Douglas Crockford

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CES 2005

I attended the International Consumer Electronics Show, January 5-8, 2005, at the Las Vegas Convention Center in Las Vegas. The conference was produced by the Consumer Electronics Association.

Readjustment

This is a good time for CE. Business was up 11% last year, beating CEA's prediction of 4%. Business is expected to grow 11% again this year. DTV has stalled, and adoption of HDTV is still very slow. In spite of that, sales of new TV sets continues to grow. The number of brands and models also grows. For example, last year HP had 3 models. This year they will have 17 models (including FP).

Improvements in size and image quality can be seen in all technologies and all brands. 1080p sets have appeared years before any consumer 1080p signal source. Quality is no longer a differentiator. A high-quality display is not a premium feature: it is a minimum requirement. All sets look great, so consumers will use other criteria for selecting their purchases. These will include

Price. There is a lot of product coming to market. I expect that prices will continue to fall. Best Buy and Circuit City are in decline as business goes to Costco and Walmart.

Form factor. Thin is still really popular. There is pressure to make RP sets thinner. FP is growing in popularity because today it is the thinnest possible. Nobody talks about this, but I think weight is a problem.

Personalization. People like customizing their cell phones and MP3 players. Laptops are now coming in attractive colors, not just gray and black. I think this can apply to TV sets and other CE equipment as well. Since large-screen TV is purchased as furniture, I think people would like to choose styles as they do when selecting furniture.

Easiness (we'll say more about this later).

Plays well with others (we'll say more about this later, too).

Stodgy, tired old companies like Intel, Motorola, Texas Instruments, HP, and others were working really hard to look hip and young and trendy. I don't think they are really fooling anybody.

The Center of the Universe

We have been observing the Battle for Control of The Center of the Universe, in which industries and companies were attempting to warp the space around them so that they could have control over the convergence of business. I heard many speakers from many companies and many industries declaring and agreeing that The Center of the Universe is The Consumer. Carly Fiorina of HP called this the democratization of technology. Chairman Powell said that in making decisions at the FCC that he must "look at everything though the eyes of the Consumer."

This is reflected in consumer-oriented product design, which is a contrast to the technology-oriented or marketing-oriented design which usually dominates CE. It is now all about creating value for the consumer. I heard a Network Executive say "We cannot dictate to Consumers. They are in charge."

Consumers already have lots of TVs and telephones. They don't really need (or even want) to replace them. They have better things to do with their money. CE must use powerful new technologies in innovative and attractive ways in order to make sales.

So now the Battle transforms into a conventional battle for marketshare. Competition is going to be intense. Product design and delivery schedules will be further compressed. No one will be able to dominate the market. Everyone will work really hard to get their piece.

Ultimately there is going to be a Battle between the studios and consumers over DRM. I expect that most CE companies will be on the side of Consumers, not the Studios. In the Keynote Introduction, Gary Shapiro mentioned the Grokster case. MPAA has taken Grokster to the Supreme Court in an attempt to overturn the Betamax Decision, which gave basic protection to the CE industry. Shapiro is worried that MPAA will be successful. He called on all members of CEA to go to the Congress and call for new legislation to protect the industry.

The Cable industry will also be seeking legislation which will allow it to time-shift broadcast programming. This will allow companies like Comcast to offer broadcast programming on an On Demand basis. I think this is the future of television programming, but current Copyright law can be used to prevent it.

Are the Networks irrelevant in an On Demand world in which people can select programs based on their titles or content? The Networks think that their value will be as Trusted Brands. They think that Consumers will seek their high-quality programs. Also, Consumers tend to watch programs that they tend to watch; it is expensive to introduce Consumers to new programs.

Plays well with others

The Digital Livingroom Battleground has now become an ecosystem. All of the CE devices are expected to work together. Most people use the word seamless to describe this, but I think that is a mistake. If the system were truly seamless, then it would not be possible to tell where one functional unit stops and where another functional unit begins. This can make the system confusing and mysterious. People like functional units. People buy functional units. They just want them to play well together.

Interoperability is going to become an important differentiator. It will also put severe pressure on the industry to finally get right on issues of cabling and control.

If you do technology-oriented design, you notice that since all devices are made of the same digital stuff, so we can make a device that does everything, and all of those features and functions produce more value. However, if you do consumer-oriented design, you reach a very different conclusion. Consumers do not want their TVs to turn into computers. They do not like their computers. They do not trust them. They do not want features that they won't use. Excess features are a negative. Consumer-oriented design is necessary for the development of positive features.

When Bill Gates of Microsoft did his keynote presentation, several of his demonstrations failed, one with the Blue Screen of Death. Consumers do not want to see this.

I saw this sticker on some TV sets:

Please don't insert
a Memory Stick
edited with a PC.

Consumers will understand this to mean that there is an unhealthy connection between the computer and the TV. This is extremely undesirable. They do not want a TV set that can get computer bugs.

There were many calls at CES for systems that are simple and easy to use, but I did not hear many practical ideas for how to accomplish this. Ron Garriques of Motorola said that devices should not be like Swiss Army Knives (which can do many things, but not very well). Devices should be specialized and easy to use.

Intel showed a fake demo of using hand gestures to control a TV system. It reminded me of Myron Krueger's Artificial Reality experiments, in which cameras observe people and identify gestures. I think this could be a fruitful area for UI research.

FCC

Gary Shapiro of CEA thinks that one of the big problems with the DTV transition is that the Federal Government has not set a firm date for when analog broadcasting is switched off. FCC Chairman Powell agrees that this is a problem, but is powerless to do anything about it. There may be some sort of action in this area this year. Currently, no one can answer the questions "When must I have an HDTV set?" so people continue to buy stuff which is not HDTV, which increases the difficulty of the transition. (My feeling is that broadcasting is no longer an important distribution system. DVD, Cable, and Satellite are much more important.)

Cable obtained a delay of the DCR order from the FCC, and will seek another delay. CEA wants FCC to deny the request for delay. CEA thinks DCR is very important, but it will not be important until the 2 way specification and agreement are completed.

Chairman Powell is in favor of intermodal competition (broadcast vs cable vs telco vs satellite...). He is strongly against "evil bits" (viruses, spam, spyware).

DVR

TiVo still makes the best DVR. TiVo demonstrated the "Tahiti" upgrades to its system which allow for getting TV programs from the Internet.

Unfortunately, TiVo has made two serious mistakes. The first, they have marketed their product badly. Most consumers have heard of TiVo, but the company has done a very bad job of explaining what its product does. As a result, adoption has been much too slow.

Second, they did not make a deal with the Cable Industry, so now Motorola and Scientific-Atlanta are building their own DVRs. The alliance they made with the Satellite industry is falling apart. DirecTV has announced its own DVR.

There were lots of DVRs and Media Hubs at CES. (A media hub contains a DVR, a DVD recorder, an Internet connection, wireless.) I heard one estimate that there were 15 brands, possibly more. DVR is going to be a very important product.

A friend in the Cable industry told me that the software and UI in his company's DVR is not very good. He wishes that he could be selling TiVos to his customers. Only 70% of cable DVR users think it is easy to use. Cable executives say that simplicity and the consumer's experience are the most important thing. They are correct, but they do not fully understand it yet. It is not enough just to say it.