The Apple Tree Casts Its Shadow Over CES

As is its custom, Apple is an unseen presence at the Consumer Electronics Show, which opened in the Las Vegas Convention Center yesterday. But never has its shadow cast a broader swath over the estimated 140,000 attendees milling about 1.6 million square feet filled with over 2,700 exhibitors than it does this year, David Sarno suggests in the Los Angeles Times this morning.

It’s all about rumors that Apple has indeed “cracked the code” on TV, as Steve Jobs averred to Walter Issacson, and will be disrupting the cable and broadcast landscape soon with its typical disregard for the way people currently consume information. The likes of Samsung, LG and Sony are scrambling “to come up with the next big thing in home entertainment,” Sarno says, but the analysts he talks to seem to be on the same wave length as Jefferies & Co.’s Peter Misek.



"They're just throwing spaghetti up against the wall right now," says Misek. "I think Apple's going to force a big change in the industry --and it's hard for the companies to respond when they don't know what iTV looks like yet."

The Wall Street Journal’s Don Clark and Jessica E. Vascellaro take a look at some of that pasta primavera this morning, even as it slides down the exhibitors’ partition walls. Samsung has a set that responds to voice commands, à la Siri, as well as gestures, à la Xbox 360 and others. LG also unveiled a voice-and gesture-activated remote control, and speech-recognition specialist Novauris Technologies is working with Panasonic, they report. But there’s lots more, including content solutions.

“Companies such as Yahoo and Gracenote are leaning on complex algorithms and sound-analysis techniques to serve up extra information about programs and offer individualized advertising and shopping opportunities,” Clark and Vascellaro report. But they say the challenge of separating the content that consumers want to see from all the dross they don’t is “complicated by the fact that some powerful players -- such as cable and satellite companies, as well as Apple and -- are building vast repositories of video programming and aren't necessarily eager to let other companies search through it.”

Speaking of Apple, Microsoft CEO Steve Ballmer gave his “final” keynote address at CES by announcing a few reactive products last night. In a speech that CNNMoney refers to as a “gonzo” event replete with a gospel “Tweet Choir,” Cookie Monster, Ryan Seacrest and an Auto-Tuned Bill Gates, Ballmer delivered a lot of flash but little news, according to Julianne Pepitone. When asked “what’s next” by Seacrest, Ballmer replied: "Windows 8 is what's next! There's nothing at Microsoft that's more important than Windows."

Pepitone takes a look at the Windows 8 that Microsoft has released, pointing out that it’s not even in beta yet and that, as radically different as it may be, Apple will probably have its own radically different OS by the time it launches next year.

Then there’s Microsoft’s mobile OS. In its “struggle to close a canyon-like gap established by leaders Apple and Google,” Ballmer showed off Nokia’s Lumia 710 that uses Windows Phones software. It will be available tomorrow to T-Mobile USA customers; the Lumia 900 and HTC’s Titan II phones will be on AT&T’s 4G LTE network later this year, according to Ballmer.

But prognosticators are not blown away. “More than 80% of smartphone buyers say they will buy an iPhone or Android device in the next six months,” blogs Cecilia Kang in the Washington Post, citing Yankee Group analyst Katie Lewis. “Only 9% say they will buy a Windows Mobile phone.”

The Wall Street Journal’s Kevin Sintumuang ran down all the devices that enable consumers to “cut the cord” to cable, accompanied by an amusing “Dear John” letter to the hapless provider (or should I write “appless”?)  he’s leaving behind. “I’ve changed … but you’ve changed more,” he writes. Indeed, when it comes to content, “more” seems the operative creative principle:

“How many shows about housewives are there? I like chefs, but I don't need to see them on television 24/7. Ghost hunters? Dancing celebrities? Talent shows? ‘Shark Week’? Celebrity ghost-hunting talent shows during ‘Shark Week’? It's too much of too little. You're full of a lot of inescapable crap.”

Many observers blame Millennials for abandoning the crap on cable for the crap online, but that’s not necessarily the case, points out Ypulse’s Melanie Shreffler.

“In our research on Millennials' media habits,” writes Shreffler in an email, “we learned that while most students watch streaming TV shows and video, most also watch network and cable TV.”

That’s because their parents are paying for the cable bill, whether it’s for high schoolers at home or college students whose dorms are wired. Only 25% of college student do most of their TV watching online at this point.

“It’s when students graduate and set up their own households that cord cutting takes hold; they realize the expense and cut back their service or, occasionally, cut out cable TV altogether,” Shreffler observes.

2 comments about "The Apple Tree Casts Its Shadow Over CES".
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  1. Jim O'neal from Independant Media Consultant, January 10, 2012 at 9:21 a.m.

    On the last segment..Cutting the Chord, I can state firsthand with a recent grad set up in her own cable, online only...CableCo's have a big issue coming forward with their 100-250/month bills

  2. Brad Stewart from Molecule Inc., January 10, 2012 at 11:05 a.m.

    Great article, Thom.

    I think iTV is staring at us in the face (pun not intended), and this article offers a hint at what it might be, if we connect some of the dots.

    iPhone and Android were successful because developers adopted it. These development companies weren't basement-dwelling hacks, à la Facebook API, but real companies with significant resources and funding.

    By creating a distribution/display ecosystem by selling beautiful devices, and maintaining control on content rules, iTV would be exactly like the iPhone ecosystem. There would be an ensuing rush of producers, creating professional paid content for affluent and hungry device owners.

    In short, Apple could do for TV producers what it has already done for mobile developers. And apple would get a slice of all associated transactions: something Panasonic, LG, and other TV manufacturers currently don't get.

    Though this all sounds theoretical, I honestly can't imagine Apple straying far from its iPhone ecosystem model, so I think this is as realistic a guess as any.

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