this was previously published in March 2008 in Dealerscope Magazine:
Ten years ago, consumers bought consumer electronics devices largely independent of the services and content they would eventually use in conjunction with those devices. Those times are gone.
As opposed to piecing together an a la carte experience by coupling hardware, software and services, today’s consumer is in search of a more robust, 360 experience. This 360 experience focuses less on what the devices, services and content can do in isolation and more on how they come together to provide the consumer with the experience they are seeking straight out of the box. This change is driving an important shift within the consumer electronics industry, as content owners, service providers and hardware manufacturers come together to create and provide a 360 solution.
Indications of this evolution in consumer preferences are evident throughout recent CEA research. For example, one in three consumers indicate they are interested in wirelessly transferring photos from a camera to a printer, and one in four consumers are interested in transferring photos to a television for viewing.
Consumers’ desires are evolving at the same time a plethora of Web-based offerings are emerging to provide consumers with entirely new services. These changes have consequently influenced hardware design and functionality. For example, portable devices like digital cameras and mobile phones are increasingly enabling consumers to more seamlessly interact with content-sharing services and other user-specific content like YouTube, Flickr and local weather.
Hardware devices are enabling consumers to connect with content and services through GPS, WiFi and cellular capabilities. These connections expand functionality and increase content and service offerings available on and through the devices. For example, by mixing GPS functionality with a WiFi or cellular connection, consumers can interact with services and content in pre-established preferences and specific locations. According to a recent CEA study, one in three consumers is interested in owning a GPS-enabled mobile phone. This functionality will drive the next round of location-based and location-aware services, enabling consumers to personalize a unique and geographically relevent experience.
The examples are numerous. Certainly, the rise of the digital video recorder (DVR) is a clear sign of how content, services and hardware are coming together to enable the consumer to create an individualistic experience. Today, approximately 25 percent of U.S. households have a DVR, up from nine percent of U.S. households just 36 months ago. While these technological innovations are often disruptive in the short-term, they are driving these three previously segregated and detached businesses together to prepare for future obstacles and opportunities.
The move to provide 360 solutions is clearly one of the driving forces behind the enormous upswing in media and services, with content producers, service providers and device manufacturers forming partnerships. This year, a flurry of those partnerships were announced around CES. For example, Macrovision and CinemaNow partnered up to offer downloadable CinemaNow content directly to Macrovision-enabled consumer electronic devices. Netflix also announced they were teaming up with LG to offer Netflix-enabled set-top boxes that would allow consumers to stream Netflix movies to these LG set-top devices.
These partnerships are also showing up earlier in the design cycle. Take for example the Google-initiated Open Handset Alliance, and the WiMAX-focused Xohm Alliance. In both cases, device manufacturers, content owners and service providers came together in the very early rounds of the alliance to collectively frame the discussion.
How will the trend toward a 360 solution influence retailing? CEA research finds consumers are increasingly interested in using tech support services and attending in-store product tutorials. Utilizing these services will help consumers ensure they are getting the experience they are looking for. A recent CEA survey of CEA’s exclusive CE Advisory Panel—consisting of industry insiders from executives to other decision makers and influencers—found that advertising channels will likely see dramatic shifts over the next several years. For example, more than half of industry insiders believe that advertising channels like social networking, Web content advertising, product placement and in-video game advertising will be more important over the next five years.
The use of a multi-channel advertising approach to communicate with customers and expose them to these different elements will become ever important in the years to come and retailers need to be aligned with the information flowing through these diverse information channels.