Rebecca Day

Amid a flurry of activity over privacy concerns with Samsung connected TVs, including queries to Samsung by the ranking member of the Senate Privacy Subcommittee (see 1502110028), the Electronic Privacy Information Center (EPIC) petitioned the FTC to investigate what it calls Samsung's “unfair and deceptive voice collection and transmission practices,” according to a 20-page complaint filed this week.

Bluetooth’s recent move toward IP connectivity via IPv6 -- coupled with the implementation of mesh functionality -- could make it a serious threat to ZigBee and Thread in the connected home, said ABI Research. The recently announced Bluetooth 4.2 specification offers improvements in speed, connectivity and security over the previous version, said ABI. Its report said that makes Bluetooth "more viable than ever” in connecting low-power devices such as smart light bulbs and thermostats, wearables and sensors that will be part of the smart home of the future. The most significant Internet of Things-related update from the Bluetooth Special Interest Group is the ability for Bluetooth Smart devices to connect directly to the Internet via IPv6/6LoWPAN (over Low-Power Wireless Personal Area Networks) using the new Internet Protocol Support Profile (IPSP), said ABI. A barrier to the adoption of home automation systems has been the cost and complexity of gateways required to connect each device to the Internet, it said, citing the Philips Hue smart LED bulbs. Bluetooth 4.2 offers up to 2.5 times faster data throughput along with packet sizes up to 10 times larger than earlier versions. By shortening the time needed to transfer data, a device can return to the idle state more quickly, said the report, resulting in lower energy usage and longer battery life. Higher data rates result in fewer transmission errors, too, which also contributes to lower energy consumption, making Bluetooth well suited to low-power applications, said ABI. A critical omission from the latest Bluetooth spec is mesh networking capability, which ABI called critical to extending the home network's range, ensuring reliability, boosting performance and raising the network's “overall intelligence.” Competing technologies including ZigBee and Thread offer mesh networking over 802.15.4 chipsets, and while the Bluetooth SIG is working on mesh networking capabilities, a release date hasn’t been set. “In a short-range connectivity solution such as Bluetooth Smart, mesh topologies are necessary to ensure reliable whole-house coverage,” said the industry research firm. With Thread and now Bluetooth offering IPv6 connectivity, “significant momentum” appears to be gathering around IP connectivity for low-power devices in the smart home, along with an expectation for devices to consolidate around 6LoWPAN/IPv6-based solutions for vertical markets in the future, said ABI. The move toward IP-based standards will help ensure interoperability across connectivity technology and device types that make up the IoT, it said.

The Michael Kors brand is leading the wearables effort for the Fossil Group and plans to bring product to market later this year, Fossil CEO Kosta Kartsotis said on an earnings call Tuesday. The company is working closely with the Kors brand on wearable technologies and is in talks with all its brands “about the appropriate time to bring out some products,” he said. Fossil's other brands include Burberry, Diesel and DKNY. Kartsotis sees wearables as a key element in company strategy as it looks to leverage its fashion position “to become the point where fashion, design and technology converge.” He said Fossil is working with Google and Intel (see 1501080038) on the electronics side, and wearables are a part of the company’s long-term vision. “Someday, every watch we make could have some type of technology in it,” Kartsotis said. “I expect at some point all our watches will have enhanced technology, whether it's sensors, communication,” he said, and an app community also could develop around its platform. The watch business is just a small percentage of “the huge amount of spending” taking place in technology, including phones, iPads and service plans, Kartsotis said. If just a small percentage of the total consumer technology spending moves into the watch business, it could have “a dramatic impact on the growth of the category and make it more relevant,” he said. “We are sitting right in the middle of something that could be much larger.” Fossil is hoping for a receptive market in millennials who “largely have grown up without watches” and believes connected technology can make a watch “more relevant to their lives,” Kartsotis said. “They had a cellphone when they grew up” and didn’t necessarily wear a watch, he said. “With the branding and technology coming into play, we think we've got a big opportunity.” Investing in wearables enables Fossil to leverage its global platform, which includes numerous brands and 30,000 points of sale worldwide, Kartsotis said. He referred to the company's "mindshare" in the market and said Fossil can "make great-looking products that have an emotional attachment to customers that love brands but also have a little extra functionality." The plans extend beyond watches. "We are looking at both display items like smart watches but also non-display items like jewelry and potentially bracelets," he said. Eventually, connected technology "will probably impact all brands," he said. Speaking on the economics of wearable technology, Kartsotis said one of the “exciting things” about wearables is that “as technology gets better, battery life is going to be better … functionality is going to be better and the economics will be better because as the quantities grow, then the costs, etc., come down pretty quickly. So that's partly why we think it's a very compelling long-term opportunity.”

Smartphone owners have upped their loyalty level to Android and iOS operating systems, but a ceiling on iPhone sales in the U.S. could be looming, said a study on consumer behavior released by Consumer Intelligence Research Partners (CIRP). The researcher analyzed data from the September launch of the iPhone 6 and 6 Plus to determine whether Apple's most successful iPhone launch ever was a “one-time response to an outstanding new product, or a permanent change in how consumers buy iPhones.”

The U.S. mobile handset recycle rate fell 15 percent last year, or by 25 million phones, said a report by Recon Analytics that predicted a downward trend for smartphone sales with far-reaching effects just as more spectrum is opening for new services. Of the 143 million mobile phones sold in the U.S. in 2014, nine in 10 were smartphones, said Recon analyst Roger Entner, which compares with smartphone sales of roughly 50 percent the prior year. With device sales and new subscriber additions declining, the handset replacement rate has “abruptly slowed to the lowest rate since we began calculating the metric,” said Entner. He forecasts device sales will decline 5 percent to 136 million in 2015 and slip again in 2016 to 131 million. Consumers’ phone purchase patterns have changed, said Entner, with a growing number delaying upgrades to fulfill two-year contract obligations for lower monthly service plans. Consumers replacing their phones focused on newer, higher-priced devices, which resulted in device revenue slipping only 5 percent in 2014 despite the 15 percent drop in unit sales, said Entner. Short term, the movement to higher-priced devices bumps up revenue and profitability for mobile carriers, he said. The long-term trend is negative, because it takes longer for new devices to reach the network, exacerbated by the introduction of equipment installment plans (EIP) that have extended the handset replacement cycle by 4.1 months to 26.5 months in 2014, Entner said. The percentage of devices being replaced every year grew from 45 percent in 2013 to 49 percent last year, compared with the percentage of devices that replaced obsolete devices, which jumped from 15 percent in 2013 to 35 percent a year later, said Entner. Devices replaced on the traditional two-year schedule fell from 40 percent in 2013 to 16 percent last year, he said. A wedge, Entner said, is forming in Americans’ purchasing behavior between those who upgrade phones every year and those who upgrade when the phone breaks or becomes obsolete. App capabilities may be “artificially restrained” as developers cater to a consumer less prone to take advantage of new technologies to improve the utility of the device and service, he said. Software developers will have to consider that a large percentage of smartphones in use won’t be able to run cutting-edge apps, said Entner. Some developers won’t build the latest features into their apps, slowing the pace of innovation, he said. Older devices in the market that don’t have the latest electronics won’t be able to access new spectrum bands as they come online, said Entner. A six-year-old iPhone 3GS will achieve download speeds of 2 Mbps with its first-generation WCDMA chipsets, compared with an iPhone 6 that can download the content 25 times faster and access newly licensed spectrum, said Entner. “As fewer people upgrade their devices, the pace with which consumers can use new unused parts of the networks on new spectrum slows down and consumers are stuck on congested legacy spectrum,” Entner said, underscoring that mobile operators spent more than $45 billion on new spectrum in the recent AWS-3 auction. The transition to Voice over LTE (VoLTE) could be slowed by an “embedded base of older devices,” said Entner, and consumers' experience with speed and graphics could suffer, leading to buffering or long waits as content loads. “Longer-term developments could be largely offset in the short term by the slowed innovation and cramped spectrum caused by delayed handset replacement,” the researcher said. While following T-Mobile into the EIP space, AT&T has been able to defend its base against T-Mobile and other operators that offer EIP financial benefits as “device subsidy expenditures have declined significantly,” said Entner. He envisions AT&T encountering the same problems as T-Mobile as “the device universe" of its customers ages. Verizon is holding on to the status quo while offering consumers the option to do EIP, said Entner. Verizon benefits less from the short-term gains of EIP but “will also not suffer as much from a lengthened handset replacement cycle,” Entner said. He called Sprint, which “dabbles” in EIP offers, a “long-term winner.” The carrier's 24-month handset leasing program is a “viable plan” to both retain the device upgrade cycle and “reap the benefits from a customer base with newer devices,” Entner said.

Amazon, with a score of 83.72, finished behind first-place Wegmans Food Markets in the 2015 Harris Poll Reputation Quotient study. Consumers rated companies on key "reputational dimensions" of products and services, emotional appeal, financial performance and vision and leadership, Harris said Wednesday. The reputations of the 100 most visible companies range from excellent (scores of 80+) to poor (scores of 50 to 64). Apple (80.69), at ninth, has fallen five spots since 2012. Among consumer tech companies, Google came in at 10 (80.44), Sony at 13 (79.93), Microsoft at 15 (79.94), Intel at 20 (78.54), LG at 23 (78.20), Hewlett-Packard at 42 (75.26) and Dell at 60 (72.13). Verizon led wireless carriers in 66th place with a “fair” rating of 69.74, followed by Sprint at 72 (67.66), T-Mobile at 75 (67.54), and AT&T at 76 (67.26). Video operators hovered in the fair to poor range on the list. DirecTV posted at 83 (65.27), Charter at 92 (60.30) and Comcast at 93 (60.64). Dish Network came in 98th out of the 100, with a rating of 58.07, according to rankings. Goldman Sachs bottomed out the list. “Reputation is far from static and is a business asset that is earned every day as people evaluate companies through the lens of what matters most to them,” Harris spokeswoman Carol Gstalder said. The study was done online among 27,278 U.S. respondents Oct. 20 to Dec. 18, with preliminary nominating research done with 4,034 respondents, Aug. 26-28 and Sept. 24-26.

Following a CES jam-packed with Internet of Things and smart home hopefuls, IHS in a post-show analysis identified opportunities and challenges for the fledgling market. Privacy and the need for standards are formidable challenges facing the IoT, but huge opportunities exist in an “increasingly tech-savvy consumer market” for the entire chain from semiconductor companies to appliance makers, IHS said. It predicted a potential connected universe of 30-90 billion devices within five years. Competing technologies and standards threaten growth within the IoT ecosystem, said IHS, citing Wi-Fi, Bluetooth Smart, 6LoPAN, ZigBee and cellular. At CES, groups such as the Open Interconnect Consortium, backed by Atmel, Broadcom, Dell, Intel and Samsung, were working to establish a connectivity protocol to enable interoperability among connected devices within a few years. The cost to connect within the IoT is “cheap” enough to make the IoT a reality this year, said IHS. Sensors will drive opportunities in consumer devices, and “cost-effective silicon” will drive shipments of nearly 12 billion sensors into consumer and mobile applications, up from 5.6 billion in 2012, it said. Data collected from the sensors have “vast implications” as the information becomes aggregated across many users in the cloud, said the industry researcher. The ability to analyze large amounts of data to track behavioral trends -- such as the way millions of consumers use devices -- can create “a level of predictive intelligence that is completely novel,” said IHS. The ubiquity of the smartphone and its ability to communicate via Wi-Fi, Bluetooth and cellular positions it well as the gateway to the IoT, IHS said, but the smartphone has to continue to learn more languages as the IoT expands. On smart homes, “a holistic approach to IoT problem solving is needed,” instead of the piecemeal approach now offered by disparate devices, IHS said. It envisioned a “package” approach combining hardware, firmware, middleware, application software, cloud services and other components delivered by solution providers as the “key to integration.” The smart home market is still a few years away from mainstream penetration due to the lack of interoperability among different systems, which is "causing confusion for the average consumer,” said IHS.

Viewing video has overtaken playing games as the most popular entertainment activity on tablets, said a Futuresource Consulting report that polled consumers in France, Germany, the U.K. and U.S. Some 57 percent of tablet owners in the four countries watch video on their mobile device -- vs. 53 percent who play games -- and 24 percent pay-to-view video content, Futuresource said. The U.S. leads all markets in watching paid-for video on tablets with 34 percent of users paying for video content, it said. Large tablets appear to encourage more viewing, as 62 percent of large tablet users said they watched video on their devices compared with 53 percent of small tablet owners, it said. The TV continues to gain use as a connected device, said the industry research firm Tuesday. Nearly 80 percent of connected TV owners stream video, and 63 percent access a premium video service at least once a week, it said. Households with children under 12 are 20 percent more likely to subscribe to TV services, said the data. Netflix subscribers are four times more likely to own a digital media adapter than Netflix non-subscribers. Twelve percent of households with kids had an UltraViolet account vs. 4 percent of households with no kids, and households with kids outnumbered those without as packaged media buyers and renters by 38 percent to 18 percent. Deleting premium packages from TV subscriptions, known as cord shaving, reached 17 percent of U.S. consumers in October 2014. That was up from 13 percent in September 2013, led by 19- to 25-year-olds and households with children, said the survey. U.S. pay TV subscribers stood at 65 million last fall versus 10 million streaming VOD customers, while 35 million U.S. viewers fit into both groups, it said. Music streaming is the most popular form of music consumption in the four countries, with 29 percent of respondents reporting they listen to free music services and 42 percent to Internet radio stations. The U.S. skewed higher at 50 percent of respondents who reported listening to any type of music service. Only 5 percent of the total base said it pays for a subscription music service. The survey was conducted during September and October with a nationally representative sample of just more than 1,000 consumers in each country.

Hype about the launch of the iPhone 6 and 6 Plus last fall took a toll on sales of iPads in Q4 for Apple, which shipped 4.6 million fewer tablets versus the previous-year quarter, an industry research firm said. Apple had a 17.8 percent shipment decline over Q4 2013, to 21.4 million units in 2014 Q4, a Monday report​ from IDC said. Apple CEO Tim Cook said last week when releasing quarterly results that the iPhone was the star of that quarter (see 1501280031). The company expanded its iPad lineup by keeping around older models and offering a lower entry price point of $249, but the strategy “wasn't enough to spur iPad sales given the excitement around the launch of the new iPhones,” Jitesh Ubrani, IDC senior research analyst, said. Apple’s efforts to maintain iPad momentum “have fallen flat” because the latest generation of iPads offer “very minimalistic upgrades over their previous versions,” IDC said. "Cannibalization at the bottom from the iPhone and at the top from the Mac appears to be a serious issue for the iPad.” Worldwide tablet shipments, meanwhile, had a year-over-year decline for the first time since the market's inception in 2010, IDC said. It said overall shipments for tablets and 2-in-1 devices slipped 3.2 percent, to 76.1 million in Q4, compared with 78.6 million for the 2013 period. "The tablet market is still very top heavy" because Apple and Samsung are largely carrying the market each year, Ubrani said. Fifth-place Amazon had the steepest annual volume decline of the top five tablet vendors, IDC said. Despite a product refresh at the end of September with the Kindle Fire HDX 8.9 and 7-inch Fire HD, holiday sales tumbled nearly 70 percent compared with 2013, IDC said. Of the top five, it said that only Lenovo, in a distant third place, had growth in Q4, boosting tablet shipments by 9 percent to 3.7 million units for 4.8 percent global market share. IDC forecasts growth for the tablet category in 2015, Jean Philippe Bouchard, research director-tablets, said. Potential growth contributors include Microsoft's new operating system, a shift toward larger screen sizes and “productivity focused solutions,” along with technology innovations such as gesture control, he said.

The table is set for Thread Group-branded connected home products to reach store shelves during the second half of 2015, Sujata Neidig, its vice president-marketing and Freescale Semiconductor business development manager, told us Friday. The alliance, which said last week it had surpassed 80 members, is on a fast track to bring the connected home mainstream, Neidig said. Thread’s initial goal is to get the spec released, due for summer, and then to increase awareness of the protocol among developers, manufacturers and software developers, Neidig said. The group then will raise awareness among consumers, she said. Success will be launching products that are Thread-enabled and expanding the market from there, she said. The connected home has been talked about for many years, Neidig said, “and we want to enable it as soon as possible.” The alliance positions Thread as a simple, low-cost way to connect devices in the home. “We built Thread based on existing technologies,” Neidig said, adding that Thread runs on any existing 802.15.4 radio, of which “millions” are in homes today. “All you’re doing is adding the Thread software stack,” she said. “Theoretically, any device on the market today that has an 802.15.4 radio in it can be updated on the air via software to run Thread.” Thread’s position in the Internet of Things is that it’s targeted only to the connected home, it’s focused on connecting devices and enabling them to communicate, and it’s an IP-based standard in a mesh network configuration that’s low power and scalable, Neidig said. Founding companies include Nest, Samsung and Silicon Labs. Thread Group also announced last week its enabler program that’s designed to spur development among startups that don’t have the $2,500 funding necessary to join the group (see 1501280033).