Accenture’s top 5 predictions for what will be hot at CES 2017

Roughly 177,000 people are expected to converge on Las Vegas next week for the Consumer Electronics Show. CES 2017 will have around 2 million square feet of exhibit space, and I’ll be there checking out the event with VentureBeat writers Ken Leung and John Brandon. We’ll all be trying to figure out what the big themes of the show will be.

John Curran, managing director for communications, media, and tech at Accenture, has come up with his annual predictions of the prevailing themes at CES 2017. I interviewed him about those predictions, which can serve as a guide through the madness. His first big prediction is that artificial intelligence will be huge at the show, thanks to breakthroughs in the past few years that have made AI practical for use in a wide range of consumer services. He also believes intelligent assistants, from Siri to Alexa, will also be hot.

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But not all will be rosy. Curran warns that the “insecurity of things” means that consumers won’t trust Internet of Things devices until companies fix the ongoing security problems. Curran also thinks augmented reality and virtual reality will be hot, and that companies that wrap everything up in effective services will win consumers’ hearts. I also spoke with Curran about the big trends at CES 2016.

Here’s an edited transcript of our latest interview.

VentureBeat: What’s your general expectation of CES this year, compared to a year ago?

John Curran: It’s maybe the kickoff of a new wave of innovation. If I look at the big trends that are happening in the industry right now, you have some new technologies that are coming on to the scene that I think have the potential to start a wave that lasts the next couple of years. I’ll be excited to see that.

VB: What’s the first major trend you expect?

Curran: The first wave of innovation I was talking about is artificial intelligence. AI has a chance to be the story of the show this year. It’s a golden thread that will be woven through so many of the technologies that we’re going to see at CES — everything from automotive to robotics to smartphones to health and fitness. I’m excited to see how it manifests itself and permeates the show.

VB: Is that different in that everyone expects these things to work now, whatever’s using AI? In the past it always seemed very futuristic.

Curran: The technology has advanced. If you look at what you have now as a convergence of big data and analytics, machine learning, natural language processing, ubiquitous connectivity — all these things come together. You have an opportunity for device manufacturers and companies who are building services to run on those devices to leverage AI and create much easier-to-use, much more intuitive and natural customer interfaces. They can create a compelling set of new services that solve people’s everyday, pragmatic challenges and problems.

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VB: What are some of the gadgets that you think will get better through AI? Everybody talks about self-driving cars, but what other variety do you see?

Curran: It runs the gamut. Automotive is certainly a spot where AI is going to be shown prominently. Smartphones have gotten better. People are used to intelligent assistants built into smartphones now. You’re going to see health and fitness devices incorporate AI, helping people come up with better exercise regimens, reminding them to take their medicine. Across the show you’ll see different companies experimenting with different executions of AI.

VB: Have you thought about who the leaders in the space might be?

Curran: In the self-driving car space we’ve had a number of companies come out and test that technology. When you think about things like intelligent assistants, we have embedded services like Siri from Apple, Google Home, Amazon Echo with Alexa. A number of big platform players are coming into the space and starting to do interesting things with both embedded AI and AI devices like the assistants.

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VB: Trend number two you said was intelligent assistants. Can you explain more about that as far the distinction with AI?

Curran: Intelligent assistants are a manifestation of AI, but they’re devices or services that leverage both AI and natural language processing to help people control the devices in their homes or engage with services. It’s the ability to use voice commands and stream your music or control the temperature in your house. Set up reminders to get to your next appointment on time. These intelligent assistants create an easy-to-use interface that takes a lot of the hard work out of our everyday lives. They simplify a very frantic and hectic lifestyle by doing the routine tasks that we need to get done.

One thing on intelligent assistants that will be interesting to watch at the show is the degree to which they’re becoming platforms. We’ve had a number of new devices come to the market over the last couple of years that haven’t quite taken off in the mainstream yet. Some early success with early adopters, but the IOT devices and some of these connected devices — people have found the devices themselves to not be as intuitive or easy to use as they were hoping.

Intelligent assistants create a new user interface that allows people to take advantage of all these great devices and innovations we’ve had over the last couple of years in an easier, more obvious way. One thing to watch will be the number of joint announcements and ecosystem announcements we get at CES where the intelligent assistant companies and platforms are competing to create a rich ecosystem and an immersive set of consumer experiences.

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VB: Your third trend is the “insecurity of things.” That seems to run counter to some of what you’ve talked about. AI may work, but there could be big security holes in it.

Curran: The Internet of Things is an interesting challenge right now. You have all these new connected devices coming on that have the potential to make everyday life that much better, richer, easier, more secure. But they come with some challenges. Companies have a tension in their designs. They’re trying to make these devices easy and simple to use, easy and simple to set up and connect, but in doing so many of them have put no security in place, or hard-coded passwords in place, and these devices are easy to hack.

That creates two different security threats. It’ll be interesting, at CES, to see how companies talk about addressing those threats. The first threat is more toward the back end. It’s the behind-the-scenes security threat. Hackers are able to access these devices and then use, say, home security cameras to launch a denial-of-service attack on a website. That’s already happened. We’re seeing widespread calls, including from the Department of Homeland Security, for improved security measures to close some of the vulnerabilities these devices are creating.

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The second security angle, the more consumer-facing one, is the fact that these IOT devices bring consumer concerns about security and privacy from the online world into the real world. If you think about the last 18 months, security and privacy have moved from a tech-pages conversation to a front-page conversation. Consumers have seen this in some of their favorite retailers being hacked, personal data being stolen. They’ve seen celebrity photos hacked. The latest election cycle brought conversations about hacking almost every day. This has moved to the fore as far as top-of-mind awareness among consumers.

When they look at the IOT devices, the interesting vulnerability these create is that they take that concern into the home, into tangible settings. That home security camera I installed in the house to improve my security, if it’s hacked — someone now has a live feed from inside my home. Talk about an invasion of privacy. The home thermostat that has AI behind it so it can predict when I’m home and adjust the temperature so the house is always comfortable and the heating bill stays low, someone hacks that information and now they know about my physical comings and goings. They know when the house is vacant.

These IOT devices create tremendous consumer benefit, but they’ve opened up new security concerns that companies need to address for these devices to explode into mainstream adoption. When companies resolve that tension between ease of setup, ease of use, and ongoing manageability of security settings, that will go a long way toward driving adoption of these new connected devices.

VB: You’ve just described the plot of Ubisoft’s Watch Dogs 2 video game. One idea proposed in the fiction there is that some security vulnerabilities are intentional — that companies want to get access to personal information and use it or sell it. There’s an element of paranoia in the conversation at this point.

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Curran: One thing we’ve seen, a trend starting last year and I think a trend still this year, is the whole move toward greater empowerment of the consumer when it comes to their security and privacy. The companies that, in the long term, will be the most successful are those that create real transparency as far as what data’s being collected, how it’s being collected, with whom it’s being shared and when. Giving consumers an easy-to-use interface to control those decisions and make sure they’re aware of the trade-offs they’re making.

Many consumers are willing to trade a certain amount of personal information for a defined benefit. If you’re making my life easier, if you’re providing me a richer set of services that I find valuable, I may be willing to trade information. It’s when consumers feel like they haven’t been told or that they weren’t aware that companies violate a trust, and beyond that point it’s so hard to win consumers back.

VB: Do companies seem to be aware of this challenge as far as security?

Curran: Last year was the first year I can recall where security was a big story at CES. We saw a large number of companies at the show talking about the security of the devices they had just introduced. Other companies were talking about additional services and security capabilities they were bringing to market that would make existing devices in people’s lives more secure. Last year was the coming-out party, if you will, for security as a story at CES, and I think this year that trend continues and accelerates.

VB: Your fourth trend is the rise of augmented reality and virtual reality.

Curran: Last year was also the first year we really saw VR come to the fore with commercially available products at CES. This year, as I look at CES, I anticipate a year of innovation and experimentation when it comes to VR. Companies are going to be looking at how they can create richer, more immersive consumer experiences. I’ve seen companies experimenting with how to move beyond VR visuals to other senses. Can they bring in things like touch and smell? I’ve seen micro-heaters and micro-coolers, even water misters, trying to create an immersive experience. What will be interesting at the show is seeing which of these experiments excite the consumer and capture the imagination, and which ones miss the mark. It’ll be a fascinating show when it comes to VR.

The other thing for VR that I’m particularly watching at CES is the degree to which the media and content players show up. What announcements do we get about new media deals and content becoming available on VR? We recently saw the NBA announce that they would broadcast games in VR. As you get new content like that on the market, it attracts a whole new set of users, excites a new fanbase, and gets people interested in adopting the technology.

VB: For VR I’m not sure where it is on the hype curve. It grew to something like a $2.7 billion industry in 2016, but it’s far below some expectations as far as the number of units going out the door.

Curran: Like I say, this was the first full-fledged year where we see VR moving into mainstream, commercially available products. I’m excited about the early results we’ve seen. Now one of the challenges for VR is getting enough exciting and compelling content to attract not just the tech enthusiast, but the mainstream customer. That becomes a critical component as people look at VR as marketing and VR as an entertainment platform, be it for games or video or other content. As the platforms become more pervasive, it becomes more compelling for content producers to think about how to exploit this and reach new customers or delight existing customers in a new way. That’s the next step for expanding the VR market.

VB: A couple of different parties launched into the market. Facebook has Oculus. Valve and HTC have the Vive. One of them is an open platform and the other is closed. I wonder to what extent companies in the ecosystem care about that. Do they want to be in the camps of the major platform owners, or do they want it all to be open? What about across all the tech platforms, not just VR?

Curran: If you look at it over time, we’ve had successful examples of both. The reality in the tech industry, if people are able to create compelling consumer experiences, open platforms have done well and closed platforms have done well. Back in the day Windows and Microsoft had a very open platform that did extremely well. Apple historically has been more closed and done extremely well. We see companies being able to adopt both strategies.

The real key is, can you develop the right consumer experiences that attract enough people to your platform that it becomes the platform all developers feel they have to target when they’re bringing content to market? This becomes one of those virtuous cycles when it’s done well. The network effect kicks in. The more people are on the platform, the more developers want to target it. The more developers bring content, the more people want to join the platform.

The key for companies establishing these platforms is kicking off that cycle. How do I excite the early enthusiasts and translate their enthusiasm to broader-based adoption by mainstream customers? As that cycle picks up, it takes on a life of its own. It’s early days now as to which becomes the winning formula within VR, but either approach could work. It comes down to who’s winning the hearts and minds of early customers and translating those customers into ambassadors who propel their brands and platforms forward.

VB: It almost seems like every platform owner has to be in every one of the things you’ve talked about. They don’t want to be dependent on somebody else’s significant piece of the platform.

Curran: When you look at the platforms themselves — again, just look back over the history of tech. Some platforms are more narrowly targeted. Some are much more pervasive in their scope and magnitude. We’ve seen consumers adopt what I would call more fit-for-purpose types of experiences and devices, platforms that are more single-focused, things that solve an everyday need. People look at them and think, “I have to have that.” But we also see companies that take a very broad-based approach. They’re going to create a more pervasive platform with more general capabilities that touches many more aspects of people’s lives. There’s a built-in utility to having a common interface, a common way of interacting, a simplified set of fewer devices in my life that allow me to do many things.

It’s tough to say exactly which formula will work without looking at how people are approaching this from the customer’s perspective. How are platforms winning hearts and minds? I so often think it comes down to just a few emotional needs you have to solve. There’s that “oh, wow” moment, where consumers move from an awareness that the technology exists to an excitement about its potential. Then they move from that enthusiasm to confidence. Are the companies able to instill confidence that that potential can be realized? And not only realized, but realized in my life. “I can use this. This is the right technology for me.” Companies that are able to seamlessly move consumers through those emotional needs are the ones that gain traction and pick up momentum in the market.

VB: Your last trend was services. What do you mean by that?

Curran: This builds on many of the themes we’ve been talking about so far. We’ve seen many of the hardware companies extend their reach into services. They’re looking to differentiate not just on hardware alone, but the rich sets of consumer experience that hardware enables.

I think back to CES 10 years ago. So much of what I saw was excitement about the latest specs. It was the biggest this, the smallest that, the fastest whatever. Those were the stories that resonated out of the show. We’ve moved in many cases beyond talk about specifications and much more into what value the devices and services deliver in people’s lives. What comes of this is you see traditional hardware companies moving into services and having more of their conversation be about the services.

The nice thing about this is it allows for more points of differentiation. Companies can find more points of innovation. Done right, the innovation is mutually reinforcing. The new services require new hardware. Consumers upgrade to buy a new device and take advantage of all the capabilities in the service. As new devices come out with enhanced capabilities like new sensors, those create white space to develop rich, immersive consumer experiences that are differentiated. You’re starting to see more companies playing on both sides of that equation as an opportunity to differentiate themselves in the market.

VB: Anything else you’d like to add about the show?

Curran: I’m very excited for CES this year. I’m always looking forward to that next thing that’s going to amaze us. That’s one of the joys of working and spending time in this industry. It moves fast and it moves in unexpected ways. CES is a great opportunity where you have the whole industry coming together. I can’t wait to be surprised by something I never thought about, but that becomes so intuitively obvious when someone does a great job of innovating.