There is a new wearable technology, and I am not completely negative on it. Don’t get me wrong: NFC payment rings (that you wear on your finger) are NOT going to be the Next Big Thing, and will not be more popular than smartphones or tablets. But I think that we may see millions of these on people’s hands by 2018, maybe even 25 million. Why might smart rings be more popular than smart watches such as the Apple watch or smart glasses such as Google Glass?
It is true that smart rings don’t do very much compared to smart watches or glasses. In my view, that’s not a bug, that’s a feature! While it is technologically possible to make a head wearable or wrist wearable show notifications and make calls and have a screen, the device ends up being big, bulky, noticeable and expensive.
On the other hand (as it were) a ring containing an NFC chip is only good for authentication. You could use it to make a payment, unlock your phone or front door or car door…and that’s about it. But since it does only one thing, it costs about $50, not $500. No battery. No reliance on a smartphone or Wi-Fi network. And almost no one would ever notice that you are wearing it.
Next, wrist wearables like fitness bands are kind of nags. They bug us to get off our butts and walk or run or exercise. Which is great, of course…but it is like pushing water uphill! Most people are lazy, and don’t want to move around more than necessary. Getting people to exercise is (sadly) harder than getting them to buy more stuff with an easier payment technology.
Speaking of uphill battles? Over the past 30 years tens of millions of people have stopped wearing things on their face. Over the last 10 years tens of millions of people have stopped wearing things on their wrists. Contact lenses and laser eye surgery have let many people get rid of glasses, and ubiquitous smartphones have let many people get rid of wristwatches.
Getting people to go back to wearing something they thought they had gotten rid of is hard; I think that is part of why sales of other wearable technologies have been so disappointing. But there has been no significant move away from wearing rings.
Finally, most of you won’t remember this, but finger-worn technology is not a new thing. In the 1970s, there was something called Mood Rings. They didn’t work well, were pretty unattractive, and were ruined if you got them wet. But they sold MILLIONS, and at a price that is equivalent to about $250 in today’s money.
I haven’t got a lot of data on this, since NFC ring tech is so new. But I have a hunch this wearable might actually surprise on the upside.
Digital advertising spending has grown over the last decade by stealing a lot of share from print magazines and newspapers and some other categories. But the odd thing is that ad spending in North America for both TV and radio advertising is NOT collapsing in the same way as print. In fact, depending on the year, both are still rising! I have a theory as to why.
This gets a little tricky, so bear with me! You may remember something called the Pareto Principle, also known at the 80/20 rule? It says that 80% of the effects come from 20% of the causes. This isn’t true in every industry, but it IS true a lot of the time. Many companies get about 4/5 of their revenues from one fifth of their customers, for instance.
It is also true of many digital behaviors, according to Nielsen. The top 20% of users are responsible for 76% of in home Internet usage on a PC, 83% of smartphone video, and a shocking 87% of streaming on a PC. (Is hyper-Pareto a thing?) On the other hand, the 80/20 rule does NOT apply to traditional TV and AM/FM radio. The top fifth of viewers/listeners still account for more than their share, of course…but they represent ‘only’ 52% (TV) and 48% (radio) of all usage. Much less than Pareto would suggest. Why is this important?
If you are an advertiser, and you want to sell a product with a very precise and targeted market in mind, digital is awesome! You can spend only what you need to, and ‘waste’ very little of your ad dollars. (It doesn’t mean they always buy, but at least you aren’t paying for ads to be seen by people who would never purchase your product.)
But what if you are selling a product that EVERYBODY might want to buy? In that case, if you buy (for example) display ads on video streaming on a PC, 87% of your ads will be seen by 20% of the market, and the rest of your market will see very few of your ads.
That suggests that some products are better for digital, but others are better for traditional broadcast media like radio and TV. If true, that would suggest that the spending gains seen by digital in the past few years may start slowing, TV and radio will stay resilient or even grow, and that their relative shares will stabilise for the next few years.
Interestingly, that is exactly what seems to be happening when we look at ad spending trends for the first half of 2016: TV and radio are doing better than expected, and digital is still growing, but a little less than expected.
The implications for the future of TV and radio advertising are intriguing. Yes, audiences are dropping a little, but ad spend may be more robust.
Advice to a 25 year old: so we had coffee, talked about your job hunt, and I made some introductions?
I have “coffee meetings” with people looking to make a career change or start a new career dozens of times per year. I am always happy to do it, of course…but my time is valuable. So they owe me and so do you!🙂
What do I want in return? Saying thanks is great, and you already did that, with a prompt, fulsome, and heartfelt email the next day. Well done, you were raised right!
But what else might you owe me? I don’t want money, no flowers needed, and I have no interest in your first born child. What I would like is brief but meaningful information sharing, preferably via email or Messenger. Two kinds please:
1) If I introduced you to persons A, B and C…let me know how it is going after a week or two? “Hi Duncan: I have a meeting with A on Friday, B next week, but C hasn’t been replying to my emails.” Why do I want to know this? Because I take our conversation seriously, and my commitment to help you equally seriously. If I made the offer to have you meet the right people, there is a little flag in my mental “to do” list until those meetings take place. If C isn’t getting back to you, let me know, and I will gently assist; you will get your coffee chat, and I will sleep better at night knowing my job is over!
2) Please send me brief follow-ups after each meeting? Why? Because I want to know how useful my process of making introductions is. If I am sending you (and others) to meet people who are rude and unhelpful, then I need to cross them off my list. Equally, if the meeting outcome is “They said it was a waste of time, and they not only hate me, they won’t even talk to you any more” then that is an important thing for me to know about too! If they hire you to be CEO of their company, then I will be happy for you, and not worry about coming up with any more names for you to meet. Finally, if they liked you well enough and referred you to other people or firms, I might be able to help you there too.
To be clear, you’re only 25! I am not criticizing you for not knowing all of the above. I didn’t know it when I was your age, and most of your peers don’t communicate well in this way either. I also know that it isn’t laziness on your part: you worry that you’ve taken up a lot of my time already, and don’t want to “bug me” with a bunch of follow up emails. This note is let you know that you are NOT bothering me, and that I would rather get more information from you than less. If you start spamming me…don’t worry, I will be sure to let you know. Immediately.🙂
And maybe not everyone my age who makes introductions has the same preferences I do. But I think most do want to hear back about whether the meeting has been set up, and how it went. I hope you don’t mind me sharing my preferences.
Another nice thing happened to me this week. I was shooting a video for Deloitte in our new offices on Monday, and the nice lady who had set the whole thing up was unfamiliar to me. After we finished the shoot, I asked if we had ever met before?
“Not exactly,” she said, “but in the fall of 2013 I was looking for work, and had a couple of possible jobs in line. I was at an IABC event in Toronto where you gave your Predictions talk, and some part of why I decided to pick Deloitte was that speech. You made Deloitte seem like a cool, interesting and fun company to work at.”
I was (briefly) speechless. As a speaker, I have never received a better compliment. My role at Deloitte is to get prospective clients to talk to us, keep existing clients happy by giving them fresh insights, and (as often as possible) to have them give us money-making projects and engagements.
But none of that works unless we have the best and brightest and most diverse group of employees possible. Finding out that I helped, at least in some small way, has sent my personal job satisfaction through the roof.🙂
I had something nice happen yesterday! A reporter who covered the tech beat back in 2001 took the time to write me:
“Yahoo’s sale to Verizon had me laughing as I recalled a January 2001 interview where you predicted Yahoo would one day be sold for nickels on the dollar.
My editor at the time said I had to remove that from my copy.”
Given that Yahoo’s peak market cap was about $120B, and they just sold the core property for under $5B, it is nice to have my prediction more-or-less come exactly true! Nickels on the dollar indeed.
I guess the other thing to note is that many of the best and most accurate predictions tend to get edited, modified or vetoed outright. The truly bold and useful predictions almost always look unpublishable when they are first made! So don’t censor yourself when thinking about the future.
1) Yes, PC sales continue to fall. Q2 2016 sales are down 4.5% from the same quarter in 2015.
2) But given that PC sales fell over 10% for all of 2015, and are being forecast to fall 11% this year, a 4.5% drop is actually better than expected!
3) Oddly, Apple PC sales are falling faster than average: they are losing market share. I have no idea why that is, but it is an interesting shift given that Mac share had been rising for 6-7 years now.
4) Going forward, I predict that PC sales will continue to decline: bad years will be down around 10%, average years will see a 5% drop, and good times will be flat. It is possible we might see a year where sales actually increase, but a) I wouldn’t count on it; and b) any increase will be 1-3%, nothing spectacular.
5) PCs are a mature market, with stable and reliable technology, and an ever lengthening replacement cycle. Most people and businesses will buy a new computer only when the old one breaks down; a new machine every 6-7 years.
6) This has NOTHING to do with how computers are being used. Fewer new ones are being purchased, but the most recent US data shows that people in all demographics continue to use their computers for an hour per day (not including work usage) and the usage is actually higher in 2016 than it was last year: internet on a PC rose 10 minutes year over year according to Nielsen.
7) Also worth remembering that even with continuing declines, we will see over 250 million computers a year be sold, worth well over $100 billion. Still a massive industry, and an important platform, with an installed base of over 1.6 billion devices.
Here are ten quick thoughts, especially on the augmented reality (AR) angles: does the success of PG mean that AR is at a tipping point? (As always, I have no view on the stock market implications.)
1) It is definitely a hit. But comparing the number of daily average users (DAUs) to Tinder or Twitter doesn’t make sense; we should be measuring it against other successful mobile game titles. Pokémon Go has been downloaded about 7.5 million times, and let’s assume that 6 million are playing it daily, which is likely high, but we are early in the adoption cycle. Our old friend Angry Birds had over 30 million DAUs at one time, Clash of Clans was over 100 million DAU, and the record holder seems to be Candy Crush Saga, which had 158 million people PER DAY playing it in Q1 2015. Although PG has yet to launch globally, it is clearly not yet in the “big leagues” for mobile games.
2) But will it have ‘legs?’ Many games come out, peak quickly, but then see numbers drop again almost as quickly. Others have much greater longevity or retention as they call it in the gaming business. Retention is defined as the percentage of people who played your game in Month 1 also play it in Month 2. Losing more than half of your players in the months after launch is normal: only 16% of games have Day One retention rates higher than 50%! We just don’t know yet what Pokémon Go retention will be – my own guess is that it will likely have slightly lower retention than average for some of the reasons below.
3) The time of year matters: this is a great summer game. I suspect it will do less well when the weather gets colder or wetter. #CatchACold isn’t nearly as fun as #CatchEmAll!
4) This may be more about how much people love Pokémon than how much they love Augmented Reality. There are a number of other similar AR mobile games , and none of them have seen this kind of success. Ingress (an earlier game from the makers of PG, and without the AR overlays) had about a million monthly average users.
5) It is hard to overestimate the laziness of human beings. Yes, people are running around and trying to “catch ‘em all”, which is great for fitness: one woman said her pedometer measured twice as many steps in a day while she was playing! But, as we know from fitness bands, the drop-off rate for gamifying physical exertion is high. People do it for a few days, then turn back into couch potatoes!😦
6) The most popular smartphone games tend to be casual time-fillers. You can play for a minute or two while in a line-up, or on a bus. Pokémon Go requires more of a time commitment – early data suggests that the average player is spending over 43 minutes per day in the game. That is amazing engagement, but likely to appeal only to a fairly narrow slice of serious gamers.
7) Some people are saying that this will be big for Augmented Reality in general. I don’t think that there is much evidence for that. Playing with your phone in a limited AR way is good, but how will that translate into AR headsets? Or into non-game AR content? Or into non-Pokémon AR content? All good questions…
8) A lot of smart futurist-type people and forecasters have been saying that AR will be the next big thing since 2010. They have been badly, embarrassingly wrong so far. And I think some of the buzz around Pokémon Go is from AR-boosters pouncing on this first success like a drowning man grabbing a life-saver.
The success of Pokémon Go means that at least some people, for some period of time, will actually use and enjoy using augmented reality for certain kinds of content. We didn’t know that before, so this is definitely meaningful new information.
But whether this is a bellwether for ever-increasing growth in the AR market is unproven in my view. Critically, most of the AR advocates have been pushing AR headsets of late, not the mobile phone overlay version. I don’t think the success of Pokémon Go does anything to suggest that people will also be willing to wear expensive, heavy, obtrusive headsets.
9) It is worth noting that Pokémon Go is unusually VISIBLE. Tens or hundreds of millions of people can and are using their smartphones to hurl birds at pigs, be ninjas with fruit, or drive around Hollywood with Kim Kardashian. But unless you peer at their little screens, the game playing are not being thrust into your awareness. In contrast, even a few dozen people gathered in one spot in Central Park makes headlines. (Which I find slightly odd: I have been to Central Park, and it has well over 100,000 visitors per day in the summer. Why make a fuss about a few dozen playing Pokémon?) I would argue the impact of Pokémon Go is being exaggerated to some extent by the extremely public nature of the game.
10) There are lists of issues that are getting written up: people getting robbed, walking into traffic, security issues around the app, draining your battery, or even using up data. (The last is not a big deal: PG uses about 10 MB per hour of play.) I think these are all fairly minor points, and will not be significant long term factors.
I think AR in mobile gaming will be very similar to motion control in console gaming. The Nintendo Wii showed that motion control was a real market, and a profitable market, with tens of millions of people trying it and using it. But it reached a quick peak, and then fell rapidly from that peak: see chart below. Critically, it NEVER became the way that most people played games. It was an alternative, but always a small piece of the pie. I suspect AR in gaming will be the same. And motion control never crossed over from console gaming into how we interacted with our TV sets or computers…despite many companies trying to make that transition.
Tesla is now being investigated by the NHTSC following a May accident where a driver was killed while his car was in Autopilot mode. There are a few articles out there, but this Washington Post has the best information by far, accident site is the picture at top. In addition to the obvious human cost, this is the first time a human has been killed while a car was in autonomous or semi-autonomous self driving mode. There will be a lot of debate about where the fault lies. I am not interested in the legal aspects, but there are a few parties who share some fault. Sorry for the cursing below, but a guy is dead and I am angry about that.
The Driver: Not a nice thing to say, but the Tesla website and owner’s manual and everywhere else tells you SPECIFICALLY to keep your eyes on the road, your hands on the wheel, and always be ready to take control. That said, attempts to make this all about the (dead) driver are NOT going to fly with popular opinion, politicians, the media, regulators, and so on.
Tesla: Stop calling it fucking Autopilot. It is a very sophisticated and capable advanced cruise control – and calling it Autopilot makes drivers think it is more capable than it is. Yes, Tesla warns people not to trust it too much, but if a pilot cruising along at 35,000 feet turns on the “autopilot” the plane NEVER smashes into another airplane. It will automatically avoid a crash, which did not happen in this case.
The Media: Stop fucking calling Teslas “self driving cars.” They are nothing close, at least in 2016. Tesla warnings that the Autopilot feature is in beta, needs to be backed up by human drivers, and so on get turned into background noise by a million media mentions that call them self-driving. Nobody reads End User License Agreements disclaimers, but that usually doesn’t end up with people getting killed.
Tesla Again: Time to get a little technical. There are two broad approaches to making vehicles more autonomous that are related to how the car “sees” the road. One is to put a big, expensive, active sensor on top of the car a la Google. The Google car uses LIDAR, which is like laser radar, to scan the environment with great precision. It costs a lot of money, is pretty ugly, and doesn’t work in snow, but it does have certain advantages. One of them is that it would have detected a truck in the path of Joshua Brown’s car.
The other approach is to have a suite of cameras that look in all directions. This is cheaper, blends in better with the car, and works well under many circumstances. This is what Tesla uses, and it appears to be at least in part responsible for the fatal crash. To quote the Tesla blog post announcing the crash: “Neither Autopilot nor the driver noticed the white side of the tractor trailer against a brightly lit sky, so the brake was not applied.” In other words, the lighting conditions were such that purely optical systems (whether a human eye or a semi-autonomous car with cameras) were not good enough. Elon Musk stated publicly in October 2015 that fully autonomous vehicles don’t need to use LIDAR, but would need “passive optical and then with maybe one forward RADAR… if you are driving fast into rain or snow or dust.” I think we can now say that we can add bright daylight and white trucks to “rain or snow or dust” and remove the word “maybe.” I will make a prediction here: purely optical solutions are not sufficient and all autonomous (and maybe even semi-autonomous, see next point) vehicles MUST have at least one active sensing technology at wavelengths different than the human eye uses. We will not settle for robot cars that are roughly as dangerous as human drivers: they need to be safer, or there’s not much point. [Edited to add: I was unclear above. The Tesla does have a front facing radar unit, but it only scans the road ahead up to about the level of the hood. The truck body was high enough that the radar didn’t ‘see’ it, not detected by the cameras, and still low enough to cause a catastrophic and fatal crash.]
Semi-autonomous Vehicles: There is a fundamental problem here. Developing fully autonomous vehicles is going to take a while, and there are many benefits from incrementally getting there. Rolling out features like automatic emergency braking (which will be standard on most American cars for sale in 2022) will save thousands of lives, billions of dollars, get consumers to trust the technology, and also allow the technology to reach economies of scale. But there is an uncanny valley in terms of driving.
Uncanny valley refers to the fact that Elmer Fudd is kind of adorkable, but the characters from Polar Express were nightmarish! As animation moves from the cartoonish to almost-human, there is a perverse effect where “superior” animation actually looks worse.
In the same way, nobody became a worse driver because they had an automatic transmission. Even cruise control doesn’t seem to have increased accident rates. But as semi-autonomous technology gets better and better, there is a very real risk that human drivers will be lulled into inattentiveness by the improvements in autonomy.
I am not sure there is an easy fix for that last point, except getting active sensing into cars fast.
Compared to What?: Tesla is spending a lot of time saying that this was the first fatality in over 130 million miles driven, and the average in the US is one fatality every 94 million miles driven. That is true, but beside the point in two ways.
First, I think the public and regulators are going to demand more of semi-autonomous cars. Making the same mistakes a human would have made won’t be good enough, and it is clear that the Tesla camera approach was not good enough in this instance.
Second, this was a car, and expensive car, and on a divided highway. As part of that 94 million mile stat, there are many motorcycles (15% of fatalities), old and unsafe vehicles, and collisions in bad weather, at night or on much more dangerous roads. Given the conditions, I think that most of us would expect our robot cars to do better.
The Nielsen Total Audience Report for Q1 2016 came out this week, and (as always) it is filled with a trove of information for those tracking the traditional television industry, and the habits of viewers, especially the key 18-24 year old demographic. You can download the full report for free.
Those who know me know that my view on the US TV market is “erosion, not implosion.” Across a number of metrics, people are watching only slightly less traditional TV and a few are cancelling cable, but not as many as you think. The only real area of concern for me is what is going on with those 18-24 year old millennials: they may be a bellwether. In my post on the Q4 2015 data, published on March 26, I put up a chart of the year over year changes in live and time shifted TV minutes for the 18-24 demographic, and said:
“…annual declines of 25% feel like they were an exception, and were likely a bit of a one-off. Next, it is possible that annual rates of decline may stabilize at around 10% in the US, or that they may improve even more, and we may see single digit annual decreases in traditional TV viewing. I don’t have enough data yet to know, but my hunch is that a 10% annual decline is the most reasonable assumption. The five year CAGR is exactly -10% since 2010.”
I nailed it: in the same quarter last year this age group watched 155 minutes per day of traditional TV, and in 2016 they watched 140 minutes daily, for a 10% annual decline. (9.8% if you want to be exact!)
It is nice to have your hunches confirmed so quickly, and I am going to stick with that hunch: I am predicting that viewing minutes for 18-24 year olds do not start dropping by crazy amounts, but neither have we hit a floor. Viewing minutes will continue to decline at around 10% per year for this age group, and this is a very real, very serious issue for traditional broadcasters and cable/satellite/telco bundle providers. See below, but the rate of decline in TV minutes for young people is about ten times the rate for the overall US population.
Additional observations from the Nielsen report:
1) Traditional TV for the population as a whole is declining…but SOOOOO slowly. Adult (18+) live and time shifted TV dropped from 5 hours and 7 minutes daily in Q1 2015 to 5 hours and 4 minutes daily in Q1 2016. That is THREE minutes less TV per day, or a 1% decline. Not quite the death of TV, eh?
2) Paying for traditional cable, satellite or telco TV bundles is falling. Cord-cutting is a thing, and is growing: there were 100.77 million homes paying for TV last year, and only 99.22 million this year. That loss of 1.5 million homes is meaningful, but needs to be put in context. The number of US homes paying for traditional TV fell 1.5% in the last year. That’s not good, but neither is it catastrophic. It will likely continue to fall, but may still be around 90 million by 2020.
3) In my view, the key source of FUTURE cord-cutters are those who watch the least TV. (Duh!) In Q1 2014 the 20% of Americans with internet access who watched the least live and time shifted TV (48.2 million people) watched 29.2 minutes of TV daily. By Q1 2016 that quintile (now 47.5 million people) watched only 15.4 minutes daily, or 47% less in only two years (see chart below.) Although TV viewing for the average American is barely dropping at all, for one in five Americans it is collapsing. These are the cable cutters, the Netflix-only folks, and they tend to be young, well-educated and highly employed. This matters to advertisers.
4) The PC continues to hang in there too. Yes, smartphone usage is up year over year, but time spent on a PC for those 18+ rose by over an hour per week (from 5h36m to 6h43m), and it even rose for 18-24 year olds (4h26m in 2015 to 4h32m in 2016.)