My overview of CES2016

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Here are some personal observations from the floor of CES2016 in Las Vegas. I was too busy shooting videos and finalizing Predictions for its launch on January 13 to see any of the fine work done by my Deloitte colleagues on the panels or at the dinners, so I can’t comment on those aspects of CES!

I need to start by saying that my thoughts below are as a former technology venture capitalist and investor. It is likely to be very different from everything else you read about CES, and does not reflect consensus views. If you want consensus reporting, there are literally thousands of CES overview articles out there. Most of the stuff you read about CES is either written by the media (who sell ads) or investment bankers (who sell deals.) In their world, everything on the show floor is great, and it will all be massively successful, and every single one of these new markets will be the next big thing. That kind of positive bias drives web traffic and deal flow, and good for them.

But as someone who invested hundreds of millions of dollars into tech companies over the years, I know that most new products fail. Most new categories end up being much smaller than the initial projections. Some are bigger (and as an investor that’s where you try to make your bets!) but you need to be very realistic about what is mostly hype and what is actual. So forgive me if I seem a little too pessimistic at times! That only comes from watching $20 million of your investors’ money go to zero…several times.

Disclaimers over. The hot new products for 2016 are…TV sets and laptop computers. Yup – everything old is new again!

TV sets are big. And thin! That whole “death of TV” thing can’t be true. The stroking, caressing, ogling, lusting and moaning from the crowds in front of the TV displays at CES was louder than… (I probably shouldn’t finish that sentence.) 🙂

The most coveted devices were big screens (over 80”), OLED screens, and the 8K displays (double the pixels of 4K sets.) Compared to last year, I would say that there were fewer curved TVs, but the real “wow factor” were the ultra-thin versions. Seriously – there were 80-100” sets that were less than half an inch thick at the edges. This thinness probably doesn’t matter in most consumers’ homes…but it does look really cool. Equally, I suspect 8K and 4K sets only really show off their pixel count when you walk right up to them, and from normal viewing distances the extra resolution would be wasted. But that doesn’t mean that hundreds of people weren’t looking at these sets and talking about buying one. That is probably a reliable indicator of future demand.

[I should add something here. There were also cool displays at CES of self-driving cars. I believe that technology will be huge, but I have to be blunt and say that you really can’t tell much about a self-driving car by looking at one parked on the Las Vegas Convention Center show floor! (If they could demo an autonomous vehicle that handles the traffic outside the Sands Convention Center, we would all be impressed.) Equally, lots of the CES crowd love taking pictures of the drones and the 3D printers: they have high “gee whiz” factors. But the people taking the photos don’t tend to be experts at 3D printing or drone technology – they are not likely to be terribly good judges of what they are seeing. They’ve probably never bought a drone or 3D printer.

But that’s not true of TV sets. The people who are ooh-ing and aah-ing over the new TV screens are very knowledgeable buyers. They have purchased many TV sets over their lives, they know what makes them open their wallets, they know how to judge a good TV picture, and the CES floor is almost as good a location to evaluate a TV screen as their living room.

When I see a thousand people admiring a TV set at CES, I think that is a meaningful and useful indicator of probable real world buying behaviour. But when I see a thousand people taking photos of a ball-shaped drone, I am less confident that their actions will translate into sales.]

Ultra-thin laptops. If you ask people what they want in a laptop, they will usually answer “better battery life and good keyboard.” But when I wandered around CES, the laptops that were getting all the love could double as cheese slicers. I am not sure why, but something about these ethereal devices seems to draw a crowd, regardless of high price points and lack of practicality. I was intrigued by one article, which put it this way: “Physically speaking, these Windows PCs are pretty much tablets with the keyboard permanently attached.” That feels right to me: we have our large screen phones, and we love our light and thin tablets…but we also like the bigger screens and full keyboards of traditional laptops. No evidence that we are in the post-PC era.

Smartphones and tablets were a bit meh: Everybody has one of each (or more), but 2016 didn’t feel like an exciting year for either device category at CES. Now that’s being a bit unfair: the really big show for mobile devices is Mobile World Congress in Barcelona (Feb 22-25 this year) so I suspect the device makers may have been keeping their powder dry for product launches next month. Still, I look at the sales forecasts for tablets and smartphones for the next couple of quarters and I think saying we are entering a bit of a lull would be a good way of putting it. Don’t misunderstand me: we are using mobile devices more than ever but there don’t seem to be any buzzy new technologies in the mobile device space in 2016. I suspect 5G might change that pretty quickly, but they are still arguing over what 5G wireless means, so it will be a while yet!

Smart appliances are a ghost town. The following is a true story. Getting from one part of the LVCC to another can take 20 minutes or more. Some of that is because these places are huge, but another is that the aisles are JAMMED with people walking slowly, stopping and looking at cool tech stuff, and taking selfies. So when I and my ace Deloitte video crew (yay Divyesh and Michael) were trying to get to a specific location in a hurry, we got frustrated. But luckily, we were able to take a short cut through a smart appliance section…there were almost no people. We zoomed right through, although I did stop to pat a sad and lonely smart fridge on the way. This experience played out at every other smart appliance display we passed over the days: the folks attending CES just aren’t that interested in this technology. The media loves the fridge that opens its door for you, but it doesn’t seem to compare to drones, VR or 3D printers for mass appeal.

Eye candy, or breakthrough technology? As I said above, things such as drones, virtual reality and 3D printers look amazing on the show floor. The idea that you can print out a Lego head with your face on it makes for great video footage. But very similar displays last year drew equally large crowds — there were tens of thousands of people admiring the 3D Systems booth and their $999 home printer last January at CES2015. And on December 27 on 2015, the company announced they were getting out of the “factory in every home” consumer space (although they are still a leader in enterprise 3D printing.) So while I will keep my eye on all of these technologies, I am not willing to get too optimistic based on the CES crowds alone.

The FAA had a booth at CES: nice guys, lots of beards, cute hats. Not a single person talking to them, despite the fact that the FAA is going to require drone registration going forward, to keep an eye on the idiots who are flying in front of jets and interfering with forest fire fighting planes. My point is that the people taking pictures of the cool drones might not actually be planning on buying, flying, or registering them!

I also need to report back on VR headsets. The crowds of gamers were lined up again, but I really wonder if CES is the right indicator for mainstream success. Will VR goggles be snapped up by hard core gamers? Absolutely, but I am very sceptical about wider adoption. Have you actually tried a pair? They are still pretty heavy, make you look weird, and make it almost impossible to interact with people around you. This is NOT the official Deloitte view, but I think VR goggles will be as massive a success as home 3D TV was. I.e. big splash at CES, but relatively low current usage.

Gaming is huge. Between mobile, PC and console games we are talking a $100 billion market. Now CES is the natural habitat of the gamer, but I see no signs this industry is about to start shrinking. Lots of fanboys and fangirls, and all looked ready to drop some serious coin. This market is one where VR headsets (even at $600!) will do well.

So are accessories, especially sound. We tend to focus on the hub device with the big processor and screen…the smartphone, tablet, TV set or PC. But there are so many different accessories that make the hubs better. Cases, earphones, selfie sticks, remote controls, enhanced keyboards, extra batteries and so on; adding up to tens of billions of dollars per year, or more than every dollar spent on drones, VR goggles and home 3D printers added together! Spending even a few minutes walking through CES is a great reminder that (for example) while the smartphone is a big market; it also supports an entire ecosystem of accessories. That’s been true for years, but as I look at the changes in 2016 compared to 2015, I noticed the growth in the number of speakers, headphones, and other near-audiophile gear being offered and engaged with by people on the floor. I sense the beginning of an acoustic wave, where we have all upgraded our screens, and realize that a pair of $40 speakers just won’t cut it. In 2016, perhaps “audio is the new black.”

The interstitial moment: going, going, gone. I have been attending tech tradeshows since 1995. That makes a bit more than 20 years, and I noticed something new this year. Las Vegas has these moving sidewalks…like escalators, but flat. They aren’t fast, and even a few years ago, people would walk on them to get where they were going more quickly. In 2016, it isn’t that people are in any less of a hurry…but the second they hit the slidewalks, they stop walking and pull out their phones. It’s only 15 seconds of smartphone time, but they still want to spend that brief time on their phones. Waiting for an elevator? Use the smartphone.

There was a time when opening a book or newspaper was something you did if you had 5 minutes to kill. The idea that even 15 seconds is too much to be un-entertained seems to be a new one. There used to be interstitial moments where we simply were – gaps in our otherwise always distracted lives. Those moments may be gone: the smartphone is like a vacuum cleaner, sucking up every available bite-sized chunk of time in our lives. That’s a pretty meaningful change.

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2 responses to “My overview of CES2016”

  1. Minnikin, Paula says :

    When is the TMT Halifax this year?

    P

    From: dunstewart <comment-reply@wordpress.com> Reply-To: dunstewart <comment+cgtpfyg743j1e4rkn6e9w5@comment.wordpress.com> Date: Tuesday, January 12, 2016 at 11:01 AM To: Paula Minnikin <paula@minnikin.ca> Subject: [New post] My overview of CES2016

    dunstewart posted: ” Here are some personal observations from the floor of CES2016 in Las Vegas. I was too busy shooting videos and finalizing Predictions for its launch on January 13 to see any of the fine work done by my Deloitte colleagues on the panels or at the dinners”

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