CES: The Purpose-Driven Device

Greetings from the igloo that has become Kansas City.  On Friday, I had the chance to escape the coldest Midwest temps and attend the Consumer Electronics Show in sunny and warm Las Vegas. Everyone should attend the CES once in their lifetime – it’s a logistical masterpiece.  I walked the floor in between meetings and panels, and was amazed at the pace of change within the industry.  Heck, the Kindle 2 wasn’t announced until Feb 9 last year – at the 2010 CES, e-readers had their own section.  We now have the following:

  1. The nearly 1-year old Amazon Kindle 2 and nearly 8-month old Kindle DX (the “elder statesmen” of e-readers)
  2. The Skiff, an 11.5 inch 1200 x 1600 display marvel,  Black and white and read all over, as Hearst joked during one of their interviews. 
  3. The Plastic Logic Que ProReader, another 11 inch ultra-thin with shatterproof plastic that will retail between $650 and $800 at Barnes & Noble.
  4. Spring design has an e-reader called the Alex, which runs Google Android and e-ink on two separate screens. 
  5. The Samsung e6 and e101 readers (6 inches and 11 inches).  This reader features the Google Library and has a slider functionality.  Uses Wi-Fi and Bluetooth to connect.
  6. The iRiver Story, which starts to ship this month.  Felt a lot like a lighter Kindle DX. 
  7. Entourage Systems has their Edge, something they call a “Dual Book” which was surprisingly light and easy to handle.  McGraw Hill, John Wiley & Sons, and the Oxford University Press have all signed on.  It’s a $490 device. 
  8. Aluratek has an e-reader called the Libre which uses a monochrome LCD display to keep costs down (it’ll retail below $200). 
  9. Bookeen has a new six inch e-reader called the Orizon which had a very good touch screen. 
  10. DMC Worldwide has their Ocean lineup which looked more like a laptop without a keyboard. 
  11. The CoolER was a very lightweight reader with over 2 million titles available. 
  12. iRex has their Iliad line, which retailed for $700 prior to selling out.  Along with Sony and Kindle, iRex has been around for a season or two. 
  13. Sony has pocket, touch, and daily edition models of readers.  They were into e-readers long before they were cool.  
  14. Then there is the Barnes & Noble Nook.  I spent some time putting a Nook through its paces over Christmas and liked it.  Dual screens (monochrome, then color) is easier to get used to than I expected.

 

CNET.com has a good section on E-reader reporting from the CES show if you want pictures of many of these devices, and a small sample of the devices described are pictured here: e-reader lineup 11110. If that weren’t enough, we have the slate of “slates” from Apple, Microsoft, and others, that will be able to accommodate many if not most e-reader formats.  Confused and overwhelmed?  And this is just the first year…

 The rise of the e-reader leads to a much larger and complex question:  Can purpose-driven devices survive, and for how long?  Does every device have to do everything?  If there is a “win,” “place,” and “show” in the e-reader world, how can we predict which models will win?  From the answers to these questions come the answers to “which apps win?” and “where is value created in the apps space after we are gamed out?”

 Here’s four examples of purpose-driven electronics that have survived:

1.  Calculators.  Sure, sometimes we use the one on our phone, but if you need to determine the slope of that line, nothing beats a an HP or Texas Instruments device.  The BAII Plus is also available as a $15 app on the iTunes app store.  HP has also added their 12c and 15c scientific calculators to the iTunes store at prices that are significantly less expensive than the stand-alone device. 

2. Snapshot and Video Cameras.  With the Snapdragon processor in full stride, “premium” or “super” mobile phones will likely start with 1GHz processors and go from there.  But digital cameras continue to proliferate, led by Canon, and digital video cameras are the choice of families – even with iPod Nano video capabilities, and abundance of photo applications in both the Android and iTunes markets, and 3/5/? Mexapixel cameras becoming mainstream on many mobile phones. 

3. Navigation Devices.  TomTom made the big move here a few months ago when they released their navigation device for the iPhone for $99 (it’s on sale now for $50).  Google has the Latitude and Navigator services out in the marketplace, and there are dozens of high quality applications available (some included in your mobile plan) over mobile devices.  Garmin still has a market capitalization of nearly $7 billion. 

4. Standalone Personal Video Players (Sony PSP, Nintendo DS).  You can even get the Sony model in a Hannah Montana bundle or with your favorite Rock Band titles.  The iPod touch was supposed to kill the video game business when it was announced in 2007.  There are tens of thousands of titles available today for mobile devices – but the beat goes on for PSP and DS titles. 

Not all purpose driven devices have lived – the pager died in less than five years, the home telephone as we know it will be obsolete in another ten years, and all but the high-end home stereos are dying every day to iPods and Pandora.  Palm announced this week their support of an application that renders last year’s MiFi obsolete.  Why do some survive while others die?  Here’s some ideas: 

 1.  Heritage and habit.  This likely determines the slope of decline as opposed to replacement.  If I am used to using an HP 12c, I am going to continue to use it.  Those buttons on the remote are habit forming – once you learn where the “Guide” or the “List” button is, why learn another format?  Using this argument for e-readers, there are some who claim that the binding in a book is a natural feel, and that it sits well in your lap.  That argument may work for the adoption process from physical to digital media, but it’s going to be hard to claim “habits” have been formed in less than a year with the Kindle when alternatives emerge (although the proprietary Kindle format might be a short-term inhibitor).  Final note: Heritage creates communities whose bonds cannot be easily broken.  More on that in a future article.

2.  Form factor.  The buttons on the PSP are there for a reason.  Same for the size of the screen and the clarity of the Skiff.  Same for the e-Ink technology for the Kindle and many of the devices described above.  Many of us who have followed the progress of the Kindle scratched our heads when the iTouch/ iPhone (and later the Kindle for PC) versions were released.  But Amazon had a good idea that for small doses, the iPod/ iPhone would be best, and for more complex charts and graphs, the PC version is better.  But for good ol’ reading, the form of the Kindle 2 works for the majority of their targeted segments. 

3.  Data, processor, and lens requirements.  In my discussions on this topic this week, I asked “what would it take to have the functionality of the Canon Powershot 12.1 Megapixel camera on my Droid?”  The analyst answered “Batteries, processing, and memory.”  I then asked “what about an SLR?”  They gave me a puzzled stare – “won’t happen.”  Why?  “Can’t change the lens.”  We have come a long way in processing technology since the iPhone debuted in 2007, and as was noted in this column last month, the 1 GHz LG (and now Nexus) processors are just the starting point.  With recent advancements, the corollary is also true:  When the mobile processing and data storage environments overtake the stand-alone devices, the rate of substitution will increase.  This is why games are the main draw of the iTunes store, and why navigation companies like TomTom are releasing their software through the iTunes store.  (Note: there is either a sub- or a separate category here that addresses the pace of technological development – not just “how much” but “how fast” that needs to also be considered.  Not enough time to go into details, but likely time is the function and capabilities are the variable). 

4.  The business model.  Nothing motivates like survival.  Amazon saw the Kindle as an opportunity to reinvent the distribution model – to offer New York Times bestsellers for $10 instead of $25.  They saw the handwriting on the wall and the economic benefit of acting early.  But they did so to protect (and expand) their distribution-based business model.  The Skiff is another prime example – reinvent news distribution.  What if Tower Records has introduced the iPod prior to Apple?  History is littered with carcasses that waited too long to make the risky decision.  The business model is the strongest variable to determining whether the stand-alone device will survive.  When company executives that drive strategic decisions do not understand the pace of technology or the underlying business model implications of their decisions, run for cover.  As we examined last week, the content creation industry (which includes publishing and programming) is in the middle of many of these decisions as we speak. 

 There are more factors, and one reason why I am publishing this blog now on Wordpress is to develop these ideas more fully.  With this framework, we can now answer next week’s question:  What will that Apple or Microsoft tablet really do?  How does it fit in to the wired and wireless ecosystems?  Let’s start the conversation.

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7 Responses to CES: The Purpose-Driven Device

  1. abhik says:

    Jim,
    Like the section on purpose-driven electronics. All new electronics should pass the litmus test of human cultural evolution. We may have to go back ain history and study how and why we adopted the winning electronics/technology.
    Thank you for sharing your thoughts.

    • Agreed. It’s important to form a framefork for evaluating “what will this tablet (or other new device) do?” An interesting thing in researching for this article is to see how long many purpose-driven devices have been around. The HP-12C, my calculator of choice, is celebrating its 29th birthday this year! That’s an example of heritage and habit.

      One of the predictions I have made in the past is that Apple will aggressively take over the “R” function of the DVR. It started with the prediction “a 1 Terabyte iPod” but I think it’s quite larger than that. Any thoughts?

      • abhik says:

        Timing of some electronics (the Kindles, the E-readers) seem perfect; it matches society’s thirst of going Green. Recording device is somewhat irrelevant with all the high speeds and availability of contents. Personal storage devices are cheaper and are compatible among devices. The best thing that can happen is a Magic Jack solution in cable space. To make it happen we need a economic and compensation structure for studios to exist profitably in non big cable environment.

      • One comment made by a friend was “consumer needs remain the same and technology alone is rarely the key to unlocking economic value, and that real value is only created when technology is combined with a new way of doing business.” We want to communicate, to be enertained, to learn, to have community, to listen, to see. He’s got a tough job – convince a paper-centric company that dabbled in on-line to move straight to app-centric. My comment back to him was “time is the catalyst.” Thoughts?

  2. abhik says:

    Completely agree on all your comments.
    Time is the catalyst provided we continue to innovate and pursue.
    Businesses and consumers both do not change unless they have to (disruption in habit or business). A powerful innovation can disrupt everything and can make long term economic sense. Government policies are also sometime catalyst (positive or negative) to innovation, marketing etc.

  3. Ida Zenor says:

    The processor is tagged as a little recent model amount however it and also the GPU are most likely the similar speed since the 3GS. The old Contact using the similar CPU and GPU as the 3G was faster. Besides getting the clock speed turned up higher the Touch has less software programs to run since its not a phone. It should defeat any iPhone to this day in overall performance.

  4. The second I first examine this specific post, I felt almost perplexed. I understand finally. Now I’m in a wonderful frame of mind, so I dropped you a weblink to a totally free Best Buy gift card. Just remember never take advantage of it to order lame crap.

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