Ovum's senior analyst for devices and platforms, Nick Dillon, says the annual Consumer Electronic Show (CES) in Las Vegas is overly focused on hardware, "Making it look increasingly dated, as the majority of innovation is now happening in software and services rather than in hardware design.
"CES is traditionally focused on new hardware products, which is understandable as this is where the majority of innovation has occurred in the past," Dillon said. "However, the rise of smart devices has caused a fundamental shift in the consumer technology industry, meaning that this is no longer the case."
"The focus of innovation has now shifted to the software and services running on these devices, rather than the physical hardware. Smartphone hardware is now generally "good enough" for the majority of users and as a result it has become commoditized and homogenized," Dillon added. "The market has settled on large, slab-shaped, touchscreen devices as the optimum design for smart devices, meaning there is very little ability left for device vendors to differentiate on hardware. This was point was illustrated neatly at CES, where the main "innovation" was the launch of larger-screened smartphones or "phablets" as they are often called.
"Conversely, the market for software and services continues to grow at a phenomenal rate. Apple recently announced that 40 billion applications have now been downloaded from its App Store, illustrating users' insatiable hunger for new applications and services. For those looking to keep track of the latest innovations in the consumer technology market, the software-focused events such as Google I/O, Apple WWDC, Microsoft Build, and Facebook f8 are now a better place to look than CES."
It's a controversial viewpoint to some extent, because I believe that if you asked the average person in the street what the most exciting development in consumer electronics has been in the past year, most would say tablets. A few would probably talk about the latest smartphones. How many would talk about software or services?
Quite a few, if Dillon is to be believed, making the point that even though tablets and other smart devices are hot, it's the apps that run on them making them sexy, more than the hardware itself.