CES 2020 Observations and Insights – Day One

CES is the biggest event showcasing emerging consumer-facing technology.  Adoption of connected devices across consumer channels has exploded and this year’s show is expected to focus on bringing that technology closer to customers.  As exponential growth continues across the Consumer IoT ecosystem (connected smart devices and services), the show floor is filled with the usual technology players, an amazing array of tech startups and an expanded presence of traditionally non-tech companies moving towards what’s next in digital.

Learning From the Startup Ecosystem

Many startups are focusing on increasingly more specific customer needs. To some extent, this wider array of highly targeted products and services could mean less initial direct competition between value propositions that serve the same niche. However, this makes for a great petri dish for the rest of the ecosystem to learn from the companies that are dedicated to solving very specific customer problems.

Early Observations at CES 2020

Our early impression from seeing the focus of startups and major incumbents at CES2020 collectively are a few key trends that build on progress made over the last several years, such as artificial intelligence, devices are getting smarter and increasingly, more devices are getting smart (planters, bikes, safety devices, clothing and even shelve just to name a few), specialized pet and pet owner products (e.g., smart doors) and robotics.  Robots are a good example of proliferation within a product category where there is increasing focus on specific customer needs. Many feature anthropomorphic traits to encourage human interaction and create more emotionally compelling human-machine engagement. Another continuing trend is the extent to which so many technology products and services are dependent on cloud services and continuous Wi-Fi and mobile data connectivity.

For Service Providers Specifically

Smart home devices continue to flood the show floor.  As these devices become more ubiquitous in consumers’ lives, the focus of innovation will likely shift from which device to choose within a given subcategory (e.g., motion sensors, smoke detectors, light switches, etc. since most are indistinguishable to consumers) to making smart home customer experiences easier to set up and more convenient and consolidated.  Delivering compelling smart home experiences is much more dependent on creating holistic solutions than about getting lost in the myriad of largely generic devices and stand-alone solutions. When it comes to service providers, winning companies will not walk the floor to determine which suite of smart home devices to sell but will focus on how to offer differentiated customer value proposition that are uniquely targeted to their core customers.

With a proliferation of overly generic products, services, partners and channels, what should drive success?

A winning model for many service providers includes:

1. A tenacious focus on developing and providing differentiated and disruptive customer experiences.
2. A commitment to building and refining the overall business model around an overarching customer value proposition.
3. Proximity to the customer, allowing for efficient scalability of customer acquisition marketing efforts.
4. While this last point seems obvious, our experience is that it’s frequently overlooked, a critical success factor is engineering the business model from a holistic perspective that aligns value proposition differentiation, customer lifetime value and customer acquisition costs.

Many companies will get this last part right, but will fail competitively because they miss the first step:

Why are they in, or going into this business? What customer problems do they/will they solve? This is the role of a customer-centric value proposition, which brings focus to priorities and creates a context for decision-making in addition to market trends, economics and other data.

As an example, from the home security vertical, SimpliSafe and ADT both offer home security and other related products and services. While there are significant differences in specific attributes such as pricing, breadth of solution/services, installation and others, the central difference between the way the two companies go to market is the needs they focus on individually and the overarching value proposition design and execution to meet those needs.

As companies spend the week learning about the array of smart home and connected solutions, consider that achieving success in this space will not be driven by debating and choosing the “right” devices, but by ensuring that your value propositions occupy enough important places in the value chain to have enough margin to focus on and afford the marketing and acquisition costs to recognize growth and success.