Trend Report Digital 2012 by Shelly Palmer

www.shellypalmer.com

2013 Consumer Electronics Trend Report

SHELLYPALMER.COM © 2013 PAGE 2 OF 23

Table of Contents Introduction .................................................................................................. 3 Screen Ubiquity and Diversity ...................................................................... 5 Video Viewing Continues to Evolve Rapidly ................................................ 9 The Smartphone as Your Personal Control Center .................................... 13 Digital Health Comes On Strong ............................................................... 15 Connected and Smart Homes Get Closer to a Tipping Point .................... 16 Cars Get Smarter ........................................................................................ 18 Trending Tech You Should Watch ............................................................ 20 Conclusion .................................................................................................. 22

BY: SHELLY PALMER, JIM TURNER & JARED PALMER COPYRIGHT © 2013 ADVANCED MEDIA VENTURES GROUP LLC ALL RIGHTS RESERVED



Introduction Welcome to the Shelly Palmer 2013 Consumer Electronics Trend Report. In the next few pages we offer a brief over-view of the consumer electronics trends that will have the biggest near-term im-pact on consumer behavior. Thinner, More Powerful & Higher Res For everything with a screen, the trend will continue to be be thinner, more powerful and higher resolution. But that doesn’t mean that it’s business as usual. According to research by the Consumer Electronics Association (CEA), the or-ganization that stages the Consumer Electronics Show (CES) smartphones sales will see continued growth in 2013 and will remain the primary revenue driver for the industry. Shipment revenues for smartphones are expected to reach $37 billion in 2013, with more than 125.8 million units shipping to dealers, up 16 percent from 2012. Tablet computers also are ex-pected to see phenomenal growth. In 2013, unit sales of tablets are projected to surpass 105 million (up 54 percent), resulting in $35.6 billion in shipment revenue, up 22 percent year-over-year.1

1 CEA Press Release.

These are big numbers and they are only going to get bigger — but what do they mean? In my new book, Digital Wisdom: Thought Leadership for a Connected World, I examine how three interesting ob-served laws converge to offer meaning to statistics like these: 1) Moore’s Law proposes that the num-ber of transistors on integrated circuits doubles approximately every two years.2 This isn’t accurate, it’s more like one year, and the rate of change is accelerat-ing. But it does speak to the idea of ex-ponential growth. 2) Metcalfe’s Law posits that the value of a telecommunications network is pro-portional to the square of the number of connected users of the system (n2). The math here is debatable too, but it is very obvious that the value of a network in-creases with the addition of each addi-tional user, the only question is, by how much? 3) Kurzweil’s Law of Accelerating Re-turns is the thesis of his book The Singu-larity is Near and he observes that the rate of change in a wide variety of evolu-tionary systems tends to increase expo-nentially. This is the least obvious of the

2 Gordon E. Moore, "Cramming More Components onto Integrated Circuits," Electronics 38.8 (April 19, 1965: 114-17 ftp://download.intel.com/research/silicon/moorespaper.pdf.



three laws, but understanding the expo-nential rate of technological progress is critical to understanding how consumer behavior will evolve. When taken together, these three laws, which are not really laws, but rather ide-as — help add context to the CEA’s re-search. You can intuit that rapid and remarkable socioeconomic change will start happening faster than we can plan for it. The speed will continue to accel-erate, and the “network effect,” (Metcalfe’s Law) will empower consum-ers in ways that will stretch the limits of our imaginations. While reading this report, try to keep these three conceptual laws in mind and think about how, when taken in context, technologically empowered consumers will impact your business.



Screen Ubiquity and Diversity Only a few short years ago, conventional wisdom held that people preferred to watch long content on big screens and short content on small screens. Today, viewer data confirms that people will watch content of any length on the best available screen. Manufacturers are now using a "Goldilocks Strategy" searching for screen sizes that are, "just right" for targeted user cohorts. Screen size gives context to the user experience allowing users to choose how, when and where they want to watch, play and interact in a connected world. Cognizant of this shift, flat screens are getting smarter, and content and appli-cations are getting delivered on a dra-matic range of screen sizes and device feature sets. We are beginning to see de-vice convergence—smart TVs are be-coming more and more like tablets and smartphones, and tablets and smartphones are becoming more like televisions, thanks to TV Everywhere. However, this doesn’t tell the whole sto-ry. Second screen experiences (i.e. using a secondary connected device while us-ing another) are redefining content con-sumption and interaction. Television devices will continue to see significant increases in size and resolu-tion along with subsequent technologi-cally-driven price deflation.

Tablets and smartphones together now out-ship computers; over two thirds of Americans plan to buy a tablet, most of them in the next two years.3 We will look at the devices and explore the implications of this ubiquity and di-versity. Television The business is in transition. Shipments were down 7% in Q3 2012 and the trend continues. Average screen size increased 5% to 35” with larger screens steadily increasing in market share.4 This reflects just how fast manufacturing technology is developing and how quickly prices are deflating—bigger, slimmer, cheaper is what you need to remember. Major topics of discussion for 2013 in-clude: OLED, Ultra HD (a.k.a. 4K), Smart TVs and, of course, the new com-petitive landscape. Organic LED (OLED) With respect to resolution, Organic LED (OLED) TVs have been the "next big thing" for over two years, but the technology is still on the distant horizon. To understand the clarity and contrast ratio of an OLED screen, imagine an extremely thin, flexible, bendable, very 3 CEA Survey. 4 NPD DisplaySearch Advanced Quarterly Global TV Shipment and Forecast Report.



low power LED screen with the absolute best display quality available today—that’s OLED. 5 Although a technologi-cally imperfect example, just imagine a really big Apple Retina Display.6 OLED is even better! OLED smartphone displays are already on the market on many Android and Windows phones, but sizing up the technology to create OLED TVs has proved difficult because pixel defects are common and current yield rates are still below 10%. OLED might launch in a meaningful way in 2013 (Samsung is rumored to have a 55” model in the works). When manufacturers eventually get this right, you’ll see flexible OLED screens wrapped around products everywhere—Times Square meets your local grocery store! UltraHD (4K) TVs may finally be catching up to video camera technology with the advent of Ultra HD (a.k.a. 4K or UHD). 4K is shorthand for 4000, which repre-sents the order of magnitude of the reso-lution 3840 x 2160 pixels (8.3 megapix-els). This is approximately four times the number of pixels and therefore twice the

5 You may hear the technology referred to as “Super AMOLED,” but this is just Samsung’s proprietary name for its OLED displays. 6 The “Retina Display” found in many Apple products is not OLED. It is IPS, which stands for “In Plane Switching,"and is actually a premium LCD technology that’s known for having a wide viewing angle and clear picture.

resolution of currently deployed HD sets. Size Matters With respect to resolution and screen size, industry logic suggests 25” is ap-propriate for standard definition, 50” for HD and now 84”, or larger for UHD. LG, Sony, Sharpe and Samsung are all offering UHD sets ranging 60-85” cost-ing between $15,000 and $25,000 USD. Westinghouse is touting a 110” 4K set for Q1 2013 as well as 50”, 55” and 60” models. Massive 4K sets will make for an incredible home theatre experience for those trying to keep up with the Jones’. But what does one do with a 4K set? Not a whole lot as of now. Unfortunate-ly, right now, there is almost no native 4K content, so practically everything you watch on a 4K set will be upconverted from HDTV (a.k.a. 2K). Analysts believe that content delivery will be via blu-ray-like discs or over the Internet. Prices will drop dramatically and more 4K content will surely be cre-ated in the future. Right now, however, 4K is just a very cool technology that offers a glimpse into the future. 4K May Be Bad For 2K One immediate impact of Ultra HD may be to scare high-end buyers away from purchasing very large (70" – 90") 2K HDTV sets. Why spend $9,000 USD on an 80" 2K set when an 84" 4K set is only a few thousand more? It's a



question every high-end flat screen buyer will be asking themselves in 2013. 3D TV For all the hype, 3D never happened. With limited 3D content available, ex-pensive glasses needed and oh yeah, an optimal perpendicular viewing set up, consumers have spoken with their wal-lets about the technology and sales are fading. 3D is a passing fad -- don’t let anyone tell you otherwise. Smart TV (Connected TV) In contrast to 3D, TVs featuring Inter-net connectivity (Smart TVs) are grow-ing in popularity. Out of 114 million homes, 25 million have Smart TVs, and while only half are actually connected to the Internet, 7 fewer still are regularly used for OTT viewing. Although some headwinds exist because of a lack of in-dustry standardization, the real problem is content acquisition and audience measurement. Remarkable Competition

The competitive landscape is in transi-tion. Because of global geo-political headwinds and Japan’s stagnating econ-omy, the major Japanese manufacturers Panasonic, Sharp and Sony are in finan-cial trouble. According to Bloomberg, the trio collectively lost $15 billion in market capitalization and will be elimi-nating 29,000 jobs.8,9 7 NPD Group. 8 Japan has had two consecutive quarters of negative GDP growth. McLannahan, Ben, and Simon Rabinovitch. "Japan

This past year, Samsung established it-self as the new market leader in flat screen TVs with a near-record 26% global market share. With the top five consumer electronics manufacturers viciously competing for every market share point, this is going to be a great year for consumers. Tablets and Smartphones All the hype about the mobile revolution is probably warranted. 821 million smartphones and tablets were sold glob-ally in 2012 and 1.2 billion are expected to be sold in 2013.10 Smartphone and tablet shipments also exceeded PC shipments in Q4 and the combined in-stalled base of smartphones and tablets are expected to exceed PCs in mid-2013.11 Where’s all the growth coming from? Not the just the US and China. Vice George Ferreira, President and Chief Operating Officer of Samsung Electron-ics Africa, announced that with an esti-mated 450 million smartphone users in 2012 that Africa is now the second larg-est and fastest mobile phone market in enters recession before election - FT.com." FT.com. The Financial Times, 10 Dec. 2012. Web. 6 Jan. 2013. <http://www.ft.com/intl/cms/s/0/dd3dd156-4278-11e2-979e-00144feabdc0.html#axzz2HA3a9NJ2>. 9 Yasu, Mariko. "James Bond Can’t Fix Sony as Japan Elec-tronics Scrape Lows." Bloomberg Technology. Bloomberg LP, 20 Dec. 2012. Web. 3 Jan. 2013. <http://www.bloomberg.com/news/2012-12-19/james-bond-can-t-fix-sony-as-japan-electronics-scrape-lows-tech.html>. 10 Gartner Inc.. "Gartner Says 821 Million Smart Devices Will Be Purchased Worldwide in 2012; Sales to Rise to 1.2 Billion in 2013." Gartner Technology Research. N.p., n.d. Web. 29 Nov. 2012. http://www.gartner.com/it/page.jsp?id=2227215. 11 Mary Meeker. 2012 KPCB Internet Trend Report.



the world after China.12 Price deflation is driving penetration rates. For example, Chinese manufacturer Huawei is now offering a $50 Android-powered 3G smartphone.13 Don’t be surprised if you see a $20 smartphone on the market by 2015. The tablet market is exploding too. Two-thirds of online consumers expect to purchase a tablet eventually, with 45% in the next two years. 31% of Americans own them, twice as many as last year.14 Tablets are disrupting common practices in business, education, gaming and me-dia consumption. Tablets and smartphones are changing the way we create and consume content and our relationship with information. Even though a video may be seen by millions of people, you are still watching it up close (maybe with headphones) and having an intensely personal experience. This new intimate relationship with content is literally is redefining mass media. Tablets and smartphones are also chang-ing the relationship that gamers have with game consoles. One good way to 12 Biodun Coker. "Nigeria Ahead Smartphone Penetration in Africa." Business Day. N.p., 27 Nov. 2012. Web. 31 Dec. 2012. <htttp://www.businessdayonline.com/NG/index.php/markets/companies-and-market/48068-nigeria-ahead-smartphones-penetration-in-african>. 13 Lomas, Natasha. "$50 Android Smartphones Are Disrupt-ing Africa Much Faster Than You Think, Says Wikipedia’s Jimmy Wales | TechCrunch." TechCrunch. Aol Tech, 10 Dec. 2012. Web. 31 Dec. 2012. <http://techcrunch.com/2012/12/10/50-android-smartphones-are-disrupting-africa-much-faster-than-you-think-says-wikipedias-jimmy-wales/> 14 CEA.

think about this new set of consumer behaviors is simply, "people are taking their TVs with them."



VIDEO

Video Viewing Continues to Evolve Rapidly Combined with the explosion of screens, big shifts are taking place as consumers move more fully into on-demand streaming consumption of video and other content. Subscription services are growing and also facing new challenges and competition. Furthermore, new viewing habits make measurement and monetization of content more complex. Advertising and marketing opportunities have expanded, but knowing what mes-sages are effective and understanding the new currency of engagement is, at best, a challenge. The Internet is for Porn! So what are people doing with all these different screens? Mostly watching vid-eo. (See Fig. 1) On any given night, Netflix accounts for about one-third of primetime Internet traffic. Overall video traffic is expected to grow 26% next year, and by 2016, it will account for 86% of all global consumer IP traffic.15 (See Fig. 2) In other words, in about three years there will be more than 1.2 million minutes of video content crossing global IP networks each second. Video con-sumption is exploding across all plat-forms, especially in the mobile space.

15Cisco VNI, 2012.

Monthly mobile video consumption in bytes is expected to increase 1000% over the next three years (See Figs. 2 &3). Some key questions for 2013:

• Will all of this additional video viewing burden infrastructure?

• What will happen to bandwidth

costs?

• Will limited data plans stunt this growth?

• How will the "network effect"

impact consumer behavior?



Figure 1

Figure 2

Figure 3

Figure 4

Figure 5

Figure 6

Source: CEA Research, Cisco, VNI 2012.

60.5%

10.3%

10.3%

9.8%

4.5% 3.6% 1.0%

Global Consumer Internet Video 2012 by Category

(PB per month)

0

10

20

30

40

50

2012 2013 2014 2015 2016

Exab

ytes

per

mon

th

Growth of Global Consumer Internet Video by Category

40.4%

12.4% 12.8%

8.4%

17.8%

5.3% 2.8%

Global Consumer Internet Video 2016 by Category

(PB per month)

56%

44%

22%

14% 11%

US New Media Set-top Box Distribution

Game Consoles

DVR

Smart TVs & Blu Ray Players Tablets

OTT Boxes

73%

40%

6%

5%

0% 25% 50% 75% 100%

Catch up on missed episodes of TV

Catch up on shows discovers after

Cut back on cable

Cancelled cable

Rationale for TV Content Streaming

92%

41%

12% 10%

0%

25%

50%

75%

100%

% of

Con

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ers

Weekly Video Consumption by Device



Content Ownership in an On-Demand World

The traditional concept of owning con-tent is shifting as we move toward a fully on-demand world. Subscription services from Netflix, Amazon, and HuluPlus are reshaping behavior (See Figs. 5 & 6). Whereas physical media sales are down 4%, continuing a longer trend, rentals and video-on-demand Multi-systems Operator (MSO) are down 18% and subscriptions and streaming are up 25%.16 Consumers are becoming more com-fortable with less ownership and more streaming. Content costs are rising and so expand-ing streaming libraries is proving to be quite expensive. When consumers can access content on a What I want, Where I want, When I want (WiwWiwWiw), basis filters become paramount, especial-ly when there are mutually exclusive content libraries available. OTT & Xbox We will see new services that bundle and filter OTT services and content very soon (See Fig. 4). These services could find themselves as smart TV apps, set-top-boxes, media centers or most likely, game consoles. Out of 70 million Xbox 360 units, 40 million have Xbox Live subscriptions. With a new Xbox unit likely to ship by YE2013.

16 CEA Research.

Microsoft has the unique opportunity of establishing itself as the central home media platform for the next five years. Content Deals As good as this all sounds, the elephant in the room has several file cabinets of existing content deals on its back. The cost of creating a virtual MSO is astro-nomical. Very few companies have the funds to replicate a cable operator or, to realistically provide the fantasy tech-panacea... a la carte cable content. It may happen, but it is going to take an astonishingly large sum of money to ac-complish the task. Yes, the technology exists. No, the deals have not been done. Just because something is techno-logically possible does not mean that it is guaranteed to happen in a reasonable time frame. New Measurement Headwinds, Advertising and Monetization The rapid growth of second screen and borderless viewing is going to require a complete overhaul of measurement technology and a revision on generally accepted content release windows. 17 Managing release windows will continue to be the best way to maximize profita-bility. 17 Windowing is a term-of-art that content publishers use to describe the act of delaying distribution of content on various channels until the previous distribution channel is properly yield managed. Although, there are many, many variations, a typical widowing schema for a major motion picture might be: Theatrical release => DVD (home entertainment) => Hotel => Pay Per View => Premium Cable => Broadcast Television => Online.



Second screen viewing has the capability to amplify or dampen viewer engage-ment. But remember, unlike television ratings and share, engagement is a con-cept, not a metric. There are no gener-ally accepted measurement practices or pricing models for engagement. Multi-Tasking A recent study by Google, Ipsos and Sterling suggested that viewers watch TV with another device in hand 77% of the time 34% with a PC/Laptop and 49% with a smartphone or tablet.18 Apps like GetGlue and Viggle attempt to cap-italize on this multi-tasking behavior, but they lag far behind Twitter. The Social Media Wildcard Even as Twitter ups its efforts to inte-grate with live network TV content, there is still an unanswered question of causation vs. correlation. Which phrase is true "I Tweet, therefore I watch." or, "I watch, therefore I Tweet." So far, the answer is elusive and the relationship of Twitter mass and velocity on TV ratings, advertising and product sales has yet to be determined or fully understood. People have clearly demonstrated that you can use Twitter to overthrow gov-ernments – it is unclear if tweets can help sell toothpaste.

18 Google Research. "The New Multi-screen World: Under-standing Cross-Platform Consumer Behavior." August 2012.

Borderless Viewing Borderless viewing, the ability to watch the same video on multiple devices, is an emerging trend and a disruptive behavior that is complicating pricing models and contextualization. How should ads be priced when the two viewing devices have different interac-tive, technological and location-tracking capabilities and traditionally different advertising metrics? That is "the" ques-tion. Without better metrics, we will see more and more legal bouts over content rights.



The Smartphone as Your Personal Control Center Smartphones are intensely personal de-vices. They are always on, they live in our pockets and purses, they even come to bed with us. Because we are insanely attached to our smartphones, our smartphones are very "smart" about us. So, when are we likely to see the smartphone evolve into a true personal digital assistant? When will it become a control surface for our other digital de-vices? When will privacy laws, cyber-security and business rules allow us to truly enjoy the benefits of connected liv-ing? The answer is: now. Exo-digitally Enhanced Humans It’s curious and misleading that we still refer to these devices as phones since they have evolved into something so much more powerful. Coupled with Near Field Communication (NFC) chips, GPS and Bluetooth connectivity, they are personal electronic command centers used for digital communication, navigation, commerce, Internet access, social networking, photography, video, security, music, TV, health monitoring and gaming. (See Verizon's advertising campaign for HTC's Droid DNA.) As our central communication and enter-tainment hub, they are truly an exo-digital extension of us; they are the hu-man body’s first external digital organ.

Global socioeconomic and cultural adap-tation is the major catalyst for the mo-bile revolution. It is a joint effort be-tween manufacturers, society and politi-cal institutions. Ubiquitous Access to The Network If you watch television, you are sure to have noticed that both Verizon and AT&T claim 4G network dominance in the United States. Carriers and cablers alike are offering free Wi-Fi in public spaces. Retailers, advertisers and pro-moters of all kinds are offering free WiFi in retail stores, coffee shops, concerts and wherever practical. The statistics are not important because the trend is clear – we are heading to a time of ubiquitous network access. Geeky Stuff Going Mainstream Use of QR codes has increased 350% since 2011 for “frequent scanners” (those who have scanned at least 20 QR codes). 19 This trend will continue as, what was once considered "geeky" be-comes mainstream. Access to technology will continue to alter consumer behav-ior. More people will Tweet tomorrow, than Tweeted today. More people will manipulate images tomorrow, than ma-

19 CEA Research.



nipulate them today. More people will use their connected devices to control their thermostats tomorrow, than do so today – and on, and on and on. Hyper-personal Experiences Although smartphones let us share in-formation, connect and collaborate with the rest of the connected world, more and more consumers are demanding hy-per-personalized experiences with their devices. Thanks to innovations in big data ana-lytics, our smartphones are getting smarter every day; they are adapting to our own unique behaviors, interests and preferences across the entire scope of our digital (and even analog) activities. The Cloud Changes Everything Cloud storage, the ability to seamlessly and remotely access and share files across platforms and devices, is altering the way we think about and do business. The other half of the equation, and often less discussed, is Cloud computing, which is the ability to remotely process infor-mation. Taken together, virtually unlimited stor-age and unlimited computational power will significantly change the form and functionality of our devices in the near term. Now, practically every connected device can access audio, video and data from anywhere in the Cloud. The concept of content ownership in 2013 is being rede-

fined as "access" to content stored in a remote location. But, it is important to keep in mind that there is a remarkable amount of computational power that is being accessed remotely – this trend will continue. In a very short time, smartdevices (not necessarily smartphones) are going to create a new class of smarter, better, faster, more powerfully competitive hu-mans. If you outsource your memory (to Google or Wikipedia), outsource your way-finding (to GPS), outsource your healthcare (to connected monitoring de-vices), etc. You are guaranteed to be better at the doing of life than someone who is not "exo-digitally enhanced." Our tools are evolving exponentially faster than our ability to interpret how the tools will impact our world. This may be the most important trend of all.



Digital Health Comes On Strong The recent explosion of interest in healthy living, wellness, fitness and bet-ter disease management is finding its way into consumer electronics. This ar-ea has grown 25% at CES since last year with over 210 booths dedicated to this market.20 Alliances Taking Shape New industry alliances are creating standards that enable biometric sensors, diagnostic devices, health data and rec-ords and healthcare professionals to all communicate easily. Everything Has A Companion App Once again, smartphones are at the cen-ter of it all receiving the information from wearable devices and tracking, communicating and managing your digi-tal health. Biometrics and sensors plus a wide range of apps connect your health profile to your smartphone. ANT+ is an emerging standard for the interoperability of sen-sors, primarily for fitness. Organized by a subsidiary of Garmin, it has more than 300 members including Adidas, Mi-crosoft, Sony Ericsson and Trek. With over 320 products, it is an example of how industry standardization can benefit consumers.

20 CEA Research.

Another awesome use of mobile tech-nology is remote diagnostics, which connect you to your doctor without a physical visit. Continua Health Alliance is an industry organization with more than 220 members that enables end-to-end plug-and-play connectivity of devic-es based on existing communication and data platforms for personal health man-agement and healthcare. The industry group also certifies services and publishes standards; with 70 devices certified so far, it is a huge success. Dr. McCoy's Medical Tricorder is Almost Here Digital health and wellness is nascent, but the technology promises remarkable outcomes in our connected world. The trend is clear and the progress is obvious. Within three to five years, we will see this technology enhance the work of physicians and health professionals on a global basis and, more importantly, offer basic health and wellness services to an explosively large patient population.



Connected and Smart Homes Get Closer to a Tipping Point Capabilities are increasing, major players are entering the market and costs are falling for systems that provide security for your home, monitor your energy us-age, control your lighting and media consumption, monitor activities in your home, provide remote control of locks and systems and much more. Standards Are Emerging Several interoperability standards are simplifying the systems, and with the ability to use your smartphone as the control center, as well as having it “tell” your home when you arrive and what you want, these systems are growing in popularity. Smart Appliances Remember George Jetson’s apartment in Orbit City? Well, we aren’t quite there yet, but we are certainly on our way. Connected appliances are penetrating the home. Not Smart Manufacturers Akin to what we are seeing in the smartphone, tablet and computer mar-ket, appliance manufacturers are keeping their platforms and ecosystems separate. LG’s THiNQ app will work on any

smartphone, but it won’t give you up-dates you on your Samsung washer and dryer. Expect this trend to continue as manufacturers try to build brand loyalty in a highly competitive market. In practice, this makes sense. Manufac-turer X wants to sell as many Manufac-turer X's products as possible, but con-sumers don't want to download and use a different app for every different device in their home. Third parties are already starting to create universal control apps and unless the manufacturers change their strategic direction, this trend will continue. Expect a great business for third party developers and a missed op-portunity for appliance and CE manu-facturers. Historically, the biggest man-ufacturers do not cooperate with each other -- this is a trend that will probably continue. Entertainment Conversely, much like in home monitor-ing, smartphones and remotes are con-verging on the entertainment side of the business. Apps like Roomie and iRule are IP controllers that, along with Glob-al Cache hardware, transform your smartphone into a universal remote. On the other hand, remotes are getting smarter. Many now have touch screens and smartphone-like interfaces, such as Logitech’s new Harmony Touch. Also



worth noting is Xbox SmartGlass, which turns your smartphone (and its key-board) into an Xbox remote and with some apps, into an interactive second screen too. Security and Control Hello SkyNet. Of those consumers in-terested in home automation systems, 62% said it was motivated by security, including fire and smoke monitoring.21 There are a few home automation stand-ards (Z-Wave, ZigBee, etc.) emerging that are promoting a lot of co-opitition, which is great for homeowners. Connected consumer products for home security, lighting and energy (by time and activity), temperature control, video surveillance, baby monitoring, motion sensors, garden irrigation and locking doors are all on the market now -- and not only is there an app for that -- most are controllable across platforms. Although not at CES, Lixil has a smartphone-controlled toilet (lid up and down, flushing, even monitoring and recording of bowel movements). We're hoping this is not a trend.

21 CEA Survey.



Cars Get Smarter New systems to “mirror” your smartphone onto your car’s dashboard along with biometric sensors that moni-tor your stress, drowsiness, and driving needs are bringing new intelligence to automotive systems. GM is adding “Siri” to its lowest end cars and Ford is expanding its electronic services across its models. These two along with Audi, Mercedes, and others all are adding systems that link to your smartphone to adjust the car’s settings and services to your needs as well as your specific location. 144 million Americans spend approxi-mately fifty-two minutes driving each day, and 76% of them drive alone. The car is quickly becoming a member of our personal digital ecosystem in a safe, smart and enjoyable way. Touch screens and voice recognition are helping our car computers feel more like our smartphones. There are also improvements in safety in the works. Mercedes Benz already has Attention Assist, which monitors a driv-er’s drowsiness. Toyota is testing ges-ture-based controls and face recognition systems. Ford is rumored to be testing seat-belt respiration sensors and steering wheel heart rate sensors. In addition, Ford will be rolling out phone-disabling

systems based on traffic patterns in the near-term. The trend is clear. Your smartphone and your car are both in the Cloud – the auto industry is committed having the technology work together to enhance your experience. Expect great strides in the follow-ing areas over the next few years:

• Access and Egress to the vehicle (Seats, mirrors, heat, door locks, trunk)

• Way-finding (Enhanced GPS, cartography and mapping)

• Vehicle service (needs analysis, appointments, locations)

• Relevant, contextual location-based advertising

• MoSoLo (Mobile/Social/Local) features

• Personal preferences (memory, intelligence, learning)

• Enhanced entertainment (music, games, video)

• Connected living features (social networks, email, txt, apps)



• Driver safety (inter-vehicle communication)

• Vehicle movement (traffic Jam avoidance, parking space reserva-tions)

• Interfaces with other modes of transportation (railroads, airline schedules)

And, expect the entire industry to work hard to figure out how it can do all of this while complying with new National Highway Traffic Safety Administra-tion guidelines around distracted driv-ing. Paul Mascarenas, Chief Technical Of-ficer at The Ford Motor Company says, "Eyes on the road, hands on the wheel, is our first priority." On this issue, he is clearly speaking for the entire automo-tive industry.



Trending Tech You Should Watch There are several interesting technolo-gies that you should pay attention to this year. Some are already very mature, oth-ers are nascent, but topics listed here are newly relevant in the context of how they will impact consumer behavior and the doing of business in 2013 and be-yond. Robotics Consumer Electronics robotics is still mostly about robopets and automatic vacuum cleaners, but it won't be for long. Anthropomorphic robots have been popularized by science fiction mov-ies, but robotic helpers do not need to be in human form to be useful. 3D Printing As it becomes more user-friendly and cheaper, 3D printing has the potential to upend traditional economic concepts of supply and demand. Users will be able to create just about anything as long as they have the designs and composite material. The "maker movement" is just begin-ning. Spare parts will give way to printed re-placement parts, and piracy will take on a whole new meaning when someone steals your CAD/CAM file and prints the necklace it took you two years to de-sign.

Payment Systems The mobile payment system market is booming. 1 in 5 mobile users purchased something on their smartphone in 2012.22 Square Inc. tripled its user base last year. With 3 million users, 7000 new Starbucks locations and 250,000 mer-chants using Square Wallet, the compa-ny is processing over $10 billion in transactions annually. Square is currently experimenting with taxis and will be in-troducing gift cards too.23 Gesture and Face Recognition Now that practically every device in-cludes a camera, gesture control and face recognition software is starting to im-prove. While still more of a parlor trick than a paradigm shift, the trend is clear – our tools are going to know how we move and react to our movements. This will change research, as well as gaming, and almost every field where tracking movement makes sense. Connectivity Expansion: NFC and WiFi

22 CEA Survey. 23 Rao, Leena. "Square Now Processing $10B In Annual Payments; Added $2B Over Past Month (And That Doesn’t Include Starbucks) | TechCrunch." TechCrunch. Aol, 14 Sept. 2012. Web. 6 Jan. 2013. <http://techcrunch.com/2012/11/14/square-now-seeing-10-billion-in-annual-payments/>.



A fascinating use of NFC is Samsung's TecTiles, which allow users to create their own NFC Tags. These stickers when tapped by an Android powered Samsung smartphone execute a pre-determined task on the device. Users can create TecTiles to launch an app, make a phone call, send a text message, check in on Foursquare, update a Facebook sta-tus, play a song and a whole lot more. TecTiles are a great example of how our mobile devices are letting us interact with our physical environment in new and unique ways. WiFi’s growth has been extraordinary with 1.5 billion devices shipped globally in 2012 (up 5x in just 4 years), and it is still getting better. 802.11ac (a.k.a. “5G WiFi”) is now the fastest WiFi ever, but so far there are no hardware devices to use it yet. WiGig is on the horizon. It’s 7 times as fast as wired Gigabit Stand-ard. Remember, the speed of infor-mation is directly equated to economic success. WirelessHD (a communications proto-col that uses a 7 GHz channel in the 60 GHz Extremely High Frequency radio band) is also trying to become a stand-ard. Several major manufacturers are promoting the technology so, it is worth keeping an eye on. Bluetooth may seem like old hat, but people are actually starting to use it now. Bluetooth-Enabled Device Shipments Expected to Exceed 2 Billion in 2013.24

24 Wood, Laura. "Research and Markets: Bluetooth 2011: Rapid Growth for Established Interface." Research and Mar-

UnGaming Handheld games have come along way since the original Nintendo GameBoy. Apps have replaced cartridges and with better and better screens and graphics cards, come better and more fun games. Smartphones and tablets have all but turned the stand-alone hand-held game market into a super low budget kids-only business. The Fading Camera and Stand-alone Navigation Markets Phones are replacing both point and shoot cameras and GPS devices. Again we are seeing functionality convergence on both sides. Android-powered camer-as with WiFi are hitting the market and camcorders aren’t dead yet. However, manufacturers are focusing on mainly the enthusiast and professional market. The days of the dedicated point-and-shoot camera are numbered. As for stand-alone GPS units, and even factory installed GPS, the clock is ticking. It is just a matter of time before these devices are replaced by the GPS function in your mobile device. The timing will be faster than the demise of the dealer-installed cell phone.

kets: Bluetooth 2011: Rapid Growth for Established Interface. N.p., n.d. Web.



Conclusion

The story of humankind is segmented by our tools -- from the Stone Age to the Bronze Age to the Iron Age to the In-dustrial Age through the Space Age and into the Information Age, we have al-ways described and defined ourselves by our technology. The trends outlined here should be viewed through a single filter, Technol-ogy is meaningless unless it changes the way be behave. If you understand a how a technological trend will change how we do life, then the technology matters. If it doesn't seem life changing to you, make sure you truly understand how it will be used be-fore you dismiss it.

In practice: There will be more connect-ed devices tomorrow than there are to-day. Networks will be more powerful tomorrow than they are today. More people will have access to content and to each other tomorrow than they have today. Every industry expert can tell you "what" is eventually going to happen, the hard part is telling you "when." If you apply Moore's Law, Metcalfe's Law and the Law of Accelerating Re-turns to what we've covered here, you should be able to gain some insight about "when" this technology will truly change the world.

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Trend Report Digital 2012 by Shelly Palmer