Fire Management
12000
10000
8000
6000
4000
2000
00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Agriculture
Energy
GovernmentMedia amp Entertainment
Others
US commercial drone market by application 2012-2022USD million
SOURCE GRAND VIEW RESEARCH
bull Vehicle Traffic Control
bull Marketing amp Entertainment
bull Energy amp Mining
bull Real Estate
bull News Gathering
bull Infrastructure Monitoring
CONSUMER ELECTRONICS
40
Research indicates sales of commercial and civilian drones will grow at a compound
annual rate of 19 between 2015 and 2020 The economic impact of the commercial
drone segment is forecast to grow to $51 billion by 2025
While some analysts argue package delivery will not be an early priority the impact
drones have on the delivery of consumer electronics may be relatively muted as only
a third of the people surveyed recently trust a drone to deliver consumer electronics
The economic impact of the commercial drone sectordirect economic impact from the UAV industry in the United States (billion US dollars)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$12
$23
$35 $36$38 $40
$42 $44 $4649
$51
SOURCE STATISTA
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
07
SOURCE STATISTA
USER GROWTH in millions (worldwide)
User Growth Margins amp Mix Growth by RegionThe concern regarding margin pressure comes into focus when you
examine the industryrsquos revenue growth projections in the context of
exploding user growth Speci ically more than 850 million people are
expected to purchase consumer electronics in 2016 compared with
an estimated 11 billion in 2020
2015 2016 2017 2018 2019 2020 2021
78908500
9150
983310540
11221
11799
1000
750
500
250
0
1250
CONSUMER ELECTRONICS
08
Despite a dramatic increase in forecasted user the average revenue per person is
ultimately projected to plateau at the end of the decade from $267 USD per user in 2017
to $321 by 2021
Average revenue per userin US dollars (worldwide)
220
240
260
280
300
320
340
2021202020192018201720162015
$23402
$24801
$26794
$28906
$30582
$31674$32188
SOURCE STATISTA
CONSUMER ELECTRONICS
09
Similarly worldwide shipments of consumer electronics are expected to be relatively
flat during the second half of the decade down from $396 billion USD in 2007 to an
estimated $347 billion USD in 2018
SOURCE STATISTA
CONSUMER ELECTRONICS
10
Partially offsetting slowing growth in the maturing smartphone market are emerging
technologies including wearables drones 3D printers and connected homes
The mix of consumer electronics being sold is changing as well Industry sales leaders
include smartphones automobile electronics and flat panel televisions
SOURCE BUSINESS WIRE
SOURCE BUSINESS WIRE
2015 tech industry outlookSales leaders
CE SALESLEADERSSmartphones$53 billion in revenue177 million units
Tablets$226 billion in revenue73 million units
RIDING HIGH ON NEW VEHICLES
Automotive electronics$145 billion in revenue
TVrsquos larger than 40 inches will account for 6 of TV shipments in 2015 up 8
BIGGER IS BETTER4K ultra HD$52 billion in revenue44 million shipments expected
LCD flat panels$186 in revenue
$53B(+5)
$145B(+68)
$52B(+136)
2015 tech industry outlookEmerging technologies
WEARABLESA DEVICE REVOLUTIONFitness and activity trackersReach $18 billion in revenue in 2015 203 million units
WORLD CHANGERSDrones
$105 million in revenue700000 units
3D printers$210 million in revenue
CONNECTED HOME TECHNOLOGIES
$967 million in revenue
$18B(+20)
$967M(+32)
85 of consumers agree that using a fitness and activity tracker is motivating them to reach their fitness goals according to CEArsquos Wearable Activity Trackers Engaging Consumers to Monitor their Health
Drones could reach 1 Million US flights a day in 20 years according to CEA economic research
Includes smart thermostats smart smoke detectors and CO2 detectors Wi-Fi cameras smart home systems smart locks connected switches dimmers and outlets
CONSUMER ELECTRONICS
11
Growth By RegionThe United States is now the second largest market for consumer electronics with a user
base that is forecast to spend more than $55 billion USD in 2016 significantly less than
China which is forecast to spend more than $64 billion USD
SOURCE STATISTA
Revenue in the consumer electronics market2016 global comparison in million US dollars
Top Countries
China
United States
Japan
United Kingdom
Germany
647623
558504
160421
132156
129833
in mUSD
CONSUMER ELECTRONICS
12
However opportunities begin to take shape when you examine user penetration In the
US user penetration is just 525 which indicates additional growth opportunities exist
User penetration in the consumer electronics marketin percent in 2016 (worldwide)
Top Countries
United States
United Kingdom
Germany
Denmark
Japan
525
453
340
301
294
SOURCE STATISTA
CONSUMER ELECTRONICS
13
The biggest growth opportunity in the second half of the decade appears to be in
emerging markets where growing middle classes are developing alongside relatively
affluent upper classes in the Asia-Pacific region Interestingly though while China is the
largest emerging market for the tech industry India is actually growing the fastest
Whereas sales of tech devices in China are forecast to grow by $18 billion USD in 2015
tech device sales in India are forecast to reach $348 billion USD in 2015 an increase of
$48 billion USD Smartphones are driving growth in India as some manufactures have cut
prices to increase share
SOURCE STATISTA
CONSUMER ELECTRONICS
14
Target Market DemographicsSeveral economic tailwinds are expected to stimulate ecommerce and help consumer
electronics manufactures offset slowing growth overall These tailwinds include forecasted
increases in GDP per capita as well as internet and smartphone penetration
Additionally expect the industry to focus intensely on the 25-34 age demographic as it is
forecast to grow significantly between now and 2021
User by age groups in the consumer electronics marketin millions (worldwide)
2021202020192018201720162015
1250
1000
750
500
250
0
11799
78908500
91509833
1054011221
16-24
25-34
35-4445-54
55+
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
15
Specifically within the aforementioned demographic the projected number of male consumers
in the 25-34 age group is expected to be nearly double that of female users in 2016
By 2021 male consumers between 25-34 are again projected to be nearly double the size
of female consumers However the total addressable market between the age of 25-34 is
expected to grow to nearly 300 million
User by age groups and gender in the consumer electronics marketin millions in 2016 (worldwide)
250300 200 150 100 50 0 100 150 200 250 300
55+
45-54
35-44
25-34
16-24
50
Male
Female
User by age groups and gender in the consumer electronics marketin millions in 2021 (worldwide)
250300 200 150 100 50 0 100 150 200 250 300
55+
45-54
35-44
25-34
16-24
50
Male
Female
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
16
Regardless of age the majority of consumer electronics forecast to be sold in 2016 are
expected to be purchased by low and medium income consumers
User by age groups and income splitin millions in 2016
1967m
4464m
2069m
Low
Medium
High
Total
55+
45-54
35-44
25-34
16-24
SOURCE STATISTA
17
Industry Trends
PAGE 18 INTRODUCTION
PAGE 19 TREND 01
The Smartphone Matures
PAGE 22 TREND 02
Emerging Markets Drive Demand
PAGE 25 TREND 03
Home Automation Spikes as the loT Grows
PAGE 30 TREND 04
The Connected Car Evolves
PAGE 37 TREND 05
Commercial Drones Take (Test) Flight
PAGE 43 TREND 06
3D Printing Evolves Beyond Just Prototyping
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
18
The trends impacting the consumer electronics industry are creating opportunistic yet
challenging environments in which to operate Besides increased competition currency
concerns and economic headwinds in Europe and Asia-Pacific are making it increasingly
difficult for manufacturers of consumer electronics to grow their top lines while also
protecting margins
While demand for some traditional tech devices appears to be slowing demand for newer products in the car home and beyond is helping to offset some of the lost revenue How those trends combine with future technologies the ability to continue investing in RampD and whether the worldrsquos economies will position consumers to pay for expensive tech products will dictate how the following five trends play out the second half of the decade
CONSUMER ELECTRONICS
19
TREND 01
The Smartphone MaturesResearch suggests some people are more willing to go without sex rather than go without
their mobile phones In fact 26 of those surveyed said they could not live without their
phones versus 20 who said they couldnrsquot live without sex
SOURCE STATISTA
Source Harris Interactive
CONSUMER ELECTRONICS
20
Despite the opportunity emerging markets provide smartphone makers data indicate
the smartphone market is maturing In 2015 according to Accenture less than half of
smartphone owners plan to purchase a new one
Some analysts argue that phone and data service providers that no longer subsidize the
price of phones may be negatively impacting demand However smartphone makers may
also be victims of their own success and simply unable to innovate or add breathtaking new
features as quickly as consumers have been accustomed Nearly half of the consumers not
planning to purchase a new smartphone say theyrsquore happy with the device they have or
SOURCE ACCENTURE
SOURCE ACCENTURE
CONSUMER ELECTRONICS
21
The data indicate itrsquos not just smartphone demand thatrsquos slowing Consumer demand
for certain televisions laptops and tablets is also expected to be sluggish year over year
As was the case with smartphones consumers appear to be happy with what they
already have
The trend combined with other variables has negatively impacted 2015 holiday sales
at Best Buy prompted Samsung to warn of slower growth in 2016 and could result in
Applersquos first ever year-over-year decline in iPhone sales in Q2 2016 However on the Q1
2016 earnings call Apple CEO Tim Cook revealed the $691 (ASP) iPhone was taking share
from Android and sounded optimistic albeit cautious due to signs of economic strain in
Hong Kong regarding the companyrsquos prospects in emerging markets
SOURCE ACCENTURE
CONSUMER ELECTRONICS
22
Market analysts project sales of consumer electronics in emerging markets to grow at a
compound annual rate of 15 between 2015-2020 Growth is forecast to be most robust
in the Asia-Pacific region excluding Japan Increasingly the focus will be on China where
sales are forecast to grow by $18 billion USD in 2015
Forecasting a surge in the globalmiddle class
Poor
Middle ClassRich
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
9
8
7
6
5
4
3
2
1
0
TREND 02
Emerging Markets Drive DemandResearch suggests the world has lived through two middle class expansions since 1800
during the Industrial Revolution and after World War II Today research analysts argue
wersquore living through a third The data indicate that by 2030 two thirds of the global middle
class will live in the Asia-Pacific region up from just under one-third in 2009
SOURCE EY
CONSUMER ELECTRONICS
23
Lifting the lid on the Chinese consumer suggests consumer electronics manufacturers
may have room to sell products at higher price points Jean-Marc Bellaiche senior partner
and managing director at The Boston Consulting Group argues there are two drivers of
growth in the Chinese economy
1
2
The Emerging Middle ClassldquoAmong the emerging middle class the ldquoaspirational
massesrdquo also called the ldquotrendy metropolitanrdquo
comprises 330 million consumers and 25-27 percent
of the luxury market and the ldquorising middle classrdquo
made up of ldquothe proud business womanrdquo is 70
million consumers and 25-27 percent of the marketrdquo
An Increase In The Number of MillionairesldquoThere are also two types of millionaires new
money and old money New money also called ldquothe
loan traderrdquo or ldquothe Russian climberrdquo is 75 million
people and 30-35 percent of the luxury market
The old money crowd can be generalized as the
ldquonoble Italian entrepreneurrdquo This group is 25 million
consumers and 10-15 percent of the luxury marketrdquo
CONSUMER ELECTRONICS
24
In other words approximately one billion people in China or as much as 70 of the
population are projected to be middle class by 2030
Remember India is poised for explosive middle class growth as well Analysts at EY
recently projected
China total income by band 2010 and 2020annual income thousands of people
50+
30-50
15-30
5-15
0-5
2010 2020
112
2085
2388
933
3137
54
433
1619
499
US$
US$b
ldquoIndiarsquos global middle class meanwhile at around
50 million people or 5 of the population is much
smaller We expect this to grow steadily over the
next decade reaching 200 million by 2020 After
this we expect growth to really accelerate reaching
475 million by 2030 and adding more people than
the Chinese to the global middle class worldwide
after 2027rdquo
SOURCE EY
CONSUMER ELECTRONICS
25
Home automation
Ambient Asissted Living
Security
Energy Management
Home Entertainment
TREND 03
Home Automation Spikes as the loT GrowsThe second half of the decade is poised for explosive growth in the Smart Home market
segment To illustrate the growth potential in this segment wersquoll rely on data from Statista
as itrsquos a bit more conservative than other industry estimates
WARNING You can easily find research reports that contradict one another in terms of
how fast this segment is growing and is projected to grow through 2020 However the
productsincluded in the Smart Home segment varies which means yoursquore not always
comparing apples to apples
When we talk about the Smart Home segment wersquore including
CONSUMER ELECTRONICS
26
Not included in the data wersquoll highlight are devices like smartphones tablets and
television remote controls Herersquos Statistarsquos reasoning
ldquoDevices whose primary function is not for the
automation or remote control of household
equipment eg smartphones and tablets are not
included here Similarly devices whose reason for
purchase is only related to household connection
and remote control to a limited extent such as
Smart-TVs refrigerators or ovens are also not
includedrdquo
Whatrsquos important though is that a $7 billion dollar industry in 2015 is forecast to grow
to a more than $32 billion dollar industry by 2021
CONSUMER ELECTRONICS
27
Revenue in the smart home marketin millions US dollar
2021202020192018201720162015
32191
28468
24249
19495
14649
104327237
40000
30000
20000
10000
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy Management
Besides new products and a shift toward the IoT the Smart Home segmentrsquos relatively
small penetration rate between 1-18 depending on the segment is expected to
further drive growth
Smart home penetration ratein percent (US)
2020201920182017201620152014
80
60
40
20
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
28
Connected-home device shipments according to BI Intelligence will grow at a compound
annual rate of 67 over the next five years to 18 billion units shipped in 2019
Global connected-home device annual shipmentsin millions
2000
1800
1600
1400
1200
1000
800
600
400
200
0
2012 2013 2014E 2015E 2016E 2017E 2018E 2019E
We are here
67 CAGR2014-2019
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
29
Despite the fact that a sizable portion of the total addressable market has yet to adopt
Smart Home technology analysts suggest shipment growth is expected to peak in the
coming years While the following chart obviously doesnrsquot take into account the invention
of innovative new Smart Home products decelerating growth towards the back portion of
the decade may also pressure the average revenue per Smart Household
Average revenue per smart home in the smart home marketin US dollar
2021202020192018201720162015
450
400
350
300
250
200
150
100
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
CONSUMER ELECTRONICS
30
TREND 04
The Connected Car EvolvesIndustry estimates suggest more than 380 million connected cars will be on the road
by 2021 and have the ability to stream music surf the web alert drivers to traffic and
weather conditions and possibly even self-park Tech companies will play a significant
role as analysts who routinely upwardly adjust their forecasts for this segment expect
fully autonomous vehicles to be on the market in just a few years
Estimated connected car shipmentsin millions (worldwide)
2015E 2016E 2017E 2018E 2019E 2020E 2021E
50
100
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
31
In addition to autonomous vehicles the connected car market is defined by features
such as
bull Content amp Services
bull Safety amp Driving Assistance
bull Navigation Services
bull Diagnostics amp Maintenance
bull Connectivity
These technologies are forecast to more than double revenue in the connected car
market from more than $10 billion USD in 2017 to more than $21 billion USD by 2021
Revenue in the connected car marketin millions US dollar
21217
17026
13556
10376
80116109
4622
25000
20000
15000
10000
5000
0
Content amp Services
Safety amp Driving Assistance
Navigation ServicesDiagnostics amp Maintenance
Connectivity
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
32
While the definition of a connected car is likely to evolve in the years to come today there
are six categories of connectivity that are defining and driving this trend
SOURCE STRATEGYamp
Mobility Management Functions that allow the driver to reach a destination quickly safely and in a
cost-efficient manner
Examplesbull Current traffic informationbull Parking lot or garage assistance
bull Optimized fuel consumption
SafetyFunctions that warn the driver of external hazards and internal responses of the
vehicle to hazards
Examplesbull Collision protectionbull Hazard warnings
bull Emergency functions
Driver AssistanceFunctions invovling partially or fully
automatic driving
Examplesbull Operational assistance or autopilot in
heavy traffic in parking or on highways
Well-beingFunctions involving the driverrsquos comfort
and ability and fitness to drive
Examplesbull Fatigue detectionbull Automatic environment adjustments
to keep drivers alert
bull Medical assistance
Vehicle ManagementFunctions that aid in the driver in reducing
operating costs and improving ease of use
Examplesbull Vehicle condition and service remindersbull Remote operation
bull Transfer of usage data
EntertainmentFunctions involving the entertainment
of the driver and passengers
Examplesbull Smartphone interfacebull WLAN hot spotbull Music video internet social media
bull Mobile office
CONSUMER ELECTRONICS
33
Just 93 of vehicles manufactured in 2016 are considered connected cars However
demand is expected to increase in part when lower vehicle price points are implemented
as market research indicates that many of todayrsquos connected cars tend to be relatively
luxurious models with average selling prices of $55000 Consistent with that the
connected car penetration rate is projected to be 277 by 2020
34
61
93
131
176
225
277
Penetration rate in the connected car marketin percent (US)
0
5
10
15
20
25
30
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
34
However as the market becomes more saturated with connected cars average revenue
per connected car is projected to decline to $66685 USD by 2020
115029
84312
72679
6742065447 6668566075
Revenue per connected carin US dollars
1200
1100
1000
900
800
700
6002014 2015 2016 2017 2018 2019 2020
SOURCE STATISTA
CONSUMER ELECTRONICS
35
In addition to realigning automaker IT departments and creating user-friendly interfaces
that are IoT compatible and potentially even device agnostic analysts suggest connected
car manufacturers will have to overcome this challenge
Faster Product CyclesldquoThe typical product cycle in the passenger car
industry is about eight years in the consumer
electronics industry itrsquos less than a year To
successfully sell electronics products for connected
cars automakers will need to mimic the rapid
development cycles of the consumer electronics
companies The key for the automakers is to learn
to build perfectly functioning modular systems
into which updates and product developments can
be integrated quickly and with little effort Such a
modular infotainment building set would allow for
individual components to be updated through plug-
and-play technologies several times during a carrsquos
life cyclerdquo
CONSUMER ELECTRONICS
36
If yoursquore wondering why connected cars were included under consumer electronics
consider how the world will change when self-driving vehicles are status quo Google has
already logged more than 1 million autonomous vehicle miles and has been involved in
just 12 minor crashes in six years none of which were the fault of the driverless car
Once autonomous vehicles become part of our driving fabric expect next generation
connected cars to offer driverspassengers additional options in terms of the devices that
can interact with the vehicle
Smartphone temperature control amp bed-like seat adjustment applications and voice control of windows car hoods amp trunks and streaming music
Remote control or voice activated aftermarket add-ons that allow a passenger to plug in an electric car or pump gas remotely
Innovative cameras and real time editing software that allow for video conferencing that appears as if itrsquos being conducted in an office rather than a car
CONSUMER ELECTRONICS
37
TREND 05
Commercial Drones Take (Test) FlightWhile civilian use of drones may be what many first picture when they think of drones
itrsquos the military use of drones that has been driving demand Specifically military use of
drones has far outpaced civilian use of drones when measured by revenue Defense
spending on drones is projected to be robust through 2024
Global aerial drone marketin billions $14
$12
$10
$8
$6
$4
$2
$0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
DefenseCivilian
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
38
However research also suggests the civilian and commercial markets are expected to
grow significantly as drones are used in new and innovative ways Analysts at Grand View
Research describe future applications such as
ldquoAgriculture is expected to emerge as the dominant
application sector over the forecast period on
account of several benefits attained such as yield
increase due to crop monitoring Tech giants such
as Facebook Inc and Google Inc are planning
to use solar powered UAVs that hover around the
atmosphere of the earth providing internet access
to the remotest of places acting as flying internet
access points or hotspots In addition Amazon has
been working on Prime Air a drone delivery system
that promises goods delivered within 30 minutes
after order placementrdquo
CONSUMER ELECTRONICS
39
The list of potential drone applications includes
bull Agriculture
bull Law Enforcement
bull Ecommerce Delivery
bull Mapping amp Imagery
bull Wildlife Patrolling
bull Forest Fire Management
12000
10000
8000
6000
4000
2000
00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Agriculture
Energy
GovernmentMedia amp Entertainment
Others
US commercial drone market by application 2012-2022USD million
SOURCE GRAND VIEW RESEARCH
bull Vehicle Traffic Control
bull Marketing amp Entertainment
bull Energy amp Mining
bull Real Estate
bull News Gathering
bull Infrastructure Monitoring
CONSUMER ELECTRONICS
40
Research indicates sales of commercial and civilian drones will grow at a compound
annual rate of 19 between 2015 and 2020 The economic impact of the commercial
drone segment is forecast to grow to $51 billion by 2025
While some analysts argue package delivery will not be an early priority the impact
drones have on the delivery of consumer electronics may be relatively muted as only
a third of the people surveyed recently trust a drone to deliver consumer electronics
The economic impact of the commercial drone sectordirect economic impact from the UAV industry in the United States (billion US dollars)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$12
$23
$35 $36$38 $40
$42 $44 $4649
$51
SOURCE STATISTA
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
08
Despite a dramatic increase in forecasted user the average revenue per person is
ultimately projected to plateau at the end of the decade from $267 USD per user in 2017
to $321 by 2021
Average revenue per userin US dollars (worldwide)
220
240
260
280
300
320
340
2021202020192018201720162015
$23402
$24801
$26794
$28906
$30582
$31674$32188
SOURCE STATISTA
CONSUMER ELECTRONICS
09
Similarly worldwide shipments of consumer electronics are expected to be relatively
flat during the second half of the decade down from $396 billion USD in 2007 to an
estimated $347 billion USD in 2018
SOURCE STATISTA
CONSUMER ELECTRONICS
10
Partially offsetting slowing growth in the maturing smartphone market are emerging
technologies including wearables drones 3D printers and connected homes
The mix of consumer electronics being sold is changing as well Industry sales leaders
include smartphones automobile electronics and flat panel televisions
SOURCE BUSINESS WIRE
SOURCE BUSINESS WIRE
2015 tech industry outlookSales leaders
CE SALESLEADERSSmartphones$53 billion in revenue177 million units
Tablets$226 billion in revenue73 million units
RIDING HIGH ON NEW VEHICLES
Automotive electronics$145 billion in revenue
TVrsquos larger than 40 inches will account for 6 of TV shipments in 2015 up 8
BIGGER IS BETTER4K ultra HD$52 billion in revenue44 million shipments expected
LCD flat panels$186 in revenue
$53B(+5)
$145B(+68)
$52B(+136)
2015 tech industry outlookEmerging technologies
WEARABLESA DEVICE REVOLUTIONFitness and activity trackersReach $18 billion in revenue in 2015 203 million units
WORLD CHANGERSDrones
$105 million in revenue700000 units
3D printers$210 million in revenue
CONNECTED HOME TECHNOLOGIES
$967 million in revenue
$18B(+20)
$967M(+32)
85 of consumers agree that using a fitness and activity tracker is motivating them to reach their fitness goals according to CEArsquos Wearable Activity Trackers Engaging Consumers to Monitor their Health
Drones could reach 1 Million US flights a day in 20 years according to CEA economic research
Includes smart thermostats smart smoke detectors and CO2 detectors Wi-Fi cameras smart home systems smart locks connected switches dimmers and outlets
CONSUMER ELECTRONICS
11
Growth By RegionThe United States is now the second largest market for consumer electronics with a user
base that is forecast to spend more than $55 billion USD in 2016 significantly less than
China which is forecast to spend more than $64 billion USD
SOURCE STATISTA
Revenue in the consumer electronics market2016 global comparison in million US dollars
Top Countries
China
United States
Japan
United Kingdom
Germany
647623
558504
160421
132156
129833
in mUSD
CONSUMER ELECTRONICS
12
However opportunities begin to take shape when you examine user penetration In the
US user penetration is just 525 which indicates additional growth opportunities exist
User penetration in the consumer electronics marketin percent in 2016 (worldwide)
Top Countries
United States
United Kingdom
Germany
Denmark
Japan
525
453
340
301
294
SOURCE STATISTA
CONSUMER ELECTRONICS
13
The biggest growth opportunity in the second half of the decade appears to be in
emerging markets where growing middle classes are developing alongside relatively
affluent upper classes in the Asia-Pacific region Interestingly though while China is the
largest emerging market for the tech industry India is actually growing the fastest
Whereas sales of tech devices in China are forecast to grow by $18 billion USD in 2015
tech device sales in India are forecast to reach $348 billion USD in 2015 an increase of
$48 billion USD Smartphones are driving growth in India as some manufactures have cut
prices to increase share
SOURCE STATISTA
CONSUMER ELECTRONICS
14
Target Market DemographicsSeveral economic tailwinds are expected to stimulate ecommerce and help consumer
electronics manufactures offset slowing growth overall These tailwinds include forecasted
increases in GDP per capita as well as internet and smartphone penetration
Additionally expect the industry to focus intensely on the 25-34 age demographic as it is
forecast to grow significantly between now and 2021
User by age groups in the consumer electronics marketin millions (worldwide)
2021202020192018201720162015
1250
1000
750
500
250
0
11799
78908500
91509833
1054011221
16-24
25-34
35-4445-54
55+
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
15
Specifically within the aforementioned demographic the projected number of male consumers
in the 25-34 age group is expected to be nearly double that of female users in 2016
By 2021 male consumers between 25-34 are again projected to be nearly double the size
of female consumers However the total addressable market between the age of 25-34 is
expected to grow to nearly 300 million
User by age groups and gender in the consumer electronics marketin millions in 2016 (worldwide)
250300 200 150 100 50 0 100 150 200 250 300
55+
45-54
35-44
25-34
16-24
50
Male
Female
User by age groups and gender in the consumer electronics marketin millions in 2021 (worldwide)
250300 200 150 100 50 0 100 150 200 250 300
55+
45-54
35-44
25-34
16-24
50
Male
Female
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
16
Regardless of age the majority of consumer electronics forecast to be sold in 2016 are
expected to be purchased by low and medium income consumers
User by age groups and income splitin millions in 2016
1967m
4464m
2069m
Low
Medium
High
Total
55+
45-54
35-44
25-34
16-24
SOURCE STATISTA
17
Industry Trends
PAGE 18 INTRODUCTION
PAGE 19 TREND 01
The Smartphone Matures
PAGE 22 TREND 02
Emerging Markets Drive Demand
PAGE 25 TREND 03
Home Automation Spikes as the loT Grows
PAGE 30 TREND 04
The Connected Car Evolves
PAGE 37 TREND 05
Commercial Drones Take (Test) Flight
PAGE 43 TREND 06
3D Printing Evolves Beyond Just Prototyping
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
18
The trends impacting the consumer electronics industry are creating opportunistic yet
challenging environments in which to operate Besides increased competition currency
concerns and economic headwinds in Europe and Asia-Pacific are making it increasingly
difficult for manufacturers of consumer electronics to grow their top lines while also
protecting margins
While demand for some traditional tech devices appears to be slowing demand for newer products in the car home and beyond is helping to offset some of the lost revenue How those trends combine with future technologies the ability to continue investing in RampD and whether the worldrsquos economies will position consumers to pay for expensive tech products will dictate how the following five trends play out the second half of the decade
CONSUMER ELECTRONICS
19
TREND 01
The Smartphone MaturesResearch suggests some people are more willing to go without sex rather than go without
their mobile phones In fact 26 of those surveyed said they could not live without their
phones versus 20 who said they couldnrsquot live without sex
SOURCE STATISTA
Source Harris Interactive
CONSUMER ELECTRONICS
20
Despite the opportunity emerging markets provide smartphone makers data indicate
the smartphone market is maturing In 2015 according to Accenture less than half of
smartphone owners plan to purchase a new one
Some analysts argue that phone and data service providers that no longer subsidize the
price of phones may be negatively impacting demand However smartphone makers may
also be victims of their own success and simply unable to innovate or add breathtaking new
features as quickly as consumers have been accustomed Nearly half of the consumers not
planning to purchase a new smartphone say theyrsquore happy with the device they have or
SOURCE ACCENTURE
SOURCE ACCENTURE
CONSUMER ELECTRONICS
21
The data indicate itrsquos not just smartphone demand thatrsquos slowing Consumer demand
for certain televisions laptops and tablets is also expected to be sluggish year over year
As was the case with smartphones consumers appear to be happy with what they
already have
The trend combined with other variables has negatively impacted 2015 holiday sales
at Best Buy prompted Samsung to warn of slower growth in 2016 and could result in
Applersquos first ever year-over-year decline in iPhone sales in Q2 2016 However on the Q1
2016 earnings call Apple CEO Tim Cook revealed the $691 (ASP) iPhone was taking share
from Android and sounded optimistic albeit cautious due to signs of economic strain in
Hong Kong regarding the companyrsquos prospects in emerging markets
SOURCE ACCENTURE
CONSUMER ELECTRONICS
22
Market analysts project sales of consumer electronics in emerging markets to grow at a
compound annual rate of 15 between 2015-2020 Growth is forecast to be most robust
in the Asia-Pacific region excluding Japan Increasingly the focus will be on China where
sales are forecast to grow by $18 billion USD in 2015
Forecasting a surge in the globalmiddle class
Poor
Middle ClassRich
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
9
8
7
6
5
4
3
2
1
0
TREND 02
Emerging Markets Drive DemandResearch suggests the world has lived through two middle class expansions since 1800
during the Industrial Revolution and after World War II Today research analysts argue
wersquore living through a third The data indicate that by 2030 two thirds of the global middle
class will live in the Asia-Pacific region up from just under one-third in 2009
SOURCE EY
CONSUMER ELECTRONICS
23
Lifting the lid on the Chinese consumer suggests consumer electronics manufacturers
may have room to sell products at higher price points Jean-Marc Bellaiche senior partner
and managing director at The Boston Consulting Group argues there are two drivers of
growth in the Chinese economy
1
2
The Emerging Middle ClassldquoAmong the emerging middle class the ldquoaspirational
massesrdquo also called the ldquotrendy metropolitanrdquo
comprises 330 million consumers and 25-27 percent
of the luxury market and the ldquorising middle classrdquo
made up of ldquothe proud business womanrdquo is 70
million consumers and 25-27 percent of the marketrdquo
An Increase In The Number of MillionairesldquoThere are also two types of millionaires new
money and old money New money also called ldquothe
loan traderrdquo or ldquothe Russian climberrdquo is 75 million
people and 30-35 percent of the luxury market
The old money crowd can be generalized as the
ldquonoble Italian entrepreneurrdquo This group is 25 million
consumers and 10-15 percent of the luxury marketrdquo
CONSUMER ELECTRONICS
24
In other words approximately one billion people in China or as much as 70 of the
population are projected to be middle class by 2030
Remember India is poised for explosive middle class growth as well Analysts at EY
recently projected
China total income by band 2010 and 2020annual income thousands of people
50+
30-50
15-30
5-15
0-5
2010 2020
112
2085
2388
933
3137
54
433
1619
499
US$
US$b
ldquoIndiarsquos global middle class meanwhile at around
50 million people or 5 of the population is much
smaller We expect this to grow steadily over the
next decade reaching 200 million by 2020 After
this we expect growth to really accelerate reaching
475 million by 2030 and adding more people than
the Chinese to the global middle class worldwide
after 2027rdquo
SOURCE EY
CONSUMER ELECTRONICS
25
Home automation
Ambient Asissted Living
Security
Energy Management
Home Entertainment
TREND 03
Home Automation Spikes as the loT GrowsThe second half of the decade is poised for explosive growth in the Smart Home market
segment To illustrate the growth potential in this segment wersquoll rely on data from Statista
as itrsquos a bit more conservative than other industry estimates
WARNING You can easily find research reports that contradict one another in terms of
how fast this segment is growing and is projected to grow through 2020 However the
productsincluded in the Smart Home segment varies which means yoursquore not always
comparing apples to apples
When we talk about the Smart Home segment wersquore including
CONSUMER ELECTRONICS
26
Not included in the data wersquoll highlight are devices like smartphones tablets and
television remote controls Herersquos Statistarsquos reasoning
ldquoDevices whose primary function is not for the
automation or remote control of household
equipment eg smartphones and tablets are not
included here Similarly devices whose reason for
purchase is only related to household connection
and remote control to a limited extent such as
Smart-TVs refrigerators or ovens are also not
includedrdquo
Whatrsquos important though is that a $7 billion dollar industry in 2015 is forecast to grow
to a more than $32 billion dollar industry by 2021
CONSUMER ELECTRONICS
27
Revenue in the smart home marketin millions US dollar
2021202020192018201720162015
32191
28468
24249
19495
14649
104327237
40000
30000
20000
10000
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy Management
Besides new products and a shift toward the IoT the Smart Home segmentrsquos relatively
small penetration rate between 1-18 depending on the segment is expected to
further drive growth
Smart home penetration ratein percent (US)
2020201920182017201620152014
80
60
40
20
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
28
Connected-home device shipments according to BI Intelligence will grow at a compound
annual rate of 67 over the next five years to 18 billion units shipped in 2019
Global connected-home device annual shipmentsin millions
2000
1800
1600
1400
1200
1000
800
600
400
200
0
2012 2013 2014E 2015E 2016E 2017E 2018E 2019E
We are here
67 CAGR2014-2019
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
29
Despite the fact that a sizable portion of the total addressable market has yet to adopt
Smart Home technology analysts suggest shipment growth is expected to peak in the
coming years While the following chart obviously doesnrsquot take into account the invention
of innovative new Smart Home products decelerating growth towards the back portion of
the decade may also pressure the average revenue per Smart Household
Average revenue per smart home in the smart home marketin US dollar
2021202020192018201720162015
450
400
350
300
250
200
150
100
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
CONSUMER ELECTRONICS
30
TREND 04
The Connected Car EvolvesIndustry estimates suggest more than 380 million connected cars will be on the road
by 2021 and have the ability to stream music surf the web alert drivers to traffic and
weather conditions and possibly even self-park Tech companies will play a significant
role as analysts who routinely upwardly adjust their forecasts for this segment expect
fully autonomous vehicles to be on the market in just a few years
Estimated connected car shipmentsin millions (worldwide)
2015E 2016E 2017E 2018E 2019E 2020E 2021E
50
100
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
31
In addition to autonomous vehicles the connected car market is defined by features
such as
bull Content amp Services
bull Safety amp Driving Assistance
bull Navigation Services
bull Diagnostics amp Maintenance
bull Connectivity
These technologies are forecast to more than double revenue in the connected car
market from more than $10 billion USD in 2017 to more than $21 billion USD by 2021
Revenue in the connected car marketin millions US dollar
21217
17026
13556
10376
80116109
4622
25000
20000
15000
10000
5000
0
Content amp Services
Safety amp Driving Assistance
Navigation ServicesDiagnostics amp Maintenance
Connectivity
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
32
While the definition of a connected car is likely to evolve in the years to come today there
are six categories of connectivity that are defining and driving this trend
SOURCE STRATEGYamp
Mobility Management Functions that allow the driver to reach a destination quickly safely and in a
cost-efficient manner
Examplesbull Current traffic informationbull Parking lot or garage assistance
bull Optimized fuel consumption
SafetyFunctions that warn the driver of external hazards and internal responses of the
vehicle to hazards
Examplesbull Collision protectionbull Hazard warnings
bull Emergency functions
Driver AssistanceFunctions invovling partially or fully
automatic driving
Examplesbull Operational assistance or autopilot in
heavy traffic in parking or on highways
Well-beingFunctions involving the driverrsquos comfort
and ability and fitness to drive
Examplesbull Fatigue detectionbull Automatic environment adjustments
to keep drivers alert
bull Medical assistance
Vehicle ManagementFunctions that aid in the driver in reducing
operating costs and improving ease of use
Examplesbull Vehicle condition and service remindersbull Remote operation
bull Transfer of usage data
EntertainmentFunctions involving the entertainment
of the driver and passengers
Examplesbull Smartphone interfacebull WLAN hot spotbull Music video internet social media
bull Mobile office
CONSUMER ELECTRONICS
33
Just 93 of vehicles manufactured in 2016 are considered connected cars However
demand is expected to increase in part when lower vehicle price points are implemented
as market research indicates that many of todayrsquos connected cars tend to be relatively
luxurious models with average selling prices of $55000 Consistent with that the
connected car penetration rate is projected to be 277 by 2020
34
61
93
131
176
225
277
Penetration rate in the connected car marketin percent (US)
0
5
10
15
20
25
30
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
34
However as the market becomes more saturated with connected cars average revenue
per connected car is projected to decline to $66685 USD by 2020
115029
84312
72679
6742065447 6668566075
Revenue per connected carin US dollars
1200
1100
1000
900
800
700
6002014 2015 2016 2017 2018 2019 2020
SOURCE STATISTA
CONSUMER ELECTRONICS
35
In addition to realigning automaker IT departments and creating user-friendly interfaces
that are IoT compatible and potentially even device agnostic analysts suggest connected
car manufacturers will have to overcome this challenge
Faster Product CyclesldquoThe typical product cycle in the passenger car
industry is about eight years in the consumer
electronics industry itrsquos less than a year To
successfully sell electronics products for connected
cars automakers will need to mimic the rapid
development cycles of the consumer electronics
companies The key for the automakers is to learn
to build perfectly functioning modular systems
into which updates and product developments can
be integrated quickly and with little effort Such a
modular infotainment building set would allow for
individual components to be updated through plug-
and-play technologies several times during a carrsquos
life cyclerdquo
CONSUMER ELECTRONICS
36
If yoursquore wondering why connected cars were included under consumer electronics
consider how the world will change when self-driving vehicles are status quo Google has
already logged more than 1 million autonomous vehicle miles and has been involved in
just 12 minor crashes in six years none of which were the fault of the driverless car
Once autonomous vehicles become part of our driving fabric expect next generation
connected cars to offer driverspassengers additional options in terms of the devices that
can interact with the vehicle
Smartphone temperature control amp bed-like seat adjustment applications and voice control of windows car hoods amp trunks and streaming music
Remote control or voice activated aftermarket add-ons that allow a passenger to plug in an electric car or pump gas remotely
Innovative cameras and real time editing software that allow for video conferencing that appears as if itrsquos being conducted in an office rather than a car
CONSUMER ELECTRONICS
37
TREND 05
Commercial Drones Take (Test) FlightWhile civilian use of drones may be what many first picture when they think of drones
itrsquos the military use of drones that has been driving demand Specifically military use of
drones has far outpaced civilian use of drones when measured by revenue Defense
spending on drones is projected to be robust through 2024
Global aerial drone marketin billions $14
$12
$10
$8
$6
$4
$2
$0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
DefenseCivilian
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
38
However research also suggests the civilian and commercial markets are expected to
grow significantly as drones are used in new and innovative ways Analysts at Grand View
Research describe future applications such as
ldquoAgriculture is expected to emerge as the dominant
application sector over the forecast period on
account of several benefits attained such as yield
increase due to crop monitoring Tech giants such
as Facebook Inc and Google Inc are planning
to use solar powered UAVs that hover around the
atmosphere of the earth providing internet access
to the remotest of places acting as flying internet
access points or hotspots In addition Amazon has
been working on Prime Air a drone delivery system
that promises goods delivered within 30 minutes
after order placementrdquo
CONSUMER ELECTRONICS
39
The list of potential drone applications includes
bull Agriculture
bull Law Enforcement
bull Ecommerce Delivery
bull Mapping amp Imagery
bull Wildlife Patrolling
bull Forest Fire Management
12000
10000
8000
6000
4000
2000
00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Agriculture
Energy
GovernmentMedia amp Entertainment
Others
US commercial drone market by application 2012-2022USD million
SOURCE GRAND VIEW RESEARCH
bull Vehicle Traffic Control
bull Marketing amp Entertainment
bull Energy amp Mining
bull Real Estate
bull News Gathering
bull Infrastructure Monitoring
CONSUMER ELECTRONICS
40
Research indicates sales of commercial and civilian drones will grow at a compound
annual rate of 19 between 2015 and 2020 The economic impact of the commercial
drone segment is forecast to grow to $51 billion by 2025
While some analysts argue package delivery will not be an early priority the impact
drones have on the delivery of consumer electronics may be relatively muted as only
a third of the people surveyed recently trust a drone to deliver consumer electronics
The economic impact of the commercial drone sectordirect economic impact from the UAV industry in the United States (billion US dollars)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$12
$23
$35 $36$38 $40
$42 $44 $4649
$51
SOURCE STATISTA
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
09
Similarly worldwide shipments of consumer electronics are expected to be relatively
flat during the second half of the decade down from $396 billion USD in 2007 to an
estimated $347 billion USD in 2018
SOURCE STATISTA
CONSUMER ELECTRONICS
10
Partially offsetting slowing growth in the maturing smartphone market are emerging
technologies including wearables drones 3D printers and connected homes
The mix of consumer electronics being sold is changing as well Industry sales leaders
include smartphones automobile electronics and flat panel televisions
SOURCE BUSINESS WIRE
SOURCE BUSINESS WIRE
2015 tech industry outlookSales leaders
CE SALESLEADERSSmartphones$53 billion in revenue177 million units
Tablets$226 billion in revenue73 million units
RIDING HIGH ON NEW VEHICLES
Automotive electronics$145 billion in revenue
TVrsquos larger than 40 inches will account for 6 of TV shipments in 2015 up 8
BIGGER IS BETTER4K ultra HD$52 billion in revenue44 million shipments expected
LCD flat panels$186 in revenue
$53B(+5)
$145B(+68)
$52B(+136)
2015 tech industry outlookEmerging technologies
WEARABLESA DEVICE REVOLUTIONFitness and activity trackersReach $18 billion in revenue in 2015 203 million units
WORLD CHANGERSDrones
$105 million in revenue700000 units
3D printers$210 million in revenue
CONNECTED HOME TECHNOLOGIES
$967 million in revenue
$18B(+20)
$967M(+32)
85 of consumers agree that using a fitness and activity tracker is motivating them to reach their fitness goals according to CEArsquos Wearable Activity Trackers Engaging Consumers to Monitor their Health
Drones could reach 1 Million US flights a day in 20 years according to CEA economic research
Includes smart thermostats smart smoke detectors and CO2 detectors Wi-Fi cameras smart home systems smart locks connected switches dimmers and outlets
CONSUMER ELECTRONICS
11
Growth By RegionThe United States is now the second largest market for consumer electronics with a user
base that is forecast to spend more than $55 billion USD in 2016 significantly less than
China which is forecast to spend more than $64 billion USD
SOURCE STATISTA
Revenue in the consumer electronics market2016 global comparison in million US dollars
Top Countries
China
United States
Japan
United Kingdom
Germany
647623
558504
160421
132156
129833
in mUSD
CONSUMER ELECTRONICS
12
However opportunities begin to take shape when you examine user penetration In the
US user penetration is just 525 which indicates additional growth opportunities exist
User penetration in the consumer electronics marketin percent in 2016 (worldwide)
Top Countries
United States
United Kingdom
Germany
Denmark
Japan
525
453
340
301
294
SOURCE STATISTA
CONSUMER ELECTRONICS
13
The biggest growth opportunity in the second half of the decade appears to be in
emerging markets where growing middle classes are developing alongside relatively
affluent upper classes in the Asia-Pacific region Interestingly though while China is the
largest emerging market for the tech industry India is actually growing the fastest
Whereas sales of tech devices in China are forecast to grow by $18 billion USD in 2015
tech device sales in India are forecast to reach $348 billion USD in 2015 an increase of
$48 billion USD Smartphones are driving growth in India as some manufactures have cut
prices to increase share
SOURCE STATISTA
CONSUMER ELECTRONICS
14
Target Market DemographicsSeveral economic tailwinds are expected to stimulate ecommerce and help consumer
electronics manufactures offset slowing growth overall These tailwinds include forecasted
increases in GDP per capita as well as internet and smartphone penetration
Additionally expect the industry to focus intensely on the 25-34 age demographic as it is
forecast to grow significantly between now and 2021
User by age groups in the consumer electronics marketin millions (worldwide)
2021202020192018201720162015
1250
1000
750
500
250
0
11799
78908500
91509833
1054011221
16-24
25-34
35-4445-54
55+
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
15
Specifically within the aforementioned demographic the projected number of male consumers
in the 25-34 age group is expected to be nearly double that of female users in 2016
By 2021 male consumers between 25-34 are again projected to be nearly double the size
of female consumers However the total addressable market between the age of 25-34 is
expected to grow to nearly 300 million
User by age groups and gender in the consumer electronics marketin millions in 2016 (worldwide)
250300 200 150 100 50 0 100 150 200 250 300
55+
45-54
35-44
25-34
16-24
50
Male
Female
User by age groups and gender in the consumer electronics marketin millions in 2021 (worldwide)
250300 200 150 100 50 0 100 150 200 250 300
55+
45-54
35-44
25-34
16-24
50
Male
Female
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
16
Regardless of age the majority of consumer electronics forecast to be sold in 2016 are
expected to be purchased by low and medium income consumers
User by age groups and income splitin millions in 2016
1967m
4464m
2069m
Low
Medium
High
Total
55+
45-54
35-44
25-34
16-24
SOURCE STATISTA
17
Industry Trends
PAGE 18 INTRODUCTION
PAGE 19 TREND 01
The Smartphone Matures
PAGE 22 TREND 02
Emerging Markets Drive Demand
PAGE 25 TREND 03
Home Automation Spikes as the loT Grows
PAGE 30 TREND 04
The Connected Car Evolves
PAGE 37 TREND 05
Commercial Drones Take (Test) Flight
PAGE 43 TREND 06
3D Printing Evolves Beyond Just Prototyping
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
18
The trends impacting the consumer electronics industry are creating opportunistic yet
challenging environments in which to operate Besides increased competition currency
concerns and economic headwinds in Europe and Asia-Pacific are making it increasingly
difficult for manufacturers of consumer electronics to grow their top lines while also
protecting margins
While demand for some traditional tech devices appears to be slowing demand for newer products in the car home and beyond is helping to offset some of the lost revenue How those trends combine with future technologies the ability to continue investing in RampD and whether the worldrsquos economies will position consumers to pay for expensive tech products will dictate how the following five trends play out the second half of the decade
CONSUMER ELECTRONICS
19
TREND 01
The Smartphone MaturesResearch suggests some people are more willing to go without sex rather than go without
their mobile phones In fact 26 of those surveyed said they could not live without their
phones versus 20 who said they couldnrsquot live without sex
SOURCE STATISTA
Source Harris Interactive
CONSUMER ELECTRONICS
20
Despite the opportunity emerging markets provide smartphone makers data indicate
the smartphone market is maturing In 2015 according to Accenture less than half of
smartphone owners plan to purchase a new one
Some analysts argue that phone and data service providers that no longer subsidize the
price of phones may be negatively impacting demand However smartphone makers may
also be victims of their own success and simply unable to innovate or add breathtaking new
features as quickly as consumers have been accustomed Nearly half of the consumers not
planning to purchase a new smartphone say theyrsquore happy with the device they have or
SOURCE ACCENTURE
SOURCE ACCENTURE
CONSUMER ELECTRONICS
21
The data indicate itrsquos not just smartphone demand thatrsquos slowing Consumer demand
for certain televisions laptops and tablets is also expected to be sluggish year over year
As was the case with smartphones consumers appear to be happy with what they
already have
The trend combined with other variables has negatively impacted 2015 holiday sales
at Best Buy prompted Samsung to warn of slower growth in 2016 and could result in
Applersquos first ever year-over-year decline in iPhone sales in Q2 2016 However on the Q1
2016 earnings call Apple CEO Tim Cook revealed the $691 (ASP) iPhone was taking share
from Android and sounded optimistic albeit cautious due to signs of economic strain in
Hong Kong regarding the companyrsquos prospects in emerging markets
SOURCE ACCENTURE
CONSUMER ELECTRONICS
22
Market analysts project sales of consumer electronics in emerging markets to grow at a
compound annual rate of 15 between 2015-2020 Growth is forecast to be most robust
in the Asia-Pacific region excluding Japan Increasingly the focus will be on China where
sales are forecast to grow by $18 billion USD in 2015
Forecasting a surge in the globalmiddle class
Poor
Middle ClassRich
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
9
8
7
6
5
4
3
2
1
0
TREND 02
Emerging Markets Drive DemandResearch suggests the world has lived through two middle class expansions since 1800
during the Industrial Revolution and after World War II Today research analysts argue
wersquore living through a third The data indicate that by 2030 two thirds of the global middle
class will live in the Asia-Pacific region up from just under one-third in 2009
SOURCE EY
CONSUMER ELECTRONICS
23
Lifting the lid on the Chinese consumer suggests consumer electronics manufacturers
may have room to sell products at higher price points Jean-Marc Bellaiche senior partner
and managing director at The Boston Consulting Group argues there are two drivers of
growth in the Chinese economy
1
2
The Emerging Middle ClassldquoAmong the emerging middle class the ldquoaspirational
massesrdquo also called the ldquotrendy metropolitanrdquo
comprises 330 million consumers and 25-27 percent
of the luxury market and the ldquorising middle classrdquo
made up of ldquothe proud business womanrdquo is 70
million consumers and 25-27 percent of the marketrdquo
An Increase In The Number of MillionairesldquoThere are also two types of millionaires new
money and old money New money also called ldquothe
loan traderrdquo or ldquothe Russian climberrdquo is 75 million
people and 30-35 percent of the luxury market
The old money crowd can be generalized as the
ldquonoble Italian entrepreneurrdquo This group is 25 million
consumers and 10-15 percent of the luxury marketrdquo
CONSUMER ELECTRONICS
24
In other words approximately one billion people in China or as much as 70 of the
population are projected to be middle class by 2030
Remember India is poised for explosive middle class growth as well Analysts at EY
recently projected
China total income by band 2010 and 2020annual income thousands of people
50+
30-50
15-30
5-15
0-5
2010 2020
112
2085
2388
933
3137
54
433
1619
499
US$
US$b
ldquoIndiarsquos global middle class meanwhile at around
50 million people or 5 of the population is much
smaller We expect this to grow steadily over the
next decade reaching 200 million by 2020 After
this we expect growth to really accelerate reaching
475 million by 2030 and adding more people than
the Chinese to the global middle class worldwide
after 2027rdquo
SOURCE EY
CONSUMER ELECTRONICS
25
Home automation
Ambient Asissted Living
Security
Energy Management
Home Entertainment
TREND 03
Home Automation Spikes as the loT GrowsThe second half of the decade is poised for explosive growth in the Smart Home market
segment To illustrate the growth potential in this segment wersquoll rely on data from Statista
as itrsquos a bit more conservative than other industry estimates
WARNING You can easily find research reports that contradict one another in terms of
how fast this segment is growing and is projected to grow through 2020 However the
productsincluded in the Smart Home segment varies which means yoursquore not always
comparing apples to apples
When we talk about the Smart Home segment wersquore including
CONSUMER ELECTRONICS
26
Not included in the data wersquoll highlight are devices like smartphones tablets and
television remote controls Herersquos Statistarsquos reasoning
ldquoDevices whose primary function is not for the
automation or remote control of household
equipment eg smartphones and tablets are not
included here Similarly devices whose reason for
purchase is only related to household connection
and remote control to a limited extent such as
Smart-TVs refrigerators or ovens are also not
includedrdquo
Whatrsquos important though is that a $7 billion dollar industry in 2015 is forecast to grow
to a more than $32 billion dollar industry by 2021
CONSUMER ELECTRONICS
27
Revenue in the smart home marketin millions US dollar
2021202020192018201720162015
32191
28468
24249
19495
14649
104327237
40000
30000
20000
10000
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy Management
Besides new products and a shift toward the IoT the Smart Home segmentrsquos relatively
small penetration rate between 1-18 depending on the segment is expected to
further drive growth
Smart home penetration ratein percent (US)
2020201920182017201620152014
80
60
40
20
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
28
Connected-home device shipments according to BI Intelligence will grow at a compound
annual rate of 67 over the next five years to 18 billion units shipped in 2019
Global connected-home device annual shipmentsin millions
2000
1800
1600
1400
1200
1000
800
600
400
200
0
2012 2013 2014E 2015E 2016E 2017E 2018E 2019E
We are here
67 CAGR2014-2019
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
29
Despite the fact that a sizable portion of the total addressable market has yet to adopt
Smart Home technology analysts suggest shipment growth is expected to peak in the
coming years While the following chart obviously doesnrsquot take into account the invention
of innovative new Smart Home products decelerating growth towards the back portion of
the decade may also pressure the average revenue per Smart Household
Average revenue per smart home in the smart home marketin US dollar
2021202020192018201720162015
450
400
350
300
250
200
150
100
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
CONSUMER ELECTRONICS
30
TREND 04
The Connected Car EvolvesIndustry estimates suggest more than 380 million connected cars will be on the road
by 2021 and have the ability to stream music surf the web alert drivers to traffic and
weather conditions and possibly even self-park Tech companies will play a significant
role as analysts who routinely upwardly adjust their forecasts for this segment expect
fully autonomous vehicles to be on the market in just a few years
Estimated connected car shipmentsin millions (worldwide)
2015E 2016E 2017E 2018E 2019E 2020E 2021E
50
100
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
31
In addition to autonomous vehicles the connected car market is defined by features
such as
bull Content amp Services
bull Safety amp Driving Assistance
bull Navigation Services
bull Diagnostics amp Maintenance
bull Connectivity
These technologies are forecast to more than double revenue in the connected car
market from more than $10 billion USD in 2017 to more than $21 billion USD by 2021
Revenue in the connected car marketin millions US dollar
21217
17026
13556
10376
80116109
4622
25000
20000
15000
10000
5000
0
Content amp Services
Safety amp Driving Assistance
Navigation ServicesDiagnostics amp Maintenance
Connectivity
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
32
While the definition of a connected car is likely to evolve in the years to come today there
are six categories of connectivity that are defining and driving this trend
SOURCE STRATEGYamp
Mobility Management Functions that allow the driver to reach a destination quickly safely and in a
cost-efficient manner
Examplesbull Current traffic informationbull Parking lot or garage assistance
bull Optimized fuel consumption
SafetyFunctions that warn the driver of external hazards and internal responses of the
vehicle to hazards
Examplesbull Collision protectionbull Hazard warnings
bull Emergency functions
Driver AssistanceFunctions invovling partially or fully
automatic driving
Examplesbull Operational assistance or autopilot in
heavy traffic in parking or on highways
Well-beingFunctions involving the driverrsquos comfort
and ability and fitness to drive
Examplesbull Fatigue detectionbull Automatic environment adjustments
to keep drivers alert
bull Medical assistance
Vehicle ManagementFunctions that aid in the driver in reducing
operating costs and improving ease of use
Examplesbull Vehicle condition and service remindersbull Remote operation
bull Transfer of usage data
EntertainmentFunctions involving the entertainment
of the driver and passengers
Examplesbull Smartphone interfacebull WLAN hot spotbull Music video internet social media
bull Mobile office
CONSUMER ELECTRONICS
33
Just 93 of vehicles manufactured in 2016 are considered connected cars However
demand is expected to increase in part when lower vehicle price points are implemented
as market research indicates that many of todayrsquos connected cars tend to be relatively
luxurious models with average selling prices of $55000 Consistent with that the
connected car penetration rate is projected to be 277 by 2020
34
61
93
131
176
225
277
Penetration rate in the connected car marketin percent (US)
0
5
10
15
20
25
30
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
34
However as the market becomes more saturated with connected cars average revenue
per connected car is projected to decline to $66685 USD by 2020
115029
84312
72679
6742065447 6668566075
Revenue per connected carin US dollars
1200
1100
1000
900
800
700
6002014 2015 2016 2017 2018 2019 2020
SOURCE STATISTA
CONSUMER ELECTRONICS
35
In addition to realigning automaker IT departments and creating user-friendly interfaces
that are IoT compatible and potentially even device agnostic analysts suggest connected
car manufacturers will have to overcome this challenge
Faster Product CyclesldquoThe typical product cycle in the passenger car
industry is about eight years in the consumer
electronics industry itrsquos less than a year To
successfully sell electronics products for connected
cars automakers will need to mimic the rapid
development cycles of the consumer electronics
companies The key for the automakers is to learn
to build perfectly functioning modular systems
into which updates and product developments can
be integrated quickly and with little effort Such a
modular infotainment building set would allow for
individual components to be updated through plug-
and-play technologies several times during a carrsquos
life cyclerdquo
CONSUMER ELECTRONICS
36
If yoursquore wondering why connected cars were included under consumer electronics
consider how the world will change when self-driving vehicles are status quo Google has
already logged more than 1 million autonomous vehicle miles and has been involved in
just 12 minor crashes in six years none of which were the fault of the driverless car
Once autonomous vehicles become part of our driving fabric expect next generation
connected cars to offer driverspassengers additional options in terms of the devices that
can interact with the vehicle
Smartphone temperature control amp bed-like seat adjustment applications and voice control of windows car hoods amp trunks and streaming music
Remote control or voice activated aftermarket add-ons that allow a passenger to plug in an electric car or pump gas remotely
Innovative cameras and real time editing software that allow for video conferencing that appears as if itrsquos being conducted in an office rather than a car
CONSUMER ELECTRONICS
37
TREND 05
Commercial Drones Take (Test) FlightWhile civilian use of drones may be what many first picture when they think of drones
itrsquos the military use of drones that has been driving demand Specifically military use of
drones has far outpaced civilian use of drones when measured by revenue Defense
spending on drones is projected to be robust through 2024
Global aerial drone marketin billions $14
$12
$10
$8
$6
$4
$2
$0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
DefenseCivilian
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
38
However research also suggests the civilian and commercial markets are expected to
grow significantly as drones are used in new and innovative ways Analysts at Grand View
Research describe future applications such as
ldquoAgriculture is expected to emerge as the dominant
application sector over the forecast period on
account of several benefits attained such as yield
increase due to crop monitoring Tech giants such
as Facebook Inc and Google Inc are planning
to use solar powered UAVs that hover around the
atmosphere of the earth providing internet access
to the remotest of places acting as flying internet
access points or hotspots In addition Amazon has
been working on Prime Air a drone delivery system
that promises goods delivered within 30 minutes
after order placementrdquo
CONSUMER ELECTRONICS
39
The list of potential drone applications includes
bull Agriculture
bull Law Enforcement
bull Ecommerce Delivery
bull Mapping amp Imagery
bull Wildlife Patrolling
bull Forest Fire Management
12000
10000
8000
6000
4000
2000
00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Agriculture
Energy
GovernmentMedia amp Entertainment
Others
US commercial drone market by application 2012-2022USD million
SOURCE GRAND VIEW RESEARCH
bull Vehicle Traffic Control
bull Marketing amp Entertainment
bull Energy amp Mining
bull Real Estate
bull News Gathering
bull Infrastructure Monitoring
CONSUMER ELECTRONICS
40
Research indicates sales of commercial and civilian drones will grow at a compound
annual rate of 19 between 2015 and 2020 The economic impact of the commercial
drone segment is forecast to grow to $51 billion by 2025
While some analysts argue package delivery will not be an early priority the impact
drones have on the delivery of consumer electronics may be relatively muted as only
a third of the people surveyed recently trust a drone to deliver consumer electronics
The economic impact of the commercial drone sectordirect economic impact from the UAV industry in the United States (billion US dollars)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$12
$23
$35 $36$38 $40
$42 $44 $4649
$51
SOURCE STATISTA
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
10
Partially offsetting slowing growth in the maturing smartphone market are emerging
technologies including wearables drones 3D printers and connected homes
The mix of consumer electronics being sold is changing as well Industry sales leaders
include smartphones automobile electronics and flat panel televisions
SOURCE BUSINESS WIRE
SOURCE BUSINESS WIRE
2015 tech industry outlookSales leaders
CE SALESLEADERSSmartphones$53 billion in revenue177 million units
Tablets$226 billion in revenue73 million units
RIDING HIGH ON NEW VEHICLES
Automotive electronics$145 billion in revenue
TVrsquos larger than 40 inches will account for 6 of TV shipments in 2015 up 8
BIGGER IS BETTER4K ultra HD$52 billion in revenue44 million shipments expected
LCD flat panels$186 in revenue
$53B(+5)
$145B(+68)
$52B(+136)
2015 tech industry outlookEmerging technologies
WEARABLESA DEVICE REVOLUTIONFitness and activity trackersReach $18 billion in revenue in 2015 203 million units
WORLD CHANGERSDrones
$105 million in revenue700000 units
3D printers$210 million in revenue
CONNECTED HOME TECHNOLOGIES
$967 million in revenue
$18B(+20)
$967M(+32)
85 of consumers agree that using a fitness and activity tracker is motivating them to reach their fitness goals according to CEArsquos Wearable Activity Trackers Engaging Consumers to Monitor their Health
Drones could reach 1 Million US flights a day in 20 years according to CEA economic research
Includes smart thermostats smart smoke detectors and CO2 detectors Wi-Fi cameras smart home systems smart locks connected switches dimmers and outlets
CONSUMER ELECTRONICS
11
Growth By RegionThe United States is now the second largest market for consumer electronics with a user
base that is forecast to spend more than $55 billion USD in 2016 significantly less than
China which is forecast to spend more than $64 billion USD
SOURCE STATISTA
Revenue in the consumer electronics market2016 global comparison in million US dollars
Top Countries
China
United States
Japan
United Kingdom
Germany
647623
558504
160421
132156
129833
in mUSD
CONSUMER ELECTRONICS
12
However opportunities begin to take shape when you examine user penetration In the
US user penetration is just 525 which indicates additional growth opportunities exist
User penetration in the consumer electronics marketin percent in 2016 (worldwide)
Top Countries
United States
United Kingdom
Germany
Denmark
Japan
525
453
340
301
294
SOURCE STATISTA
CONSUMER ELECTRONICS
13
The biggest growth opportunity in the second half of the decade appears to be in
emerging markets where growing middle classes are developing alongside relatively
affluent upper classes in the Asia-Pacific region Interestingly though while China is the
largest emerging market for the tech industry India is actually growing the fastest
Whereas sales of tech devices in China are forecast to grow by $18 billion USD in 2015
tech device sales in India are forecast to reach $348 billion USD in 2015 an increase of
$48 billion USD Smartphones are driving growth in India as some manufactures have cut
prices to increase share
SOURCE STATISTA
CONSUMER ELECTRONICS
14
Target Market DemographicsSeveral economic tailwinds are expected to stimulate ecommerce and help consumer
electronics manufactures offset slowing growth overall These tailwinds include forecasted
increases in GDP per capita as well as internet and smartphone penetration
Additionally expect the industry to focus intensely on the 25-34 age demographic as it is
forecast to grow significantly between now and 2021
User by age groups in the consumer electronics marketin millions (worldwide)
2021202020192018201720162015
1250
1000
750
500
250
0
11799
78908500
91509833
1054011221
16-24
25-34
35-4445-54
55+
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
15
Specifically within the aforementioned demographic the projected number of male consumers
in the 25-34 age group is expected to be nearly double that of female users in 2016
By 2021 male consumers between 25-34 are again projected to be nearly double the size
of female consumers However the total addressable market between the age of 25-34 is
expected to grow to nearly 300 million
User by age groups and gender in the consumer electronics marketin millions in 2016 (worldwide)
250300 200 150 100 50 0 100 150 200 250 300
55+
45-54
35-44
25-34
16-24
50
Male
Female
User by age groups and gender in the consumer electronics marketin millions in 2021 (worldwide)
250300 200 150 100 50 0 100 150 200 250 300
55+
45-54
35-44
25-34
16-24
50
Male
Female
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
16
Regardless of age the majority of consumer electronics forecast to be sold in 2016 are
expected to be purchased by low and medium income consumers
User by age groups and income splitin millions in 2016
1967m
4464m
2069m
Low
Medium
High
Total
55+
45-54
35-44
25-34
16-24
SOURCE STATISTA
17
Industry Trends
PAGE 18 INTRODUCTION
PAGE 19 TREND 01
The Smartphone Matures
PAGE 22 TREND 02
Emerging Markets Drive Demand
PAGE 25 TREND 03
Home Automation Spikes as the loT Grows
PAGE 30 TREND 04
The Connected Car Evolves
PAGE 37 TREND 05
Commercial Drones Take (Test) Flight
PAGE 43 TREND 06
3D Printing Evolves Beyond Just Prototyping
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
18
The trends impacting the consumer electronics industry are creating opportunistic yet
challenging environments in which to operate Besides increased competition currency
concerns and economic headwinds in Europe and Asia-Pacific are making it increasingly
difficult for manufacturers of consumer electronics to grow their top lines while also
protecting margins
While demand for some traditional tech devices appears to be slowing demand for newer products in the car home and beyond is helping to offset some of the lost revenue How those trends combine with future technologies the ability to continue investing in RampD and whether the worldrsquos economies will position consumers to pay for expensive tech products will dictate how the following five trends play out the second half of the decade
CONSUMER ELECTRONICS
19
TREND 01
The Smartphone MaturesResearch suggests some people are more willing to go without sex rather than go without
their mobile phones In fact 26 of those surveyed said they could not live without their
phones versus 20 who said they couldnrsquot live without sex
SOURCE STATISTA
Source Harris Interactive
CONSUMER ELECTRONICS
20
Despite the opportunity emerging markets provide smartphone makers data indicate
the smartphone market is maturing In 2015 according to Accenture less than half of
smartphone owners plan to purchase a new one
Some analysts argue that phone and data service providers that no longer subsidize the
price of phones may be negatively impacting demand However smartphone makers may
also be victims of their own success and simply unable to innovate or add breathtaking new
features as quickly as consumers have been accustomed Nearly half of the consumers not
planning to purchase a new smartphone say theyrsquore happy with the device they have or
SOURCE ACCENTURE
SOURCE ACCENTURE
CONSUMER ELECTRONICS
21
The data indicate itrsquos not just smartphone demand thatrsquos slowing Consumer demand
for certain televisions laptops and tablets is also expected to be sluggish year over year
As was the case with smartphones consumers appear to be happy with what they
already have
The trend combined with other variables has negatively impacted 2015 holiday sales
at Best Buy prompted Samsung to warn of slower growth in 2016 and could result in
Applersquos first ever year-over-year decline in iPhone sales in Q2 2016 However on the Q1
2016 earnings call Apple CEO Tim Cook revealed the $691 (ASP) iPhone was taking share
from Android and sounded optimistic albeit cautious due to signs of economic strain in
Hong Kong regarding the companyrsquos prospects in emerging markets
SOURCE ACCENTURE
CONSUMER ELECTRONICS
22
Market analysts project sales of consumer electronics in emerging markets to grow at a
compound annual rate of 15 between 2015-2020 Growth is forecast to be most robust
in the Asia-Pacific region excluding Japan Increasingly the focus will be on China where
sales are forecast to grow by $18 billion USD in 2015
Forecasting a surge in the globalmiddle class
Poor
Middle ClassRich
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
9
8
7
6
5
4
3
2
1
0
TREND 02
Emerging Markets Drive DemandResearch suggests the world has lived through two middle class expansions since 1800
during the Industrial Revolution and after World War II Today research analysts argue
wersquore living through a third The data indicate that by 2030 two thirds of the global middle
class will live in the Asia-Pacific region up from just under one-third in 2009
SOURCE EY
CONSUMER ELECTRONICS
23
Lifting the lid on the Chinese consumer suggests consumer electronics manufacturers
may have room to sell products at higher price points Jean-Marc Bellaiche senior partner
and managing director at The Boston Consulting Group argues there are two drivers of
growth in the Chinese economy
1
2
The Emerging Middle ClassldquoAmong the emerging middle class the ldquoaspirational
massesrdquo also called the ldquotrendy metropolitanrdquo
comprises 330 million consumers and 25-27 percent
of the luxury market and the ldquorising middle classrdquo
made up of ldquothe proud business womanrdquo is 70
million consumers and 25-27 percent of the marketrdquo
An Increase In The Number of MillionairesldquoThere are also two types of millionaires new
money and old money New money also called ldquothe
loan traderrdquo or ldquothe Russian climberrdquo is 75 million
people and 30-35 percent of the luxury market
The old money crowd can be generalized as the
ldquonoble Italian entrepreneurrdquo This group is 25 million
consumers and 10-15 percent of the luxury marketrdquo
CONSUMER ELECTRONICS
24
In other words approximately one billion people in China or as much as 70 of the
population are projected to be middle class by 2030
Remember India is poised for explosive middle class growth as well Analysts at EY
recently projected
China total income by band 2010 and 2020annual income thousands of people
50+
30-50
15-30
5-15
0-5
2010 2020
112
2085
2388
933
3137
54
433
1619
499
US$
US$b
ldquoIndiarsquos global middle class meanwhile at around
50 million people or 5 of the population is much
smaller We expect this to grow steadily over the
next decade reaching 200 million by 2020 After
this we expect growth to really accelerate reaching
475 million by 2030 and adding more people than
the Chinese to the global middle class worldwide
after 2027rdquo
SOURCE EY
CONSUMER ELECTRONICS
25
Home automation
Ambient Asissted Living
Security
Energy Management
Home Entertainment
TREND 03
Home Automation Spikes as the loT GrowsThe second half of the decade is poised for explosive growth in the Smart Home market
segment To illustrate the growth potential in this segment wersquoll rely on data from Statista
as itrsquos a bit more conservative than other industry estimates
WARNING You can easily find research reports that contradict one another in terms of
how fast this segment is growing and is projected to grow through 2020 However the
productsincluded in the Smart Home segment varies which means yoursquore not always
comparing apples to apples
When we talk about the Smart Home segment wersquore including
CONSUMER ELECTRONICS
26
Not included in the data wersquoll highlight are devices like smartphones tablets and
television remote controls Herersquos Statistarsquos reasoning
ldquoDevices whose primary function is not for the
automation or remote control of household
equipment eg smartphones and tablets are not
included here Similarly devices whose reason for
purchase is only related to household connection
and remote control to a limited extent such as
Smart-TVs refrigerators or ovens are also not
includedrdquo
Whatrsquos important though is that a $7 billion dollar industry in 2015 is forecast to grow
to a more than $32 billion dollar industry by 2021
CONSUMER ELECTRONICS
27
Revenue in the smart home marketin millions US dollar
2021202020192018201720162015
32191
28468
24249
19495
14649
104327237
40000
30000
20000
10000
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy Management
Besides new products and a shift toward the IoT the Smart Home segmentrsquos relatively
small penetration rate between 1-18 depending on the segment is expected to
further drive growth
Smart home penetration ratein percent (US)
2020201920182017201620152014
80
60
40
20
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
28
Connected-home device shipments according to BI Intelligence will grow at a compound
annual rate of 67 over the next five years to 18 billion units shipped in 2019
Global connected-home device annual shipmentsin millions
2000
1800
1600
1400
1200
1000
800
600
400
200
0
2012 2013 2014E 2015E 2016E 2017E 2018E 2019E
We are here
67 CAGR2014-2019
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
29
Despite the fact that a sizable portion of the total addressable market has yet to adopt
Smart Home technology analysts suggest shipment growth is expected to peak in the
coming years While the following chart obviously doesnrsquot take into account the invention
of innovative new Smart Home products decelerating growth towards the back portion of
the decade may also pressure the average revenue per Smart Household
Average revenue per smart home in the smart home marketin US dollar
2021202020192018201720162015
450
400
350
300
250
200
150
100
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
CONSUMER ELECTRONICS
30
TREND 04
The Connected Car EvolvesIndustry estimates suggest more than 380 million connected cars will be on the road
by 2021 and have the ability to stream music surf the web alert drivers to traffic and
weather conditions and possibly even self-park Tech companies will play a significant
role as analysts who routinely upwardly adjust their forecasts for this segment expect
fully autonomous vehicles to be on the market in just a few years
Estimated connected car shipmentsin millions (worldwide)
2015E 2016E 2017E 2018E 2019E 2020E 2021E
50
100
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
31
In addition to autonomous vehicles the connected car market is defined by features
such as
bull Content amp Services
bull Safety amp Driving Assistance
bull Navigation Services
bull Diagnostics amp Maintenance
bull Connectivity
These technologies are forecast to more than double revenue in the connected car
market from more than $10 billion USD in 2017 to more than $21 billion USD by 2021
Revenue in the connected car marketin millions US dollar
21217
17026
13556
10376
80116109
4622
25000
20000
15000
10000
5000
0
Content amp Services
Safety amp Driving Assistance
Navigation ServicesDiagnostics amp Maintenance
Connectivity
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
32
While the definition of a connected car is likely to evolve in the years to come today there
are six categories of connectivity that are defining and driving this trend
SOURCE STRATEGYamp
Mobility Management Functions that allow the driver to reach a destination quickly safely and in a
cost-efficient manner
Examplesbull Current traffic informationbull Parking lot or garage assistance
bull Optimized fuel consumption
SafetyFunctions that warn the driver of external hazards and internal responses of the
vehicle to hazards
Examplesbull Collision protectionbull Hazard warnings
bull Emergency functions
Driver AssistanceFunctions invovling partially or fully
automatic driving
Examplesbull Operational assistance or autopilot in
heavy traffic in parking or on highways
Well-beingFunctions involving the driverrsquos comfort
and ability and fitness to drive
Examplesbull Fatigue detectionbull Automatic environment adjustments
to keep drivers alert
bull Medical assistance
Vehicle ManagementFunctions that aid in the driver in reducing
operating costs and improving ease of use
Examplesbull Vehicle condition and service remindersbull Remote operation
bull Transfer of usage data
EntertainmentFunctions involving the entertainment
of the driver and passengers
Examplesbull Smartphone interfacebull WLAN hot spotbull Music video internet social media
bull Mobile office
CONSUMER ELECTRONICS
33
Just 93 of vehicles manufactured in 2016 are considered connected cars However
demand is expected to increase in part when lower vehicle price points are implemented
as market research indicates that many of todayrsquos connected cars tend to be relatively
luxurious models with average selling prices of $55000 Consistent with that the
connected car penetration rate is projected to be 277 by 2020
34
61
93
131
176
225
277
Penetration rate in the connected car marketin percent (US)
0
5
10
15
20
25
30
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
34
However as the market becomes more saturated with connected cars average revenue
per connected car is projected to decline to $66685 USD by 2020
115029
84312
72679
6742065447 6668566075
Revenue per connected carin US dollars
1200
1100
1000
900
800
700
6002014 2015 2016 2017 2018 2019 2020
SOURCE STATISTA
CONSUMER ELECTRONICS
35
In addition to realigning automaker IT departments and creating user-friendly interfaces
that are IoT compatible and potentially even device agnostic analysts suggest connected
car manufacturers will have to overcome this challenge
Faster Product CyclesldquoThe typical product cycle in the passenger car
industry is about eight years in the consumer
electronics industry itrsquos less than a year To
successfully sell electronics products for connected
cars automakers will need to mimic the rapid
development cycles of the consumer electronics
companies The key for the automakers is to learn
to build perfectly functioning modular systems
into which updates and product developments can
be integrated quickly and with little effort Such a
modular infotainment building set would allow for
individual components to be updated through plug-
and-play technologies several times during a carrsquos
life cyclerdquo
CONSUMER ELECTRONICS
36
If yoursquore wondering why connected cars were included under consumer electronics
consider how the world will change when self-driving vehicles are status quo Google has
already logged more than 1 million autonomous vehicle miles and has been involved in
just 12 minor crashes in six years none of which were the fault of the driverless car
Once autonomous vehicles become part of our driving fabric expect next generation
connected cars to offer driverspassengers additional options in terms of the devices that
can interact with the vehicle
Smartphone temperature control amp bed-like seat adjustment applications and voice control of windows car hoods amp trunks and streaming music
Remote control or voice activated aftermarket add-ons that allow a passenger to plug in an electric car or pump gas remotely
Innovative cameras and real time editing software that allow for video conferencing that appears as if itrsquos being conducted in an office rather than a car
CONSUMER ELECTRONICS
37
TREND 05
Commercial Drones Take (Test) FlightWhile civilian use of drones may be what many first picture when they think of drones
itrsquos the military use of drones that has been driving demand Specifically military use of
drones has far outpaced civilian use of drones when measured by revenue Defense
spending on drones is projected to be robust through 2024
Global aerial drone marketin billions $14
$12
$10
$8
$6
$4
$2
$0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
DefenseCivilian
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
38
However research also suggests the civilian and commercial markets are expected to
grow significantly as drones are used in new and innovative ways Analysts at Grand View
Research describe future applications such as
ldquoAgriculture is expected to emerge as the dominant
application sector over the forecast period on
account of several benefits attained such as yield
increase due to crop monitoring Tech giants such
as Facebook Inc and Google Inc are planning
to use solar powered UAVs that hover around the
atmosphere of the earth providing internet access
to the remotest of places acting as flying internet
access points or hotspots In addition Amazon has
been working on Prime Air a drone delivery system
that promises goods delivered within 30 minutes
after order placementrdquo
CONSUMER ELECTRONICS
39
The list of potential drone applications includes
bull Agriculture
bull Law Enforcement
bull Ecommerce Delivery
bull Mapping amp Imagery
bull Wildlife Patrolling
bull Forest Fire Management
12000
10000
8000
6000
4000
2000
00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Agriculture
Energy
GovernmentMedia amp Entertainment
Others
US commercial drone market by application 2012-2022USD million
SOURCE GRAND VIEW RESEARCH
bull Vehicle Traffic Control
bull Marketing amp Entertainment
bull Energy amp Mining
bull Real Estate
bull News Gathering
bull Infrastructure Monitoring
CONSUMER ELECTRONICS
40
Research indicates sales of commercial and civilian drones will grow at a compound
annual rate of 19 between 2015 and 2020 The economic impact of the commercial
drone segment is forecast to grow to $51 billion by 2025
While some analysts argue package delivery will not be an early priority the impact
drones have on the delivery of consumer electronics may be relatively muted as only
a third of the people surveyed recently trust a drone to deliver consumer electronics
The economic impact of the commercial drone sectordirect economic impact from the UAV industry in the United States (billion US dollars)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$12
$23
$35 $36$38 $40
$42 $44 $4649
$51
SOURCE STATISTA
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
11
Growth By RegionThe United States is now the second largest market for consumer electronics with a user
base that is forecast to spend more than $55 billion USD in 2016 significantly less than
China which is forecast to spend more than $64 billion USD
SOURCE STATISTA
Revenue in the consumer electronics market2016 global comparison in million US dollars
Top Countries
China
United States
Japan
United Kingdom
Germany
647623
558504
160421
132156
129833
in mUSD
CONSUMER ELECTRONICS
12
However opportunities begin to take shape when you examine user penetration In the
US user penetration is just 525 which indicates additional growth opportunities exist
User penetration in the consumer electronics marketin percent in 2016 (worldwide)
Top Countries
United States
United Kingdom
Germany
Denmark
Japan
525
453
340
301
294
SOURCE STATISTA
CONSUMER ELECTRONICS
13
The biggest growth opportunity in the second half of the decade appears to be in
emerging markets where growing middle classes are developing alongside relatively
affluent upper classes in the Asia-Pacific region Interestingly though while China is the
largest emerging market for the tech industry India is actually growing the fastest
Whereas sales of tech devices in China are forecast to grow by $18 billion USD in 2015
tech device sales in India are forecast to reach $348 billion USD in 2015 an increase of
$48 billion USD Smartphones are driving growth in India as some manufactures have cut
prices to increase share
SOURCE STATISTA
CONSUMER ELECTRONICS
14
Target Market DemographicsSeveral economic tailwinds are expected to stimulate ecommerce and help consumer
electronics manufactures offset slowing growth overall These tailwinds include forecasted
increases in GDP per capita as well as internet and smartphone penetration
Additionally expect the industry to focus intensely on the 25-34 age demographic as it is
forecast to grow significantly between now and 2021
User by age groups in the consumer electronics marketin millions (worldwide)
2021202020192018201720162015
1250
1000
750
500
250
0
11799
78908500
91509833
1054011221
16-24
25-34
35-4445-54
55+
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
15
Specifically within the aforementioned demographic the projected number of male consumers
in the 25-34 age group is expected to be nearly double that of female users in 2016
By 2021 male consumers between 25-34 are again projected to be nearly double the size
of female consumers However the total addressable market between the age of 25-34 is
expected to grow to nearly 300 million
User by age groups and gender in the consumer electronics marketin millions in 2016 (worldwide)
250300 200 150 100 50 0 100 150 200 250 300
55+
45-54
35-44
25-34
16-24
50
Male
Female
User by age groups and gender in the consumer electronics marketin millions in 2021 (worldwide)
250300 200 150 100 50 0 100 150 200 250 300
55+
45-54
35-44
25-34
16-24
50
Male
Female
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
16
Regardless of age the majority of consumer electronics forecast to be sold in 2016 are
expected to be purchased by low and medium income consumers
User by age groups and income splitin millions in 2016
1967m
4464m
2069m
Low
Medium
High
Total
55+
45-54
35-44
25-34
16-24
SOURCE STATISTA
17
Industry Trends
PAGE 18 INTRODUCTION
PAGE 19 TREND 01
The Smartphone Matures
PAGE 22 TREND 02
Emerging Markets Drive Demand
PAGE 25 TREND 03
Home Automation Spikes as the loT Grows
PAGE 30 TREND 04
The Connected Car Evolves
PAGE 37 TREND 05
Commercial Drones Take (Test) Flight
PAGE 43 TREND 06
3D Printing Evolves Beyond Just Prototyping
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
18
The trends impacting the consumer electronics industry are creating opportunistic yet
challenging environments in which to operate Besides increased competition currency
concerns and economic headwinds in Europe and Asia-Pacific are making it increasingly
difficult for manufacturers of consumer electronics to grow their top lines while also
protecting margins
While demand for some traditional tech devices appears to be slowing demand for newer products in the car home and beyond is helping to offset some of the lost revenue How those trends combine with future technologies the ability to continue investing in RampD and whether the worldrsquos economies will position consumers to pay for expensive tech products will dictate how the following five trends play out the second half of the decade
CONSUMER ELECTRONICS
19
TREND 01
The Smartphone MaturesResearch suggests some people are more willing to go without sex rather than go without
their mobile phones In fact 26 of those surveyed said they could not live without their
phones versus 20 who said they couldnrsquot live without sex
SOURCE STATISTA
Source Harris Interactive
CONSUMER ELECTRONICS
20
Despite the opportunity emerging markets provide smartphone makers data indicate
the smartphone market is maturing In 2015 according to Accenture less than half of
smartphone owners plan to purchase a new one
Some analysts argue that phone and data service providers that no longer subsidize the
price of phones may be negatively impacting demand However smartphone makers may
also be victims of their own success and simply unable to innovate or add breathtaking new
features as quickly as consumers have been accustomed Nearly half of the consumers not
planning to purchase a new smartphone say theyrsquore happy with the device they have or
SOURCE ACCENTURE
SOURCE ACCENTURE
CONSUMER ELECTRONICS
21
The data indicate itrsquos not just smartphone demand thatrsquos slowing Consumer demand
for certain televisions laptops and tablets is also expected to be sluggish year over year
As was the case with smartphones consumers appear to be happy with what they
already have
The trend combined with other variables has negatively impacted 2015 holiday sales
at Best Buy prompted Samsung to warn of slower growth in 2016 and could result in
Applersquos first ever year-over-year decline in iPhone sales in Q2 2016 However on the Q1
2016 earnings call Apple CEO Tim Cook revealed the $691 (ASP) iPhone was taking share
from Android and sounded optimistic albeit cautious due to signs of economic strain in
Hong Kong regarding the companyrsquos prospects in emerging markets
SOURCE ACCENTURE
CONSUMER ELECTRONICS
22
Market analysts project sales of consumer electronics in emerging markets to grow at a
compound annual rate of 15 between 2015-2020 Growth is forecast to be most robust
in the Asia-Pacific region excluding Japan Increasingly the focus will be on China where
sales are forecast to grow by $18 billion USD in 2015
Forecasting a surge in the globalmiddle class
Poor
Middle ClassRich
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
9
8
7
6
5
4
3
2
1
0
TREND 02
Emerging Markets Drive DemandResearch suggests the world has lived through two middle class expansions since 1800
during the Industrial Revolution and after World War II Today research analysts argue
wersquore living through a third The data indicate that by 2030 two thirds of the global middle
class will live in the Asia-Pacific region up from just under one-third in 2009
SOURCE EY
CONSUMER ELECTRONICS
23
Lifting the lid on the Chinese consumer suggests consumer electronics manufacturers
may have room to sell products at higher price points Jean-Marc Bellaiche senior partner
and managing director at The Boston Consulting Group argues there are two drivers of
growth in the Chinese economy
1
2
The Emerging Middle ClassldquoAmong the emerging middle class the ldquoaspirational
massesrdquo also called the ldquotrendy metropolitanrdquo
comprises 330 million consumers and 25-27 percent
of the luxury market and the ldquorising middle classrdquo
made up of ldquothe proud business womanrdquo is 70
million consumers and 25-27 percent of the marketrdquo
An Increase In The Number of MillionairesldquoThere are also two types of millionaires new
money and old money New money also called ldquothe
loan traderrdquo or ldquothe Russian climberrdquo is 75 million
people and 30-35 percent of the luxury market
The old money crowd can be generalized as the
ldquonoble Italian entrepreneurrdquo This group is 25 million
consumers and 10-15 percent of the luxury marketrdquo
CONSUMER ELECTRONICS
24
In other words approximately one billion people in China or as much as 70 of the
population are projected to be middle class by 2030
Remember India is poised for explosive middle class growth as well Analysts at EY
recently projected
China total income by band 2010 and 2020annual income thousands of people
50+
30-50
15-30
5-15
0-5
2010 2020
112
2085
2388
933
3137
54
433
1619
499
US$
US$b
ldquoIndiarsquos global middle class meanwhile at around
50 million people or 5 of the population is much
smaller We expect this to grow steadily over the
next decade reaching 200 million by 2020 After
this we expect growth to really accelerate reaching
475 million by 2030 and adding more people than
the Chinese to the global middle class worldwide
after 2027rdquo
SOURCE EY
CONSUMER ELECTRONICS
25
Home automation
Ambient Asissted Living
Security
Energy Management
Home Entertainment
TREND 03
Home Automation Spikes as the loT GrowsThe second half of the decade is poised for explosive growth in the Smart Home market
segment To illustrate the growth potential in this segment wersquoll rely on data from Statista
as itrsquos a bit more conservative than other industry estimates
WARNING You can easily find research reports that contradict one another in terms of
how fast this segment is growing and is projected to grow through 2020 However the
productsincluded in the Smart Home segment varies which means yoursquore not always
comparing apples to apples
When we talk about the Smart Home segment wersquore including
CONSUMER ELECTRONICS
26
Not included in the data wersquoll highlight are devices like smartphones tablets and
television remote controls Herersquos Statistarsquos reasoning
ldquoDevices whose primary function is not for the
automation or remote control of household
equipment eg smartphones and tablets are not
included here Similarly devices whose reason for
purchase is only related to household connection
and remote control to a limited extent such as
Smart-TVs refrigerators or ovens are also not
includedrdquo
Whatrsquos important though is that a $7 billion dollar industry in 2015 is forecast to grow
to a more than $32 billion dollar industry by 2021
CONSUMER ELECTRONICS
27
Revenue in the smart home marketin millions US dollar
2021202020192018201720162015
32191
28468
24249
19495
14649
104327237
40000
30000
20000
10000
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy Management
Besides new products and a shift toward the IoT the Smart Home segmentrsquos relatively
small penetration rate between 1-18 depending on the segment is expected to
further drive growth
Smart home penetration ratein percent (US)
2020201920182017201620152014
80
60
40
20
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
28
Connected-home device shipments according to BI Intelligence will grow at a compound
annual rate of 67 over the next five years to 18 billion units shipped in 2019
Global connected-home device annual shipmentsin millions
2000
1800
1600
1400
1200
1000
800
600
400
200
0
2012 2013 2014E 2015E 2016E 2017E 2018E 2019E
We are here
67 CAGR2014-2019
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
29
Despite the fact that a sizable portion of the total addressable market has yet to adopt
Smart Home technology analysts suggest shipment growth is expected to peak in the
coming years While the following chart obviously doesnrsquot take into account the invention
of innovative new Smart Home products decelerating growth towards the back portion of
the decade may also pressure the average revenue per Smart Household
Average revenue per smart home in the smart home marketin US dollar
2021202020192018201720162015
450
400
350
300
250
200
150
100
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
CONSUMER ELECTRONICS
30
TREND 04
The Connected Car EvolvesIndustry estimates suggest more than 380 million connected cars will be on the road
by 2021 and have the ability to stream music surf the web alert drivers to traffic and
weather conditions and possibly even self-park Tech companies will play a significant
role as analysts who routinely upwardly adjust their forecasts for this segment expect
fully autonomous vehicles to be on the market in just a few years
Estimated connected car shipmentsin millions (worldwide)
2015E 2016E 2017E 2018E 2019E 2020E 2021E
50
100
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
31
In addition to autonomous vehicles the connected car market is defined by features
such as
bull Content amp Services
bull Safety amp Driving Assistance
bull Navigation Services
bull Diagnostics amp Maintenance
bull Connectivity
These technologies are forecast to more than double revenue in the connected car
market from more than $10 billion USD in 2017 to more than $21 billion USD by 2021
Revenue in the connected car marketin millions US dollar
21217
17026
13556
10376
80116109
4622
25000
20000
15000
10000
5000
0
Content amp Services
Safety amp Driving Assistance
Navigation ServicesDiagnostics amp Maintenance
Connectivity
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
32
While the definition of a connected car is likely to evolve in the years to come today there
are six categories of connectivity that are defining and driving this trend
SOURCE STRATEGYamp
Mobility Management Functions that allow the driver to reach a destination quickly safely and in a
cost-efficient manner
Examplesbull Current traffic informationbull Parking lot or garage assistance
bull Optimized fuel consumption
SafetyFunctions that warn the driver of external hazards and internal responses of the
vehicle to hazards
Examplesbull Collision protectionbull Hazard warnings
bull Emergency functions
Driver AssistanceFunctions invovling partially or fully
automatic driving
Examplesbull Operational assistance or autopilot in
heavy traffic in parking or on highways
Well-beingFunctions involving the driverrsquos comfort
and ability and fitness to drive
Examplesbull Fatigue detectionbull Automatic environment adjustments
to keep drivers alert
bull Medical assistance
Vehicle ManagementFunctions that aid in the driver in reducing
operating costs and improving ease of use
Examplesbull Vehicle condition and service remindersbull Remote operation
bull Transfer of usage data
EntertainmentFunctions involving the entertainment
of the driver and passengers
Examplesbull Smartphone interfacebull WLAN hot spotbull Music video internet social media
bull Mobile office
CONSUMER ELECTRONICS
33
Just 93 of vehicles manufactured in 2016 are considered connected cars However
demand is expected to increase in part when lower vehicle price points are implemented
as market research indicates that many of todayrsquos connected cars tend to be relatively
luxurious models with average selling prices of $55000 Consistent with that the
connected car penetration rate is projected to be 277 by 2020
34
61
93
131
176
225
277
Penetration rate in the connected car marketin percent (US)
0
5
10
15
20
25
30
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
34
However as the market becomes more saturated with connected cars average revenue
per connected car is projected to decline to $66685 USD by 2020
115029
84312
72679
6742065447 6668566075
Revenue per connected carin US dollars
1200
1100
1000
900
800
700
6002014 2015 2016 2017 2018 2019 2020
SOURCE STATISTA
CONSUMER ELECTRONICS
35
In addition to realigning automaker IT departments and creating user-friendly interfaces
that are IoT compatible and potentially even device agnostic analysts suggest connected
car manufacturers will have to overcome this challenge
Faster Product CyclesldquoThe typical product cycle in the passenger car
industry is about eight years in the consumer
electronics industry itrsquos less than a year To
successfully sell electronics products for connected
cars automakers will need to mimic the rapid
development cycles of the consumer electronics
companies The key for the automakers is to learn
to build perfectly functioning modular systems
into which updates and product developments can
be integrated quickly and with little effort Such a
modular infotainment building set would allow for
individual components to be updated through plug-
and-play technologies several times during a carrsquos
life cyclerdquo
CONSUMER ELECTRONICS
36
If yoursquore wondering why connected cars were included under consumer electronics
consider how the world will change when self-driving vehicles are status quo Google has
already logged more than 1 million autonomous vehicle miles and has been involved in
just 12 minor crashes in six years none of which were the fault of the driverless car
Once autonomous vehicles become part of our driving fabric expect next generation
connected cars to offer driverspassengers additional options in terms of the devices that
can interact with the vehicle
Smartphone temperature control amp bed-like seat adjustment applications and voice control of windows car hoods amp trunks and streaming music
Remote control or voice activated aftermarket add-ons that allow a passenger to plug in an electric car or pump gas remotely
Innovative cameras and real time editing software that allow for video conferencing that appears as if itrsquos being conducted in an office rather than a car
CONSUMER ELECTRONICS
37
TREND 05
Commercial Drones Take (Test) FlightWhile civilian use of drones may be what many first picture when they think of drones
itrsquos the military use of drones that has been driving demand Specifically military use of
drones has far outpaced civilian use of drones when measured by revenue Defense
spending on drones is projected to be robust through 2024
Global aerial drone marketin billions $14
$12
$10
$8
$6
$4
$2
$0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
DefenseCivilian
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
38
However research also suggests the civilian and commercial markets are expected to
grow significantly as drones are used in new and innovative ways Analysts at Grand View
Research describe future applications such as
ldquoAgriculture is expected to emerge as the dominant
application sector over the forecast period on
account of several benefits attained such as yield
increase due to crop monitoring Tech giants such
as Facebook Inc and Google Inc are planning
to use solar powered UAVs that hover around the
atmosphere of the earth providing internet access
to the remotest of places acting as flying internet
access points or hotspots In addition Amazon has
been working on Prime Air a drone delivery system
that promises goods delivered within 30 minutes
after order placementrdquo
CONSUMER ELECTRONICS
39
The list of potential drone applications includes
bull Agriculture
bull Law Enforcement
bull Ecommerce Delivery
bull Mapping amp Imagery
bull Wildlife Patrolling
bull Forest Fire Management
12000
10000
8000
6000
4000
2000
00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Agriculture
Energy
GovernmentMedia amp Entertainment
Others
US commercial drone market by application 2012-2022USD million
SOURCE GRAND VIEW RESEARCH
bull Vehicle Traffic Control
bull Marketing amp Entertainment
bull Energy amp Mining
bull Real Estate
bull News Gathering
bull Infrastructure Monitoring
CONSUMER ELECTRONICS
40
Research indicates sales of commercial and civilian drones will grow at a compound
annual rate of 19 between 2015 and 2020 The economic impact of the commercial
drone segment is forecast to grow to $51 billion by 2025
While some analysts argue package delivery will not be an early priority the impact
drones have on the delivery of consumer electronics may be relatively muted as only
a third of the people surveyed recently trust a drone to deliver consumer electronics
The economic impact of the commercial drone sectordirect economic impact from the UAV industry in the United States (billion US dollars)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$12
$23
$35 $36$38 $40
$42 $44 $4649
$51
SOURCE STATISTA
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
12
However opportunities begin to take shape when you examine user penetration In the
US user penetration is just 525 which indicates additional growth opportunities exist
User penetration in the consumer electronics marketin percent in 2016 (worldwide)
Top Countries
United States
United Kingdom
Germany
Denmark
Japan
525
453
340
301
294
SOURCE STATISTA
CONSUMER ELECTRONICS
13
The biggest growth opportunity in the second half of the decade appears to be in
emerging markets where growing middle classes are developing alongside relatively
affluent upper classes in the Asia-Pacific region Interestingly though while China is the
largest emerging market for the tech industry India is actually growing the fastest
Whereas sales of tech devices in China are forecast to grow by $18 billion USD in 2015
tech device sales in India are forecast to reach $348 billion USD in 2015 an increase of
$48 billion USD Smartphones are driving growth in India as some manufactures have cut
prices to increase share
SOURCE STATISTA
CONSUMER ELECTRONICS
14
Target Market DemographicsSeveral economic tailwinds are expected to stimulate ecommerce and help consumer
electronics manufactures offset slowing growth overall These tailwinds include forecasted
increases in GDP per capita as well as internet and smartphone penetration
Additionally expect the industry to focus intensely on the 25-34 age demographic as it is
forecast to grow significantly between now and 2021
User by age groups in the consumer electronics marketin millions (worldwide)
2021202020192018201720162015
1250
1000
750
500
250
0
11799
78908500
91509833
1054011221
16-24
25-34
35-4445-54
55+
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
15
Specifically within the aforementioned demographic the projected number of male consumers
in the 25-34 age group is expected to be nearly double that of female users in 2016
By 2021 male consumers between 25-34 are again projected to be nearly double the size
of female consumers However the total addressable market between the age of 25-34 is
expected to grow to nearly 300 million
User by age groups and gender in the consumer electronics marketin millions in 2016 (worldwide)
250300 200 150 100 50 0 100 150 200 250 300
55+
45-54
35-44
25-34
16-24
50
Male
Female
User by age groups and gender in the consumer electronics marketin millions in 2021 (worldwide)
250300 200 150 100 50 0 100 150 200 250 300
55+
45-54
35-44
25-34
16-24
50
Male
Female
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
16
Regardless of age the majority of consumer electronics forecast to be sold in 2016 are
expected to be purchased by low and medium income consumers
User by age groups and income splitin millions in 2016
1967m
4464m
2069m
Low
Medium
High
Total
55+
45-54
35-44
25-34
16-24
SOURCE STATISTA
17
Industry Trends
PAGE 18 INTRODUCTION
PAGE 19 TREND 01
The Smartphone Matures
PAGE 22 TREND 02
Emerging Markets Drive Demand
PAGE 25 TREND 03
Home Automation Spikes as the loT Grows
PAGE 30 TREND 04
The Connected Car Evolves
PAGE 37 TREND 05
Commercial Drones Take (Test) Flight
PAGE 43 TREND 06
3D Printing Evolves Beyond Just Prototyping
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
18
The trends impacting the consumer electronics industry are creating opportunistic yet
challenging environments in which to operate Besides increased competition currency
concerns and economic headwinds in Europe and Asia-Pacific are making it increasingly
difficult for manufacturers of consumer electronics to grow their top lines while also
protecting margins
While demand for some traditional tech devices appears to be slowing demand for newer products in the car home and beyond is helping to offset some of the lost revenue How those trends combine with future technologies the ability to continue investing in RampD and whether the worldrsquos economies will position consumers to pay for expensive tech products will dictate how the following five trends play out the second half of the decade
CONSUMER ELECTRONICS
19
TREND 01
The Smartphone MaturesResearch suggests some people are more willing to go without sex rather than go without
their mobile phones In fact 26 of those surveyed said they could not live without their
phones versus 20 who said they couldnrsquot live without sex
SOURCE STATISTA
Source Harris Interactive
CONSUMER ELECTRONICS
20
Despite the opportunity emerging markets provide smartphone makers data indicate
the smartphone market is maturing In 2015 according to Accenture less than half of
smartphone owners plan to purchase a new one
Some analysts argue that phone and data service providers that no longer subsidize the
price of phones may be negatively impacting demand However smartphone makers may
also be victims of their own success and simply unable to innovate or add breathtaking new
features as quickly as consumers have been accustomed Nearly half of the consumers not
planning to purchase a new smartphone say theyrsquore happy with the device they have or
SOURCE ACCENTURE
SOURCE ACCENTURE
CONSUMER ELECTRONICS
21
The data indicate itrsquos not just smartphone demand thatrsquos slowing Consumer demand
for certain televisions laptops and tablets is also expected to be sluggish year over year
As was the case with smartphones consumers appear to be happy with what they
already have
The trend combined with other variables has negatively impacted 2015 holiday sales
at Best Buy prompted Samsung to warn of slower growth in 2016 and could result in
Applersquos first ever year-over-year decline in iPhone sales in Q2 2016 However on the Q1
2016 earnings call Apple CEO Tim Cook revealed the $691 (ASP) iPhone was taking share
from Android and sounded optimistic albeit cautious due to signs of economic strain in
Hong Kong regarding the companyrsquos prospects in emerging markets
SOURCE ACCENTURE
CONSUMER ELECTRONICS
22
Market analysts project sales of consumer electronics in emerging markets to grow at a
compound annual rate of 15 between 2015-2020 Growth is forecast to be most robust
in the Asia-Pacific region excluding Japan Increasingly the focus will be on China where
sales are forecast to grow by $18 billion USD in 2015
Forecasting a surge in the globalmiddle class
Poor
Middle ClassRich
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
9
8
7
6
5
4
3
2
1
0
TREND 02
Emerging Markets Drive DemandResearch suggests the world has lived through two middle class expansions since 1800
during the Industrial Revolution and after World War II Today research analysts argue
wersquore living through a third The data indicate that by 2030 two thirds of the global middle
class will live in the Asia-Pacific region up from just under one-third in 2009
SOURCE EY
CONSUMER ELECTRONICS
23
Lifting the lid on the Chinese consumer suggests consumer electronics manufacturers
may have room to sell products at higher price points Jean-Marc Bellaiche senior partner
and managing director at The Boston Consulting Group argues there are two drivers of
growth in the Chinese economy
1
2
The Emerging Middle ClassldquoAmong the emerging middle class the ldquoaspirational
massesrdquo also called the ldquotrendy metropolitanrdquo
comprises 330 million consumers and 25-27 percent
of the luxury market and the ldquorising middle classrdquo
made up of ldquothe proud business womanrdquo is 70
million consumers and 25-27 percent of the marketrdquo
An Increase In The Number of MillionairesldquoThere are also two types of millionaires new
money and old money New money also called ldquothe
loan traderrdquo or ldquothe Russian climberrdquo is 75 million
people and 30-35 percent of the luxury market
The old money crowd can be generalized as the
ldquonoble Italian entrepreneurrdquo This group is 25 million
consumers and 10-15 percent of the luxury marketrdquo
CONSUMER ELECTRONICS
24
In other words approximately one billion people in China or as much as 70 of the
population are projected to be middle class by 2030
Remember India is poised for explosive middle class growth as well Analysts at EY
recently projected
China total income by band 2010 and 2020annual income thousands of people
50+
30-50
15-30
5-15
0-5
2010 2020
112
2085
2388
933
3137
54
433
1619
499
US$
US$b
ldquoIndiarsquos global middle class meanwhile at around
50 million people or 5 of the population is much
smaller We expect this to grow steadily over the
next decade reaching 200 million by 2020 After
this we expect growth to really accelerate reaching
475 million by 2030 and adding more people than
the Chinese to the global middle class worldwide
after 2027rdquo
SOURCE EY
CONSUMER ELECTRONICS
25
Home automation
Ambient Asissted Living
Security
Energy Management
Home Entertainment
TREND 03
Home Automation Spikes as the loT GrowsThe second half of the decade is poised for explosive growth in the Smart Home market
segment To illustrate the growth potential in this segment wersquoll rely on data from Statista
as itrsquos a bit more conservative than other industry estimates
WARNING You can easily find research reports that contradict one another in terms of
how fast this segment is growing and is projected to grow through 2020 However the
productsincluded in the Smart Home segment varies which means yoursquore not always
comparing apples to apples
When we talk about the Smart Home segment wersquore including
CONSUMER ELECTRONICS
26
Not included in the data wersquoll highlight are devices like smartphones tablets and
television remote controls Herersquos Statistarsquos reasoning
ldquoDevices whose primary function is not for the
automation or remote control of household
equipment eg smartphones and tablets are not
included here Similarly devices whose reason for
purchase is only related to household connection
and remote control to a limited extent such as
Smart-TVs refrigerators or ovens are also not
includedrdquo
Whatrsquos important though is that a $7 billion dollar industry in 2015 is forecast to grow
to a more than $32 billion dollar industry by 2021
CONSUMER ELECTRONICS
27
Revenue in the smart home marketin millions US dollar
2021202020192018201720162015
32191
28468
24249
19495
14649
104327237
40000
30000
20000
10000
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy Management
Besides new products and a shift toward the IoT the Smart Home segmentrsquos relatively
small penetration rate between 1-18 depending on the segment is expected to
further drive growth
Smart home penetration ratein percent (US)
2020201920182017201620152014
80
60
40
20
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
28
Connected-home device shipments according to BI Intelligence will grow at a compound
annual rate of 67 over the next five years to 18 billion units shipped in 2019
Global connected-home device annual shipmentsin millions
2000
1800
1600
1400
1200
1000
800
600
400
200
0
2012 2013 2014E 2015E 2016E 2017E 2018E 2019E
We are here
67 CAGR2014-2019
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
29
Despite the fact that a sizable portion of the total addressable market has yet to adopt
Smart Home technology analysts suggest shipment growth is expected to peak in the
coming years While the following chart obviously doesnrsquot take into account the invention
of innovative new Smart Home products decelerating growth towards the back portion of
the decade may also pressure the average revenue per Smart Household
Average revenue per smart home in the smart home marketin US dollar
2021202020192018201720162015
450
400
350
300
250
200
150
100
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
CONSUMER ELECTRONICS
30
TREND 04
The Connected Car EvolvesIndustry estimates suggest more than 380 million connected cars will be on the road
by 2021 and have the ability to stream music surf the web alert drivers to traffic and
weather conditions and possibly even self-park Tech companies will play a significant
role as analysts who routinely upwardly adjust their forecasts for this segment expect
fully autonomous vehicles to be on the market in just a few years
Estimated connected car shipmentsin millions (worldwide)
2015E 2016E 2017E 2018E 2019E 2020E 2021E
50
100
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
31
In addition to autonomous vehicles the connected car market is defined by features
such as
bull Content amp Services
bull Safety amp Driving Assistance
bull Navigation Services
bull Diagnostics amp Maintenance
bull Connectivity
These technologies are forecast to more than double revenue in the connected car
market from more than $10 billion USD in 2017 to more than $21 billion USD by 2021
Revenue in the connected car marketin millions US dollar
21217
17026
13556
10376
80116109
4622
25000
20000
15000
10000
5000
0
Content amp Services
Safety amp Driving Assistance
Navigation ServicesDiagnostics amp Maintenance
Connectivity
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
32
While the definition of a connected car is likely to evolve in the years to come today there
are six categories of connectivity that are defining and driving this trend
SOURCE STRATEGYamp
Mobility Management Functions that allow the driver to reach a destination quickly safely and in a
cost-efficient manner
Examplesbull Current traffic informationbull Parking lot or garage assistance
bull Optimized fuel consumption
SafetyFunctions that warn the driver of external hazards and internal responses of the
vehicle to hazards
Examplesbull Collision protectionbull Hazard warnings
bull Emergency functions
Driver AssistanceFunctions invovling partially or fully
automatic driving
Examplesbull Operational assistance or autopilot in
heavy traffic in parking or on highways
Well-beingFunctions involving the driverrsquos comfort
and ability and fitness to drive
Examplesbull Fatigue detectionbull Automatic environment adjustments
to keep drivers alert
bull Medical assistance
Vehicle ManagementFunctions that aid in the driver in reducing
operating costs and improving ease of use
Examplesbull Vehicle condition and service remindersbull Remote operation
bull Transfer of usage data
EntertainmentFunctions involving the entertainment
of the driver and passengers
Examplesbull Smartphone interfacebull WLAN hot spotbull Music video internet social media
bull Mobile office
CONSUMER ELECTRONICS
33
Just 93 of vehicles manufactured in 2016 are considered connected cars However
demand is expected to increase in part when lower vehicle price points are implemented
as market research indicates that many of todayrsquos connected cars tend to be relatively
luxurious models with average selling prices of $55000 Consistent with that the
connected car penetration rate is projected to be 277 by 2020
34
61
93
131
176
225
277
Penetration rate in the connected car marketin percent (US)
0
5
10
15
20
25
30
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
34
However as the market becomes more saturated with connected cars average revenue
per connected car is projected to decline to $66685 USD by 2020
115029
84312
72679
6742065447 6668566075
Revenue per connected carin US dollars
1200
1100
1000
900
800
700
6002014 2015 2016 2017 2018 2019 2020
SOURCE STATISTA
CONSUMER ELECTRONICS
35
In addition to realigning automaker IT departments and creating user-friendly interfaces
that are IoT compatible and potentially even device agnostic analysts suggest connected
car manufacturers will have to overcome this challenge
Faster Product CyclesldquoThe typical product cycle in the passenger car
industry is about eight years in the consumer
electronics industry itrsquos less than a year To
successfully sell electronics products for connected
cars automakers will need to mimic the rapid
development cycles of the consumer electronics
companies The key for the automakers is to learn
to build perfectly functioning modular systems
into which updates and product developments can
be integrated quickly and with little effort Such a
modular infotainment building set would allow for
individual components to be updated through plug-
and-play technologies several times during a carrsquos
life cyclerdquo
CONSUMER ELECTRONICS
36
If yoursquore wondering why connected cars were included under consumer electronics
consider how the world will change when self-driving vehicles are status quo Google has
already logged more than 1 million autonomous vehicle miles and has been involved in
just 12 minor crashes in six years none of which were the fault of the driverless car
Once autonomous vehicles become part of our driving fabric expect next generation
connected cars to offer driverspassengers additional options in terms of the devices that
can interact with the vehicle
Smartphone temperature control amp bed-like seat adjustment applications and voice control of windows car hoods amp trunks and streaming music
Remote control or voice activated aftermarket add-ons that allow a passenger to plug in an electric car or pump gas remotely
Innovative cameras and real time editing software that allow for video conferencing that appears as if itrsquos being conducted in an office rather than a car
CONSUMER ELECTRONICS
37
TREND 05
Commercial Drones Take (Test) FlightWhile civilian use of drones may be what many first picture when they think of drones
itrsquos the military use of drones that has been driving demand Specifically military use of
drones has far outpaced civilian use of drones when measured by revenue Defense
spending on drones is projected to be robust through 2024
Global aerial drone marketin billions $14
$12
$10
$8
$6
$4
$2
$0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
DefenseCivilian
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
38
However research also suggests the civilian and commercial markets are expected to
grow significantly as drones are used in new and innovative ways Analysts at Grand View
Research describe future applications such as
ldquoAgriculture is expected to emerge as the dominant
application sector over the forecast period on
account of several benefits attained such as yield
increase due to crop monitoring Tech giants such
as Facebook Inc and Google Inc are planning
to use solar powered UAVs that hover around the
atmosphere of the earth providing internet access
to the remotest of places acting as flying internet
access points or hotspots In addition Amazon has
been working on Prime Air a drone delivery system
that promises goods delivered within 30 minutes
after order placementrdquo
CONSUMER ELECTRONICS
39
The list of potential drone applications includes
bull Agriculture
bull Law Enforcement
bull Ecommerce Delivery
bull Mapping amp Imagery
bull Wildlife Patrolling
bull Forest Fire Management
12000
10000
8000
6000
4000
2000
00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Agriculture
Energy
GovernmentMedia amp Entertainment
Others
US commercial drone market by application 2012-2022USD million
SOURCE GRAND VIEW RESEARCH
bull Vehicle Traffic Control
bull Marketing amp Entertainment
bull Energy amp Mining
bull Real Estate
bull News Gathering
bull Infrastructure Monitoring
CONSUMER ELECTRONICS
40
Research indicates sales of commercial and civilian drones will grow at a compound
annual rate of 19 between 2015 and 2020 The economic impact of the commercial
drone segment is forecast to grow to $51 billion by 2025
While some analysts argue package delivery will not be an early priority the impact
drones have on the delivery of consumer electronics may be relatively muted as only
a third of the people surveyed recently trust a drone to deliver consumer electronics
The economic impact of the commercial drone sectordirect economic impact from the UAV industry in the United States (billion US dollars)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$12
$23
$35 $36$38 $40
$42 $44 $4649
$51
SOURCE STATISTA
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
13
The biggest growth opportunity in the second half of the decade appears to be in
emerging markets where growing middle classes are developing alongside relatively
affluent upper classes in the Asia-Pacific region Interestingly though while China is the
largest emerging market for the tech industry India is actually growing the fastest
Whereas sales of tech devices in China are forecast to grow by $18 billion USD in 2015
tech device sales in India are forecast to reach $348 billion USD in 2015 an increase of
$48 billion USD Smartphones are driving growth in India as some manufactures have cut
prices to increase share
SOURCE STATISTA
CONSUMER ELECTRONICS
14
Target Market DemographicsSeveral economic tailwinds are expected to stimulate ecommerce and help consumer
electronics manufactures offset slowing growth overall These tailwinds include forecasted
increases in GDP per capita as well as internet and smartphone penetration
Additionally expect the industry to focus intensely on the 25-34 age demographic as it is
forecast to grow significantly between now and 2021
User by age groups in the consumer electronics marketin millions (worldwide)
2021202020192018201720162015
1250
1000
750
500
250
0
11799
78908500
91509833
1054011221
16-24
25-34
35-4445-54
55+
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
15
Specifically within the aforementioned demographic the projected number of male consumers
in the 25-34 age group is expected to be nearly double that of female users in 2016
By 2021 male consumers between 25-34 are again projected to be nearly double the size
of female consumers However the total addressable market between the age of 25-34 is
expected to grow to nearly 300 million
User by age groups and gender in the consumer electronics marketin millions in 2016 (worldwide)
250300 200 150 100 50 0 100 150 200 250 300
55+
45-54
35-44
25-34
16-24
50
Male
Female
User by age groups and gender in the consumer electronics marketin millions in 2021 (worldwide)
250300 200 150 100 50 0 100 150 200 250 300
55+
45-54
35-44
25-34
16-24
50
Male
Female
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
16
Regardless of age the majority of consumer electronics forecast to be sold in 2016 are
expected to be purchased by low and medium income consumers
User by age groups and income splitin millions in 2016
1967m
4464m
2069m
Low
Medium
High
Total
55+
45-54
35-44
25-34
16-24
SOURCE STATISTA
17
Industry Trends
PAGE 18 INTRODUCTION
PAGE 19 TREND 01
The Smartphone Matures
PAGE 22 TREND 02
Emerging Markets Drive Demand
PAGE 25 TREND 03
Home Automation Spikes as the loT Grows
PAGE 30 TREND 04
The Connected Car Evolves
PAGE 37 TREND 05
Commercial Drones Take (Test) Flight
PAGE 43 TREND 06
3D Printing Evolves Beyond Just Prototyping
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
18
The trends impacting the consumer electronics industry are creating opportunistic yet
challenging environments in which to operate Besides increased competition currency
concerns and economic headwinds in Europe and Asia-Pacific are making it increasingly
difficult for manufacturers of consumer electronics to grow their top lines while also
protecting margins
While demand for some traditional tech devices appears to be slowing demand for newer products in the car home and beyond is helping to offset some of the lost revenue How those trends combine with future technologies the ability to continue investing in RampD and whether the worldrsquos economies will position consumers to pay for expensive tech products will dictate how the following five trends play out the second half of the decade
CONSUMER ELECTRONICS
19
TREND 01
The Smartphone MaturesResearch suggests some people are more willing to go without sex rather than go without
their mobile phones In fact 26 of those surveyed said they could not live without their
phones versus 20 who said they couldnrsquot live without sex
SOURCE STATISTA
Source Harris Interactive
CONSUMER ELECTRONICS
20
Despite the opportunity emerging markets provide smartphone makers data indicate
the smartphone market is maturing In 2015 according to Accenture less than half of
smartphone owners plan to purchase a new one
Some analysts argue that phone and data service providers that no longer subsidize the
price of phones may be negatively impacting demand However smartphone makers may
also be victims of their own success and simply unable to innovate or add breathtaking new
features as quickly as consumers have been accustomed Nearly half of the consumers not
planning to purchase a new smartphone say theyrsquore happy with the device they have or
SOURCE ACCENTURE
SOURCE ACCENTURE
CONSUMER ELECTRONICS
21
The data indicate itrsquos not just smartphone demand thatrsquos slowing Consumer demand
for certain televisions laptops and tablets is also expected to be sluggish year over year
As was the case with smartphones consumers appear to be happy with what they
already have
The trend combined with other variables has negatively impacted 2015 holiday sales
at Best Buy prompted Samsung to warn of slower growth in 2016 and could result in
Applersquos first ever year-over-year decline in iPhone sales in Q2 2016 However on the Q1
2016 earnings call Apple CEO Tim Cook revealed the $691 (ASP) iPhone was taking share
from Android and sounded optimistic albeit cautious due to signs of economic strain in
Hong Kong regarding the companyrsquos prospects in emerging markets
SOURCE ACCENTURE
CONSUMER ELECTRONICS
22
Market analysts project sales of consumer electronics in emerging markets to grow at a
compound annual rate of 15 between 2015-2020 Growth is forecast to be most robust
in the Asia-Pacific region excluding Japan Increasingly the focus will be on China where
sales are forecast to grow by $18 billion USD in 2015
Forecasting a surge in the globalmiddle class
Poor
Middle ClassRich
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
9
8
7
6
5
4
3
2
1
0
TREND 02
Emerging Markets Drive DemandResearch suggests the world has lived through two middle class expansions since 1800
during the Industrial Revolution and after World War II Today research analysts argue
wersquore living through a third The data indicate that by 2030 two thirds of the global middle
class will live in the Asia-Pacific region up from just under one-third in 2009
SOURCE EY
CONSUMER ELECTRONICS
23
Lifting the lid on the Chinese consumer suggests consumer electronics manufacturers
may have room to sell products at higher price points Jean-Marc Bellaiche senior partner
and managing director at The Boston Consulting Group argues there are two drivers of
growth in the Chinese economy
1
2
The Emerging Middle ClassldquoAmong the emerging middle class the ldquoaspirational
massesrdquo also called the ldquotrendy metropolitanrdquo
comprises 330 million consumers and 25-27 percent
of the luxury market and the ldquorising middle classrdquo
made up of ldquothe proud business womanrdquo is 70
million consumers and 25-27 percent of the marketrdquo
An Increase In The Number of MillionairesldquoThere are also two types of millionaires new
money and old money New money also called ldquothe
loan traderrdquo or ldquothe Russian climberrdquo is 75 million
people and 30-35 percent of the luxury market
The old money crowd can be generalized as the
ldquonoble Italian entrepreneurrdquo This group is 25 million
consumers and 10-15 percent of the luxury marketrdquo
CONSUMER ELECTRONICS
24
In other words approximately one billion people in China or as much as 70 of the
population are projected to be middle class by 2030
Remember India is poised for explosive middle class growth as well Analysts at EY
recently projected
China total income by band 2010 and 2020annual income thousands of people
50+
30-50
15-30
5-15
0-5
2010 2020
112
2085
2388
933
3137
54
433
1619
499
US$
US$b
ldquoIndiarsquos global middle class meanwhile at around
50 million people or 5 of the population is much
smaller We expect this to grow steadily over the
next decade reaching 200 million by 2020 After
this we expect growth to really accelerate reaching
475 million by 2030 and adding more people than
the Chinese to the global middle class worldwide
after 2027rdquo
SOURCE EY
CONSUMER ELECTRONICS
25
Home automation
Ambient Asissted Living
Security
Energy Management
Home Entertainment
TREND 03
Home Automation Spikes as the loT GrowsThe second half of the decade is poised for explosive growth in the Smart Home market
segment To illustrate the growth potential in this segment wersquoll rely on data from Statista
as itrsquos a bit more conservative than other industry estimates
WARNING You can easily find research reports that contradict one another in terms of
how fast this segment is growing and is projected to grow through 2020 However the
productsincluded in the Smart Home segment varies which means yoursquore not always
comparing apples to apples
When we talk about the Smart Home segment wersquore including
CONSUMER ELECTRONICS
26
Not included in the data wersquoll highlight are devices like smartphones tablets and
television remote controls Herersquos Statistarsquos reasoning
ldquoDevices whose primary function is not for the
automation or remote control of household
equipment eg smartphones and tablets are not
included here Similarly devices whose reason for
purchase is only related to household connection
and remote control to a limited extent such as
Smart-TVs refrigerators or ovens are also not
includedrdquo
Whatrsquos important though is that a $7 billion dollar industry in 2015 is forecast to grow
to a more than $32 billion dollar industry by 2021
CONSUMER ELECTRONICS
27
Revenue in the smart home marketin millions US dollar
2021202020192018201720162015
32191
28468
24249
19495
14649
104327237
40000
30000
20000
10000
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy Management
Besides new products and a shift toward the IoT the Smart Home segmentrsquos relatively
small penetration rate between 1-18 depending on the segment is expected to
further drive growth
Smart home penetration ratein percent (US)
2020201920182017201620152014
80
60
40
20
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
28
Connected-home device shipments according to BI Intelligence will grow at a compound
annual rate of 67 over the next five years to 18 billion units shipped in 2019
Global connected-home device annual shipmentsin millions
2000
1800
1600
1400
1200
1000
800
600
400
200
0
2012 2013 2014E 2015E 2016E 2017E 2018E 2019E
We are here
67 CAGR2014-2019
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
29
Despite the fact that a sizable portion of the total addressable market has yet to adopt
Smart Home technology analysts suggest shipment growth is expected to peak in the
coming years While the following chart obviously doesnrsquot take into account the invention
of innovative new Smart Home products decelerating growth towards the back portion of
the decade may also pressure the average revenue per Smart Household
Average revenue per smart home in the smart home marketin US dollar
2021202020192018201720162015
450
400
350
300
250
200
150
100
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
CONSUMER ELECTRONICS
30
TREND 04
The Connected Car EvolvesIndustry estimates suggest more than 380 million connected cars will be on the road
by 2021 and have the ability to stream music surf the web alert drivers to traffic and
weather conditions and possibly even self-park Tech companies will play a significant
role as analysts who routinely upwardly adjust their forecasts for this segment expect
fully autonomous vehicles to be on the market in just a few years
Estimated connected car shipmentsin millions (worldwide)
2015E 2016E 2017E 2018E 2019E 2020E 2021E
50
100
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
31
In addition to autonomous vehicles the connected car market is defined by features
such as
bull Content amp Services
bull Safety amp Driving Assistance
bull Navigation Services
bull Diagnostics amp Maintenance
bull Connectivity
These technologies are forecast to more than double revenue in the connected car
market from more than $10 billion USD in 2017 to more than $21 billion USD by 2021
Revenue in the connected car marketin millions US dollar
21217
17026
13556
10376
80116109
4622
25000
20000
15000
10000
5000
0
Content amp Services
Safety amp Driving Assistance
Navigation ServicesDiagnostics amp Maintenance
Connectivity
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
32
While the definition of a connected car is likely to evolve in the years to come today there
are six categories of connectivity that are defining and driving this trend
SOURCE STRATEGYamp
Mobility Management Functions that allow the driver to reach a destination quickly safely and in a
cost-efficient manner
Examplesbull Current traffic informationbull Parking lot or garage assistance
bull Optimized fuel consumption
SafetyFunctions that warn the driver of external hazards and internal responses of the
vehicle to hazards
Examplesbull Collision protectionbull Hazard warnings
bull Emergency functions
Driver AssistanceFunctions invovling partially or fully
automatic driving
Examplesbull Operational assistance or autopilot in
heavy traffic in parking or on highways
Well-beingFunctions involving the driverrsquos comfort
and ability and fitness to drive
Examplesbull Fatigue detectionbull Automatic environment adjustments
to keep drivers alert
bull Medical assistance
Vehicle ManagementFunctions that aid in the driver in reducing
operating costs and improving ease of use
Examplesbull Vehicle condition and service remindersbull Remote operation
bull Transfer of usage data
EntertainmentFunctions involving the entertainment
of the driver and passengers
Examplesbull Smartphone interfacebull WLAN hot spotbull Music video internet social media
bull Mobile office
CONSUMER ELECTRONICS
33
Just 93 of vehicles manufactured in 2016 are considered connected cars However
demand is expected to increase in part when lower vehicle price points are implemented
as market research indicates that many of todayrsquos connected cars tend to be relatively
luxurious models with average selling prices of $55000 Consistent with that the
connected car penetration rate is projected to be 277 by 2020
34
61
93
131
176
225
277
Penetration rate in the connected car marketin percent (US)
0
5
10
15
20
25
30
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
34
However as the market becomes more saturated with connected cars average revenue
per connected car is projected to decline to $66685 USD by 2020
115029
84312
72679
6742065447 6668566075
Revenue per connected carin US dollars
1200
1100
1000
900
800
700
6002014 2015 2016 2017 2018 2019 2020
SOURCE STATISTA
CONSUMER ELECTRONICS
35
In addition to realigning automaker IT departments and creating user-friendly interfaces
that are IoT compatible and potentially even device agnostic analysts suggest connected
car manufacturers will have to overcome this challenge
Faster Product CyclesldquoThe typical product cycle in the passenger car
industry is about eight years in the consumer
electronics industry itrsquos less than a year To
successfully sell electronics products for connected
cars automakers will need to mimic the rapid
development cycles of the consumer electronics
companies The key for the automakers is to learn
to build perfectly functioning modular systems
into which updates and product developments can
be integrated quickly and with little effort Such a
modular infotainment building set would allow for
individual components to be updated through plug-
and-play technologies several times during a carrsquos
life cyclerdquo
CONSUMER ELECTRONICS
36
If yoursquore wondering why connected cars were included under consumer electronics
consider how the world will change when self-driving vehicles are status quo Google has
already logged more than 1 million autonomous vehicle miles and has been involved in
just 12 minor crashes in six years none of which were the fault of the driverless car
Once autonomous vehicles become part of our driving fabric expect next generation
connected cars to offer driverspassengers additional options in terms of the devices that
can interact with the vehicle
Smartphone temperature control amp bed-like seat adjustment applications and voice control of windows car hoods amp trunks and streaming music
Remote control or voice activated aftermarket add-ons that allow a passenger to plug in an electric car or pump gas remotely
Innovative cameras and real time editing software that allow for video conferencing that appears as if itrsquos being conducted in an office rather than a car
CONSUMER ELECTRONICS
37
TREND 05
Commercial Drones Take (Test) FlightWhile civilian use of drones may be what many first picture when they think of drones
itrsquos the military use of drones that has been driving demand Specifically military use of
drones has far outpaced civilian use of drones when measured by revenue Defense
spending on drones is projected to be robust through 2024
Global aerial drone marketin billions $14
$12
$10
$8
$6
$4
$2
$0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
DefenseCivilian
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
38
However research also suggests the civilian and commercial markets are expected to
grow significantly as drones are used in new and innovative ways Analysts at Grand View
Research describe future applications such as
ldquoAgriculture is expected to emerge as the dominant
application sector over the forecast period on
account of several benefits attained such as yield
increase due to crop monitoring Tech giants such
as Facebook Inc and Google Inc are planning
to use solar powered UAVs that hover around the
atmosphere of the earth providing internet access
to the remotest of places acting as flying internet
access points or hotspots In addition Amazon has
been working on Prime Air a drone delivery system
that promises goods delivered within 30 minutes
after order placementrdquo
CONSUMER ELECTRONICS
39
The list of potential drone applications includes
bull Agriculture
bull Law Enforcement
bull Ecommerce Delivery
bull Mapping amp Imagery
bull Wildlife Patrolling
bull Forest Fire Management
12000
10000
8000
6000
4000
2000
00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Agriculture
Energy
GovernmentMedia amp Entertainment
Others
US commercial drone market by application 2012-2022USD million
SOURCE GRAND VIEW RESEARCH
bull Vehicle Traffic Control
bull Marketing amp Entertainment
bull Energy amp Mining
bull Real Estate
bull News Gathering
bull Infrastructure Monitoring
CONSUMER ELECTRONICS
40
Research indicates sales of commercial and civilian drones will grow at a compound
annual rate of 19 between 2015 and 2020 The economic impact of the commercial
drone segment is forecast to grow to $51 billion by 2025
While some analysts argue package delivery will not be an early priority the impact
drones have on the delivery of consumer electronics may be relatively muted as only
a third of the people surveyed recently trust a drone to deliver consumer electronics
The economic impact of the commercial drone sectordirect economic impact from the UAV industry in the United States (billion US dollars)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$12
$23
$35 $36$38 $40
$42 $44 $4649
$51
SOURCE STATISTA
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
14
Target Market DemographicsSeveral economic tailwinds are expected to stimulate ecommerce and help consumer
electronics manufactures offset slowing growth overall These tailwinds include forecasted
increases in GDP per capita as well as internet and smartphone penetration
Additionally expect the industry to focus intensely on the 25-34 age demographic as it is
forecast to grow significantly between now and 2021
User by age groups in the consumer electronics marketin millions (worldwide)
2021202020192018201720162015
1250
1000
750
500
250
0
11799
78908500
91509833
1054011221
16-24
25-34
35-4445-54
55+
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
15
Specifically within the aforementioned demographic the projected number of male consumers
in the 25-34 age group is expected to be nearly double that of female users in 2016
By 2021 male consumers between 25-34 are again projected to be nearly double the size
of female consumers However the total addressable market between the age of 25-34 is
expected to grow to nearly 300 million
User by age groups and gender in the consumer electronics marketin millions in 2016 (worldwide)
250300 200 150 100 50 0 100 150 200 250 300
55+
45-54
35-44
25-34
16-24
50
Male
Female
User by age groups and gender in the consumer electronics marketin millions in 2021 (worldwide)
250300 200 150 100 50 0 100 150 200 250 300
55+
45-54
35-44
25-34
16-24
50
Male
Female
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
16
Regardless of age the majority of consumer electronics forecast to be sold in 2016 are
expected to be purchased by low and medium income consumers
User by age groups and income splitin millions in 2016
1967m
4464m
2069m
Low
Medium
High
Total
55+
45-54
35-44
25-34
16-24
SOURCE STATISTA
17
Industry Trends
PAGE 18 INTRODUCTION
PAGE 19 TREND 01
The Smartphone Matures
PAGE 22 TREND 02
Emerging Markets Drive Demand
PAGE 25 TREND 03
Home Automation Spikes as the loT Grows
PAGE 30 TREND 04
The Connected Car Evolves
PAGE 37 TREND 05
Commercial Drones Take (Test) Flight
PAGE 43 TREND 06
3D Printing Evolves Beyond Just Prototyping
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
18
The trends impacting the consumer electronics industry are creating opportunistic yet
challenging environments in which to operate Besides increased competition currency
concerns and economic headwinds in Europe and Asia-Pacific are making it increasingly
difficult for manufacturers of consumer electronics to grow their top lines while also
protecting margins
While demand for some traditional tech devices appears to be slowing demand for newer products in the car home and beyond is helping to offset some of the lost revenue How those trends combine with future technologies the ability to continue investing in RampD and whether the worldrsquos economies will position consumers to pay for expensive tech products will dictate how the following five trends play out the second half of the decade
CONSUMER ELECTRONICS
19
TREND 01
The Smartphone MaturesResearch suggests some people are more willing to go without sex rather than go without
their mobile phones In fact 26 of those surveyed said they could not live without their
phones versus 20 who said they couldnrsquot live without sex
SOURCE STATISTA
Source Harris Interactive
CONSUMER ELECTRONICS
20
Despite the opportunity emerging markets provide smartphone makers data indicate
the smartphone market is maturing In 2015 according to Accenture less than half of
smartphone owners plan to purchase a new one
Some analysts argue that phone and data service providers that no longer subsidize the
price of phones may be negatively impacting demand However smartphone makers may
also be victims of their own success and simply unable to innovate or add breathtaking new
features as quickly as consumers have been accustomed Nearly half of the consumers not
planning to purchase a new smartphone say theyrsquore happy with the device they have or
SOURCE ACCENTURE
SOURCE ACCENTURE
CONSUMER ELECTRONICS
21
The data indicate itrsquos not just smartphone demand thatrsquos slowing Consumer demand
for certain televisions laptops and tablets is also expected to be sluggish year over year
As was the case with smartphones consumers appear to be happy with what they
already have
The trend combined with other variables has negatively impacted 2015 holiday sales
at Best Buy prompted Samsung to warn of slower growth in 2016 and could result in
Applersquos first ever year-over-year decline in iPhone sales in Q2 2016 However on the Q1
2016 earnings call Apple CEO Tim Cook revealed the $691 (ASP) iPhone was taking share
from Android and sounded optimistic albeit cautious due to signs of economic strain in
Hong Kong regarding the companyrsquos prospects in emerging markets
SOURCE ACCENTURE
CONSUMER ELECTRONICS
22
Market analysts project sales of consumer electronics in emerging markets to grow at a
compound annual rate of 15 between 2015-2020 Growth is forecast to be most robust
in the Asia-Pacific region excluding Japan Increasingly the focus will be on China where
sales are forecast to grow by $18 billion USD in 2015
Forecasting a surge in the globalmiddle class
Poor
Middle ClassRich
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
9
8
7
6
5
4
3
2
1
0
TREND 02
Emerging Markets Drive DemandResearch suggests the world has lived through two middle class expansions since 1800
during the Industrial Revolution and after World War II Today research analysts argue
wersquore living through a third The data indicate that by 2030 two thirds of the global middle
class will live in the Asia-Pacific region up from just under one-third in 2009
SOURCE EY
CONSUMER ELECTRONICS
23
Lifting the lid on the Chinese consumer suggests consumer electronics manufacturers
may have room to sell products at higher price points Jean-Marc Bellaiche senior partner
and managing director at The Boston Consulting Group argues there are two drivers of
growth in the Chinese economy
1
2
The Emerging Middle ClassldquoAmong the emerging middle class the ldquoaspirational
massesrdquo also called the ldquotrendy metropolitanrdquo
comprises 330 million consumers and 25-27 percent
of the luxury market and the ldquorising middle classrdquo
made up of ldquothe proud business womanrdquo is 70
million consumers and 25-27 percent of the marketrdquo
An Increase In The Number of MillionairesldquoThere are also two types of millionaires new
money and old money New money also called ldquothe
loan traderrdquo or ldquothe Russian climberrdquo is 75 million
people and 30-35 percent of the luxury market
The old money crowd can be generalized as the
ldquonoble Italian entrepreneurrdquo This group is 25 million
consumers and 10-15 percent of the luxury marketrdquo
CONSUMER ELECTRONICS
24
In other words approximately one billion people in China or as much as 70 of the
population are projected to be middle class by 2030
Remember India is poised for explosive middle class growth as well Analysts at EY
recently projected
China total income by band 2010 and 2020annual income thousands of people
50+
30-50
15-30
5-15
0-5
2010 2020
112
2085
2388
933
3137
54
433
1619
499
US$
US$b
ldquoIndiarsquos global middle class meanwhile at around
50 million people or 5 of the population is much
smaller We expect this to grow steadily over the
next decade reaching 200 million by 2020 After
this we expect growth to really accelerate reaching
475 million by 2030 and adding more people than
the Chinese to the global middle class worldwide
after 2027rdquo
SOURCE EY
CONSUMER ELECTRONICS
25
Home automation
Ambient Asissted Living
Security
Energy Management
Home Entertainment
TREND 03
Home Automation Spikes as the loT GrowsThe second half of the decade is poised for explosive growth in the Smart Home market
segment To illustrate the growth potential in this segment wersquoll rely on data from Statista
as itrsquos a bit more conservative than other industry estimates
WARNING You can easily find research reports that contradict one another in terms of
how fast this segment is growing and is projected to grow through 2020 However the
productsincluded in the Smart Home segment varies which means yoursquore not always
comparing apples to apples
When we talk about the Smart Home segment wersquore including
CONSUMER ELECTRONICS
26
Not included in the data wersquoll highlight are devices like smartphones tablets and
television remote controls Herersquos Statistarsquos reasoning
ldquoDevices whose primary function is not for the
automation or remote control of household
equipment eg smartphones and tablets are not
included here Similarly devices whose reason for
purchase is only related to household connection
and remote control to a limited extent such as
Smart-TVs refrigerators or ovens are also not
includedrdquo
Whatrsquos important though is that a $7 billion dollar industry in 2015 is forecast to grow
to a more than $32 billion dollar industry by 2021
CONSUMER ELECTRONICS
27
Revenue in the smart home marketin millions US dollar
2021202020192018201720162015
32191
28468
24249
19495
14649
104327237
40000
30000
20000
10000
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy Management
Besides new products and a shift toward the IoT the Smart Home segmentrsquos relatively
small penetration rate between 1-18 depending on the segment is expected to
further drive growth
Smart home penetration ratein percent (US)
2020201920182017201620152014
80
60
40
20
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
28
Connected-home device shipments according to BI Intelligence will grow at a compound
annual rate of 67 over the next five years to 18 billion units shipped in 2019
Global connected-home device annual shipmentsin millions
2000
1800
1600
1400
1200
1000
800
600
400
200
0
2012 2013 2014E 2015E 2016E 2017E 2018E 2019E
We are here
67 CAGR2014-2019
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
29
Despite the fact that a sizable portion of the total addressable market has yet to adopt
Smart Home technology analysts suggest shipment growth is expected to peak in the
coming years While the following chart obviously doesnrsquot take into account the invention
of innovative new Smart Home products decelerating growth towards the back portion of
the decade may also pressure the average revenue per Smart Household
Average revenue per smart home in the smart home marketin US dollar
2021202020192018201720162015
450
400
350
300
250
200
150
100
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
CONSUMER ELECTRONICS
30
TREND 04
The Connected Car EvolvesIndustry estimates suggest more than 380 million connected cars will be on the road
by 2021 and have the ability to stream music surf the web alert drivers to traffic and
weather conditions and possibly even self-park Tech companies will play a significant
role as analysts who routinely upwardly adjust their forecasts for this segment expect
fully autonomous vehicles to be on the market in just a few years
Estimated connected car shipmentsin millions (worldwide)
2015E 2016E 2017E 2018E 2019E 2020E 2021E
50
100
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
31
In addition to autonomous vehicles the connected car market is defined by features
such as
bull Content amp Services
bull Safety amp Driving Assistance
bull Navigation Services
bull Diagnostics amp Maintenance
bull Connectivity
These technologies are forecast to more than double revenue in the connected car
market from more than $10 billion USD in 2017 to more than $21 billion USD by 2021
Revenue in the connected car marketin millions US dollar
21217
17026
13556
10376
80116109
4622
25000
20000
15000
10000
5000
0
Content amp Services
Safety amp Driving Assistance
Navigation ServicesDiagnostics amp Maintenance
Connectivity
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
32
While the definition of a connected car is likely to evolve in the years to come today there
are six categories of connectivity that are defining and driving this trend
SOURCE STRATEGYamp
Mobility Management Functions that allow the driver to reach a destination quickly safely and in a
cost-efficient manner
Examplesbull Current traffic informationbull Parking lot or garage assistance
bull Optimized fuel consumption
SafetyFunctions that warn the driver of external hazards and internal responses of the
vehicle to hazards
Examplesbull Collision protectionbull Hazard warnings
bull Emergency functions
Driver AssistanceFunctions invovling partially or fully
automatic driving
Examplesbull Operational assistance or autopilot in
heavy traffic in parking or on highways
Well-beingFunctions involving the driverrsquos comfort
and ability and fitness to drive
Examplesbull Fatigue detectionbull Automatic environment adjustments
to keep drivers alert
bull Medical assistance
Vehicle ManagementFunctions that aid in the driver in reducing
operating costs and improving ease of use
Examplesbull Vehicle condition and service remindersbull Remote operation
bull Transfer of usage data
EntertainmentFunctions involving the entertainment
of the driver and passengers
Examplesbull Smartphone interfacebull WLAN hot spotbull Music video internet social media
bull Mobile office
CONSUMER ELECTRONICS
33
Just 93 of vehicles manufactured in 2016 are considered connected cars However
demand is expected to increase in part when lower vehicle price points are implemented
as market research indicates that many of todayrsquos connected cars tend to be relatively
luxurious models with average selling prices of $55000 Consistent with that the
connected car penetration rate is projected to be 277 by 2020
34
61
93
131
176
225
277
Penetration rate in the connected car marketin percent (US)
0
5
10
15
20
25
30
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
34
However as the market becomes more saturated with connected cars average revenue
per connected car is projected to decline to $66685 USD by 2020
115029
84312
72679
6742065447 6668566075
Revenue per connected carin US dollars
1200
1100
1000
900
800
700
6002014 2015 2016 2017 2018 2019 2020
SOURCE STATISTA
CONSUMER ELECTRONICS
35
In addition to realigning automaker IT departments and creating user-friendly interfaces
that are IoT compatible and potentially even device agnostic analysts suggest connected
car manufacturers will have to overcome this challenge
Faster Product CyclesldquoThe typical product cycle in the passenger car
industry is about eight years in the consumer
electronics industry itrsquos less than a year To
successfully sell electronics products for connected
cars automakers will need to mimic the rapid
development cycles of the consumer electronics
companies The key for the automakers is to learn
to build perfectly functioning modular systems
into which updates and product developments can
be integrated quickly and with little effort Such a
modular infotainment building set would allow for
individual components to be updated through plug-
and-play technologies several times during a carrsquos
life cyclerdquo
CONSUMER ELECTRONICS
36
If yoursquore wondering why connected cars were included under consumer electronics
consider how the world will change when self-driving vehicles are status quo Google has
already logged more than 1 million autonomous vehicle miles and has been involved in
just 12 minor crashes in six years none of which were the fault of the driverless car
Once autonomous vehicles become part of our driving fabric expect next generation
connected cars to offer driverspassengers additional options in terms of the devices that
can interact with the vehicle
Smartphone temperature control amp bed-like seat adjustment applications and voice control of windows car hoods amp trunks and streaming music
Remote control or voice activated aftermarket add-ons that allow a passenger to plug in an electric car or pump gas remotely
Innovative cameras and real time editing software that allow for video conferencing that appears as if itrsquos being conducted in an office rather than a car
CONSUMER ELECTRONICS
37
TREND 05
Commercial Drones Take (Test) FlightWhile civilian use of drones may be what many first picture when they think of drones
itrsquos the military use of drones that has been driving demand Specifically military use of
drones has far outpaced civilian use of drones when measured by revenue Defense
spending on drones is projected to be robust through 2024
Global aerial drone marketin billions $14
$12
$10
$8
$6
$4
$2
$0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
DefenseCivilian
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
38
However research also suggests the civilian and commercial markets are expected to
grow significantly as drones are used in new and innovative ways Analysts at Grand View
Research describe future applications such as
ldquoAgriculture is expected to emerge as the dominant
application sector over the forecast period on
account of several benefits attained such as yield
increase due to crop monitoring Tech giants such
as Facebook Inc and Google Inc are planning
to use solar powered UAVs that hover around the
atmosphere of the earth providing internet access
to the remotest of places acting as flying internet
access points or hotspots In addition Amazon has
been working on Prime Air a drone delivery system
that promises goods delivered within 30 minutes
after order placementrdquo
CONSUMER ELECTRONICS
39
The list of potential drone applications includes
bull Agriculture
bull Law Enforcement
bull Ecommerce Delivery
bull Mapping amp Imagery
bull Wildlife Patrolling
bull Forest Fire Management
12000
10000
8000
6000
4000
2000
00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Agriculture
Energy
GovernmentMedia amp Entertainment
Others
US commercial drone market by application 2012-2022USD million
SOURCE GRAND VIEW RESEARCH
bull Vehicle Traffic Control
bull Marketing amp Entertainment
bull Energy amp Mining
bull Real Estate
bull News Gathering
bull Infrastructure Monitoring
CONSUMER ELECTRONICS
40
Research indicates sales of commercial and civilian drones will grow at a compound
annual rate of 19 between 2015 and 2020 The economic impact of the commercial
drone segment is forecast to grow to $51 billion by 2025
While some analysts argue package delivery will not be an early priority the impact
drones have on the delivery of consumer electronics may be relatively muted as only
a third of the people surveyed recently trust a drone to deliver consumer electronics
The economic impact of the commercial drone sectordirect economic impact from the UAV industry in the United States (billion US dollars)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$12
$23
$35 $36$38 $40
$42 $44 $4649
$51
SOURCE STATISTA
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
15
Specifically within the aforementioned demographic the projected number of male consumers
in the 25-34 age group is expected to be nearly double that of female users in 2016
By 2021 male consumers between 25-34 are again projected to be nearly double the size
of female consumers However the total addressable market between the age of 25-34 is
expected to grow to nearly 300 million
User by age groups and gender in the consumer electronics marketin millions in 2016 (worldwide)
250300 200 150 100 50 0 100 150 200 250 300
55+
45-54
35-44
25-34
16-24
50
Male
Female
User by age groups and gender in the consumer electronics marketin millions in 2021 (worldwide)
250300 200 150 100 50 0 100 150 200 250 300
55+
45-54
35-44
25-34
16-24
50
Male
Female
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
16
Regardless of age the majority of consumer electronics forecast to be sold in 2016 are
expected to be purchased by low and medium income consumers
User by age groups and income splitin millions in 2016
1967m
4464m
2069m
Low
Medium
High
Total
55+
45-54
35-44
25-34
16-24
SOURCE STATISTA
17
Industry Trends
PAGE 18 INTRODUCTION
PAGE 19 TREND 01
The Smartphone Matures
PAGE 22 TREND 02
Emerging Markets Drive Demand
PAGE 25 TREND 03
Home Automation Spikes as the loT Grows
PAGE 30 TREND 04
The Connected Car Evolves
PAGE 37 TREND 05
Commercial Drones Take (Test) Flight
PAGE 43 TREND 06
3D Printing Evolves Beyond Just Prototyping
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
18
The trends impacting the consumer electronics industry are creating opportunistic yet
challenging environments in which to operate Besides increased competition currency
concerns and economic headwinds in Europe and Asia-Pacific are making it increasingly
difficult for manufacturers of consumer electronics to grow their top lines while also
protecting margins
While demand for some traditional tech devices appears to be slowing demand for newer products in the car home and beyond is helping to offset some of the lost revenue How those trends combine with future technologies the ability to continue investing in RampD and whether the worldrsquos economies will position consumers to pay for expensive tech products will dictate how the following five trends play out the second half of the decade
CONSUMER ELECTRONICS
19
TREND 01
The Smartphone MaturesResearch suggests some people are more willing to go without sex rather than go without
their mobile phones In fact 26 of those surveyed said they could not live without their
phones versus 20 who said they couldnrsquot live without sex
SOURCE STATISTA
Source Harris Interactive
CONSUMER ELECTRONICS
20
Despite the opportunity emerging markets provide smartphone makers data indicate
the smartphone market is maturing In 2015 according to Accenture less than half of
smartphone owners plan to purchase a new one
Some analysts argue that phone and data service providers that no longer subsidize the
price of phones may be negatively impacting demand However smartphone makers may
also be victims of their own success and simply unable to innovate or add breathtaking new
features as quickly as consumers have been accustomed Nearly half of the consumers not
planning to purchase a new smartphone say theyrsquore happy with the device they have or
SOURCE ACCENTURE
SOURCE ACCENTURE
CONSUMER ELECTRONICS
21
The data indicate itrsquos not just smartphone demand thatrsquos slowing Consumer demand
for certain televisions laptops and tablets is also expected to be sluggish year over year
As was the case with smartphones consumers appear to be happy with what they
already have
The trend combined with other variables has negatively impacted 2015 holiday sales
at Best Buy prompted Samsung to warn of slower growth in 2016 and could result in
Applersquos first ever year-over-year decline in iPhone sales in Q2 2016 However on the Q1
2016 earnings call Apple CEO Tim Cook revealed the $691 (ASP) iPhone was taking share
from Android and sounded optimistic albeit cautious due to signs of economic strain in
Hong Kong regarding the companyrsquos prospects in emerging markets
SOURCE ACCENTURE
CONSUMER ELECTRONICS
22
Market analysts project sales of consumer electronics in emerging markets to grow at a
compound annual rate of 15 between 2015-2020 Growth is forecast to be most robust
in the Asia-Pacific region excluding Japan Increasingly the focus will be on China where
sales are forecast to grow by $18 billion USD in 2015
Forecasting a surge in the globalmiddle class
Poor
Middle ClassRich
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
9
8
7
6
5
4
3
2
1
0
TREND 02
Emerging Markets Drive DemandResearch suggests the world has lived through two middle class expansions since 1800
during the Industrial Revolution and after World War II Today research analysts argue
wersquore living through a third The data indicate that by 2030 two thirds of the global middle
class will live in the Asia-Pacific region up from just under one-third in 2009
SOURCE EY
CONSUMER ELECTRONICS
23
Lifting the lid on the Chinese consumer suggests consumer electronics manufacturers
may have room to sell products at higher price points Jean-Marc Bellaiche senior partner
and managing director at The Boston Consulting Group argues there are two drivers of
growth in the Chinese economy
1
2
The Emerging Middle ClassldquoAmong the emerging middle class the ldquoaspirational
massesrdquo also called the ldquotrendy metropolitanrdquo
comprises 330 million consumers and 25-27 percent
of the luxury market and the ldquorising middle classrdquo
made up of ldquothe proud business womanrdquo is 70
million consumers and 25-27 percent of the marketrdquo
An Increase In The Number of MillionairesldquoThere are also two types of millionaires new
money and old money New money also called ldquothe
loan traderrdquo or ldquothe Russian climberrdquo is 75 million
people and 30-35 percent of the luxury market
The old money crowd can be generalized as the
ldquonoble Italian entrepreneurrdquo This group is 25 million
consumers and 10-15 percent of the luxury marketrdquo
CONSUMER ELECTRONICS
24
In other words approximately one billion people in China or as much as 70 of the
population are projected to be middle class by 2030
Remember India is poised for explosive middle class growth as well Analysts at EY
recently projected
China total income by band 2010 and 2020annual income thousands of people
50+
30-50
15-30
5-15
0-5
2010 2020
112
2085
2388
933
3137
54
433
1619
499
US$
US$b
ldquoIndiarsquos global middle class meanwhile at around
50 million people or 5 of the population is much
smaller We expect this to grow steadily over the
next decade reaching 200 million by 2020 After
this we expect growth to really accelerate reaching
475 million by 2030 and adding more people than
the Chinese to the global middle class worldwide
after 2027rdquo
SOURCE EY
CONSUMER ELECTRONICS
25
Home automation
Ambient Asissted Living
Security
Energy Management
Home Entertainment
TREND 03
Home Automation Spikes as the loT GrowsThe second half of the decade is poised for explosive growth in the Smart Home market
segment To illustrate the growth potential in this segment wersquoll rely on data from Statista
as itrsquos a bit more conservative than other industry estimates
WARNING You can easily find research reports that contradict one another in terms of
how fast this segment is growing and is projected to grow through 2020 However the
productsincluded in the Smart Home segment varies which means yoursquore not always
comparing apples to apples
When we talk about the Smart Home segment wersquore including
CONSUMER ELECTRONICS
26
Not included in the data wersquoll highlight are devices like smartphones tablets and
television remote controls Herersquos Statistarsquos reasoning
ldquoDevices whose primary function is not for the
automation or remote control of household
equipment eg smartphones and tablets are not
included here Similarly devices whose reason for
purchase is only related to household connection
and remote control to a limited extent such as
Smart-TVs refrigerators or ovens are also not
includedrdquo
Whatrsquos important though is that a $7 billion dollar industry in 2015 is forecast to grow
to a more than $32 billion dollar industry by 2021
CONSUMER ELECTRONICS
27
Revenue in the smart home marketin millions US dollar
2021202020192018201720162015
32191
28468
24249
19495
14649
104327237
40000
30000
20000
10000
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy Management
Besides new products and a shift toward the IoT the Smart Home segmentrsquos relatively
small penetration rate between 1-18 depending on the segment is expected to
further drive growth
Smart home penetration ratein percent (US)
2020201920182017201620152014
80
60
40
20
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
28
Connected-home device shipments according to BI Intelligence will grow at a compound
annual rate of 67 over the next five years to 18 billion units shipped in 2019
Global connected-home device annual shipmentsin millions
2000
1800
1600
1400
1200
1000
800
600
400
200
0
2012 2013 2014E 2015E 2016E 2017E 2018E 2019E
We are here
67 CAGR2014-2019
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
29
Despite the fact that a sizable portion of the total addressable market has yet to adopt
Smart Home technology analysts suggest shipment growth is expected to peak in the
coming years While the following chart obviously doesnrsquot take into account the invention
of innovative new Smart Home products decelerating growth towards the back portion of
the decade may also pressure the average revenue per Smart Household
Average revenue per smart home in the smart home marketin US dollar
2021202020192018201720162015
450
400
350
300
250
200
150
100
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
CONSUMER ELECTRONICS
30
TREND 04
The Connected Car EvolvesIndustry estimates suggest more than 380 million connected cars will be on the road
by 2021 and have the ability to stream music surf the web alert drivers to traffic and
weather conditions and possibly even self-park Tech companies will play a significant
role as analysts who routinely upwardly adjust their forecasts for this segment expect
fully autonomous vehicles to be on the market in just a few years
Estimated connected car shipmentsin millions (worldwide)
2015E 2016E 2017E 2018E 2019E 2020E 2021E
50
100
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
31
In addition to autonomous vehicles the connected car market is defined by features
such as
bull Content amp Services
bull Safety amp Driving Assistance
bull Navigation Services
bull Diagnostics amp Maintenance
bull Connectivity
These technologies are forecast to more than double revenue in the connected car
market from more than $10 billion USD in 2017 to more than $21 billion USD by 2021
Revenue in the connected car marketin millions US dollar
21217
17026
13556
10376
80116109
4622
25000
20000
15000
10000
5000
0
Content amp Services
Safety amp Driving Assistance
Navigation ServicesDiagnostics amp Maintenance
Connectivity
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
32
While the definition of a connected car is likely to evolve in the years to come today there
are six categories of connectivity that are defining and driving this trend
SOURCE STRATEGYamp
Mobility Management Functions that allow the driver to reach a destination quickly safely and in a
cost-efficient manner
Examplesbull Current traffic informationbull Parking lot or garage assistance
bull Optimized fuel consumption
SafetyFunctions that warn the driver of external hazards and internal responses of the
vehicle to hazards
Examplesbull Collision protectionbull Hazard warnings
bull Emergency functions
Driver AssistanceFunctions invovling partially or fully
automatic driving
Examplesbull Operational assistance or autopilot in
heavy traffic in parking or on highways
Well-beingFunctions involving the driverrsquos comfort
and ability and fitness to drive
Examplesbull Fatigue detectionbull Automatic environment adjustments
to keep drivers alert
bull Medical assistance
Vehicle ManagementFunctions that aid in the driver in reducing
operating costs and improving ease of use
Examplesbull Vehicle condition and service remindersbull Remote operation
bull Transfer of usage data
EntertainmentFunctions involving the entertainment
of the driver and passengers
Examplesbull Smartphone interfacebull WLAN hot spotbull Music video internet social media
bull Mobile office
CONSUMER ELECTRONICS
33
Just 93 of vehicles manufactured in 2016 are considered connected cars However
demand is expected to increase in part when lower vehicle price points are implemented
as market research indicates that many of todayrsquos connected cars tend to be relatively
luxurious models with average selling prices of $55000 Consistent with that the
connected car penetration rate is projected to be 277 by 2020
34
61
93
131
176
225
277
Penetration rate in the connected car marketin percent (US)
0
5
10
15
20
25
30
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
34
However as the market becomes more saturated with connected cars average revenue
per connected car is projected to decline to $66685 USD by 2020
115029
84312
72679
6742065447 6668566075
Revenue per connected carin US dollars
1200
1100
1000
900
800
700
6002014 2015 2016 2017 2018 2019 2020
SOURCE STATISTA
CONSUMER ELECTRONICS
35
In addition to realigning automaker IT departments and creating user-friendly interfaces
that are IoT compatible and potentially even device agnostic analysts suggest connected
car manufacturers will have to overcome this challenge
Faster Product CyclesldquoThe typical product cycle in the passenger car
industry is about eight years in the consumer
electronics industry itrsquos less than a year To
successfully sell electronics products for connected
cars automakers will need to mimic the rapid
development cycles of the consumer electronics
companies The key for the automakers is to learn
to build perfectly functioning modular systems
into which updates and product developments can
be integrated quickly and with little effort Such a
modular infotainment building set would allow for
individual components to be updated through plug-
and-play technologies several times during a carrsquos
life cyclerdquo
CONSUMER ELECTRONICS
36
If yoursquore wondering why connected cars were included under consumer electronics
consider how the world will change when self-driving vehicles are status quo Google has
already logged more than 1 million autonomous vehicle miles and has been involved in
just 12 minor crashes in six years none of which were the fault of the driverless car
Once autonomous vehicles become part of our driving fabric expect next generation
connected cars to offer driverspassengers additional options in terms of the devices that
can interact with the vehicle
Smartphone temperature control amp bed-like seat adjustment applications and voice control of windows car hoods amp trunks and streaming music
Remote control or voice activated aftermarket add-ons that allow a passenger to plug in an electric car or pump gas remotely
Innovative cameras and real time editing software that allow for video conferencing that appears as if itrsquos being conducted in an office rather than a car
CONSUMER ELECTRONICS
37
TREND 05
Commercial Drones Take (Test) FlightWhile civilian use of drones may be what many first picture when they think of drones
itrsquos the military use of drones that has been driving demand Specifically military use of
drones has far outpaced civilian use of drones when measured by revenue Defense
spending on drones is projected to be robust through 2024
Global aerial drone marketin billions $14
$12
$10
$8
$6
$4
$2
$0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
DefenseCivilian
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
38
However research also suggests the civilian and commercial markets are expected to
grow significantly as drones are used in new and innovative ways Analysts at Grand View
Research describe future applications such as
ldquoAgriculture is expected to emerge as the dominant
application sector over the forecast period on
account of several benefits attained such as yield
increase due to crop monitoring Tech giants such
as Facebook Inc and Google Inc are planning
to use solar powered UAVs that hover around the
atmosphere of the earth providing internet access
to the remotest of places acting as flying internet
access points or hotspots In addition Amazon has
been working on Prime Air a drone delivery system
that promises goods delivered within 30 minutes
after order placementrdquo
CONSUMER ELECTRONICS
39
The list of potential drone applications includes
bull Agriculture
bull Law Enforcement
bull Ecommerce Delivery
bull Mapping amp Imagery
bull Wildlife Patrolling
bull Forest Fire Management
12000
10000
8000
6000
4000
2000
00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Agriculture
Energy
GovernmentMedia amp Entertainment
Others
US commercial drone market by application 2012-2022USD million
SOURCE GRAND VIEW RESEARCH
bull Vehicle Traffic Control
bull Marketing amp Entertainment
bull Energy amp Mining
bull Real Estate
bull News Gathering
bull Infrastructure Monitoring
CONSUMER ELECTRONICS
40
Research indicates sales of commercial and civilian drones will grow at a compound
annual rate of 19 between 2015 and 2020 The economic impact of the commercial
drone segment is forecast to grow to $51 billion by 2025
While some analysts argue package delivery will not be an early priority the impact
drones have on the delivery of consumer electronics may be relatively muted as only
a third of the people surveyed recently trust a drone to deliver consumer electronics
The economic impact of the commercial drone sectordirect economic impact from the UAV industry in the United States (billion US dollars)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$12
$23
$35 $36$38 $40
$42 $44 $4649
$51
SOURCE STATISTA
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
16
Regardless of age the majority of consumer electronics forecast to be sold in 2016 are
expected to be purchased by low and medium income consumers
User by age groups and income splitin millions in 2016
1967m
4464m
2069m
Low
Medium
High
Total
55+
45-54
35-44
25-34
16-24
SOURCE STATISTA
17
Industry Trends
PAGE 18 INTRODUCTION
PAGE 19 TREND 01
The Smartphone Matures
PAGE 22 TREND 02
Emerging Markets Drive Demand
PAGE 25 TREND 03
Home Automation Spikes as the loT Grows
PAGE 30 TREND 04
The Connected Car Evolves
PAGE 37 TREND 05
Commercial Drones Take (Test) Flight
PAGE 43 TREND 06
3D Printing Evolves Beyond Just Prototyping
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
18
The trends impacting the consumer electronics industry are creating opportunistic yet
challenging environments in which to operate Besides increased competition currency
concerns and economic headwinds in Europe and Asia-Pacific are making it increasingly
difficult for manufacturers of consumer electronics to grow their top lines while also
protecting margins
While demand for some traditional tech devices appears to be slowing demand for newer products in the car home and beyond is helping to offset some of the lost revenue How those trends combine with future technologies the ability to continue investing in RampD and whether the worldrsquos economies will position consumers to pay for expensive tech products will dictate how the following five trends play out the second half of the decade
CONSUMER ELECTRONICS
19
TREND 01
The Smartphone MaturesResearch suggests some people are more willing to go without sex rather than go without
their mobile phones In fact 26 of those surveyed said they could not live without their
phones versus 20 who said they couldnrsquot live without sex
SOURCE STATISTA
Source Harris Interactive
CONSUMER ELECTRONICS
20
Despite the opportunity emerging markets provide smartphone makers data indicate
the smartphone market is maturing In 2015 according to Accenture less than half of
smartphone owners plan to purchase a new one
Some analysts argue that phone and data service providers that no longer subsidize the
price of phones may be negatively impacting demand However smartphone makers may
also be victims of their own success and simply unable to innovate or add breathtaking new
features as quickly as consumers have been accustomed Nearly half of the consumers not
planning to purchase a new smartphone say theyrsquore happy with the device they have or
SOURCE ACCENTURE
SOURCE ACCENTURE
CONSUMER ELECTRONICS
21
The data indicate itrsquos not just smartphone demand thatrsquos slowing Consumer demand
for certain televisions laptops and tablets is also expected to be sluggish year over year
As was the case with smartphones consumers appear to be happy with what they
already have
The trend combined with other variables has negatively impacted 2015 holiday sales
at Best Buy prompted Samsung to warn of slower growth in 2016 and could result in
Applersquos first ever year-over-year decline in iPhone sales in Q2 2016 However on the Q1
2016 earnings call Apple CEO Tim Cook revealed the $691 (ASP) iPhone was taking share
from Android and sounded optimistic albeit cautious due to signs of economic strain in
Hong Kong regarding the companyrsquos prospects in emerging markets
SOURCE ACCENTURE
CONSUMER ELECTRONICS
22
Market analysts project sales of consumer electronics in emerging markets to grow at a
compound annual rate of 15 between 2015-2020 Growth is forecast to be most robust
in the Asia-Pacific region excluding Japan Increasingly the focus will be on China where
sales are forecast to grow by $18 billion USD in 2015
Forecasting a surge in the globalmiddle class
Poor
Middle ClassRich
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
9
8
7
6
5
4
3
2
1
0
TREND 02
Emerging Markets Drive DemandResearch suggests the world has lived through two middle class expansions since 1800
during the Industrial Revolution and after World War II Today research analysts argue
wersquore living through a third The data indicate that by 2030 two thirds of the global middle
class will live in the Asia-Pacific region up from just under one-third in 2009
SOURCE EY
CONSUMER ELECTRONICS
23
Lifting the lid on the Chinese consumer suggests consumer electronics manufacturers
may have room to sell products at higher price points Jean-Marc Bellaiche senior partner
and managing director at The Boston Consulting Group argues there are two drivers of
growth in the Chinese economy
1
2
The Emerging Middle ClassldquoAmong the emerging middle class the ldquoaspirational
massesrdquo also called the ldquotrendy metropolitanrdquo
comprises 330 million consumers and 25-27 percent
of the luxury market and the ldquorising middle classrdquo
made up of ldquothe proud business womanrdquo is 70
million consumers and 25-27 percent of the marketrdquo
An Increase In The Number of MillionairesldquoThere are also two types of millionaires new
money and old money New money also called ldquothe
loan traderrdquo or ldquothe Russian climberrdquo is 75 million
people and 30-35 percent of the luxury market
The old money crowd can be generalized as the
ldquonoble Italian entrepreneurrdquo This group is 25 million
consumers and 10-15 percent of the luxury marketrdquo
CONSUMER ELECTRONICS
24
In other words approximately one billion people in China or as much as 70 of the
population are projected to be middle class by 2030
Remember India is poised for explosive middle class growth as well Analysts at EY
recently projected
China total income by band 2010 and 2020annual income thousands of people
50+
30-50
15-30
5-15
0-5
2010 2020
112
2085
2388
933
3137
54
433
1619
499
US$
US$b
ldquoIndiarsquos global middle class meanwhile at around
50 million people or 5 of the population is much
smaller We expect this to grow steadily over the
next decade reaching 200 million by 2020 After
this we expect growth to really accelerate reaching
475 million by 2030 and adding more people than
the Chinese to the global middle class worldwide
after 2027rdquo
SOURCE EY
CONSUMER ELECTRONICS
25
Home automation
Ambient Asissted Living
Security
Energy Management
Home Entertainment
TREND 03
Home Automation Spikes as the loT GrowsThe second half of the decade is poised for explosive growth in the Smart Home market
segment To illustrate the growth potential in this segment wersquoll rely on data from Statista
as itrsquos a bit more conservative than other industry estimates
WARNING You can easily find research reports that contradict one another in terms of
how fast this segment is growing and is projected to grow through 2020 However the
productsincluded in the Smart Home segment varies which means yoursquore not always
comparing apples to apples
When we talk about the Smart Home segment wersquore including
CONSUMER ELECTRONICS
26
Not included in the data wersquoll highlight are devices like smartphones tablets and
television remote controls Herersquos Statistarsquos reasoning
ldquoDevices whose primary function is not for the
automation or remote control of household
equipment eg smartphones and tablets are not
included here Similarly devices whose reason for
purchase is only related to household connection
and remote control to a limited extent such as
Smart-TVs refrigerators or ovens are also not
includedrdquo
Whatrsquos important though is that a $7 billion dollar industry in 2015 is forecast to grow
to a more than $32 billion dollar industry by 2021
CONSUMER ELECTRONICS
27
Revenue in the smart home marketin millions US dollar
2021202020192018201720162015
32191
28468
24249
19495
14649
104327237
40000
30000
20000
10000
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy Management
Besides new products and a shift toward the IoT the Smart Home segmentrsquos relatively
small penetration rate between 1-18 depending on the segment is expected to
further drive growth
Smart home penetration ratein percent (US)
2020201920182017201620152014
80
60
40
20
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
28
Connected-home device shipments according to BI Intelligence will grow at a compound
annual rate of 67 over the next five years to 18 billion units shipped in 2019
Global connected-home device annual shipmentsin millions
2000
1800
1600
1400
1200
1000
800
600
400
200
0
2012 2013 2014E 2015E 2016E 2017E 2018E 2019E
We are here
67 CAGR2014-2019
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
29
Despite the fact that a sizable portion of the total addressable market has yet to adopt
Smart Home technology analysts suggest shipment growth is expected to peak in the
coming years While the following chart obviously doesnrsquot take into account the invention
of innovative new Smart Home products decelerating growth towards the back portion of
the decade may also pressure the average revenue per Smart Household
Average revenue per smart home in the smart home marketin US dollar
2021202020192018201720162015
450
400
350
300
250
200
150
100
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
CONSUMER ELECTRONICS
30
TREND 04
The Connected Car EvolvesIndustry estimates suggest more than 380 million connected cars will be on the road
by 2021 and have the ability to stream music surf the web alert drivers to traffic and
weather conditions and possibly even self-park Tech companies will play a significant
role as analysts who routinely upwardly adjust their forecasts for this segment expect
fully autonomous vehicles to be on the market in just a few years
Estimated connected car shipmentsin millions (worldwide)
2015E 2016E 2017E 2018E 2019E 2020E 2021E
50
100
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
31
In addition to autonomous vehicles the connected car market is defined by features
such as
bull Content amp Services
bull Safety amp Driving Assistance
bull Navigation Services
bull Diagnostics amp Maintenance
bull Connectivity
These technologies are forecast to more than double revenue in the connected car
market from more than $10 billion USD in 2017 to more than $21 billion USD by 2021
Revenue in the connected car marketin millions US dollar
21217
17026
13556
10376
80116109
4622
25000
20000
15000
10000
5000
0
Content amp Services
Safety amp Driving Assistance
Navigation ServicesDiagnostics amp Maintenance
Connectivity
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
32
While the definition of a connected car is likely to evolve in the years to come today there
are six categories of connectivity that are defining and driving this trend
SOURCE STRATEGYamp
Mobility Management Functions that allow the driver to reach a destination quickly safely and in a
cost-efficient manner
Examplesbull Current traffic informationbull Parking lot or garage assistance
bull Optimized fuel consumption
SafetyFunctions that warn the driver of external hazards and internal responses of the
vehicle to hazards
Examplesbull Collision protectionbull Hazard warnings
bull Emergency functions
Driver AssistanceFunctions invovling partially or fully
automatic driving
Examplesbull Operational assistance or autopilot in
heavy traffic in parking or on highways
Well-beingFunctions involving the driverrsquos comfort
and ability and fitness to drive
Examplesbull Fatigue detectionbull Automatic environment adjustments
to keep drivers alert
bull Medical assistance
Vehicle ManagementFunctions that aid in the driver in reducing
operating costs and improving ease of use
Examplesbull Vehicle condition and service remindersbull Remote operation
bull Transfer of usage data
EntertainmentFunctions involving the entertainment
of the driver and passengers
Examplesbull Smartphone interfacebull WLAN hot spotbull Music video internet social media
bull Mobile office
CONSUMER ELECTRONICS
33
Just 93 of vehicles manufactured in 2016 are considered connected cars However
demand is expected to increase in part when lower vehicle price points are implemented
as market research indicates that many of todayrsquos connected cars tend to be relatively
luxurious models with average selling prices of $55000 Consistent with that the
connected car penetration rate is projected to be 277 by 2020
34
61
93
131
176
225
277
Penetration rate in the connected car marketin percent (US)
0
5
10
15
20
25
30
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
34
However as the market becomes more saturated with connected cars average revenue
per connected car is projected to decline to $66685 USD by 2020
115029
84312
72679
6742065447 6668566075
Revenue per connected carin US dollars
1200
1100
1000
900
800
700
6002014 2015 2016 2017 2018 2019 2020
SOURCE STATISTA
CONSUMER ELECTRONICS
35
In addition to realigning automaker IT departments and creating user-friendly interfaces
that are IoT compatible and potentially even device agnostic analysts suggest connected
car manufacturers will have to overcome this challenge
Faster Product CyclesldquoThe typical product cycle in the passenger car
industry is about eight years in the consumer
electronics industry itrsquos less than a year To
successfully sell electronics products for connected
cars automakers will need to mimic the rapid
development cycles of the consumer electronics
companies The key for the automakers is to learn
to build perfectly functioning modular systems
into which updates and product developments can
be integrated quickly and with little effort Such a
modular infotainment building set would allow for
individual components to be updated through plug-
and-play technologies several times during a carrsquos
life cyclerdquo
CONSUMER ELECTRONICS
36
If yoursquore wondering why connected cars were included under consumer electronics
consider how the world will change when self-driving vehicles are status quo Google has
already logged more than 1 million autonomous vehicle miles and has been involved in
just 12 minor crashes in six years none of which were the fault of the driverless car
Once autonomous vehicles become part of our driving fabric expect next generation
connected cars to offer driverspassengers additional options in terms of the devices that
can interact with the vehicle
Smartphone temperature control amp bed-like seat adjustment applications and voice control of windows car hoods amp trunks and streaming music
Remote control or voice activated aftermarket add-ons that allow a passenger to plug in an electric car or pump gas remotely
Innovative cameras and real time editing software that allow for video conferencing that appears as if itrsquos being conducted in an office rather than a car
CONSUMER ELECTRONICS
37
TREND 05
Commercial Drones Take (Test) FlightWhile civilian use of drones may be what many first picture when they think of drones
itrsquos the military use of drones that has been driving demand Specifically military use of
drones has far outpaced civilian use of drones when measured by revenue Defense
spending on drones is projected to be robust through 2024
Global aerial drone marketin billions $14
$12
$10
$8
$6
$4
$2
$0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
DefenseCivilian
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
38
However research also suggests the civilian and commercial markets are expected to
grow significantly as drones are used in new and innovative ways Analysts at Grand View
Research describe future applications such as
ldquoAgriculture is expected to emerge as the dominant
application sector over the forecast period on
account of several benefits attained such as yield
increase due to crop monitoring Tech giants such
as Facebook Inc and Google Inc are planning
to use solar powered UAVs that hover around the
atmosphere of the earth providing internet access
to the remotest of places acting as flying internet
access points or hotspots In addition Amazon has
been working on Prime Air a drone delivery system
that promises goods delivered within 30 minutes
after order placementrdquo
CONSUMER ELECTRONICS
39
The list of potential drone applications includes
bull Agriculture
bull Law Enforcement
bull Ecommerce Delivery
bull Mapping amp Imagery
bull Wildlife Patrolling
bull Forest Fire Management
12000
10000
8000
6000
4000
2000
00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Agriculture
Energy
GovernmentMedia amp Entertainment
Others
US commercial drone market by application 2012-2022USD million
SOURCE GRAND VIEW RESEARCH
bull Vehicle Traffic Control
bull Marketing amp Entertainment
bull Energy amp Mining
bull Real Estate
bull News Gathering
bull Infrastructure Monitoring
CONSUMER ELECTRONICS
40
Research indicates sales of commercial and civilian drones will grow at a compound
annual rate of 19 between 2015 and 2020 The economic impact of the commercial
drone segment is forecast to grow to $51 billion by 2025
While some analysts argue package delivery will not be an early priority the impact
drones have on the delivery of consumer electronics may be relatively muted as only
a third of the people surveyed recently trust a drone to deliver consumer electronics
The economic impact of the commercial drone sectordirect economic impact from the UAV industry in the United States (billion US dollars)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$12
$23
$35 $36$38 $40
$42 $44 $4649
$51
SOURCE STATISTA
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
17
Industry Trends
PAGE 18 INTRODUCTION
PAGE 19 TREND 01
The Smartphone Matures
PAGE 22 TREND 02
Emerging Markets Drive Demand
PAGE 25 TREND 03
Home Automation Spikes as the loT Grows
PAGE 30 TREND 04
The Connected Car Evolves
PAGE 37 TREND 05
Commercial Drones Take (Test) Flight
PAGE 43 TREND 06
3D Printing Evolves Beyond Just Prototyping
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
18
The trends impacting the consumer electronics industry are creating opportunistic yet
challenging environments in which to operate Besides increased competition currency
concerns and economic headwinds in Europe and Asia-Pacific are making it increasingly
difficult for manufacturers of consumer electronics to grow their top lines while also
protecting margins
While demand for some traditional tech devices appears to be slowing demand for newer products in the car home and beyond is helping to offset some of the lost revenue How those trends combine with future technologies the ability to continue investing in RampD and whether the worldrsquos economies will position consumers to pay for expensive tech products will dictate how the following five trends play out the second half of the decade
CONSUMER ELECTRONICS
19
TREND 01
The Smartphone MaturesResearch suggests some people are more willing to go without sex rather than go without
their mobile phones In fact 26 of those surveyed said they could not live without their
phones versus 20 who said they couldnrsquot live without sex
SOURCE STATISTA
Source Harris Interactive
CONSUMER ELECTRONICS
20
Despite the opportunity emerging markets provide smartphone makers data indicate
the smartphone market is maturing In 2015 according to Accenture less than half of
smartphone owners plan to purchase a new one
Some analysts argue that phone and data service providers that no longer subsidize the
price of phones may be negatively impacting demand However smartphone makers may
also be victims of their own success and simply unable to innovate or add breathtaking new
features as quickly as consumers have been accustomed Nearly half of the consumers not
planning to purchase a new smartphone say theyrsquore happy with the device they have or
SOURCE ACCENTURE
SOURCE ACCENTURE
CONSUMER ELECTRONICS
21
The data indicate itrsquos not just smartphone demand thatrsquos slowing Consumer demand
for certain televisions laptops and tablets is also expected to be sluggish year over year
As was the case with smartphones consumers appear to be happy with what they
already have
The trend combined with other variables has negatively impacted 2015 holiday sales
at Best Buy prompted Samsung to warn of slower growth in 2016 and could result in
Applersquos first ever year-over-year decline in iPhone sales in Q2 2016 However on the Q1
2016 earnings call Apple CEO Tim Cook revealed the $691 (ASP) iPhone was taking share
from Android and sounded optimistic albeit cautious due to signs of economic strain in
Hong Kong regarding the companyrsquos prospects in emerging markets
SOURCE ACCENTURE
CONSUMER ELECTRONICS
22
Market analysts project sales of consumer electronics in emerging markets to grow at a
compound annual rate of 15 between 2015-2020 Growth is forecast to be most robust
in the Asia-Pacific region excluding Japan Increasingly the focus will be on China where
sales are forecast to grow by $18 billion USD in 2015
Forecasting a surge in the globalmiddle class
Poor
Middle ClassRich
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
9
8
7
6
5
4
3
2
1
0
TREND 02
Emerging Markets Drive DemandResearch suggests the world has lived through two middle class expansions since 1800
during the Industrial Revolution and after World War II Today research analysts argue
wersquore living through a third The data indicate that by 2030 two thirds of the global middle
class will live in the Asia-Pacific region up from just under one-third in 2009
SOURCE EY
CONSUMER ELECTRONICS
23
Lifting the lid on the Chinese consumer suggests consumer electronics manufacturers
may have room to sell products at higher price points Jean-Marc Bellaiche senior partner
and managing director at The Boston Consulting Group argues there are two drivers of
growth in the Chinese economy
1
2
The Emerging Middle ClassldquoAmong the emerging middle class the ldquoaspirational
massesrdquo also called the ldquotrendy metropolitanrdquo
comprises 330 million consumers and 25-27 percent
of the luxury market and the ldquorising middle classrdquo
made up of ldquothe proud business womanrdquo is 70
million consumers and 25-27 percent of the marketrdquo
An Increase In The Number of MillionairesldquoThere are also two types of millionaires new
money and old money New money also called ldquothe
loan traderrdquo or ldquothe Russian climberrdquo is 75 million
people and 30-35 percent of the luxury market
The old money crowd can be generalized as the
ldquonoble Italian entrepreneurrdquo This group is 25 million
consumers and 10-15 percent of the luxury marketrdquo
CONSUMER ELECTRONICS
24
In other words approximately one billion people in China or as much as 70 of the
population are projected to be middle class by 2030
Remember India is poised for explosive middle class growth as well Analysts at EY
recently projected
China total income by band 2010 and 2020annual income thousands of people
50+
30-50
15-30
5-15
0-5
2010 2020
112
2085
2388
933
3137
54
433
1619
499
US$
US$b
ldquoIndiarsquos global middle class meanwhile at around
50 million people or 5 of the population is much
smaller We expect this to grow steadily over the
next decade reaching 200 million by 2020 After
this we expect growth to really accelerate reaching
475 million by 2030 and adding more people than
the Chinese to the global middle class worldwide
after 2027rdquo
SOURCE EY
CONSUMER ELECTRONICS
25
Home automation
Ambient Asissted Living
Security
Energy Management
Home Entertainment
TREND 03
Home Automation Spikes as the loT GrowsThe second half of the decade is poised for explosive growth in the Smart Home market
segment To illustrate the growth potential in this segment wersquoll rely on data from Statista
as itrsquos a bit more conservative than other industry estimates
WARNING You can easily find research reports that contradict one another in terms of
how fast this segment is growing and is projected to grow through 2020 However the
productsincluded in the Smart Home segment varies which means yoursquore not always
comparing apples to apples
When we talk about the Smart Home segment wersquore including
CONSUMER ELECTRONICS
26
Not included in the data wersquoll highlight are devices like smartphones tablets and
television remote controls Herersquos Statistarsquos reasoning
ldquoDevices whose primary function is not for the
automation or remote control of household
equipment eg smartphones and tablets are not
included here Similarly devices whose reason for
purchase is only related to household connection
and remote control to a limited extent such as
Smart-TVs refrigerators or ovens are also not
includedrdquo
Whatrsquos important though is that a $7 billion dollar industry in 2015 is forecast to grow
to a more than $32 billion dollar industry by 2021
CONSUMER ELECTRONICS
27
Revenue in the smart home marketin millions US dollar
2021202020192018201720162015
32191
28468
24249
19495
14649
104327237
40000
30000
20000
10000
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy Management
Besides new products and a shift toward the IoT the Smart Home segmentrsquos relatively
small penetration rate between 1-18 depending on the segment is expected to
further drive growth
Smart home penetration ratein percent (US)
2020201920182017201620152014
80
60
40
20
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
28
Connected-home device shipments according to BI Intelligence will grow at a compound
annual rate of 67 over the next five years to 18 billion units shipped in 2019
Global connected-home device annual shipmentsin millions
2000
1800
1600
1400
1200
1000
800
600
400
200
0
2012 2013 2014E 2015E 2016E 2017E 2018E 2019E
We are here
67 CAGR2014-2019
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
29
Despite the fact that a sizable portion of the total addressable market has yet to adopt
Smart Home technology analysts suggest shipment growth is expected to peak in the
coming years While the following chart obviously doesnrsquot take into account the invention
of innovative new Smart Home products decelerating growth towards the back portion of
the decade may also pressure the average revenue per Smart Household
Average revenue per smart home in the smart home marketin US dollar
2021202020192018201720162015
450
400
350
300
250
200
150
100
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
CONSUMER ELECTRONICS
30
TREND 04
The Connected Car EvolvesIndustry estimates suggest more than 380 million connected cars will be on the road
by 2021 and have the ability to stream music surf the web alert drivers to traffic and
weather conditions and possibly even self-park Tech companies will play a significant
role as analysts who routinely upwardly adjust their forecasts for this segment expect
fully autonomous vehicles to be on the market in just a few years
Estimated connected car shipmentsin millions (worldwide)
2015E 2016E 2017E 2018E 2019E 2020E 2021E
50
100
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
31
In addition to autonomous vehicles the connected car market is defined by features
such as
bull Content amp Services
bull Safety amp Driving Assistance
bull Navigation Services
bull Diagnostics amp Maintenance
bull Connectivity
These technologies are forecast to more than double revenue in the connected car
market from more than $10 billion USD in 2017 to more than $21 billion USD by 2021
Revenue in the connected car marketin millions US dollar
21217
17026
13556
10376
80116109
4622
25000
20000
15000
10000
5000
0
Content amp Services
Safety amp Driving Assistance
Navigation ServicesDiagnostics amp Maintenance
Connectivity
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
32
While the definition of a connected car is likely to evolve in the years to come today there
are six categories of connectivity that are defining and driving this trend
SOURCE STRATEGYamp
Mobility Management Functions that allow the driver to reach a destination quickly safely and in a
cost-efficient manner
Examplesbull Current traffic informationbull Parking lot or garage assistance
bull Optimized fuel consumption
SafetyFunctions that warn the driver of external hazards and internal responses of the
vehicle to hazards
Examplesbull Collision protectionbull Hazard warnings
bull Emergency functions
Driver AssistanceFunctions invovling partially or fully
automatic driving
Examplesbull Operational assistance or autopilot in
heavy traffic in parking or on highways
Well-beingFunctions involving the driverrsquos comfort
and ability and fitness to drive
Examplesbull Fatigue detectionbull Automatic environment adjustments
to keep drivers alert
bull Medical assistance
Vehicle ManagementFunctions that aid in the driver in reducing
operating costs and improving ease of use
Examplesbull Vehicle condition and service remindersbull Remote operation
bull Transfer of usage data
EntertainmentFunctions involving the entertainment
of the driver and passengers
Examplesbull Smartphone interfacebull WLAN hot spotbull Music video internet social media
bull Mobile office
CONSUMER ELECTRONICS
33
Just 93 of vehicles manufactured in 2016 are considered connected cars However
demand is expected to increase in part when lower vehicle price points are implemented
as market research indicates that many of todayrsquos connected cars tend to be relatively
luxurious models with average selling prices of $55000 Consistent with that the
connected car penetration rate is projected to be 277 by 2020
34
61
93
131
176
225
277
Penetration rate in the connected car marketin percent (US)
0
5
10
15
20
25
30
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
34
However as the market becomes more saturated with connected cars average revenue
per connected car is projected to decline to $66685 USD by 2020
115029
84312
72679
6742065447 6668566075
Revenue per connected carin US dollars
1200
1100
1000
900
800
700
6002014 2015 2016 2017 2018 2019 2020
SOURCE STATISTA
CONSUMER ELECTRONICS
35
In addition to realigning automaker IT departments and creating user-friendly interfaces
that are IoT compatible and potentially even device agnostic analysts suggest connected
car manufacturers will have to overcome this challenge
Faster Product CyclesldquoThe typical product cycle in the passenger car
industry is about eight years in the consumer
electronics industry itrsquos less than a year To
successfully sell electronics products for connected
cars automakers will need to mimic the rapid
development cycles of the consumer electronics
companies The key for the automakers is to learn
to build perfectly functioning modular systems
into which updates and product developments can
be integrated quickly and with little effort Such a
modular infotainment building set would allow for
individual components to be updated through plug-
and-play technologies several times during a carrsquos
life cyclerdquo
CONSUMER ELECTRONICS
36
If yoursquore wondering why connected cars were included under consumer electronics
consider how the world will change when self-driving vehicles are status quo Google has
already logged more than 1 million autonomous vehicle miles and has been involved in
just 12 minor crashes in six years none of which were the fault of the driverless car
Once autonomous vehicles become part of our driving fabric expect next generation
connected cars to offer driverspassengers additional options in terms of the devices that
can interact with the vehicle
Smartphone temperature control amp bed-like seat adjustment applications and voice control of windows car hoods amp trunks and streaming music
Remote control or voice activated aftermarket add-ons that allow a passenger to plug in an electric car or pump gas remotely
Innovative cameras and real time editing software that allow for video conferencing that appears as if itrsquos being conducted in an office rather than a car
CONSUMER ELECTRONICS
37
TREND 05
Commercial Drones Take (Test) FlightWhile civilian use of drones may be what many first picture when they think of drones
itrsquos the military use of drones that has been driving demand Specifically military use of
drones has far outpaced civilian use of drones when measured by revenue Defense
spending on drones is projected to be robust through 2024
Global aerial drone marketin billions $14
$12
$10
$8
$6
$4
$2
$0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
DefenseCivilian
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
38
However research also suggests the civilian and commercial markets are expected to
grow significantly as drones are used in new and innovative ways Analysts at Grand View
Research describe future applications such as
ldquoAgriculture is expected to emerge as the dominant
application sector over the forecast period on
account of several benefits attained such as yield
increase due to crop monitoring Tech giants such
as Facebook Inc and Google Inc are planning
to use solar powered UAVs that hover around the
atmosphere of the earth providing internet access
to the remotest of places acting as flying internet
access points or hotspots In addition Amazon has
been working on Prime Air a drone delivery system
that promises goods delivered within 30 minutes
after order placementrdquo
CONSUMER ELECTRONICS
39
The list of potential drone applications includes
bull Agriculture
bull Law Enforcement
bull Ecommerce Delivery
bull Mapping amp Imagery
bull Wildlife Patrolling
bull Forest Fire Management
12000
10000
8000
6000
4000
2000
00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Agriculture
Energy
GovernmentMedia amp Entertainment
Others
US commercial drone market by application 2012-2022USD million
SOURCE GRAND VIEW RESEARCH
bull Vehicle Traffic Control
bull Marketing amp Entertainment
bull Energy amp Mining
bull Real Estate
bull News Gathering
bull Infrastructure Monitoring
CONSUMER ELECTRONICS
40
Research indicates sales of commercial and civilian drones will grow at a compound
annual rate of 19 between 2015 and 2020 The economic impact of the commercial
drone segment is forecast to grow to $51 billion by 2025
While some analysts argue package delivery will not be an early priority the impact
drones have on the delivery of consumer electronics may be relatively muted as only
a third of the people surveyed recently trust a drone to deliver consumer electronics
The economic impact of the commercial drone sectordirect economic impact from the UAV industry in the United States (billion US dollars)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$12
$23
$35 $36$38 $40
$42 $44 $4649
$51
SOURCE STATISTA
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
18
The trends impacting the consumer electronics industry are creating opportunistic yet
challenging environments in which to operate Besides increased competition currency
concerns and economic headwinds in Europe and Asia-Pacific are making it increasingly
difficult for manufacturers of consumer electronics to grow their top lines while also
protecting margins
While demand for some traditional tech devices appears to be slowing demand for newer products in the car home and beyond is helping to offset some of the lost revenue How those trends combine with future technologies the ability to continue investing in RampD and whether the worldrsquos economies will position consumers to pay for expensive tech products will dictate how the following five trends play out the second half of the decade
CONSUMER ELECTRONICS
19
TREND 01
The Smartphone MaturesResearch suggests some people are more willing to go without sex rather than go without
their mobile phones In fact 26 of those surveyed said they could not live without their
phones versus 20 who said they couldnrsquot live without sex
SOURCE STATISTA
Source Harris Interactive
CONSUMER ELECTRONICS
20
Despite the opportunity emerging markets provide smartphone makers data indicate
the smartphone market is maturing In 2015 according to Accenture less than half of
smartphone owners plan to purchase a new one
Some analysts argue that phone and data service providers that no longer subsidize the
price of phones may be negatively impacting demand However smartphone makers may
also be victims of their own success and simply unable to innovate or add breathtaking new
features as quickly as consumers have been accustomed Nearly half of the consumers not
planning to purchase a new smartphone say theyrsquore happy with the device they have or
SOURCE ACCENTURE
SOURCE ACCENTURE
CONSUMER ELECTRONICS
21
The data indicate itrsquos not just smartphone demand thatrsquos slowing Consumer demand
for certain televisions laptops and tablets is also expected to be sluggish year over year
As was the case with smartphones consumers appear to be happy with what they
already have
The trend combined with other variables has negatively impacted 2015 holiday sales
at Best Buy prompted Samsung to warn of slower growth in 2016 and could result in
Applersquos first ever year-over-year decline in iPhone sales in Q2 2016 However on the Q1
2016 earnings call Apple CEO Tim Cook revealed the $691 (ASP) iPhone was taking share
from Android and sounded optimistic albeit cautious due to signs of economic strain in
Hong Kong regarding the companyrsquos prospects in emerging markets
SOURCE ACCENTURE
CONSUMER ELECTRONICS
22
Market analysts project sales of consumer electronics in emerging markets to grow at a
compound annual rate of 15 between 2015-2020 Growth is forecast to be most robust
in the Asia-Pacific region excluding Japan Increasingly the focus will be on China where
sales are forecast to grow by $18 billion USD in 2015
Forecasting a surge in the globalmiddle class
Poor
Middle ClassRich
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
9
8
7
6
5
4
3
2
1
0
TREND 02
Emerging Markets Drive DemandResearch suggests the world has lived through two middle class expansions since 1800
during the Industrial Revolution and after World War II Today research analysts argue
wersquore living through a third The data indicate that by 2030 two thirds of the global middle
class will live in the Asia-Pacific region up from just under one-third in 2009
SOURCE EY
CONSUMER ELECTRONICS
23
Lifting the lid on the Chinese consumer suggests consumer electronics manufacturers
may have room to sell products at higher price points Jean-Marc Bellaiche senior partner
and managing director at The Boston Consulting Group argues there are two drivers of
growth in the Chinese economy
1
2
The Emerging Middle ClassldquoAmong the emerging middle class the ldquoaspirational
massesrdquo also called the ldquotrendy metropolitanrdquo
comprises 330 million consumers and 25-27 percent
of the luxury market and the ldquorising middle classrdquo
made up of ldquothe proud business womanrdquo is 70
million consumers and 25-27 percent of the marketrdquo
An Increase In The Number of MillionairesldquoThere are also two types of millionaires new
money and old money New money also called ldquothe
loan traderrdquo or ldquothe Russian climberrdquo is 75 million
people and 30-35 percent of the luxury market
The old money crowd can be generalized as the
ldquonoble Italian entrepreneurrdquo This group is 25 million
consumers and 10-15 percent of the luxury marketrdquo
CONSUMER ELECTRONICS
24
In other words approximately one billion people in China or as much as 70 of the
population are projected to be middle class by 2030
Remember India is poised for explosive middle class growth as well Analysts at EY
recently projected
China total income by band 2010 and 2020annual income thousands of people
50+
30-50
15-30
5-15
0-5
2010 2020
112
2085
2388
933
3137
54
433
1619
499
US$
US$b
ldquoIndiarsquos global middle class meanwhile at around
50 million people or 5 of the population is much
smaller We expect this to grow steadily over the
next decade reaching 200 million by 2020 After
this we expect growth to really accelerate reaching
475 million by 2030 and adding more people than
the Chinese to the global middle class worldwide
after 2027rdquo
SOURCE EY
CONSUMER ELECTRONICS
25
Home automation
Ambient Asissted Living
Security
Energy Management
Home Entertainment
TREND 03
Home Automation Spikes as the loT GrowsThe second half of the decade is poised for explosive growth in the Smart Home market
segment To illustrate the growth potential in this segment wersquoll rely on data from Statista
as itrsquos a bit more conservative than other industry estimates
WARNING You can easily find research reports that contradict one another in terms of
how fast this segment is growing and is projected to grow through 2020 However the
productsincluded in the Smart Home segment varies which means yoursquore not always
comparing apples to apples
When we talk about the Smart Home segment wersquore including
CONSUMER ELECTRONICS
26
Not included in the data wersquoll highlight are devices like smartphones tablets and
television remote controls Herersquos Statistarsquos reasoning
ldquoDevices whose primary function is not for the
automation or remote control of household
equipment eg smartphones and tablets are not
included here Similarly devices whose reason for
purchase is only related to household connection
and remote control to a limited extent such as
Smart-TVs refrigerators or ovens are also not
includedrdquo
Whatrsquos important though is that a $7 billion dollar industry in 2015 is forecast to grow
to a more than $32 billion dollar industry by 2021
CONSUMER ELECTRONICS
27
Revenue in the smart home marketin millions US dollar
2021202020192018201720162015
32191
28468
24249
19495
14649
104327237
40000
30000
20000
10000
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy Management
Besides new products and a shift toward the IoT the Smart Home segmentrsquos relatively
small penetration rate between 1-18 depending on the segment is expected to
further drive growth
Smart home penetration ratein percent (US)
2020201920182017201620152014
80
60
40
20
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
28
Connected-home device shipments according to BI Intelligence will grow at a compound
annual rate of 67 over the next five years to 18 billion units shipped in 2019
Global connected-home device annual shipmentsin millions
2000
1800
1600
1400
1200
1000
800
600
400
200
0
2012 2013 2014E 2015E 2016E 2017E 2018E 2019E
We are here
67 CAGR2014-2019
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
29
Despite the fact that a sizable portion of the total addressable market has yet to adopt
Smart Home technology analysts suggest shipment growth is expected to peak in the
coming years While the following chart obviously doesnrsquot take into account the invention
of innovative new Smart Home products decelerating growth towards the back portion of
the decade may also pressure the average revenue per Smart Household
Average revenue per smart home in the smart home marketin US dollar
2021202020192018201720162015
450
400
350
300
250
200
150
100
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
CONSUMER ELECTRONICS
30
TREND 04
The Connected Car EvolvesIndustry estimates suggest more than 380 million connected cars will be on the road
by 2021 and have the ability to stream music surf the web alert drivers to traffic and
weather conditions and possibly even self-park Tech companies will play a significant
role as analysts who routinely upwardly adjust their forecasts for this segment expect
fully autonomous vehicles to be on the market in just a few years
Estimated connected car shipmentsin millions (worldwide)
2015E 2016E 2017E 2018E 2019E 2020E 2021E
50
100
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
31
In addition to autonomous vehicles the connected car market is defined by features
such as
bull Content amp Services
bull Safety amp Driving Assistance
bull Navigation Services
bull Diagnostics amp Maintenance
bull Connectivity
These technologies are forecast to more than double revenue in the connected car
market from more than $10 billion USD in 2017 to more than $21 billion USD by 2021
Revenue in the connected car marketin millions US dollar
21217
17026
13556
10376
80116109
4622
25000
20000
15000
10000
5000
0
Content amp Services
Safety amp Driving Assistance
Navigation ServicesDiagnostics amp Maintenance
Connectivity
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
32
While the definition of a connected car is likely to evolve in the years to come today there
are six categories of connectivity that are defining and driving this trend
SOURCE STRATEGYamp
Mobility Management Functions that allow the driver to reach a destination quickly safely and in a
cost-efficient manner
Examplesbull Current traffic informationbull Parking lot or garage assistance
bull Optimized fuel consumption
SafetyFunctions that warn the driver of external hazards and internal responses of the
vehicle to hazards
Examplesbull Collision protectionbull Hazard warnings
bull Emergency functions
Driver AssistanceFunctions invovling partially or fully
automatic driving
Examplesbull Operational assistance or autopilot in
heavy traffic in parking or on highways
Well-beingFunctions involving the driverrsquos comfort
and ability and fitness to drive
Examplesbull Fatigue detectionbull Automatic environment adjustments
to keep drivers alert
bull Medical assistance
Vehicle ManagementFunctions that aid in the driver in reducing
operating costs and improving ease of use
Examplesbull Vehicle condition and service remindersbull Remote operation
bull Transfer of usage data
EntertainmentFunctions involving the entertainment
of the driver and passengers
Examplesbull Smartphone interfacebull WLAN hot spotbull Music video internet social media
bull Mobile office
CONSUMER ELECTRONICS
33
Just 93 of vehicles manufactured in 2016 are considered connected cars However
demand is expected to increase in part when lower vehicle price points are implemented
as market research indicates that many of todayrsquos connected cars tend to be relatively
luxurious models with average selling prices of $55000 Consistent with that the
connected car penetration rate is projected to be 277 by 2020
34
61
93
131
176
225
277
Penetration rate in the connected car marketin percent (US)
0
5
10
15
20
25
30
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
34
However as the market becomes more saturated with connected cars average revenue
per connected car is projected to decline to $66685 USD by 2020
115029
84312
72679
6742065447 6668566075
Revenue per connected carin US dollars
1200
1100
1000
900
800
700
6002014 2015 2016 2017 2018 2019 2020
SOURCE STATISTA
CONSUMER ELECTRONICS
35
In addition to realigning automaker IT departments and creating user-friendly interfaces
that are IoT compatible and potentially even device agnostic analysts suggest connected
car manufacturers will have to overcome this challenge
Faster Product CyclesldquoThe typical product cycle in the passenger car
industry is about eight years in the consumer
electronics industry itrsquos less than a year To
successfully sell electronics products for connected
cars automakers will need to mimic the rapid
development cycles of the consumer electronics
companies The key for the automakers is to learn
to build perfectly functioning modular systems
into which updates and product developments can
be integrated quickly and with little effort Such a
modular infotainment building set would allow for
individual components to be updated through plug-
and-play technologies several times during a carrsquos
life cyclerdquo
CONSUMER ELECTRONICS
36
If yoursquore wondering why connected cars were included under consumer electronics
consider how the world will change when self-driving vehicles are status quo Google has
already logged more than 1 million autonomous vehicle miles and has been involved in
just 12 minor crashes in six years none of which were the fault of the driverless car
Once autonomous vehicles become part of our driving fabric expect next generation
connected cars to offer driverspassengers additional options in terms of the devices that
can interact with the vehicle
Smartphone temperature control amp bed-like seat adjustment applications and voice control of windows car hoods amp trunks and streaming music
Remote control or voice activated aftermarket add-ons that allow a passenger to plug in an electric car or pump gas remotely
Innovative cameras and real time editing software that allow for video conferencing that appears as if itrsquos being conducted in an office rather than a car
CONSUMER ELECTRONICS
37
TREND 05
Commercial Drones Take (Test) FlightWhile civilian use of drones may be what many first picture when they think of drones
itrsquos the military use of drones that has been driving demand Specifically military use of
drones has far outpaced civilian use of drones when measured by revenue Defense
spending on drones is projected to be robust through 2024
Global aerial drone marketin billions $14
$12
$10
$8
$6
$4
$2
$0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
DefenseCivilian
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
38
However research also suggests the civilian and commercial markets are expected to
grow significantly as drones are used in new and innovative ways Analysts at Grand View
Research describe future applications such as
ldquoAgriculture is expected to emerge as the dominant
application sector over the forecast period on
account of several benefits attained such as yield
increase due to crop monitoring Tech giants such
as Facebook Inc and Google Inc are planning
to use solar powered UAVs that hover around the
atmosphere of the earth providing internet access
to the remotest of places acting as flying internet
access points or hotspots In addition Amazon has
been working on Prime Air a drone delivery system
that promises goods delivered within 30 minutes
after order placementrdquo
CONSUMER ELECTRONICS
39
The list of potential drone applications includes
bull Agriculture
bull Law Enforcement
bull Ecommerce Delivery
bull Mapping amp Imagery
bull Wildlife Patrolling
bull Forest Fire Management
12000
10000
8000
6000
4000
2000
00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Agriculture
Energy
GovernmentMedia amp Entertainment
Others
US commercial drone market by application 2012-2022USD million
SOURCE GRAND VIEW RESEARCH
bull Vehicle Traffic Control
bull Marketing amp Entertainment
bull Energy amp Mining
bull Real Estate
bull News Gathering
bull Infrastructure Monitoring
CONSUMER ELECTRONICS
40
Research indicates sales of commercial and civilian drones will grow at a compound
annual rate of 19 between 2015 and 2020 The economic impact of the commercial
drone segment is forecast to grow to $51 billion by 2025
While some analysts argue package delivery will not be an early priority the impact
drones have on the delivery of consumer electronics may be relatively muted as only
a third of the people surveyed recently trust a drone to deliver consumer electronics
The economic impact of the commercial drone sectordirect economic impact from the UAV industry in the United States (billion US dollars)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$12
$23
$35 $36$38 $40
$42 $44 $4649
$51
SOURCE STATISTA
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
19
TREND 01
The Smartphone MaturesResearch suggests some people are more willing to go without sex rather than go without
their mobile phones In fact 26 of those surveyed said they could not live without their
phones versus 20 who said they couldnrsquot live without sex
SOURCE STATISTA
Source Harris Interactive
CONSUMER ELECTRONICS
20
Despite the opportunity emerging markets provide smartphone makers data indicate
the smartphone market is maturing In 2015 according to Accenture less than half of
smartphone owners plan to purchase a new one
Some analysts argue that phone and data service providers that no longer subsidize the
price of phones may be negatively impacting demand However smartphone makers may
also be victims of their own success and simply unable to innovate or add breathtaking new
features as quickly as consumers have been accustomed Nearly half of the consumers not
planning to purchase a new smartphone say theyrsquore happy with the device they have or
SOURCE ACCENTURE
SOURCE ACCENTURE
CONSUMER ELECTRONICS
21
The data indicate itrsquos not just smartphone demand thatrsquos slowing Consumer demand
for certain televisions laptops and tablets is also expected to be sluggish year over year
As was the case with smartphones consumers appear to be happy with what they
already have
The trend combined with other variables has negatively impacted 2015 holiday sales
at Best Buy prompted Samsung to warn of slower growth in 2016 and could result in
Applersquos first ever year-over-year decline in iPhone sales in Q2 2016 However on the Q1
2016 earnings call Apple CEO Tim Cook revealed the $691 (ASP) iPhone was taking share
from Android and sounded optimistic albeit cautious due to signs of economic strain in
Hong Kong regarding the companyrsquos prospects in emerging markets
SOURCE ACCENTURE
CONSUMER ELECTRONICS
22
Market analysts project sales of consumer electronics in emerging markets to grow at a
compound annual rate of 15 between 2015-2020 Growth is forecast to be most robust
in the Asia-Pacific region excluding Japan Increasingly the focus will be on China where
sales are forecast to grow by $18 billion USD in 2015
Forecasting a surge in the globalmiddle class
Poor
Middle ClassRich
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
9
8
7
6
5
4
3
2
1
0
TREND 02
Emerging Markets Drive DemandResearch suggests the world has lived through two middle class expansions since 1800
during the Industrial Revolution and after World War II Today research analysts argue
wersquore living through a third The data indicate that by 2030 two thirds of the global middle
class will live in the Asia-Pacific region up from just under one-third in 2009
SOURCE EY
CONSUMER ELECTRONICS
23
Lifting the lid on the Chinese consumer suggests consumer electronics manufacturers
may have room to sell products at higher price points Jean-Marc Bellaiche senior partner
and managing director at The Boston Consulting Group argues there are two drivers of
growth in the Chinese economy
1
2
The Emerging Middle ClassldquoAmong the emerging middle class the ldquoaspirational
massesrdquo also called the ldquotrendy metropolitanrdquo
comprises 330 million consumers and 25-27 percent
of the luxury market and the ldquorising middle classrdquo
made up of ldquothe proud business womanrdquo is 70
million consumers and 25-27 percent of the marketrdquo
An Increase In The Number of MillionairesldquoThere are also two types of millionaires new
money and old money New money also called ldquothe
loan traderrdquo or ldquothe Russian climberrdquo is 75 million
people and 30-35 percent of the luxury market
The old money crowd can be generalized as the
ldquonoble Italian entrepreneurrdquo This group is 25 million
consumers and 10-15 percent of the luxury marketrdquo
CONSUMER ELECTRONICS
24
In other words approximately one billion people in China or as much as 70 of the
population are projected to be middle class by 2030
Remember India is poised for explosive middle class growth as well Analysts at EY
recently projected
China total income by band 2010 and 2020annual income thousands of people
50+
30-50
15-30
5-15
0-5
2010 2020
112
2085
2388
933
3137
54
433
1619
499
US$
US$b
ldquoIndiarsquos global middle class meanwhile at around
50 million people or 5 of the population is much
smaller We expect this to grow steadily over the
next decade reaching 200 million by 2020 After
this we expect growth to really accelerate reaching
475 million by 2030 and adding more people than
the Chinese to the global middle class worldwide
after 2027rdquo
SOURCE EY
CONSUMER ELECTRONICS
25
Home automation
Ambient Asissted Living
Security
Energy Management
Home Entertainment
TREND 03
Home Automation Spikes as the loT GrowsThe second half of the decade is poised for explosive growth in the Smart Home market
segment To illustrate the growth potential in this segment wersquoll rely on data from Statista
as itrsquos a bit more conservative than other industry estimates
WARNING You can easily find research reports that contradict one another in terms of
how fast this segment is growing and is projected to grow through 2020 However the
productsincluded in the Smart Home segment varies which means yoursquore not always
comparing apples to apples
When we talk about the Smart Home segment wersquore including
CONSUMER ELECTRONICS
26
Not included in the data wersquoll highlight are devices like smartphones tablets and
television remote controls Herersquos Statistarsquos reasoning
ldquoDevices whose primary function is not for the
automation or remote control of household
equipment eg smartphones and tablets are not
included here Similarly devices whose reason for
purchase is only related to household connection
and remote control to a limited extent such as
Smart-TVs refrigerators or ovens are also not
includedrdquo
Whatrsquos important though is that a $7 billion dollar industry in 2015 is forecast to grow
to a more than $32 billion dollar industry by 2021
CONSUMER ELECTRONICS
27
Revenue in the smart home marketin millions US dollar
2021202020192018201720162015
32191
28468
24249
19495
14649
104327237
40000
30000
20000
10000
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy Management
Besides new products and a shift toward the IoT the Smart Home segmentrsquos relatively
small penetration rate between 1-18 depending on the segment is expected to
further drive growth
Smart home penetration ratein percent (US)
2020201920182017201620152014
80
60
40
20
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
28
Connected-home device shipments according to BI Intelligence will grow at a compound
annual rate of 67 over the next five years to 18 billion units shipped in 2019
Global connected-home device annual shipmentsin millions
2000
1800
1600
1400
1200
1000
800
600
400
200
0
2012 2013 2014E 2015E 2016E 2017E 2018E 2019E
We are here
67 CAGR2014-2019
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
29
Despite the fact that a sizable portion of the total addressable market has yet to adopt
Smart Home technology analysts suggest shipment growth is expected to peak in the
coming years While the following chart obviously doesnrsquot take into account the invention
of innovative new Smart Home products decelerating growth towards the back portion of
the decade may also pressure the average revenue per Smart Household
Average revenue per smart home in the smart home marketin US dollar
2021202020192018201720162015
450
400
350
300
250
200
150
100
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
CONSUMER ELECTRONICS
30
TREND 04
The Connected Car EvolvesIndustry estimates suggest more than 380 million connected cars will be on the road
by 2021 and have the ability to stream music surf the web alert drivers to traffic and
weather conditions and possibly even self-park Tech companies will play a significant
role as analysts who routinely upwardly adjust their forecasts for this segment expect
fully autonomous vehicles to be on the market in just a few years
Estimated connected car shipmentsin millions (worldwide)
2015E 2016E 2017E 2018E 2019E 2020E 2021E
50
100
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
31
In addition to autonomous vehicles the connected car market is defined by features
such as
bull Content amp Services
bull Safety amp Driving Assistance
bull Navigation Services
bull Diagnostics amp Maintenance
bull Connectivity
These technologies are forecast to more than double revenue in the connected car
market from more than $10 billion USD in 2017 to more than $21 billion USD by 2021
Revenue in the connected car marketin millions US dollar
21217
17026
13556
10376
80116109
4622
25000
20000
15000
10000
5000
0
Content amp Services
Safety amp Driving Assistance
Navigation ServicesDiagnostics amp Maintenance
Connectivity
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
32
While the definition of a connected car is likely to evolve in the years to come today there
are six categories of connectivity that are defining and driving this trend
SOURCE STRATEGYamp
Mobility Management Functions that allow the driver to reach a destination quickly safely and in a
cost-efficient manner
Examplesbull Current traffic informationbull Parking lot or garage assistance
bull Optimized fuel consumption
SafetyFunctions that warn the driver of external hazards and internal responses of the
vehicle to hazards
Examplesbull Collision protectionbull Hazard warnings
bull Emergency functions
Driver AssistanceFunctions invovling partially or fully
automatic driving
Examplesbull Operational assistance or autopilot in
heavy traffic in parking or on highways
Well-beingFunctions involving the driverrsquos comfort
and ability and fitness to drive
Examplesbull Fatigue detectionbull Automatic environment adjustments
to keep drivers alert
bull Medical assistance
Vehicle ManagementFunctions that aid in the driver in reducing
operating costs and improving ease of use
Examplesbull Vehicle condition and service remindersbull Remote operation
bull Transfer of usage data
EntertainmentFunctions involving the entertainment
of the driver and passengers
Examplesbull Smartphone interfacebull WLAN hot spotbull Music video internet social media
bull Mobile office
CONSUMER ELECTRONICS
33
Just 93 of vehicles manufactured in 2016 are considered connected cars However
demand is expected to increase in part when lower vehicle price points are implemented
as market research indicates that many of todayrsquos connected cars tend to be relatively
luxurious models with average selling prices of $55000 Consistent with that the
connected car penetration rate is projected to be 277 by 2020
34
61
93
131
176
225
277
Penetration rate in the connected car marketin percent (US)
0
5
10
15
20
25
30
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
34
However as the market becomes more saturated with connected cars average revenue
per connected car is projected to decline to $66685 USD by 2020
115029
84312
72679
6742065447 6668566075
Revenue per connected carin US dollars
1200
1100
1000
900
800
700
6002014 2015 2016 2017 2018 2019 2020
SOURCE STATISTA
CONSUMER ELECTRONICS
35
In addition to realigning automaker IT departments and creating user-friendly interfaces
that are IoT compatible and potentially even device agnostic analysts suggest connected
car manufacturers will have to overcome this challenge
Faster Product CyclesldquoThe typical product cycle in the passenger car
industry is about eight years in the consumer
electronics industry itrsquos less than a year To
successfully sell electronics products for connected
cars automakers will need to mimic the rapid
development cycles of the consumer electronics
companies The key for the automakers is to learn
to build perfectly functioning modular systems
into which updates and product developments can
be integrated quickly and with little effort Such a
modular infotainment building set would allow for
individual components to be updated through plug-
and-play technologies several times during a carrsquos
life cyclerdquo
CONSUMER ELECTRONICS
36
If yoursquore wondering why connected cars were included under consumer electronics
consider how the world will change when self-driving vehicles are status quo Google has
already logged more than 1 million autonomous vehicle miles and has been involved in
just 12 minor crashes in six years none of which were the fault of the driverless car
Once autonomous vehicles become part of our driving fabric expect next generation
connected cars to offer driverspassengers additional options in terms of the devices that
can interact with the vehicle
Smartphone temperature control amp bed-like seat adjustment applications and voice control of windows car hoods amp trunks and streaming music
Remote control or voice activated aftermarket add-ons that allow a passenger to plug in an electric car or pump gas remotely
Innovative cameras and real time editing software that allow for video conferencing that appears as if itrsquos being conducted in an office rather than a car
CONSUMER ELECTRONICS
37
TREND 05
Commercial Drones Take (Test) FlightWhile civilian use of drones may be what many first picture when they think of drones
itrsquos the military use of drones that has been driving demand Specifically military use of
drones has far outpaced civilian use of drones when measured by revenue Defense
spending on drones is projected to be robust through 2024
Global aerial drone marketin billions $14
$12
$10
$8
$6
$4
$2
$0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
DefenseCivilian
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
38
However research also suggests the civilian and commercial markets are expected to
grow significantly as drones are used in new and innovative ways Analysts at Grand View
Research describe future applications such as
ldquoAgriculture is expected to emerge as the dominant
application sector over the forecast period on
account of several benefits attained such as yield
increase due to crop monitoring Tech giants such
as Facebook Inc and Google Inc are planning
to use solar powered UAVs that hover around the
atmosphere of the earth providing internet access
to the remotest of places acting as flying internet
access points or hotspots In addition Amazon has
been working on Prime Air a drone delivery system
that promises goods delivered within 30 minutes
after order placementrdquo
CONSUMER ELECTRONICS
39
The list of potential drone applications includes
bull Agriculture
bull Law Enforcement
bull Ecommerce Delivery
bull Mapping amp Imagery
bull Wildlife Patrolling
bull Forest Fire Management
12000
10000
8000
6000
4000
2000
00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Agriculture
Energy
GovernmentMedia amp Entertainment
Others
US commercial drone market by application 2012-2022USD million
SOURCE GRAND VIEW RESEARCH
bull Vehicle Traffic Control
bull Marketing amp Entertainment
bull Energy amp Mining
bull Real Estate
bull News Gathering
bull Infrastructure Monitoring
CONSUMER ELECTRONICS
40
Research indicates sales of commercial and civilian drones will grow at a compound
annual rate of 19 between 2015 and 2020 The economic impact of the commercial
drone segment is forecast to grow to $51 billion by 2025
While some analysts argue package delivery will not be an early priority the impact
drones have on the delivery of consumer electronics may be relatively muted as only
a third of the people surveyed recently trust a drone to deliver consumer electronics
The economic impact of the commercial drone sectordirect economic impact from the UAV industry in the United States (billion US dollars)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$12
$23
$35 $36$38 $40
$42 $44 $4649
$51
SOURCE STATISTA
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
20
Despite the opportunity emerging markets provide smartphone makers data indicate
the smartphone market is maturing In 2015 according to Accenture less than half of
smartphone owners plan to purchase a new one
Some analysts argue that phone and data service providers that no longer subsidize the
price of phones may be negatively impacting demand However smartphone makers may
also be victims of their own success and simply unable to innovate or add breathtaking new
features as quickly as consumers have been accustomed Nearly half of the consumers not
planning to purchase a new smartphone say theyrsquore happy with the device they have or
SOURCE ACCENTURE
SOURCE ACCENTURE
CONSUMER ELECTRONICS
21
The data indicate itrsquos not just smartphone demand thatrsquos slowing Consumer demand
for certain televisions laptops and tablets is also expected to be sluggish year over year
As was the case with smartphones consumers appear to be happy with what they
already have
The trend combined with other variables has negatively impacted 2015 holiday sales
at Best Buy prompted Samsung to warn of slower growth in 2016 and could result in
Applersquos first ever year-over-year decline in iPhone sales in Q2 2016 However on the Q1
2016 earnings call Apple CEO Tim Cook revealed the $691 (ASP) iPhone was taking share
from Android and sounded optimistic albeit cautious due to signs of economic strain in
Hong Kong regarding the companyrsquos prospects in emerging markets
SOURCE ACCENTURE
CONSUMER ELECTRONICS
22
Market analysts project sales of consumer electronics in emerging markets to grow at a
compound annual rate of 15 between 2015-2020 Growth is forecast to be most robust
in the Asia-Pacific region excluding Japan Increasingly the focus will be on China where
sales are forecast to grow by $18 billion USD in 2015
Forecasting a surge in the globalmiddle class
Poor
Middle ClassRich
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
9
8
7
6
5
4
3
2
1
0
TREND 02
Emerging Markets Drive DemandResearch suggests the world has lived through two middle class expansions since 1800
during the Industrial Revolution and after World War II Today research analysts argue
wersquore living through a third The data indicate that by 2030 two thirds of the global middle
class will live in the Asia-Pacific region up from just under one-third in 2009
SOURCE EY
CONSUMER ELECTRONICS
23
Lifting the lid on the Chinese consumer suggests consumer electronics manufacturers
may have room to sell products at higher price points Jean-Marc Bellaiche senior partner
and managing director at The Boston Consulting Group argues there are two drivers of
growth in the Chinese economy
1
2
The Emerging Middle ClassldquoAmong the emerging middle class the ldquoaspirational
massesrdquo also called the ldquotrendy metropolitanrdquo
comprises 330 million consumers and 25-27 percent
of the luxury market and the ldquorising middle classrdquo
made up of ldquothe proud business womanrdquo is 70
million consumers and 25-27 percent of the marketrdquo
An Increase In The Number of MillionairesldquoThere are also two types of millionaires new
money and old money New money also called ldquothe
loan traderrdquo or ldquothe Russian climberrdquo is 75 million
people and 30-35 percent of the luxury market
The old money crowd can be generalized as the
ldquonoble Italian entrepreneurrdquo This group is 25 million
consumers and 10-15 percent of the luxury marketrdquo
CONSUMER ELECTRONICS
24
In other words approximately one billion people in China or as much as 70 of the
population are projected to be middle class by 2030
Remember India is poised for explosive middle class growth as well Analysts at EY
recently projected
China total income by band 2010 and 2020annual income thousands of people
50+
30-50
15-30
5-15
0-5
2010 2020
112
2085
2388
933
3137
54
433
1619
499
US$
US$b
ldquoIndiarsquos global middle class meanwhile at around
50 million people or 5 of the population is much
smaller We expect this to grow steadily over the
next decade reaching 200 million by 2020 After
this we expect growth to really accelerate reaching
475 million by 2030 and adding more people than
the Chinese to the global middle class worldwide
after 2027rdquo
SOURCE EY
CONSUMER ELECTRONICS
25
Home automation
Ambient Asissted Living
Security
Energy Management
Home Entertainment
TREND 03
Home Automation Spikes as the loT GrowsThe second half of the decade is poised for explosive growth in the Smart Home market
segment To illustrate the growth potential in this segment wersquoll rely on data from Statista
as itrsquos a bit more conservative than other industry estimates
WARNING You can easily find research reports that contradict one another in terms of
how fast this segment is growing and is projected to grow through 2020 However the
productsincluded in the Smart Home segment varies which means yoursquore not always
comparing apples to apples
When we talk about the Smart Home segment wersquore including
CONSUMER ELECTRONICS
26
Not included in the data wersquoll highlight are devices like smartphones tablets and
television remote controls Herersquos Statistarsquos reasoning
ldquoDevices whose primary function is not for the
automation or remote control of household
equipment eg smartphones and tablets are not
included here Similarly devices whose reason for
purchase is only related to household connection
and remote control to a limited extent such as
Smart-TVs refrigerators or ovens are also not
includedrdquo
Whatrsquos important though is that a $7 billion dollar industry in 2015 is forecast to grow
to a more than $32 billion dollar industry by 2021
CONSUMER ELECTRONICS
27
Revenue in the smart home marketin millions US dollar
2021202020192018201720162015
32191
28468
24249
19495
14649
104327237
40000
30000
20000
10000
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy Management
Besides new products and a shift toward the IoT the Smart Home segmentrsquos relatively
small penetration rate between 1-18 depending on the segment is expected to
further drive growth
Smart home penetration ratein percent (US)
2020201920182017201620152014
80
60
40
20
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
28
Connected-home device shipments according to BI Intelligence will grow at a compound
annual rate of 67 over the next five years to 18 billion units shipped in 2019
Global connected-home device annual shipmentsin millions
2000
1800
1600
1400
1200
1000
800
600
400
200
0
2012 2013 2014E 2015E 2016E 2017E 2018E 2019E
We are here
67 CAGR2014-2019
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
29
Despite the fact that a sizable portion of the total addressable market has yet to adopt
Smart Home technology analysts suggest shipment growth is expected to peak in the
coming years While the following chart obviously doesnrsquot take into account the invention
of innovative new Smart Home products decelerating growth towards the back portion of
the decade may also pressure the average revenue per Smart Household
Average revenue per smart home in the smart home marketin US dollar
2021202020192018201720162015
450
400
350
300
250
200
150
100
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
CONSUMER ELECTRONICS
30
TREND 04
The Connected Car EvolvesIndustry estimates suggest more than 380 million connected cars will be on the road
by 2021 and have the ability to stream music surf the web alert drivers to traffic and
weather conditions and possibly even self-park Tech companies will play a significant
role as analysts who routinely upwardly adjust their forecasts for this segment expect
fully autonomous vehicles to be on the market in just a few years
Estimated connected car shipmentsin millions (worldwide)
2015E 2016E 2017E 2018E 2019E 2020E 2021E
50
100
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
31
In addition to autonomous vehicles the connected car market is defined by features
such as
bull Content amp Services
bull Safety amp Driving Assistance
bull Navigation Services
bull Diagnostics amp Maintenance
bull Connectivity
These technologies are forecast to more than double revenue in the connected car
market from more than $10 billion USD in 2017 to more than $21 billion USD by 2021
Revenue in the connected car marketin millions US dollar
21217
17026
13556
10376
80116109
4622
25000
20000
15000
10000
5000
0
Content amp Services
Safety amp Driving Assistance
Navigation ServicesDiagnostics amp Maintenance
Connectivity
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
32
While the definition of a connected car is likely to evolve in the years to come today there
are six categories of connectivity that are defining and driving this trend
SOURCE STRATEGYamp
Mobility Management Functions that allow the driver to reach a destination quickly safely and in a
cost-efficient manner
Examplesbull Current traffic informationbull Parking lot or garage assistance
bull Optimized fuel consumption
SafetyFunctions that warn the driver of external hazards and internal responses of the
vehicle to hazards
Examplesbull Collision protectionbull Hazard warnings
bull Emergency functions
Driver AssistanceFunctions invovling partially or fully
automatic driving
Examplesbull Operational assistance or autopilot in
heavy traffic in parking or on highways
Well-beingFunctions involving the driverrsquos comfort
and ability and fitness to drive
Examplesbull Fatigue detectionbull Automatic environment adjustments
to keep drivers alert
bull Medical assistance
Vehicle ManagementFunctions that aid in the driver in reducing
operating costs and improving ease of use
Examplesbull Vehicle condition and service remindersbull Remote operation
bull Transfer of usage data
EntertainmentFunctions involving the entertainment
of the driver and passengers
Examplesbull Smartphone interfacebull WLAN hot spotbull Music video internet social media
bull Mobile office
CONSUMER ELECTRONICS
33
Just 93 of vehicles manufactured in 2016 are considered connected cars However
demand is expected to increase in part when lower vehicle price points are implemented
as market research indicates that many of todayrsquos connected cars tend to be relatively
luxurious models with average selling prices of $55000 Consistent with that the
connected car penetration rate is projected to be 277 by 2020
34
61
93
131
176
225
277
Penetration rate in the connected car marketin percent (US)
0
5
10
15
20
25
30
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
34
However as the market becomes more saturated with connected cars average revenue
per connected car is projected to decline to $66685 USD by 2020
115029
84312
72679
6742065447 6668566075
Revenue per connected carin US dollars
1200
1100
1000
900
800
700
6002014 2015 2016 2017 2018 2019 2020
SOURCE STATISTA
CONSUMER ELECTRONICS
35
In addition to realigning automaker IT departments and creating user-friendly interfaces
that are IoT compatible and potentially even device agnostic analysts suggest connected
car manufacturers will have to overcome this challenge
Faster Product CyclesldquoThe typical product cycle in the passenger car
industry is about eight years in the consumer
electronics industry itrsquos less than a year To
successfully sell electronics products for connected
cars automakers will need to mimic the rapid
development cycles of the consumer electronics
companies The key for the automakers is to learn
to build perfectly functioning modular systems
into which updates and product developments can
be integrated quickly and with little effort Such a
modular infotainment building set would allow for
individual components to be updated through plug-
and-play technologies several times during a carrsquos
life cyclerdquo
CONSUMER ELECTRONICS
36
If yoursquore wondering why connected cars were included under consumer electronics
consider how the world will change when self-driving vehicles are status quo Google has
already logged more than 1 million autonomous vehicle miles and has been involved in
just 12 minor crashes in six years none of which were the fault of the driverless car
Once autonomous vehicles become part of our driving fabric expect next generation
connected cars to offer driverspassengers additional options in terms of the devices that
can interact with the vehicle
Smartphone temperature control amp bed-like seat adjustment applications and voice control of windows car hoods amp trunks and streaming music
Remote control or voice activated aftermarket add-ons that allow a passenger to plug in an electric car or pump gas remotely
Innovative cameras and real time editing software that allow for video conferencing that appears as if itrsquos being conducted in an office rather than a car
CONSUMER ELECTRONICS
37
TREND 05
Commercial Drones Take (Test) FlightWhile civilian use of drones may be what many first picture when they think of drones
itrsquos the military use of drones that has been driving demand Specifically military use of
drones has far outpaced civilian use of drones when measured by revenue Defense
spending on drones is projected to be robust through 2024
Global aerial drone marketin billions $14
$12
$10
$8
$6
$4
$2
$0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
DefenseCivilian
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
38
However research also suggests the civilian and commercial markets are expected to
grow significantly as drones are used in new and innovative ways Analysts at Grand View
Research describe future applications such as
ldquoAgriculture is expected to emerge as the dominant
application sector over the forecast period on
account of several benefits attained such as yield
increase due to crop monitoring Tech giants such
as Facebook Inc and Google Inc are planning
to use solar powered UAVs that hover around the
atmosphere of the earth providing internet access
to the remotest of places acting as flying internet
access points or hotspots In addition Amazon has
been working on Prime Air a drone delivery system
that promises goods delivered within 30 minutes
after order placementrdquo
CONSUMER ELECTRONICS
39
The list of potential drone applications includes
bull Agriculture
bull Law Enforcement
bull Ecommerce Delivery
bull Mapping amp Imagery
bull Wildlife Patrolling
bull Forest Fire Management
12000
10000
8000
6000
4000
2000
00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Agriculture
Energy
GovernmentMedia amp Entertainment
Others
US commercial drone market by application 2012-2022USD million
SOURCE GRAND VIEW RESEARCH
bull Vehicle Traffic Control
bull Marketing amp Entertainment
bull Energy amp Mining
bull Real Estate
bull News Gathering
bull Infrastructure Monitoring
CONSUMER ELECTRONICS
40
Research indicates sales of commercial and civilian drones will grow at a compound
annual rate of 19 between 2015 and 2020 The economic impact of the commercial
drone segment is forecast to grow to $51 billion by 2025
While some analysts argue package delivery will not be an early priority the impact
drones have on the delivery of consumer electronics may be relatively muted as only
a third of the people surveyed recently trust a drone to deliver consumer electronics
The economic impact of the commercial drone sectordirect economic impact from the UAV industry in the United States (billion US dollars)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$12
$23
$35 $36$38 $40
$42 $44 $4649
$51
SOURCE STATISTA
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
21
The data indicate itrsquos not just smartphone demand thatrsquos slowing Consumer demand
for certain televisions laptops and tablets is also expected to be sluggish year over year
As was the case with smartphones consumers appear to be happy with what they
already have
The trend combined with other variables has negatively impacted 2015 holiday sales
at Best Buy prompted Samsung to warn of slower growth in 2016 and could result in
Applersquos first ever year-over-year decline in iPhone sales in Q2 2016 However on the Q1
2016 earnings call Apple CEO Tim Cook revealed the $691 (ASP) iPhone was taking share
from Android and sounded optimistic albeit cautious due to signs of economic strain in
Hong Kong regarding the companyrsquos prospects in emerging markets
SOURCE ACCENTURE
CONSUMER ELECTRONICS
22
Market analysts project sales of consumer electronics in emerging markets to grow at a
compound annual rate of 15 between 2015-2020 Growth is forecast to be most robust
in the Asia-Pacific region excluding Japan Increasingly the focus will be on China where
sales are forecast to grow by $18 billion USD in 2015
Forecasting a surge in the globalmiddle class
Poor
Middle ClassRich
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
9
8
7
6
5
4
3
2
1
0
TREND 02
Emerging Markets Drive DemandResearch suggests the world has lived through two middle class expansions since 1800
during the Industrial Revolution and after World War II Today research analysts argue
wersquore living through a third The data indicate that by 2030 two thirds of the global middle
class will live in the Asia-Pacific region up from just under one-third in 2009
SOURCE EY
CONSUMER ELECTRONICS
23
Lifting the lid on the Chinese consumer suggests consumer electronics manufacturers
may have room to sell products at higher price points Jean-Marc Bellaiche senior partner
and managing director at The Boston Consulting Group argues there are two drivers of
growth in the Chinese economy
1
2
The Emerging Middle ClassldquoAmong the emerging middle class the ldquoaspirational
massesrdquo also called the ldquotrendy metropolitanrdquo
comprises 330 million consumers and 25-27 percent
of the luxury market and the ldquorising middle classrdquo
made up of ldquothe proud business womanrdquo is 70
million consumers and 25-27 percent of the marketrdquo
An Increase In The Number of MillionairesldquoThere are also two types of millionaires new
money and old money New money also called ldquothe
loan traderrdquo or ldquothe Russian climberrdquo is 75 million
people and 30-35 percent of the luxury market
The old money crowd can be generalized as the
ldquonoble Italian entrepreneurrdquo This group is 25 million
consumers and 10-15 percent of the luxury marketrdquo
CONSUMER ELECTRONICS
24
In other words approximately one billion people in China or as much as 70 of the
population are projected to be middle class by 2030
Remember India is poised for explosive middle class growth as well Analysts at EY
recently projected
China total income by band 2010 and 2020annual income thousands of people
50+
30-50
15-30
5-15
0-5
2010 2020
112
2085
2388
933
3137
54
433
1619
499
US$
US$b
ldquoIndiarsquos global middle class meanwhile at around
50 million people or 5 of the population is much
smaller We expect this to grow steadily over the
next decade reaching 200 million by 2020 After
this we expect growth to really accelerate reaching
475 million by 2030 and adding more people than
the Chinese to the global middle class worldwide
after 2027rdquo
SOURCE EY
CONSUMER ELECTRONICS
25
Home automation
Ambient Asissted Living
Security
Energy Management
Home Entertainment
TREND 03
Home Automation Spikes as the loT GrowsThe second half of the decade is poised for explosive growth in the Smart Home market
segment To illustrate the growth potential in this segment wersquoll rely on data from Statista
as itrsquos a bit more conservative than other industry estimates
WARNING You can easily find research reports that contradict one another in terms of
how fast this segment is growing and is projected to grow through 2020 However the
productsincluded in the Smart Home segment varies which means yoursquore not always
comparing apples to apples
When we talk about the Smart Home segment wersquore including
CONSUMER ELECTRONICS
26
Not included in the data wersquoll highlight are devices like smartphones tablets and
television remote controls Herersquos Statistarsquos reasoning
ldquoDevices whose primary function is not for the
automation or remote control of household
equipment eg smartphones and tablets are not
included here Similarly devices whose reason for
purchase is only related to household connection
and remote control to a limited extent such as
Smart-TVs refrigerators or ovens are also not
includedrdquo
Whatrsquos important though is that a $7 billion dollar industry in 2015 is forecast to grow
to a more than $32 billion dollar industry by 2021
CONSUMER ELECTRONICS
27
Revenue in the smart home marketin millions US dollar
2021202020192018201720162015
32191
28468
24249
19495
14649
104327237
40000
30000
20000
10000
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy Management
Besides new products and a shift toward the IoT the Smart Home segmentrsquos relatively
small penetration rate between 1-18 depending on the segment is expected to
further drive growth
Smart home penetration ratein percent (US)
2020201920182017201620152014
80
60
40
20
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
28
Connected-home device shipments according to BI Intelligence will grow at a compound
annual rate of 67 over the next five years to 18 billion units shipped in 2019
Global connected-home device annual shipmentsin millions
2000
1800
1600
1400
1200
1000
800
600
400
200
0
2012 2013 2014E 2015E 2016E 2017E 2018E 2019E
We are here
67 CAGR2014-2019
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
29
Despite the fact that a sizable portion of the total addressable market has yet to adopt
Smart Home technology analysts suggest shipment growth is expected to peak in the
coming years While the following chart obviously doesnrsquot take into account the invention
of innovative new Smart Home products decelerating growth towards the back portion of
the decade may also pressure the average revenue per Smart Household
Average revenue per smart home in the smart home marketin US dollar
2021202020192018201720162015
450
400
350
300
250
200
150
100
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
CONSUMER ELECTRONICS
30
TREND 04
The Connected Car EvolvesIndustry estimates suggest more than 380 million connected cars will be on the road
by 2021 and have the ability to stream music surf the web alert drivers to traffic and
weather conditions and possibly even self-park Tech companies will play a significant
role as analysts who routinely upwardly adjust their forecasts for this segment expect
fully autonomous vehicles to be on the market in just a few years
Estimated connected car shipmentsin millions (worldwide)
2015E 2016E 2017E 2018E 2019E 2020E 2021E
50
100
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
31
In addition to autonomous vehicles the connected car market is defined by features
such as
bull Content amp Services
bull Safety amp Driving Assistance
bull Navigation Services
bull Diagnostics amp Maintenance
bull Connectivity
These technologies are forecast to more than double revenue in the connected car
market from more than $10 billion USD in 2017 to more than $21 billion USD by 2021
Revenue in the connected car marketin millions US dollar
21217
17026
13556
10376
80116109
4622
25000
20000
15000
10000
5000
0
Content amp Services
Safety amp Driving Assistance
Navigation ServicesDiagnostics amp Maintenance
Connectivity
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
32
While the definition of a connected car is likely to evolve in the years to come today there
are six categories of connectivity that are defining and driving this trend
SOURCE STRATEGYamp
Mobility Management Functions that allow the driver to reach a destination quickly safely and in a
cost-efficient manner
Examplesbull Current traffic informationbull Parking lot or garage assistance
bull Optimized fuel consumption
SafetyFunctions that warn the driver of external hazards and internal responses of the
vehicle to hazards
Examplesbull Collision protectionbull Hazard warnings
bull Emergency functions
Driver AssistanceFunctions invovling partially or fully
automatic driving
Examplesbull Operational assistance or autopilot in
heavy traffic in parking or on highways
Well-beingFunctions involving the driverrsquos comfort
and ability and fitness to drive
Examplesbull Fatigue detectionbull Automatic environment adjustments
to keep drivers alert
bull Medical assistance
Vehicle ManagementFunctions that aid in the driver in reducing
operating costs and improving ease of use
Examplesbull Vehicle condition and service remindersbull Remote operation
bull Transfer of usage data
EntertainmentFunctions involving the entertainment
of the driver and passengers
Examplesbull Smartphone interfacebull WLAN hot spotbull Music video internet social media
bull Mobile office
CONSUMER ELECTRONICS
33
Just 93 of vehicles manufactured in 2016 are considered connected cars However
demand is expected to increase in part when lower vehicle price points are implemented
as market research indicates that many of todayrsquos connected cars tend to be relatively
luxurious models with average selling prices of $55000 Consistent with that the
connected car penetration rate is projected to be 277 by 2020
34
61
93
131
176
225
277
Penetration rate in the connected car marketin percent (US)
0
5
10
15
20
25
30
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
34
However as the market becomes more saturated with connected cars average revenue
per connected car is projected to decline to $66685 USD by 2020
115029
84312
72679
6742065447 6668566075
Revenue per connected carin US dollars
1200
1100
1000
900
800
700
6002014 2015 2016 2017 2018 2019 2020
SOURCE STATISTA
CONSUMER ELECTRONICS
35
In addition to realigning automaker IT departments and creating user-friendly interfaces
that are IoT compatible and potentially even device agnostic analysts suggest connected
car manufacturers will have to overcome this challenge
Faster Product CyclesldquoThe typical product cycle in the passenger car
industry is about eight years in the consumer
electronics industry itrsquos less than a year To
successfully sell electronics products for connected
cars automakers will need to mimic the rapid
development cycles of the consumer electronics
companies The key for the automakers is to learn
to build perfectly functioning modular systems
into which updates and product developments can
be integrated quickly and with little effort Such a
modular infotainment building set would allow for
individual components to be updated through plug-
and-play technologies several times during a carrsquos
life cyclerdquo
CONSUMER ELECTRONICS
36
If yoursquore wondering why connected cars were included under consumer electronics
consider how the world will change when self-driving vehicles are status quo Google has
already logged more than 1 million autonomous vehicle miles and has been involved in
just 12 minor crashes in six years none of which were the fault of the driverless car
Once autonomous vehicles become part of our driving fabric expect next generation
connected cars to offer driverspassengers additional options in terms of the devices that
can interact with the vehicle
Smartphone temperature control amp bed-like seat adjustment applications and voice control of windows car hoods amp trunks and streaming music
Remote control or voice activated aftermarket add-ons that allow a passenger to plug in an electric car or pump gas remotely
Innovative cameras and real time editing software that allow for video conferencing that appears as if itrsquos being conducted in an office rather than a car
CONSUMER ELECTRONICS
37
TREND 05
Commercial Drones Take (Test) FlightWhile civilian use of drones may be what many first picture when they think of drones
itrsquos the military use of drones that has been driving demand Specifically military use of
drones has far outpaced civilian use of drones when measured by revenue Defense
spending on drones is projected to be robust through 2024
Global aerial drone marketin billions $14
$12
$10
$8
$6
$4
$2
$0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
DefenseCivilian
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
38
However research also suggests the civilian and commercial markets are expected to
grow significantly as drones are used in new and innovative ways Analysts at Grand View
Research describe future applications such as
ldquoAgriculture is expected to emerge as the dominant
application sector over the forecast period on
account of several benefits attained such as yield
increase due to crop monitoring Tech giants such
as Facebook Inc and Google Inc are planning
to use solar powered UAVs that hover around the
atmosphere of the earth providing internet access
to the remotest of places acting as flying internet
access points or hotspots In addition Amazon has
been working on Prime Air a drone delivery system
that promises goods delivered within 30 minutes
after order placementrdquo
CONSUMER ELECTRONICS
39
The list of potential drone applications includes
bull Agriculture
bull Law Enforcement
bull Ecommerce Delivery
bull Mapping amp Imagery
bull Wildlife Patrolling
bull Forest Fire Management
12000
10000
8000
6000
4000
2000
00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Agriculture
Energy
GovernmentMedia amp Entertainment
Others
US commercial drone market by application 2012-2022USD million
SOURCE GRAND VIEW RESEARCH
bull Vehicle Traffic Control
bull Marketing amp Entertainment
bull Energy amp Mining
bull Real Estate
bull News Gathering
bull Infrastructure Monitoring
CONSUMER ELECTRONICS
40
Research indicates sales of commercial and civilian drones will grow at a compound
annual rate of 19 between 2015 and 2020 The economic impact of the commercial
drone segment is forecast to grow to $51 billion by 2025
While some analysts argue package delivery will not be an early priority the impact
drones have on the delivery of consumer electronics may be relatively muted as only
a third of the people surveyed recently trust a drone to deliver consumer electronics
The economic impact of the commercial drone sectordirect economic impact from the UAV industry in the United States (billion US dollars)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$12
$23
$35 $36$38 $40
$42 $44 $4649
$51
SOURCE STATISTA
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
22
Market analysts project sales of consumer electronics in emerging markets to grow at a
compound annual rate of 15 between 2015-2020 Growth is forecast to be most robust
in the Asia-Pacific region excluding Japan Increasingly the focus will be on China where
sales are forecast to grow by $18 billion USD in 2015
Forecasting a surge in the globalmiddle class
Poor
Middle ClassRich
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
9
8
7
6
5
4
3
2
1
0
TREND 02
Emerging Markets Drive DemandResearch suggests the world has lived through two middle class expansions since 1800
during the Industrial Revolution and after World War II Today research analysts argue
wersquore living through a third The data indicate that by 2030 two thirds of the global middle
class will live in the Asia-Pacific region up from just under one-third in 2009
SOURCE EY
CONSUMER ELECTRONICS
23
Lifting the lid on the Chinese consumer suggests consumer electronics manufacturers
may have room to sell products at higher price points Jean-Marc Bellaiche senior partner
and managing director at The Boston Consulting Group argues there are two drivers of
growth in the Chinese economy
1
2
The Emerging Middle ClassldquoAmong the emerging middle class the ldquoaspirational
massesrdquo also called the ldquotrendy metropolitanrdquo
comprises 330 million consumers and 25-27 percent
of the luxury market and the ldquorising middle classrdquo
made up of ldquothe proud business womanrdquo is 70
million consumers and 25-27 percent of the marketrdquo
An Increase In The Number of MillionairesldquoThere are also two types of millionaires new
money and old money New money also called ldquothe
loan traderrdquo or ldquothe Russian climberrdquo is 75 million
people and 30-35 percent of the luxury market
The old money crowd can be generalized as the
ldquonoble Italian entrepreneurrdquo This group is 25 million
consumers and 10-15 percent of the luxury marketrdquo
CONSUMER ELECTRONICS
24
In other words approximately one billion people in China or as much as 70 of the
population are projected to be middle class by 2030
Remember India is poised for explosive middle class growth as well Analysts at EY
recently projected
China total income by band 2010 and 2020annual income thousands of people
50+
30-50
15-30
5-15
0-5
2010 2020
112
2085
2388
933
3137
54
433
1619
499
US$
US$b
ldquoIndiarsquos global middle class meanwhile at around
50 million people or 5 of the population is much
smaller We expect this to grow steadily over the
next decade reaching 200 million by 2020 After
this we expect growth to really accelerate reaching
475 million by 2030 and adding more people than
the Chinese to the global middle class worldwide
after 2027rdquo
SOURCE EY
CONSUMER ELECTRONICS
25
Home automation
Ambient Asissted Living
Security
Energy Management
Home Entertainment
TREND 03
Home Automation Spikes as the loT GrowsThe second half of the decade is poised for explosive growth in the Smart Home market
segment To illustrate the growth potential in this segment wersquoll rely on data from Statista
as itrsquos a bit more conservative than other industry estimates
WARNING You can easily find research reports that contradict one another in terms of
how fast this segment is growing and is projected to grow through 2020 However the
productsincluded in the Smart Home segment varies which means yoursquore not always
comparing apples to apples
When we talk about the Smart Home segment wersquore including
CONSUMER ELECTRONICS
26
Not included in the data wersquoll highlight are devices like smartphones tablets and
television remote controls Herersquos Statistarsquos reasoning
ldquoDevices whose primary function is not for the
automation or remote control of household
equipment eg smartphones and tablets are not
included here Similarly devices whose reason for
purchase is only related to household connection
and remote control to a limited extent such as
Smart-TVs refrigerators or ovens are also not
includedrdquo
Whatrsquos important though is that a $7 billion dollar industry in 2015 is forecast to grow
to a more than $32 billion dollar industry by 2021
CONSUMER ELECTRONICS
27
Revenue in the smart home marketin millions US dollar
2021202020192018201720162015
32191
28468
24249
19495
14649
104327237
40000
30000
20000
10000
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy Management
Besides new products and a shift toward the IoT the Smart Home segmentrsquos relatively
small penetration rate between 1-18 depending on the segment is expected to
further drive growth
Smart home penetration ratein percent (US)
2020201920182017201620152014
80
60
40
20
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
28
Connected-home device shipments according to BI Intelligence will grow at a compound
annual rate of 67 over the next five years to 18 billion units shipped in 2019
Global connected-home device annual shipmentsin millions
2000
1800
1600
1400
1200
1000
800
600
400
200
0
2012 2013 2014E 2015E 2016E 2017E 2018E 2019E
We are here
67 CAGR2014-2019
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
29
Despite the fact that a sizable portion of the total addressable market has yet to adopt
Smart Home technology analysts suggest shipment growth is expected to peak in the
coming years While the following chart obviously doesnrsquot take into account the invention
of innovative new Smart Home products decelerating growth towards the back portion of
the decade may also pressure the average revenue per Smart Household
Average revenue per smart home in the smart home marketin US dollar
2021202020192018201720162015
450
400
350
300
250
200
150
100
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
CONSUMER ELECTRONICS
30
TREND 04
The Connected Car EvolvesIndustry estimates suggest more than 380 million connected cars will be on the road
by 2021 and have the ability to stream music surf the web alert drivers to traffic and
weather conditions and possibly even self-park Tech companies will play a significant
role as analysts who routinely upwardly adjust their forecasts for this segment expect
fully autonomous vehicles to be on the market in just a few years
Estimated connected car shipmentsin millions (worldwide)
2015E 2016E 2017E 2018E 2019E 2020E 2021E
50
100
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
31
In addition to autonomous vehicles the connected car market is defined by features
such as
bull Content amp Services
bull Safety amp Driving Assistance
bull Navigation Services
bull Diagnostics amp Maintenance
bull Connectivity
These technologies are forecast to more than double revenue in the connected car
market from more than $10 billion USD in 2017 to more than $21 billion USD by 2021
Revenue in the connected car marketin millions US dollar
21217
17026
13556
10376
80116109
4622
25000
20000
15000
10000
5000
0
Content amp Services
Safety amp Driving Assistance
Navigation ServicesDiagnostics amp Maintenance
Connectivity
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
32
While the definition of a connected car is likely to evolve in the years to come today there
are six categories of connectivity that are defining and driving this trend
SOURCE STRATEGYamp
Mobility Management Functions that allow the driver to reach a destination quickly safely and in a
cost-efficient manner
Examplesbull Current traffic informationbull Parking lot or garage assistance
bull Optimized fuel consumption
SafetyFunctions that warn the driver of external hazards and internal responses of the
vehicle to hazards
Examplesbull Collision protectionbull Hazard warnings
bull Emergency functions
Driver AssistanceFunctions invovling partially or fully
automatic driving
Examplesbull Operational assistance or autopilot in
heavy traffic in parking or on highways
Well-beingFunctions involving the driverrsquos comfort
and ability and fitness to drive
Examplesbull Fatigue detectionbull Automatic environment adjustments
to keep drivers alert
bull Medical assistance
Vehicle ManagementFunctions that aid in the driver in reducing
operating costs and improving ease of use
Examplesbull Vehicle condition and service remindersbull Remote operation
bull Transfer of usage data
EntertainmentFunctions involving the entertainment
of the driver and passengers
Examplesbull Smartphone interfacebull WLAN hot spotbull Music video internet social media
bull Mobile office
CONSUMER ELECTRONICS
33
Just 93 of vehicles manufactured in 2016 are considered connected cars However
demand is expected to increase in part when lower vehicle price points are implemented
as market research indicates that many of todayrsquos connected cars tend to be relatively
luxurious models with average selling prices of $55000 Consistent with that the
connected car penetration rate is projected to be 277 by 2020
34
61
93
131
176
225
277
Penetration rate in the connected car marketin percent (US)
0
5
10
15
20
25
30
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
34
However as the market becomes more saturated with connected cars average revenue
per connected car is projected to decline to $66685 USD by 2020
115029
84312
72679
6742065447 6668566075
Revenue per connected carin US dollars
1200
1100
1000
900
800
700
6002014 2015 2016 2017 2018 2019 2020
SOURCE STATISTA
CONSUMER ELECTRONICS
35
In addition to realigning automaker IT departments and creating user-friendly interfaces
that are IoT compatible and potentially even device agnostic analysts suggest connected
car manufacturers will have to overcome this challenge
Faster Product CyclesldquoThe typical product cycle in the passenger car
industry is about eight years in the consumer
electronics industry itrsquos less than a year To
successfully sell electronics products for connected
cars automakers will need to mimic the rapid
development cycles of the consumer electronics
companies The key for the automakers is to learn
to build perfectly functioning modular systems
into which updates and product developments can
be integrated quickly and with little effort Such a
modular infotainment building set would allow for
individual components to be updated through plug-
and-play technologies several times during a carrsquos
life cyclerdquo
CONSUMER ELECTRONICS
36
If yoursquore wondering why connected cars were included under consumer electronics
consider how the world will change when self-driving vehicles are status quo Google has
already logged more than 1 million autonomous vehicle miles and has been involved in
just 12 minor crashes in six years none of which were the fault of the driverless car
Once autonomous vehicles become part of our driving fabric expect next generation
connected cars to offer driverspassengers additional options in terms of the devices that
can interact with the vehicle
Smartphone temperature control amp bed-like seat adjustment applications and voice control of windows car hoods amp trunks and streaming music
Remote control or voice activated aftermarket add-ons that allow a passenger to plug in an electric car or pump gas remotely
Innovative cameras and real time editing software that allow for video conferencing that appears as if itrsquos being conducted in an office rather than a car
CONSUMER ELECTRONICS
37
TREND 05
Commercial Drones Take (Test) FlightWhile civilian use of drones may be what many first picture when they think of drones
itrsquos the military use of drones that has been driving demand Specifically military use of
drones has far outpaced civilian use of drones when measured by revenue Defense
spending on drones is projected to be robust through 2024
Global aerial drone marketin billions $14
$12
$10
$8
$6
$4
$2
$0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
DefenseCivilian
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
38
However research also suggests the civilian and commercial markets are expected to
grow significantly as drones are used in new and innovative ways Analysts at Grand View
Research describe future applications such as
ldquoAgriculture is expected to emerge as the dominant
application sector over the forecast period on
account of several benefits attained such as yield
increase due to crop monitoring Tech giants such
as Facebook Inc and Google Inc are planning
to use solar powered UAVs that hover around the
atmosphere of the earth providing internet access
to the remotest of places acting as flying internet
access points or hotspots In addition Amazon has
been working on Prime Air a drone delivery system
that promises goods delivered within 30 minutes
after order placementrdquo
CONSUMER ELECTRONICS
39
The list of potential drone applications includes
bull Agriculture
bull Law Enforcement
bull Ecommerce Delivery
bull Mapping amp Imagery
bull Wildlife Patrolling
bull Forest Fire Management
12000
10000
8000
6000
4000
2000
00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Agriculture
Energy
GovernmentMedia amp Entertainment
Others
US commercial drone market by application 2012-2022USD million
SOURCE GRAND VIEW RESEARCH
bull Vehicle Traffic Control
bull Marketing amp Entertainment
bull Energy amp Mining
bull Real Estate
bull News Gathering
bull Infrastructure Monitoring
CONSUMER ELECTRONICS
40
Research indicates sales of commercial and civilian drones will grow at a compound
annual rate of 19 between 2015 and 2020 The economic impact of the commercial
drone segment is forecast to grow to $51 billion by 2025
While some analysts argue package delivery will not be an early priority the impact
drones have on the delivery of consumer electronics may be relatively muted as only
a third of the people surveyed recently trust a drone to deliver consumer electronics
The economic impact of the commercial drone sectordirect economic impact from the UAV industry in the United States (billion US dollars)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$12
$23
$35 $36$38 $40
$42 $44 $4649
$51
SOURCE STATISTA
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
23
Lifting the lid on the Chinese consumer suggests consumer electronics manufacturers
may have room to sell products at higher price points Jean-Marc Bellaiche senior partner
and managing director at The Boston Consulting Group argues there are two drivers of
growth in the Chinese economy
1
2
The Emerging Middle ClassldquoAmong the emerging middle class the ldquoaspirational
massesrdquo also called the ldquotrendy metropolitanrdquo
comprises 330 million consumers and 25-27 percent
of the luxury market and the ldquorising middle classrdquo
made up of ldquothe proud business womanrdquo is 70
million consumers and 25-27 percent of the marketrdquo
An Increase In The Number of MillionairesldquoThere are also two types of millionaires new
money and old money New money also called ldquothe
loan traderrdquo or ldquothe Russian climberrdquo is 75 million
people and 30-35 percent of the luxury market
The old money crowd can be generalized as the
ldquonoble Italian entrepreneurrdquo This group is 25 million
consumers and 10-15 percent of the luxury marketrdquo
CONSUMER ELECTRONICS
24
In other words approximately one billion people in China or as much as 70 of the
population are projected to be middle class by 2030
Remember India is poised for explosive middle class growth as well Analysts at EY
recently projected
China total income by band 2010 and 2020annual income thousands of people
50+
30-50
15-30
5-15
0-5
2010 2020
112
2085
2388
933
3137
54
433
1619
499
US$
US$b
ldquoIndiarsquos global middle class meanwhile at around
50 million people or 5 of the population is much
smaller We expect this to grow steadily over the
next decade reaching 200 million by 2020 After
this we expect growth to really accelerate reaching
475 million by 2030 and adding more people than
the Chinese to the global middle class worldwide
after 2027rdquo
SOURCE EY
CONSUMER ELECTRONICS
25
Home automation
Ambient Asissted Living
Security
Energy Management
Home Entertainment
TREND 03
Home Automation Spikes as the loT GrowsThe second half of the decade is poised for explosive growth in the Smart Home market
segment To illustrate the growth potential in this segment wersquoll rely on data from Statista
as itrsquos a bit more conservative than other industry estimates
WARNING You can easily find research reports that contradict one another in terms of
how fast this segment is growing and is projected to grow through 2020 However the
productsincluded in the Smart Home segment varies which means yoursquore not always
comparing apples to apples
When we talk about the Smart Home segment wersquore including
CONSUMER ELECTRONICS
26
Not included in the data wersquoll highlight are devices like smartphones tablets and
television remote controls Herersquos Statistarsquos reasoning
ldquoDevices whose primary function is not for the
automation or remote control of household
equipment eg smartphones and tablets are not
included here Similarly devices whose reason for
purchase is only related to household connection
and remote control to a limited extent such as
Smart-TVs refrigerators or ovens are also not
includedrdquo
Whatrsquos important though is that a $7 billion dollar industry in 2015 is forecast to grow
to a more than $32 billion dollar industry by 2021
CONSUMER ELECTRONICS
27
Revenue in the smart home marketin millions US dollar
2021202020192018201720162015
32191
28468
24249
19495
14649
104327237
40000
30000
20000
10000
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy Management
Besides new products and a shift toward the IoT the Smart Home segmentrsquos relatively
small penetration rate between 1-18 depending on the segment is expected to
further drive growth
Smart home penetration ratein percent (US)
2020201920182017201620152014
80
60
40
20
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
28
Connected-home device shipments according to BI Intelligence will grow at a compound
annual rate of 67 over the next five years to 18 billion units shipped in 2019
Global connected-home device annual shipmentsin millions
2000
1800
1600
1400
1200
1000
800
600
400
200
0
2012 2013 2014E 2015E 2016E 2017E 2018E 2019E
We are here
67 CAGR2014-2019
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
29
Despite the fact that a sizable portion of the total addressable market has yet to adopt
Smart Home technology analysts suggest shipment growth is expected to peak in the
coming years While the following chart obviously doesnrsquot take into account the invention
of innovative new Smart Home products decelerating growth towards the back portion of
the decade may also pressure the average revenue per Smart Household
Average revenue per smart home in the smart home marketin US dollar
2021202020192018201720162015
450
400
350
300
250
200
150
100
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
CONSUMER ELECTRONICS
30
TREND 04
The Connected Car EvolvesIndustry estimates suggest more than 380 million connected cars will be on the road
by 2021 and have the ability to stream music surf the web alert drivers to traffic and
weather conditions and possibly even self-park Tech companies will play a significant
role as analysts who routinely upwardly adjust their forecasts for this segment expect
fully autonomous vehicles to be on the market in just a few years
Estimated connected car shipmentsin millions (worldwide)
2015E 2016E 2017E 2018E 2019E 2020E 2021E
50
100
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
31
In addition to autonomous vehicles the connected car market is defined by features
such as
bull Content amp Services
bull Safety amp Driving Assistance
bull Navigation Services
bull Diagnostics amp Maintenance
bull Connectivity
These technologies are forecast to more than double revenue in the connected car
market from more than $10 billion USD in 2017 to more than $21 billion USD by 2021
Revenue in the connected car marketin millions US dollar
21217
17026
13556
10376
80116109
4622
25000
20000
15000
10000
5000
0
Content amp Services
Safety amp Driving Assistance
Navigation ServicesDiagnostics amp Maintenance
Connectivity
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
32
While the definition of a connected car is likely to evolve in the years to come today there
are six categories of connectivity that are defining and driving this trend
SOURCE STRATEGYamp
Mobility Management Functions that allow the driver to reach a destination quickly safely and in a
cost-efficient manner
Examplesbull Current traffic informationbull Parking lot or garage assistance
bull Optimized fuel consumption
SafetyFunctions that warn the driver of external hazards and internal responses of the
vehicle to hazards
Examplesbull Collision protectionbull Hazard warnings
bull Emergency functions
Driver AssistanceFunctions invovling partially or fully
automatic driving
Examplesbull Operational assistance or autopilot in
heavy traffic in parking or on highways
Well-beingFunctions involving the driverrsquos comfort
and ability and fitness to drive
Examplesbull Fatigue detectionbull Automatic environment adjustments
to keep drivers alert
bull Medical assistance
Vehicle ManagementFunctions that aid in the driver in reducing
operating costs and improving ease of use
Examplesbull Vehicle condition and service remindersbull Remote operation
bull Transfer of usage data
EntertainmentFunctions involving the entertainment
of the driver and passengers
Examplesbull Smartphone interfacebull WLAN hot spotbull Music video internet social media
bull Mobile office
CONSUMER ELECTRONICS
33
Just 93 of vehicles manufactured in 2016 are considered connected cars However
demand is expected to increase in part when lower vehicle price points are implemented
as market research indicates that many of todayrsquos connected cars tend to be relatively
luxurious models with average selling prices of $55000 Consistent with that the
connected car penetration rate is projected to be 277 by 2020
34
61
93
131
176
225
277
Penetration rate in the connected car marketin percent (US)
0
5
10
15
20
25
30
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
34
However as the market becomes more saturated with connected cars average revenue
per connected car is projected to decline to $66685 USD by 2020
115029
84312
72679
6742065447 6668566075
Revenue per connected carin US dollars
1200
1100
1000
900
800
700
6002014 2015 2016 2017 2018 2019 2020
SOURCE STATISTA
CONSUMER ELECTRONICS
35
In addition to realigning automaker IT departments and creating user-friendly interfaces
that are IoT compatible and potentially even device agnostic analysts suggest connected
car manufacturers will have to overcome this challenge
Faster Product CyclesldquoThe typical product cycle in the passenger car
industry is about eight years in the consumer
electronics industry itrsquos less than a year To
successfully sell electronics products for connected
cars automakers will need to mimic the rapid
development cycles of the consumer electronics
companies The key for the automakers is to learn
to build perfectly functioning modular systems
into which updates and product developments can
be integrated quickly and with little effort Such a
modular infotainment building set would allow for
individual components to be updated through plug-
and-play technologies several times during a carrsquos
life cyclerdquo
CONSUMER ELECTRONICS
36
If yoursquore wondering why connected cars were included under consumer electronics
consider how the world will change when self-driving vehicles are status quo Google has
already logged more than 1 million autonomous vehicle miles and has been involved in
just 12 minor crashes in six years none of which were the fault of the driverless car
Once autonomous vehicles become part of our driving fabric expect next generation
connected cars to offer driverspassengers additional options in terms of the devices that
can interact with the vehicle
Smartphone temperature control amp bed-like seat adjustment applications and voice control of windows car hoods amp trunks and streaming music
Remote control or voice activated aftermarket add-ons that allow a passenger to plug in an electric car or pump gas remotely
Innovative cameras and real time editing software that allow for video conferencing that appears as if itrsquos being conducted in an office rather than a car
CONSUMER ELECTRONICS
37
TREND 05
Commercial Drones Take (Test) FlightWhile civilian use of drones may be what many first picture when they think of drones
itrsquos the military use of drones that has been driving demand Specifically military use of
drones has far outpaced civilian use of drones when measured by revenue Defense
spending on drones is projected to be robust through 2024
Global aerial drone marketin billions $14
$12
$10
$8
$6
$4
$2
$0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
DefenseCivilian
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
38
However research also suggests the civilian and commercial markets are expected to
grow significantly as drones are used in new and innovative ways Analysts at Grand View
Research describe future applications such as
ldquoAgriculture is expected to emerge as the dominant
application sector over the forecast period on
account of several benefits attained such as yield
increase due to crop monitoring Tech giants such
as Facebook Inc and Google Inc are planning
to use solar powered UAVs that hover around the
atmosphere of the earth providing internet access
to the remotest of places acting as flying internet
access points or hotspots In addition Amazon has
been working on Prime Air a drone delivery system
that promises goods delivered within 30 minutes
after order placementrdquo
CONSUMER ELECTRONICS
39
The list of potential drone applications includes
bull Agriculture
bull Law Enforcement
bull Ecommerce Delivery
bull Mapping amp Imagery
bull Wildlife Patrolling
bull Forest Fire Management
12000
10000
8000
6000
4000
2000
00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Agriculture
Energy
GovernmentMedia amp Entertainment
Others
US commercial drone market by application 2012-2022USD million
SOURCE GRAND VIEW RESEARCH
bull Vehicle Traffic Control
bull Marketing amp Entertainment
bull Energy amp Mining
bull Real Estate
bull News Gathering
bull Infrastructure Monitoring
CONSUMER ELECTRONICS
40
Research indicates sales of commercial and civilian drones will grow at a compound
annual rate of 19 between 2015 and 2020 The economic impact of the commercial
drone segment is forecast to grow to $51 billion by 2025
While some analysts argue package delivery will not be an early priority the impact
drones have on the delivery of consumer electronics may be relatively muted as only
a third of the people surveyed recently trust a drone to deliver consumer electronics
The economic impact of the commercial drone sectordirect economic impact from the UAV industry in the United States (billion US dollars)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$12
$23
$35 $36$38 $40
$42 $44 $4649
$51
SOURCE STATISTA
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
24
In other words approximately one billion people in China or as much as 70 of the
population are projected to be middle class by 2030
Remember India is poised for explosive middle class growth as well Analysts at EY
recently projected
China total income by band 2010 and 2020annual income thousands of people
50+
30-50
15-30
5-15
0-5
2010 2020
112
2085
2388
933
3137
54
433
1619
499
US$
US$b
ldquoIndiarsquos global middle class meanwhile at around
50 million people or 5 of the population is much
smaller We expect this to grow steadily over the
next decade reaching 200 million by 2020 After
this we expect growth to really accelerate reaching
475 million by 2030 and adding more people than
the Chinese to the global middle class worldwide
after 2027rdquo
SOURCE EY
CONSUMER ELECTRONICS
25
Home automation
Ambient Asissted Living
Security
Energy Management
Home Entertainment
TREND 03
Home Automation Spikes as the loT GrowsThe second half of the decade is poised for explosive growth in the Smart Home market
segment To illustrate the growth potential in this segment wersquoll rely on data from Statista
as itrsquos a bit more conservative than other industry estimates
WARNING You can easily find research reports that contradict one another in terms of
how fast this segment is growing and is projected to grow through 2020 However the
productsincluded in the Smart Home segment varies which means yoursquore not always
comparing apples to apples
When we talk about the Smart Home segment wersquore including
CONSUMER ELECTRONICS
26
Not included in the data wersquoll highlight are devices like smartphones tablets and
television remote controls Herersquos Statistarsquos reasoning
ldquoDevices whose primary function is not for the
automation or remote control of household
equipment eg smartphones and tablets are not
included here Similarly devices whose reason for
purchase is only related to household connection
and remote control to a limited extent such as
Smart-TVs refrigerators or ovens are also not
includedrdquo
Whatrsquos important though is that a $7 billion dollar industry in 2015 is forecast to grow
to a more than $32 billion dollar industry by 2021
CONSUMER ELECTRONICS
27
Revenue in the smart home marketin millions US dollar
2021202020192018201720162015
32191
28468
24249
19495
14649
104327237
40000
30000
20000
10000
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy Management
Besides new products and a shift toward the IoT the Smart Home segmentrsquos relatively
small penetration rate between 1-18 depending on the segment is expected to
further drive growth
Smart home penetration ratein percent (US)
2020201920182017201620152014
80
60
40
20
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
28
Connected-home device shipments according to BI Intelligence will grow at a compound
annual rate of 67 over the next five years to 18 billion units shipped in 2019
Global connected-home device annual shipmentsin millions
2000
1800
1600
1400
1200
1000
800
600
400
200
0
2012 2013 2014E 2015E 2016E 2017E 2018E 2019E
We are here
67 CAGR2014-2019
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
29
Despite the fact that a sizable portion of the total addressable market has yet to adopt
Smart Home technology analysts suggest shipment growth is expected to peak in the
coming years While the following chart obviously doesnrsquot take into account the invention
of innovative new Smart Home products decelerating growth towards the back portion of
the decade may also pressure the average revenue per Smart Household
Average revenue per smart home in the smart home marketin US dollar
2021202020192018201720162015
450
400
350
300
250
200
150
100
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
CONSUMER ELECTRONICS
30
TREND 04
The Connected Car EvolvesIndustry estimates suggest more than 380 million connected cars will be on the road
by 2021 and have the ability to stream music surf the web alert drivers to traffic and
weather conditions and possibly even self-park Tech companies will play a significant
role as analysts who routinely upwardly adjust their forecasts for this segment expect
fully autonomous vehicles to be on the market in just a few years
Estimated connected car shipmentsin millions (worldwide)
2015E 2016E 2017E 2018E 2019E 2020E 2021E
50
100
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
31
In addition to autonomous vehicles the connected car market is defined by features
such as
bull Content amp Services
bull Safety amp Driving Assistance
bull Navigation Services
bull Diagnostics amp Maintenance
bull Connectivity
These technologies are forecast to more than double revenue in the connected car
market from more than $10 billion USD in 2017 to more than $21 billion USD by 2021
Revenue in the connected car marketin millions US dollar
21217
17026
13556
10376
80116109
4622
25000
20000
15000
10000
5000
0
Content amp Services
Safety amp Driving Assistance
Navigation ServicesDiagnostics amp Maintenance
Connectivity
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
32
While the definition of a connected car is likely to evolve in the years to come today there
are six categories of connectivity that are defining and driving this trend
SOURCE STRATEGYamp
Mobility Management Functions that allow the driver to reach a destination quickly safely and in a
cost-efficient manner
Examplesbull Current traffic informationbull Parking lot or garage assistance
bull Optimized fuel consumption
SafetyFunctions that warn the driver of external hazards and internal responses of the
vehicle to hazards
Examplesbull Collision protectionbull Hazard warnings
bull Emergency functions
Driver AssistanceFunctions invovling partially or fully
automatic driving
Examplesbull Operational assistance or autopilot in
heavy traffic in parking or on highways
Well-beingFunctions involving the driverrsquos comfort
and ability and fitness to drive
Examplesbull Fatigue detectionbull Automatic environment adjustments
to keep drivers alert
bull Medical assistance
Vehicle ManagementFunctions that aid in the driver in reducing
operating costs and improving ease of use
Examplesbull Vehicle condition and service remindersbull Remote operation
bull Transfer of usage data
EntertainmentFunctions involving the entertainment
of the driver and passengers
Examplesbull Smartphone interfacebull WLAN hot spotbull Music video internet social media
bull Mobile office
CONSUMER ELECTRONICS
33
Just 93 of vehicles manufactured in 2016 are considered connected cars However
demand is expected to increase in part when lower vehicle price points are implemented
as market research indicates that many of todayrsquos connected cars tend to be relatively
luxurious models with average selling prices of $55000 Consistent with that the
connected car penetration rate is projected to be 277 by 2020
34
61
93
131
176
225
277
Penetration rate in the connected car marketin percent (US)
0
5
10
15
20
25
30
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
34
However as the market becomes more saturated with connected cars average revenue
per connected car is projected to decline to $66685 USD by 2020
115029
84312
72679
6742065447 6668566075
Revenue per connected carin US dollars
1200
1100
1000
900
800
700
6002014 2015 2016 2017 2018 2019 2020
SOURCE STATISTA
CONSUMER ELECTRONICS
35
In addition to realigning automaker IT departments and creating user-friendly interfaces
that are IoT compatible and potentially even device agnostic analysts suggest connected
car manufacturers will have to overcome this challenge
Faster Product CyclesldquoThe typical product cycle in the passenger car
industry is about eight years in the consumer
electronics industry itrsquos less than a year To
successfully sell electronics products for connected
cars automakers will need to mimic the rapid
development cycles of the consumer electronics
companies The key for the automakers is to learn
to build perfectly functioning modular systems
into which updates and product developments can
be integrated quickly and with little effort Such a
modular infotainment building set would allow for
individual components to be updated through plug-
and-play technologies several times during a carrsquos
life cyclerdquo
CONSUMER ELECTRONICS
36
If yoursquore wondering why connected cars were included under consumer electronics
consider how the world will change when self-driving vehicles are status quo Google has
already logged more than 1 million autonomous vehicle miles and has been involved in
just 12 minor crashes in six years none of which were the fault of the driverless car
Once autonomous vehicles become part of our driving fabric expect next generation
connected cars to offer driverspassengers additional options in terms of the devices that
can interact with the vehicle
Smartphone temperature control amp bed-like seat adjustment applications and voice control of windows car hoods amp trunks and streaming music
Remote control or voice activated aftermarket add-ons that allow a passenger to plug in an electric car or pump gas remotely
Innovative cameras and real time editing software that allow for video conferencing that appears as if itrsquos being conducted in an office rather than a car
CONSUMER ELECTRONICS
37
TREND 05
Commercial Drones Take (Test) FlightWhile civilian use of drones may be what many first picture when they think of drones
itrsquos the military use of drones that has been driving demand Specifically military use of
drones has far outpaced civilian use of drones when measured by revenue Defense
spending on drones is projected to be robust through 2024
Global aerial drone marketin billions $14
$12
$10
$8
$6
$4
$2
$0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
DefenseCivilian
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
38
However research also suggests the civilian and commercial markets are expected to
grow significantly as drones are used in new and innovative ways Analysts at Grand View
Research describe future applications such as
ldquoAgriculture is expected to emerge as the dominant
application sector over the forecast period on
account of several benefits attained such as yield
increase due to crop monitoring Tech giants such
as Facebook Inc and Google Inc are planning
to use solar powered UAVs that hover around the
atmosphere of the earth providing internet access
to the remotest of places acting as flying internet
access points or hotspots In addition Amazon has
been working on Prime Air a drone delivery system
that promises goods delivered within 30 minutes
after order placementrdquo
CONSUMER ELECTRONICS
39
The list of potential drone applications includes
bull Agriculture
bull Law Enforcement
bull Ecommerce Delivery
bull Mapping amp Imagery
bull Wildlife Patrolling
bull Forest Fire Management
12000
10000
8000
6000
4000
2000
00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Agriculture
Energy
GovernmentMedia amp Entertainment
Others
US commercial drone market by application 2012-2022USD million
SOURCE GRAND VIEW RESEARCH
bull Vehicle Traffic Control
bull Marketing amp Entertainment
bull Energy amp Mining
bull Real Estate
bull News Gathering
bull Infrastructure Monitoring
CONSUMER ELECTRONICS
40
Research indicates sales of commercial and civilian drones will grow at a compound
annual rate of 19 between 2015 and 2020 The economic impact of the commercial
drone segment is forecast to grow to $51 billion by 2025
While some analysts argue package delivery will not be an early priority the impact
drones have on the delivery of consumer electronics may be relatively muted as only
a third of the people surveyed recently trust a drone to deliver consumer electronics
The economic impact of the commercial drone sectordirect economic impact from the UAV industry in the United States (billion US dollars)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$12
$23
$35 $36$38 $40
$42 $44 $4649
$51
SOURCE STATISTA
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
25
Home automation
Ambient Asissted Living
Security
Energy Management
Home Entertainment
TREND 03
Home Automation Spikes as the loT GrowsThe second half of the decade is poised for explosive growth in the Smart Home market
segment To illustrate the growth potential in this segment wersquoll rely on data from Statista
as itrsquos a bit more conservative than other industry estimates
WARNING You can easily find research reports that contradict one another in terms of
how fast this segment is growing and is projected to grow through 2020 However the
productsincluded in the Smart Home segment varies which means yoursquore not always
comparing apples to apples
When we talk about the Smart Home segment wersquore including
CONSUMER ELECTRONICS
26
Not included in the data wersquoll highlight are devices like smartphones tablets and
television remote controls Herersquos Statistarsquos reasoning
ldquoDevices whose primary function is not for the
automation or remote control of household
equipment eg smartphones and tablets are not
included here Similarly devices whose reason for
purchase is only related to household connection
and remote control to a limited extent such as
Smart-TVs refrigerators or ovens are also not
includedrdquo
Whatrsquos important though is that a $7 billion dollar industry in 2015 is forecast to grow
to a more than $32 billion dollar industry by 2021
CONSUMER ELECTRONICS
27
Revenue in the smart home marketin millions US dollar
2021202020192018201720162015
32191
28468
24249
19495
14649
104327237
40000
30000
20000
10000
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy Management
Besides new products and a shift toward the IoT the Smart Home segmentrsquos relatively
small penetration rate between 1-18 depending on the segment is expected to
further drive growth
Smart home penetration ratein percent (US)
2020201920182017201620152014
80
60
40
20
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
28
Connected-home device shipments according to BI Intelligence will grow at a compound
annual rate of 67 over the next five years to 18 billion units shipped in 2019
Global connected-home device annual shipmentsin millions
2000
1800
1600
1400
1200
1000
800
600
400
200
0
2012 2013 2014E 2015E 2016E 2017E 2018E 2019E
We are here
67 CAGR2014-2019
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
29
Despite the fact that a sizable portion of the total addressable market has yet to adopt
Smart Home technology analysts suggest shipment growth is expected to peak in the
coming years While the following chart obviously doesnrsquot take into account the invention
of innovative new Smart Home products decelerating growth towards the back portion of
the decade may also pressure the average revenue per Smart Household
Average revenue per smart home in the smart home marketin US dollar
2021202020192018201720162015
450
400
350
300
250
200
150
100
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
CONSUMER ELECTRONICS
30
TREND 04
The Connected Car EvolvesIndustry estimates suggest more than 380 million connected cars will be on the road
by 2021 and have the ability to stream music surf the web alert drivers to traffic and
weather conditions and possibly even self-park Tech companies will play a significant
role as analysts who routinely upwardly adjust their forecasts for this segment expect
fully autonomous vehicles to be on the market in just a few years
Estimated connected car shipmentsin millions (worldwide)
2015E 2016E 2017E 2018E 2019E 2020E 2021E
50
100
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
31
In addition to autonomous vehicles the connected car market is defined by features
such as
bull Content amp Services
bull Safety amp Driving Assistance
bull Navigation Services
bull Diagnostics amp Maintenance
bull Connectivity
These technologies are forecast to more than double revenue in the connected car
market from more than $10 billion USD in 2017 to more than $21 billion USD by 2021
Revenue in the connected car marketin millions US dollar
21217
17026
13556
10376
80116109
4622
25000
20000
15000
10000
5000
0
Content amp Services
Safety amp Driving Assistance
Navigation ServicesDiagnostics amp Maintenance
Connectivity
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
32
While the definition of a connected car is likely to evolve in the years to come today there
are six categories of connectivity that are defining and driving this trend
SOURCE STRATEGYamp
Mobility Management Functions that allow the driver to reach a destination quickly safely and in a
cost-efficient manner
Examplesbull Current traffic informationbull Parking lot or garage assistance
bull Optimized fuel consumption
SafetyFunctions that warn the driver of external hazards and internal responses of the
vehicle to hazards
Examplesbull Collision protectionbull Hazard warnings
bull Emergency functions
Driver AssistanceFunctions invovling partially or fully
automatic driving
Examplesbull Operational assistance or autopilot in
heavy traffic in parking or on highways
Well-beingFunctions involving the driverrsquos comfort
and ability and fitness to drive
Examplesbull Fatigue detectionbull Automatic environment adjustments
to keep drivers alert
bull Medical assistance
Vehicle ManagementFunctions that aid in the driver in reducing
operating costs and improving ease of use
Examplesbull Vehicle condition and service remindersbull Remote operation
bull Transfer of usage data
EntertainmentFunctions involving the entertainment
of the driver and passengers
Examplesbull Smartphone interfacebull WLAN hot spotbull Music video internet social media
bull Mobile office
CONSUMER ELECTRONICS
33
Just 93 of vehicles manufactured in 2016 are considered connected cars However
demand is expected to increase in part when lower vehicle price points are implemented
as market research indicates that many of todayrsquos connected cars tend to be relatively
luxurious models with average selling prices of $55000 Consistent with that the
connected car penetration rate is projected to be 277 by 2020
34
61
93
131
176
225
277
Penetration rate in the connected car marketin percent (US)
0
5
10
15
20
25
30
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
34
However as the market becomes more saturated with connected cars average revenue
per connected car is projected to decline to $66685 USD by 2020
115029
84312
72679
6742065447 6668566075
Revenue per connected carin US dollars
1200
1100
1000
900
800
700
6002014 2015 2016 2017 2018 2019 2020
SOURCE STATISTA
CONSUMER ELECTRONICS
35
In addition to realigning automaker IT departments and creating user-friendly interfaces
that are IoT compatible and potentially even device agnostic analysts suggest connected
car manufacturers will have to overcome this challenge
Faster Product CyclesldquoThe typical product cycle in the passenger car
industry is about eight years in the consumer
electronics industry itrsquos less than a year To
successfully sell electronics products for connected
cars automakers will need to mimic the rapid
development cycles of the consumer electronics
companies The key for the automakers is to learn
to build perfectly functioning modular systems
into which updates and product developments can
be integrated quickly and with little effort Such a
modular infotainment building set would allow for
individual components to be updated through plug-
and-play technologies several times during a carrsquos
life cyclerdquo
CONSUMER ELECTRONICS
36
If yoursquore wondering why connected cars were included under consumer electronics
consider how the world will change when self-driving vehicles are status quo Google has
already logged more than 1 million autonomous vehicle miles and has been involved in
just 12 minor crashes in six years none of which were the fault of the driverless car
Once autonomous vehicles become part of our driving fabric expect next generation
connected cars to offer driverspassengers additional options in terms of the devices that
can interact with the vehicle
Smartphone temperature control amp bed-like seat adjustment applications and voice control of windows car hoods amp trunks and streaming music
Remote control or voice activated aftermarket add-ons that allow a passenger to plug in an electric car or pump gas remotely
Innovative cameras and real time editing software that allow for video conferencing that appears as if itrsquos being conducted in an office rather than a car
CONSUMER ELECTRONICS
37
TREND 05
Commercial Drones Take (Test) FlightWhile civilian use of drones may be what many first picture when they think of drones
itrsquos the military use of drones that has been driving demand Specifically military use of
drones has far outpaced civilian use of drones when measured by revenue Defense
spending on drones is projected to be robust through 2024
Global aerial drone marketin billions $14
$12
$10
$8
$6
$4
$2
$0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
DefenseCivilian
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
38
However research also suggests the civilian and commercial markets are expected to
grow significantly as drones are used in new and innovative ways Analysts at Grand View
Research describe future applications such as
ldquoAgriculture is expected to emerge as the dominant
application sector over the forecast period on
account of several benefits attained such as yield
increase due to crop monitoring Tech giants such
as Facebook Inc and Google Inc are planning
to use solar powered UAVs that hover around the
atmosphere of the earth providing internet access
to the remotest of places acting as flying internet
access points or hotspots In addition Amazon has
been working on Prime Air a drone delivery system
that promises goods delivered within 30 minutes
after order placementrdquo
CONSUMER ELECTRONICS
39
The list of potential drone applications includes
bull Agriculture
bull Law Enforcement
bull Ecommerce Delivery
bull Mapping amp Imagery
bull Wildlife Patrolling
bull Forest Fire Management
12000
10000
8000
6000
4000
2000
00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Agriculture
Energy
GovernmentMedia amp Entertainment
Others
US commercial drone market by application 2012-2022USD million
SOURCE GRAND VIEW RESEARCH
bull Vehicle Traffic Control
bull Marketing amp Entertainment
bull Energy amp Mining
bull Real Estate
bull News Gathering
bull Infrastructure Monitoring
CONSUMER ELECTRONICS
40
Research indicates sales of commercial and civilian drones will grow at a compound
annual rate of 19 between 2015 and 2020 The economic impact of the commercial
drone segment is forecast to grow to $51 billion by 2025
While some analysts argue package delivery will not be an early priority the impact
drones have on the delivery of consumer electronics may be relatively muted as only
a third of the people surveyed recently trust a drone to deliver consumer electronics
The economic impact of the commercial drone sectordirect economic impact from the UAV industry in the United States (billion US dollars)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$12
$23
$35 $36$38 $40
$42 $44 $4649
$51
SOURCE STATISTA
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
26
Not included in the data wersquoll highlight are devices like smartphones tablets and
television remote controls Herersquos Statistarsquos reasoning
ldquoDevices whose primary function is not for the
automation or remote control of household
equipment eg smartphones and tablets are not
included here Similarly devices whose reason for
purchase is only related to household connection
and remote control to a limited extent such as
Smart-TVs refrigerators or ovens are also not
includedrdquo
Whatrsquos important though is that a $7 billion dollar industry in 2015 is forecast to grow
to a more than $32 billion dollar industry by 2021
CONSUMER ELECTRONICS
27
Revenue in the smart home marketin millions US dollar
2021202020192018201720162015
32191
28468
24249
19495
14649
104327237
40000
30000
20000
10000
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy Management
Besides new products and a shift toward the IoT the Smart Home segmentrsquos relatively
small penetration rate between 1-18 depending on the segment is expected to
further drive growth
Smart home penetration ratein percent (US)
2020201920182017201620152014
80
60
40
20
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
28
Connected-home device shipments according to BI Intelligence will grow at a compound
annual rate of 67 over the next five years to 18 billion units shipped in 2019
Global connected-home device annual shipmentsin millions
2000
1800
1600
1400
1200
1000
800
600
400
200
0
2012 2013 2014E 2015E 2016E 2017E 2018E 2019E
We are here
67 CAGR2014-2019
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
29
Despite the fact that a sizable portion of the total addressable market has yet to adopt
Smart Home technology analysts suggest shipment growth is expected to peak in the
coming years While the following chart obviously doesnrsquot take into account the invention
of innovative new Smart Home products decelerating growth towards the back portion of
the decade may also pressure the average revenue per Smart Household
Average revenue per smart home in the smart home marketin US dollar
2021202020192018201720162015
450
400
350
300
250
200
150
100
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
CONSUMER ELECTRONICS
30
TREND 04
The Connected Car EvolvesIndustry estimates suggest more than 380 million connected cars will be on the road
by 2021 and have the ability to stream music surf the web alert drivers to traffic and
weather conditions and possibly even self-park Tech companies will play a significant
role as analysts who routinely upwardly adjust their forecasts for this segment expect
fully autonomous vehicles to be on the market in just a few years
Estimated connected car shipmentsin millions (worldwide)
2015E 2016E 2017E 2018E 2019E 2020E 2021E
50
100
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
31
In addition to autonomous vehicles the connected car market is defined by features
such as
bull Content amp Services
bull Safety amp Driving Assistance
bull Navigation Services
bull Diagnostics amp Maintenance
bull Connectivity
These technologies are forecast to more than double revenue in the connected car
market from more than $10 billion USD in 2017 to more than $21 billion USD by 2021
Revenue in the connected car marketin millions US dollar
21217
17026
13556
10376
80116109
4622
25000
20000
15000
10000
5000
0
Content amp Services
Safety amp Driving Assistance
Navigation ServicesDiagnostics amp Maintenance
Connectivity
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
32
While the definition of a connected car is likely to evolve in the years to come today there
are six categories of connectivity that are defining and driving this trend
SOURCE STRATEGYamp
Mobility Management Functions that allow the driver to reach a destination quickly safely and in a
cost-efficient manner
Examplesbull Current traffic informationbull Parking lot or garage assistance
bull Optimized fuel consumption
SafetyFunctions that warn the driver of external hazards and internal responses of the
vehicle to hazards
Examplesbull Collision protectionbull Hazard warnings
bull Emergency functions
Driver AssistanceFunctions invovling partially or fully
automatic driving
Examplesbull Operational assistance or autopilot in
heavy traffic in parking or on highways
Well-beingFunctions involving the driverrsquos comfort
and ability and fitness to drive
Examplesbull Fatigue detectionbull Automatic environment adjustments
to keep drivers alert
bull Medical assistance
Vehicle ManagementFunctions that aid in the driver in reducing
operating costs and improving ease of use
Examplesbull Vehicle condition and service remindersbull Remote operation
bull Transfer of usage data
EntertainmentFunctions involving the entertainment
of the driver and passengers
Examplesbull Smartphone interfacebull WLAN hot spotbull Music video internet social media
bull Mobile office
CONSUMER ELECTRONICS
33
Just 93 of vehicles manufactured in 2016 are considered connected cars However
demand is expected to increase in part when lower vehicle price points are implemented
as market research indicates that many of todayrsquos connected cars tend to be relatively
luxurious models with average selling prices of $55000 Consistent with that the
connected car penetration rate is projected to be 277 by 2020
34
61
93
131
176
225
277
Penetration rate in the connected car marketin percent (US)
0
5
10
15
20
25
30
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
34
However as the market becomes more saturated with connected cars average revenue
per connected car is projected to decline to $66685 USD by 2020
115029
84312
72679
6742065447 6668566075
Revenue per connected carin US dollars
1200
1100
1000
900
800
700
6002014 2015 2016 2017 2018 2019 2020
SOURCE STATISTA
CONSUMER ELECTRONICS
35
In addition to realigning automaker IT departments and creating user-friendly interfaces
that are IoT compatible and potentially even device agnostic analysts suggest connected
car manufacturers will have to overcome this challenge
Faster Product CyclesldquoThe typical product cycle in the passenger car
industry is about eight years in the consumer
electronics industry itrsquos less than a year To
successfully sell electronics products for connected
cars automakers will need to mimic the rapid
development cycles of the consumer electronics
companies The key for the automakers is to learn
to build perfectly functioning modular systems
into which updates and product developments can
be integrated quickly and with little effort Such a
modular infotainment building set would allow for
individual components to be updated through plug-
and-play technologies several times during a carrsquos
life cyclerdquo
CONSUMER ELECTRONICS
36
If yoursquore wondering why connected cars were included under consumer electronics
consider how the world will change when self-driving vehicles are status quo Google has
already logged more than 1 million autonomous vehicle miles and has been involved in
just 12 minor crashes in six years none of which were the fault of the driverless car
Once autonomous vehicles become part of our driving fabric expect next generation
connected cars to offer driverspassengers additional options in terms of the devices that
can interact with the vehicle
Smartphone temperature control amp bed-like seat adjustment applications and voice control of windows car hoods amp trunks and streaming music
Remote control or voice activated aftermarket add-ons that allow a passenger to plug in an electric car or pump gas remotely
Innovative cameras and real time editing software that allow for video conferencing that appears as if itrsquos being conducted in an office rather than a car
CONSUMER ELECTRONICS
37
TREND 05
Commercial Drones Take (Test) FlightWhile civilian use of drones may be what many first picture when they think of drones
itrsquos the military use of drones that has been driving demand Specifically military use of
drones has far outpaced civilian use of drones when measured by revenue Defense
spending on drones is projected to be robust through 2024
Global aerial drone marketin billions $14
$12
$10
$8
$6
$4
$2
$0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
DefenseCivilian
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
38
However research also suggests the civilian and commercial markets are expected to
grow significantly as drones are used in new and innovative ways Analysts at Grand View
Research describe future applications such as
ldquoAgriculture is expected to emerge as the dominant
application sector over the forecast period on
account of several benefits attained such as yield
increase due to crop monitoring Tech giants such
as Facebook Inc and Google Inc are planning
to use solar powered UAVs that hover around the
atmosphere of the earth providing internet access
to the remotest of places acting as flying internet
access points or hotspots In addition Amazon has
been working on Prime Air a drone delivery system
that promises goods delivered within 30 minutes
after order placementrdquo
CONSUMER ELECTRONICS
39
The list of potential drone applications includes
bull Agriculture
bull Law Enforcement
bull Ecommerce Delivery
bull Mapping amp Imagery
bull Wildlife Patrolling
bull Forest Fire Management
12000
10000
8000
6000
4000
2000
00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Agriculture
Energy
GovernmentMedia amp Entertainment
Others
US commercial drone market by application 2012-2022USD million
SOURCE GRAND VIEW RESEARCH
bull Vehicle Traffic Control
bull Marketing amp Entertainment
bull Energy amp Mining
bull Real Estate
bull News Gathering
bull Infrastructure Monitoring
CONSUMER ELECTRONICS
40
Research indicates sales of commercial and civilian drones will grow at a compound
annual rate of 19 between 2015 and 2020 The economic impact of the commercial
drone segment is forecast to grow to $51 billion by 2025
While some analysts argue package delivery will not be an early priority the impact
drones have on the delivery of consumer electronics may be relatively muted as only
a third of the people surveyed recently trust a drone to deliver consumer electronics
The economic impact of the commercial drone sectordirect economic impact from the UAV industry in the United States (billion US dollars)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$12
$23
$35 $36$38 $40
$42 $44 $4649
$51
SOURCE STATISTA
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
27
Revenue in the smart home marketin millions US dollar
2021202020192018201720162015
32191
28468
24249
19495
14649
104327237
40000
30000
20000
10000
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy Management
Besides new products and a shift toward the IoT the Smart Home segmentrsquos relatively
small penetration rate between 1-18 depending on the segment is expected to
further drive growth
Smart home penetration ratein percent (US)
2020201920182017201620152014
80
60
40
20
0
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
SOURCE STATISTA
CONSUMER ELECTRONICS
28
Connected-home device shipments according to BI Intelligence will grow at a compound
annual rate of 67 over the next five years to 18 billion units shipped in 2019
Global connected-home device annual shipmentsin millions
2000
1800
1600
1400
1200
1000
800
600
400
200
0
2012 2013 2014E 2015E 2016E 2017E 2018E 2019E
We are here
67 CAGR2014-2019
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
29
Despite the fact that a sizable portion of the total addressable market has yet to adopt
Smart Home technology analysts suggest shipment growth is expected to peak in the
coming years While the following chart obviously doesnrsquot take into account the invention
of innovative new Smart Home products decelerating growth towards the back portion of
the decade may also pressure the average revenue per Smart Household
Average revenue per smart home in the smart home marketin US dollar
2021202020192018201720162015
450
400
350
300
250
200
150
100
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
CONSUMER ELECTRONICS
30
TREND 04
The Connected Car EvolvesIndustry estimates suggest more than 380 million connected cars will be on the road
by 2021 and have the ability to stream music surf the web alert drivers to traffic and
weather conditions and possibly even self-park Tech companies will play a significant
role as analysts who routinely upwardly adjust their forecasts for this segment expect
fully autonomous vehicles to be on the market in just a few years
Estimated connected car shipmentsin millions (worldwide)
2015E 2016E 2017E 2018E 2019E 2020E 2021E
50
100
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
31
In addition to autonomous vehicles the connected car market is defined by features
such as
bull Content amp Services
bull Safety amp Driving Assistance
bull Navigation Services
bull Diagnostics amp Maintenance
bull Connectivity
These technologies are forecast to more than double revenue in the connected car
market from more than $10 billion USD in 2017 to more than $21 billion USD by 2021
Revenue in the connected car marketin millions US dollar
21217
17026
13556
10376
80116109
4622
25000
20000
15000
10000
5000
0
Content amp Services
Safety amp Driving Assistance
Navigation ServicesDiagnostics amp Maintenance
Connectivity
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
32
While the definition of a connected car is likely to evolve in the years to come today there
are six categories of connectivity that are defining and driving this trend
SOURCE STRATEGYamp
Mobility Management Functions that allow the driver to reach a destination quickly safely and in a
cost-efficient manner
Examplesbull Current traffic informationbull Parking lot or garage assistance
bull Optimized fuel consumption
SafetyFunctions that warn the driver of external hazards and internal responses of the
vehicle to hazards
Examplesbull Collision protectionbull Hazard warnings
bull Emergency functions
Driver AssistanceFunctions invovling partially or fully
automatic driving
Examplesbull Operational assistance or autopilot in
heavy traffic in parking or on highways
Well-beingFunctions involving the driverrsquos comfort
and ability and fitness to drive
Examplesbull Fatigue detectionbull Automatic environment adjustments
to keep drivers alert
bull Medical assistance
Vehicle ManagementFunctions that aid in the driver in reducing
operating costs and improving ease of use
Examplesbull Vehicle condition and service remindersbull Remote operation
bull Transfer of usage data
EntertainmentFunctions involving the entertainment
of the driver and passengers
Examplesbull Smartphone interfacebull WLAN hot spotbull Music video internet social media
bull Mobile office
CONSUMER ELECTRONICS
33
Just 93 of vehicles manufactured in 2016 are considered connected cars However
demand is expected to increase in part when lower vehicle price points are implemented
as market research indicates that many of todayrsquos connected cars tend to be relatively
luxurious models with average selling prices of $55000 Consistent with that the
connected car penetration rate is projected to be 277 by 2020
34
61
93
131
176
225
277
Penetration rate in the connected car marketin percent (US)
0
5
10
15
20
25
30
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
34
However as the market becomes more saturated with connected cars average revenue
per connected car is projected to decline to $66685 USD by 2020
115029
84312
72679
6742065447 6668566075
Revenue per connected carin US dollars
1200
1100
1000
900
800
700
6002014 2015 2016 2017 2018 2019 2020
SOURCE STATISTA
CONSUMER ELECTRONICS
35
In addition to realigning automaker IT departments and creating user-friendly interfaces
that are IoT compatible and potentially even device agnostic analysts suggest connected
car manufacturers will have to overcome this challenge
Faster Product CyclesldquoThe typical product cycle in the passenger car
industry is about eight years in the consumer
electronics industry itrsquos less than a year To
successfully sell electronics products for connected
cars automakers will need to mimic the rapid
development cycles of the consumer electronics
companies The key for the automakers is to learn
to build perfectly functioning modular systems
into which updates and product developments can
be integrated quickly and with little effort Such a
modular infotainment building set would allow for
individual components to be updated through plug-
and-play technologies several times during a carrsquos
life cyclerdquo
CONSUMER ELECTRONICS
36
If yoursquore wondering why connected cars were included under consumer electronics
consider how the world will change when self-driving vehicles are status quo Google has
already logged more than 1 million autonomous vehicle miles and has been involved in
just 12 minor crashes in six years none of which were the fault of the driverless car
Once autonomous vehicles become part of our driving fabric expect next generation
connected cars to offer driverspassengers additional options in terms of the devices that
can interact with the vehicle
Smartphone temperature control amp bed-like seat adjustment applications and voice control of windows car hoods amp trunks and streaming music
Remote control or voice activated aftermarket add-ons that allow a passenger to plug in an electric car or pump gas remotely
Innovative cameras and real time editing software that allow for video conferencing that appears as if itrsquos being conducted in an office rather than a car
CONSUMER ELECTRONICS
37
TREND 05
Commercial Drones Take (Test) FlightWhile civilian use of drones may be what many first picture when they think of drones
itrsquos the military use of drones that has been driving demand Specifically military use of
drones has far outpaced civilian use of drones when measured by revenue Defense
spending on drones is projected to be robust through 2024
Global aerial drone marketin billions $14
$12
$10
$8
$6
$4
$2
$0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
DefenseCivilian
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
38
However research also suggests the civilian and commercial markets are expected to
grow significantly as drones are used in new and innovative ways Analysts at Grand View
Research describe future applications such as
ldquoAgriculture is expected to emerge as the dominant
application sector over the forecast period on
account of several benefits attained such as yield
increase due to crop monitoring Tech giants such
as Facebook Inc and Google Inc are planning
to use solar powered UAVs that hover around the
atmosphere of the earth providing internet access
to the remotest of places acting as flying internet
access points or hotspots In addition Amazon has
been working on Prime Air a drone delivery system
that promises goods delivered within 30 minutes
after order placementrdquo
CONSUMER ELECTRONICS
39
The list of potential drone applications includes
bull Agriculture
bull Law Enforcement
bull Ecommerce Delivery
bull Mapping amp Imagery
bull Wildlife Patrolling
bull Forest Fire Management
12000
10000
8000
6000
4000
2000
00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Agriculture
Energy
GovernmentMedia amp Entertainment
Others
US commercial drone market by application 2012-2022USD million
SOURCE GRAND VIEW RESEARCH
bull Vehicle Traffic Control
bull Marketing amp Entertainment
bull Energy amp Mining
bull Real Estate
bull News Gathering
bull Infrastructure Monitoring
CONSUMER ELECTRONICS
40
Research indicates sales of commercial and civilian drones will grow at a compound
annual rate of 19 between 2015 and 2020 The economic impact of the commercial
drone segment is forecast to grow to $51 billion by 2025
While some analysts argue package delivery will not be an early priority the impact
drones have on the delivery of consumer electronics may be relatively muted as only
a third of the people surveyed recently trust a drone to deliver consumer electronics
The economic impact of the commercial drone sectordirect economic impact from the UAV industry in the United States (billion US dollars)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$12
$23
$35 $36$38 $40
$42 $44 $4649
$51
SOURCE STATISTA
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
28
Connected-home device shipments according to BI Intelligence will grow at a compound
annual rate of 67 over the next five years to 18 billion units shipped in 2019
Global connected-home device annual shipmentsin millions
2000
1800
1600
1400
1200
1000
800
600
400
200
0
2012 2013 2014E 2015E 2016E 2017E 2018E 2019E
We are here
67 CAGR2014-2019
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
29
Despite the fact that a sizable portion of the total addressable market has yet to adopt
Smart Home technology analysts suggest shipment growth is expected to peak in the
coming years While the following chart obviously doesnrsquot take into account the invention
of innovative new Smart Home products decelerating growth towards the back portion of
the decade may also pressure the average revenue per Smart Household
Average revenue per smart home in the smart home marketin US dollar
2021202020192018201720162015
450
400
350
300
250
200
150
100
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
CONSUMER ELECTRONICS
30
TREND 04
The Connected Car EvolvesIndustry estimates suggest more than 380 million connected cars will be on the road
by 2021 and have the ability to stream music surf the web alert drivers to traffic and
weather conditions and possibly even self-park Tech companies will play a significant
role as analysts who routinely upwardly adjust their forecasts for this segment expect
fully autonomous vehicles to be on the market in just a few years
Estimated connected car shipmentsin millions (worldwide)
2015E 2016E 2017E 2018E 2019E 2020E 2021E
50
100
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
31
In addition to autonomous vehicles the connected car market is defined by features
such as
bull Content amp Services
bull Safety amp Driving Assistance
bull Navigation Services
bull Diagnostics amp Maintenance
bull Connectivity
These technologies are forecast to more than double revenue in the connected car
market from more than $10 billion USD in 2017 to more than $21 billion USD by 2021
Revenue in the connected car marketin millions US dollar
21217
17026
13556
10376
80116109
4622
25000
20000
15000
10000
5000
0
Content amp Services
Safety amp Driving Assistance
Navigation ServicesDiagnostics amp Maintenance
Connectivity
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
32
While the definition of a connected car is likely to evolve in the years to come today there
are six categories of connectivity that are defining and driving this trend
SOURCE STRATEGYamp
Mobility Management Functions that allow the driver to reach a destination quickly safely and in a
cost-efficient manner
Examplesbull Current traffic informationbull Parking lot or garage assistance
bull Optimized fuel consumption
SafetyFunctions that warn the driver of external hazards and internal responses of the
vehicle to hazards
Examplesbull Collision protectionbull Hazard warnings
bull Emergency functions
Driver AssistanceFunctions invovling partially or fully
automatic driving
Examplesbull Operational assistance or autopilot in
heavy traffic in parking or on highways
Well-beingFunctions involving the driverrsquos comfort
and ability and fitness to drive
Examplesbull Fatigue detectionbull Automatic environment adjustments
to keep drivers alert
bull Medical assistance
Vehicle ManagementFunctions that aid in the driver in reducing
operating costs and improving ease of use
Examplesbull Vehicle condition and service remindersbull Remote operation
bull Transfer of usage data
EntertainmentFunctions involving the entertainment
of the driver and passengers
Examplesbull Smartphone interfacebull WLAN hot spotbull Music video internet social media
bull Mobile office
CONSUMER ELECTRONICS
33
Just 93 of vehicles manufactured in 2016 are considered connected cars However
demand is expected to increase in part when lower vehicle price points are implemented
as market research indicates that many of todayrsquos connected cars tend to be relatively
luxurious models with average selling prices of $55000 Consistent with that the
connected car penetration rate is projected to be 277 by 2020
34
61
93
131
176
225
277
Penetration rate in the connected car marketin percent (US)
0
5
10
15
20
25
30
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
34
However as the market becomes more saturated with connected cars average revenue
per connected car is projected to decline to $66685 USD by 2020
115029
84312
72679
6742065447 6668566075
Revenue per connected carin US dollars
1200
1100
1000
900
800
700
6002014 2015 2016 2017 2018 2019 2020
SOURCE STATISTA
CONSUMER ELECTRONICS
35
In addition to realigning automaker IT departments and creating user-friendly interfaces
that are IoT compatible and potentially even device agnostic analysts suggest connected
car manufacturers will have to overcome this challenge
Faster Product CyclesldquoThe typical product cycle in the passenger car
industry is about eight years in the consumer
electronics industry itrsquos less than a year To
successfully sell electronics products for connected
cars automakers will need to mimic the rapid
development cycles of the consumer electronics
companies The key for the automakers is to learn
to build perfectly functioning modular systems
into which updates and product developments can
be integrated quickly and with little effort Such a
modular infotainment building set would allow for
individual components to be updated through plug-
and-play technologies several times during a carrsquos
life cyclerdquo
CONSUMER ELECTRONICS
36
If yoursquore wondering why connected cars were included under consumer electronics
consider how the world will change when self-driving vehicles are status quo Google has
already logged more than 1 million autonomous vehicle miles and has been involved in
just 12 minor crashes in six years none of which were the fault of the driverless car
Once autonomous vehicles become part of our driving fabric expect next generation
connected cars to offer driverspassengers additional options in terms of the devices that
can interact with the vehicle
Smartphone temperature control amp bed-like seat adjustment applications and voice control of windows car hoods amp trunks and streaming music
Remote control or voice activated aftermarket add-ons that allow a passenger to plug in an electric car or pump gas remotely
Innovative cameras and real time editing software that allow for video conferencing that appears as if itrsquos being conducted in an office rather than a car
CONSUMER ELECTRONICS
37
TREND 05
Commercial Drones Take (Test) FlightWhile civilian use of drones may be what many first picture when they think of drones
itrsquos the military use of drones that has been driving demand Specifically military use of
drones has far outpaced civilian use of drones when measured by revenue Defense
spending on drones is projected to be robust through 2024
Global aerial drone marketin billions $14
$12
$10
$8
$6
$4
$2
$0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
DefenseCivilian
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
38
However research also suggests the civilian and commercial markets are expected to
grow significantly as drones are used in new and innovative ways Analysts at Grand View
Research describe future applications such as
ldquoAgriculture is expected to emerge as the dominant
application sector over the forecast period on
account of several benefits attained such as yield
increase due to crop monitoring Tech giants such
as Facebook Inc and Google Inc are planning
to use solar powered UAVs that hover around the
atmosphere of the earth providing internet access
to the remotest of places acting as flying internet
access points or hotspots In addition Amazon has
been working on Prime Air a drone delivery system
that promises goods delivered within 30 minutes
after order placementrdquo
CONSUMER ELECTRONICS
39
The list of potential drone applications includes
bull Agriculture
bull Law Enforcement
bull Ecommerce Delivery
bull Mapping amp Imagery
bull Wildlife Patrolling
bull Forest Fire Management
12000
10000
8000
6000
4000
2000
00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Agriculture
Energy
GovernmentMedia amp Entertainment
Others
US commercial drone market by application 2012-2022USD million
SOURCE GRAND VIEW RESEARCH
bull Vehicle Traffic Control
bull Marketing amp Entertainment
bull Energy amp Mining
bull Real Estate
bull News Gathering
bull Infrastructure Monitoring
CONSUMER ELECTRONICS
40
Research indicates sales of commercial and civilian drones will grow at a compound
annual rate of 19 between 2015 and 2020 The economic impact of the commercial
drone segment is forecast to grow to $51 billion by 2025
While some analysts argue package delivery will not be an early priority the impact
drones have on the delivery of consumer electronics may be relatively muted as only
a third of the people surveyed recently trust a drone to deliver consumer electronics
The economic impact of the commercial drone sectordirect economic impact from the UAV industry in the United States (billion US dollars)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$12
$23
$35 $36$38 $40
$42 $44 $4649
$51
SOURCE STATISTA
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
29
Despite the fact that a sizable portion of the total addressable market has yet to adopt
Smart Home technology analysts suggest shipment growth is expected to peak in the
coming years While the following chart obviously doesnrsquot take into account the invention
of innovative new Smart Home products decelerating growth towards the back portion of
the decade may also pressure the average revenue per Smart Household
Average revenue per smart home in the smart home marketin US dollar
2021202020192018201720162015
450
400
350
300
250
200
150
100
Home Automation
Security
Home EntertainmentAmbient Assisted Living
Energy ManagementTotal
SOURCE STATISTA
CONSUMER ELECTRONICS
30
TREND 04
The Connected Car EvolvesIndustry estimates suggest more than 380 million connected cars will be on the road
by 2021 and have the ability to stream music surf the web alert drivers to traffic and
weather conditions and possibly even self-park Tech companies will play a significant
role as analysts who routinely upwardly adjust their forecasts for this segment expect
fully autonomous vehicles to be on the market in just a few years
Estimated connected car shipmentsin millions (worldwide)
2015E 2016E 2017E 2018E 2019E 2020E 2021E
50
100
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
31
In addition to autonomous vehicles the connected car market is defined by features
such as
bull Content amp Services
bull Safety amp Driving Assistance
bull Navigation Services
bull Diagnostics amp Maintenance
bull Connectivity
These technologies are forecast to more than double revenue in the connected car
market from more than $10 billion USD in 2017 to more than $21 billion USD by 2021
Revenue in the connected car marketin millions US dollar
21217
17026
13556
10376
80116109
4622
25000
20000
15000
10000
5000
0
Content amp Services
Safety amp Driving Assistance
Navigation ServicesDiagnostics amp Maintenance
Connectivity
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
32
While the definition of a connected car is likely to evolve in the years to come today there
are six categories of connectivity that are defining and driving this trend
SOURCE STRATEGYamp
Mobility Management Functions that allow the driver to reach a destination quickly safely and in a
cost-efficient manner
Examplesbull Current traffic informationbull Parking lot or garage assistance
bull Optimized fuel consumption
SafetyFunctions that warn the driver of external hazards and internal responses of the
vehicle to hazards
Examplesbull Collision protectionbull Hazard warnings
bull Emergency functions
Driver AssistanceFunctions invovling partially or fully
automatic driving
Examplesbull Operational assistance or autopilot in
heavy traffic in parking or on highways
Well-beingFunctions involving the driverrsquos comfort
and ability and fitness to drive
Examplesbull Fatigue detectionbull Automatic environment adjustments
to keep drivers alert
bull Medical assistance
Vehicle ManagementFunctions that aid in the driver in reducing
operating costs and improving ease of use
Examplesbull Vehicle condition and service remindersbull Remote operation
bull Transfer of usage data
EntertainmentFunctions involving the entertainment
of the driver and passengers
Examplesbull Smartphone interfacebull WLAN hot spotbull Music video internet social media
bull Mobile office
CONSUMER ELECTRONICS
33
Just 93 of vehicles manufactured in 2016 are considered connected cars However
demand is expected to increase in part when lower vehicle price points are implemented
as market research indicates that many of todayrsquos connected cars tend to be relatively
luxurious models with average selling prices of $55000 Consistent with that the
connected car penetration rate is projected to be 277 by 2020
34
61
93
131
176
225
277
Penetration rate in the connected car marketin percent (US)
0
5
10
15
20
25
30
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
34
However as the market becomes more saturated with connected cars average revenue
per connected car is projected to decline to $66685 USD by 2020
115029
84312
72679
6742065447 6668566075
Revenue per connected carin US dollars
1200
1100
1000
900
800
700
6002014 2015 2016 2017 2018 2019 2020
SOURCE STATISTA
CONSUMER ELECTRONICS
35
In addition to realigning automaker IT departments and creating user-friendly interfaces
that are IoT compatible and potentially even device agnostic analysts suggest connected
car manufacturers will have to overcome this challenge
Faster Product CyclesldquoThe typical product cycle in the passenger car
industry is about eight years in the consumer
electronics industry itrsquos less than a year To
successfully sell electronics products for connected
cars automakers will need to mimic the rapid
development cycles of the consumer electronics
companies The key for the automakers is to learn
to build perfectly functioning modular systems
into which updates and product developments can
be integrated quickly and with little effort Such a
modular infotainment building set would allow for
individual components to be updated through plug-
and-play technologies several times during a carrsquos
life cyclerdquo
CONSUMER ELECTRONICS
36
If yoursquore wondering why connected cars were included under consumer electronics
consider how the world will change when self-driving vehicles are status quo Google has
already logged more than 1 million autonomous vehicle miles and has been involved in
just 12 minor crashes in six years none of which were the fault of the driverless car
Once autonomous vehicles become part of our driving fabric expect next generation
connected cars to offer driverspassengers additional options in terms of the devices that
can interact with the vehicle
Smartphone temperature control amp bed-like seat adjustment applications and voice control of windows car hoods amp trunks and streaming music
Remote control or voice activated aftermarket add-ons that allow a passenger to plug in an electric car or pump gas remotely
Innovative cameras and real time editing software that allow for video conferencing that appears as if itrsquos being conducted in an office rather than a car
CONSUMER ELECTRONICS
37
TREND 05
Commercial Drones Take (Test) FlightWhile civilian use of drones may be what many first picture when they think of drones
itrsquos the military use of drones that has been driving demand Specifically military use of
drones has far outpaced civilian use of drones when measured by revenue Defense
spending on drones is projected to be robust through 2024
Global aerial drone marketin billions $14
$12
$10
$8
$6
$4
$2
$0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
DefenseCivilian
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
38
However research also suggests the civilian and commercial markets are expected to
grow significantly as drones are used in new and innovative ways Analysts at Grand View
Research describe future applications such as
ldquoAgriculture is expected to emerge as the dominant
application sector over the forecast period on
account of several benefits attained such as yield
increase due to crop monitoring Tech giants such
as Facebook Inc and Google Inc are planning
to use solar powered UAVs that hover around the
atmosphere of the earth providing internet access
to the remotest of places acting as flying internet
access points or hotspots In addition Amazon has
been working on Prime Air a drone delivery system
that promises goods delivered within 30 minutes
after order placementrdquo
CONSUMER ELECTRONICS
39
The list of potential drone applications includes
bull Agriculture
bull Law Enforcement
bull Ecommerce Delivery
bull Mapping amp Imagery
bull Wildlife Patrolling
bull Forest Fire Management
12000
10000
8000
6000
4000
2000
00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Agriculture
Energy
GovernmentMedia amp Entertainment
Others
US commercial drone market by application 2012-2022USD million
SOURCE GRAND VIEW RESEARCH
bull Vehicle Traffic Control
bull Marketing amp Entertainment
bull Energy amp Mining
bull Real Estate
bull News Gathering
bull Infrastructure Monitoring
CONSUMER ELECTRONICS
40
Research indicates sales of commercial and civilian drones will grow at a compound
annual rate of 19 between 2015 and 2020 The economic impact of the commercial
drone segment is forecast to grow to $51 billion by 2025
While some analysts argue package delivery will not be an early priority the impact
drones have on the delivery of consumer electronics may be relatively muted as only
a third of the people surveyed recently trust a drone to deliver consumer electronics
The economic impact of the commercial drone sectordirect economic impact from the UAV industry in the United States (billion US dollars)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$12
$23
$35 $36$38 $40
$42 $44 $4649
$51
SOURCE STATISTA
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
30
TREND 04
The Connected Car EvolvesIndustry estimates suggest more than 380 million connected cars will be on the road
by 2021 and have the ability to stream music surf the web alert drivers to traffic and
weather conditions and possibly even self-park Tech companies will play a significant
role as analysts who routinely upwardly adjust their forecasts for this segment expect
fully autonomous vehicles to be on the market in just a few years
Estimated connected car shipmentsin millions (worldwide)
2015E 2016E 2017E 2018E 2019E 2020E 2021E
50
100
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
31
In addition to autonomous vehicles the connected car market is defined by features
such as
bull Content amp Services
bull Safety amp Driving Assistance
bull Navigation Services
bull Diagnostics amp Maintenance
bull Connectivity
These technologies are forecast to more than double revenue in the connected car
market from more than $10 billion USD in 2017 to more than $21 billion USD by 2021
Revenue in the connected car marketin millions US dollar
21217
17026
13556
10376
80116109
4622
25000
20000
15000
10000
5000
0
Content amp Services
Safety amp Driving Assistance
Navigation ServicesDiagnostics amp Maintenance
Connectivity
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
32
While the definition of a connected car is likely to evolve in the years to come today there
are six categories of connectivity that are defining and driving this trend
SOURCE STRATEGYamp
Mobility Management Functions that allow the driver to reach a destination quickly safely and in a
cost-efficient manner
Examplesbull Current traffic informationbull Parking lot or garage assistance
bull Optimized fuel consumption
SafetyFunctions that warn the driver of external hazards and internal responses of the
vehicle to hazards
Examplesbull Collision protectionbull Hazard warnings
bull Emergency functions
Driver AssistanceFunctions invovling partially or fully
automatic driving
Examplesbull Operational assistance or autopilot in
heavy traffic in parking or on highways
Well-beingFunctions involving the driverrsquos comfort
and ability and fitness to drive
Examplesbull Fatigue detectionbull Automatic environment adjustments
to keep drivers alert
bull Medical assistance
Vehicle ManagementFunctions that aid in the driver in reducing
operating costs and improving ease of use
Examplesbull Vehicle condition and service remindersbull Remote operation
bull Transfer of usage data
EntertainmentFunctions involving the entertainment
of the driver and passengers
Examplesbull Smartphone interfacebull WLAN hot spotbull Music video internet social media
bull Mobile office
CONSUMER ELECTRONICS
33
Just 93 of vehicles manufactured in 2016 are considered connected cars However
demand is expected to increase in part when lower vehicle price points are implemented
as market research indicates that many of todayrsquos connected cars tend to be relatively
luxurious models with average selling prices of $55000 Consistent with that the
connected car penetration rate is projected to be 277 by 2020
34
61
93
131
176
225
277
Penetration rate in the connected car marketin percent (US)
0
5
10
15
20
25
30
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
34
However as the market becomes more saturated with connected cars average revenue
per connected car is projected to decline to $66685 USD by 2020
115029
84312
72679
6742065447 6668566075
Revenue per connected carin US dollars
1200
1100
1000
900
800
700
6002014 2015 2016 2017 2018 2019 2020
SOURCE STATISTA
CONSUMER ELECTRONICS
35
In addition to realigning automaker IT departments and creating user-friendly interfaces
that are IoT compatible and potentially even device agnostic analysts suggest connected
car manufacturers will have to overcome this challenge
Faster Product CyclesldquoThe typical product cycle in the passenger car
industry is about eight years in the consumer
electronics industry itrsquos less than a year To
successfully sell electronics products for connected
cars automakers will need to mimic the rapid
development cycles of the consumer electronics
companies The key for the automakers is to learn
to build perfectly functioning modular systems
into which updates and product developments can
be integrated quickly and with little effort Such a
modular infotainment building set would allow for
individual components to be updated through plug-
and-play technologies several times during a carrsquos
life cyclerdquo
CONSUMER ELECTRONICS
36
If yoursquore wondering why connected cars were included under consumer electronics
consider how the world will change when self-driving vehicles are status quo Google has
already logged more than 1 million autonomous vehicle miles and has been involved in
just 12 minor crashes in six years none of which were the fault of the driverless car
Once autonomous vehicles become part of our driving fabric expect next generation
connected cars to offer driverspassengers additional options in terms of the devices that
can interact with the vehicle
Smartphone temperature control amp bed-like seat adjustment applications and voice control of windows car hoods amp trunks and streaming music
Remote control or voice activated aftermarket add-ons that allow a passenger to plug in an electric car or pump gas remotely
Innovative cameras and real time editing software that allow for video conferencing that appears as if itrsquos being conducted in an office rather than a car
CONSUMER ELECTRONICS
37
TREND 05
Commercial Drones Take (Test) FlightWhile civilian use of drones may be what many first picture when they think of drones
itrsquos the military use of drones that has been driving demand Specifically military use of
drones has far outpaced civilian use of drones when measured by revenue Defense
spending on drones is projected to be robust through 2024
Global aerial drone marketin billions $14
$12
$10
$8
$6
$4
$2
$0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
DefenseCivilian
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
38
However research also suggests the civilian and commercial markets are expected to
grow significantly as drones are used in new and innovative ways Analysts at Grand View
Research describe future applications such as
ldquoAgriculture is expected to emerge as the dominant
application sector over the forecast period on
account of several benefits attained such as yield
increase due to crop monitoring Tech giants such
as Facebook Inc and Google Inc are planning
to use solar powered UAVs that hover around the
atmosphere of the earth providing internet access
to the remotest of places acting as flying internet
access points or hotspots In addition Amazon has
been working on Prime Air a drone delivery system
that promises goods delivered within 30 minutes
after order placementrdquo
CONSUMER ELECTRONICS
39
The list of potential drone applications includes
bull Agriculture
bull Law Enforcement
bull Ecommerce Delivery
bull Mapping amp Imagery
bull Wildlife Patrolling
bull Forest Fire Management
12000
10000
8000
6000
4000
2000
00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Agriculture
Energy
GovernmentMedia amp Entertainment
Others
US commercial drone market by application 2012-2022USD million
SOURCE GRAND VIEW RESEARCH
bull Vehicle Traffic Control
bull Marketing amp Entertainment
bull Energy amp Mining
bull Real Estate
bull News Gathering
bull Infrastructure Monitoring
CONSUMER ELECTRONICS
40
Research indicates sales of commercial and civilian drones will grow at a compound
annual rate of 19 between 2015 and 2020 The economic impact of the commercial
drone segment is forecast to grow to $51 billion by 2025
While some analysts argue package delivery will not be an early priority the impact
drones have on the delivery of consumer electronics may be relatively muted as only
a third of the people surveyed recently trust a drone to deliver consumer electronics
The economic impact of the commercial drone sectordirect economic impact from the UAV industry in the United States (billion US dollars)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$12
$23
$35 $36$38 $40
$42 $44 $4649
$51
SOURCE STATISTA
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
31
In addition to autonomous vehicles the connected car market is defined by features
such as
bull Content amp Services
bull Safety amp Driving Assistance
bull Navigation Services
bull Diagnostics amp Maintenance
bull Connectivity
These technologies are forecast to more than double revenue in the connected car
market from more than $10 billion USD in 2017 to more than $21 billion USD by 2021
Revenue in the connected car marketin millions US dollar
21217
17026
13556
10376
80116109
4622
25000
20000
15000
10000
5000
0
Content amp Services
Safety amp Driving Assistance
Navigation ServicesDiagnostics amp Maintenance
Connectivity
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
32
While the definition of a connected car is likely to evolve in the years to come today there
are six categories of connectivity that are defining and driving this trend
SOURCE STRATEGYamp
Mobility Management Functions that allow the driver to reach a destination quickly safely and in a
cost-efficient manner
Examplesbull Current traffic informationbull Parking lot or garage assistance
bull Optimized fuel consumption
SafetyFunctions that warn the driver of external hazards and internal responses of the
vehicle to hazards
Examplesbull Collision protectionbull Hazard warnings
bull Emergency functions
Driver AssistanceFunctions invovling partially or fully
automatic driving
Examplesbull Operational assistance or autopilot in
heavy traffic in parking or on highways
Well-beingFunctions involving the driverrsquos comfort
and ability and fitness to drive
Examplesbull Fatigue detectionbull Automatic environment adjustments
to keep drivers alert
bull Medical assistance
Vehicle ManagementFunctions that aid in the driver in reducing
operating costs and improving ease of use
Examplesbull Vehicle condition and service remindersbull Remote operation
bull Transfer of usage data
EntertainmentFunctions involving the entertainment
of the driver and passengers
Examplesbull Smartphone interfacebull WLAN hot spotbull Music video internet social media
bull Mobile office
CONSUMER ELECTRONICS
33
Just 93 of vehicles manufactured in 2016 are considered connected cars However
demand is expected to increase in part when lower vehicle price points are implemented
as market research indicates that many of todayrsquos connected cars tend to be relatively
luxurious models with average selling prices of $55000 Consistent with that the
connected car penetration rate is projected to be 277 by 2020
34
61
93
131
176
225
277
Penetration rate in the connected car marketin percent (US)
0
5
10
15
20
25
30
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
34
However as the market becomes more saturated with connected cars average revenue
per connected car is projected to decline to $66685 USD by 2020
115029
84312
72679
6742065447 6668566075
Revenue per connected carin US dollars
1200
1100
1000
900
800
700
6002014 2015 2016 2017 2018 2019 2020
SOURCE STATISTA
CONSUMER ELECTRONICS
35
In addition to realigning automaker IT departments and creating user-friendly interfaces
that are IoT compatible and potentially even device agnostic analysts suggest connected
car manufacturers will have to overcome this challenge
Faster Product CyclesldquoThe typical product cycle in the passenger car
industry is about eight years in the consumer
electronics industry itrsquos less than a year To
successfully sell electronics products for connected
cars automakers will need to mimic the rapid
development cycles of the consumer electronics
companies The key for the automakers is to learn
to build perfectly functioning modular systems
into which updates and product developments can
be integrated quickly and with little effort Such a
modular infotainment building set would allow for
individual components to be updated through plug-
and-play technologies several times during a carrsquos
life cyclerdquo
CONSUMER ELECTRONICS
36
If yoursquore wondering why connected cars were included under consumer electronics
consider how the world will change when self-driving vehicles are status quo Google has
already logged more than 1 million autonomous vehicle miles and has been involved in
just 12 minor crashes in six years none of which were the fault of the driverless car
Once autonomous vehicles become part of our driving fabric expect next generation
connected cars to offer driverspassengers additional options in terms of the devices that
can interact with the vehicle
Smartphone temperature control amp bed-like seat adjustment applications and voice control of windows car hoods amp trunks and streaming music
Remote control or voice activated aftermarket add-ons that allow a passenger to plug in an electric car or pump gas remotely
Innovative cameras and real time editing software that allow for video conferencing that appears as if itrsquos being conducted in an office rather than a car
CONSUMER ELECTRONICS
37
TREND 05
Commercial Drones Take (Test) FlightWhile civilian use of drones may be what many first picture when they think of drones
itrsquos the military use of drones that has been driving demand Specifically military use of
drones has far outpaced civilian use of drones when measured by revenue Defense
spending on drones is projected to be robust through 2024
Global aerial drone marketin billions $14
$12
$10
$8
$6
$4
$2
$0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
DefenseCivilian
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
38
However research also suggests the civilian and commercial markets are expected to
grow significantly as drones are used in new and innovative ways Analysts at Grand View
Research describe future applications such as
ldquoAgriculture is expected to emerge as the dominant
application sector over the forecast period on
account of several benefits attained such as yield
increase due to crop monitoring Tech giants such
as Facebook Inc and Google Inc are planning
to use solar powered UAVs that hover around the
atmosphere of the earth providing internet access
to the remotest of places acting as flying internet
access points or hotspots In addition Amazon has
been working on Prime Air a drone delivery system
that promises goods delivered within 30 minutes
after order placementrdquo
CONSUMER ELECTRONICS
39
The list of potential drone applications includes
bull Agriculture
bull Law Enforcement
bull Ecommerce Delivery
bull Mapping amp Imagery
bull Wildlife Patrolling
bull Forest Fire Management
12000
10000
8000
6000
4000
2000
00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Agriculture
Energy
GovernmentMedia amp Entertainment
Others
US commercial drone market by application 2012-2022USD million
SOURCE GRAND VIEW RESEARCH
bull Vehicle Traffic Control
bull Marketing amp Entertainment
bull Energy amp Mining
bull Real Estate
bull News Gathering
bull Infrastructure Monitoring
CONSUMER ELECTRONICS
40
Research indicates sales of commercial and civilian drones will grow at a compound
annual rate of 19 between 2015 and 2020 The economic impact of the commercial
drone segment is forecast to grow to $51 billion by 2025
While some analysts argue package delivery will not be an early priority the impact
drones have on the delivery of consumer electronics may be relatively muted as only
a third of the people surveyed recently trust a drone to deliver consumer electronics
The economic impact of the commercial drone sectordirect economic impact from the UAV industry in the United States (billion US dollars)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$12
$23
$35 $36$38 $40
$42 $44 $4649
$51
SOURCE STATISTA
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
32
While the definition of a connected car is likely to evolve in the years to come today there
are six categories of connectivity that are defining and driving this trend
SOURCE STRATEGYamp
Mobility Management Functions that allow the driver to reach a destination quickly safely and in a
cost-efficient manner
Examplesbull Current traffic informationbull Parking lot or garage assistance
bull Optimized fuel consumption
SafetyFunctions that warn the driver of external hazards and internal responses of the
vehicle to hazards
Examplesbull Collision protectionbull Hazard warnings
bull Emergency functions
Driver AssistanceFunctions invovling partially or fully
automatic driving
Examplesbull Operational assistance or autopilot in
heavy traffic in parking or on highways
Well-beingFunctions involving the driverrsquos comfort
and ability and fitness to drive
Examplesbull Fatigue detectionbull Automatic environment adjustments
to keep drivers alert
bull Medical assistance
Vehicle ManagementFunctions that aid in the driver in reducing
operating costs and improving ease of use
Examplesbull Vehicle condition and service remindersbull Remote operation
bull Transfer of usage data
EntertainmentFunctions involving the entertainment
of the driver and passengers
Examplesbull Smartphone interfacebull WLAN hot spotbull Music video internet social media
bull Mobile office
CONSUMER ELECTRONICS
33
Just 93 of vehicles manufactured in 2016 are considered connected cars However
demand is expected to increase in part when lower vehicle price points are implemented
as market research indicates that many of todayrsquos connected cars tend to be relatively
luxurious models with average selling prices of $55000 Consistent with that the
connected car penetration rate is projected to be 277 by 2020
34
61
93
131
176
225
277
Penetration rate in the connected car marketin percent (US)
0
5
10
15
20
25
30
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
34
However as the market becomes more saturated with connected cars average revenue
per connected car is projected to decline to $66685 USD by 2020
115029
84312
72679
6742065447 6668566075
Revenue per connected carin US dollars
1200
1100
1000
900
800
700
6002014 2015 2016 2017 2018 2019 2020
SOURCE STATISTA
CONSUMER ELECTRONICS
35
In addition to realigning automaker IT departments and creating user-friendly interfaces
that are IoT compatible and potentially even device agnostic analysts suggest connected
car manufacturers will have to overcome this challenge
Faster Product CyclesldquoThe typical product cycle in the passenger car
industry is about eight years in the consumer
electronics industry itrsquos less than a year To
successfully sell electronics products for connected
cars automakers will need to mimic the rapid
development cycles of the consumer electronics
companies The key for the automakers is to learn
to build perfectly functioning modular systems
into which updates and product developments can
be integrated quickly and with little effort Such a
modular infotainment building set would allow for
individual components to be updated through plug-
and-play technologies several times during a carrsquos
life cyclerdquo
CONSUMER ELECTRONICS
36
If yoursquore wondering why connected cars were included under consumer electronics
consider how the world will change when self-driving vehicles are status quo Google has
already logged more than 1 million autonomous vehicle miles and has been involved in
just 12 minor crashes in six years none of which were the fault of the driverless car
Once autonomous vehicles become part of our driving fabric expect next generation
connected cars to offer driverspassengers additional options in terms of the devices that
can interact with the vehicle
Smartphone temperature control amp bed-like seat adjustment applications and voice control of windows car hoods amp trunks and streaming music
Remote control or voice activated aftermarket add-ons that allow a passenger to plug in an electric car or pump gas remotely
Innovative cameras and real time editing software that allow for video conferencing that appears as if itrsquos being conducted in an office rather than a car
CONSUMER ELECTRONICS
37
TREND 05
Commercial Drones Take (Test) FlightWhile civilian use of drones may be what many first picture when they think of drones
itrsquos the military use of drones that has been driving demand Specifically military use of
drones has far outpaced civilian use of drones when measured by revenue Defense
spending on drones is projected to be robust through 2024
Global aerial drone marketin billions $14
$12
$10
$8
$6
$4
$2
$0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
DefenseCivilian
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
38
However research also suggests the civilian and commercial markets are expected to
grow significantly as drones are used in new and innovative ways Analysts at Grand View
Research describe future applications such as
ldquoAgriculture is expected to emerge as the dominant
application sector over the forecast period on
account of several benefits attained such as yield
increase due to crop monitoring Tech giants such
as Facebook Inc and Google Inc are planning
to use solar powered UAVs that hover around the
atmosphere of the earth providing internet access
to the remotest of places acting as flying internet
access points or hotspots In addition Amazon has
been working on Prime Air a drone delivery system
that promises goods delivered within 30 minutes
after order placementrdquo
CONSUMER ELECTRONICS
39
The list of potential drone applications includes
bull Agriculture
bull Law Enforcement
bull Ecommerce Delivery
bull Mapping amp Imagery
bull Wildlife Patrolling
bull Forest Fire Management
12000
10000
8000
6000
4000
2000
00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Agriculture
Energy
GovernmentMedia amp Entertainment
Others
US commercial drone market by application 2012-2022USD million
SOURCE GRAND VIEW RESEARCH
bull Vehicle Traffic Control
bull Marketing amp Entertainment
bull Energy amp Mining
bull Real Estate
bull News Gathering
bull Infrastructure Monitoring
CONSUMER ELECTRONICS
40
Research indicates sales of commercial and civilian drones will grow at a compound
annual rate of 19 between 2015 and 2020 The economic impact of the commercial
drone segment is forecast to grow to $51 billion by 2025
While some analysts argue package delivery will not be an early priority the impact
drones have on the delivery of consumer electronics may be relatively muted as only
a third of the people surveyed recently trust a drone to deliver consumer electronics
The economic impact of the commercial drone sectordirect economic impact from the UAV industry in the United States (billion US dollars)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$12
$23
$35 $36$38 $40
$42 $44 $4649
$51
SOURCE STATISTA
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
33
Just 93 of vehicles manufactured in 2016 are considered connected cars However
demand is expected to increase in part when lower vehicle price points are implemented
as market research indicates that many of todayrsquos connected cars tend to be relatively
luxurious models with average selling prices of $55000 Consistent with that the
connected car penetration rate is projected to be 277 by 2020
34
61
93
131
176
225
277
Penetration rate in the connected car marketin percent (US)
0
5
10
15
20
25
30
2020201920182017201620152014
SOURCE STATISTA
CONSUMER ELECTRONICS
34
However as the market becomes more saturated with connected cars average revenue
per connected car is projected to decline to $66685 USD by 2020
115029
84312
72679
6742065447 6668566075
Revenue per connected carin US dollars
1200
1100
1000
900
800
700
6002014 2015 2016 2017 2018 2019 2020
SOURCE STATISTA
CONSUMER ELECTRONICS
35
In addition to realigning automaker IT departments and creating user-friendly interfaces
that are IoT compatible and potentially even device agnostic analysts suggest connected
car manufacturers will have to overcome this challenge
Faster Product CyclesldquoThe typical product cycle in the passenger car
industry is about eight years in the consumer
electronics industry itrsquos less than a year To
successfully sell electronics products for connected
cars automakers will need to mimic the rapid
development cycles of the consumer electronics
companies The key for the automakers is to learn
to build perfectly functioning modular systems
into which updates and product developments can
be integrated quickly and with little effort Such a
modular infotainment building set would allow for
individual components to be updated through plug-
and-play technologies several times during a carrsquos
life cyclerdquo
CONSUMER ELECTRONICS
36
If yoursquore wondering why connected cars were included under consumer electronics
consider how the world will change when self-driving vehicles are status quo Google has
already logged more than 1 million autonomous vehicle miles and has been involved in
just 12 minor crashes in six years none of which were the fault of the driverless car
Once autonomous vehicles become part of our driving fabric expect next generation
connected cars to offer driverspassengers additional options in terms of the devices that
can interact with the vehicle
Smartphone temperature control amp bed-like seat adjustment applications and voice control of windows car hoods amp trunks and streaming music
Remote control or voice activated aftermarket add-ons that allow a passenger to plug in an electric car or pump gas remotely
Innovative cameras and real time editing software that allow for video conferencing that appears as if itrsquos being conducted in an office rather than a car
CONSUMER ELECTRONICS
37
TREND 05
Commercial Drones Take (Test) FlightWhile civilian use of drones may be what many first picture when they think of drones
itrsquos the military use of drones that has been driving demand Specifically military use of
drones has far outpaced civilian use of drones when measured by revenue Defense
spending on drones is projected to be robust through 2024
Global aerial drone marketin billions $14
$12
$10
$8
$6
$4
$2
$0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
DefenseCivilian
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
38
However research also suggests the civilian and commercial markets are expected to
grow significantly as drones are used in new and innovative ways Analysts at Grand View
Research describe future applications such as
ldquoAgriculture is expected to emerge as the dominant
application sector over the forecast period on
account of several benefits attained such as yield
increase due to crop monitoring Tech giants such
as Facebook Inc and Google Inc are planning
to use solar powered UAVs that hover around the
atmosphere of the earth providing internet access
to the remotest of places acting as flying internet
access points or hotspots In addition Amazon has
been working on Prime Air a drone delivery system
that promises goods delivered within 30 minutes
after order placementrdquo
CONSUMER ELECTRONICS
39
The list of potential drone applications includes
bull Agriculture
bull Law Enforcement
bull Ecommerce Delivery
bull Mapping amp Imagery
bull Wildlife Patrolling
bull Forest Fire Management
12000
10000
8000
6000
4000
2000
00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Agriculture
Energy
GovernmentMedia amp Entertainment
Others
US commercial drone market by application 2012-2022USD million
SOURCE GRAND VIEW RESEARCH
bull Vehicle Traffic Control
bull Marketing amp Entertainment
bull Energy amp Mining
bull Real Estate
bull News Gathering
bull Infrastructure Monitoring
CONSUMER ELECTRONICS
40
Research indicates sales of commercial and civilian drones will grow at a compound
annual rate of 19 between 2015 and 2020 The economic impact of the commercial
drone segment is forecast to grow to $51 billion by 2025
While some analysts argue package delivery will not be an early priority the impact
drones have on the delivery of consumer electronics may be relatively muted as only
a third of the people surveyed recently trust a drone to deliver consumer electronics
The economic impact of the commercial drone sectordirect economic impact from the UAV industry in the United States (billion US dollars)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$12
$23
$35 $36$38 $40
$42 $44 $4649
$51
SOURCE STATISTA
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
34
However as the market becomes more saturated with connected cars average revenue
per connected car is projected to decline to $66685 USD by 2020
115029
84312
72679
6742065447 6668566075
Revenue per connected carin US dollars
1200
1100
1000
900
800
700
6002014 2015 2016 2017 2018 2019 2020
SOURCE STATISTA
CONSUMER ELECTRONICS
35
In addition to realigning automaker IT departments and creating user-friendly interfaces
that are IoT compatible and potentially even device agnostic analysts suggest connected
car manufacturers will have to overcome this challenge
Faster Product CyclesldquoThe typical product cycle in the passenger car
industry is about eight years in the consumer
electronics industry itrsquos less than a year To
successfully sell electronics products for connected
cars automakers will need to mimic the rapid
development cycles of the consumer electronics
companies The key for the automakers is to learn
to build perfectly functioning modular systems
into which updates and product developments can
be integrated quickly and with little effort Such a
modular infotainment building set would allow for
individual components to be updated through plug-
and-play technologies several times during a carrsquos
life cyclerdquo
CONSUMER ELECTRONICS
36
If yoursquore wondering why connected cars were included under consumer electronics
consider how the world will change when self-driving vehicles are status quo Google has
already logged more than 1 million autonomous vehicle miles and has been involved in
just 12 minor crashes in six years none of which were the fault of the driverless car
Once autonomous vehicles become part of our driving fabric expect next generation
connected cars to offer driverspassengers additional options in terms of the devices that
can interact with the vehicle
Smartphone temperature control amp bed-like seat adjustment applications and voice control of windows car hoods amp trunks and streaming music
Remote control or voice activated aftermarket add-ons that allow a passenger to plug in an electric car or pump gas remotely
Innovative cameras and real time editing software that allow for video conferencing that appears as if itrsquos being conducted in an office rather than a car
CONSUMER ELECTRONICS
37
TREND 05
Commercial Drones Take (Test) FlightWhile civilian use of drones may be what many first picture when they think of drones
itrsquos the military use of drones that has been driving demand Specifically military use of
drones has far outpaced civilian use of drones when measured by revenue Defense
spending on drones is projected to be robust through 2024
Global aerial drone marketin billions $14
$12
$10
$8
$6
$4
$2
$0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
DefenseCivilian
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
38
However research also suggests the civilian and commercial markets are expected to
grow significantly as drones are used in new and innovative ways Analysts at Grand View
Research describe future applications such as
ldquoAgriculture is expected to emerge as the dominant
application sector over the forecast period on
account of several benefits attained such as yield
increase due to crop monitoring Tech giants such
as Facebook Inc and Google Inc are planning
to use solar powered UAVs that hover around the
atmosphere of the earth providing internet access
to the remotest of places acting as flying internet
access points or hotspots In addition Amazon has
been working on Prime Air a drone delivery system
that promises goods delivered within 30 minutes
after order placementrdquo
CONSUMER ELECTRONICS
39
The list of potential drone applications includes
bull Agriculture
bull Law Enforcement
bull Ecommerce Delivery
bull Mapping amp Imagery
bull Wildlife Patrolling
bull Forest Fire Management
12000
10000
8000
6000
4000
2000
00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Agriculture
Energy
GovernmentMedia amp Entertainment
Others
US commercial drone market by application 2012-2022USD million
SOURCE GRAND VIEW RESEARCH
bull Vehicle Traffic Control
bull Marketing amp Entertainment
bull Energy amp Mining
bull Real Estate
bull News Gathering
bull Infrastructure Monitoring
CONSUMER ELECTRONICS
40
Research indicates sales of commercial and civilian drones will grow at a compound
annual rate of 19 between 2015 and 2020 The economic impact of the commercial
drone segment is forecast to grow to $51 billion by 2025
While some analysts argue package delivery will not be an early priority the impact
drones have on the delivery of consumer electronics may be relatively muted as only
a third of the people surveyed recently trust a drone to deliver consumer electronics
The economic impact of the commercial drone sectordirect economic impact from the UAV industry in the United States (billion US dollars)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$12
$23
$35 $36$38 $40
$42 $44 $4649
$51
SOURCE STATISTA
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
35
In addition to realigning automaker IT departments and creating user-friendly interfaces
that are IoT compatible and potentially even device agnostic analysts suggest connected
car manufacturers will have to overcome this challenge
Faster Product CyclesldquoThe typical product cycle in the passenger car
industry is about eight years in the consumer
electronics industry itrsquos less than a year To
successfully sell electronics products for connected
cars automakers will need to mimic the rapid
development cycles of the consumer electronics
companies The key for the automakers is to learn
to build perfectly functioning modular systems
into which updates and product developments can
be integrated quickly and with little effort Such a
modular infotainment building set would allow for
individual components to be updated through plug-
and-play technologies several times during a carrsquos
life cyclerdquo
CONSUMER ELECTRONICS
36
If yoursquore wondering why connected cars were included under consumer electronics
consider how the world will change when self-driving vehicles are status quo Google has
already logged more than 1 million autonomous vehicle miles and has been involved in
just 12 minor crashes in six years none of which were the fault of the driverless car
Once autonomous vehicles become part of our driving fabric expect next generation
connected cars to offer driverspassengers additional options in terms of the devices that
can interact with the vehicle
Smartphone temperature control amp bed-like seat adjustment applications and voice control of windows car hoods amp trunks and streaming music
Remote control or voice activated aftermarket add-ons that allow a passenger to plug in an electric car or pump gas remotely
Innovative cameras and real time editing software that allow for video conferencing that appears as if itrsquos being conducted in an office rather than a car
CONSUMER ELECTRONICS
37
TREND 05
Commercial Drones Take (Test) FlightWhile civilian use of drones may be what many first picture when they think of drones
itrsquos the military use of drones that has been driving demand Specifically military use of
drones has far outpaced civilian use of drones when measured by revenue Defense
spending on drones is projected to be robust through 2024
Global aerial drone marketin billions $14
$12
$10
$8
$6
$4
$2
$0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
DefenseCivilian
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
38
However research also suggests the civilian and commercial markets are expected to
grow significantly as drones are used in new and innovative ways Analysts at Grand View
Research describe future applications such as
ldquoAgriculture is expected to emerge as the dominant
application sector over the forecast period on
account of several benefits attained such as yield
increase due to crop monitoring Tech giants such
as Facebook Inc and Google Inc are planning
to use solar powered UAVs that hover around the
atmosphere of the earth providing internet access
to the remotest of places acting as flying internet
access points or hotspots In addition Amazon has
been working on Prime Air a drone delivery system
that promises goods delivered within 30 minutes
after order placementrdquo
CONSUMER ELECTRONICS
39
The list of potential drone applications includes
bull Agriculture
bull Law Enforcement
bull Ecommerce Delivery
bull Mapping amp Imagery
bull Wildlife Patrolling
bull Forest Fire Management
12000
10000
8000
6000
4000
2000
00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Agriculture
Energy
GovernmentMedia amp Entertainment
Others
US commercial drone market by application 2012-2022USD million
SOURCE GRAND VIEW RESEARCH
bull Vehicle Traffic Control
bull Marketing amp Entertainment
bull Energy amp Mining
bull Real Estate
bull News Gathering
bull Infrastructure Monitoring
CONSUMER ELECTRONICS
40
Research indicates sales of commercial and civilian drones will grow at a compound
annual rate of 19 between 2015 and 2020 The economic impact of the commercial
drone segment is forecast to grow to $51 billion by 2025
While some analysts argue package delivery will not be an early priority the impact
drones have on the delivery of consumer electronics may be relatively muted as only
a third of the people surveyed recently trust a drone to deliver consumer electronics
The economic impact of the commercial drone sectordirect economic impact from the UAV industry in the United States (billion US dollars)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$12
$23
$35 $36$38 $40
$42 $44 $4649
$51
SOURCE STATISTA
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
36
If yoursquore wondering why connected cars were included under consumer electronics
consider how the world will change when self-driving vehicles are status quo Google has
already logged more than 1 million autonomous vehicle miles and has been involved in
just 12 minor crashes in six years none of which were the fault of the driverless car
Once autonomous vehicles become part of our driving fabric expect next generation
connected cars to offer driverspassengers additional options in terms of the devices that
can interact with the vehicle
Smartphone temperature control amp bed-like seat adjustment applications and voice control of windows car hoods amp trunks and streaming music
Remote control or voice activated aftermarket add-ons that allow a passenger to plug in an electric car or pump gas remotely
Innovative cameras and real time editing software that allow for video conferencing that appears as if itrsquos being conducted in an office rather than a car
CONSUMER ELECTRONICS
37
TREND 05
Commercial Drones Take (Test) FlightWhile civilian use of drones may be what many first picture when they think of drones
itrsquos the military use of drones that has been driving demand Specifically military use of
drones has far outpaced civilian use of drones when measured by revenue Defense
spending on drones is projected to be robust through 2024
Global aerial drone marketin billions $14
$12
$10
$8
$6
$4
$2
$0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
DefenseCivilian
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
38
However research also suggests the civilian and commercial markets are expected to
grow significantly as drones are used in new and innovative ways Analysts at Grand View
Research describe future applications such as
ldquoAgriculture is expected to emerge as the dominant
application sector over the forecast period on
account of several benefits attained such as yield
increase due to crop monitoring Tech giants such
as Facebook Inc and Google Inc are planning
to use solar powered UAVs that hover around the
atmosphere of the earth providing internet access
to the remotest of places acting as flying internet
access points or hotspots In addition Amazon has
been working on Prime Air a drone delivery system
that promises goods delivered within 30 minutes
after order placementrdquo
CONSUMER ELECTRONICS
39
The list of potential drone applications includes
bull Agriculture
bull Law Enforcement
bull Ecommerce Delivery
bull Mapping amp Imagery
bull Wildlife Patrolling
bull Forest Fire Management
12000
10000
8000
6000
4000
2000
00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Agriculture
Energy
GovernmentMedia amp Entertainment
Others
US commercial drone market by application 2012-2022USD million
SOURCE GRAND VIEW RESEARCH
bull Vehicle Traffic Control
bull Marketing amp Entertainment
bull Energy amp Mining
bull Real Estate
bull News Gathering
bull Infrastructure Monitoring
CONSUMER ELECTRONICS
40
Research indicates sales of commercial and civilian drones will grow at a compound
annual rate of 19 between 2015 and 2020 The economic impact of the commercial
drone segment is forecast to grow to $51 billion by 2025
While some analysts argue package delivery will not be an early priority the impact
drones have on the delivery of consumer electronics may be relatively muted as only
a third of the people surveyed recently trust a drone to deliver consumer electronics
The economic impact of the commercial drone sectordirect economic impact from the UAV industry in the United States (billion US dollars)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$12
$23
$35 $36$38 $40
$42 $44 $4649
$51
SOURCE STATISTA
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
37
TREND 05
Commercial Drones Take (Test) FlightWhile civilian use of drones may be what many first picture when they think of drones
itrsquos the military use of drones that has been driving demand Specifically military use of
drones has far outpaced civilian use of drones when measured by revenue Defense
spending on drones is projected to be robust through 2024
Global aerial drone marketin billions $14
$12
$10
$8
$6
$4
$2
$0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
DefenseCivilian
SOURCE BI INTELLIGENCE
CONSUMER ELECTRONICS
38
However research also suggests the civilian and commercial markets are expected to
grow significantly as drones are used in new and innovative ways Analysts at Grand View
Research describe future applications such as
ldquoAgriculture is expected to emerge as the dominant
application sector over the forecast period on
account of several benefits attained such as yield
increase due to crop monitoring Tech giants such
as Facebook Inc and Google Inc are planning
to use solar powered UAVs that hover around the
atmosphere of the earth providing internet access
to the remotest of places acting as flying internet
access points or hotspots In addition Amazon has
been working on Prime Air a drone delivery system
that promises goods delivered within 30 minutes
after order placementrdquo
CONSUMER ELECTRONICS
39
The list of potential drone applications includes
bull Agriculture
bull Law Enforcement
bull Ecommerce Delivery
bull Mapping amp Imagery
bull Wildlife Patrolling
bull Forest Fire Management
12000
10000
8000
6000
4000
2000
00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Agriculture
Energy
GovernmentMedia amp Entertainment
Others
US commercial drone market by application 2012-2022USD million
SOURCE GRAND VIEW RESEARCH
bull Vehicle Traffic Control
bull Marketing amp Entertainment
bull Energy amp Mining
bull Real Estate
bull News Gathering
bull Infrastructure Monitoring
CONSUMER ELECTRONICS
40
Research indicates sales of commercial and civilian drones will grow at a compound
annual rate of 19 between 2015 and 2020 The economic impact of the commercial
drone segment is forecast to grow to $51 billion by 2025
While some analysts argue package delivery will not be an early priority the impact
drones have on the delivery of consumer electronics may be relatively muted as only
a third of the people surveyed recently trust a drone to deliver consumer electronics
The economic impact of the commercial drone sectordirect economic impact from the UAV industry in the United States (billion US dollars)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$12
$23
$35 $36$38 $40
$42 $44 $4649
$51
SOURCE STATISTA
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
38
However research also suggests the civilian and commercial markets are expected to
grow significantly as drones are used in new and innovative ways Analysts at Grand View
Research describe future applications such as
ldquoAgriculture is expected to emerge as the dominant
application sector over the forecast period on
account of several benefits attained such as yield
increase due to crop monitoring Tech giants such
as Facebook Inc and Google Inc are planning
to use solar powered UAVs that hover around the
atmosphere of the earth providing internet access
to the remotest of places acting as flying internet
access points or hotspots In addition Amazon has
been working on Prime Air a drone delivery system
that promises goods delivered within 30 minutes
after order placementrdquo
CONSUMER ELECTRONICS
39
The list of potential drone applications includes
bull Agriculture
bull Law Enforcement
bull Ecommerce Delivery
bull Mapping amp Imagery
bull Wildlife Patrolling
bull Forest Fire Management
12000
10000
8000
6000
4000
2000
00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Agriculture
Energy
GovernmentMedia amp Entertainment
Others
US commercial drone market by application 2012-2022USD million
SOURCE GRAND VIEW RESEARCH
bull Vehicle Traffic Control
bull Marketing amp Entertainment
bull Energy amp Mining
bull Real Estate
bull News Gathering
bull Infrastructure Monitoring
CONSUMER ELECTRONICS
40
Research indicates sales of commercial and civilian drones will grow at a compound
annual rate of 19 between 2015 and 2020 The economic impact of the commercial
drone segment is forecast to grow to $51 billion by 2025
While some analysts argue package delivery will not be an early priority the impact
drones have on the delivery of consumer electronics may be relatively muted as only
a third of the people surveyed recently trust a drone to deliver consumer electronics
The economic impact of the commercial drone sectordirect economic impact from the UAV industry in the United States (billion US dollars)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$12
$23
$35 $36$38 $40
$42 $44 $4649
$51
SOURCE STATISTA
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
39
The list of potential drone applications includes
bull Agriculture
bull Law Enforcement
bull Ecommerce Delivery
bull Mapping amp Imagery
bull Wildlife Patrolling
bull Forest Fire Management
12000
10000
8000
6000
4000
2000
00
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Agriculture
Energy
GovernmentMedia amp Entertainment
Others
US commercial drone market by application 2012-2022USD million
SOURCE GRAND VIEW RESEARCH
bull Vehicle Traffic Control
bull Marketing amp Entertainment
bull Energy amp Mining
bull Real Estate
bull News Gathering
bull Infrastructure Monitoring
CONSUMER ELECTRONICS
40
Research indicates sales of commercial and civilian drones will grow at a compound
annual rate of 19 between 2015 and 2020 The economic impact of the commercial
drone segment is forecast to grow to $51 billion by 2025
While some analysts argue package delivery will not be an early priority the impact
drones have on the delivery of consumer electronics may be relatively muted as only
a third of the people surveyed recently trust a drone to deliver consumer electronics
The economic impact of the commercial drone sectordirect economic impact from the UAV industry in the United States (billion US dollars)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$12
$23
$35 $36$38 $40
$42 $44 $4649
$51
SOURCE STATISTA
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
40
Research indicates sales of commercial and civilian drones will grow at a compound
annual rate of 19 between 2015 and 2020 The economic impact of the commercial
drone segment is forecast to grow to $51 billion by 2025
While some analysts argue package delivery will not be an early priority the impact
drones have on the delivery of consumer electronics may be relatively muted as only
a third of the people surveyed recently trust a drone to deliver consumer electronics
The economic impact of the commercial drone sectordirect economic impact from the UAV industry in the United States (billion US dollars)
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$12
$23
$35 $36$38 $40
$42 $44 $4649
$51
SOURCE STATISTA
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
41
74
54
45
44
44
32
15
73
For which of the following products would you be open to trusting drone deliveryUS consumersrsquo opinion on items qualified for drone delivery 2015 (share of respondents)
Books
Clothes and Apparel
Pet Items
Tools
Sporting Goods
Household Goods
Consumer Electronics
Luxury Goods SOURCE STATISTA
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
42
As is often the case technology is well ahead of regulation While a record 185
commercial drone waivers were issued in April 2015 expect a relatively slow regulatory
process in regard to green lighting expanded use of commercial drones As BI Intelligence
puts it
ldquoProposed US regulation would effectively end the
ban on commercial drone flights and would allow
low-altitude flights of small drones within view of
a ground-based pilot The rules are unlikely to be
finalized before early 2017 Some believe it will
happen earlier But we believe it most likely that
widespread but heavily restricted commercial UAV
flights will become routine sometime that yearrdquo
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
43
TREND 06
3D Printing Evolves Beyond Just PrototypingThe 3D Printing market value is expected to grow from approximately $7 billion in 2016 to
nearly $21 billion by 2020
2013 2014 2016 2018 2020
$4
$6 $7
$13
$21
Value of the additive manufacturing (3D printing) market worldwide from 2011 to 2021in billions US dollars
SOURCE STATISTA
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
44
Thus far 3D Printing has been used mainly as a tool for rapid prototyping However
analysts suggest that will change toward the second half of the decade as the global
market for 3D Printing and services is projected to grow at a compound annual rate
of 457 through 2018 As printing printing methods and software evolve expect the
growth in 3D printing to be driven by new uses
Possibly the biggest advance in 3D Printing is the emergence of a new class of printers
that provides both high capability and lower price points In fact affordable specialty
3D printers that create high-quality products have recently become cornerstones for
ecommerce businesses
For instance consumers who are unwilling or unable to spend thousands of dollars on a
piece of fine jewelry now have the option of paying several hundred for a nearly identical
piece created by a 3D jewelry printer Iconery combines ecommerce with fashion and
3D Printing to offer women access to beautiful designs for a fraction of what they might
otherwise pay Obviously compromises are made in terms of the raw materials used to
create 3D printed pieces but the target market here isnrsquot likely the ultra-wealthy
Expect the trend to evolve in ways that position 3D printers on store shelves and allow
consumers to customize products on demand
SOURCE PWC
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
4545
PAGE 46 INTRODUCTION
PAGE 47 DRIVER 01
Virtual Reality Business Solutions Powered by Artificial Intelligence
PAGE 48 DRIVER 02
Ultra-Personal Customer Experiences Powered by Next Generation Beacons
PAGE 51 DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring Revenue
PAGE 54 DRIVER 04
Context-Aware Devices That Predict Needs amp Improve Health
Tomorrow amp Beyond
CONSUMER ELECTRONICS
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
46
The future will likely belong to consumer electronics manufactures that not only create the next must-have item but those that also ensure their new products seamlessly integrate within a userrsquos broader IoT ecosystem the home the car and in virtual reality and beyond Igniting future growth in the sector will also require consumer electronics manufacturers to build products designed for the IoT with security in mind In a password-free mobile payment voice activated future that frequently jumps back and forth between reality VR and AR (augmented reality) protecting customers from IoT threats will become essential in earning trust Consumer electronics that solve big problems easily integrate into a consumerrsquos IoT and
create highly valuable user experiences will position themselves to drive future growth in
the following four ways
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
47
DRIVER 01
Virtual Reality Business Solutions Powered By Artificial IntelligenceStreamlining solving or otherwise combining consumer electronics with evolving or yet
to be invented technologies in ways that solve difficult business problems better than
employees can in some situations will provide the industry opportunities to further serve
the enterprise market
An AI powered personal customer service representative a consumer
can access in virtual reality that already knows the customerrsquos purchase
history preferences and behavior and can help the customer with
billing questions returns or exchanges that are subsequently
automated in the physical world and require no human interaction
unless the customer desires
Virtual customer service representatives equipped with emotion
detecting AI like that created by a startup recently acquired by Apple
that can automatically sense and interpret whether the customer is
satisfied or unsatisfied with the experience and make real time data
driven adjustments
Consumer electronics powered by AI and for use in VR may also help enterprise companies more
efficiently and effectively achieve human resources or employee training objectives
Scientists working at VR labs argue that VR will become more effective than video in the
corporate workplace Electronics that supplement complement or otherwise add value to
VR experiences will likely drive demand in the enterprise market
A device that offers diversity training that transforms a white male
in virtual reality into a black female and allows him to virtually feel
prejudice by experiencing the harsh discriminatory behavior of
avatars
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
48
Mass merchant stores (Target
Walmart)
Electronicsstores
Home improvement
stores
Oice supply stores
Other Donrsquot know
6865
55
48
13 13
What type of store would beacons be most useful in
DRIVER 02
Ultra-Personal Customer Experiences Powered By Next Generation BeaconsAs the digital and physical worlds merge via pop-up stores and omni-channel marketing
and sales strategies consumer electronics manufacturers will have myriad opportunities
to assist pop-ups and established physical stores capitalize on the 78 of consumers who
spend $1500 additional dollars per month at brick amp mortar stores versus ecommerce
stores
Store beacons powered by Bluetooth that recognize you by device location and digital
behavior can send alerts offers or text messages Creatively improving upon existing
beacon capabilities may help increase overall industry sales as two-thirds of recent survey
respondents say theyrsquod welcome beacons in brick and mortar electronics stores
SOURCE CTA
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
49
You are comfortable using beacons while shopping
Donrsquot know4
Neutral9
Strongly Disagree
30
Strongly Agree16
SomewhatDisagree
13
SomewhatAgree28
However formidable barriers exist regarding the comfort level people have when
considering whether theyrsquod like to shop with beacons In fact 53 are uncomfortable with
the idea of using beacons to shop
SOURCE CTA
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
50
It means next generation beacons must not be designed solely to increase sales Next
gen beacons must leverage customer data and online behavior to intimately understand
individual users and offer not only an enjoyable shopping experience but also help
consumers make better choices save money and offer IoT security protection
Beacons that are connected to appliances medicine cabinets and
food pantries and attached or embedded in VR headsets that not
only allow for a personalized virtual shopping experience but also
offer suggested purchases based on replenishment cycles items of
which the shopper is running low or food items that are about to
expire and are on a userrsquos meal schedule for that evening
Beacon-like devices attached to personalized shopping hubs or
designated store areas that recognize a customer the moment
they walk into a store automatically rotate shelf space so only
merchandise the customer is most likely to buy is on display and
incorporate facial recognition scanning or eye tracking technology
to interpret amp better learn the customerrsquos preferences and make
improved data driven purchase suggestions
Beacons that attach or embed in mobile devices that may be
accessed with permission by companies that then have access to
a userrsquos personal calendar event schedule and social networks or
contacts and can offer targeted promotions based on situational data
like weather geography upcoming activities and social interaction
Beacons that connect the device home and car in ways that inform
shoppers when they donrsquot need an item they are about to purchase
whether an item theyrsquore about to be purchased can be purchased
cheaper elsewhere or whether the shopper has selected the correct
maintenance item such as filters that fit the furnace properly or the
proper tap water filter replacement
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
51
DRIVER 03
Next Generation Wearables That ldquoFeelrdquo amp Generate Recurring RevenueNext generation wearables will likely combine with VR in ways that better protect us from
human error while also providing consumer electronics manufacturers with much needed
recurring revenue The cosmetics industry is leading the way in this regard by creating
Wearables that feel like human skin described by some as a robotic
band-aids or wearable tattoos and can connect with devices to
reveal personal health data like temperature stiffness hydration
heart rate UV exposure LrsquoOreal is co-creating a flexible electronics
patch designed to measure exposure to UV radiation and create a
custom skin protection solution based on an individualrsquos skin type
Researchers are attempting to build avatars that can replicate the
feel of an actual handshake in VR as well as other tactile events that
are often experienced in reality which could overcome the limitations
of video conferencing and possibly reduce business travel costs
by simulating the face-to-face feeling business professionals often
desire to make better decisions
Wearable gloves or faux medical instruments or devices that help
surgeons feel exactly what itrsquos like to successfully perform a specific
high-risk action during a virtual surgery
Likewise VR research labs are already working on technology to allow people to ldquofeelrdquo
what theyrsquore seeing in virtual reality
The ldquofeelrdquo technology that may one day complement VR may also integrate with consumer
electronics that help skilled professionals perform at even higher levels
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
52
Finger wearables that help automotive repair technicians listen to
touch and feel what a successful part extraction feels like amid
difficult or impossible to see vehicle repair scenarios that often
result in costly botched repairs due to inexperience
Products that allow a defense attorney who is interested in striking
the right tone while cross-examining a crime victim to virtually morph
into the actual crime victim and actually feel thanks to wearable
sensors how their breathing heart rate and other bodily functions
change while being questioned
Feel technology that integrates with virtual safety training for miners
construction workers and oil amp gas driller that enable them to
actually feel what a particular part procedure or system feels like
when installed incorrectly or in the lead up to a collapse disaster
or explosion
Next gen wearables that complement VR with ldquofeelrdquo experiences may also help consumer
electronics manufacturers develop new sources of recurring revenue for professions that
are highly dangerous have high turnover or must regularly educate employees about
new industry rules and regulations
The idea that consumer electronics devices can generate recurring revenue is something
thatrsquos already happening at Livestream a platform that enables consumers and businesses
to broadcast and watch live events The company recently launched its category creating
Mevo a pocket-sized live event camera device that can be mounted anywhere and lets
people edit while they film
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
53
Mevo allows practically anyone to create and direct the equivalent of a multi-camera shoot
from an application on their iPhone
Herersquos how it works bull Mount the camera anywhere yoursquod like
bull Use the iPhone app to pan zoom cut and live switch between Mevorsquos
nine virtual cameras
bull Share the event with your social network later or live stream the event
yoursquore directing almost anywhere in the world
SOURCE LIVESTREAM
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
54
ldquoPeople have never been able to do anything like
this beforerdquo Jeremiah Linder Mevorsquos marketing
manager says ldquoWe set out to allow anyone to
be a video director and give them the power of
a professional television crew in the palm of
their handrdquo
ldquoA system is context-aware if it uses context to
provide relevant information andor services to the
user where relevancy depends on the userrsquos taskrdquo
Even better customers who purchase the $399 Mevo can edit save and share their
events later without additional charge However customers who prefer to stream events
live pay a monthly subscription
DRIVER 04
Context-Aware Devices That Predict Needs amp Improve HealthNext generation devices will interact with us in ways todayrsquos smart devices simply canrsquot
Advances in machine learning natural language processing and technology that can
detect our emotions as well as interpret personal health data in real time will likely
combine in ways that make it possible for next gen consumer electronics devices to be
context-aware on a much deeper level
While context-aware has been defined differently since 1994 herersquos how Anind K Dey
and Gregory D Abowd at the Graphics Visualization and Usability Center and College of
Computing at the Georgia Institute of Technology define it
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
55
In its earliest forms context-aware applications included autocorrect computer
screensavers and motion-detecting lights The concept morphed into location based
navigation devices and has evolved today into anticipatory context-awareness such as
predictive typing software for smartphones
Tomorrowrsquos context-aware advances will likely come in the form of better functioning
virtual assistants Rick Kowalski of the Consumer Technology Association summarizes the
future like this
ldquoThe predictive power of context-aware computing
is one of the features that make it useful The idea
is that devices can accurately act on our behalf
in a way that saves time and effort Software
developers are beginning to build predictive
features into personal digital assistants on our
mobile devicesrdquo
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
56
78
39
38
28
22
21
17
5
21
2
Top desired tasks for virtual personal assistants
Any (Net)
Reporting the news or weather
Performing calling or texting functions by voice command
Providing dining and entertainment recommendations based on location
Scheduling and time management
Answering questions about music movies or TV shows
Providing shopping recommendations and deals pertaining to the
recommended retailers
Summarizing trends and conversations on your social media accounts
None of these
Donrsquot knowrefusedSOURCE CTA
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
57
3D printed wearables like football helmets or cosmetic stickers
known as Dermocosmetics that process contextual data such as the
number of times a quarterback has been hit during a game versus
the average how his cognition compares to other situations or the
average as well as personal health data like hydration and sugar
levels to suggest specific courses of action or in-game treatment or
benching to prevent injury amp illness
Evaluation devices that mount on school bus driver seats taxicab
rear view mirrors or inside plane cockpits that combine real time
traffic and passenger pattern data with key health metrics so school
bus drivers pilots and or designated drivers responsible for the
safety of others can be be monitored remotely in real time provided
with pre-emptive corrective behavioral action or removed from their
positions of responsibility
Context combined with structured knowledge housed on the web promises one day
to provide virtual assistants that can stay one step ahead by predicting what we want
or need in advance Imagine how consumer electronics manufactures might one day
integrate these advances with wearables
One company of the forefront of all this is InteraXon a Canadian startup that created
Muse a personal meditation assistant in the form of a headband that measures your
brain activity interprets your level of anxiety and helps you learn to calm yourself
ldquoYour brain is similar to a musclerdquo InteraXonrsquos
Martin Cieszewski says ldquoWhen you train your
biceps you see results the same is possible with
your mindrdquo
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
58
The headband also provides real time feedback you can use to track progress over time
better recognize when yoursquore starting to stress and rewards you for calming yourself and
achieving a healthier state of mind
Herersquos how it worksbull The headband fits across your forehead and tucks behind your ears
bull It connects via Bluetooth to a smartphone application called Calm that assists
in meditation
bull The headband uses EEG sensors the same technology doctors use to check for epilepsy
or Alzheimerrsquos to measure and interpret your brainwaves
bull Once you begin meditating the app provides real-time brain feedback by providing
audio that indicates whether your brain is ldquoactiverdquo or ldquocalmrdquo
bull If yoursquore calm yoursquoll hear pleasant sounds like birds chirping
bull If your mind is active yoursquoll hear harsher weather-related sounds like strong wind
and waves
SOURCE INTERAXON
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
CONSUMER ELECTRONICS
59
The app monitors a userrsquos progress over time and can help users pinpoint specific
situations or environments in which the user might be more prone to experience stress
or anxiety The idea is to use the Muse to train yourself to become more self-aware and
quickly recognize in the real world when your mind wanders or you become stressed
If you can do this the company suggests you can with practice quickly begin to calm
your brain
Muse is now expanding to help others
Doctors psychologists and therapists are prescribing
Muse as a supplement or alternative to traditional
prescription medications and for addiction recovery
patients
Professional athletes especially golfers are using
Muse to gain a competitive advantage and improve
performance
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
606060
Technology Friend or Foe
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
The big thing is we needed to be sure we could handle more volume which is why Shopify just made sense
Right now we only have a few SKUs but Shopify allows us to add SKUs easily and in a
really intuitive way
ldquo
ldquoJEREMIAH LINDER
Marketing Manager at Livestream
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
TECHNOLOGY FRIEND OR FOE
62
Whatrsquos Your Digital Business Advantage
A customized checkout that increases conversion rates and average ticket size
Creating interactive and highly personal customer experiences
A POS application you can use to make sales in both the digital and physical worlds but still provide centralized one-stop-shop reporting
Split testing cart upsell and cross sell tactics designed to increase top line growth
A customizable flexible and easy to use ecommerce platform that allows you to focus on the customer experience
Innovatively marketing in ways that increase conversions andcustomer lifetime value
Unless you have a digital advantage research suggests yoursquoll likely end up like the
20-percent of todayrsquos market leaders thatrsquoll lose their top spot to younger more agile
companies Unfortunately many of the ecommerce companies we talk with arenrsquot
singularly focused on the things thatrsquoll help them succeed and grow
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
TECHNOLOGY FRIEND OR FOE
63
Itrsquos not that these objectives arenrsquot top of mind or that yoursquore not working toward
them The problem is often the technology that underpins your ecommerce business
which often unnecessarily distracts your attention from key business goals and robs
you of the money and time needed to accomplish whatrsquos really important
Herersquos how Shopifyrsquos Andrea Wahbe sums it up in a blog post entitled
Why Are You Still Paying $1 Million For An Ecommerce Site
ldquoFor years high volume merchants have willingly
budgeted between $500000 to $1 Million for
the design development project management
supporting applications and content for their
ecommerce website builds
Add to that your needs for ongoing site maintenance
and new features and yoursquore looking at spending
upwards of an additional $1M a year to have an
enterprise ecommerce service provider support
your annual online business growthrdquo
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
TECHNOLOGY FRIEND OR FOE
64
So ask yourself this is technology a friend or foe
ldquoIn all of those conversations I said please
explain why I need to spend $100000 on
a custom checkout cart the vendor has
probably already built for another client
versus one thatrsquos already on the market
and working well for thousands of other
ecommerce companies like ours If I go
down the custom route it could be a black
hole and wind up costing hundreds of
thousands of dollars more for development
and integrationrdquo
NATE CHECKETTS
CEO
Rhone Apparel
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
TECHNOLOGY FRIEND OR FOE
65
The Replatforming Myth
ldquoWersquore ecstatic about all of the possibilities
Not only did we not take a huge hit when we
changed platforms but our organic traffic
began growing Our conversion rate has
increased 25-30 and our average order
value is up 15-20 Wersquore super optimistic
about the futurerdquo
Yoursquoll lose traffic customers and it might not workhellip
Those are just a handful of the reasons ecommerce companies give for not replatforming
or initially trusting an easy to use out-of-the-box solution like Shopify Plus an enterprise
ecommerce platform for high volume merchants
The reality is replatforming with Shopify Plus is easy even for big
ecommerce companies that require customization integration and
applications that tightly manage inventory and fulfillment In fact
many of the negatives you hear about replatforming are part of
The Dirty Little Secret Traditional Enterprise Software Companies
Donrsquot Want You To Know
JOHN HART
Ecommerce Manager
Peepers
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
TECHNOLOGY FRIEND OR FOE
66
The Shopify Plus team has helped thousands of merchants replatform quickly and in ways that answer two burning questions many of you and your peers have
QUESTION 1
Is Shopify Plus easy to use
ANSWER
Itrsquos extremely easy to use right out of the box Even better itrsquos flexible which means you
can easily integrate your current systems and quickly customize your store
ldquoItrsquos Shopifyrsquos inexpensive technology that
allows us to stitch all of the pieces together
If you have no technical experience Shopify
allows you to pop a few buttons and have
a store up in no time But if you have a bit
of technical know-how itrsquos also a platform
thatrsquos extremely flexible in terms of
customizationrdquo
MADISON WICKHAM
Co-founder
Man Outfitters
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
TECHNOLOGY FRIEND OR FOE
67
QUESTION 2
How will Shopify Plus impact my business financially
ANSWER
Yoursquoll pay a fraction of the cost of a traditional enterprise software solution know exactly
what yoursquoll pay each month and can invest the money you save into growing your
business Going with Shopify gives merchants two key advantages
ldquoWersquove saved so much money since moving
to Shopify Plus Irsquom no longer calling a
developer at 3 AM and begging people
to help Our hosting development and
software costs have been cut in half
since switching Shopify Plus is worth
every pennyrdquo
ldquoThe push notifications on my Shopify
smartphone app were going crazy It was
incredible an extreme high to see two or
three sales notifications every minute In just
a week we were doing in revenue what some
of the biggest artists do in an entire month
We wound up doing $2 million in 30-daysrdquo
FARAH BARGHI
Brand Manager
All Pro Science
CHARLIE JABALEY
Co-Founder
Street Execs
01 Cost Savings
02 Increased Revenue Generation
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
TECHNOLOGY FRIEND OR FOE
68
Objections to ReplatformingItrsquos a big decisionhellip
One almost no one makes without at least a degree of unease In fact if yoursquore not at least
a little nervous about replatforming you probably donrsquot fully appreciate the perceived risks
Similarly though you may not be genuinely appreciating the risk of opting to stay with your
traditional ecommerce enterprise solution
The replatforming objections you may have are likely similar to those Shopify Plus
merchants had prior to switching
ldquoI wish you had come to me six months ago Irsquove put
too much money and time into our current platform
to switch at this pointrdquo
ldquoWersquove put a lot of money into development in fact
our business is structured around employing a lot of
developers to make this work I canrsquot go back to my
boss now and tell him or her that we donrsquot need all
this after wersquove already spent the moneyrdquo
ldquoIrsquom in too deep now to switchrdquo
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
TECHNOLOGY FRIEND OR FOE
69
These are extremely difficult positions to find oneself in Even if you realize albeit
belatedly that a relatively inexpensive out-of-the-box enterprise ecommerce solution
offering the functionality an enterprise level organization requires exists it just doesnrsquot
seem like an option if yoursquove sunk large quantities of time and money into your existing
platform
Remember this though
ldquoA rational decision maker is interested only
in the future consequences of current
investments Justifying earlier mistakes is
not among [a rational thinkerrsquos] concerns
The decision to invest additional resources
in a losing account when better investments
are available is known as the sunk-cost
fallacy a costly mistake that is observed in
decisions large and smallrdquo
DANIEL KAHNEMAN
Nobel Laureate and Author
Thinking Fast And Slow
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
TECHNOLOGY FRIEND OR FOE
70
When Technology Fades AwayItrsquos not sustainable continuing to pour resources into something your competitors take
for granted and to which they pay little attention Traditional ecommerce enterprise
software is a recurring expense that can gnaw away at margins distract you from growing
your business and prevent you from realizing your full potential as a company
Itrsquos never too late to right a wrong
Identifying a solution that could save your organization millions of dollars year after year
even if yoursquove already sunk significant time money and face into your current platform is
undoubtedly one of the most courageous and valuable contributions yoursquoll ever make
ldquoWe were never really a sunglasses company
Wersquore more of a marketing agency with a
great product that we know how to brand
and sell Shopify Plus helped us to focus on
that rather than the technologyrdquo ANDREAS KLEIN
Chief Operations
Officer
Hawkers
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
TECHNOLOGY FRIEND OR FOE
71
What if technology got out of your wayWhat would you spend the hundreds of thousands of dollars in savings on innovative
research and development improving the customer experience or marketing like you
know you can if only you had the time
Your future will likely be determined by the experiences you create for customers
Virtual reality ecommerce recommended by AI-powered personal assistants and amplified via social shares and next generation segmentation
On demand one-click ecommerce motivated by artificial intelligence and delivered in the same day to a location of your choice
Wearables and digital mapping technology that can detect emotion and combine it withpersonal health data to boost conversions and sales
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
TECHNOLOGY FRIEND OR FOE
72
If yoursquore worried about outdated technology you wonrsquot be focused on creating points of differentiation like your competitors
ldquoThere really are no technical limitations
now If we want to do something all we
have to do is plug it in and gordquo
ldquoShopify is just the best It is by far the best
ecommerce platform out there and has truly
allowed us to sync our operations with
vendors apps and tech partners as well
as provide amazing reportingrdquo
RON DIORIO
Digital Engagement Director
The Economist
GRIFFIN THALL
Co-Founder
Pure Vida Bracelets
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
TECHNOLOGY FRIEND OR FOE
73
ldquoShopify allows us to focus on product
development Having a plug-and-play option
that is still flexible enough to meet our
business needs and maintain the aesthetics
we want is great Itrsquos just so easy with
Shopify It really allowed us to get up and
running and gain a lot of momentum right
out of the gaterdquo
ldquoShopify is absolutely awesome We swear
by Shopify now and wouldnrsquot be where we
are today without itrdquo
JEREMIAH LINDER
Marketer
Livestream
MIKE BROWN
Founder
Death Wish Coffee
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond
Integrate customize and invent the futureDo it easily with Shopify Plus
Get started
Insight and imagination for tomorrow and beyond