CES 2016 Recap, Platform Edition: The Young and the Questions

By Nathaniel Malka

Last week’s CES saw an estimated 170,000 attendees descend on Las Vegas for another record-breaking round of updates from 3,800 exhibitors, their consumer electronics products and technologies, and myriad personal step counters.

Compared to last year, whereas 2015 saw an explosion of exciting new products in the connected home, wearables, VR and media, 2016 was expansive but seemed to beg more questions than answers, from decidedly young fields.

As we did last year, Applico pondered the platform potential of some of the more interesting stories from the show. Here’s our 2016 CES recap:

Autonomous Tide Rolling

On the eve of CES, GM announced its $500 million investment in ridesharing platform Lyft, with plans to develop a network of autonomous cars. Challenge accepted, Uber, Google, and Tesla – and oh yeah, add to that the award-winning announcement of the Chevy Bolt, a fabulously unremarkable, affordable electric vehicle, beating Tesla’s Model 3 to market.

Despite the ongoing upheaval in the auto industry and march toward autonomous cars, improved infotainment systems (LG’s system in the Bolt, Uconnect’s leading UI/UX in FCA, both to support Apple’s CarPlay and Android Auto) were the main connected advances on display. Car makers, on the floor at least, showcased delivery over concepting. Moves toward autonomous cars, meanwhile, march forward in the component technologies and deals (e.g., Mercedes-Benz with the first autonomous license from Nevada).

With endless headlines pointing toward autonomous cars, it is easy to simplify the complexity and challenges involved. Enter Nvidia, who showcased their Drive PX2, the first AI supercomputer for self-driving cars. Nvidia simultaneously inspired attendees with advances in machine learning in deep neural networks – crucial for perception in city driving – and reminded us how much distance we are yet to go before autonomous cars become commercialized. For now, Nvidia’s Drivenet platform appears poised for a dominant position, already in use by Daimler, BMW and Ford.

Network effects certainly loom large in the learning curve behind Drivenet’s success and similarly that of Mobileye’s mapping data for self-driving cars. Availability of the technology improves in a virtuous cycle with the growth in numbers of cars using it. We must then wonder, why has GM not committed to funding the expansion of the network of fast-charging sites necessary for longer-distance travel of its own electric vehicles?

The Internet of Even More Everything

Turning inside the home, 2016 was another year of rapid growth in connected products. Panasonic revealed its smart home system, Ora, while Samsung pushed forward with the SmartThings hub, including ZigBee and Z-Wave radios and the SmartThings companion app. LG lauched SmartThinq appliances complete with HomeChat text-enabled communications. Myriad other products and platforms followed, maybe half of them with Amazon’s Alexa.

Our questions from 2015 linger, only now more loudly. What standards will arise to simplify interoperability and unlock the full promise of M2M (machine to machine)? How will IoT security catch up with the explosion of products, each one of them another open door for bad actors to intrude into your smart home? On a more positive note, as innovation in the smart home enables more intelligent automation of our connected devices, what use cases will lead the way for M2M platforms? We are certainly optimistic about the potential in security and safety.

Who Wore It Best?

In Wearables, unlike the Smart Home, the broad expansion of products we have seen between 2015 and 2016 CES mercifully appears to show a bit of maturing. Basic fitness tracking is surely narrower and has become more commoditized, with early leaders including Fitbit, Apple, and Under Armour. One question in the past had been ‘what about design sense?’ Closer to the business strategy, ‘what further social features can we expect?’

This year’s class of wearables has begun the move toward enhanced design. The term ‘fashtech’ has now entered the frame. WiseWear attracted attention with its luxury bracelet line designed by Iris Apfel. Similarly, the Misfit Ray has won awards for its sleek appearance. It is likely a stretch to expect consumers to spend $395 on the WiseWear bracelet, but for us the trend in some of the social features is more interesting: Given that each luxury wearable will inevitably be a niche product, which platform emerges to collect the users across multiple luxury products? Will the required bluetooth connection to one’s mobile device allow for adoption by elderly users?

Community dynamics in wearables are just starting to get interesting. Revolar, not a fitness tracker, but a safety-first tactile button for distress calls, won deserved attention for its product that will harness the social graph in groups of watchers for one’s safety. WiseWear and many others are building similar features. We are a fan of these features, especially to fight sexual assault. With Revolar and wearables such as WiseWear, we will be eagerly watching the competition among platforms deploying wearables for personal safety.

You Used to Watch Me on a Flat Screen

Even with the massive presence of wearables and connected home products or the looming advances toward autonomous cars, the new media technology on the block truly occupied center stage at this year’s show. We are talking, of course, about virtual reality.

Despite 2015’s VR announcements, 2016 was the year that consumers got to really experience a range of content and headgear that is very close to commercial release. Samsung greeted attendees just inside the convention center entrance and took thousands on a 4D roller coaster ride on Gear VR. The celebrated HTC Vive carted users to an experience on Mount Everest. And of course, VR is not only going out more, it’s also wearing less: Naughty America showed media a private demo of VR porn that is surely just the beginning of a major trend.

As exciting as the entertainment potential with VR appears, we wonder how platform competition in VR will play out. What business model plays will unlock network effects to dominate on this emerging technology? Three questions that immediately spring to mind:

• Will competition between headgear makers play out a la those other entertainment development platforms, the gaming consoles? If an equipment maker can differentiate enough with features to stake an early lead in consumer adoption, the gravity for content creators could lead to platform dominance. The future is murky here… Samsung’s is priced at $99 but vs Oculus’ $599 do they match on quality? As happened with Microsoft’s Xbox, there is an opportunity for a platform company to heavily subsidize participation by software developers to ensure their consoles have enough content for consumers. For more information on how VR companies can approach solving the chicken and egg problem, reference an earlier article here.
• Will social interactions be a driver of viral adoption? Oculus wowed users with their Toy Box experience, in which two players could simultaneously experience the VR environment and interact with each other. A subtle software advantage like this make a huge difference for developers and users alike. (Don’t forget our 2015 prediction about gesture recognition entering VR!)
• What products will emerge to enable user-generated content for VR? Development platform opportunities are not the only Maker platforms to pay attention to here; look out for Content platforms as well!

CES 2016 is in the books but for so many platform opportunities, it represents just the beginning. Before we sign off, a final toast to a different sort of media platform. If you thought 2015 was the pinnacle of barista art, wait until Ripples’ coffee product opens its art to UGC producers …

---

Filed under: Platform Innovation | Topics: CES