Juicero – Cautionary tale.

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A cautionary tale for budding entrepreneurs.

  • While Juicero is no Theranos, it has got itself into a life-threatening mess that I suspect has come about solely because it got its business model wrong.
  • Juicero is a Silicon Valley company that claims to offer the kind of juice purchased in a store but prepared freshly at home and is totally mess-free.
  • This works through a cold press that can deliver up to 4 tons of force to squeeze the liquid from pre-prepared pouches of fruits and vegetables that the company also sells.
  • The press can only make juice from the pouches which combined with an app and a database, is able to keep track of the produce the user has, when it will expire and send alerts and so on.
  • The juicer is priced at a pretty punchy $400 (reduced from an eyewatering $700) with each pouch selling for $5-$8 meaning that each glass of juice is going to cost somewhere in the region of $7-$8 depending on how long the machine lasts.
  • With each pouch delivering about 9oz of juice, this adds up to $0.83 per ounce which is broadly in line with the top-of-the-line juice companies in Silicon Valley (see here) which charge around $0.86 per oz.
  • I think that the business model is based around breaking even on the pouches and the service with most of the margin coming from the machine.
  • This explains why the company will only sell the pouches to owners of the machine as without it, the business model would collapse.
  • This is where the problems really begin because it turns out that it is possible to produce a perfectly good glass of juice using nothing but bare hands (see here).
  • A female reporter was able to extract 8.5oz of juice from one of the pouches faster than the machine could produce 9.0oz
  • NASA has measured that the human hands of the average male are capable of producing around 90Kg of force (see here).
  • This means that the other 3.5 tons of force that the machine can produce only increases production by 6% demonstrating that Juicero is massively over specified for the task for which it has been designed.
  • Furthermore, if there is a power cut or the Internet is down, no juice is produced whereas hands work all the time and can even offer juicing on the move with limitless battery life.
  • This is where I think the company has gotten its business model wrong.
  • I think it should have followed the tried and tested printer and cartridge model where the printer is sold at break even or a loss and the money is made on the cartridges.
  • I suspect Juicero could have designed the press to deliver 200Kg of force rather than 4 tons with no perceptible difference in performance other than a much cheaper price.
  • If the company had then sold the device for $50 rather than its starting price of $700, I doubt whether anyone would have even bothered to try and squeeze the pouches by hand.
  • This way the company could have hoped to have achieved much greater volume and in doing so it would have been able to get better prices from its suppliers and make good margins on the pouches.
  • The problem now is that everybody knows that the Juicero machine is surplus to requirements for everyone who can read an expiry date.
  • Hence, a change in strategy is urgently required.
  • Juicero offers convenience and in that regard it may have a future as a subscription service for very high quality juice that one prepares at home.
  • However, it will have to confess its shortcomings, ditch the expensive machine and reorient itself around the printer / cartridge model with something much cheaper.
  • On its current trajectory, it is likely to be squeezed out of existence.

 

Samsung – Edge dancer pt. II

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I think Bixby will struggle against Google Assistant.

  • Samsung has launched its offensive on the digital assistant market but I think it will still be dancing around the edge of the main act on the Galaxy s8: Google Assistant.
  • Samsung has announced that its new digital assistant, Bixby will be present on the Samsung Galaxy 8 with its own dedicated key on the side of the device.
  • Bixby promises to offer:
    • First, completeness: This promises to give users complete control of enabled apps rather than the few tasks offered by other assistants.
    • Second contextual awareness: Samsung is promising that Bixby will be aware of the context within which it has been triggered, making it more relevant and useful.
    • I suspect that it will do this using the hooks in Android that Google wrote to enable Google Assistant to do the same thing.
    • Third natural language recognition: Bixby should be able to understand complex, multi-part questions as well as prompt the user to clarify the pieces that it does not understand.
  • These features are very similar to those promised by Viv, the artificial intelligence company that Samsung purchased in October 2016 which is clearly the source of this product.
  • If Bixby can truly fulfil the promises that it is making, then it will almost certainly will be better than Google Assistant.
  • However, I think that this is a very big ask given that RFM research has found that AI excellence to date has been a factor of time and data volume.
  • Viv was founded in 2012 and has no data from commercial products while Google has been crunching data for 20 years and has orders of magnitude more data than its nearest rival.
  • Consequently, I think that compared to this highly ambitious billing, Bixby is going to fall very far short of the promises that it has made.
  • Furthermore, Samsung’s delivery of Bixby is going to be hobbled by the 2014 agreement that it made with Google where it agreed not to compete in the ecosystem (see here).
  • This is why I suspect that Bixby has been relegated to a button on the side of the device whereas it will be Google Assistant that is sitting on the all-important home button.
  • As a result I think on the smartphone, Bixby will lose out to Google Assistant but on other devices it has some chance.
  • Samsung has a good portfolio of other electronic devices, which combined with its SmartThings offering, could allow Bixby to offer intelligent and intuitive control of other Samsung devices.
  • This could help Samsung to encourage greater ownership of Samsung devices across its range but again this will depend on how good Bixby really is.
  • Over 20% of all Google mobile searches are already done using voice meaning that many users are already conditioned to pressing the home button and asking as well as being used to Google’s quality of service.
  • Consequently, I think that the odds are heavily stacked against Samsung having much success with Bixby but as long as it can continue to outsell Huawei by more than 2 phones to 1, the profitability of its handset business should remain intact.
  • I still pretty cautious on Samsung as I am not convinced that the full fall-out from the Note 7 disaster has been felt in terms of market share, which is what makes the Galaxy s8 launch so important.
  • I prefer Baidu, Tencent and Microsoft.

 

Amazon vs. Google – Homefront pt. II.

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Amazon is pre-emptively moving to keep Google out.

  • Amazon is pulling out all of the stops to ensure that it is Alexa, rather than Google Assistant, that ends up becoming the nerve centre for controlling the smart home.
  • In its latest move, Amazon is offering credits for AWS that are likely to ensure that connecting one’s smart home device to Alexa remains free in almost every circumstance.
  • As the scope of Alexa improves and users can do more with Alexa, it is likely that creators of smart home devices will require more space on AWS that will require them to start paying Amazon.
  • Most device developers are small start-ups with very limited funds meaning that this will be a big incentive to do more with Alexa.
  • At the moment, the free tier gives developers 1m AWS Lamda requests and 750 hours of EC2 compute time per month.
  • Beyond that, developers end up incurring a monthly charge which is something that Amazon is wisely keen to avoid.
  • With this new program, Amazon is offering a one-time credit of $100 as well as $100 per month towards any charges that they incur as a result of usage of their devices.
  • This is likely to ensure that almost all developers of smart home devices will not have to pay anything to Amazon until they are generating so much usage that they are making plenty of money themselves.
  • I think that this is a very shrewd move as it encourages more developers to sign up to make their devices work with Alexa and also encourages them to make the skills deeper and more intuitive.
  • Currently, most skills are very basic and as a result they suffer from usability problems which in most cases makes it easier to turn the device on manually rather than using Alexa.
  • This looks like a pre-emptive move to keep Google at bay as I see Google making rapid moves to improve its Google Home developer program after being all but wiped out at CES 2017.
  • Even though Amazon has close to 10m devices installed in the houses of users compared to Google at 0.5m – 1m, the Google Home experience is so superior to Alexa that I still see a risk of Amazon losing this race (see here).
  • This is why I see Amazon doing everything that it can to show developers love and support which is something that to date, Google has badly neglected.
  • The result is that very few of the smart home device developers are making sure that their devices works with Google Home giving many users more reason go with Amazon’s Echo devices rather than Google.
  • Amazon is also very fortunate that the market’s view of Alexa is so positive as a side by side test of the Amazon Echo against Google Home shows how inferior Amazon is compared to Google.
  • This is why it is still Google’s battle to lose but Amazon is clearly doing everything that it can to ensure that it is Alexa rather than Google that dominates the potentially extremely lucrative market for intelligent home automation.
  • From an investment perspective, neither of these two companies are desperately appealing leaving me preferring Baidu, Microsoft and Tencent with Apple for long-term income based investors.

 

Intel – Auto ambition

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Intel must break out of the mould that success has cast for it.

  • The acquisition of Mobileye by Intel highlights both Intel’s determination not to miss the next big trend as well as the concentration of Google’s competitors around HERE.
  • Intel will buy Mobileye for $15.4bn and merge it with its existing autonomous driving business to create one of the leading supplier of autonomous driving systems.
  • Intel already has a substantial effort in this space but adding Mobileye gives it a very strong position in visual sensors and most importantly, gives it direct access to 80% of the automotive market.
  • These doors were already open for Intel but I think that going in with Mobileye will ensure that the automotive industry takes it much more seriously.
  • I think that missing the boat in mobile has damaged Intel’s reputation to the point where some potential customers think that Intel has little to offer beyond chips for PCs and chips for servers.
  • In reality, this is very far from the truth but dispelling that impression is one of the most important tasks that Intel faces over the next few years.
  • The fact that Intel will soon become one of the top 4 shareholders of HERE will also help in improving its credibility in both location and automotive.
  • This is because HERE is the only realistic alternative to Google in high definition maps for autonomous driving which are now recognised as essential for a car to drive itself.
  • Even Mobileye, which early in 2016 was adamant that a HD map was not needed, has caved in and is now working with HERE to use its HD map in its systems.
  • In addition, other ecosystems such as Tencent, Baidu, Facebook and Amazon are also working with HERE for their location data, all of which will benefit Intel as it tries to break the mould that the market has set for it.
  • Mobileye represents that second largest acquisition in Intel’s history underlining the need for semiconductor companies to move into markets beyond consumer electronics and PCs.
  • This is why Qualcomm is buying NXP and why Samsung is buying Harmon.
  • Intel has now armed itself with the potential to offer an end to end solution for autonomous driving but the key to success will be how well it can execute on that offering.
  • History is not in Intel’s side but I detect a change in the way Intel thinks about its place in the world that just might allow it to break the x86 mould that history has cast for it.

Smart Home – Back to front.

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Apple is losing badly despite offering the best user experience.

  • Apple has redesigned its HomeKit website (see here) in order to generate interest around its smart home offering but despite having the best experience, it remains a very distant third in developed markets.
  • HomeKit enables smart home devices to be controlled with Siri as well as the Apple’s own Home app that appeared with iOS10.
  • I think that Apple has three main problems with its offering for smart home:
    • First: Hardware. device makers need to install a piece of Apple hardware to enable them to work with HomeKit.
    • This adds a level of complexity and cost for device makers who in many instances are small companies with only a few employees and very limited resources.
    • Consequently, most have ignored HomeKit completely and simply written their own app for iOS devices that talks to the device directly over WiFi or Bluetooth.
    • Second: Data. Just like Digital Life services, HomeKit brings together multiple devices and enables them to work together.
    • The device makers get access to the data that their devices generate, but it is only Apple that gets to see the whole picture.
    • RFM research has found on multiple occasions that understanding the bigger picture is far more useful and offers a much greater monetisation opportunity than looking at data sets individually.
    • I think that this is why device makers who understand this concept generally decline to make their devices work with HomeKit or HealthKit.
    • Third: Device. Apple has no device within which Siri can reside within the home.
    • Usage of both Alexa and Google Home show that over 60% of all usage is generated when the user’s hands are busy with another task.
    • This makes the use case of Siri on a device that needs to be removed from the pocket not as easy or as intuitive as Alexa or Google Home.
    • Furthermore, both Alexa and Google Home can hear the user from a distance which also improves the use case within the home.
    • Hence I think it quite likely that Apple will launch a home speaker device of its own or enable third parties to embed Siri in their products.
  • The irony of the current situation is that Apple has by far the best smart home user experience.
  • This is because Apple has understood the importance of integrating these devices together into single commands and use cases like going to bed, leaving the house or arriving home.
  • This makes it easy to turn off all the lights, lock up, turn down the heating and so on with a single button press which is something that neither of the other two have come close to offering.
  • Furthermore, I suspect that HomeKit will end up being far more secure than the other two but at this point in time, no one seems to care.
  • Amazon has both first mover advantage and has done the best job of showing developers love and support.
  • The net result is that there now over 10,000 skills available for Alexa which continues to grow rapidly despite the awful user experience offered by most of these skills.
  • Consequently, I still think that this is Google’s race to lose as its product is by far the best, and its decimation by Amazon at CES seems to have shocked it into getting its developer activities up to scratch.
  • Of the three, I would continue to prefer Apple but overall I still like Baidu, Microsoft and Tencent.

Google vs. Amazon – Homefront.

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This could be a repeat of VHS vs. Betamax. 

  • Google is adding functionality to allow Google Assistant to compete more directly with Amazon’s Alexa, but what it really needs is to offer love and support to developers of smart home products.
  • Google’s failure to do this was visible on every stand at CES where a smart home product was to be found as they all will work with Amazon Alexa
  • Only a very tiny fraction will work with Google Assistant.
  • Google’s shopping functionality has involved singing a up a series of retailers such as Costco, PetSmart and Target to link their online ordering systems with Google Home such that a similar (to Amazon) shopping experience can be offered through the device.
  • Measuring up to Amazon in this category is going to be tough because Amazon has one system through which millions of products are available globally, whereas Google will have to sign up lots of retailers in every locality where it aims to have this service available.
  • However, when it comes to almost all of the other features, Google Assistant is capable of offering a vastly superior user performance than Amazon Alexa.
  • This is because the AI that powers Google Assistant is top of the class while Alexa’s is second rate at best.
  • Furthermore, the Google Home speaker is $50 cheaper than the Amazon Echo and in my opinion, a nicer looking product.
  • However, where Google falls over is home automation and here Amazon is currently ruling the roost.
  • RFM research has found that device developers receive plenty of love and support from Amazon which combined with the fact that there are now 8m devices in the hands of users drives them to make their products work with Alexa right from launch.
  • This is despite the fact that using many of these products with Amazon Alexa is a frustrating and fragmented experience.
  • A good example of this is Plex, which recently enabled an Alexa skill so that the user could control the Plex player using Alexa.
  • However, because Alexa lacks the brains to make service intuitive, the user experience is so bad that one tries to control Plex with Alexa once and quickly returns to the remote control.
  • In contrast to Amazon, many developers find that Google is difficult to work with and some did not even know who to at Google to call to enable Google Home with their product.
  • This is the opportunity for Google Home even though it only has around 0.5m devices in the market today.
  • I think Google needs to ramp up its love and support for developers immediately and thinking that they will just turn up at Google i/o is not nearly good enough.
  • There is a whole segment (home) of the digital ecosystem up for grabs right now and I still maintain that this is Google’s to lose.
  • However, at the moment it is Amazon that is blazing the trail and if Alexa makes it into the majority of households before Google pulls its finger out then the game will, in all probability, already be lost.
  • This will not be the first time that an inferior product will have won the day and I think there are valuable lessons that Google can learn from studying this history.
  • From an investment perspective, I continue to not really like either Alphabet or Amazon preferring Baidu, Tencent and Microsoft.

Fitbit – Boredom bites.

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User indifference likely to drive further estimate cuts in 2017.

  • Fitbit issued a horrible profit warning as users appear to be becoming bored with fitness tracking despite Fitbit’s efforts to drive engagement through the ecosystem.
  • Q4 16A revenues / Adj.EPS will be $572m – $580m / LOSS$0.51 – LOSS$0.56 compared to previous guidance of $725m – $750m / $0.14 – $0.18.
  • The new revenue estimate is 22% below where the company thought demand would be in Q4 16 and 27% below the consensus estimate of $736m.
  • The company also took the knife to its 2017 estimates with revenues / Adj-EPS of $1.5bn – $1.7bn / LOSS$0.22 – LOSS$0.44 compared with consensus at $2.38bn / $0.43.
  • The company blamed market softness for the shortfall and promised a recovery in H2 2017 but only because the year over year comparisons are much easier given the awful H2 2016 the company has had.
  • I think that Fitbit has three major problems:
    • First: It’s sensors are not accurate enough to be of any use beyond recreational health.
    • I believe that all health trackers suffer from this problem and until these devices are far more accurate, they will all have difficulty in expanding into the huge opportunity represented by health monitoring.
    • Phillips makes some bold claims in this area but I have yet to see hard evidence that its products are meaningfully more accurate than anyone else’s.
    • Second: The issue with wearables being a solution looking for a problem (see here) appears to be getting worse.
    • This is because the health tracking that these devices offer is simply not good enough and hence many devices end up gathering dust in a drawer after a couple of months.
    • Fitbit does far better than most but with only 23.2m active users of its devices, there are still a large number of devices out there that are no longer on the wrists of users.
    • Furthermore, from an ecosystem perspective, Fitbit is still miles adrift of the 100m active users that RFM estimates are needed for an ecosystem to hit critical mass.
    • Third: Fitbit is being eroded from both ends with Apple Watch at the top of the market and cheap Chinese health trackers at the bottom.
    • This issue is exacerbated by the fact that Fitbit has offered no real innovation in health tracking for some considerable time which has meant that the cheaper Chinese versions are just as good in terms of generating raw data.
    • If Fitbit was able to reliably track calorie consumption, blood pressure or blood sugar, then this would give it something with which to fight back against commoditisation, but of this there is no sign.
  • On top of the warning, Fitbit has also pledged to cut $200m of OPEX in 2017 with way less than 10% of this coming from headcount.
  • This means that certain aspects of sales and marketing and some research and development projects are also going to be cut.
  • This will make it even harder for Fitbit to come up with a winning innovation with which to restore its gross margins.
  • Consequently, the outlook for Fitbit in 2017 looks very difficult and I suspect that it may be taking the knife to its estimates yet again in 2017.
  • Just like GoPro, Fitbit remains one to be assiduously avoided in 2017 as both have further to fall leaving them open for acquisition (see here).

Sonos – Sounds of sameness pt. II

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I do not see the boldness required to save Sonos 

  • Sonos has announced a change in leadership with its 14 year veteran CEO / founder John MacFarlane handing over the reigns to President Patrick Spence who joined Sonos in 2012 as COO.
  • Patrick Spence was previously with BlackBerry in a sales and marketing role.
  • Although Sonos reportedly has had a reasonable end to 2016, it remains in a strategic quandary that I think will take a very bold move to fix.
  • The problem is essentially that as it now supports the major music streaming services, it has relinquished a large part of its long term differentiation.
  • Sonos’ strategy to date has been to lock its users into its ecosystem and only allowing them to use popular services such as Spotify, Amazon and so on via its own app.
  • The idea was to create a compelling user experience such that users would choose a Sonos even if something of equivalent quality was available at the same price point.
  • Unfortunately, this is where it has all come unstuck as Sonos’ ecosystem delivers a frustrating, buggy and substandard user experience that I think users would not use if they had a choice.
  • By enabling both Spotify Connect and Amazon Echo, Sonos has removed the requirement for users to use its software which I think is a sign that it is giving up on trying to create user preference around an ecosystem.
  • Because Amazon Echo and Spotify Connect are keen to work with any speaker on the market, Sonos’ differentiation now becomes: audio quality, design and its multi-room function.
  • Hence, I see Sonos’ only chance is to either
    • First: invest in cool new hardware features and stay ahead of its competition to maintain its price premium or
    • Second: to go for volume and gain scale advantages by significantly outselling its rivals.
  • Given Sonos’ current position, I think that both of these options will require a bold strategic move from Sonos that would probably have most chance of success if led by an outsider.
  • Hence, I fear that Sonos’ outlook remains rather bleak and hence it may end up being acquired.
  • I see it making a good tuck-in acquisition for any company trying to create a cross device ecosystem as its brand is very well known.
  • I see Samsung, Apple, Sony and Amazon all as potential acquirers.

CES Day 1/2 – Winners and losers.

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Winners

Amazon.

  • In my mind, the star of CES 2017 is Amazon which is beginning to show signs of doing to Google what VHS did to Betamax.
  • Betamax was a vastly superior technology but a slick marketing campaign by JVC ensured that VHS was adopted and Betamax struggled to remain relevant.
  • These battles are now fought online and in the developer community and here it is currently Amazon all the way.
  • On the show floor everyone who is developing a device that goes anywhere near the home is ensuring that it works with Amazon’s Echo.
  • Google Home has barely put in an appearance.
  • Furthermore, Huawei’s Mate 9 has included Amazon’s digital assistant Alexa because Google’s Assistant is currently only available on Pixel.
  • This is a huge and lucky win for Amazon because as it has managed to kick start the virtuous circle where more developers mean more devices sold which mean more developers and so on.
  • The issue is that when it comes to the digital assistant itself, Alexa is far too dim to be of any real use (see here) but if users adopt it for a hub in the smart home, Amazon will then have time and data to improve.
  • Using Echo as a smart home controller could easily evolve into other areas as the device will already be present in the home which could really hurt the appeal of Google Assistant in the long term.

NVIDIA.

  • NVIDIA is the word on everybody’s lips and despite a somewhat lack lustre set of demos, the stand has been heaving every time I have walked past it.
  • Most attention is being paid to what NVIDIA is doing in automotive and how it could represent a challenge to Intel in the server space.
  • Its key proposition is to use its parallel graphics chipset designs in other tasks where parallel processing is an advantage such as artificial intelligence and in servers and data centres.
  • NVIDIA has neatly combined the two hot potatoes in the tech industry (AI and automotive) which has resulted in a disproportionate amount of interest being generated.
  • NVIDA has gained great momentum from CES but whether it can keep that going through 2017 is a valid question.

HERE.

  • HERE is one of the few that has shown ground breaking progress over the last few days.
  • The addition of Tencent, NavInfo and Intel as partners (see here) has continued with addition of Nvidia and Mobileye as partners.
  • For HERE, the addition of Mobileye is a particular endorsement of its strategy as only 12 months ago, Mobileye was adamant that autonomous driving did not require a map.
  • This embarrassing about-face gives HERE’s credibility another meaningful boost.
  • HERE is now a credible threat to Google Maps but the time has come to turn the ink on the partnership agreements into action.

Losers

Google.

  • Google is the big loser when considering the traction that Amazon Echo is generating among the smart device companies.
  • This is because Google Home should be a superior product when compared to Echo because Google Assistant is much smarter with better functionality than Echo.
  • However, early users of Google Home complain of poor voice recognition which appears to be preventing the superior intelligence that underpins the user experience from shining through.
  • Combine this with the fact that on all the IoT stands, there is barely a Google Home device to be seen and one starts to wonder whether Google Home will make it at all.
  • This is a sign that Google’s execution on Google Home (and potentially Pixel) is not going as well as hoped.
  • I am increasingly worried that Google will squander the opportunity to both capitalise on the market that Amazon has opened for it as well as benefit from Samsung’s misfortunes.

LeEco.

  • While LeEco has a good presence at CES with a range of devices and two cars, it has a real PR problem.
  • Chatter in and around the stand is all centred around the financial difficulties that LeEco is experiencing with very little focus attention being paid to the products or the proposition.
  • For a consumer device company this is a massive problem as it can quickly lead to a death spiral of confidence.
  • If people think that the company’s future is doubt, then they won’t buy the products which, in turn, will increase financial pressure, bad news flow and so on.
  • LeEco needs to break this cycle before it is too late and I still think that the only way out is for the company to ditch both its own car as well as that of Faraday Future (see here).

Apple.

  • Apple does not publicly attend trade shows but the degree to which it has been absent in the last few days is striking.
  • No one is discussing Apple on the stands and I have been greatly surprised with the degree with which two of its long-term initiative appear to be being ignored.
  • I have long believed that Apple’s long-term strategy to maintain its differentiation (and its margins) is to a large part predicated on its ability to offer a great experience around the home and in health.
  • This is where HealthKit and HomeKit (see here) come in but to work, device makers need to ensure that their devices are fully interoperable with this software.
  • Of the entire multitude of devices that I have seen in the last two days these two words were not mentioned once.
  • While Apple remains the strongest ecosystem, it needs to ensure that it continues to be the place where home and health devices come together because that is where the real value is to be had.
  • Amazon is showing up Apple just as it is Google.

CES Day 0 – Square one.

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IoT – everywhere and nowhere.

  • With the press cycle already revved-up well before the official opening of CES, almost everything that is on show is a known device, tool, utensil or appliance that can now work with a smartphone.
  • However, this is pretty much what we saw last year and it feels like the electronics industry remains at square one waiting for the next revolution that will drive it forward.
  • The smartphone remains firmly at the centre with almost every innovation being displayed involving a device of some description that can be controlled by the smartphone.
  • This is what I think off as IoT 1.0 or square one.
  • This is where every device is controlled by the smartphone but where every device exists in glorious isolation to all of the others that are out there.
  • For example, controlling a light bulb or air conditioning unit from my smartphone is great but other than saving on shoe leather, it doesn’t really offer the user any real benefit.
  • However, a system where all of my devices are aware of each other and can be controlled in an integrated way or can control themselves based on the user’s preferences is much more interesting.
  • This is what I refer to as IoT 2.0 and of this there is very little to be found with systems, standards and protocols remaining completely proprietary.
  • This is a problem that Apple is trying to solve with HomeKit and HealthKit and it is very telling that of the multitude of companies that I have seen in the last two days these two words were not mentioned once.
  • I suspect that this is because even the small companies have realised that the real value remains in the data and fear that while HomeKit will allow them to work well with other devices in the home, the real value will accrue to Apple rather than to themselves.
  • This is the deadlock that has to be broken before the utility of smart pet feeders, shoes, sunshades, beer makers, door locks, beds, pillows and so on really come into their own.
  • Of this there is no sign and without it, is suspect that the electronics buying public will be unenthused with paying $179 to be able to control an air conditioner for which it already has a remote control.

 Huawei – Double down. 

  • After a difficult 2016 where it fell to third place in its home market, Huawei is doubling down with the launch of its new flagship the Honor 6X.
  • The 6X is the first device to use 2 rear cameras on a mid-range device and offers a few funky photo modes to try and make its photography offering stand-out.
  • Huawei promises much better performance and battery life and is targeting to ship 30m units, double that of the 5X.
  • Its main differentiator in achieving this goal is price where the device will sell for $250.
  • The problem here is that all of its competitors are doing the same thing and while Huawei might sell 30m units of this product, I am certain that it will make almost no money doing so.
  • Huawei is symptomatic of life in smartphones where a one needs a huge scale advantage or a thriving ecosystem to make money.
  • Huawei has neither and difficulties in its home market are making it more reluctant to really invest to achieve these aims.