Ten trends to look for in CE product development

There are several key trends in consumer electronics (CE) products that may guide developers in the years ahead. Many are part and parcel of the development of earlier CE-related products, such as Direct Broadcast Satellites (DBS), satellite radio, CDs and video games. In fact, superior business managers or strategists developing new and similar business models would be wise to review the growth of major companies in these key sectors, in order to learn how to avoid the same pitfalls.

Key capabilities, features and challenges faced in this market include:

• Simplicity

• Quick revenue streams

• Lower margins

• Higher content costs

• Immediacy, choice and control

• Enhanced competition

• Novel concepts and niche Markets

• Customer customization

• Real -time

• Mobility

Of these those that need to be of most concern to embedded developers active in this segment are the growth of novel concepts and niche markets. The reason novel concepts and niche markets are significant opportunities - as they have never been before - is largely due to the remarkable new technologies that are helping hardware and software designers to quickly, affordably and, sometimes, profitably, implement what could only be dreamed about a decade ago.

Perhaps one of the earliest and best examples of national deployments to niche markets is seen in the deployment of satellite-delivered video to hundreds of millions of potential subscribers, especially since 1994 and the unveiling of DirecTV. With a continental (and larger) footprint, a geostationary satellite could deliver the same signal to everyone in the United States, thus justifying large expenditures to deliver content - which would never have worked in even the largest of regional cable systems.

This is because the DBS operators' conglomeration of single-channel niche viewers in town after town, and in city after city across the nation added up to a total number that made sense economically, which was not possible in smaller, mid-sized or even the largest cable systems. The DirecTV NFL Sunday Ticket, the satellite radio adult Pay-Per-Listen (PPL) channels, and very possibly, the nascent Major League Baseball broadband out-of-market content packages, are three key examples of this trend in action.

Hand-in-hand with niche markets and novel concepts, is the idea of consumer choice and control, which is a second key trend. Just about every CE deployment recognized today looks at either a hardware or a software - or both - which give the consumer more choice and control than ever before. Moreover, in most instances, the early beginnings of these choice and control examples are just that: Early beginnings. So, for example, what began in the video game industry as a couple of providers and a handful of game choices is now measured in the thousands of video games and three to four key providers. What began in the DBS industry as 100 video channels is now close to 300 and growing. Plus, a CD selection of hundreds is now tracked in millions, as well as billions of individually "burned" CDs.

Recent hardware developments PDAs, computers and digital set-top boxes (STBs), do a great deal to further the concepts mentioned above, as well as that of immediacy. Further examples include Digital Video Recorders (DVRs) and Video-on-Demand (VOD), which allow consumers to see large sums of content when they want, often in whatever room of the home they want, and for a price that makes sense for the consumer and - one hopes - for the operator, as well.

Both VOD and DVR deployments are enough in their infancy to make statements about their complete revenue successes far from accurate. Nonetheless, we are comfortable projecting DVR growth in the U.S. alone reaching almost 30 million units in 2008. Considering the fact that there are over 500 million VCRs deployed globally today, this figure is achievable.

Indeed, CE hardware and software is headed in the direction of "anything, anywhere, always," the paradigm that will make any new CE project or plan jump even higher to meet these expectations. Additionally, just about every form of set-top box is becoming a significant processing computer these days, from DVRs, VODs and DVDs, to modems, video games and broadband devices.

Close on the heals of this trend is the related area of mobility. Hardware is becoming lighter and smaller, and the content is being built to fit, in order to achieve this required mobility. Most today would in no way be surprised to hear that mobile phones may eventually replace the standard land-line telephone.

Challenges ahead

Nonetheless, an equal number of challenges and pivotal obstacles remain for these same planners and strategists. These include concerns related to consumers, the government, legalities, and simply business itself. Key among these are the complexity of modern technologies, coupled with consumers receiving inadequate information, and the resultant inadequate consumer demand, plus the stifling of product and service marketability.

Concerns about government actions are important, because its position on matters such as Digital Rights Management (DRM) and the implementation of standards, for example, the interoperable satellite radio box that both Sirius and XM are voluntarily working toward today.

Government concerns are also occasionally related to economics, technological issues and business model development and implementation. A major "business" challenge often involves just managing price points. Traditionally, for the CE business, getting the price of a CE item below $299 first, and then below $199, are seen as key benchmarks before a business will ever reach a so-called "critical mass." The development and deployment of the VCR in the U.S. is a prime example of this lesson.

Some might wonder and question, Just what is the importance of looking at trends -and challenges- when building a new CE business model? To answer this, perhaps a military analogy might be apropos: For modern military training, why is it even today that instructors fashion learning around historical lessons and patterns? The answer is simple: human history repeats itself.

So, too, in business, are trends seen in one set of CE subsector as applicable to others. And so, too, are challenges encountered in one subsector often experienced in another. By becoming a student of these histories, and better still, implementing models that account for these trends and challenges, business development managers and strategists do a better job of what they are paid to do: Grow business.

Jimmy Schaeffler is addressing the ESC in a panel on consumer electronics chaired by Jeff Bier, general manager of Berkeley Design Technology, Inc.