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News out today confirms that Sony has indeed sold off its Vaio PC arm, ending 17 years in the personal computer business. And that CEO Kazuo Hirai has also decided to separate the TV division into a standalone unit in order to better heal it. Although he insists for now that Sony has no plans to sell that division, it would be foolish of the company not to consider any good offers. If there are any.
Because really, who would want that business? It has lost nearly $8 billion in the last 10 years and has been rapidly losing share to Samsung and LG and is about to get attacked by Chinese TV makers eager to have more influence in the US and other Western markets. I saw a very impressive offering from Hisense, TCL, and Haier at this year’s CES and expect them to make inroads against the more expensive panels from Sony, Panasonic, and Sharp, all of which have struggled to keep up.
Google’s acquisition of Nest has stirred a lot of interest and reaction, some of it misguided. After talking to lots of reporters, here are ten quick thoughts on why Google bought Nest and what it means:
1. Google bought Nest for talent and strategic perspective, not products or data. Nest is too small and not scaling fast enough to justify the acquisition. This is about getting a great team that can teach Google about a new market realm, how the Internet of Things comes into the Connected Home.
2. The price is ridiculously high – unless Google gets a huge head start on Connected Home. Google’s acquisition of Waze for $1 billion and Nest for $3.2 billion look pricey – but they are strategic bets for the long run, and can’t easily be compared.
3. Building the next generation of Google Now is the goal, not snooping on our temps, room locations and smoke alarms. The Nest Labs team will help fuel development of the next generation of Google Now as it shifts more toward proactive assistance and advice.
4. Google’s aim is to get an early start on identifying and adding software interfaces (APIs) to Gmail/Google Drive that connect it to smart products. This is not about Android in the home or about a battle for the device OS – it’s a battle for whose cloud service platform will coordinate an individual’s smart products – and their digital self.
5. Identity, privacy, and security will also crucial in building out the Connected Home. Blanket privacy policies won’t be enough. Fatemeh Khatibloo’s research on contextual privacy shows the new way that privacy and identity will have to be managed.
The madness that is the Consumer Electronics Show (CES) has finally subsided, people are safely home (some never arrived thanks to cancelled flights), and we’ve had sufficient time to read the CES stars and foretell what it means for 2014 and beyond. Condensing this show down to so few points requires omitting some things, even some fun things like Michael Bay’s meltdown and T-Mobile CEO John Legere’s attention-grabbing tactics, but it’s my job to say what it means. So here I go, predicting what will happen in 2014 with three (admittedly long) bullets:
You’re in for a big surprise. Microsoft is winning one of the most important battles in the digital world: The battle for the TV. The TV battle is important for reasons you already know: TV consumes more time than anything else and it generates annual revenues from $140 to $160 billion each year in the US alone.
But the stakes of the battle have risen sharply. The fight over the TV is really a fight over the next massive consumer platform that is coming up for grabs. Of platforms there are few: Google owns search, Amazon owns digital retail, Facebook owns social, and Apple owns consumer devices. Microsoft owns, well, nothing at the moment, despite its handsome revenue stream from Windows and Office.
That could change soon. Microsoft’s Xbox 360 is already the most-watched net-connected TV device in the US and soon, the world. With more than 70 million consoles in households worldwide – as many as half of them connected to the Internet, depending on the country – Microsoft can rapidly drive new video services into tens of millions of households.
With more and more devices having the possibility to connect to the Internet wireless, including handheld games, smartphones, game consoles, and tablets, we were interested in the uptake of wireless home networks in Europe. We asked Europeans the following question: "A home network allows you to share an Internet connection among multiple PCs or go online from multiple rooms of the house. Home networks also allow PCs to share a printer or connect with other devices. Do you have a home network?"
Three-quarters of online Europeans with a wireless home network share an Internet connection among multiple PCs, and 17% have already connected their PC to their TV set. Wireless networks are popular among families and multiple-PC households: 86% of wireless home network owners have more than one PC at home, and 40% have children living at home.
I'm in the business of identifying when there's a change in the wind coming that will push us in a new direction. On balance, I've been successful. So much so, that when something I staked my career on becomes commonplace, people are so used to it that they look back and think I was only pointing out the obvious. Like when the most senior faculty member in the advertising department at Syracuse University rejected the "Interactive Advertising" course I proposed to teach in 1996 because online advertising was "just a fad." I took a stand and got to teach the class, over his objections. Fast forward to today and online advertising is so obvious that predicting it is a thankless task.
I say this because I am about to take a stand I want you to remember. Ready? Starting November 4th, Kinect for Xbox 360 will usher us into a new era Forrester has entitled the Era of Experience. This is an era in which we will revolutionize the digital home and everything that goes along with it: TV, internet, interactivity, apps, communication. It will affect just about everything you do in your home. Yes, that, too.
I've just completed a very in-depth report for Forrester that explains in detail why Kinect represents the shape of things to come. I show that Kinect is to multitouch user interfaces what the mouse was to DOS. It is a transformative change in the user experience, the interposition of a new and dramatically natural way to interact -- not just with TV, not just with computers -- but with every machine that we will conceive of in the future. This permits us entry to the Era of Experience, the next phase of human economic development.
With the adoption of more and more devices that can connect to Wi-Fi, it’s interesting to understand the uptake of home networks. Forrester's Technographics® data shows that 30% of online Europeans have already set up a wireless home network, and a further 11% are planning to get one in the next six months. The adoption of wireless home networks has grown in Europe since 2006, while the adoption of wired networks is declining (dropping from 12% in 2006 to 6% in 2009).
Three-quarters of online Europeans with a wireless home network share an Internet connection among multiple PCs, and 17% have already connected their PC to their TV set. Wireless networks are especially popular among families and multiple-PC households: 86% of wireless home network owners have more than one PC at home, and 40% have children living at home.
I'm a big fan of the digital home, even if the phrase itself has slipped from popular use lately. I cannot wait for it to happen to me -- I'll have connected displays (does the word TV even apply anymore?) throughout the house, including the ones in my pocket, in my lap, or otherwise within reach at all times. Those displays will all speak IP, the language of the Internet, and they'll all speak to each other as well, allowing me to control one display -- say, my TV -- with another one -- my Droid X, for example. There's so much product innovation yet to come in the digital home that I love my job.
I'm not the only one who sees it, of course. If you follow the excited announcements from TV makers and electronics retailers like Best Buy, the next TV we all buy will be a connected TV (defined as a TV set with its own Internet connection whether wired or wireless and some kind of software platform), a critical first step toward that future digital home nirvana.
Connected TVs are going to be a big deal; to understand why, read my latest report which includes US survey results about connected TVs along with a forecast for connected TV penetration through the middle of the decade. It just went live to Forrester clients last week. In the report, we show that thanks to the enthusiasm on the supply side, connected TVs are going to sell like proverbial hotcakes. By 2015, we forecast that more than 43 million US homes will have at least one. That's a remarkable number, especially considering that we entered 2010 with fewer than 2 million connected TV homes in the US.
It has only been a few weeks since Google announced it would create a brave, new world with its Google TV platform. In all the reactions and the commentary, I have been amazed at how little people understand what's really going on here. Let me summarize: Google TV is a bigger deal than you think. In fact, it is so big that I scrapped the blog post I drafted about it because only a full-length report (with supporting survey data) could adequately explain what Google TV has done and will do to the TV market. That report went live this week. Allow me to explain why the report was necessary.
Some have expressed surprise that Google would even care about TV in the first place. After all, Google takes nearly $7 billion dollars into its coffers each quarter from that little old search engine it sports, a run-rate of $27 billion a year. In fact, this has long been a problem Google faces -- its core business is so terribly profitable that it's hard to justify investing in its acquisitions and side projects which have zero hope of ever contributing meaningfully to the business (not unlike the problem at Microsoft where Windows 7 is Microsoft). So why would Google bother with the old TV in our living rooms?
Because TV matters in a way that nothing else does. Each year, the TV drives roughly $70 billion in advertising and an equal amount in cable and satellite fees, and another $25 billion in consumer electronics sales. Plus, viewers spend 4.5 hours a day with it -- which is, mind you, the equivalent of a full-time job in some socialist-leaning countries (I'll refrain from naming names).
Google's goal is to get into that marketplace, eventually appropriating a healthy chunk of the billions in advertising that flow to and through the TV today with such painful inefficiency.