If you happened to be blind-folded and dropped into any random part of last week's CES show floor and told that you are where at the world's largest X show, I think there would be a good chance one could guess that X stood for “cases “and speakers of all shapes and sizes.” These products were prevalent throughout each of the conference halls that it would seem low margin peripherals like cases and bluetooth speakers are the filler for desperate brands looking to justify their booths at the show.
There are a couple of terrific posts that do a great job of culling the best from the uncountable pixels of high resolution TVs, convertible laptops, smartphones, and tablets, so I'll stick to two quick observations:
First, it was amazing to see how quickly both the smartphone and the tablet have been commoditized by the dual forces of Android and Chinese manufacturing. A couple of years ago, even the flagship devices from tier-1 Chinese companies like Huawei and ZTE looked like they belonged in the bottom of a cereal box with their janky, molasses-like animations pushing their underpowered chips well below the tolerable. But Android got better, Moore's Law did it's thing, and perhaps most importantly, the fit and finish of the devices this year— even from companies like Changhong which doesn’t even really make smartphones— were within 10% of anything from Samsung or Apple. In a world where a 7 inch tablet sells for $85 (as the Coby rep told me), it’s going to be very hard to maintain a price premium without some sort of a greater ecosystem benefit. iOS still has that for now, but as its software lock-in gets hollowed out from the inside by companies like Google, Spotify, Evernote, and Dropbox, I wonder how lasting the advantage will be.
The second observation is related to the last point: it would appear all that is required to partake in the delusion that you can will a differentiating ecosystem into being is a large enough corporation which makes at least two types of screens (televisions, tablets, phones, and PCs being the big four but with home control and traditional appliances not far behind). Sadly though this is a classic case of thinking from the business model on in instead of from the customer out (I should know, having worked on the AppStore for printers at HP for more than a year under the spell of 22% net margin incrementally spilled ink). No matter how hard these companies will it, it is hard to believe that the ecosystem will spring up out of some yet unidentified use case, especially for those tied to Android, a black hole for any sort of lock-in beyond Google services, or Microsoft, the company struggling to retain software relevance in an integrated device world.
If I were a startup with the relevant IP/skills, I might be thinking hard about how to fit into the ecosystem plans of Samsung, HTC, Huwai, etc. I suspect a lot of M&A dollars will be spent in the ecosystem delusion even by players who’ve traditionally been cheap on paying for software & services.
Because even if it fails, the strategy has at least a small chance of keeping them from becoming smartphone case manufacturers, the last stop on the way out of relevance at CES.