One of the most interesting things about attending the 2006 International Consumer Electronics Show is seeing the increasing speed at which technologies are becoming commodities in this space. Technologies that even a few years ago were extraordinary state-of-the-art are now just another ho-hum technology that every company in the world produces.
A great example of this is 50-75-inch high definition plasma television sets: last time I checked this product segment there were really only four or five credible vendors, all the biggest electronic firms: Sony, Samsung, Philips, etc. This year at CES, however, there were at least twenty
different hi-def plasma vendors offering devices that are all gorgeous, all vibrant, all with good industrial design, and all, ultimately, indifferentiatable from each other, and some of these companies I bet you’ve never even heard of.
That, of course, is the very definition of a commodity: when it’s impossible to differentiate between vendor offerings based on capabilities. IBM exec Linda Sanford and I just wrote a book about this topic, Let Go To Grow, so this is a subject near to my heart and, frankly, one that I think is quite important to the long-term economic health of our country.
So what else here at CES has clearly become a commodity?
USB flash drives: They’re such commodities now that at least fifteen different companies were handing them out as digital press kits, and some of them are clearly custom builds: Lexar handed out a 63MB flash drive press kit, a size that isn’t even available on the common market.
Bluetooth: So common now and presumably so simple to implement that at least 100 vendors from countries around the world are offering bluetooth headphones, bluetooth speakers, bluetooth car interfaces, bluetooth-based Internet terminals and lots of other devices, uses for this short-range low-security communications protocol.
MP3 players: I’m frankly surprised that companies weren’t given these away as tchotchkas, they’re so commoditized. I saw MP3 players so small that they’d be lost faster than you can say “micro-mini-iPod”.
Handheld video players: before they’ve even become mainstream, there are now dozens and dozens of companies offering video viewing devices ranging from the size of a matchbook to a cigarette package, decks of cards, and even paperback books with lovely 7″ or 8″ screens. The missing piece of this particular puzzle remains giving consumers the ability to view their existing media on the new platform: if I already purchased a DVD, why is it so darn hard to convert it to view on my iPod Video, Sony PSP, or other MPEG viewer?
Cellphones: companies are now having such a tough time differentiating cellular telephones that the features of new phones are becoming rather amusingly powerful. From multi-gigabyte hard disks to multi-megabyte digital cameras, TV streaming capabilities, Web browsers that let you surf anywhere, music players (and subscription services), movie services, GPS location systems so you can track your kids motion during a day, traditional phone interface devices that let them piggyback on your existing cell service, and much more. My colleague and friend Drew Crouch finally asked one of the biggest vendors “that’s great, but can I still make a phone call with it?” (they didn’t appreciate the question!)
Skype and VOIP: So many companies are offering voice over Internet devices, or will be offering them within six months, that it’s clearly moved right into a commodity too. There were dozens of Skype-friendly phones at the electronics show ranging from beautiful cordless devices from Philips to amusing gadgets like a small Taiwanese company offering a USB computer mouse that flips open to be a Skype phone. When you’re using it as a mouse it will vibrate if you get an incoming call, darn cool idea!
Indeed, there are so many companies offering Skype -based devices, either computer headsets, USB-based telephones, wireless phones based on either wifi or standard phone communication, or even small boxes that let you plug your existing telephone into the Internet and utilize Skype, that I finally now understand where eBay determined its astonishing multi-billion-dollar purchase price for Skype.
There are a number of big players in the Voice over IP marketplace, and the two biggest are Skype and Vonage. But there wasn’t one third-party vendor at the Consumer Electronics Show offering anything Vonage-enabled or Vonage-capable, while there were dozens of Skype-friendly products and solutions. That’s why Skype is going to win this race, and why Vonage’s excessive customer acquisition are going to eventually spell doom to them.
At the end of the day the Consumer Electronics Show is a bellwether for the entire economy of the 21st century, after all. As goes consumer electronics, so goes the entire world. And when we’re all heading to a commodity future, how do we differentiate?
I think the next step will be, for entertainment media, the loss of the distinction between hardware, software, and content. When you buy a book/music performance/video/movie, what you’ll get is both the content AND the playback device, given continued commodization in hardware devices. This will (partly) solve the interoperability problem. (ps – you’re still blocking yahoo email, a service that I pay for)