6 Key Takeaways From This Year’s Consumer Electronics Show
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The consumer electronics industry held its annual showcase of new products and technologies from January 5-8 in Las Vegas, and Fuel By McKinsey was there to take it all in. We see several key trends that will impact the investment landscape for consumer-focused growth companies in the next year.
We are still in the early days of self-driving cars revolution. Original equipment manufacturers (OEMs) generated excitement with flashy prototype vehicles at CES. But the underlying technologies need to mature for mass market production to be economically viable. Companies addressing three key technological issues stood out to us:
Autonomous vehicle software. The software that powers autonomous vehicles is one of the next great computing platforms, and a number of companies are competing for dominance and the network effects that come with it, just as Intel achieved for desktop computing. Nvidia is a key example. The company is working on an end-to-end self-driving vehicle platform utilizing GPUs, deep learning algorithms, cameras and every sensor data available (LiDAR, radar, audio etc.) to enable Level 4 AV by 2020. Nvidia also announced partnerships with Audi, Mercedes-Benz, Tesla, ZF, and Bosch.
Blockchain technology. Several startups are utilizing the blockchain to enable autonomous vehicles to transact with infrastructure. Estimated time frame for early applications is around 2021.
Cybersecurity. A critical area for protecting autonomous vehicles, with several companies investing in innovative solutions.
Smart Home or Connected Home was one of the more mature markets highlighted at CES with several established products in family security, energy monitoring, and connectivity. However, the space is incredibly fragmented with many hardware providers that lack the ability to differentiate. Overall, there are several trends we identified:
Companies are creating smart devices for every part of the house (e.g., bedroom, garage, living room, kitchen, backyard, front door), but most products with traction remain linked to family security (e.g., Ring, Canary) and connectivity (e.g., Luma, Eero, Google) pain-points.
Artificial Intelligence is finding its way into smart home products in three ways: intelligent assistants (e.g., Amazon, Google), home automation (e.g., Honeywell, Control 4) and data analytics & personalization through IoT.
Intelligent assistants with natural language interfaces continue to be marketed as technologies that will drive further adoption of the smart home. Amazon’s has struck deals to integrate its Alexa service into several products in various categories, such as cars (VW and Ford), refrigerators (LG), televisions, humanoid robots and other smart home devices. This resembles a land grab strategy as Amazon has to win every connected device other than a smartphone which is dominated by Google Assistant and Siri.
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Companies across industries created VR and AR experiences (primarily on Samsung Gear, Oculus Rift, PlayStation VR, Microsoft HoloLens) to draw crowds but many big name players, such as Oculus, Microsoft, and Magic Leap did not attend. Overall there were couple trends that continue to be reinforced:
Gaming clearly continues to be the primary use-case for VR with majority of working demos focusing on different types of gaming applications.
There was a clear emphasis on AR technology for enterprise applications as well as for gaming and niche consumer applications.
Sleep and well-being products are on the rise especially for vendors looking to link digital health and connected home portfolios (e.g., using sleep monitors to control lights, mattresses, pillows, temperature).
To differentiate from the large number of vendors, companies will need to develop clear themes for their products (e.g., mother and baby care, oral care, sleep monitoring), clear target segments (e.g., aging) and start to prove clinical value (e.g., improved medication adherence).
Digital Health solutions at CES 2017 looked very similar to previous shows which reinforced several trends in the industry:
There were two main trends related to robotics at CES this year:
First trend was educational robots. Several “teach your child to code by programming a robot” companies show cased their products.
Second trend was personal assistant robots. Both consumer (e.g., home assistant) and enterprise (e.g., assistance inside shopping malls, hospitals, retail banks) use cases were highlighted. Most products were in prototype phase and included limited implementations of artificial intelligence.
A number of notable drone companies presented at CES. On the low-end consumer segment, there are limited differentiation opportunities. On the high-end consumer and enterprise segments, differentiation opportunities reside in software (e.g. better computer vision capabilities such as obstacle avoidance and object tracking) and in add-on services. On the enterprise side, we identified two trends:
Enterprise applications of drones are on the rise. We are going to see more drones assisting humans in inspection (building, base station), law enforcement, surveillance, firefighting, and agriculture.
Fixed-wing drones with vertical take-off capability (as opposed to quadcopters) are emerging for enterprise use. Autel showed cased their prototype. DJI is rumored to be working on a similar product as well.
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