CES 2013 Preview: Content Shapes Hardware's Future
CES 2013 Preview: Content Shapes Hardware's Future

This year's electronics extravaganza will put content makers at the forefront

Consumer electronics in recent years have become more than just high-powered circuitry. They're also about the content.

That means media, which used to play a supporting role as a sort of Vanna White showing off the features of the latest gadgetry, has become a rock star in its own right.

At this year's Consumer Electronics Show (CES) in Las Vegas, you will be just as likely to find examples of devices designed specifically around the characteristics of the media they transmit, as the other way around. In other words, the best technology will often be the items that can make themselves disappear and put the content front and center.

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Hardware specs, however, remain quite relevant. The art of making consumer electronics transparent, elegant and dead simple is much harder than it looks. That's why a show like CES exists. Thousands of companies around the world vie each year at the show to prove that they've got the formula right-though only a handful do.

With 3,000 exhibitors and more than 150,000 expected attendees during four days starting Jan. 8, the show will be a primordial soup of controlled chaos. And at 1.9 million square feet of convention floor space that equals the area of 32 football fields, this year's CES will be the largest in its 47-year history.

As with most years, the show can be analyzed through overarching themes. Here are a few to help decode this year's event.

EVERYTHING BECOMES EASIER FOR CONSUMERS

"If it isn't wireless or ready to go out of the box, it's probably last year's model," says Richard Doherty, an analyst with the Envisioneering Group. "Everything will be wireless this year. There won't be screens, devices or music systems that don't have Bluetooth, WiFi or both."

Pairing devices or hooking them up to an Internet connection will be a lot less cryptic. Manufacturers want to take advantage of the fact that one-quarter of households worldwide have access to wireless Internet, according to a report by Strategy Analytics. In the United States, where media consumption is among the highest in the world, more than 61% of households have WiFi.

Why it matters: Devices will rely less on physical media and more on digitally distributed content for their utility and appeal. The ability to market through digital channels will be increasingly important as fewer consumers walk down the aisles of brick-and-mortar stores to explore their entertainment options.

"It's a double-edged sword," Digital World Research chief executive P.J. McNealy says. "Traditional brick-and-mortar will be increasingly dis-intermediated, which means content owners have to find new marketing and distribution channels. On the other hand, that represents new opportunities."

Indeed, one of the show's primary keynotes is "Brand Matters," which will assemble leading marketing minds from AT&T, American Express, Samsung, Unilever, the Coca-Cola Co. and Salesforce.com to dissect how digital platforms are transforming the world of brand messaging.

Check out these CES preview videos (another below) from Billboard.biz contributor Scott Steinberg, who will be reporting for .Biz from the conference. Scott runs the management consulting/market research firm TechSavvy.

SECOND SCREEN GETS FIRST BILLING

It's not just about using a tablet as an alternative remote control anymore. People are increasingly bringing along another screen with them when they turn on their TVs. Examples include sports fans who sit on their couches with their laptops, fingers ready to look up team statistics, player bios or a piece of esoteric trivia that suddenly becomes vitally important to settle a bet. For others, watching a movie or TV show now involves searching IMDB.com for credits or actor bios, or Wikipedia for plot summaries and behind-the-scenes gossip.

Why it matters: This extra piece of real estate will reshape entertainment in numerous ways that we're only now beginning to understand. It's not just ad space: It's also the ability to serve up companion content that further engages viewers and listeners in a powerful, interactive "lean-forward" manner. And it's an opportunity to wrap additional commerce in a way that's not intrusive to the content playing on the big screen.

APPLE'S INVISIBLE HAND WILL BE FELT

It's ironic that the largest consumer electronics company by revenue, Apple, has never exhibited at CES. But that doesn't mean Apple products aren't on display at the show.

One of the fastest-growing parts of CES is the iLounge Pavilion. The exhibit space opened in 2010 with fewer than 100 companies showing Apple peripherals within 25,000 square feet of space.

This year, iLounge will be one of the main events. More than 500 companies that make peripheral technologies for Apple devices have signed up to show their wares at CES. The pavilion is in such demand that its 120,000 square feet of exhibit space was sold out within three hours of becoming available, according to Jeremy Horwitz, editor-in-chief of iLounge, the online publication that organizes the pavilion with the Consumer Electronics Assn.

"Growth of Apple's entire product family and the strength of the brand has only increased" in the past few years, Horwitz says. "It went from a niche computer manufacturer to being the thought leader of consumer electronics. If you are an accessory developer today, you need to have a product that works with Apple devices."

The Cupertino, Calif., company's influence is so strong that merely the hint of its next moves are enough to cause convulsions in the $206 billion consumer electronics industry. One clear example at CES this year is the rumored Apple TV set, which many believe could ship either late this year or in 2014.

"That has every company scared to death," Doherty says. "Everyone is scrambling now so they can be competitive when the Apple television ships."

Why it matters: Apple's success partly stems from its products' ease of use. This skill is particularly relevant because TVs have gotten exponentially complex. Not only are multiple devices plugged into the TV, all requiring their own remote controls with their Byzantine buttons, but the services available on a connected TV require more than just channel switching. There are music services that offer tens of millions of songs, streaming video services that have a bewildering array of options and gaming services attached to full-blown social networks, as well as thousands of apps and widgets.

SAMSUNG WILL SET THE PACE

Among the companies present at CES, Samsung will be one of the most influential. The company has evolved from challenger to champion in recent years, displacing Sony as the world's largest manufacturer of high-end TVs.

"They are the giant, bigger than the 800-pound gorilla," Doherty says, half-jesting. "Their booth last year crossed over several zip codes."

The Korean colossus currently makes screens for one of every two TVs and tablets sold in the world today, though not necessarily under its own brand. Its billion-dollar factories crank out screens, semiconductors and myriad components for other companies that assemble, package and sell the devices under their own brands.

"They have an edge over everybody else, because they actually make the parts internally," Doherty says. "That also means they are able to keep what they do under wraps because there aren't as many third-party companies working with them that can leak information. That makes Samsung the biggest wild card of the show."

Why it matters: Samsung put its toe in the content waters in 2012 when it bought mSpot, a mobile music streaming technology company in Silicon Valley. A few months later, it launched an all-in-one music streaming service for its mobile devices. With abundant resources, Samsung has the potential to become a powerful content platform.

Video from Billboard.biz contributor Scott Steinberg, who will be reporting from this year's conference. Scott runs the management consulting/market research firm TechSavvy.

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