Category Archives: mobile

The dismal rise of smart TVs

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Why are smart TVs not scaling?

Nielsen published some interesting stats recently on technology adoption in the United States. Broadband access to the Internet is now near 80%, meaning even Grandma has it. Smartphones have skyrocketed from about no use in 2007 (when they were first released by Apple as a category) to adoption by 3 of 4 adults. Tablets went from zero in 2010 to 46% last year, and today should be in the hands of 1 in 2 consumers. But smart TVs are trailing … in 2014 reaching only 13% of the U.S. population. At that lackluster growth rate, in five years only 1 in 4 U.S. households will have one.

Smart TVs are basically large video screens connected to the Internet, allowing you to “stream” content online, from Kevin Spacey taking over the world in Netflix’s House of Cards to YouTube videos. There are numerous reasons adoption may be slow: the average U.S. household already has three TV sets; consumers recently went through mass spending on flat panels, as they emerged as a sexy category about a decade ago, so may be reluctant to upgrade yet again; and the remote controls of the smartest TVs still don’t lend themselves to typing in commands for Internet video searches. Between the cost outlay and the lousy absent keyboards, it’s little wonder few have adopted to Internet-connected flat panels.

But there is a deeper psychological issue at play, too. When Robert Sommer first wrote of “personal space” in 1969, he suggested we actually have three fields of taking in information: an intimate space near our face or ears, similar to a lover’s whisper; a personal workspace about arm’s length away, the distance of tools in our hands; and a social space from about 4 to 10 feet away. Today’s technology fits perfectly in each of these fields: mobile is intimate, laptops are personal/work space, and TVs are social. We are more likely to speak up in our intimate space (“Honey, please move your elbow”) and more focused on listening in our social space (“shh, don’t interrupt the storyteller.”) This is why our thumbs crawl over mobile smartphone keyboards but with TV, we just want to chillax for the show.

Don’t get us wrong. TV is still king of all media. Despite all the hoopla over digital and mobile, consumers spend more than 4 hours a day letting the blue light of cable bathe over them, outpacing time spent on any other communication devices. But our utility of television is one of social receptivity. We don’t want to engage with big screens, but instead, wish for them to entertain us without nuanced input. Like stories from around a campfire, the streams that come from TV are meant for us to be received as passive entertainment. Our guess is “smart TVs” may never take off, even as screen resolutions grow sharper and the flat-panels increase in size until they are as large as your basement wall. Our modality is simply passive as we watch Kevin Spacey. When we want to truly engage, we turn to the mobile Twitter interface in our hands.



More evidence that Apple will move to holograms

hologram woman face

Predicting what the world’s favorite tech-design firm will do is dangerous business. A few years back, we forecast that Apple would launch a tablet called the “iPad” in Businessweek, and were correct. But we’ve also suggested Apple might sell displays for holographic imagery, and nothing’s happened yet.

So this week we were intrigued when Apple bought PrimeSense, a 3D sensing company that specializes in human motion capture. PrimeSense was the brains behind the cameras inside the Microsoft Kinect game gizmo, which captures your movement in a room so your avatar can dance or shoot things on screen. PrimeSense would give Apple a perfect input for holographic image capture. Apple has its own patents for human facial capture from different angles. And most intriguingly, Apple went to the trouble to patent a holographic screen display that would beam different images to the two eyes of each person in a room — creating the illusion of a floating hologram, without you needed to wear one of those awkward 3D headsets. Inputs and outputs are aligned for Apple to push holograms through screens.

Apple needs to reboot its slowing growth

So, why would Apple do this? The tech wizard is starting to stall. iPhone sales growth, measured year over year, slowed from a whopping 140% growth rate in spring 2012 to just 20% in Q2 of this year. iPad sales growth has slowed even further, down from 90% to -10% in the same periods. And as Business Insider recently noted, Android — the main iOS competitor in mobile — has won the real game, now owning 80% of global smartphones and 60% of tablets. With the world of consumers moving to glowing mobile screens, iPads and iPhones risk becoming shiny commodities, easily replaced by the next piece of glass. Apple shipments of iPhones peaked in Q4 2012 and have not recovered since. The mobile gadget market is tipping away from Apple.

(Savvy observers will note China remains a large growth opportunity in mobile, and Apple just redesigned its entire mobile operating system with a flatter, cleaner, almost Asian motif. Hm.)

Beyond gadget competitors, the cost of mobile gadgets is falling, also squeezing Apple. Prices for smartphones globally are expected to drop from $300 on average in 2012 to $200 in 2014, a whopping 33% decline in two years. In its most recent annual report, Apple lists under “Risk Factors” (the most interesting thing in any annual report) that the company is unique in that it provides the entire hardware and software solution for its products and “as a result, the Company must make significant investments in research and development… if the Company is unable to continue to develop and sell innovative new products with attractive margins or if competitors infringe on the Company’s intellectual property, the Company’s ability to maintain a competitive advantage could be adversely affected.” In non-lawyer speak, this means Apple is worried about how to maintain margins on its current gadgets.

Solution: 3D content for iGadgets

Now, let’s look at where Apple could go. Wearables or smart TVs? While growing, those sectors combined still account for less than 10% of all global Internet device sales. Apple might launch an iWatch, but sales would be meh. Content? Well, Apple did revolutionize the music business with iTunes, and has built a significant cash stream there. iTunes revenue is running at about $20 billion a year, which, if broken out as a separate company, would put iTunes at No. 145 on the Fortune 500 list just above United States Steel.

If gadget device growth is stalling, perhaps Apple could break into another content industry? Content so sexy it jacks up all iProduct sales?

The telecommunications industry could be that target. The total telecom market is $1.8 trillion, and consumers are none too happy with their wireless, cable or phone providers. If Apple built (and held onto the intellectual property of) a revolutionary new holographic transmission display, every iTV, iPad, or iPhone would suddenly be vastly more desirable. It might also be able to charge something for transmission. Rather than build an entirely new hardware product — which is getting more difficult as designs converge to little glass panes — Apple would reinforce the uniqueness of its current gadget portfolio.

And of course, content should push gadget sales. The actual Apple patent for holography has an intriguing feature that could require hardware upgrades. It describes how a sensor, pointed at the room to find where your head would be, would also pick up  ambient lighting in the room. So if the image beamed a business colleague from the West Coast into your conference room, the sunlight coming in the window could be captured to adjust the image so John Henry has a shadow by his nose. The verisimilitude would be complete. Such high-resolution output would require faster hardware gadgets … because as Apple notes in its patent, “although much more realistic, a dynamically presented holographic image also requires far greater computational ability and bandwidth than is generally required for a two-view stereo display.” Hello, future iPhones and iPads with faster chips.

To project all this 3D nuance, Apple would need the best imaging capture technology. PrimeSense has a good track record there, doesn’t it?


Facebook’s $7 Trojan horse (watch out, Amazon)

Mark Zuckerberg, how investors have underestimated you.

Depending on how you look at it, Facebook is either on a tear or washed up. eMarketer predicts Facebook will generate $5 billion in revenue this year, with $4.2 billion from advertising, taking 4% of the global digital ad spend in 2012 — not too shabby. But Facebook also faces the law of large numbers, meaning it’s hard to grow once you’re already damned big. That eMarketer forecast of August was downgraded by $1 billion from its previous prediction in February; ouch. And Facebook has two other huge challenges — it’s making pennies from mobile and online video, the fastest-growing media channels in advertising, and Facebook is still a weakling in the Asia-Pacific, the market expected to grow fastest in ad spend over the next few years.

So Facebook made a brilliant move this month to diversify its ad portfolio by going … straight to you, dear consumer. Facebook now invites individuals who post something to pay to promote their missives at $7 a pop, to make sure more people you connect with inside Facebook actually see you. Let’s put aside for a minute the fact that Facebook is fighting its own EdgeRank algorithm that helps us enjoy our social feeds by blocking old girlfriends or uncles with annoying politics, and consider how much money Facebook could make:

  • Facebook has 1 billion total users
  • Of those, about 552 million log in daily
  • Facebook has reported users make an average of 3.5 comments or Likes per day, so let’s assume users make an equal number of personal posts each day: 3.5
  • That’s 1.93 billion posts per day
  • Let’s assume Facebook gets an anemic 0.03% response rate on this offer for consumers to pay for their own posts (a response rate equal to click-throughs on all those other FB ads)
  • That’s 579,000 self-promoted posts a day
  • Each post costs $7
  • Facebook just made a cool $1.5 billion next year — achieving 30% revenue growth

$1.5 billion is nothing. Facebook is just getting started with your data.

There’s a much larger play here as well — if you pay for your post with a credit card or PayPal, for the first time Facebook is training you to give it your payment mechanisms. OK, so you’re addicted to Facebook. And Facebook has your credit card. Whatcha think you’re going to do when Facebook makes it easy for you to buy stuff inside Facebook?

I’m not talking those little Facebook ads for things you don’t want — I’m pointing to a store that rivals with everything you desire on your own terms. Facebook has already built this store: millions of brands have “Facebook pages” touting Pepsi, Coke, Barack Obama and Mitt Romney. All Facebook has to do is install the cash register, and you better believe when those pages become e-commerce functional, brands will promote ways for you to buy stuff inside Facebook.

Mobile payments come next.

And of course Facebook, with your payment information now loaded, would helpfully transform your mobile Facebook app into a mobile wallet … extracting a cut of the billions of dollars that are paid to AmEx, Visa and Mastercard in annual financial transaction fees. Go out for a nice Italian dinner and swipe your newsfeed at the register, and you could pay while also telling all your friends about the great night out.

It’s all so brilliant. A $7 offer. Which leads to $1.5 billion in revenue as Facebook collects your credit card numbers. Millions of brand pages waiting to be turned into an online mall. Marketers promoting Facebook for free by including their “Like us on Facebook” in every one of their own ads, stimulating demand. And a Facebook mobile app that, once preloaded with your credit info, could rival Visa.

Zuck, some days I really like you.

When the air itself becomes the gadget

One irony of our virtual-networked age is consumers are still gaga about gadgets. The Internet and apps may give us a million different ways to view weather forecasts on a screen, but as soon as Apple launches a thinner MacBook Pro Air with a black bezel, we’ll run to the mall.

The challenge of course is computer product designs are converging into flat panes, and eventually panes can only go so far. When screens and smartphones achieve the apex of glass, product differentiation will be difficult. Which is why devices soon will move out of solid shapes.

Two examples are laser keyboards and miniature projectors. The Cube Laser Virtual Keyboard is a $180 gizmo that beams glowing keys onto any flat surface, and somehow tracks the position of your fingers as you “click” on the flat QWERTY layout. You pair the device with an iPad and suddenly can type away like mad. (Flatscreen tablets suck at typing, yes.) It doesn’t take a rocket scientist to guess that within two years Apple and Samsung will add such laser-keyboard inputs into their tablets and phones. And for output, miniature projectors do exactly what they sound like — beam images from your phone and tablet onto the wall, so you can regale dinner companions with cat videos or hold an impromptu PowerPoint presentation with that executive you meet in the bathroom stall.

The third and most promising way devices will leave their hardware shells behind is virtual reality projections. Google announced this week it is expanding its Google Maps 3-D modeling (which renders photorealistic images of major metro buildings, streets, water, and flora from aerial imagery) to mobile phones. Now your handset can unveil a virtual earth tied to your location. If Google has figured out how to compress this powerful software into small handsets, the next step will be putting it inside your glasses, and soon you can overlay any fiction on the world you wish. Some clever hackers twisted the Google Project Glass teaser video to show how you could overlay the “Battlefield 5” game onto your neighborhood walk, if only you wore the right pair of virtual-reality spectacles.

Soon, keyboard inputs, video projections, and virtual reality will dance in the air around our fingers and eyeballs. The hunger to buy the next Apple product will fade, because slightly recast aluminum shells will become commoditized and a glass tab that transforms into a high-def screen is just another piece of glass. Apple, Google/Motorola, Samsung, Dell, HP and other gadget manufacturers will need to spend more time thinking through virtual interfaces than concrete shells. Play it forward and you’ll see plenty of opportunity for garage startups to break into this new anti-product world. When the air itself becomes the gadget, the definition of product design will change.

Google Maps goes indoors … ooh, look, a sale!

The Holy Grail of marketing is the ability to influence consumers when they finally go into purchase mode — and today, in 2011, after all our decades of advertising influence, we still can’t do that. Walk into a wine shop or Victoria’s Secret and there is no voice whispering in your ear saying, please, buy this instead. Some mobile apps attempt this but most are cumbersome, filled with game mechanics of points and mayorships. Joe Sixpack is just too serious to adopt Foursquare games.

Google gets closer by bringing its Maps feature indoors. Users of Android handsets can boot up layouts of airports, malls, or stores (all in staged rollout) such as Home Depot and Macy’s. Google claims the GPS system is tuned tightly enough that it can even recognize your position if you move up or down levels in a store or mall with multiple floors.

If adoption takes off — dang, we want it already on our iPhone — consumers will tap a platform built for last-minute marketing offers. Tie it with a database on your preferences and value (information Google in partnership with merchants could access), and personalized offers designed to influence only you could finally arrive. “Turn right off the escalator, dear, instead of left. The lingerie is on sale, 50% off, but only if we walk in now.”

Ben Kunz is vice president of strategic planning at Mediassociates, an advertising media planning and buying agency, and co-founder of its digital trading desk eEffective.

Google’s slice of the credit card cake

We wrote in Bloomberg Businessweek in March that Facebook could become your future bank, or more exactly, use its lock-in as one of the top smartphone apps to get in the mobile payment processing game. Billions of dollars flow toward Visa, Mastercard, American Express and PayPal each year from the small percent of each payment they extract to help you buy things at stores or on the web, and as near field communication turns cell phones into digital wallets, all that money could go into play. Facebook has 250 million avid smartphone users and a Credits system set to transfer funds, so why not make money by expediting shopping on iPhones?

Now Google is first out of the gate, with more than a dozen Droid handsets due by Christmas with the built-in NFC payment functionality. Today, Bloomberg reports, Google will announce its first mobile-payment system available on smart phones.

How much money is at stake? PayPal makes $4 billion annually on $92 billion in online transfers (PayPal is the means of choice for about 18 percent of all e-commerce transactions). American Express, which controls about 24 percent of credit card transactions in the U.S., takes in more than $25 billion in annual revenue. Money isn’t revolutionized very often; credit cards — once called traveler’s cards — took off in the 1950s, and PayPal was able to capture the new need for secure shopping on the Internet at the turn of this century. Now with money moving to cell phones, the definition of cash has once again gone into play. There are 302 million active cell phones in the United States; think of the market if only half of them start using Google or Facebook apps to buy the morning coffee.

Ben Kunz is vice president of strategic planning at Mediassociates, an advertising media planning and buying agency, and co-founder of its digital trading desk eEffective.

Image: Domiriel

The new burden of money apps

Congratulations, Mr. Jones. Bank of America has just shifted $10 into your son’s college fund.
It’s risky to predict the future — for instance if, in 1999, we had told you soon everyone would be fascinated by typing messages to strangers via telephones, you’d say we were nuts — but here goes. Money apps are the next big thing. Mobile phones, you see, are about to include near field communication signals that turn them into portable wallets, swipe-able near any cash register, and the money apps they hold will do to currency what digital photos did to Kodak film processing.

We apologize about the Victoria’s Secret checkout wait. $30 is now waiting in your lingerie button.
Once anyone can beam funds into your electronic device, the definition of money will change, just as apps made the old-school Windows operating system obsolete. Think about this: How many apps do you have on your iPhone or Droid now? 50? And if the whim strikes you, would you download a dozen more? Of course. Apps are single-utility interfaces that help you easily check the weather, sports scores, and news, or better yet do things with photos, music, guitar tuning, and air-traffic control signals that you never could before.

Tell your friends you love the Ford Fiesta and unlock $5 in free fuel!

So what happens to money when you can do new things with it too — when electronic currency becomes as malleable as an iPhone icon? Imagine Talbots sending your wife more than a coupon — instead, $50 in hard cash, but usable only inside the Talbots Outlets stores. Groupon ain’t seen nothing yet when every retailer in the world learns to beam you currency redeemable in their retail aisles. And advertisers, of course, could buy your attention … or more insidiously send you funds on the condition you say things you don’t mean to your friends, like, gee, aren’t L.L. Bean khaki pants all the rage today?

Money has always had two utilities: storage tied to protected value, and motion tied to acceptance elsewhere. The mobilization of money on smart phones, tablets, or other portable devices will create a third value — the ability of influencers to shift funds to you immediately to direct your desired behavior. Any app could become a mini bank-vault, filled with value you unlock only if you jump through the next hoop. It will go beyond 50% off coupons — artificial discounts tied to some vague price-framing gimmick — because the money the influencers load onto your mobile gadget can be used anywhere, if you play their game. You think the points systems of Twitter followers or Facebook friends are addictive? Just wait until they include cold, hard cash.

Ben Kunz is vice president of strategic planning at Mediassociates, an advertising media planning and buying agency, and co-founder of its digital trading desk eEffective.

Image: Bichxa

Beyond ZOMG: cell phone tracking and Color’s new business model

German Green Party politician Malte Spitz is concerned about privacy. So to prove a point, he sued Deutsche Telekom to have them release six months of tracking information collected by his cell phone; Spitz then gave the data to Zeit Online, which made a freakily accurate animated graphic of Spitz’s exact travels over six months. The map shows Spitz as a dot moving from meeting to meeting, stopping to sleep … and by combining the phone data with publicly available information from his tweets and web activity, observers can determine much of what he was thinking and doing throughout each day.

Of course a normal reaction is ZOMG, cell towers are watching us. Once you get past this, the next reaction is to wonder, how could consumers be protected while putting such data to beneficial use?

In marketing, for instance, personalization is something consumers long for (see: the success of Netflix) but something marketers fail miserably at (mainly because each consumer has thousands of different modalities that manifest themselves almost randomly, e.g. you could be a hipster and father and lover and friend and cycling enthusiast and researcher of pharmaceutical meds, all at different times in one day). Truly accurate geolocation tracking, coupled with data feeds that flag or predict your consumption modality, would allow advertising to be tailored to what you really want, when you want it. Such personalization would fill the very basic marketing gap — blindingly obvious, once you think of it — of digital coupons at checkouts tailored to something consumers really want but haven’t purchased yet (as opposed to current couponing in U.S. grocery stores, which offers you discounts on products you already bought after you pay the clerk, doh).

Personalization, perhaps the real play for Color
Tailoring offers at the point of decision remains excruciatingly difficult, which is why marketers have failed to make so-called 1to1 personalization happen. Better tracking systems could finally make personalization possible.

App upstart Color could be a player. Robert Scoble noted this week that Color, the much-ballyhooed and confusingly designed photo app, launched to apparent failure … but has location technology behind it that could make future use more interesting (and worthy of the $41 million VC investment). Scoble wrote, “for instance, when you take a photo [Color] measures the audio profile of the room, captures the compass reading and other sensor readings, and pretty accurately knows other users in the room at the same time.” At face value Color creates a new type of spontaneous social network, useful for sharing pictures with strangers at a rock concert. But imagine deploying Color’s location sensors to reach groups of consumers passing through the mall on Black Friday, parsing which people are leaning to your retail location … and tying that back to past individual consumption histories to predict what they want, with photos of products and associated discounts popping up on their handsets. Unlike the social couponing aspects of Groupon, a geo-location discount from Color would not try to get someone in the door, but rather influence consumers for more sales once they are at the store. The leverage there is exponentially higher.

The data is out there, and businesses are just beginning to learn how to use it. The future of personalization may finally arrive. Of course, that also means not freaking you out with marketers who know when you’ve been sleeping and know when you’re awake.

(It’s worth playing with the cell phone data map here to see the tracking experience yourself.)

Ben Kunz is vice president of strategic planning at Mediassociates, an advertising media planning and buying agency, and co-founder of its digital trading desk eEffective.

Via Groovemonkey.

Progressive watches your driving, Google watches your face

“Good drivers finally get the savings they deserve.” That’s how Progressive pitches Snapshot, its new optional device that goes inside your car to monitor how far you drive and how hard you brake, the idea being if you are a good driver, Progressive will use its remote watching to reduce your insurance rates.

It’s part of a trend of consumer tracking that can be both beneficial and freaky. Google (no April’s Fool joke) is working on a facial recognition mobile app that could use a photo of your mug to automatically link to your online profile, very useful at business conferences and extremely worrisome, say, to women who may not want men finding their home address after shooting their image at a bar. (Google, recognizing the privacy concerns and recently stung by its Buzz data debacle, is said to be making the app opt-in only at first.) The convergence of online personal profiles, ubiquitous cameras, location-based services, and algorithms that can convert images to data means consumer sharing may be everywhere … and consumer privacy may be a thing of the past.

Ben Kunz is vice president of strategic planning at Mediassociates, an advertising media planning and buying agency, and co-founder of its digital trading desk eEffective.

Image: Iris Shreve Garrott

Japan shocks and the last-second decision

We’re at SXSW Interactive in Austin this weekend exploring 1,400 panels, and everyone this year is searching for the next big technology. It ain’t here. Last year it was Foursquare and location-based services, and a few years before it was Twitter; this time, nothing new has risen (except for me-too startups flaunting cloud-based web editing, Groupon coupon knockoffs, etc.).

So a suggestion: What about a service that uses consumer location and mobile to influence buyers right at the moment of decision? If you want to see a rare example of this last untapped land of marketing influence, check out mGive, an innovative mobile service that helps consumers give money instantly with a text-this-to-that on their cell phones. Many orgs raising funds for the devastation in Japan use it (you can find a list of reputable aid groups for Japan here.) What’s fascinating is the simple dynamic steers consumers to a close based on a snap judgment, a dynamic most marketers can’t achieve.

Think of the opportunity: A man in a wine store, confused over labels, about to approach the checkout. A woman buying soccer cleats for her daughter, looking at the rack of 100 Nike and Adidas models on the wall. Today there is no way to touch those people just as they reach for their wallets. To pull off a signal consumers might respond to would require vast integration — of LBS, store inventory, customer preference data, observation of consumer modality (“the woman is approaching the Nike shoe wall…”), push notification, pre-staged marketing offers or price framing, and perhaps even near field communication that turns mobile handsets into faux credit cards. But if you did that, you could personalize an offer just as Sally Smith reaches for the sneakers. Advertising could become truly relevant, helping a buyer nearing commitment make her confusing decision. We might raise even more money for Japan.

Ben Kunz is vice president of strategic planning at Mediassociates, an advertising media planning and buying agency, and co-founder of its digital trading desk eEffective.