Delighting the Consumer: Exceeding Expectations for Digital Lifestyles Enhancement

Summary information from Day 2: CONNECTIONS™ May 2007, hosted in Santa Clara, CA.

Delighting the Consumer: Exceeding Expectations for Digital Lifestyles Enhancement

This panel brings together companies that are leveraging consumer research, marketing prowess, and technical expertise to create new applications, services, and devices for end users to enjoy. They will discuss key steps in developing digital lifestyles solutions, from concept to the store shelf.

Ted Feldman, President/Founder, Neosonik
Hestia Lei, Executive Director, U-verse Member Marketing & Programmer Management, AT&T, Inc.
Joe Menard, Corporate Vice President, Consumer Business, AMD, Inc.
Moderator: John Barrett, Director, Research, Parks Associates

Hestia Lei spoke about AT&T’s rollout of its U-verse television services. The service is now available in 18 markets, with a total of 20,000 subscribers, and key features include a picture-in-picture feature that works with any television because it is a tunerless solution. She also noted that the U-verse solution allows for up to four streams to be recorded on the DVR, a significant difference between the AT&T service and other television services. Lei said that the marketing for U-verse has also been unique in that they are leveraging in-home demonstrations with good success. Whereas a satellite marketing effort (in-store, for example) requires on average 2.5 visits to get a customer to subscribe, AT&T is getting subscribers “on the spot.” AT&T is also looking to strengthen its U-verse community of subscribers via a magazine and a special Website.

Joe Menard began his presentation by noting that today’s bandwidth is currently a “non-delightful experience” for consumers. He called for further improvement in in-home connectivity by developing simple solutions that are truly plug-and-play. This improvement, he said, will require open standards. His call to the industry for delighting the consumer includes five key mantras:

• Things should work as promised;
• Premium content should be made easily available;
• Bandwidth needs to be improved;
• The network should have a focus of quality-of-service; and
• The solutions should be easy to understand and buy.

Ted Feldman from Neosnik said that one key consumer desire is ease-of-installation and use with such solutions as home theater and multiroom audio. Retailers and dealers are constantly turning away customers who simply want wireless speakers for their video and audio entertainment purposes at home. Up till now, he said, these solutions simply haven’t been available. However, his company has developed a wireless speaker system that has solved the critical engineering issues in order to assure an excellent sound experience. Ensuring the transmission of audio at just the right amount of time (with the minimum of delay) is absolutely essential to guaranteeing that the solution meets customers’ expectations.

Summary information from Day 2: CONNECTIONS™ May 2007, hosted in Santa Clara, CA.

Lunch Keynote — Intersection of Art and Science: The Digital Disruption of Entertainment

Lunch Sponsored by HomePNA

Presented by: Daniel Scheinman, Senior Vice President and General Manager, Cisco Media Solutions Group, Cisco Systems, Inc.

“We stand at one of the most exciting times in our industry,” said Scheinman as he began his address. The disruptions to the advertising, media, and communications industries, brought by growing broadband Internet access, the digitization of content, and the empowerment of the consumer, are building (and growing) a $1.2 trillion business. Industries, he noted, are being reshaped and creating enormous economic value.

Scheinman covered three main areas in his keynote address: 1) What the recent disruptions mean for the technology industry; 2) What the impact will and should be for media companies; and 3) Cisco’s role in shaping the industry.

As you look at previous eras of major technological innovation, we are just now exiting a the “WAN/LAN” timeframe and entering into a new age of consumer empowerment. This new area will be characterized by very different flows of innovation, said Scheinman. Previously, you could count on technology development flowing from universities, to money center banks, to enterprise, service providers, and finally the consumer. Now, he says, many of today’s innovations are initiated at the consumer and service provider space, and are just now being adopted by the enterprise. Two relevant examples he used were high-definition television and community-oriented networking. Cisco today has 1,500 employees using a third-party community networking site such as Facebook because the company has not yet developed its own internal community solution.

This new age of consumer empowerment will mean even stronger growth for companies in the technology space, said Scheinman. If you look at projections for worldwide revenues for communications, IT, and electronics purchases, it’s a trillion-dollar market, growing at about 5% annually. When you add in the consumer, he expects growth to jump to 10% annually, driven in large part by more rapid-than-expected surges in broadband growth in India and China. “Consumer-oriented technology,” he noted, “will become an important center for profits and revenue.”

The challenge that the empowered consumer brings to content creators is acute, Scheinman noted. Not only are the expecting higher-quality offerings, but content enjoyment is characterized by a massive increase in content availability, plus ever-increasing freedom in how and where consumers enjoy it. The increasing fragmentation of time and space is a huge challenge for the content industry, Scheinman noted, because they lack the fundamental ability to truly connect one-one-one with their audience. In the old days, the connection was generally made at retail or other third-party outlets, leaving the studios to dictate the terms in which they would distribute content. Now, the industry is at a distinct disadvantage in the consumer-as-center-of-the-world model in which we find ourselves.

Two fundamental questions that the content industry needs to answer are 1) What do people want; and 2) Where will they find it? Scheinman says that the answer to these questions lies in a significant opportunity – building communities around content. This is nothing new. After all, we had the water cooler back in the days when the broadcasters and studios were dictating the how and when terms of content enjoyment. Today, younger consumers especially are showing the first indications that entertainment tomorrow will be less about “collecting” than “community.”

Cisco’s role in the new era of community and personalized distribution of content will be significant, Scheinman predicts. The opportunities for the company in the new era lie in three specific areas – Distribute, Connect, and Discover. With its next-gen IP network, Cisco has a strong position in the distribution space, he notes. Now, with Scientific-Atlanta and Linksys as Cisco brands, Scheinman notes that consumers stand about a 50% chance of connecting through the Internet with either of those to companies’ products.

It’s the Discover phase that Dan says is the big challenge and opportunity for Cisco. The company that wins in providing best-of-class solutions for Discover will be solving two fundamental challenges facing the industry:

• How does anyone find anything (and why should they have to work to do so); and
• How do companies build a brand?

One relevant example that Scheinman discussed to answer these to questions is the work that the company did in helping the National Hockey League develop its community-oriented Website. One key and surprising finding for the NHL was the realization that far more than 10% of its fans are female, shattering preconceived notions about what the NHL’s core fan base looks like. These findings prove that successful online community development can lead to surprising results and to business growth, Scheinman said.

In conclusion, Scheinman noted that Cisco has an incredible presence at retail with Linksys and with the service provider community with Scientific-Atlanta. “If we can build the third leg with the content owners,” he said, “we’ll be very successful as a company.”