Andrew Frank

CES2010 was packed with innovation – from 3D TVs to myriad e-readers and mobile computing devices of every shape and size. No one stole the show, but almost every vendor I saw put something impressive on the table.

In the end I couldn’t fully escape the wistful sentiment, “if only the world economy would start growing fast enough to allow consumers to buy all this cool stuff.” But this is a short-sighted view. The longer-term vision is that the consumer electronics industry appears on the brink of converging with – and rescuing – its two beleaguered sister industries, telecommunications and media.

First, the convergence of CE and telecom is evident in almost every device, which now not only contains a digital radio chipset but also comes bundled with some kind of telecom service and/or platform. This creates vast new opportunities for telecom companies to partner with manufacturers to become content distributors, with many potential new revenue models, from service provisioning to ecommerce. This is one of the cornerstones of the emerging electronic publishing model.

Second, CE appears ready to lead media – especially publishers and video producers – into a new market landscape where they might recover their status as privileged providers of valued content to consumers, a status that the internet for all its ubiquity has significantly eroded. Inspired by the vision and success of Apple (which predictably managed to play a starring role at CES despite being absent), CE companies now all recognize the need to bundle content platforms and services with devices. And media companies, also learning from Apple (and Amazon), for their part recognize the critical need to create and enforce standards on those platforms to assure interoperability and openness and avoid lock-in, concepts that the IT world has recognized for some time. While “interoperability” defies the Apple approach to differentiation and control, most manufacturers are learning the subtleties of how to differentiate while adhering to content standards that maximize consumer value in the new landscape of digital media.

So the stage is set for a new golden age, supported by a potential virtuous cycle roughly like this:

• Innovations like 3D video content, internet-connected TVs and components, electronic paper, and new portable device form-factors will drive consumer demand for new devices (economy permitting);
• As devices come bundled with data comm. services (both open internet-based, as in most connected TVs and Blu-ray players, and closed mobile-based, as in most e-readers and netbooks), demand for telecom will rise and new service bundling models will replace or supplement current obsolescence cycles of CE;
• These innovations will also increasingly be supported by open standards like the MVC standard for 3D video and the EPUB and PDF standards for electronic publishing, creating new more-secure global content distribution platforms with better monetization capabilities;
• As content becomes more monetizable on these platforms, high-value content will shift to these channels, creating new creative possibilities and more demand for premium content experiences that require the latest upgrades, etc.

Of course, such a utopian outcome is far from assured. Any number of macroeconomic factors, regulatory factors, and competitive instincts that favor extreme disruption, could easily derail this fragile new “experience economy.” But this is perhaps the first CES I can remember that demonstrated how the long-oversold concept of “convergence” might actually work.

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