This year, according to our fitness trackers, we walked nearly twenty miles of convention show floor looking for innovations with the potential to dramatically disrupt existing businesses and industries—the better and cheaper offerings we call Big Bang Disruptors.
It was great to see companies we’ve written about in earlier years growing bigger, some steadily developing their new technologies and others taking off into the stratosphere.
The Parrot smart pot and the Quell pain management wrap are now commercial products, while longer-term but higher-potential start-ups including Veristride (smart shoe inserts to help with rehab), Kolibree (gamified toothbrushes), and Tobii (eye tracking hardware and software), have made progress finding business partners for their enabling technologies, which continue to improve.
Our most successful “graduate,” however, is Oculus, whose virtual reality hardware—finally for sale later this year for $599—was everywhere on the show floor, often to augment demos of other technology.
In 2013, we trekked to a suite far from the convention center to visit with the founders of the company, then an on-going Kickstarter project. Since then, it has gone on to win CES “best of show” (for a prototype!) and was acquired by Facebook in 2014 for $2 billion. To think we knew them when they were sleeping in the suite to save money.
It’s even more remarkable to reflect on whole categories of technologies that only a few years ago took their first baby steps at CES are now occupying entire floors of the show, including drones, 3D printers, wearables and the Internet of Things.
As the price and performance of these categories continue to improve, the number of experimenters proliferates, setting the stage for the often sudden mass adoption that is characteristic of Big Bang market development.
That phenomenon is being accelerated by the increasing componentization and standardization of key inputs, including sensors, displays, cameras, and chipsets. The more of these that companies large and small buy from vendors around the world, the faster the improvement cycle accelerates—a true virtuous cycle.
This year there are the usual dazzling new consumer products, including 360-degree high definition cameras, 98 inch curved 8K OLED televisions that are thinner than a small stack of credit cards, and eerily beautiful “black stainless steel” smart appliances from Samsung, LG and others with built in-displays showing contextually-relevant information. All of them are connected to everything else now, as a matter of course.
We faced a dilemma this year picking the five most disruptive innovations from over 2 million square feet of exhibit space. At previous CES shows, we’ve been spoiled by entirely new kinds of disruptive innovation that seemed to spring up from nowhere, often led by a visionary start-up.
But nothing so dramatic is going on this year (with some exceptions noted below).
Why not? , In a report issued by Accenture earlier this week, our colleagues note that their survey of 28,000 consumers worldwide finds growth generally stalling in communications, media and technology companies.
“Unfortunately,” the report reveals, “demand for the next generation of devices enabled by the Internet of Things isn’t growing fast enough to offset declines in traditional categories.”
Based on the evidence, Accenture believes that “price, security and ease of use remain barriers to adoption. Other factors, which we’ve noted before, include a long-running battle over IoT standards--which shows no sign of resolution--and the lack of any mass market “must have” applications. Once those issues are resolved, watch out for the bang.
So instead of disruptive individual products, this year we’re grouping our findings into the most disruptive trends we saw this year, all of which cross several traditional industry boundaries (a trend in itself).
Without further introduction, here they are:
1. Autonomous vehicles go mainstream – CES is now a car show. Automotive technology has increased by 25% to over 200,000 square feet of exhibit space. Beyond the latest electric, hydrogen fuel cell, and hybrid models, there were some outrageous concept cars, including a supposed Tesla-killer from Faraday Future that looked like a Batmobile on acid.
But aside from the eye-poppers, there was a more important transformation taking place in the mood-lit car booths of Audi, Volkswagen, Toyota and others.
In just a few years, cars have gone from merely being connected to the Internet to being autonomous—a revolution in technology. At this point, the basic tools for self-driving cars have been worked out, and much of it can now be produced at scale for relatively little cost.
Gone are the days of the giant LIDARs spinning on top of the early Google prototypes. Now the cameras and sensors are embedded in the car’s design, sometimes replacing old-fashioned technology such as side-view mirrors. And these are no longer concept cars—they’re actually being tested in live traffic.
Even as cars take over more of the driving (a trend that began decades ago with power brakes and automatic transmissions) in incremental steps, the general consensus is that truly autonomous vehicles will hit the road sometime after 2020.
But now the main hold-ups are regulatory (adapting traffic and insurance law to a new reality) and the need for new mobile networks that can handle the data volume and reliability needs of millions of vehicles (see #3 below).
2. Providers become platforms – As new categories mature from the early experimentation stage to the Big Bang stage in our shark fin model of adoption, old industry borders evaporate along with often overly-complicated supply chains.
As consumers embrace the disruptors, the floodgates are open for anyone to become a player and even a dominator in the reconstructed categories. Smart incumbents seeing the inevitable will position themselves for flexibility, becoming virtual platforms that allow their core expertise to be quickly redeployed to new businesses with new partners.
This “blurred lines” strategy is becoming positively promiscuous among leading technology providers, with the strangest imaginable combinations appearing in rapid succession. Companies including Bosch, Qualcomm and Corning are turning themselves into service providers whose expertise, brand, and technology can be used in a variety of fast-changing industries.
Everyone is getting into everyone else’s business. Gaming superstar NVidia, for example, established a foothold in automotive a few years ago by building the user interfaces for connected cars. But now they’re building much of the core software that autonomous cars will operate on.
The process is even more dramatic for Intel, whose exhibit area only a few years ago was a must-see only for early versions of the Ultrabook. Now the space is a three-ring circus highlighting the chip giant’s partnerships in pretty much everything, including wearables, drones, IoT, virtual reality, fitness, and media.
The fitness marketplace, likewise, is dominated both physically and virtually by Under Armour, which has evolved well past its roots as an innovator in sports clothing. The company just launched its own suite of connected trackers, scales and other monitoring devices, developed in partnership with HTC (which has itself repositioned from smartphone producer to virtual reality competitor).
Under Armour itself is positioning to be the platform on which all other sports and fitness products collect, analyze and report data back to the user through its UA Record app, which the company describes as “your body’s dashboard.”
3. Invisible but essential 5G infrastructure – One thing nearly all of the nascent disruptors have in common besides their relative immaturity is the need for a next-generation Internet that will be natively mobile, orders of magnitude faster, simultaneously able to handle high and low bandwidth applications at rapidly increasing volumes of traffic, and offer vast increases in reliability, security, and coverage.
That’s the general specification for an emerging protocol known as 5G, which will start to appear in full after 2020. At a panel discussion that included executives from Cisco, Ericsson, Qualcomm and Intel, the companies explained the technical, financial and regulatory challenges for the new standards, which will put the already impressive evolution of the current cutting edge 4G LTE to shame.
5G will radically redefine both the mobile architecture and the core Internet to support unique demands of the new disruptors. Self-driving cars, for example, will require network latency of less than a few nanoseconds. Robotic surgeons can't stop working simply because of radio interference. By 2020, as many as 30 billion devices connected to an Internet of Things will need networks that can penetrate deep into buildings, and low power utilization to keep batteries running for a decade or more.
And to carry 4K and 8K video at scale, and to support real-time VR applications in gaming, health, and design, 5G networks will need to offer speeds even greater than available today from home fiber connections.
Standards bodies have only just begun the process of defining what is and is not 5G, but the basic structure has become much clearer. Panelists agreed, for example, that 5G will make use of much higher frequencies of radio spectrum in bigger blocks, including extremely high or "millimeter wave" bands above 30 GHz.
5G devices will communicate at these frequencies over large clusters of small antennas, as opposed to the large towers of traditional cellular networks. Though expensive to deploy, these antenna arrays will create enormous improvements in network speeds, approaching perhaps 20 gigabits per second or greater.
Very high-definition video will rely on the speed and capacity of the higher frequencies, while the Internet of Things will take advantage of 5G's penetration and lower power utilization. Mission-critical uses, including self-driving vehicles and real-time medical applications, will drive improvements in reliability.
To accommodate not only massive increases in network traffic but the widely different characteristics of these and unknown future applications, the core of the Internet will also have to be redefined, allowing different uses to "slice" the network into multiple virtual networks, all of them sharing one set of protocols, routers, spectrum and infrastructure
In addition to clearing the high-band spectrum or working out rules for sharing it with existing users, regulators around the world will need to work out as much as possible a uniform plan, allowing equipment makers and networks economies of scale in producing as few local variations of 5G infrastructure and devices as possible. Even so, the capital costs for network operators will certainly run into the billions, if not the trillions, to deploy.
4. Random experiments accidentally collide into products – A defining feature of Big Bang Disruption is the increasing ability of experimenters to combine cheap component technologies into new products and services and launch them with little regard for risk. Most will fail, but at little cost, often producing useful insights for the next iteration. And if you launch enough particles, you may just get fission.
That’s the model on deafening display in Eureka Park, CES’s startup marketplace. What began only a few years ago as a row of interesting early-stage companies now has its own floor of convention space where hundreds of potentially game-changing products from around the world each have their own small exhibit.
In the days before Eureka Park, we had to walk the edges of the convention center looking for these gems. Now, we can’t possibly talk to even a fraction of them.
The focus of the startups runs the full range of technologies and applications, from hydrogen fuel cell smartphone batteries (Intelligent Energy) to intelligent tails for role-playing costumes (in-tail) and everything in between.
We saw an amazing range of wearables, security apps, stylish drones, baby and pet tech, smart watch variations, educational tools and leisure gimmicks (the robotic bartender Somabar), many of them raising funds solely from Kickstarter, Indiegogo and other crowdfunding platforms. Everything is sustainable and location-based.
An interesting question of strategy arose as we compared the sometimes over-broad to the often overly-narrow.
As our research shows, Big Bang markets often take off dramatically for one or two providers who chance upon just the right combination of technology and business model, a phenomenon we refer to as “winner take all markets.”
For many of these start-ups, the challenge has been to define a market to win. We saw many examples of very focused applications, including sensor-based athletic products for specific sports including basketball, cycling and boxing. Or how about a robot made specifically to clean your grill, the Grillbot?
There’s clearly an eager market for each of these, but also a small one. So the question is whether it will be big enough to give the winner momentum to move into adjacent markets and become the kind of platform provider we noted above. If not, even a successful startup may be gobbled up by a more flexible but less focused acquirer, or worse, fizzle out after the initial market is saturated.
Of course that’s a problem few of the experimenters we saw will have the luxury of facing. Much of Eureka Park had the distinct feel of having just won an MBA new business model competition. Unfortunately, many of them don’t seem to have advanced much beyond that.
But it doesn’t matter. Experimenting is cheap, and so is failing—for many of these start-ups, the cost of a booth in Eureka Park was probably the biggest expense.
5. Moore’s Law is the uber-disruptor – Looming in the background of nearly everything we’ve seen at CES for the decade we’ve been attending is the reality that every business is now a digital business, whether a consumer electronics company or a customer. As Larry wrote in a 2012 article, at CES the only law that matters is Moore’s Law.
The relentless improvement in price, performance, size and power utilization of computing power that Gordon Moore predicted back in the 1960’s is the uber disruptor. Some years that means new products while other years find entirely new categories, but either way the better and cheaper phenomenon is driving transformation in a wider range of industries all the time.
At CES this year, that reality translates to new combinations of technology being embedded, inserted or replacing analog parts on just about everything. One way or another, all the products you see can be characterized as being smart, connected, augmented, predictive, analytic, virtual and ultra.
Walking the floor, we were reminded of the sketch from the IFC series Portlandia where every product was being decorated with birds, because, why not? The marginal cost of adding wireless antenna, cameras, displays, chips, and sensors is fast approaching zero, so why not just do it, even if the applications are trivial or even unknown? If nothing else, the users may figure out some use for the stuff that will turn out to be valuable. So, put a bird on it.
The disruptive impact of digitization can of course be seen most dramatically in the consumer electronics and computing industries themselves, along with media and entertainment. (Compare this year’s CES to the embarrassing show stoppers of the not-so-distant past, as this terrific photo-essay by Matt Novak does.)
But now we’re seeing the same accelerating pace of transformation happen in industries that were long-thought safe from computers, including agriculture, energy, manufacturing, transportation, health care and even government.
As the size, cost, and power utilization of new sensors continue to improve, for example, standalone and often annoying trackers and other wearable devices are being replaced by integrated solutions from traditional providers. We saw dozens of examples of sensors being sewn directly into clothing, a category we hereby christen as wearable wearables.
In the smart home, to take another example, kludgy plug adapters that let you control traditional lights through a smartphone are being superseded by natively intelligent products with real applications.
Consider Ecovent, a temperature control system that checks humidity and other environmental factors to open and close connected vents to optimize heating of the house in various conditions. The company is now testing data analytics to diagnose problems, such as mold hazards or figuring out that the one room that never gets warm may have been built with uninsulated ducts.
Only a few years ago, the idea of using sensors to monitor and improve your sleeping habits seemed absurd. Then, suddenly, there were all kinds of products that did just that, either through trackers that you wore or devices you slipped under the sheets.
But this year, maverick mattress maker Sleep Number was at CES in force, demonstrating an aggressively-priced new foam mattress called the It bed that supplements the company’s core adjustable technology with sensors built in from top to bottom, sending a constant stream of data and analytics to your smart device.
This mainstreaming of disruptive technology is both a sign of Big Bang adoption and often in mature markets, a necessary condition. We expect to see more of this phenomenon in the immediate future.
In some sense, as these examples suggest, the technology that transforms markets become invisible, just part of the scenery. Ironically, the more disruptive the technology is, the sooner it disappears.
In the meantime, there’s plenty of crazy stuff to look at in Las Vegas every January. Like the Nixie, a mini-drone you can wear around your wrist and, when the moment hits you, tossed in the air to take a photo.
That’s right, the wearable selfie drone.
Until next year…
Follow us on Twitter and visit our Facebook page for the latest from our research. Our thanks to Ivy Lee for research assistance with this post.
