ELECTRIC CAR RACING: TESTBED FOR NEW TECH
SEPTEMBER/OCTOBER
2017
Majority Leader U.S. House of Representatives
Kevin McCarthy Connect the Home P.18
How Cars Will Communicate P.22
Disrupts the Insurance Market P.26
TALKS TECH WITH CTA'S GARY SHAPIRO
Contents
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With 5G, cars will connect to infrastructure as well as each other.
02 From the CEO Innovation is a Survival Strategy 04 Editor’s Note On the Brink
Tech 10 INNOVATOR Congressman Kevin McCarthy 13 INTERNATIONAL FOCUS France 14 A TECHNOLOGY TO WATCH Electric Car Racing: Testbed for New Tech 16 C4 Robots, Kids and the Future 17 PIPELINE Connecting Content and Tech
C TA . t e c h / i 3
Features 18 THE WISDOM OF SMART TVS Smart TV sets are a step closer to becoming the center of smart home services. 22 WHAT HAPPENS WHEN 5G COMBINES WITH VEHICLES? 5G technology will allow vehicles to talk to each other.
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DISRUPTING THE INSURANCE MARKET Lemonade is challenging insurers by using its claims bot, powered by artificial intelligence running fraud algorithms.
TECH HUB Boston Leads 3D Printing
Policy 32 FACES OF INNOVATION David Krauss, Co-founder and CEO, NoiseAware
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34 GREEN POLICY Saving Energy and Making Cents 37 POLICY UPDATE PSAPs Help Musicians Hear Again 38 INNOVATION IN RETAIL Helping Retailers Reimagine Their Businesses
50
Business
ADVICE FOR ENTREPRENEURS Office Culture Sets the Tone
42 C SPACE In Deals and Data, OTT is Reaching Dominance
51
43 BY THE NUMBERS New Technologies Take Center Stage 44 CT REPORTS CT Foundation Startup Members Ready for Tomorrow 48
Smart TVs are thinking outside the box.
FORWARD STRATEGIES IoT and Big Data Can Benefit Your Business
MARKET BEAT Develop an Advertising Strategy for Streaming Video 52 STATS & FACTS What Ads Capture Attention?
ON THE COVER Congressman Kevin McCarthy Photographed by Ben Baker
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49 RETAIL STRATEGIES Streaming Services and Cord Cutting
SEPTEMBER/OCTOBER 2017
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From the CEO
Listen up EU: Innovation is a Survival Strategy — Blocking it is a Dead End American companies have done well in software (Microsoft and Oracle), hardware (Apple French President Emmanuel Macron and Cisco), chips (Intel, NVIDIA and Qualattended CES 2016 comm), search engines (Yahoo and Google), and and CES 2017. social media (Facebook and Twitter). European regulators suggest many of these amazing innovators hurt competition as they are too big and strong. Yet many of these services and platforms delight European consumers. Many compete with each other for customers through advertising or visibility. More, it doesn’t take much investment to unseat a large software or services innovator. The low technical and capital barriers allowed these big companies to replace other dominant companies. Facebook replaced Myspace. Google replaced sites like Ask Jeeves and Yahoo. Instagram is now fighting to upend Snapchat. Apple competed successfully with Sony and went on to invent the smartphone market. European regulators ignore this history. They see a flow of new American growing companies. They see few, if any, European tech startups hitting the big time. They use ambiguous European antitrust laws to club American companies into outrageous financial settlements. So European regulators are increasingly imposing huge fines on great American companies like Apple and Google. This is the same trick they tried with IBM, Microsoft, Intel and Qualcomm. If you can’t create your own great companies you should try extracting cash from those that are successful. And if antitrust isn’t enough of a tool, try using Hopefully, the Brexit vote privacy notions or follow the China model and assert cyber and national security concerns to insist data, may signal cloud servers and other technologies be physically a populist hosted in the countries they serve. uprising away Innovation is and should be an American national strategy. It could be a European strategy. France has from antidefi nitely turned to it under President Macron. innovation EU The EU is better off looking at its anti-innovation policies. work and social policies than seeking to choke great American innovators. We have huge new technologies on the visible horizon. Every country can race to the lead, but kneecapping the competition is not okay in ice skating nor in global economic competition.
FOR OVER A DECADE, I’ve been preaching the value of innovation. I’ve declared it from the CES keynote stage. It has been my theme in two books and hundreds of columns. The need to innovate to survive applies to companies. It applies to governments and countries. It even applies to people! Everyone needs to adapt. Environments change. Competitors expand. New entrants emerge. Old legacy companies die. My generation witnessed cable, satellite, the internet, wireless, social media, digital devices, search engines and the sharing economy. All began, blossomed, created wealth, made new industries and affected legacy companies. The next generation is seeing change from drones, robots, self-driving cars, AR/VR, personalized health and artificial intelligence. We all choose one of three courses. We can be complacent and accepting and let things happen to us. Or we can block innovation and fight to remain in the past. Or we can create change ourselves and define our futures. Blocking innovation and the future is the North Korean approach. The EU does not outlaw innovation but it is not totally embracing it either. It has complex, conflicting rules and ambiguous laws. It constantly challenges successful American companies. Hopefully, the Brexit vote, and French election of pro-innovation CES attendee Emmanuel Macron as president, may signal a populist uprising away from anti-innovation EU policies. 2
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Gary Shapiro, President and CEO
I T I S I N N O VAT I O N
Editor’s Note I T I S I N N OVAT I O N PRESIDENT AND CEO
Gary Shapiro
SENIOR VICE PRESIDENT
Jeff Joseph
EDITOR-IN-CHIEF
Cindy Loffler Stevens MANAGING EDITOR
Mark Chisholm
On the Brink
W
With companies gearing up to exhibit at the upcoming CES Unveiled Paris, we look at some tech developments in France. We also have 4
SEPTEMBER/OCTOBER 2017
Jeremy Snow
DIRECTOR, MARKETING
MANAGER, CREATIVE DIRECTION
SENIOR CREATIVE MANAGER
ADVERTISING MANAGEMENT
Jenni Moyer
John Lindsey
We have all experienced déjà vu moments, or another shared occurrence where we feel like we are on the brink of something colossal. A quote from the late Steve Jobs sums up the perception that many of us have experienced. Jobs said, “Everyone here has the sense that right now is one of those moments when we are influencing the future.” ith so many tech advances full of promise, new business models are being created. For example, just look at the innovation in smart TVs and how they are becoming the control hub for smart home services like security, energy and appliance management. And read our feature on how the rollout of 5G cellular technology will dramatically impact the way vehicles communicate with each other and everything around them. We also view disruption from a new insurance company called Lemonade that is challenging traditional insurers by using a bot named Jim, powered by artificial intelligence (AI), to process claims. The company founders built the company on AI and algorithms that allow customers to apply for a policy using their smartphone with approval granted in as little as 90 seconds. Clearly the acceleration of technology is poised to continue to change our lives creating efficiencies we could not have imagined before.
EDITORIAL ASSISTANT
a snapshot at some novel toys aimed at helping to prepare and educate young people for a future where robots imbued with AI and machine learning will change our work paradigm. And “A Technology to Watch” focuses on how electric car racing is expanding new technology. Also in this issue, CTA President and CEO Gary Shapiro talks with Congressman Kevin McCarthy about some key issues affecting the tech industry and even a little trivia regarding his role in the popular Netflix show, House of Cards. And see i3’s “Stats and Facts” for the latest CTA research on how to develop an advertising strategy for streaming video. Mark your calendars for CTA’s Innovate! and Celebrate conference, in San Francisco on October 9-11. Hope to see you there as we announce CTA’s Innovation Entrepreneur Award winners and unveil our Five Technology Trends to Watch. Please send comments to
[email protected].
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Gretchen Mitchler
EDITORIAL CONTRIBUTORS
Gary Arlen, Alan Breznick, Robert Calem, Jack Cutts, John Gaudiosi, Steve Koenig, Natalie Hope McDonald, Allan Richter, Ron Schneiderman, Steve Smith, Susan Schreiner, Murray Slovick EDITORIAL ADVISORY BOARD
Kari Aakre, Intel; Dave Arland, Arland Communications; Sally Washlow, Cobra; Peter Brinkman, Casio; Gabriele Collier, HDMI; Kristen Cook, BDS Marketing; Danielle Deabler, NPR Labs; John Dunstan, Netgear; Sean Durkin, Dolby Laboratories Inc.; Peter Fannon, Panasonic/Matsushita; Bill Kircos, Intel; Bill Leebens, LM&M; Chris Loncto, Sharp Electronics Corp.; Daniel Pidgeon, Starpower; Jim Reilly, Panasonic; David Steel, Samsung; John Taylor, LG Electronics DESIGN, PRODUCTION AND PUBLISHING MANAGEMENT
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SENIOR PROJECT MANAGER
Wesley Bresette
It Is Innovation (i3) is published as a service to the members of the Consumer Technology Association (CTA) and to key players in the consumer technology industry. CTA represents more than 2,200 U.S. manufacturers of audio, video, digital imaging, accessories, mobile electronics, home networking, wireless communication, information technology and multimedia products that are sold through consumer channels. The opinions expressed in articles are those of the authors and not necessarily those of CTA. Comments, questions and letters to the editor are welcome. Address responses to: It Is Innovation (i3), Consumer Technology Association, 1919 South Eads St., Arlington, VA 22202, tel: 703 907 7600. © 2017 Consumer Technology Association Articles from this issue may be reproduced in whole or in part, provided full credit is given to CTA. CES® and International Consumer Electronics Show® are trademarks owned by CTA. It Is Innovation (i3) (USPS 022897 Vol. 5, No. 5) is published bi-monthly by the Consumer Technology Association, 1919 South Eads St., Arlington, VA 22202. Periodicals Postage Paid at Arlington, VA and at additional mailing offices. POSTMASTER:Send address changes to It Is Innovation, CTA, 1919 South Eads St., Arlington, VA 22202. Canadian Publications Agreement No. 41502062. U.S. & Canada—$24.99 a year; $5 for a single issue Mexico—$39.99 a year; $7.50 for a single issue Elsewhere—$49.99 a year; $9.00 for a single issue ISSN 23257350
Cindy Loffler Stevens, Editor-in-Chief I T I S I N N O VAT I O N
John Lindsey
Kevin McCarthy, myself, Tiffany Moore, and Gary Shapiro on the Hill.
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Tech
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A Tech To Watch
Electric Car Racing is a Testbed for New Tech
A LOOK AT NEXT-GEN TECH
Alastair Staley/LAT/Formula E
Disruptive innovation is central to America’s entrepreneurial culture.
10 Innovator 13 International Focus 14 A Tech to Watch 16 C4 Trends 17 Pipeline C TA . t e c h / i 3
SEPTEMBER/OCTOBER 2017
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Tech
CTA President and CEO Gary Shapiro with Congressman Kevin McCarthy in his ceremonial office at the Capitol.
I N N OVATO R
Gary Shapiro Talks Tech with Congressman Kevin McCarthy
I
t was July 19, one of those blistering hot summer days in Washington, DC, when CTA President and CEO Gary Shapiro visited Congressman Kevin McCarthy’s ceremonial office at the Capitol. A striking crystal chandelier hangs above paintings of the American flag and the flag of California (McCarthy serves California’s 23rd district). McCarthy was elected to Congress in 2006 from Bakersfield, CA, and became Chief Deputy Whip, and later Majority Whip. In 2014, he was elected Majority Leader of the U.S. House of Representatives. Since then, he has been committed to policies that give small businesses and entrepreneurs the confidence to hire, expand, invest and innovate. 10
SEPTEMBER/OCTOBER 2017
The grandson of a cattle rancher and the son of a firefighter, McCarthy grew up in a working-class family. At 21, he started his own small business called Kevin O’s Deli. He sold his business to put himself through college and graduate school at California State University, Bakersfield where he interned for Congressman Bill Thomas and later became a member of Congressman Thomas’s staff. In Congress, he focuses on fighting for individual liberty, an efficient government and free markets. McCarthy recently introduced and shepherded legislation through the U.S. House of Representatives giving the Department of Veterans Affairs $75 million to start a pilot program to provide accelerated computer courses in everything from robotics and basic programming to artificial intelligence and virtual reality. The following is an edited version of their discussion. I T I S I N N O VAT I O N
By Tiffany Moore
Fast Facts: Congressman Kevin Owen McCarthy Born: January 26, 1965, Bakersfield, CA Office: Representative (R-CA 23rd District) since 2013 Previous office: Representative, CA 22nd District (2007–2013) Spouse: Judy McCarthy (1992)
Left: John Lindsey; Right: Bill Clark/CQ Roll Call/Getty Images
Q How can technology make the world better? A I was involved in the JOBS Act a number of years ago dealing with capital for startups. Since that JOBS Act passed, a number of companies have benefited, for example, Snapchat didn’t have to go for an IPO to grow and get capital. We looked at old regulations and laws that were made decades ago and modernized them — taking the tradition of the past and applying it to a changing future. I worked with Chief Deputy Whip Patrick McHenry (R-NC) on the JOBS Act. I started taking members to Silicon Valley and giving different tours. I wanted members to start thinking about what America should look like in the next 50 to 100 years. We often get bogged down in Congress and Committee worrying about a small amendment instead of thinking about what overall it should look like. One of our big bipartisan bills that will affect us a great deal is the Modernizing Government Technology Act. Look at the VA system that was created in 1921. When a veteran had a problem then, they would write the claim on a piece of paper, to get news they would turn on the radio. Today we look at our cell phones for news but if there is a claim at the VA, they still write it on paper. We spend $80 billion a year on technology C TA . t e c h / i 3
Education: California State University, Bakersfield (1994); California State University, Bakersfield (1989)
Technology gives us better data so we can serve constituents better.
Tech
and government. Eighty percent of that $80 billion goes to legacy programs. Technology gives us better data so we can serve constituents better. Today, if someone calls their congressman or congresswoman and has a problem with a federal government agency, they will mail you a form to fill out before anybody can do the casework, even if it is a crisis. We are moving to make that electronic. We can make government more efficient, more effective and more accountable.
Q How can the U.S. remain the most innovative country? A There are these little Silicon Valleys in different areas based around our higher education university system. Have you heard of Udacity? Sebastian (Thrun) invented the technology that gives you nanodegrees. When our son was going to Georgetown I saw on my credit card that I was paying for Udacity. I went on a tour and took a number of members there. Sebastian, who was working for Alphabet, taught a class at Stanford and offered it online. You can get a nanodegree in web and software development, robotics or artificial intelligence, and many (graduates) are hired by the top companies in America like Facebook, Alphabet and Google. But our GI Bill denies our veterans from going to Udacity or other educational systems like it, which is why I introduced the Vet Tech bill. One of the interesting things about disruption is that it equals the playing field. If you take that same platform and apply it to the Veteran’s Administration, a veteran could make a doctor’s appointment using an app. They can rate the doctor, the doctor can rate them and they can have all of their medical records. I have been working closely with Jared Kushner at the White House. We have already been able to get the medical records in one central place and move technology into these agencies so we get better data and we are more effective and accountable. SEPTEMBER/OCTOBER 2017
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Tech them out of the country when they graduate. What can be done? A We are working closely with Darrell Issa (R-CA) and others. Today we educate somebody in America, they get an engineering degree and then we tell them to go someplace else and compete against us. Or if they want to stay here, the visas fill up in two days. We need immigration reform. The current system is broken. This is an integral part — we can tie a great deal of our immigration towards education itself. There are a number of us working on expanding H-1Bs. Innovation and the rule of law are two major factors that keep us ahead of other countries. Many times when I was growing up, I heard that there was another country rising up that was going to surpass America. It is innovation that continued to allow us to leap ahead of the others. It is in every walk of life providing someone with a greater service, equalizing their ability to get something at a lower cost, making our technology when it comes to the military stronger so we are freer and the world is safer. The other thing about technology is that other countries can grab it and that can be harmful to us. And the idea that someone craves to be an American — if you think America is a place, then protect it and don’t let anybody in but if you believe America is an idea, you want to foster it and make it grow. I firmly believe this country is an idea that is different than any other country in the world.
Our current structure of our tax code punishes people for bringing tax money back to America. When we fix that, they will bring the money back. Q How do you see tax reform playing out? A Many of the challenges in this country
CTA’s Tiffany Moore and Gary Shapiro met with Congressman McCarthy.
Q Who are some other tech savvy members of Congress? A There are some on both sides of the aisle. Will Hurd (R-TX)
is very innovative in his thought. Susan Brooks (R-IN) does a great deal. Joe Kennedy (D-MA) and I are very tight on different items. I already mentioned Patrick McHenry (R-NC) and Garrett Graves (R-LA). It is not a partisan issue. To me, every company is a technology company. For example, Dominos makes pizza but they have improved their sales because their CEO invested in technology, so now 65 percent of all orders come through an app. Their sales have almost doubled due to technology.
Q
Did Kevin Spacy spend time with you while he was working on “House of Cards”?
A
Yes, that is true, but he did not learn how to murder anyone from me. He was filming in Baltimore and came down to Washington, and I was the Whip at the time. He actually stole some lines from me. I would say, “Vote your conscience, vote your district, just don’t surprise me.” If you watch the first year, that is actually my office. The Whip on the wall. When Eric Cantor and Paul Ryan met in China with the highest elected officials and I wasn’t there, they kept asking, where is the Whip?
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Actor Kevin Spacey, left, and Congressman Kevin McCarthy, conversing during the inaugural Kevin Spacey Foundation gala at the Mandarin Oriental in Washington, D.C., in 2013.
will be solved by growth. If you take the highest growth rate in the last eight years, it is still lower than the lowest year under Clinton. That is why the middle class is hurting. That is where we can unshackle those things that hold us back and why tax reform is so important. I believe that we will get the momentum and get tax reform. We have been meeting with the Senate, we have been meeting with the administration — there is a lot of anticipation for this. Think of the trillions of dollars sitting overseas that are just holding there. Structure dictates behavior and our current structure of our tax code punishes people for bringing tax money back to America. When we fix that with repatriation, they will bring the money back and invest in their business, they will do R&D and they will go through new expensing and buy machinery and other items that make us more productive in the end. You know what else they will probably end up doing? Returning to shareholders in the form of a dividend. You’ll see an economic boost rather quickly but what we will do is invest in America for more jobs.
Q CES is the biggest business event in the world. We would love to have you there. A I would love to be there. I think it’s very important. We work on the challenges today, but if we don’t plan for the future, we won’t be in such a strong position. Every generation in America has improved on the generation before it. We want to make sure that we make that commitment to make it happen. It is an education for so many with the relationships and knowledge that you gain especially with the policy that we are making here. It is important to understand the latest technology and see the future of what is going on. I look forward to being there next year. I T I S I N N O VAT I O N
Stephanie Green/Bloomberg/Getty Images
Q Many students in the STEM area are immigrants but we kick
By Mark Chisholm
France’s Faurecia Takes Majority Stake in China’s Jiangxi Coagent Electronics
I N T E R N AT I O N A L FO C US
FRANCE Tour de France Features Sensors, IoT Technology
Looking ahead to what Faurecia Chief Executive Patrick Koller calls the “cockpit of the future,” the French company has purchased a majority stake in Chinese in-car entertainment technology company Jiangxi Coagent Electronics for 1.45 billion renminbi ($126 million or 193 million euros). The move follows a number of deals with technology companies, including partnerships with French dronemaker Parrot and German auto parts company ZF Group.
Clockwise from Top Left: Razvan/Getty Images; ANNE-CHRISTINE POUJOULAT/Getty Images; Jason Doiy/ Getty Images; Santiago Rodriguez Fonto/Getty Images; Peter Hermes Furian/Getty Images
Air France, Delta Partnership to Add Additional Flights to CES 2018 Air France in July announced plans to increase the number of flights between Paris Charles de Gaulle airport and Las Vegas McCarran airport, to support increased travel to CES 2018. The French carrier, in its partnership with Delta, will add an additional 12 nonstop flights on the route in early January. “France is the third most represented country at [CES],” stated Zoran Jelkic, senior vice president, France, Air FranceKLM. “With our exceptional offer of nonstop flights alongside Delta, we are combining our strengths to meet this high demand.”
Tech
WORLD’S FIRST SOLAR HIGHWAY OPENS IN FRANCE The village of Tourouvre-au-Perche in Normandy is the world’s first to receive a solar highway and is now undergoing a two-year test drive. The highway, just one kilometer long, features 2,800 meters of photovoltaic cells. The Colas construction company built the highway, which cost an estimated $5.2 billion. Ségolène Royal, France’s ecology minister, hopes to have one kilometer of solar roadways for every 1000 kilometers of roadway in the country.
Cycling fans took a deep dive into rider data at this year’s Tour de France held July 1 through July 23, thanks to technology supplied and managed by IT company Dimensional Data. The race’s 198 riders were equipped with multiple sensors including a GPS sensor, RF chip and a rechargeable battery. Thanks to the sensors, everyone from race organizers to fans and broadcasters could access comprehensive data on the riders throughout the race via the Tour de France mobile app.
CES Unveiled Paris CES Unveiled will return to Paris Tuesday, October 24, 2017. Join an expected 80 tech companies, including budding startups and global brands from throughout France as they showcase the latest transformative technologies at the 5th CES Unveiled Paris held at the Palais Brongniart.
Google Prevails in French Tax Ruling After six years of sparring with the French tax authority, Alphabet, Google’s parent company, won a major victory when a judge found that the company was not accountable for 1.11 billion euros, or $1.27 billion, in taxes. While the ruling is expected to be appealed, the judgment is expected to have implications for other technology companies operating in France, including Apple and Amazon. C TA . t e c h / i 3
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Tech
By Murray Slovick
A T EC H TO WATC H
T
he first thing you notice about electric car racing is that it’s relatively quiet. There is a high-pitched whining sound but not nearly the eardrum shattering blasts you get from NASCAR races at Talladega Superspeedway or the Indy cars at the brickyard in Indianapolis. Formula E racing takes place in the world’s largest cities and not on race tracks, but in the heart of the city; Hong Kong, Mexico City, Paris, Montreal, Marrakech and New York were on the calendar this year and Santiago, Rome and Sao Paolo are lining up for future races. The FIA Formula E Qualcomm New York City ePrix, held July 15-16, was the first motor-racing event ever in the metropolis. Formula E cars raced on the streets of the Red Hook neighborhood in Brooklyn in two 43-lap events on a 1.21 mile course. The challenge of Formula E is to find the most efficient way of using the energy provided by the 164-cell, 28-kilowatt-hour lithium-ion battery pack and applying it on the road. If you own a Tesla, Chevy Bolt, Nissan Leaf or any other electronic vehicle (EV) you know what I am talking about. Formula E, semiconductor company Rohm is sponsoring and officially partnering with the Venturi racing team. Rohm developed new power device technology using Silicon Carbide (SiC), a compound of silicon and carbon produced using a crystal growth process of sublimation and exposure to high temperatures of about 2,000°C. This material can withstand much higher electric fields than conventional silicon, and devices with SiC can work with higher voltages and currents, which increases power density and reduces switching losses even under high 14
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Semiconductor company Rohm is sponsoring and officially partnering with the Venturi racing team.
Silicon Carbide has been identified as a material with the potential to replace Si devices in the near term because of its superior material advantages. This year Rohm embedded SiC Schottky diodes, making the unit 2 kilograms lighter than the inverter for season two. Electric efficiency was increased by 1.7 percent, while the volume of heat extraction (read: cooling) components was reduced by 30 percent.
temperatures. The use of SiC allows for an inverter (hang on, I’ll describe this momentarily) with reduced size A Brief Explanation and weight, which in turn allows for A diode is a semiconductor device with improved weight distribution in motor two terminals, allowing the flow of current sports and less power consumption. in one direction only. A Schottky diode In electric vehicles, power inverters and (named after German physicist Walter H. converters are used to “invert” battery pack Schottky), is a semiconductor diode formed direct current (DC) to alternating current by the junction of a semiconductor with (AC) for motors that are used to propel the a metal. Incorporating SiC high-speed vehicle down the road. They also convert device construction into Schottky diodes AC to DC to charge the battery pack. With makes it possible to design parts that can an electric drivetrain, the inverter controls Withstand higher voltages and contributes the electric motor in a manner somewhat to greater compactness of other circuit equivalent to how the Engine Control Unit components due to increased power supply (ECU) of a gas or diesel internal combusefficiency and higher frequency operation. tion engine vehicle determines the vehicle’s The substitution also allows for smaller driving behavior. As a result, heatsinks for cooling. the range of the vehicle is Now that you’ve mastered directly related to the effidiodes, let me explain one ciency of the main inverter. other semiconductor compoThe range There is a growing of the vehicle nent that comes into play demand for more efficient here. MOSFETS are Metal is directly power converters with Oxide Semiconductor Fieldrelated to the Effect Transistors and handle higher power density and efficiency higher temp-erature operasignificant power levels. of the main MOSFETs are useful for power tion in Formula E racing. Conventional silicon (Si) amplifiers. They are also critiinverter. power devices can no longer cal components in high-voltage meet the requirements. switching in AC/DC and DC/ I T I S I N N O VAT I O N
Steven Tee/LAT/Formula E
Electric Car Racing is a Testbed for New Tech
EV/HEV Circuit-Blocks Promising For SiC Devices AUXILIARY UNITS
AC SUPPLY
AC/DC OBC
AC/DC STATION
Tech
BUCK DC/DC
HV BATTERY
BUCK DC/DC
BUCK & BOOST DC/DC
BOOST DC/DC
AIR CONDITIONER INVERTER
BOOST + INVERTER
FUEL CELLS
COMPRESSOR MOTOR
AC OUTLET
DC converters and DC/AC inverters. An onboard microcontroller rapidly switches on and off power to MOSFETs at high frequency. This signal then goes through step-up transformers to generate a higher voltage signal. Ultimately, the electricity flows into and produces power in an EV’s electric traction motor. For the upcoming 2017-2018 racing season, both the diodes and the MOSFETs in
HV CAPACITOR
TRACTION INVERTER
TRACTION MOTOR
the power inverter used by Venturi Racing will be made from Silicon Carbide, further trimming the size and weight of the inverter. Indeed, the inverter will become small enough to be placed lower on the chassis; you want weighty, sizeable elements as low as possible in race cars to allow for improved aerodynamics. A low center of gravity also gives you handling benefits.
Incorporating SiC high-speed device construction into Schottky diodes makes it possible to design parts that can withstand higher voltages and contributes to greater compactness of other circuit components.
It turned out the DS Virgin Racing driver Sam Bird won on both days. Because of energy-storage and drivingrange limitations, Formula E drivers change cars midrace. For the 2018-19 series a single car will be expected to make it through an entire Formula E race. Benefits in terms of range extension for your typical Tesla should follow. Apart from Audi, DS Virgin and Venturi Racing, BMW, Panasonic Jaguar and Renault are committed to Formula E. Mercedes Benz will also field a team for 2019. The knowledge gained will be funneled into road-going EVs and hybridelectric vehicles going forward. You will also see the latest tech displayed at CES 2018 in Las Vegas.
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Tech
By Susan Schreiner C 4 T R E N DS
Robots, Kids and the Future
U
ntil 1977, people used to think about robots as machines that performed pre-programmed tasks with limited memory. With the premiere of the first Star Wars movie, our perception of robots changed forever. The film introduced us to R2-D2 and his companion, C-3PO — two friendly and non-threatening robots called droids. We didn’t think much about how they could respond to natural language. Fast forward 40 years and robots are becoming a part of daily life, as the triumvirate of robotics, artificial intelligence and machine learning takes hold. The Star Wars revolution brought with it fans who built their own robots, aka “Droid Builders.” There’s even an R2-D2 Builders Club, aimed at motivating students to learn more about engineering and robotics. The reality now is that many of the “old” jobs are gone forever but are being replaced by new opportunities. The U.S. is leading the world in robotics investments, according to the Center for Economic and Business Research. Going forward, robots are more likely to replace activities within jobs rather than jobs outright. Humans will likely augment robots. For humans, acquiring skills like coding will be critical for future jobs.
infrared color and touch sensors and nine alternative programming languages. WowWee’s robotic toys teach kids how to develop their own apps to control products. WowWee’s MinionMil based on the Despicable Me franchise is a balancing robot that responds to hand gestures and is controlled from an app called Turbo Dave. Also included is a coding platform for programming fun. With WowWee’s Coji Coding Robot, kids solve
The Future of Work
Preparing Digital Natives
Today, coding products are marketed to children as young as three in the hopes of encouraging a lifelong passion. Robots make skills like critical thinking, problem-solving, languages and math tangible in a fun and challenging way, while imparting skills to prepare youngsters for future jobs. Robots can walk, talk and play games, all controlled by a simple interface with a smartphone or tablet. Lego sparks imaginations. A favorite of coding enthusiasts is Lego’s Mindstorm EV3. It combines Lego bricks with robust programming capabilities including carrying out “missions” to building custom bots. Features include 16
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problems using emojis and emoticons. This robot teaches the basics of programming with the classic :). Early readers play educational games that test memory and introduce coding concepts such as command sequences. Coji also reacts to physical stimulation like tilting. Don’t be fooled by the playful design of Cozmo by Anki. It’s definitely for more advanced learners. Cozmo’s face is a rectangular LCD screen and its only features are its expressive eyes. It responds intelligently to its environment. Cozmo plays a number of games and when it wins, it looks smug. If it loses, it may angrily knock the blocks over. Cozmo’s built-in “emotion engine,” designed by robotics experts from Carnegie Mellon University, make it one of the smartest robots that learns from experience. The owner’s interactions with Cozmo shape its personality, from a grouchy bot to a playful one — and the engagements grow Cozmo’s “brain.” You can even write code for Cozmo using the Anki developer’s site.
Lego’s Mindstorm EV3 combines Lego bricks with robust programming capabilities.
Google’s charitable arm is investing $50 million in an initiative aimed at helping people prepare for the changing nature of work. Its two-year commitment will help fund nonprofits focused on three areas: helping connect job seekers with jobs; improving job quality for low-wage workers; and creating effective training programs including technology skills. Robot toys can help to prepare young people for a future where robots imbued with AI and machine learning will act as assistants at home and at work. Robots are envisioned to enhance lifestyles and free people to focus on more valuable and creative work.
CONTACT: Reach Susan at
[email protected] I T I S I N N O VAT I O N
By Mike Bergman
Tech
PIPE LINE
Connecting Content and Tech ore than 160 engineers are working on improving Smart TV with CTA. The WAVE Project brings together many major players in commercial over-the-top (OTT) video, all seeking to improve interoperability. But if you own a smart TV and have watched a movie using Netflix, Prime, Starz or other online services, you might wonder why all the fuss? Doesn’t OTT video already work pretty well?
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A smart or connected TV contains a pretty amazing suite of media technologies. Simply making a connection to the internet requires quite a bit of code. From there, add in handling of many audio and video codecs; building interfaces to services like Netflix and Amazon Prime; figuring out some way to authenticate the same TV each time you want to watch Game of Thrones and you realize there is quite a bit going on in Smart TVs. If this wasn’t already a challenge for the development teams at your preferred TV brand, consider the challenge of getting all of this to actually work across the board. It’s one thing to build a Smart TV that does all of these things with one service, say, Netflix. It is quite another to also make it work with Amazon Prime. And Hulu, YouTube, Crackle, etc. Each of these services faces many options for how they compress, package, encrypt and ship a multimedia service to consumers. Four major media streaming technologies can ride on top of internet services and adapt to the speed of the connection. There are also multiple video codecs, audio codecs, encryption schemes and closed-caption technologies. It is easy to build up to thousands of possible combinations that could be inbound to that poor smart TV. At this point you have to hope it really is extremely “smart.” Actually, the companies making devices — phones, tablets, laptops, smart TVs, “sticks” (like Chromecast or Fire) — cannot test every combination. Instead, they estimate which combinations are most important or likely to be used, then test for those. Manufacturers discuss the technical specifications with content providers, then engineering teams integrate and test for the most necessary combinations. These are the ones that light up the screen when you turn on the device. C TA . t e c h / i 3
The Underlying Tech of OTT The WAVE Project doesn’t create new “core” standards for things like video compression or delivery. Instead, WAVE is specifying how to use the best — and best supported — modern standards. The core standards for adaptive bit rate streaming are Apple HLS and MPEG-DASH. MPEG Common Encryption, MPEG-CENC, is used to pass critical information about the encryption used, from the source to the device. Streams are packaged in MPEG-CMAF format. On the device side, WAVE uses an HTML5 API framework as a reference (handy for providing test suite materials) but doesn’t require it; HTML5-MSE and HTML5-EME are the W3C Recommendations key to this functionality along with the rest of the HTML suite.
The result is that the devices cannot be entirely consistent in how they support the many possible services. On the content side, service providers know that target devices have these inconsistencies, so they create multiple versions of the same content for multiple “platforms.” Imagine a version of Wonder Woman that is formatted to work on iPhones, another version set for Samsung TVs, and yet another version for those Android phones. It’s a bit of a nightmare. In between the content companies (sources) and devices (destinations), more elements to this infrastructure deal with getting from the source to the destination. Software companies, chipmakers, content delivery networks, transcoding services, the list goes on. And all of these companies are struggling with their role in this fragmented OTT ecosystem. The WAVE Project is working on a common, interoperable approach that can work on all devices to make everyone’s OTT life easier. The WAVE Project will lead to solutions that are tested, interoperable and predictable. A consistent approach will lower development costs, raise reliability, and enable new products and services to come to market. WAVE is about consistently using the best standards and providing usable test suites to verify those standards. The WAVE Project is global and working with the regional and international standards bodies that are critical to OTT, including broadcasting groups like ATSC and HbbTV. Partici-pants in WAVE are seeing the future, in terms of the requirements, procedures and test suites under development.
GO ONLINE: Get involved at
[email protected]. SEPTEMBER/OCTOBER 2017
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WISDOM
OF
IT IS INNOVATION
SMART TVS T his year marks a crossover for the “connected TV” business. It’s the first time that “smart TV” sets with builtin internet access capabilities will outsell set-top boxes that allow viewers to watch web-delivered programs on their existing flat-panel considerations during the first part of this screens. It also means that smart TV sets year, with 18 percent putting connectivity are a step closer to becoming the control as the number one feature. hub for smart home services including Meanwhile, Steve Koenig, CTA’s senior security, energy, appliance management director of market research, sees the and even nursery monitoring. boom in smart TV adoption in the context Moreover, as TV displays become more of the devices’ role as smart home hubs. functional — including features such as “We are now at the inflection point in the 4K Ultra High Definition and High growth of smart homes and the home ecoDynamic Range — the value of operating systems, which has flourished in the past systems and internet access are even few years,” Koenig says. He believes that more integral in the next wave of televi- the TV is a natural “command center” sion sets, according to CTA. since smart TVs enable viewers to con“Smart TV adoption has been increas- solidate activities on a single screen. He ing at a 13 percent CAGR [compound points to the 267 percent growth of interannual growth rate] during the past six net-enabled TV devices during the past years,” explains Glenn Hower, senior four years as a prelude to the next wave of analyst at research firm Parks Associates. adoption, noting homes with smart TV “Connectivity has become an important sets average about 1.7 sets now. factor at purchase.” He says that 54 per“Consumers abhor complexity, but cent of U.S. flat-panel TV customers from they embrace options,” Koenig adds. broadband households ranked internet “More consumers are anchoring to smart access as one of the top three purchase TV platforms because they have all the major video streaming services” plus they provide access to personal internet-related features. TV manufacturers have identified similar values and have been adapting their BY smart TV capabilities to meet consumer preferences. “People are interested in
GARY ARLEN
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STREAM ING IS AT TH E F O REF RO NT OF HIGH QUALITY 4K HDR CONTENT.
Annual Sales (and Projections) of LCD TVs with Smart TV Features
$26,492
$29,015
$28,082 YEAROVER-YEAR (YOY) GROWTH
YOY GROWTH
2016
2017
YOY GROWTH
3
6%
2018
SOURCE: CTA Market Research 20
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YOY GROWTH
2
2019
$30,422
$30,121
$29,552
YOY GROWTH
2
2020
1
2021
streaming media boxes accounting for 31 percent of the growth. In its new TV-Connected Device Forecast, NPD also expects that the original equipment manufacturers (OEMs) such as Roku, Amazon and Google, “will continue to partner with TV OEMs to integrate their operating systems directly into displays.”
ATTRACTING USERS, ADDING FEATURES
The growing array of online video sources has played a major role in spurring viewers to activate the core feature of smart TVs. In the early years barely half of owners actually tuned into streaming video via the apps on the devices. “Today, the picture is vastly different, with 82 percent of smart TV owners connecting the device to the internet,” says Hower of Parks Associates. “The increased adoption and rising connectivity rates have transformed the TV’s role in the home,” he continues. “Smart TVs are now a source of entertainment independent of the set-top box and other connected streaming media devices. In 2017, smart TVs overtook both streaming media players and gaming consoles as the most commonly used devices to access streaming video on the TV set.” Hower acknowledges that consumers spend “double the amount [of time] monthly on streaming content on gaming consoles than they do on Smart TVs.” But he cited Parks’ research showing that “59 percent of those who prefer to use a smart TV versus their other connected entertainment devices do so because the device is “easier to use” than other devices.” “Smart TV makers should put a greater emphasis on OTT subscriptions,” Hower adds. “They also could benefit from communicating compelling reasons why a smart TV should be the streaming device of choice with a premium user experience, given the relatively longer replacement cycle for TVs.” As smart TVs establish their stalwart role in the digital ecosystem, their capabilities are becoming integrated with other evolving TV attributes. For example, Parks Associates calculates that 94 percent of 4K/UHD sets are equipped with smart TV features and the owners know it. The latest CTA biannual U.S. Consumer Technology Sales and Forecasts breaks out popular features of digital TV IT IS INNOVATION
Brain on Previous spread by Adam Voorhes/Gallery Stock
having the most entertainment options available on their TV, on demand,” says Evan Young, senior director, Smart TV Platform at Samsung Electronics America. “Services and channels like music (which originated on phones), or cable networks (which have on-demand apps on smart TVs) that make their offerings available on smart TV platforms do well because consumers want to access them on their TV sets.” At Vizio, Lily Knowles, senior vice president of marketing, found that early adopters of smart TVs liked the ability to integrate a variety of features. She rattles off the “key features important for a seamless experience” that attracted early adopters of smart TV technology. “Having Wi-Fi built into the TV instead of relying on Ethernet, having a simple onscreen setup guide and a user interface integrated with the TV watching experience with minimal or no disruption to linear programming” are the top features, Knowles says. She also cites the value of “a remote control with a built-in keyboard to reduce the burden of typing in search keywords for content and logging into various subscription services.” Matt Durgin, director of North American Smart TV Content Partnerships at LG Electronics, also points to lessons learned about what smart TV viewers want, citing the operating system at the heart of his company’s devices. “This year LG webOS launched LG Channel Plus, which provides viewers with a simple option to channel-flip through streaming content,” Durgin explains. “More than 100 channels of streaming content from sources such as Fox Sports, PBS Digital, People, Fail Army, Time and CBS News are available without installing an application.” The collective perceptions of set makers reflects a number of independent analyses about market growth. NPD Connected Intelligence, a market research firm, predicts that by 2020, more than 260 million media devices will be connected to the internet, with smart TVs driving 48 percent of the increase and
LOOKING AHEAD
Indeed, the popularity of UHD and HDR figure into the thinking of manufacturers and analysts. LG’s Durgin cites plans to integrate smart TV technology with Rolling out smart TVs has inspired TV manufacturers to update “4K, live streaming with SlingTV and their connected TV features, focusing on what consumers want to see. HDR with partners including Netflix, Here are a few examples: Amazon, VUDU and more to follow.” Samsung’s Young agrees that, “Consumers have come to expect the highest video quality when they stream movies and TV shows. As the market develops, streaming is at the forefront of high quality 4K HDR content,” Young adds. “Our streaming partners are movEvan Young Lily Knowles Matt Durgin ing aggressively to put their original Senior Director, Senior Vice Director, programming into 4K HDR, and we Smart TV Platform, President, North American work closely with them to ensure our cusSamsung Marketing, Vizio Smart TV Content tomers receive the highest quality experiElectronics Partnerships, LG ence both in terms of picture quality America through our QLED sets and Samsung’s “Our broad installed SmartTV platform.” base allowed us to “Multiple different Young also emphasizes the growing “Consumers generally gather feedback business models prefer an integrated, appeal of multimedia, cross-platform quickly from users to have been working. consistent user experifeatures that involve smart TVs. For further refine our user Subscription, video ence and also prefer not example, Samsung’s SmartView allows experience and UI on-demand, adverto have a plethora of design, and identify users to control their TV sets, search and tising-based or even wires to and from STBs the best content hybrid consumer discover content, as well as cast personal hanging down from services to add to models have all been photos, music, and video to their TVs. the TV. Our SmartTV the platform. As more successful in reaching “Our TVs can also connect to our line of platform integrates the viewers moved to duallarge consumer bases. Family Hub refrigerators to mirror content desired apps on board screen usage while Consumers have on the fridge’s 21-inch screen,” Young says. with a single signature watching TV, Vizio a tremendous need At Vizio, Knowles focused on the role user interface that is felt it was important for customizing and of SmartCast, which she says “advances consistent not only on to advance the smart controlling their the TV, but across platthe smart TV experience and integrates TV experience and content choices.” forms like our mobile the second screen into the overall user integrate the second devices, Blu-ray players experience. SmartCast lets consumers screen into the overall and other products.” user experience.” easily create a whole home entertainment experience,” she adds. “SmartCast is an ecosystem that includes displays, soundbars and speakers that users can pair receivers. “Smart TV” shows consistent together and control with the SmartCast app from any room in the home.” popularity, lagging only slightly behind Parks Associates points out that online content providers such as UHD. (HDR is expected to be the major Netflix, Hulu and Amazon offer UHD and some HDR videos, “especially technology attribute in upcoming sales, if it’s a new product.” But he adds that traditional broadcast and cable according to the forecast). TV channels don’t promote “high quality video content as often as OTT The same CTA study acknowledges services do.” To some, that opens the door for more enhanced video from that “the ability to stream video is streaming sources as connected TV displays become the de facto receiver becoming an ubiquitous feature across” in American households. devices — again citing the compatible Indeed, a recent analysis of the smart TV market carried the headline, but competing role of set-top boxes vis“Connected TV is just a normal part of the U.S. home.” New Nielsen data à-vis smart TV receivers. CTA’s Koenig shows that in homes with smart TVs, viewing of OTT content is even higher points out that “almost all TVs larger than in homes using a connected set-top box. than 40-inches are smart now,” and he Brad Russell, another Parks Associates research analyst, summarized the expects the feature to remain popular as evolving role of TV sets in the home. “They are becoming an interface for smart more top-notch streaming content home devices and a viewing platform for video streams,” Russell says, characbecomes accessible. terizing the process as “a premium user experience in the smart home.”
Early Insights about Consumer Interests
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WHAT HAPPENS WHEN 5G COMBINES WITH VEHICLES?
In the promised land of self-driving cars, vehicles communicating with each other and everything around them will avoid accidents and make us all safer — but exactly how they’ll connect has yet to be worked out. While a long-established variant of Wi-Fi named Dedicated Short-Range Communication, or DSRC, is just gaining traction for such vehicle-to-vehicle (VSV) use cases, a potential replacement is already on the horizon: next-generation 5G cellular technology that experts say is coming soon and offers more. —By Robert E. Calem 22
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10x Faster Performance
Proposed 5G cellular vehicle-to-everything (V2X) technology is expected to supply one-tenth the latency of LTE.
LOWER LATENCY + HIGHER BANDWIDTH = ACTIVE SAFETY
“These ideas of connecting cars to an infrastructure are not new. We’ve been talking about this for decades,” says Anupam Malhotra, director of connected vehicles and data at Audi of America in Herndon, VA. “When telematics first started in the 1990s, even then there was this idea that cars could talk to traffic lights.” It was 20 years ago that ITS America first proposed that cellular spectrum be set aside for “active safety applications” including V2V and vehicle-to-infrastructure (V2I), Malhotra recalls. But at the time, cellular networks were largely analog and Wi-Fi needed faster data transfer speeds. Moreover, while cellular required all data to pass through a network operator’s base station, Wi-Fi forged a direct device-to-device connection. So, he says, the Institute of Electrical and Electronics Engineers developed DSRC, a version of Wi-Fi dubbed 802.11p, which allowed a direct and speedy car-to-car communications link. Even with the introductions of 2G and 3G networks, cellular latency (the time span between when data is sent and when it’s received) remained too large for vehicle safety applications, Malhotra adds. Thus, until as recently as 2014, he says the division for automakers remained clear: DSRC underpinned active safety and cellular enabled connected infotainment. Still, making DSRC commercially viable is challenging, and many of the ways to do that now rely on integrating some cellular connectivity, Malhotra says, citing features integrating vehicle data and data marketplaces. With the debut of 4G LTE in 2012, cellular bandwidth expanded sevenfold, and latency fell by two-thirds, making possible new safetyrelated V2I services. These include Audi’s Traffic Light Information service, which was launched at CES in 2016. Via an LTE connection, it lets specially-equipped Audi vehicles receive the phase and timing of signal changes (from red to green and vice-versa) from smart traffic lights through a cloud server, and provides warnings to the drivers. Right now, Audi is collaborating with 20 cities nationwide to harvest the traffic light data, and by 2019 half of all Audi customers in the U.S. will be able to use the service. “The same could probably not be said about DSRC in the near term,” he says. “This is an example of the kinds of things that used to be lumped into the DSRC bucket, that have slowly bled into the cellular bucket in terms of what is possible.” SEPTEMBER/OCTOBER 2017
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REPLACING THE RIDICULOUS? “There’s no real reason to still need DSRC” after 5G is available, Bonte declares. To be sure, DSRC is a mature technology and 5G is not. But, the former serves only one purpose — safety-critical V2V or V2I communications — and has an uncertain future, he says. A federal government mandate proposed by the U.S. 24
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Department of Transportation last year calls for DSRC to be installed in all cars starting in 2019. It may be revised or repealed, however, following complaints from automakers and other commenters. Currently in the U.S., DSRC is integrated into fewer than 200 traffic signals to communicate their phase and timing with cars, says Roger Lanctot, director of automotive connected mobility in the global automotive practice at Strategy Analytics, in a commentary titled DSRC: The Road to Ridiculous, published in June. Further, Lanctot notes, the only commercially available vehicle able to communicate with these signals — the sole U.S.-sold car with DSRC built in — is the 2017 Cadillac CTS. By contrast, thousands of traffic signals now connect via cellular technology (LTE) to Audi’s feature and to a similar one from BMW, which includes the ConnectedSignals EnLighten app in the BMW Apps infotainment platform. So, DSRC is unnecessary to pursue, Lanctot concludes. “The creation of an expensive, dedicated network unsupported by any consumer device technology is a road to ridiculous and a waste of taxpayer dollars.” Cellular V2X (C-V2X) technologies such as LTE and 5G are a wiser path to follow in developing automotive active safety systems, he advises. “We’re trying to pursue the government mandate,” says Gaurav Bansal, senior researcher in the network division at the Toyota InfoTechnology Center, U.S.A. Inc. in Mountain View, CA. And if the mandate takes effect, Toyota believes as much as three percent of cars on the road here in 2020 will be equipped with DSRC. By 2025, Bansal says, Toyota is expecting 42 percent of U.S. vehicles will be equipped with some sort of “cooperative automated driving” technology tied to either DSRC or 5G. And by 2030, he says, the automaker forecasts a jump to 68 percent. “In 2025, when you go on the road, there’s a good probability that you’ll find another connected vehicle” using either DSRC or 5G, Bansal says. And the resulting “cooperative automotive driving” will facilitate maneuvers such as automated merging of cars as well as active safety I T I S I N N O VAT I O N
Courtesy of Audi
Now, proposed 5G cellular vehicleto-everything (V2X) technology is expected to supply one-tenth the latency of LTE, or 10 times faster performance, and could turn the tide against DSRC. “When you look at latencies at that level, you end up taking those final few use cases that are in the DSRC bucket and saying you could also do it with 5G,” Malhotra states. Technically, 5G matches all of DSRC’s capabilities and goes further, says Dominque Bonte, managing director and vice president at ABI Research in Brussels, Belgium. Both work with two vehicles traveling at speeds up to 250 kilometers per hour in opposite directions (for a relative velocity of 500 km/hr), and latency of about 1 millisecond. Plus, 5G offers greater range — up to about a mile, versus one-half mile with DSRC — although this is not relevant as regards the short-range communications needs of V2V and V2I, Bonte declares. Also, because 5G operates in the 60GHz radio spectrum, its 10 gigabits per second (or higher) bandwidth far exceeds that of DSRC, which uses 5.9MHz radio spectrum, he says. So, “when 5G comes we can open it up to more use cases,” such as sending one vehicle’s sensor or camera data to another for better perception of the environment, streaming 4K or 8K videos to rear seat entertainment systems, or downloading big data files — including HD Map updates for selfdriving cars — from the cloud in real-time, Bonte says. The future of cellular in vehicles is assured, too. Every new vehicle in the next five years will come with a cellular modem embedded, and 80 percent of all cars on the road will have cellular onboard in 10 years, Bonte says.
sensor supplier to automakers and municipalities (for “smart city” implementations). “If you think about it, both DSRC and C-V2X are extensions to specific radio platforms — either Wi-Fi or cellular. So as the Wi-Fi standards are improving to have more bandwidth, the extensions of DSRC are doing the same. These extensions can be carried over as Wi-Fi radios are getting better and better.” So, both DSRC and C-V2X can continue to be built in to vehicles, Puvvala says. “The two technologies will coexist for at least a period of time until the transition happens,” says Manuela Papadopol, director of business development at Elektrobit, a Seattle-based subsidiary of Continental AG that supplies embedded and connected software solutions and services to automakers for autonomous driving, advanced driver assistance systems (ADAS), “THE CREATION navigation, telematics and human machine interface feaOF AN EXPENSIVE, tures. But, “for autonomous driving, we at Elektrobit defiDEDICATED nitely believe that the 5G network combined with vehicle NETWORK UNSUPto everything — infrastructure, vehicle, pedestrian — will PORTED BY ANY bring a safer, more efficient travel and better driving experiCONSUMER DEVICE ence, mainly because of the low latency and enhanced reliTECHNOLOGY ability that 5G brings.” IS A ROAD TO Testing across networks, devices and vehicles must be RIDICULOUS AND completed before any of this is possible, though, Papadopol A WASTE OF TAXadds. Right now, “the only viable existing technology for PAYER DOLLARS.” direct V2V is DSRC,” and it does today what 5G might be — Roger Lanctot, able to do in five to seven years, contends Hagai Zyss, CEO Strategy Analytics of Autotalks, a Tier 2 provider of DSRC V2X communications chipsets, based in Kfar Netter, Israel, whose customers include Denso and Bosch. The former incorporates Autotalks’ chipsets in a V2X platform expected to be available in 2019. The latter is working with Autotalks to develop a motorcycle-to-car (biketo-vehicle or B2V) communications platform. Zyss also contrasts DSRC’s 20-year history of technology stability with cellular’s recurring obsolescence as carriers move from one network technology to another. In the near term, automakers will integrate both DSRC and cellular in vehicles, the former for V2V communications, says Siddhanth Kumaramanickavel, lead research analyst for connectivity and telematics at Frost & Sullivan in India. But the firm also anticipates 5G proliferation along with self-driving cars beginning in 2023. “The solution is not one or the other, but it’s the two,” playing complementary roles like Wi-Fi and 4G in cell phones today, says Javier Gonzalvez, IEEE Standards Association representative on the IEEE 5G Steering Committee. “The issue will be, for safety, how they will be utilized. How they coexist will have to be addressed.” Yet proponents of 5G insist it will replace DSRC in the long run, if only for economic reasons. “It’s not only a question of cost, but also a technology and product roadmap that can keep up with next generation automotive use cases,” explains Nakul Duggal, vice president of product management in the automotive business of Qualcomm Technologies Inc., based in San Diego, CA — a supplier of both DSRC and cellular technologies to automakers. Given a choice between installing a new DSRC radio in a vehicle at added expense or extending the utility of a cellular modem that is already built-in, the answer for automakers is clearly in favor of cellular V2X, Duggal says. “We are talking to major automakers globally who are now GO ONLINE: reconsidering their previous positions on DSRC and thinking about Read more doing trials on cellular based V2X. This is going to be a very interesting on 5G cars at 12 to 24 months for the auto industry.” CTA.tech/i3
Thousands of traffic signals now connect via cellular technology (LTE) to Audi’s Traffic Light Information service, which was launched at CES 2016.
Look Ahead Cellular V2X (C-V2X) technologies such as LTE and 5G are a wiser path to follow in developing automotive active safety systems.
features that don’t require sensors to maintain a “line of sight.” By 2030, Bansal predicts, it’s likely that 5G will be prevalent and that cooperative automotive driving might be a key aspect of self-driving cars. Indeed, DSRC is already established in Japan, where it has been deployed since 2012, and by Toyota since late 2015. “But we see a great promise” for 5G, Bansal adds, especially regarding V2V sharing of sensor data.
COEXISTENCE IS LIKELY, BUT MAY BE TEMPORARY In fact, Bansal says, Toyota expects that future self-driving cars will emerge equipped with both DSRC and 5G wireless technologies. “There is a preconception that DSRC is outdated technology, which is not true,” says Ravi Puvvala, CEO of Savari Inc., a Santa Clara, CA-based V2X C TA . t e c h / i 3
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THE
LEMONADE LOCK-IN
How AI is disrupting the insurance market
By Jim Harris
emonade is disrupting traditional insurers in an industry that takes weeks, or even months, to settle most property and casualty insurance claims. A New York-based insurer, Lemonade set the world record in December 2016 for settling a claim in just three seconds by using its claims bot powered by artificial intelligence (AI) running 18 fraud algorithms. The customer, Brandon Pham, clicked the “submit” button for a $979 claim for a stolen Canada Goose Parka. Just seconds later, the claims bot texted him that his claim was approved and payment instructions had been sent to the bank.
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I T I S I N N O VAT I O N
Lemonade is revolutionizing the sleepy insurance industry. As of June 2017, 27 percent of Lemonade’s claims have been settled instantly by its AI claims bot. The company’s longterm goal is to settle 90 percent of claims instantly. The claims bot is called Jim and was morphed from the real Jim Hagerman, who is Lemonade’s Chief Claims Officer (CCO), and was formerly CCO of a large insurance firm. The Lemonade team spent months moving the decision process from traditional claims procedures and automating it using algorithms based, in large part, on Jim’s knowledge. The AI works to understand the nature of a claim, its severity and its urgency. It also assesses the likelihood of a fraudulent claim. If a claim is too complex, AI Jim refers it to the real Jim. However, Lemonade AI is still learning. In an industry where expense ratios average 28 percent, this offers huge savings. Lemonade’s founders didn’t come from the insurance world. They are technologists who have built the company on artificial intelligence, algorithms and technology. Customers can only apply for a policy using a smartphone and receive approval in as little as 90 seconds. By eliminating bureaucracy and digitizing the experience, Lemonade cut the cost of customer acquisition by 90 percent compared to traditional insurers. In part, this is what allows it to issue a tenant policy for 68 percent cheaper than the four largest traditional insurers.
HOW CAN THIS BE?
One answer is that while it costs traditional insurers $792 to acquire a new customer, insurance firms with independent agents spend up to $900 to write an initial home insurance policy. Lemonade issues tenant policies for as little as $5 a month — or $60 a year. No traditional insurers — with paper-based, time-intensive bureaucratic processes — have bothered with small tenants policies because their cost structure prohibits it. Price is the key determinant for most customers in deciding which insurance company to buy from, notes Bain & Company’s Customer Loyalty Study. This gives Lemonade a huge advantage. Initially, Lemonade was only available in New York City. In the first two days of business, the company wrote $14,300 in premiums. Annualized, this was $2.5 million just for NYC. Grossing it up for the rest of the country means Lemonade opened a $100 million market that had not previously existed.
C TA . t e c h / i 3
In those first 48 hours, the average renter’s policy gross premium sold was $86 a year, condos $528 and homeowners $691. Today, Lemonade’s average homeowner’s policy is roughly double the average at launch. This should frighten traditional home insurers. By the end of 2016, tenants’ packages represented 90 percent of Lemonade’s policies issued — but only 53 percent of the company’s premium revenue. By contrast, homeowners make up only 10 percent of policies but account for 47 percent of premiums. In other words, homeowner policies provide Lemonade with nine times more premium dollars than renter’s policies, which is another reason traditional insurance firms have ignored tenants insurance. Given that 110 million Americans are renters (30 percent of the U.S. population), Lemonade has a long runway for growth. Seventy percent of these renters are under 35 years old — a target group that has historically not purchased insurance. In fact, a staggering 87 percent of Lemonade customers have never bought insurance before. So in one sense Lemonade is not disrupting traditional insurance companies, but has created a new market that did not exist because it was prohibitively expensive for incumbent insurers to serve. However, in another sense, Lemonade is highly disruptive, although traditional insurance companies may not have realized it yet. Lemonade is acquiring the best possible customers – ones with great credit, great jobs and a desire for insurance – five years before any traditional insurer could consider them as clients, says Lemonade Co-Founder Daniel Schreiber.
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Mobile Sales On the Rise Consumer spending via mobile will increase from $204b in 2014 to $626b in 2018. Almost half of all e-commerce sales will be from m-commerce.
$204B
$626B
2014
2018
SOURCE: Ernst & Young
Traditional insurers will realize Lemonade is highly disruptive in five years when they discover waves of first-time home buyers, who already bought Lemonade’s tenant insurance policy and likely will buy homeowners policies from them as well. It’s the Lemonade lock-in. As of June 1, 2017 Lemonade is active in three states — California, Illinois and New York — representing 22 percent of the U.S. population. But the company is now licensed in an additional seven states — Arizona, Michigan, New Jersey, North Carolina, Rhode Island, Texas and Virginia — representing another 26 percent of the U.S. population. Once Lemonade is actively selling in these seven new states it will be serving 48 percent of the U.S. population — very close to achieving the corporate goal of offering insurance to the majority of Americans by the end of 2017. As of June 1 the company had sold 14,315 policies and the average policy size is growing. This means that Lemonade is moving up in the market, selling higher premium homeowner policies. In the most recent period for which the company disclosed sales, it sold 4,300 policies in 20 days in New York, Illinois and California. Annualized this is a run rate of 78,500 policies a year. When Lemonade
LEMONADE
28
SEPTEMBER/OCTOBER 2017
COMPETITOR
AVERAGE
$22.17
$21.42
$17.80
$16.25
In the insurance race, Lemonade's prices prove 68 percent cheaper on average. The largest homeowners’ insurance companies offer different entry-level coverage, with rates to match. This chart compares their total monthly fees with Lemonade’s, for equivalent coverage of the same renter.
begins operations in the next seven states that it’s become licensed to operate in, it will be selling 160,000 new policies a year if the run rate holds constant. Lemonade wrote $179,855 of insurance in the first 100 days to December 30, 2016. Extrapolating this to Lemonade’s sale of 14,315 policies by May 31, 2017, means that the company sold more than $2.1 million in premiums. (The company won’t release any figures beyond what it has already published on its blog and transparency chronicles. But as the average policy has been growing due to the average homeowner’s policy size growing significantly, this figure is conservative.) Lemonade is on an exponential growth trajectory, more than doubling the number
71% $6.50
Allstate
$11.42
77 51
$5.58 State Farm
$5.00 Liberty Mutual
68
66 $5.58
CHEAPER
$5.70
Farmers
SOURCE: Lemonade I T I S I N N O VAT I O N
Previouse spread and photograph courtesy of Lemonade
The Cost Advantage
Daniel Schreiber, Co-Founder and CEO (left), and Shai Wininger, Lemonade Co-Founder and President (right).
Who's Backing Lemonade's Growth Trajectory? Lemonade is backed by some heavy-hitting insurance and tech names among its financial backers, insurance backstop providers and key team members. Venture Capital Lemonade has raised $60 million in three finance rounds: • $13 million seed investment by Aleph and Sequoia in late 2015 • $13 million from XL Innovate and existing investors, and • $34 million from General Catalyst, GV (formerly Google Ventures) Thrive, Tusk Ventures and existing investors. German based Allianz has also made an investment in Lemonade.
DEMOGRAPHIC DRIVERS
In its first quarter of business, 75 percent of Lemonade’s customers were 25-34 year olds. This is not a demographic that traditional insurance companies have targeted, for reasons previously mentioned. In fact, the average age for first time homebuyers in the U.S. is 33. Young tenants have limited income, and are therefore price sensitive in their
Key Team Members Team members include former president of product at AIG, a former chief underwriting officer, a former senior vice president of claims and AIG’s head of financial planning and analysis of property and casualty.
14.3K
6K Total Investment $
of policies sold every 10 weeks. Revenue is growing even faster as the company is attracting more homeowners, translating into significantly higher premiums. However, many people don’t understand exponential growth. If Lemonade were to continue doubling its policies in force every 10 weeks, after 16 more doublings (160 weeks) it would be larger than the entire current U.S. homeowner’s insurance industry. This exponential growth can only be achieved by moving insurance from being reliant on agents and paperwork into one that is built on bots and tech notes, says Peter Diamandis, the founder of the XPrize and one of Lemonade’s founding board members. Based on its annualized run rate of policies and average premium, at the end of its first year of operations, Lemonade will be selling $23 million worth of policies a year. But at the moment, Lemonade is a tiny drop in the bucket compared to the $42.6 billion that traditional U.S. property and casualty insurers collected in 2016.
Insurance Warren Buffet’s Berkshire Hathaway is providing backstops for Lemonade’s coverage.
2.23K 716
263 Sept 2016
Oct 2016
Nov 2016
Dec 2016
Jan 2017
Feb 2017
Mar 2017
Apr 2017
May 2017
SOURCE: Lemonade
initial insurance purchase. They are also driven by their values. Lemonade is different than other insurance companies. It takes a 20 percent fee of every premium dollar. The remainder pays for claims and any funds left over at the end of the year are donated to charities and not-for-profits, as directed by policyholders. The company is the first ever B Corp certified insurance firm in the world. Millennials care about their communities and the state of the world. They want to deal with organizations that share their values. So Lemonade’s focus on giving back to the community not only attracts value conscious millennials, but also builds trust — something traditional insurance firms are lacking. Financial services are one of the least trusted industries by consumers, according to the 2017 Edelman Trust Barometer. And among financial services, only 53 percent of the public trust the insurance industry, making it the second least trusted. The experience consumers have with insurance companies becomes antagonistic once they file a claim. Edelman’s top three pieces of advice to the insurance sector are: 1) solve customer pain points; 2) invest in smarter technology to serve digital natives; and 3) focus on social purpose. Edelman’s advice seems to be exactly what Lemonade is doing. And so better prepare for the revolution. Jim Harris is the author of Blindsided, which focuses on disruptive innovation. You can follow him on Twitter @JimHarris or email him at
[email protected] SEPTEMBER/OCTOBER 2017
29
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Las Vegas has the capacity for big ideas that lead to even bigger deals. We know how to entertain and to educate. We understand what it takes for people to do important business. That’s why Las Vegas is the chosen destination, year after year, for the biggest introductions in next-generation technology.
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Policy
THE PACE OF TECHNOLOGY
Encouraging Innovation to Prosper
33
Tech Hub
Courtesy of Formlabs
Boston: The Home of 3D Printing 32 Faces of Innovation 33 Tech Hub 34 Green Policy 37 Policy Update 38 Innovation Retail C TA . t e c h / i 3
SEPTEMBER/OCTOBER 2017
31
Policy
By Bronwyn Flores
FAC E S O F I N N OVAT I O N
David Krauss, Co-Founder and CEO, NoiseAware
F
police are called to a short-term rental property, it is a burden on municipal services. Responding to noise complaints is not critical. In today’s short-term rental industry, you have a unique dynamic where activity that happens on the internet is difficult to regulate, monitor, and then enforce. NoiseAware The real people behind this industry allows hosts to — such as myself, an entrepreneur remotely and who is also a manager of eight shortproactively respond to noise term rental properties in Dallas — are nuisances. knocking on city hall doors all over the country offering our help. A city working on how to create reasonable, enforceable and complianceoriented legislation should seek the help of these newfound industry experts. I think we can bring best practices and speed up the learning curve. Personally I’m seeing cities actually reach out to me, so that’s a great turn of events. In cities all over the country — Nashville, Charleston, San Diego and Coachella Valley — I’ve been meeting with or short-term rental hosts, homeowners and property city council members. The most interesting managers who want to ensure their neighbors are not de part of my job is that we can actually make facto noise monitors — look no further than NoiseAware. a difference in city hall as a young company.
The hardware-enabled software as a service startup aims to solve the noise issue in short-term rentals by allowing hosts to remotely and proactively respond to noise nuisances. “We call ourselves the smoke detector for noise,” said Co-Founder and CEO David Krauss, who recently spoke with i3. Q Why did you start NoiseAware? A NoiseAware started as a personal,
horrific Airbnb nightmare. One weekend I had guests who threw a “mini-Coachella” party. I was the unwitting host and ashamed neighbor when I found out two days after the guests departed they earned 14 noise complaints, a police report and cost me $30,000 in fines. I was woefully unaware, even though I was two miles away. My inability to be aware of the noise issue led to that “necessity is the mother of invention” moment. By a stroke of luck, I met my co-founder: a brilliant electrical engineer named Andrew Schultz and the brains of the operation. He built systems for the U.S. military, so building a smoke detector for noise was child’s play. 32
SEPTEMBER/OCTOBER 2017
Q How are you working with major players such as Homeaway?
A We realize when noise nuisance issues get
into the legislative arena they are a threat to the viability of this entire short-term rental industry. NoiseAware helps Homeaway solve one of their biggest problems and they gave us a hand up — not a handout — by saying, “Hey, we want to help you guys succeed because it helps us.” We’re also backed by former HomeAway COO Tom Hale.
Q What is a public policy
challenge that you face? As an early-stage startup, you have to be solving a real problem otherwise there’s no point. We came at our business from a personal and very real problem. When
A
Q What’s next for NoiseAware? A We are hell bent on solving the noise
nuisance issue in short-term and vacation rentals. As a team of 10 people, each of us at NoiseAware care deeply about the sustainability and future of short-term rentals and also our customers who are responsible, good actors providing amazing experiences and accommodations. There are other folks who are giving short-term and vacation rentals a black eye. We are looking forward to deepening our partnerships with the platforms and cities going forward to bring technology to bear that has proven that it can solve the noise nuisance issue. We’ve started an advocacy arm called Rent Responsibly to educate lawmakers and celebrate the wonderful things in the short-term rental community. We want to carry the flag of the responsible, neighborly renter, host and owner. It’s important for the sustainability of our industry that everyone gets on board because if you’re not part of the solution, you’re likely part of the problem. I T I S I N N O VAT I O N
By Jeremy Snow
Policy
T EC H H U B
Boston: The Home of 3D Printing
F
rom health care to manufacturing, 3D printing offers certain businesses and engineers a flexible, efficient and personalized way to create items and parts. And no city believes in 3D printing’s potential more than Boston, where printing companies have continuously sprouted up to satisfy the country’s appetite for the new technology.
“If you need to find talent, there is no better place than Boston,” says Eugene Giller, founder and president of Rize. “I doubt I could find a better team anywhere else.”
A History of Printing
3D printing has deep roots in Boston. Z Corporation, one of the leading 3D printing companies from the 90s, sold one of the earliest commercial 3D printers in Boston after developing it at the Massachusetts Institute of Technology (MIT). Later on, many of its workers dispersed, joined new companies or started their own, including Giller, who founded his own printing company after working at Z Corporation. Since then, Boston companies have been pushing the technology’s limit to help everyone from startups to manufacturing factories. Many print using materials beyond plastic, like Desktop Metal, who recently received $115 million in investments, or Voxel8, who can 3D print electronic parts. Additionally, NVBots can mass manufacture more than 50,000 parts for their customers, while the printer itself uses cloud connectivity. “3D printing really expanded through the city on its own, morphing and merging with other
markets,” Giller says. “It’s bringing individualization and customization to the process.” Other locations, like Nervous Systems, are taking a less businessto-business approach. Founded by two MIT grads as well, the company 3D prints everything from custom jewelry and art pieces to dresses and shoes. Boston doctors are even making 3D printed spines and brains based on MRI scans to give surgeons new ways to practice, according to The Boston Globe. And at MIT, a machine complete with solar panels, wheels and an excavator is 3D printing a huge hut-like building out of foam and concrete that researchers say they want to put on Mars.
MIT and Beyond
What began as a niche product in high tech labs and factories is now more com-
monplace in Boston, stretching from public libraries all the way to MIT classrooms, where the school offers multiple 3D printing classes. AJ Perez, chairman and co-founder of NVRobots, co-developed the first graduate level 3D printing class for the mechanical engineering department at MIT. “If you look around, you could find one, maybe two, of the biggest names in 3D printing that are not in Boston,” Perez says. “The rest are at MIT.” Unlike some other 3D printing classes, MIT’s go beyond printing basics, teaching students the physics behind the technology in order to overcome its shortcomings and expand the form. And with industry leaders acting as professors, the university primes students to join one of the city’s many companies or start their own. Perez is also working to expose kids to 3D printing before college, and developed a class to teach younger children design and engineering through printing. The next step is to go even farther, Perez says. With a larger technology budget for schools and communities, Boston could guarantee 3D printing becomes a city mainstay.
Formlabs offers complete desktop systems.
A FEW NOTABLE BOSTON 3D PRINTING COMPANIES Desktop Metal
Formlabs
Markforged
NVBots
Rize
Voxel8
Cost-efficient metal printing
High-resolution laser-sharp printers
Printers for a variety of materials
Printers with cloud connectivity
Versatile printer meant for an office or lab
Prints custom electronic parts
C TA . t e c h / i 3
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Policy
By Elliot Grimm
G R E E N P O L I CY
Television Innovation Saving Energy and Making Cents
According to a recent study conducted by the Rochester Institute of Technology (RIT) and commissioned by Staples, not only are fewer materials used to make tech products, but materials of concern, such as t’s industry innovation — not government regulations lead and mercury, are being used less in — that has brought televisions bigger screens, better tech devices entering the market today. picture quality and new features to market, all while Industry innovation continues to be the saving consumers energy and money. best driver to advance the energy efficiency and sustainability of our devices. And manufacturers deserve credit for the Chances are, the television in your living room has functions and picture quality ingenuity and commitment to making unimaginable just a decade ago. Today’s TVs bring real-life images into our more energy efficient products that cut homes and allow us to record and stream our favorite shows with the push of power consumption, reduce greenhouse a button. The progress of innovation is immediately apparent when looking at gas emissions and lower conold and clunky cathode-ray tube (CRT) TVs. Televisions now sumers’ energy bills. have bigger screens and weigh three times less. As display technology evolves Not as apparent, however, is the positive impact innovaOur tech — as witnessed at CES every tion is having on energy consumption and the savings being devices January — consumers continue passed on to consumers. are now thinner, to win through market driven A new CTA study, LCD Television Power Draw Trends 2003 lighter, faster, solutions. TVs have been the to 2015, found that LCD TVs from 2015 consume 76 percent smarter centerpiece of home entertainless energy (per screen area) than TVs did in 2003. The reducment centers for decades, and tion means real savings for consumers — costing on average and much as recent research findings only six cents per day to power one TV, compared to more more energy demonstrate, TVs take center than 20 cents per day in 2003. The findings show how the efficient. stage with their energy effiindustry provides the latest and greatest technology to conciency achievements as well. sumers while remaining committed to increasing environmental sustainability. Regarding public policy, voluntary, market-driven initiatives and partnerships, such as ENERGY STAR®, have been most effective in promoting energy efficiency because they allow industry the ability to compete and innovate. It’s important for TVs Make “Cents” and Cost Less the industry to be able to invest in R&D, meet consumer TVs are bigger, sharper and smarter than ever — demand and collaborate on energy efficiency technologies. Our but use 76 percent less energy than they did in 2003. tech devices are now thinner, lighter, faster, smarter and much You pay only about $.06 a day to power your TV! more energy efficient. According to the study, TVs’ declining energy consumption 400 largely stems from improvements in lighting technology and its 350 operation. For example, backlight dimming reduces the power 300 needed to display high-resolution images. Additionally, energy 250 efficient features such as Automatic Brightness Control (ABC) 200 and Motion Detection Dimming (MDD), which dynamically 150 adjusts screen brightness in response to indoor lighting conditions, have become more common. The CTA study also found 100 the passive standby draw of TVs dropped 63 percent. 50 While energy consumption has dropped, the average TV 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 screen size has increased to 40 inches, representing more than 20 percent growth since 2010. At the same time, there have been other outcomes favorable to environmental sustainability. 34
SEPTEMBER/OCTOBER 2017
I T I S I N N O VAT I O N
Source: CTA, LCD Television Power Draw Trends 2003 to 2015
Energy (MW/in.)
I
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By Jeremy Snow
Policy
P O L I CY U P DAT E
CTA Proposal for Over-the-Counter Hearing Devices Becomes Law
O
Kevin Rivoli/Associated Press
n August 18, 2017, President Trump signed the Food and Drug Administration (FDA) Reauthorization Act into law. Embedded in the new law is a CTAchampioned provision to make hearing aids available overthe-counter. Affordable and effective, personal sound amplification products (PSAPs) offer musicians and many others a new way to follow their passion.
One morning, Richard Einhorn woke recorded music come to life. While up to experience a musician’s worst Einhorn regularly uses a hearing aid nightmare. An incredibly rare condition for daily conversations, the higher and took one of his most precious gifts — his lower frequencies common in music hearing. He calls it one of the worst days are much harder to discern. of his life. Einhorn suddenly found himIn 2014, he used his first OTC self part of the 20 percent of Americans device for music, the difference was with some degree of hearing loss and, life-changing. The first song he listened like many of them, he was unsure if he to was Bob Dylan’s “Tangled up in Blue” would effectively hear again. — it was perfect, he says. “I could hear Before the condition, he made his everything: the bass, the guitar, Dylan’s living as a composer and musician voice,” he says. “It sounded just as and gained worldwide recognition for good as I remembered. I listened to his award-winning 1994 composition, Voices of Light, an opera inspired by the silent film The Passion of Joan of Arc. Einhorn still composes today, thanks to the bag full of hearing devices and portable microphones he uses daily, alongside various phone apps. But some of Einhorn’s most important devices are over-the-counter (OTC) hearing devices known as PSAPs. These devices are great news for anyone with mild to moderate Richard Einhorn hearing loss or who may have still composes today, thanks to trouble hearing in a busy restauover-the-counter rant. And unlike other hearing hearing devices aids, which require a visit to a docknown as PSAPs. tor, they can be ordered online or picked up at a store. Plus, they are one-tenth the cost of ordinary hearing aids, ranging in price from $100 to $600. For professional musicians like Einhorn, these devices are a perfect fit. Most hearing aids are hardwired for speech, not the audio complexities music presents that make live and C TA . t e c h / i 3
the song with a hearing aid shortly after and it just wasn’t the same.” Despite his success with them, current FDA regulations require OTC devices not be marketed as hearing solutions that treat mild to moderate hearing loss. As a result, many people have missed out and are just starting to notice. Einhorn says he barely knows another musician using them. But their popularity is growing. CTA research predicts more than one million wearable hearing aids will be sold this year. Paired with strong, responsible guidelines on their creation, putting these devices on the shelves can provide a more personal solution to hearing loss with less commitment, he said. And once musicians have them, Einhorn says they would become more encouraged to combat their hearing loss or visit an audiologist.
SEPTEMBER/OCTOBER 2017
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Policy
I N N OVAT I O N R E TA I L
Sucharita Mulpuru Disruption in Retail
R
etail Industry Analyst Sucharita Mulpuru recently gave a presentation to CTA’s Retailer Council on Emerging Trends in Retail and Logistics. She previously was chief retail strategist for Shoptalk. She also served as vice president and principal analyst at Forrester Research. Mulpuru helps retailers reimagine their businesses, build profitable growth and embrace the marketplace model.
Q What is the current retail CE landscape? A Consumer electronics is so device driven.
The device that matters more than anything is the phone. What we have seen is essentially the shrinking of the store because the place where most consumers are purchasing their phone tends to be a smaller format store whether it is a carrier store, an Apple store or a Best Buy mobile store. It is more of a challenge in the rest of the CE ecosystem. A lot of that is a commoditized race to the bottom. I am waiting for more device innovation because that is really where the biggest opportunities are for CE.
Q Is the smartphone impacting retail? A The phone is the best self-service
automation tool. The phone answers almost every question you have. Ultimately, we will probably see something along the lines of the Apple Store on your phone or an app where you can scan and checkout. It is still early because I don’t think that retailers have figured out loss prevention for that yet. The Amazon Go Store is also a model.
Q Is there consolidation in retail? A I would argue that there has not been
enough consolidation. Acquisition has not typically been a retail strategy and it absolutely should be. I don’t know if it is because so many are mired in debt so they don’t have the luxury to acquire but that is their path to the future. Retailers are still caught up in the traditional model — a buyer has to put a PO in for tens of thousands of units and wait six months for the product to show up at the distribution center. They need to be more nimble. 38
SEPTEMBER/OCTOBER 2017
Mobile Retail Behavior What did you do when you researched products/services on your mobile phone in the past 3 months while not in a physical store (e.g., at home, at work, on the go, etc.)?
Compared prices
52% Looked up product information
47 Read customer reviews of a product
44 Searched for a coupon
39 Located a nearby store or to check store hours
32 Checked availability of a product in an online store
30
SOURCE: Consumer Technographics North American Retail & Travel Online Benchmark Recontact Survey 1, Q3 2016 (US)
Q How can retailers meet customer’s expectations set by Amazon? A While everybody would love to get everything really quickly, very few people are willing to pay for it. Amazon has set up distorted expectations because they do fast delivery and they don’t pass the cost on to the customer. But they have managed to find a business model to make that cost effective. The vast majority of transactions still take three to five days to deliver, including Amazon transactions. Prime Now set the expectation but even some Prime orders don’t get delivered in two days. The interesting thing about the returns research is some people don’t shop online because returns are a frustrating experience. Very few companies have differentiated themselves on a more seamless returns experience so these are places retailers can focus on. Q Will drones be used for deliveries? A What Amazon did brilliantly is it
showed what a drone delivery could look like and captured the imagination of people. But the reality for that to really come to life has more questions than answers. We have no regulation around who is allowed to deliver by drone and in what circumstances and in what part of the airspace, under what types of conditions, what time of day — so that needs to be thought through. The federal government can regulate to some degree but cities and states are going to ultimately decide. The biggest concern is how does the drone know where to deposit the package? It could be disrupted by anything from telephone wires to trees and there is no infrastructure to receive packages. If you are in suburbia and you have a yard, it may make sense but what about a condo? Also most drones can only go five miles so who is located five miles from homes? FedEx possibly, UPS stores, maybe Walmart, Target, Walgreens or your grocer. You won’t see drone deliveries for groceries because that weighs more than five pounds. Drone delivery could make sense for pizza. Dominoes is everywhere, I T I S I N N O VAT I O N
Policy
they are five miles from many homes, a pizza weighs less than five pounds and their biggest cost is labor. But it is unlikely to be a game changer for deliveries any time soon.
Q How can smaller retailers compete? A Any type of value-added services or
bundles like installation or post-transaction advice can be really valuable. Take Sur La Table — they make money off of their cooking classes. The Apple Store got a lot of traction with film editing classes. Stuff like that is value added and people are willing to pay for it. It also drives people to the store and is a way to upsell — if you want to take this great photo, then you need to buy these lenses. With the amount of creationism out there, romancing and giving people classes on how to set up a blog or whatever is new — for example, a class on understanding Snap Chat for consumers. These are opportunities, wherever there is a gap between the
knowledge base that people have, an electronics store could step in to that space. It would not be that hard to pull together.
Q Could they partner with others? A Any type of alternative revenue stream
is valuable. It could be anything from hanging a big flat-screen on the outside of your store and advertising on it to ads in the store itself. Rooftops could have solar panels and they can sell the energy back to the city or even have a rooftop garden. I think anything and everything can monetize their physical real estate. If you have excess space you could sublease some of the space to startups or provide free real estate in exchange for them acting as your onsite geek squad.
Q Are there other opportunities? A A makerspace is an opportunity because there is definitely interest in robotics, code and engineering. How can retailers take a piece of that? If I were in the CE industry,
I would do some ethnographic research at local schools and visit their makerspace. I would spend time with Lego League clubs that have engineering for kids. What are their parents spending money on? Is there an education adjacency that these companies can think about? Because now they are heavily dependent on the next innovation coming out of Apple and the next TV, but they could rethink their business model. An industry to look at is the college bookstore. Digital media killed college textbooks so they needed to find an alternative revenue stream. They went into licensed apparel and then started to sublease space, and most are also authorized Apple resellers. They have cafes, banks and many lease space to Verizon for cell towers. They went from 80 percent books to 30 percent books. I would challenge retailers to look at what is next because more electronics are being commoditized and sold online or being sold on Amazon. Where are the best opportunities to pivot?
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Forward Strategies
IoT and Big Data Can Benefit Your Business
Multi-bits/Getty Images
STRATEGIES TO GROW THE INDUSTRY
Insights to help improve the bottom line
42 C Space 43 By The Numbers 44 CT Reports 48 Forward Strategies 49 Retail Strategies 50 Advice for Entrepreneurs 51 Market Beat 52 Stats & Facts C TA . t e c h / i 3
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By Gary Arlen
C S PAC E
In Deals and Data, OTT Reaching Dominance
W
hen two Wall Street analyses, each painting rosy outlooks for over-the-top video (OTT) emerge along with deals involving Sony, Amazon, Hulu and even a cable package, something is brewing. Stir in consumer use data, and the internet video world is bubbling with excitement. Morningstar Inc., the investment research firm, predicts that Amazon Prime will have more customers than cable and satellite TV providers by the end of next year. True, not all of Prime’s customers use the video service. However, citing the rapid decline of cable subscribers (down by more than a million households during this year’s spring quarter alone), Morningstar expects that the Amazon Prime audience (about 80 million homes) will surpass the cable/satellite household count (now below 90 million). Morningstar also pointed out that Amazon’s new marketing tactics are taking Prime into more “lower-income American households,” when the price is right. A few days later, Barclays Capital predicted that linear pay TV systems (cable and satellite) will lose 31 million customers within the next 10 years. That’s about one-third of their customer base. Barclays’ equity researchers, 42
SEPTEMBER/OCTOBER 2017
citing the “shifting viewing experience” — especially among young audiences — said that eventually “OTT models will become indistinguishable from legacy media.” The media industry also is in the midst of an OTT frenzy. Perhaps the most astounding was a deal between the National Cable TV Cooperative (NCTC) and Sony Interactive Entertainment, which will make the PlayStation Vue OTT service available to more than nine million cable homes. NCTC acts as a purchasing agent for more than 850 small and medium-sized local cable systems. Vue, which was positioned as a “cable alternative,” is now a feature of the cable
broadband operations, offering up to 100 channels such as ESPN, CNN, Fox News, TNT and Discovery as well as local channels. Just prior to the Vue deal, NCTC signed to distribute Fubo TV, which offers 60 live channels via OTT. And Hulu added HBO and Cinemax to its programming lineup and signed on with Amazon, which will offer Hulu live OTT service on Amazon Fire TV and Amazon Fire TV Stick. Meanwhile, Parks Associates found more Eventually OTT than half of U.S. broadmodels, especially among young audi- band homes watch interences, will become net video through their TV indistinguishable from legacy media. sets. Even more dramatically, 72 percent of homes without a pay TV subscription buy at least one OTT video service. Along similar lines, Leichtman Research Group’s Emerging Video Services survey agreed that 72 percent of homes without pay TV buy a subscription video on-demand service, compared to 62 percent of homes that subscribe to pay TV. LRG tallied 64 percent of U.S. homes as subscribers to Netflix, Amazon Prime, Hulu and/or similar SVOD feeds, up from 47 percent two years earlier. More than half now use at least two OTT services. Along with these bullish reports, ad agency Zenith Media’s Online Video Forecasts 2017 July report found viewers spend more than 47 minutes per day watching online videos, more than half of it on mobile devices. Zenith expects that by 2019, nearly three-quarters of online viewing will be on mobile devices. It expects that online ad spending will “flip” next year, with $18 billion going to mobile video versus $15 billion to legacy platforms. As the Barclays report concluded, “the viewing experience is shifting” meaning that it’s “tough to imagine a world where all of the 200+ cable networks in existence today remain viable.” The OTT ecosystem is accelerating its role as a replacement for linear TV even faster than expected.
MEDIA REPORTS ALIGN: OVER-THE-TOP VIDEO IS ON THE RISE
⅓ LESS
Cable and satellite customers within the next 10 years.
47 MINUTES
Time spent watching online videos, more than half on mobile devices
72 %
Homes without a pay TV subscription that buy at least one OTT video service
$
18 BILLION
Online ad spending expected for mobile video versus $15 billion to legacy platforms I T I S I N N O VAT I O N
Getty Images/iStockphoto
Business
By Jack Cutts
BY T H E N U M B E RS
New Technologies Take Center Stage lowly but surely, we are witnessing a shift in the consumer technology industry. This is a passing of the baton not in the total industry revenue sense, but more the beginnings of a shift in share-of-mind and shareof-voice from mainline devices like smartphones and laptops to smart home devices and digital assistants.
istock/ mikkelwilliam
S
It’s hard to discern whether digital assistants, for example, are merely a stand-in for some overarching technology that we simply haven’t thought of yet or whether the product is ready to enter every U.S. household. Conversely, it is the very ubiquity of the smartphone and wireless internet that has ushered in the emergence of the smart home as another emerging juggernaut. Is it possible that the digital assistant is the missing piece of the smart home puzzle? Can the digital assistant help tie everything together using just your voice? Or perhaps the future of the smart home is artificial intelligence-based, meaning our voices won’t be needed at all after a while. In its biannual Sales & Forecast report released in July 2017, CTA estimates that makers of digital assistants will sell just over The ubiquity of 11 million of the devices the smartphone in 2017, up from 7.2 miland wireless lion in 2016. All told, internet has ushered in the digital assistants are emergence of the forecast to bring home smart home. $1.3 billion in 2017 and to eclipse $4 billion by 2021. Unlike digital assistants, the smart home category takes many forms and has a lot of moving parts. One of the category’s strengths is that many smart home solutions are modular in nature allowing consumers to dip a toe into smart home features without tearing open walls and breaking the bank. Of course, this flexibility generally comes with the need to buy into an existing smart home C TA . t e c h / i 3
ecosystem, even if you’re only automating one or two functions in the home. CTA’s research predicts that, among the main smart home categories, smart locks and doorbells is the sub-category that will lead the way in year-over-year unit growth at 72 percent (shipping 3.7 million units). Overall the largest sub-category on a unit basis is the smart home system, which are smart home hubs packaged with a certain array of units for placement around the home. Smart home systems will ship 6.8 million
Business
units in 2017, up from 4.5 million in 2016. IP/Wi-Fi cameras have also enjoyed large gains in unit volume since 2016, shipping five million units — a 70 percent improvement over 2016’s tally. By 2021, CTA expects consumers to demand nearly 57 million units of smart home products to the tune of almost $6.5 billion in revenue for the industry, representing triple the revenue of 2016 in just six years. No one can doubt the societal importance of the smartphone. Nor can one discount the prowess of the laptop or desktop PC for getting stuff done. However, as the industry marches forward, it’s inevitable that the devices of yesterday (even ones that are still in our pockets and work bags) will begin to fade into the background. These devices are no less crucial or productive than in years past, but they now share the stage with new technologies on the scene. The smartphone era has been a golden age for the consumer technology industry. Fortunately for the industry, even as it fades slightly into the background, the smartphone is helping pave the way for the next wave of devices that will shape our lives for the next decade and beyond. ■
CTA’S SALES & FORECAST REPORT: ESTIMATES FOR SMART HOME GROWTH
$
1.3 BILLION
Expected revenue for digital assistant sales in 2017
4
$ BILLION
Expected revenue for digital assistants sales in 2021
70 %
Increase in unit volume of IP/Wi-Fi cameras over the last year
3X
Increase in consumer demand for smart home products by 2021 SEPTEMBER/OCTOBER 2017
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Business
By Anthony Maestri
CT FO U N DAT I O N R E P O RTS
Giving Back
Q What technologies do you use in your daily life?
A I use an iPhone, iPad, computer
oyd Ivey is President and CEO of the Mitek Communications and Electronics Group as well as a board of trustee member of the Consumer Technology Association (CTA) Foundation. He recently talked with the CTA Foundation about how technology is improving the lives for individuals of all abilities.
L
Q What types of technologies
does Mitek produce? A Mitek is an industry leader serving multiple markets. These include the commercial audio, mass transit, manufacturing and consumer electronics industry. Our products are used in airports, hospitals, schools, stadiums, convention centers and office buildings. Mitek Products can be found in more than 80 countries around the world.
Loyd Ivey President and CEO of Mitek
and headphones. They help keep me in touch with what’s going on in the consumer technology industry and allow me to communicate with my friends. It’s great and fun entertainment!
Q What role can technology play in
helping seniors and individuals with disabilities live more independently? A Technology today can keep seniors from getting old. It keeps us up to speed in the 21st century. Seniors and individuals with disabilities can independently communicate with friends and loved ones. Just because you’re aging or have a disability doesn’t mean you stop living or stop working. These technologies can help us continue to do what we love and not feel left behind. By using these technologies we continue to remain relevant no matter how old we are.
Q Why was it important for CTA to create the CTA Foundation? A CTA felt it needed to give back by helping people that couldn’t afford or didn’t know how to help themselves. The CTA Foundation links seniors and people with disabilities with technologies to enhance their lives. There are so many technologies available today that older people don’t know about and we need to explain to them what they are and how to use them. We need to show seniors and people with disabilities how to acquire these things and not be frustrated. You’re never too old to learn something new. It builds confidence. Having multiple sclerosis has not hurt me or stopped me from communicating with my friends at CTA, relatives and people all around the world. Let us all enjoy the technologies of today and make the world a better place.
CTA Grant Awards The CTA Foundation is proud to award over $500,000 in grants to 10 organizations using innovative solutions to serve seniors and individuals with disabilities. • Beneficent Technology • CareWheels • Easter Seals of Greater Houston • Front Porch • Lighthouse Guild • OASIS Institute • Older Adults Technology Services (OATS) • Research to Prevent Blindness • San Diego Futures Foundation • Self-help Community Services • Generations on Line CONTACT: For more information, visit CTAFoundation.tech and click on the active grants link.
Support the CTA Foundation, be recognized as a philanthropic leader in the industry and help aid older adults and people with disabilities.
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VISIT SupportCTAF.org to give online or get information on sending stocks or checks.
SHOP at smile.Amazon.com and select the Consumer Technology Association Foundation to give 0.5% of your purchase at no extra cost to you.
CONTACT Steve Ewell at sewell@CTAFoundation. tech for information on how to set up donations through your payroll.
FOLLOW us on Twitter @CTAFoundation and share the work the industry is doing to use technology to improve lives.
I T I S I N N O VAT I O N
Top: Portra/Getty Images
SUPPORT THE CTA FOUNDATION
Business older adults. The project will explore a group listening system and test the effectiveness and viability of emerging smartphone-controlled Personal Sound Amplification Products (PSAPs). Hearables for All will assess the impact of these innovations on hearing loss, social engagement and isolation, and general wellbeing.
Q What role can technology play in helping seniors with hearing loss?
A Kari: The health and wellness
Innovative Tech Modernizing Senior Care ront Porch, a 2017 CTA Foundation grantee, is exploring the role that wearable hearing technology can play in helping seniors live more independently. Kari Olson, chief innovation and technology officer of Front Porch and president of Front Porch Center for Innovation and Wellbeing (FPCIW) and Davis Park, director of FPCIW, recently shared their insights with i3.
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Q Tell us about Front Porch and how your organization serves seniors. A Kari: Front Porch serves individuals and families through full-service retirement, active adult and affordable housing communities. Retirement communities offer options ranging from independent living to skilled care, including assisted living and memory care. Front Porch embraces a leadingedge approach to enhance wellbeing with innovative communities and programs that meet the changing needs of people as they age. Q How is your organization using
innovative technologies? A Davis: The FPCIW’s mission is to explore innovative uses of technology to empower individuals,
especially as they age. These solutions include robotic caregiving tools, smart home technology, voice-activated devices, telemedicine, exergaming, social media and virtual reality. The use of technology doesn’t magically happen, one of the fundamental cornerstones of our work is to promote adoption and engagement of technologies. A critical component to this strategy is connecting meaning and purpose between the individual and the innovation.
Q Tell us about the Hearables for All Project.
A Davis: Hearables for All is
a 12-month program launched by FPCIW to explore the next generation of wearable hearing devices for
Top: Kupicoo/Getty Images
CTA Events
Davis Park Director of FPCIW
A Davis: We’re in the midst of an
exciting explosion of hearing solutions that is already disrupting the traditional hearing device market, and the impact potential of these new solutions will be enormous for wellbeing and independence of older adults. This generous grant from the CTA Foundation enables us to test these consumer solutions and accelerate their adoption.
The CTA Foundation, a public, national foundation affiliated with CTA, was launched in 2012 with the mission to link seniors and people with disabilities with technologies to enhance their lives. The foundation strategically supports programs that affect these communities and facilitates dialog between industry, consumers, government, advocacy groups and other key stakeholders. For more information, visit CTAFoundation.tech.
For more information on CTA events, call 703-907-7600 or visit CTA.tech.
Innovate! and Celebrate
CES Unveiled Paris
October 9-11 San Francisco, CA
C TA . t e c h / i 3
Kari Olson Chief Innovation and Technocology Officer of FPCIW
impact of hearing loss can’t be overstated. As we age, the inability to hear conversations and participate in discussions progressively takes us down a path of self-isolation. The “Hearables for All” Project seeks to overcome these challenges by promoting social wellness and increasing engagement among older adults.
CES Unveiled Amsterdam
CT Hall of Fame Dinner
CES Unveiled New York
CES 2018
October 24
October 26
November 7
November 9
October 9-12
Paris, France
The Netherlands
New York, NY
New York, NY
Las Vegas, NV
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Business CT R E P O RTS
CTA Startup Membership Highlights Entrepreneurs ecognizing the critical role startups play in driving innovation and growing the industry, CTA began to offer membership to startup companies in 2011. Now in its fifth year, CTA’s Startup Membership comprises more than 20 percent of the association’s member companies. Startup membership extends a full range of benefits to companies, the ones who undoubtedly need them the most. “Our staff and members offer a wealth of expertise and knowledge to help newer companies make the connections and secure the tools they need to survive and thrive,” says Deb Kassoff, CTA’s director of member programs. i3 sat down with three CTA startup members who joined in 2012 to see how they have leveraged their memberships while growing their companies.
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Nomad
Noah Dentzel launched Nomad, which makes travel accessories and mobile devices, through a Kickstarter campaign in 2012. “As total newbies to the industry, we were delighted to learn that not only was the industry’s big tradeshow coming up just as we were nearing production of our first product, but that CTA had just begun a new startup membership that made participating at CES much more accessible to early-stage companies like ourselves,” he recalls. Noah explains that establishing a voice and identity as a startup is critical for success, but quite challenging. “It can feel intimidating comparing yourself to the colossal industry heavyweights,” he says. “The startup opportunities that CTA provides, like discounted membership, the startup exhibitor zone and pitch contests, plus treating us like we belonged there, all helped us establish ourselves in the consumer electronics world in our early days.”
TMSoft
Most startups don’t have the resources to focus on government affairs, which makes membership in a trade association even more important. Todd Moore, founder of TMSoft, a mobile app software company, joined as a CTA startup member to network, collaborate and capitalize on opportunities at CES. However, he discovered the importance of CTA’s public policy efforts after 46
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receiving a threatening letter from a “patent troll.” “I had no idea this was such an issue for small businesses, startups and app developers,” says Todd. “Now I see that our country’s patent system can be exploited and used as a weapon, stifling innovation.” Todd joined CTA’s Michael Petricone to share his story with lawmakers on Capitol Hill. “I testified before Congress about patent trolling. By giving us a seat at the table, CTA allowed me to make a difference for not only my company, but the industry.”
Formlabs
Formlabs, a 3D printer manufacturer, joined as a startup member soon after CTA began offering it. According to Moira Barry, Formlabs leveraged the benefits of CTA membership to gain maximum exposure in the early stages of launching their product. “We grew so much from starting in Eureka Park, to earning our CES Innovations Award, to growing our booth size and being one of the biggest 3D printing companies at CES,” she explains. Formlabs also relies on CTA membership to stay connected and establish itself as a leader within the industry. They also participate in CTA’s 3D Printing Working Group that brings companies together to raise awareness, conduct market research and address topics around policy, standards, and industry promotion. “Having a place at this table, among startups and established players, is a big deal for us,” says Moira.
CTA’s Membership for Startup Entrepreneurs Key members-only opportunities: • At CES: free attendee registration, access to member lounges, meeting rooms, events, discounted CES Innovations Awards fees and discounted conference passes. • Online business education all year. • Access to CTA’s extensive market research and library staff. • Invitations to networking events. • Registration discounts for all CTA events. • Advocacy on public policy issues. • Mentoring from industry veterans under CTA’s Mentor Program.
CTA offers this startup membership at a reduced rate of $95/year for two consecutive years. To qualify companies must have: • Annual revenue under $1 million. • A North America office or business location. • Introduced their first product, service or app to market within the last year or plan to in 12 months. • Not previously been a CTA member under another category. GO ONLINE: for more information visit: www.CTA.tech or email
[email protected].
I T I S I N N O VAT I O N
By Cindy Loffler Stevens
Business
the same way that it gets transmitted to your house. Every step in that ecosystem can be demonstrated or tested at Canon Burbank.
Q How does this facility encourage innovation in the industry?
A Creating films, TV shows or documenta-
Canon Burbank: Ready for Tomorrow’s Technology n July, Canon opened its sophisticated Professional Technology & Support Center in Burbank, CA. The facility provides professional filmmakers and still imaging customers with an enhanced technical environment that includes product evaluation, testing, product and workflow training, industry events and repairs. Eliott Peck, executive vice president and general manager of the Imaging Technologies & Communications Group, Canon U.S.A. Inc., who also sits on CTA’s Executive Board, explained the concept behind Canon Burbank to i3.
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Courtesy of Canon
Q Why did you create Canon Burbank? A Canon’s outreach to the film industry was
homegrown in the U.S. because of the unique nature of Hollywood and film production and our expertise in image capture in both still and video. Six years ago we launched our Cinema EOS line of cameras and lenses and offered a facility in Hollywood to service and support these high-end professional products. When we saw how quickly Cinema EOS was embraced by the filmmaking community, it became apparent we needed a bigger boat, as they say in Jaws. We learned that real handson experience is critical. The directors, the director of photography (DP) and the camera operators rely on an environment where everything connects and works – from the prepping of equipment to being able to screen films – so we approached Burbank with a fresh slate and listened to the experts. We started from scratch and built the facility to their specifications. The building is a real working evaluation and testing studio that meets clients’ needs. It is a direct result of spending years listening to our clients and then demonstrating our commitment to them in a very visible way. C TA . t e c h / i 3
ries is an art. Every DP has a vision for their story. It could be as simple as somebody who has an SLR camera and wants to create a documentary all the way to the big budget films where they spend upwards of $100 million. No matter how big or small, we want to inspire and shape their vision and bring it to life. Canon Burbank is a tool to help us do that. When clients come in, we can demonstrate and test under different shooting conditions, we can see what the resolution looks like or how our products look under different lighting conditions. We can support their editing, test material, allow them to color grade it, and finally screen it in a state-of-the-art 4K screening room. We also want to educate and inspire young students interested in filmmaking.
Q What don’t we know about Canon? A We are one of the most innovative compa-
nies on the planet. Canon Inc. has been ranked among the top five U.S. patent holders for the last 31 years. In 2016, we ranked third, ahead of Apple and Google. We are best known for our cameras and office machines, but we are involved in everything from health care technologies to the life sciences to semiconQ What is the ecosystem? ductor equipment. Last year, we A It takes a village to create acquired Toshiba Medical. If you a film but it takes a city to look at CES, the medical side of deliver the content to users the technology business is one in a changing environment. of the fastest growing innovation Many of the content creators areas. Another area that is growand parts of that ecosystem ing quickly is network security are members of CTA. We live cameras that produce highin a world of streaming and quality images in difficult condi4K content delivered directly tions, including low light. Our to users but changes in the technology does this exceptiontechnology will eventually ally well. We recently acquired move us into 8K and beyond. Axis Communications, a global How do you demonstrate or leader in network video soluservice that? We created this tions, and Milestone Systems, environment to demonstrate the leader in video management – Eliot Peck this technology in a way that software. Adding these two outhelps professionals share their standing companies to Canon’s vision when they create a film, expertise creates a powerful TV show or documentary. combination. We want to find partners to creWe built the infrastructure and cabling to ate new kinds of businesses. We see no limits make it future proof and ready for tomorrow’s to what we can do. technology – that means more data stor-
We want to find partners to create new kinds of businesses.
age and bandwidth. In this facility, to move data from our DI suite or editing bays to our screening room, you transmit the information
GO ONLINE: Visit CTA.tech/i3 for the full interview. SEPTEMBER/OCTOBER 2017
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Business
By Scott Steinberg
4. Greater Response Times
FO RWA R D ST R AT EG I E S
aven’t yet embraced the Internet of Things (IoT), which promises to bring connectivity to seemingly endless consumer products and appliances? Wake up and smell the silicon: A staggering 6.4 billion electronic devices will offer the ability to connect online this year alone — 5.5 million will arrive each day. This push towards the cloud promises myriad benefits for businesses. If you haven’t yet considered bringing IoT solutions to bear, here are five ways these new advancements can help take your enterprise to the next level.
IoT solutions can help companies rapidly respond to emerging trends. Many big data tools, technologies and services allow you to capture thousands of data points and scan for signals that shifts in the market or consumer demand may be pending. They also provide platforms to help employees more effectively connect and collaborate to quickly bring new solutions for addressing these changes to bear. These solutions make it possible for intrapreneurs — entrepreneurial thinkers inside the organization — to more quickly and cost-effectively run business prototypes and take concepts to market. Wielded effectively, they can help your business respond to market changes more rapidly and leverage insights and intelligence gained from engaging in various ventures to improve strategies.
1. Better Business Intelligence
5. Superior Performance
IoT and Big Data Can Benefit Your Business
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2. Enhanced Security and IT Capabilities
Security-related incidents are skyrocketing in volume. IoT solutions and big data tools can help guard more effectively against breaches, and spot and eliminate possible weak links in security systems and network operations before they’re exploited. Using big data tools, business leaders can quickly test for loopholes, glitches, and technical errors and create more effective backup plans and measures to prevent or recover from them. In addition to monitoring and detection capabilities, these high-tech troubleshooting systems can provide vital insights to improve network stability and boost uptime. If leveraged effectively, they can boost organizational performance, IT operations efficiency and security levels.
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3. Improved Ability to Innovate
CE industry leaders can safeguard against changing market forces by wielding IoT tools to better listen to customers, whom studies show are the number one most reliable source of innovative ideas. These tools can also give your workforce more opportunities to speak up, share insights into emerging opportunities, and quickly adapt business strategies based on rising changes in the market. IoT solutions can help your organization prepare for unforeseen disruptions, create added avenues for growth, and increase overall flexibility — crucial ingredients for operating a future-proof enterprise.
Many enterprises have become mobile, virtualized and global in nature. The more you employ IoT devices and solutions to keep tabs on what’s going on in the field, the more effectively you can manage operations. These tools are capable of collecting data on various business functions from supply chain management to sales and CRM operations and can help improve workforce productivity, optimize processes and procedures, identify potential problem areas and enjoy significant cost-savings. IoT and big data solutions can assist with tasks such as accounting, data processing and regulatory compliance. The more you integrate them into your business, the greater the ability you’ll have to cut costs, improve productivity and improve dayto-day operations.
IoT-friendly tools, like analytics software packages, allow leaders to mine data to spot emerging trends and predict market shifts.
Atomic Imagery/Getty Images
Competitive landscapes, consumer trends and buying habits can change virtually anytime. IoT-friendly tools, like analytics software packages, allow leaders to mine data to spot emerging trends and predict market shifts. Using these tools, it’s possible to track users’ behavior, purchasing patterns, and how they interact with devices and technologies to determine which pricing programs, features, and functions most resonate with audiences. Business leaders can more effectively improve hardware or software solutions, better streamline processes and workflows, and anticipate audiences’ changing needs in order to fuel growth and innovation and more effectively build competitive advantage.
I T I S I N N O VAT I O N
By Steve Smith
Business
R E TA I L ST R AT EG I E S
Experiences with Streaming Services and Cord Cutting
three miles or so from the Empire State Building reminded me again about how much clearer broadcast TV stations look in HD versus when they are rebroadcast via cable or satellite carriers. Sling TV — with an indoor antenna for local stations — makes sense for us because we have DirecTV with a full complement have read a lot of stories about cord-cutting and of stations in the living room. Spectrum’s the use of streaming services during the past new package of stations based on our couple of years, but one recent report from old Time Warner deal was fewer stations with a higher price. TechCrunch based on data from comScore hit home. While Verizon Fios has its critics we are anxiously awaiting it to According to comScore, cord cutters are watching more Netflix reach our block, if for no each month than YouTube, Hulu or Amazon combined. other reason to replace Netflix in April accounted for 40 percent more of the modem we are now over-the-top viewing hours, compared with 18 perusing and enjoy higher cent for YouTube, 14 percent for Hulu and 7 percent Does cutting speeds. Eventually for Amazon Video. In TechCrunch’s analysis of we will at least test the comScore report, Netflix encourages more the cord and using Fios and place binge watching sessions, or as reporter Sarah online services DirecTV with it in Perez put it, “On Netflix, it takes more effort to make more sense the living room. stop watching than to keep bingeing.” than continuing In my experiwith established ence DirecTV and Cutting the Cord paid TV providers? Spectrum have My wife and I recently cut the cord thanks to become the best the Roku Ultra Streaming Player I purchased marketers of online which is attached to a decade-old Pioneer plasma streaming TV services HDTV in my den with access to Netflix — as well as and cord cutting in the Sling TV, YouTube and other streaming options. Based U.S. Based on anyone’s likes on price and programming Netflix makes the most sense and dislikes of different cable/ for us. And YouTube is, well, YouTube. Great for a myriad of satellite stations Sling TV, YouTube’s unique programming from anyone around the globe. new paid TV service, Netflix, Hulu, Amazon Cutting the cord has shown me that you can enjoyably watch Video and other online based services TV with an indoor antenna to get local broadcast stations. That, in cutting the cord and using online services combination with Sling TV, Netflix, YouTube or whatever other promakes more sense than continuing with gramming you want, there is less hassle and lower costs, with a comestablished paid TV providers. promise or two along the way. Twenty years ago attending a long gone Concerning Netflix, while we have it and other streaming services annual computer conference I remember downstairs via a 4K TV we purchased last December, I’ve been watchspeaking with a trade publishing executive ing shows using it much more upstairs. For instance, while I am no after one specific seminar on how TV proTrekkie, I’m an original series Star Trek fan and liked — but did not gramming would be available online watch habitually — The Next Generation, or Voyager. I have caught via broadband connections instead of cable myself at least two or three times in the past month watching three or or satellite providers, “in the future.” four episodes in one sitting. No commercials and a reasonable subscripWell, as the saying goes, “the future is now.” tion fee makes Netflix a winner with us. Hopefully, the programming selections As for Sling TV, it is not perfect because it does not provide the wide will continue to be plentiful and reasonably selection of stations. But its cost, reliability and ease of use has made priced going forward. us a fan. While Sling TV does not provide all the cable/satellite stations we are accustomed to and only two local New York City broadcast stations — Fox and NBC — it provides plenty of programming. Steve Smith was the longtime And in buying and installing an indoor antenna that is around editor in chief of TWICE.
Steve Giralt/Gallery Stock
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Business By Jake Sigal A DV I C E FO R E N T R E P R E N E U RS
Office Culture Sets the Tone (AMA) survey at the end of each monthly staff meeting. I use half sheets of paper and ask one of the employees to collect the handwritten questions and email them to me. I respond to all of them to the entire company same day. Its responses are raw and authentic. These AMAs are part of our “The cultural culture at Tome, and they’re also norm here is to show respect organically creating new elements for others in of our collective office culture.
C
ulture is a hot topic in the world of startups, and that chatter is growing around larger businesses. I prefer the scientific definition of culture over the sociological explanation when I consider culture for business: maintaining conditions suitable for growth. I often ask myself, if everyone was doing this or that, would it be a good thing for the company? Though there are exceptions to this test, it’s usually a rock-solid predictor of a culture that works well. I’m always on the hunt to find ways to promote a healthy culture and quickly change bad habits. Part of our culture at Tome is always having a notebook and a pen at meetings, and to never have our mobile devices or laptops with us unless we’re presenting. The cultural norm here is to show respect for others in the meeting and to join the conversation. Listening is more than just hearing, and it’s a core part of our culture at Tome.
Open Communication
A friend of mine was in the office last week and he mentioned a really cool bit 50
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Key to Success
It’s important to talk openly about why you have your policies and to examine why they’re important. Be flexible with the rules, as long as pushing their boundaries remains within the spirit of your culture. As a small business owner, it’s always scary when of culture his team has developed you let go. And when discretion works, when it comes to positioning. As the be clear about why it does. team’s leader, he mentioned that when Just about everything in our culture he challenges a decision by someone else is borrowed and adjusted to fit what on the team, he makes sure to articulate works at Tome. Culture goes beyond HR why the alternative may be a better practices and branding. The work you’re choice. That sounds pretty straightfordoing needs to be core to your culture. ward, but what was more interesting Our focus at Tome is always aimed at is that he said the process goes both doing our best work and being challenged. ways. He doesn’t give his own decisions We start each weekly engineering report immunity from bottom-up challenges, by identifying the “areas we need help.” provided it can be argued why these By asking for help to the decisions are better. entire engineering team, Of course, it’s imporwe quickly find answers tant to have exceptions A wellwhich gets us faster to best with every example, and maintained products. That’s part of these typically involve our “how we work” culture. common sense. But an culture will Finally, culture sticks established culture allows make your when it becomes habit. for a more open environbusiness grow. That’s how I know we’ve ment and growth. nailed it. If we’re adding It’s the job of the CEO to something nobody likes, set the tone for the culture, it won’t evolve and it usually dies quickly. while the whole team grows it. It’s an Be careful: Culture is contagious, and cusorganic process that’s pretty cool to watch, tomers, vendors, neighbors, friends and as there are basic ideas and policies that service partners are going to take notice. promote core beliefs that can morph into Be proactive with this and be honest with better ideas with higher value. your team. A well-maintained culture One way I keep culture in check is by will make your business grow. giving an anonymous “ask me anything” I T I S I N N O VAT I O N
Riva Sayegh
the meeting and to join the conversation.”
Business
By Steve Koenig
M A R K E T B E AT
Develop an Advertising Strategy for Streaming Video
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ontent is king, but for ad-supported streaming video services the right advertising strategy can be the prince of profitability. Content attracts audiences and audiences attract advertisers, but the ad-supported streaming video business model is much more complex. Setting aside the calculus of content creation and curation, streaming services must be strategic in their approach to ad-supported video by understanding viewers’ tolerance and preferences for advertising. New research from CTA explores these qualities in detail in order to understand the optimal ad-supported video approach from the viewer’s perspective. It’s a study any business engaged in ad-supported streaming video won’t want to skip. To drill into the effectiveness and engage- the entire ad without being required ment of ads tied to streaming video, CTA to do so with the same frequency. market research employed the cuttingOnly 15 percent of viewers claim they edge quantitative research technique of never watch an ad tied to streaming choice-based conjoint (CBC) analysis in video without being required. Can the its Exploring Preferences for Personalized stickiness of ads be improved? Content Consumption Experiences study (August 2017). Mirroring the marketWhat Makes a Compelling Ad? place, conjoint research requires survey Understanding the characteristics respondents to make trade-offs in choosthat influence ad tolerance is the first ing their preferred experience. step. CTA’s analysis found the type of Despite viewers’ predilection to skip ad is the biggest factor in fostering tolerads altogether, the study reveals ads tied ance. Naturally, viewers are more likely to streaming video are remarkably effecto watch an ad for something they are tive—for both new shows and products interested in versus something they’re and services. Some 71 pernot. Next, the length of cent of U.S. online adults the ad comes into play. Ads tied to who watch ad-supported Viewers tend to expect streaming video the length of an ad streaming video report investigating a different are remarkably to generally conform to show at some point after the length of the content effective. watching an ad for it. And they’re watching. For 69 percent of online adult example, shorter spots viewers said the same for short-form video about a product or service. and longer ads with long-form content. Two-thirds (66 percent) of viewers To a lesser extent, the number and placewatch ads up to the point where they ment of ads tied to streaming video can skip the ad “most of the time” or also influence ad tolerance. “all of the time.” But interestingly, nearly Formulating the optimal ad experifour-in-ten (38 percent) viewers watch ence for streaming video involved the C TA . t e c h / i 3
choice-based conjoint analysis, where respondents picked their preferred adsupported streaming video experience from multiple “real world” scenarios. Based on the choices and trade-offs made in the conjoint exercise, the analysis clearly shows a preference for ads that can be skipped or played prior to the content. It also shows the ads should be no more than 15 seconds in length, but viewers will tolerate up to two ads tied to a piece of video content. While this ad strategy is ideal, the research offers suggestions for advertising models that operate outside the ideal scenario. For example, for ads that cannot be skipped, the length should be very brief; no more than eight seconds and they should play before the content begins. In business models where ads are 30 seconds or longer, a skip feature is paramount to boost viewer engagement. For more analysis and perspective on ad effectiveness for streaming video, download the full report on the CTA member site.
The Most Important Factors Influencing Consumers’ Ad Preferences
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When Ad Appears
16
30% Ad Type
Number of Ads
19
21
Ad Length
Length of Video Content Being Watched Source: CTA Market Research
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EFFECTIVENESS OF ADS IN AD-SUPPORTED CONTENT While watching ad supported content, I have watched an ad about a product or service…
While watching ad supported content, I have watched an ad about other content…
71%
58 …that has interested me enough to check it out right then and there.
…that has interested me enough to check it out at a later time.
53
69 …that prompted me to visit a website/app for that service/product.
PERCENTAGE AGREEING WITH STATEMENT: “I’d pay for ad-free content.” Overall
…that prompted me to purchase or subscribe to that service/product.
42%
ADS ARE LESS PREFERRED, BUT NOT A DETERRANT Percentage Who Engage in the Following Ad Consumption Behaviors “All of the Time” or “Most of the Time”
58
Heavy Watchers
67%
(5X or more/ week)
I watch the entire ad only if required (meaning no skipping or fast forwarding offered)
66 I watch the ad until the skip or fast forward feature is useable, and then I skip it
57 I allow the ad to play, if required, but ignore it until the content I want to watch starts
38 I watch the entire ad without being required
15 Only 15 percent say they “never” watch an entire ad without being required
34
Light Watchers
STATS A N D FACTS
(4X or less/week)
What Ads Capture Attention?
48 Men
37
Women
In CTA’s recent study, Exploring Preferences for Personalized Content Consumption Experiences, CTA explores viewer engagement with ads on streaming video. CTA found that viewers have reasonably high engagement with content, products and services advertised on ad-supported streaming video, but a number of factors can affect their optimal ad experience.
52
43
27
Millenials
Gen Xers
Boomers
(18-34)
(35-54)
(55+)
OPTIMIZING FOR LESS THAN OPTIMAL AD ATTRIBUTES If an ad contains this attribute… Ads Cannot Be Skipped
30 Second or Longer Ad(s)
Three or More Ads Shown
Ads Play After Content Has Begun
DO THIS
DO THIS
DO THIS
DO THIS
Ad(s) don’t exceed eight seconds Ad(s) play before content begins Ad(s) appears for content that’s less than 15 minutes 52
SEPTEMBER/OCTOBER 2017
Ad(s) can be skipped Only one ad plays for content that’s longer than 30 minutes Ad plays before content begins
Ads can be skipped Ads don’t exceed 15 seconds Ads appear for content that’s longer than one hour
Ads can be skipped Ad appears for content that’s less than 15 minutes
I T I S I N N O VAT I O N
All Charts - Source: CTA Market Research Westinghouse/YouTube
v
Business
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