So, we know that the hot market drivers continue to be all about the smart devices, whether smart phones, phablets, or tablet PCs, as pathways to the Internet of Things (IoT) – the increasing state of ubiquitous (or pervasive) computing. However, these Consumer Electronics (CE) devices represent only the short list of devices that actually comprise the IoT, although they are likely to be the gateways through which users will engage with and manage their smart lives through the IoT.
Mobility was certainly the most (positive) disruptive technology to date, but as we look ahead into 2014, and mobility is pushed to new levels, the IoT and the smart, connected life is the disruptive technology that has already begun and will reshape our industry and lives. The set of changes behind this disruption hold an important opportunity for a new growth phase for the semiconductor and electronics industry due to the significant increase in semi content that will necessarily ensue to support the connectivity.
From CE, health & fitness, medical, automotive, appliances, energy management, and connected cities, the IoT and the connected, smart life is one of interconnected devices relying on networks and embedded technology. IoT presents a new level of integration for components, devices, and use cases. In turn, there is a new level of component complexity and networking that is necessary to realize IoT: System-on-Chip (SoC), System-in-Package (SiP), connectors, embedded ICs, wireless networking (e.g., Wi-Fi, Zigbee, Bluetooth), MEMS, among other component categories.
Wireless component strong
If we consider the recent research on Bluetooth Smart ICs, including the recent webcast by IHS, as an example of the growth anticipated for wireless connector ICs, we see IHS forecasting (as reported in EP&T):
Worldwide annual shipments of Bluetooth Smart ICs [surging] to almost 300 million units in 2018, up from just over 30 million projected at the close of 2013, for a five-year compound annual growth rate [CAGR] of more than 55 percent. This year alone, shipments will grow nearly 250 percent from 9 million units last year, and volumes in 2013 are expected to double by next year. Shipments are then forecast to cross the hungred-million-mark by 2015, subsequently breaching the 200-million-unit threshold in another two years in 2017 […].
The smart wireless sector expansion is not limited to Bluetooth alone, of course, and so these significant numbers should be consider but one indicator of the positive growth momentum that IoT is already providing. Importantly, we see the wider user interface sector already pushing into new modalities, such as in automotive where the quest for connected car with constraints on the driver distraction are pushing automotive OEMs to forge new paths. One latest example is the new Mercedes-Benz touchpad in the 2015 S65 AMG, as reported by TechHive. We see clearly the modeling of user interfaces based on the already adopted technologies from smartphones and tablets but now put into new device interface situations, such as the car. Mercedes is not alone in the user interface drive, Nissan recently hinted at something akin to a Google Glass wearable technology in their new teaser leading up to the Tokyo motor show as C|net reported.
Gesture and haptic interfaces (complex touch interface that includes pressure, vibrations, motion, etc.) alongside of wireless connectivity will continue to push how users interact with devices and integrate experiences and daily life multitasking through smarter devices.
Smartening up to compete
The increasingly smart, connect, IoT world, will open a range of new interface approaches, in which the opportunity to create new competitive advantages in the CE market will drive new innovations and ways of thinking about connectivity and the IoT itself. Electronic design reported last month the inspiration from gaming devices is significant, "Developers creating interfaces for consumer electronic products now have a wide variety of options that can provide low-cost, high-functionality feedback." These interfaces, as the article carefully reviews, include touch screens, motion sensors, wearable vision-based sensors, voice recognition, 3D video image recognition, among others.
The important message to glean from is that the next phase of innovative inspiration is just opening up, meaning that we are likely only in the initial steps of a new, positive disruption for the semiconductor and electronics industry. A positive disruption that, like the smart wireless device (SWD) wave we are still riding, will increase growth for the wider, global industry.
The growth opportunities during disruptive periods do come at a risk of letting go of strategies that may no longer fit with the direction that new technologies will take businesses. Recognizing the competition advantages for adopting innovative interfaces through increasingly lower-priced embedded technology, microprocessors, and designs that leverage low-power systems, many companies and OEMs are re-thinking their business models and pushing forward to take advantage of IoT opportunities to improve user (or customer) experiences.
One very noteworthy example of a major, global corporation adopting these types of strategic changes rooted in and including new technological disruptions is the car-rental company Hertz. As highlighted in this McKinsey Interview with Hertz CEO, Mark Frissora, we clearly see the changes that are occurring throughout business that are directly tied to the IoT wave. In this interview, Hertz clearly recognizes the importance of seizing disruptive technological changes and adopting them into business models in order to adapt market strategies to maintain leadership positions:
Technology is constantly challenging traditional business models, and it happens faster and faster in ways that can be difficult to see. When a new technology emerges, companies need to decide almost immediately whether to adopt it—or they could risk being destroyed by it. […]
Zipcar was a small player, and only in big cities. But we knew the technology itself—and related developments such as software apps like Uber—would be transformational, and we knew these ideas could move up the value chain and really disrupt business models. So we embraced them, because it’s better to use a new technology to transform your own business than to watch your competitors beat you to it.
So now we’re integrating that disruptive technology into our infrastructure and creating a new business model. Our new mantra is “smart mobility,” which combines technology-enabled flexibility with our push to set the standard for sustainability. I want anyone to access any of our cars by the hour, by the day, anywhere they want it. For example, right now we have Hertz 24/7. But we don’t look at that as just an experiment in car sharing; we look at it as transforming the entire rental industry. So in less than two years, we will have car-sharing technology in 500,000 of our vehicles globally.
As we move into 2014, it shouldn't be that we worry if the smart device phenomenon may begin to peak for mature markets, as will inevitably come to pass (though unlikely in 2014), rather, we can see that this hot device growth wave is but the initiator of a new disruptive period for the industry that will have far-reaching impacts and critical growth opportunities for our industry.