The Dog Who Didn’t Bark at CES 2019
Perhaps the most notable aspect of this year’s CES was the lack of aisle after aisle of me-too products on the latest technologies. Promisingly, some core technologies like wearables, digital health and home automation, seem to be maturing (in a positive way). We could see more useful applications on display and fewer vendors, as well as broader integration with major platforms like Amazon, Google, and Apple.
With these technologies now past their euphoria stage, as investors, it’s time for us to focus on areas that are getting traction and have potential market fit. From our perspective, the most promising areas are in digital health, voice-driven applications, home automation, and transportation.
Digital Health. Among digital health segment, sleep is getting much attention though it is still in the first stage, that is, showing impressive data points but little by the way of how to improve those (beyond what is already known as key factors for good sleep). In the promising area of behavior management and mental health, there were few new platforms, yet this sector remains a potential large market. We are still in early stages of integration of sensor-based devices with clinically proven platforms that can measure and impact our health and well-being. This is the pivotal point for the next stage of growth in digital health.
Smart speakers were the showhorse of CES this year, especially with Google which showed little substantive technology but a fantastic amount of promotions and crowd catching games. In fact, it’s an amazing trend that the speakers are very popular, by one account up to 25% of U.S. households have one, and yet their functionality beyond setting a timer or playing music is still very limited.
Although the smart speakers are yet to become meaningfully useful and cross over to the must-have category, there is a platform effect from these companies that help unit different applications and provide a more sustainable growth trajectory.
Transportation. It was interesting to finally see the dialing down of the claims of autonomous cars (levels 4 and 5) being just around the corner. As we noted last year, while the promise of autonomous car is significant, the expectations of their imminent adoption are premature and show a typical example of how trends are overestimated in their adoption speed and underestimated in their depth.
There were examples of leading edge (mostly concept) technologies such as electric Vertical Takeoff and Landing (VTOL) vehicles or the so-called flying cars. While we are long way from workable solutions, this area is more promising than fully autonomous cars: planes have used level 5, aka autopilot, for decades now, and the combination of flying and using on-the-road driving for the last mile just makes sense.
AR/VR. The overhyping of VR is now fully acknowledged and we continue to believe that the more promising application is in augmented reality, not VR, and, most likely in industry and B2B markets, not consumer. There were promising technologies that competed well with Magic Leap and although the applications are still not clear, the platform does lend itself to increased productivity, hence my optimism about its B2B applications.
The dogs who didn’t bark. Among other areas notable for their absence are:
· Platforms addressing the privacy concerns of consumers
· Content and app innovations
· Using the First Screen in a fully integrated way with other devices (TVs are still mostly shiny, expensive, hi res dumb screens)
· Last Mile mobility solutions (Scooters seem like an oversold concept)
· Digital Currencies and Blockchain (at least this hype has not taken over CES yet)
Best Promising: Home automation, Health and fitness applications, voice enabled and integrated home, auto and personal platforms
Least impressive: Drones, VR, Robots
The upshot: Existing technologies are being sieved and the best ones are maturing. Time to work on some good applications and software.
