The following article is an excerpt of the CEDIA Expo 2006 keynote by William O. Leszinske, Jr., General Manager of Intel Consumer Electronics Group.
History is the study of great people and great events, and business history is no exception. Business history provides
some useful guidance that can help us understand the transformations that are reshaping the world of consumer electronics.
Henry Ford was a preeminent manufacturer of cars, and his innovations in manufacturing technology made the automobile a mass
market phenomenon. For Ford, functionality was all-important, and he was famous for saying you could get any color of Model
T you wanted, as long as it was black.
Alfred P. Sloane also built cars, and in the process he built General Motors* into what was then the largest company in the
world. To compete with Henry Ford, Sloane brought a new idea to the marketplace, defined by the intersection of two forces.
First, he delivered the functionality that Ford had already trained consumers to expect. But Sloan did not stop there. He based
his business strategy on the intersection of functionality with a powerful underlying human value: the desire for variety and
personalization. Sloane built General Motors* by offering different types of cars, in different colors, to appeal to different
types of consumers.
Sloan taught the automotive industry a powerful lesson that we see repeated many times in business history. Consumers will
ultimately get the products and services they want. Once they had become comfortable with the idea of the automobile as basic
transportation, consumers wanted choices.
Standards Spur Innovation
There is a second lesson to be learned from the business history of the transportation system. In the original model, goods were
transported by ship, train and truck, but the end-to-end process was cumbersome. Each step in the process worked under its own
set of internal rules, and at each inter-modal terminal, companies were compelled to spend time and money to repack and reconfigure
cargo. Today’s inter-modal transportation model eliminates this inefficiency with an innovative standard containerized shipping system.
In the consumer electronics (CE) industry, we observed the same phenomenon in the 1990s, as computing and communications standards
converged. As consumer electronics began to go digital, the widespread adoption of Ethernet, Internet Protocol and other networking
standards helped bring the two industries together. Today we continue to see a convergence between the PC and CE worlds. Common
standards in CDs and DVDs started the process, which was vastly accelerated by the adoption of Internet-based content distribution.
In addition to music, movies and TV shows, an array of custom-produced content is now available to consumers.
In each of these examples from business history, we see two patterns repeating themselves. First, consumers will demand the choice and
personalization they want. Second, standards will raise the pace of innovation and bring adjacent market segments together. Digital
technology in the home will repeat this pattern again as the technical convergence between the PC, Internet and CE industries intersects
with underlying human values that drive consumer behavior.
Escape: the Desire for Something New
Popular music download services have drastically altered the consumer electronics and content industries by implementing these two
fundamental lessons from business history—making use of available technical standards and by giving consumers what they want. Today
consumers can listen to personalized music anywhere and anytime they choose, but the successful online music business model is built
on something deeper. It offers consumers an opportunity to escape.
The desire to escape from the routine, ordinary world is a motivational human value that determines how people spend their personal time.
To understand how this works, Intel social scientists and researchers continue to explore how people are motivated by values and how
digital technology intersects with them. As humans, we are motivated by a broad set of additional values:
- Togetherness: the ability to connect with those who are important to you
- Control: command of your environment, from security to heating and cooling
- Access to information: throughout your business and personal life
- Love and spirituality: ranging from the expression of personal feelings to exploration and practice of religion
- Personal advancement: education and lifelong learning.
On a basic technical level, people can now connect to each other with a degree of freedom never before experienced thanks to
networking standards such as Digital Living Network Alliance (DLNA*) for digital home interoperability and Wi-Fi*, HomePlug*
Powerline and Ethernet for network connectivity. These standards will continue to stimulate innovation in consumer electronics.
The devices and services that will succeed are the ones that address human values.
In the digital home, a high performance set top box with personal video recording capability will provide access to a limitless
range of new services for entertainment, social networking and learning. Control of such devices will be shared between the consumer
and the service provider. The set top box will have network connectivity within the home, allowing it to function as a networked media
player with remote streaming capability that enables consumers to share content stored on the PVR.
The PC will offer a solution to many users. It may be located in another room, but it will be able to bring the Internet to the living
room over the home network. The PC’s disk drive will give it PVR-like capabilities.
The PC, when configured as a home media server, will provide both a rich escape experience and a springboard for new lifestyle choices
and applications. The home media server can be the intersection point for many human values and lays the foundation for bridging between
them. Intel’s entry into this category is Intel® Viiv™ technology. With this technology, the PC is connected to the Internet and produces
an extraordinary HD video and audio experience with all the storage needed for digital content.
The media server PC is built on standards including DLNA*, so it will interoperate with other CE devices on the home network. Since the
media server is network-agnostic, you will be able to wire or unwire your home as you prefer. The server will display content anywhere in
your home, while protecting premium content through another standard, Digital Transmission Content Protection over IP (DTCP-IP).
Many of us are already familiar with the basic concept of home automation, based on electronics that allow the consumer to set precise
temperature levels, set up security monitors and other systems. When we intersect this basic functionality with the human value of control,
we soon realize that you do not need to leave this core human value behind when you leave home. With a communications standard and a central
server in your home, you can take experience control beyond the four walls.
With a notebook PC or a cell phone, you can manage basic home functions such as security and energy consumption while you are on the go.
The need to monitor energy consumption is intersecting our desire for control in a big way. According to data compiled by the Consumer
Electronics Association (CEA), the lack of control over energy consumption is the single biggest regret among consumers, and controlling
security and energy consumption is high on their list of priorities for home system upgrades. The combination of today’s high energy prices,
concerns over infrastructure and global warming are raising the priority level even further.
Outside-In: a Set of Emerging Usage Models
Intersections between human values and technology standards are creating new usage models. At Intel we use the term “Outside-In” to describe
usage models based on the interaction of mobile devices with home-based networked PCs and CE devices. Examples of Outside-In usage models
include using a cell phone or Internet-connected laptop PC to communicate with a home PC for monitoring and managing your home’s energy
consumption or climate control while you are on the go.
The concept embodied in these examples involves combining the values of control and escape. By allowing content sharing using an IP-connected
mobile device, Outside-In can also bridge the values of control with togetherness. Let’s say you are traveling with a child. You can use your
mobile device to connect with your home network to view your child’s favorite movies or access a video game stored on your home systems.
While visiting your mother, you could use the same mobile device to share your family’s latest home videos stored on a PC.
Medical Technology Comes Home
Medical studies consistently show that people who need medical care do better in the comfort and familiarity of their own homes. The key
variable is whether they can be monitored and treated effectively in the home setting.
Digital technology throughout the home will help make in-home care a practical reality. For instance, sensor networks in the home can monitor
the mobility and medication regimes of older patients. This type of information can be readily gathered and stored on the home media server and
instantly shared with medical professionals and family members.
Think of this type of application in terms of your personal values. For example, how much would you pay to know that your 80-year-old mother got
up and took her pills this morning? Now combine that notion with the Outside In usage model. How much would you pay for that peace of mind while
you’re traveling to a conference?
The Next Great Intersection
Business history teaches that market segments are transformed as consumers are motivated by deeply held human values. The patterns repeat throughout
modern business history. The only difference is that the pace of change has accelerated with the spread of digital technology into everyday life.
Intel social researchers are learning how the intersections of digital standards and human values create new consumer usage models. Home automation
and control and home healthcare are just two of the adjacent market segments that are now converging to create new opportunities for consumer
electronics.
Henry Ford changed the world by bringing basic automotive technology within the reach of the masses of consumers. Alfred P. Sloane changed Henry Ford’s
world by creating an intersection between automotive functionality and human values. The consumer electronics industry stands at the next great intersection.