3D, 4G, and 5 a.m. Nights

3D, 4G, and 5 a.m. Nights

Reflections on CES 2012

Prophet senior partners James Walker and Kevin O'Donnell were in Las Vegas last week for the Consumer Electronics Show. James and Kevin were chatting as they headed home...

James Walker: Wow Kevin, quite a week at CES. What have we learned? That it's all about 3D, 4G and Ultrabooks?

Kevin: Well, the consensus among the clients I spoke with was that this year there isn't anything new on the devices or services front. That's a big step-change. Folks asked if we’re running out of ideas. That’s a bit harsh, as I can see Ultrabooks (the super thin laptops with long battery life) challenging tablets, and Intel’s announcement that they were getting into smartphones with Lenovo (and Motorola) could be the start of something.

James: Actually, I think my key takeaway was that this year CES was all about content. Channels and hardware trying to differentiate themselves and create unique consumer relationships by creating unique content, and also trying to create lock-outs for that unique content, like unique games for PS4, movies you can only see on Netflix.

Kevin: Yes, content for sure. Did you see what Howard Stringer (CEO of Sony) said? "Content and hardware belong together like wheels on a car." But we also heard a lot about channels becoming more closed, not open, like we might have assumed five years ago. Sony wants a triple play with content, distribution networks, and hardware working together with a degree of exclusivity.

James: Yep, I think we're talking Sony movies exclusive to Sony channels on Sony devices! It's not crazy to think of a Vodafone or Verizon movie channel, only on their network. Channels always become studios - think of HBO. Next it will be Netflix, Hulu, Google, mobile operators, for sure. Everyone will try to be a studio. The opportunity is to create branded content. More content means more tailored viewing and a greater engagement opportunity. Although, you assume most of this will be subscription content if it really is sexy and exclusive. Sports rights will just soar in value; networks will create their own leagues.

Kevin: I heard someone say that we've all been tricked! Microsoft and Apple are innovators for sure, but it's not like the Apollo space program!

James: Ha! I think some would say the iPhone's bigger than Apollo! Although I saw a lot of momentum for Samsung here, in Apple's absence. Actually, CES seemed bigger than ever this year (2bn sq ft of displays, almost 3,000 exhibitors). Vegas was packed. But you know for a technology show, it could embrace technology a bit more! Do we all need to converge on the Strip? Is there a TEDActive type solution, where sessions could be streamed to mini-CES sites with exhibitors in different places, like entertainment as a strand in Hollywood? Could CES happen in multiple simultaneous locations around the World? Could "attendees" have a more personal and customized experience?

Kevin: The personal customized experience is a good point to raise...Another point on themes this year was that in the absence of new hardware, the personal configuration of devices and services is emerging. Two people could have an identical handset, but it would play a completely different role in each of their lives, be used in different ways, look different. Android was everywhere, Google was everywhere!

James: I wonder if with greater content considerations, we'll see more music and film events at a future CES? Hey, maybe more like a SxSW with technology, music, and film converging? If the content becomes a bit more important than the hardware, somehow CES will have to bring this life! A bit like the boxing this week! I didn't see it, but apparently it was quite something.

Kevin: Yeah, there were a few movie stars, music people (Justin Timberlake, Kelly Clarkson, Will Smith) and sports stars in town. Music, movies, sport – from an "entertainment matters" point of view, CES was spot on. Sports rights could be transformational to the mobile market here in the U.S. There are serious issues with download limits, but they'll be solved over time, and live sports rights for streaming to mobile could be huge. ESPN's soccer highlights are very popular on mobiles in Europe; Sky in the U.K. is having good success with sports on mobile. But, it'll be expensive to buy the rights, and heavy on the downloads, so expensive for consumers for sure. Pricing it is going to be fascinating.

James: Hey, Kevin, did you take in any of the shops while we were here? Some of the new retail formats looked impressive.

Kevin: Well, retailers have to innovate in the face of the threat from online, so the in-store experience needs to be off-the-charts amazing. In a sense, with renewed purpose, I think bricks and mortar retailing is going to offer amazing levels of experience and service. Clearly, Prada, etc. in Vegas are totally amazing places to experience, but so is Neiman Marcus. And you know how someone commented about the lack of new things at CES? I think we'd say it’s not about "things," but is a mindset that runs through services, experience, content etc. Retail in Vegas is really amazing to experience, because it has to compete not only with other shops, but against the incredible "experience" of hotels, casinos, and nightclubs. In that crucible, they've created lessons for retail that can play in tamer environments outside Vegas. Speaking of retail versus nightclubs.... what did you make of the new Vegas clubs, any Vegas nightlife highlights?

James: Well, I was in bed by midnight every night, of course! At the Cosmopolitan, I liked the Scarpetta bar and the restaurant, Marquee rocked my world because I think I was the only guy there and they played Joy Division. And I always like STK because it's dark and you feel glamorous. At Hyde at the Bellagio I was the only guy in a suit! The food at Guy Savoy was possibly the best I've ever eaten in my life. It quite inspired me to cook more! To be serious, what's interesting is that the clubs have become more distinct and each offers a more differentiated experience and so are good examples of the successful design of a customer experience rather than just generic nightclubs.  Hmm, okay, I did have one 5 a.m. night, but that was all in the name of research!

Another observation, by the way, is the range of attendees at CES. I spoke to folks from supermarkets and consumer packaged goods companies, and automakers, luxury goods…they were all here. They say you have to be at CES to understand your customers’ lives now and how to engage with them, because devices and services are now such a big part of it. It's really stimulating to non-tech marketing folks to be in Vegas at CES. I'd certainly counsel marketers from all industries to attend.

Kevin: So we'll come back for CES next year? How would you summarize CES and our few days in Vegas?

James: Heck, yeah! I'm in. Okay, to summarize CES and lessons from Vegas this week:

- Lack of a new big thing this year, and have we run out of ideas?

- But we'd say innovation is not about inventing new "things." It’s a mindset that is like electricity running thru services, experience, content etc

- CES 2012 was all about content. All channels turn themselves into studios (or at least want to buy exclusive content, even GoogleTV).

- Network lock-outs, eg; Sony movie, on a Sony channel, on a Sony device. Your Samsung camera uploading to a Samsung PC.

- Customization of the customer experience and configuration of devices makes each consumer iPhone or Galaxy or whatever unique to them.

- CES has gotten enormous. Can it be delivered in a different way?

- CES is a must-attend not just for devices and operators, but even for the auto or CPG or financial services companies. You have to be here to understand your customers and how to engage with them.