Start-ups such as Fitbit and Magic Leap have made little progress in recent years, with funding cooling, and it’s services and ecosystems that are driving everyday consumer electronics. CES (Consumer Electronics Show) in Las Vegas is an annual technology and electronics carnival. Through this event, you will also find that new products are becoming more and more rare and difficult to produce.
More than a decade ago, one of the show’s most popular products was LG’s Watch Phone, which features a music player and a built-in camera for video conferencing. It turns out that it’s much more difficult to put these features together than it seems. And Apple’s genius is the ability to integrate technologies effectively into the Apple Watch, giving users a smooth, consistent wrist experience for the first time.
With the new decade coming, electronics enthusiasts will once again come out. But the factors that are stimulating the consumer electronics market have changed. The main driving force behind these essential products today is not technology and equipment, but services and ecosystems. Typically, it’s the tech and media giants that dominate it all behind the scenes.
In a sign of this change, breakthrough innovations , what audiences want most to see — have become increasingly scarce. In the new world of connected devices, independent devices that can break with the norm are now scarce. Even with new products, such as GoPro’s wearable cameras, they will struggle to stay ahead unless they can provide an attractive service to keep consumers interested and encourage them to buy more.
In 2019, a string of disappointing performances by consumer electronics start-ups proved this. In the field of personal robotics, One of the most successful technology companies, Anki, has closed its doors, even though its robotic toys were once popular. Fitbit has struggled to turn its fitness tracker into a more practical health device, but has failed to do so and has had to sell it to Google. Fans of augmented reality have been waiting another year, as Magic Leap has yet to open a new AR ecosystem of devices and content. Magic Leap has raised more than $2.5 billion since its inception.
No wonder start-up investors have lost enthusiasm for the industry. U.S. investors invested $1.74 billion in consumer electronics start-ups last year, the lowest level in four years and down nearly 30 percent from 2018, according to Crunchbase. In the low-margin, popular hardware sector, it has always been difficult to start a company, and in the field of connected devices, it is even more difficult to start a company.
Sports equipment maker Peloton’s unexpected success was a successful IPO last June, thanks to revenue streams from its built-in services and subscription businesses. But it’s too early to tell if it can go further, and this year’s CES will see a flood of Peloton replicas, so people will also try to apply Peloton’s model to other areas of personal technology.
Today, service is an important force in promoting personal science and technology. Streaming video, for example, has become one of the hottest areas of 2019 as media and entertainment companies launch premium services. Voice assistants, led by Amazon’s Alexa and Google’s Google Assistant, have infiltrated many of the electronics and become the driving force behind them, making it harder for hardware makers to differentiate their products.
This year’s performance may also provide the next queue for cloud services to disrupt consumer technology. These include cloud games, which Google recently entered the market to point to most of the world’s computing power, once disappeared at the fingertips of consumers in the data center, even if a new generation of game consoles were about to be launched.
All of these services have boosted demand for digital devices, but the subscription models they support and other new business models could generate higher revenues for service companies than hardware makers.
Another driving force behind this is the power of the consumer technology ecosystem. In smart home devices, the integration of brands and technologies, as well as people’s growing reliance on personal data, have made Amazon and Google strong competitors.
And the most successful consumer technology ecosystem company is Apple, for example, a large number of companies are trying to replicate the success of airPods, their wireless headsets. None of these companies’ products are attractive to consumers who have been used to Apple products for a long time.
None of this will stop the industry from racing to create the next sensational product. For the past few years, “smart” and “connected” have been the slogans that define the frontiers of consumer electronics. A technological revolution is brewing as 5G connectivity and artificial intelligence, which can be applied to individual devices, offer new impetus.
At CES, we’ll see some common innovation attempts that incorporate these new technologies into the next wave of everyday consumer electronics. But when the dust settles, most of these products will join the ranks of LG watch phones of the year and be dumped into the digital scrap heap.