A Tax haven is a essentially a jurisdiction (often a country) that has taxes, tax rates, or other legal structuring that provides a lower total tax burden than other jurisdictions. The ability to lower or remove a give tax burden provides an incentive for  companies or individuals to establish a presence in these jurisdiction in order to reduce or remove the imposed tax burden of the jurisdiction for which they might currently be domiciled within. This creates tax competition across jurisdictions as these jurisdictions seek to attract businesses and and individuals. As Wikipedia puts it “the central feature of a haven is that its laws and other measures can be used to evade or avoid the tax laws or regulations of other jurisdictions.”

The same aspects that drive corporate entities and individuals to establish a presence within a given jurisdiction because of tax differentials are starting to play-out when it comes to data management. Since the revelation of and concerns around spying from the National Security Agency (NSA) and other concerns of governments’ surveillance of the Internet more broadly both within the United States and other countries in the world, companies are taking a more proactive – and public – examination of where data is stored. As Nick Wingfield and Mark Scott wrote for The New York Times, “in an interview with The Financial Times, Brad Smith, Microsoft’s general counsel, said the company’s customers should be able to “make an informed choice of where their data resides.”

I posit in the coming years we will begin to see countries compete to provide privacy over stored data in many of the same way that countries today are competing to provide attractive tax environments and incentives to entities.

Unless you were somehow seemingly off the grid earlier this month, you know the 2014 International CES was held in Las Vegas where some 20,000 new products were launched. The 2014 edition marks the 47th annual CES and at a little over two million net square feet, the 2014 show was also the largest CES in history. After taking a few days off to regain a breath and recover from the inevitable CES Bug, we begin to take stock of these 20,000 product announcements. When examining these 20,000+ new products it is important to examine each of them within their own context. You should examine each product or announcement individually and independently. Here’s why:

I often hear two complaints about product launches at CES – either the product launch represents nothing “new” or the product launch is “too futurist” and not ready for primetime. These outwardly contradicting statements highlight exactly why CES still works so effectively and successfully as a stage for innovation for so many companies. CES is the platform from which companies launch new products and make announcements for both products that are years away as well as for products that are coming to market in that very moment. When examining product launches at CES it is important to differentiate between these two decidedly different types of launches.

The first type of announcements highlight something that is technologically feasible for the first time while the second type of announcements highlight something now commercially viable for the first time. Innovation is a continuum from technically feasible at one end to something that becomes a commercial blockbuster on the other end of the spectrum. CES exhibits the entire spectrum along this continuum. Understanding what a product represents and where it fits in becomes markedly easier once one differentiates between these two distinct and separate classes.

Innovation moves along this continuum with time, but products and services will not typically occupy two places along this continuum at the same time. So a product announcement should be viewed as either something that has expanded our view of what is technically feasible or as shown to us something that is ready for commercialization. We laud and celebrate both types because they are equally important to the health of the tech industry.

Deflationary price pressures have definitely been evident in the sensor market where motion sensing for example has dropped from over $7 an axis of motion capture in 2005 to around $0.50 an axis of motion capture today. With wearables – and especially with fitness trackers – sensors are a key element of the hardware solution. A move into wearables is a natural move. Input prices are down, demand is up, competition will compress prices and correspondingly margins which all combine to create an attractive business environment for whitebox manufacturers. Perhaps more importantly many of the OEMs have gained important experience with key components over the last few years as they’ve manufactured whitebox tablets and smartphones.

But unlike tablets, hardware isn’t the only element of the solution. For tablets, whitebox OEMs could turn to Android for an essentially of-the-shelf operating system, but no such option really exists for many of the wearable categories. Whitebox smartwatches can run Android, but today most fitness trackers are using proprietary operating systems. The fitness and activity tracker segment is currently the biggest segment of wearables and the most likely place for whitebox OEMs to enter. The fitness and activity tracker segment is currently dominated by the likes of JawboneFitbit, and others and saw many of the major consumer electronics manufacturers like Sony and LG enter the category earlier this month at the 2014 CES.

But the use case scenario for tablets are starkly different than for wearables. While the value-add of activity and fitness trackers lies partially in the hardware and especially within the hardware design, it primarily resides in the algorithms that drive the recommendations delivered to end-users. The interface and mechanisms for delivering these recommendations combined with the algorithmic-derived recommendations themselves have become the key differentiation for fitness trackers. I suspect that should other wearable categories breakout, it will require the proverbial “killer application” and that application will be driven by the algorithm and interface part of device and not but inexpensive hardware. To be successful in the wearables space, OEMs will need to deliver a holistic and full 360 solution that delivers a rich interface driven by meaningful algorithmic-derived recommendations.

Increased rates of digitization are leading to tech design changes that enable dynamic customization of the user experience. Take for example SwiftKey, an Android app that replaces the default Android keyboard on your device. Swiftkey learns not only what you say and how you say it (including across multiple communication channels like SMS, email, or Twitter), but also the physical way in which you say it. Always hitting the wrong key? SwiftKey will reshape the keys to improve the accuracy of your typing. As Ben Medlock, SwiftKey’s cofounder and CTO put it, “A new range of tools are required to solve a new class of problems that didn’t exist 10 years ago.”

I call this new class of tools transformative computing. As hardware becomes software, or rather what were once hardware features become software features, the change of these features from analog to digital allows changes to the user experience to happen in continuum rather than in a stepwise process which is what was required when hardware had to replace hardware. In the case of SwiftKey the physical keyboard has been replaced by a digital keyboard which allows change to be dynamic and continuous based upon user interaction with the device.

Transformative computing also impacts services. Look at how services like Netflix try to provide unique, customized recommendations to each user within a subscription. The recommendation engine (ie the algorithms) can be applied to each viewer ultimately because the entire experience is digital. Video games like Far Cry 3 are also building in more robust dynamics that cause elements of the digital experience to change based upon what the user does within the game. But some of the most interesting early applications of transformative computing is happening when analog hardware features are replaced by its digital counterpart.

The ‘sensor’ization of consumer tech plays a key role in enabling transformative computing.  Nest Thermostats for example utilize embedded sensors to adjust settings that historically would have needed to be physically adjusted by users. The Eversense thermostat can pull down the GPS coordinates from your phone and make adjustments based upon your proximity to your home. The Jawbone up features an idle alert that will alert you if you’ve been sedentary too long and the smart alarm feature is designed to wake you up when you are in a stake of light sleep around a pre-specified time. The forthcoming explosion of gesture, motion, and voice capturing capabilities that is now being embedded into devices will digitize a myriad of hardware features into software features. These features push forward the growth of transformative computing.

The push towards more personal devices also aids the move towards transformative computing. As we move from utility devices like shared desktop computers to personal devices like individually owned and used smartphones and tablets the customization of the user experience becomes more pronounced. A number of apps are starting to appear that provide a contextual user experience.

A couple of days ago the Wall Street Journal reported terrestrial radio is playing fewer hit songs more frequently (see Radio’s Answer to Spotify? Less Variety) driven by research showing that “listeners tend to stay tuned when they hear a familiar song, and tune out when they hear music they don’t recognize.” In the same article, the WSJ reports Mediabase data showing “the top 10 songs last year were played close to twice as much on the radio than they were 10 years ago.” This in contradiction to the fact that terrestrial radio remains the most frequent source of music in the U.S. and still the primary way consumers discover new music. A few thoughts on the impact digitization is having on radio listening:

  1. Digitization allows more granular audience measuring including the use of Portable People Meters
  2. Digitization allows for digital playlists that allow users to easily repeat play the same song. I’m going to refer to this as “binge repetition” – the act of listening to the same song or a series of songs over a short period of time.  This is an expansion of the original mix tape. Digital makes it easy and therefore exacerbates the practice.
  3. Digitization allows the use of algorithms to aid discovery. While this remains low relative to the national listening audience, it is certainly growing. Pandora for example reports 76.2 million active listeners with 1.58 million hours of listening a month and roughly an 8.6 percent share of the total U.S. radio listening. Spotify reports one billion playlists and 24 million active users.
  4. Digitization has moved the niche listeners to peripheral digital services like Pandora or Spotify where choice within those niches are deeper. As a result, terrestrial radio is left with a more well-defined audience.

Other thoughts? Leave them in the comments…

A few quick thoughts on the holiday shopping season:

November 1st marks the officially official opening of the holiday shopping season. This year we saw a tremendous number of promotions kick-off on November 1st. Walmart kicked off its campaign at midnight and Amazon launched its Black Friday Deals Store, offering “Deals of the Day” through Dec. 22 and weekly “Lightening Deals.”  Amazon is also allowing third-party sellers to participate in the holiday deals featured on the site.

Starting Early. Despite November 1st being the official start of the holiday shopping season, many retailers got an early start this year. BJ’s recently announced they were spreading deals across Black Friday week (and more than doubling the number of offers over last year).  Santas will be at Belk stores on Saturday November 16th for Santafest. Walmart and Kmart both ran their first holiday promotions on September 13th. But not everyone is supportive.  There is a Facebook campaign to boycott shopping on Thanksgiving.  And of course, retailers are opening their doors early on Black Friday.  Which has really become Thanksgiving evening.

True Start of Black Friday is 12:01 AM Thursday. Yes, retailers are opening their doors earlier.  But this year – for the first time – the success of Black Friday will be dictated by what happens online.  And retailers will start this at 12:01 AM on Thanksgiving.

A Social Push. Starting on November 18, Target began highlighting about 100 holiday products across all areas of its stores that have been trending well on Pinterest. BJ’s is launching a Facebook coupon program. Starting on November 22nd shoppers can vote on two different featured products and the individuals who voted for the winning product will have a coupon emailed to them.

Gift Guides. This year I feel like I’ve seen more retailers publish a gift guide. ToysRUs has long published their Great Big Toy Book (called the Great Big ToysRUs Wish Finder this year)Amazon launched an electronics gift guide.

Free Shipping.  The battle over the 2013 holiday is going to take place online.  According to a Shop.org survey from earlier in the year, roughly 35% of retailers said they offer free shipping all year, up from 23.1% a year earlier. Of the retailers not offering free shipping all year, 16% said they would begin offering it as a holiday promotion in 2013. A study from MarketLive finds 91 percent of consumers say they would take advantage of free standard shipping offers this holiday season. Lands’ End recently standardized their free shipping policy (to include all orders over $50) and many others are utilizing free shipping promotions.

Ad Previews. Over the past few years, Black Friday ads were leaked which caused retailers to issue take-down and cease and desist letters.  But retailers are quickly jumping on this bandwagon – releasing previews of their own ads.  Macy’s used Pinterest to provide a preview of items that would be included in their Black Friday promotions.  Historically retailers didn’t wanted their Black Friday circulars public until Thanksgiving Day.  Now most if not all retailers have released their Black Friday promotions two weeks ahead of Black Friday.

Flash Deals. Retailers are again using “flash deals” to promote timed deals.  Retailers are also holding some deals for last minute promotions – outside of their traditional Black Friday circulars. These were printed and distributed at stores at the Black Friday opening in past years, but increasingly I think they’ll be pushed through the retailers’ own apps.

Multiple Door Busters.  Earlier this year I predicted we’d see multiple door buster periods with earlier opening times.  That is exactly what is materializing.  OfficeMax will have doorbusters at 8PM, 11PM, and 5AM.  Walmart will have multiple doorbuster periods as well and is again publishing three different circulars.

Increase in Mobile. Recent research from Google suggests a 17% increase in overall smartphone shopping in 2013. Google also found one in four smartphone owners plan to use their devices to make a purchase — a 21% year-over-year increase.  Google expects mobile holiday shopping to increase on the weekends – especially the weekend after Black Friday. Cross Device: Google’s research found 80% of consumers will use more than one device at once while holiday shopping, and 84% will start on one device and finish on another. Shop.org survey of online retailers found 55 percent saying they are optimizing e-mail for mobile as part of their holiday marketing strategies. 45 percent will use smartphone paid search campaigns and 21 percent will utilize text message campaigns while 17 percent will use QR codes or other bar code scanning promotions.

Leveraging Smartphones Apps. More retailers are starting to utilize smartphone apps, but I expect even more activity in this category. Toys”R”Us recently launched they Toys”R”Us Wish List Wizard, an app allowing parents to scan items they want in-store for automatic inclusion on a digital wish list.

Price Matching. Target expanded their price matching policy beyond the typical 7 -day window during this holiday season. Target will match prices for products purchased between November 1 and December 21st. Staples introduced a new price matching policy as well.

In-Store Pick-up. Target expanded their in-store pick-up program to all stores by November 1st. Best Buy and others continue to promote a multi-channel shopping experience.

Attacking Showrooming:  BestBuy is taking showrooming head-on in some of their marketing and commercial spots with the slogan “your ultimate holiday showroom.”

Parlay Momentum. With a late Thanksgiving and fewer shopping days, retailers are making a big push to carry the momentum of Black Friday into the remaining holiday shopping weeks. Last week Target released their Black Friday preview ads circular. Target is offering 20% of one shopping trip between December 1st and December 7th if you spend $75 or more on Black Friday.  Target is opening at 8PM on Thanksgiving so most of their traditional Black Friday shopping will shift to Thanksgiving Day.  To keep up momentum they are encouraging shoppers to return on Friday and spend at least $75 which in turn will give them 20% off a shopping trip in the following week.  If successful, Target will turn one shopping visit into three.

Here are some great stats on how marketers are approaching the holiday season.

Sensors are combining with sensor to create sensor arrays. These sensor arrays are combining with computing power to solve complex problems and create complex systems.  The next big step is to combine these complex systems across a wider user experience. This is happening in a real and measurable way in many places, but especially inside the vehicle. Ultimately, this is how we’ll end up with fully autonomous vehicles – complex systems will combine with a large number of complex systems across the entire vehicle experience.

All of this will happen through starts and fits.  Hybrid periods I like to call them.  Here’s the next hybrid period I’d like to see:

My GPS system knows the speed at which I am traveling and also knows the speed limit for the road on which I am traveling.  But right now this information isn’t conveyed to other complex systems in the vehicle – like cruise control. Cruise control is evolving with developments like adaptive cruise control. Utilizing cameras on the front of the vehicle, these adaptive cruise control systems are now able to adjust to vehicles or other objects you are approaching at speed. If (read: once) my cruise control system has full access to my GPS system it could then adjust my speed to some function of the speed limit of the road on which I’m traveling. I could for example always travel the speed limit even though the speed limit is changing as I come into, through, and out of towns and other speed restricted areas.

Gartner recently suggested:

Unemployment, now at about 8%, will get worse. Occupy Wall Street-type protests will arrive as early as next year as machines increasingly replace middle-class workers in high cost, specialized jobs. In businesses, CIOs in particular, will face quandaries as they confront the social impact of their actions.

Will tech steal your job? Should we expect massive social unrest because of technological change?  I’m not convinced.

We have undergone thousands of years of technological change. Today we live in the most technologically sophisticated society we have ever seen. And yet – we also enjoy one of the lowest unemployment rates and one of the highest standards of living. Countries with high technology adoption see lower unemployment rates and higher standards of living – not the other way around. Technological advancement and the adoption of technology increases productivity – the productivity of workers. Certainty technological change will impact the type of work we do. But it won’t dictate a complete departure from individuals working.