The Battle for the Living Room Is Over — The War for the Consumer Is On

lrwar380The ultimate goal for consumer electronics companies 10 years ago? Control the consumer living room experience. That way, they could control consumer identities, consumer experiences, consumer credit cards and commerce — business model nirvana as consumers in markets such as the United States were upgrading from clunky cathode-ray televisions to the new, slim, high-definition TVs. Key players in this battle? Sony, Panasonic, Sharp, Nintendo and Microsoft.

Fast forward to today: The battle for the living room is already over, and the overall war for the consumer is on. Key players in this big war? Google, Amazon, Apple, Microsoft, Facebook, Samsung and LG. Sony, Panasonic, Sharp and Nintendo? By and large on the outside looking in, wondering how the vision for living room dominance blew up.

When do we stop calling them phones or tablets or TVs?
Thanks to Moore’s Law, the advancements in storage, battery life, screen display, processing power and improved networks in the past 10 years have allowed numerous “screens” to become pervasive in a consumer’s daily life. These screens are ubiquitous, and not typically locked to a location, except TVs. Consumers spend time on phones, tablets and notebooks both in the home and while mobile.

We are rapidly iterating devices to simply be powerful screens connected to the Internet, connected to clouds. The main question for a consumer will soon be, “Which size screen will I use in the car? On the train? In rooms in my house?” That answer will be driven by which hardware vendors have aggregated the best services for consumers, coupled with a compelling user interface (UI), frictionless commerce opportunities and social and communications layers built in.
The reality today is that consumers can do nearly the exact same things on a device with a 4-inch, 8-inch, 12-inch, 15-inch or 20-inch screen. There will naturally be some functions that will be more appropriate on one screen size over another, but interchangeability is already here.

So who is leading in the war to control the consumer?
The single biggest key to everything? Control the UI on the connected screens. Companies who control the UI will then dictate how software is accessed, and which software. Making a compelling, fun, friendly UI is considered to be a very special sauce — rarely made and hard to do.

Screen Shot 2013-03-18 at 12.50.00 PM

As shown in the chart above, most of the leading companies for controlling consumer interactions have at least a decent UI. Apple clearly leads the way, but Amazon and Google have made strides with improved UI. Microsoft took a big step forward with the Windows 8 UI, and Facebook has worked on improving its UI on both laptops and mobile.

Screen Shot 2013-03-18 at 12.50.35 PM

If you take the same chart and substitute the companies for the countries of origin as shown in the second chart, the subtle trend of UI success becomes clear — companies based in Silicon Valley and in the greater Seattle area are dominating, and Japan-based companies are seriously lagging. While the hardware manufacturing base may still be in Japan and Korea, UI and software development are still based in the U.S.

To this point, efforts have been made by both Japanese and Korean companies to build a presence in Silicon Valley. Nintendo moved many of its operations from Redmond, Wash., down to Silicon Valley in an effort to become more in touch with connected companies and potential partners. Earlier in February, Samsung announced plans to open up a research and development (R&D) center in Silicon Valley as well, largely focused on software — with an assumption for UI development, too. For all Samsung’s dominance in phones, memory, TVs and appliances, UI has not been a strength.

While much of the focus today is on phones, tablets, laptop and TV screens, part of the connected consumer idea will soon include connected appliances. Remote management of the oven, inventory management for food in the refrigerator, or remote management of home security or heating systems are going to become more mainstream. It’s not quite a Star Trek-type leap of faith, but software solutions will have to be built for the TV and the fridge. Samsung, given its pole position in many hardware solutions, would have great potential in these expanded connected devices, but it is still early. Hence, the investment in a Silicon Valley lab could prove hugely strategic over the next 10 years.

How do TV manufacturers change to stay competitive? How does Japan stay relevant in a connected world?
Partnerships are going to be more critical than ever because software development and UI are not core strengths for many Japanese-based consumer electronics companies. However, partnerships with non-Japan based companies are rare, and a huge challenge is to change the corporate culture of many Japanese companies. Many of these companies are engineering-driven cultures with long-standing histories of making successful products over the past 50 years. Unfortunately, the analog age of standalone devices is over, and the connected, digital world awaits. For many companies, it’ll mean partner or perish.

P.J. McNealy is founder of consulting firm Digital World Research and has conducted research in the technology and gaming sectors for 15 years. He authored “Early Days: The Market for Social Gaming and Facebook’s Potential Achilles’ Heel,” in May 2013; it is available on

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