Greetings from Washington, D.C. and Dallas where the Cable Show wowed and amazed more than 12,000 attendees. If I had to describe this year’s show with one phrase, it would be executive engagement. You could go on the show floor (or one of the many meeting points) at nearly any time and see a host of cable executives, from John Schanz/ David Cohen/ Neil Smit/ Tony Werner/ Brian Roberts from Comcast, to Glenn Britt/ Rob Marcus/ Phil Meeks at Time Warner Cable, to Pat Esser and Len Barlik at Cox.
It was not merely executive presence or executive parade, but there was engagement. This is what makes the cable show so interesting to attend. Each attendee feels like a participant, not a bystander.
I have been to seven Cable Shows in the past nine years. I’ve lived through TV Everywhere, Canoe, Digital Phone, Commercial Services, and Mobile (the original Pivot) rollouts. This was a very different show than last year’s Boston sleeper. In 2013, the Cable Show became attractive and interesting to technology followers, not simply a display of the extravagant love fest between content and transmission.
Nowhere was this more present than at the Comcast booth. Following Brian Roberts’ demonstration of the X2 platform on Tuesday morning (which, by his own admission, has undergone 1,200 changes to get to this point), the Comcast booth was flooded, creating a traffic jam of sorts between other booths. Comcast has designed a Comcast-specific cable box. They have redesigned the remote control, adding functionality to the “C” button to enable visually impaired cable customers to navigate Xfinity more easily. They have added voice search to the programming guide. While in its infancy, Comcast is attempting to incorporate a recommendation engine into their next generation of Xfinity.
As we discussed last week, there are three themes shaping the cable industry: Recommendation, Disintermediation, and Differentiation. DOCSIS 3.1 will be expensive, but will make 1Gbps of bandwidth available to homes starting in 2014. While it will never overtake my One-Click experience with Amazon, Comcast’s Xfinity X2 recommendation experience could rival the Internet’s benchmark. Interoperability with other hardware, even taken to the full extent of eliminating the cable box as we know it and providing linear channels through third-party boxes, will likely not be a core strategy (even for Time Warner Cable), but could flatten cord-cutting’s line slope.
While the cable industry began to show signs of innovation this week (and the Xfinity 2 programming guide design is extremely impressive), all eyes in technology were on San Francisco, not Washington DC as the annual Apple Worldwide Developer Conference (WWDC) convened. This was more than the expected overhaul of Apple’s latest mobile operating system (iOS7). Apple also introduced an entirely new line-up of 11 and 13 inch Mac Air tablets and a new cylindrical Mac Pro.
Last year, Apple’s OS X and iOS updates focused on integration. More Siri integration, in-car (also known as “Eyes Free” integration), Facebook integration, and language integration seem like they have been around forever, but they were all features in iOS6. Processes worked seamlessly across devices thanks to iCloud. Connecting to Apple’s AirPlay was easier.
This year, Apple’s focus is on presentation and performance. iOS7 (available this fall) is full of brightness and clarity that predecessor versions lacked (green felt and wood backgrounds are replaced with light backgrounds). iOS7 also includes increased multi-tasking capabilities, which do not drain battery life, presumably through a background “check” algorithm that senses how often applications require updates. For example, if the (messaging or email) application frequently pushes notifications, iOS will sense this and make sure that apps are updated while messages are being activated. While this seems intuitive, previous versions of iOS (and Android) treated alerts and content differently. To the application user, the instant coordination of message and content, while a small nuance within some apps, will be very important for others.
Apple’s Safari browser, while a default, was not the browser of choice for many iOS users. They might change their minds after trying out the new version. Photos, which were already wonderfully presented, not only take have a new icon, but have entirely new editing and organization capabilities.
Siri also got a facelift with a male voice option and better female voices. Notably, however, there is no improved version of Siri for Apple’s Maps application. Also, there does not appear to be any integration of Siri into the new Apple Radio app, a big missed differentiator vs. Pandora (and one that would instantly improve in-car adoption).
Other improved performance features include inclusion of call/ message/ FaceTime blocking (for that former friend who just isn’t ready to let go of the relationship) and the ability to conduct a FaceTime session in Audio Mode (only). I know, this really does not make it “Face” time, but the change is welcome if you have ever experienced FT in a volatile bandwidth environment.
Apple’s announcement was an impressive and greatly needed refresh. Comcast’s Xfinity X2 announcement was also impressive and pioneering. Both companies are highly dependent on third parties to create their future – Rotten Tomatoes for movie reviews (featured in both Comcast and Apple presentations), Yelp and OpenTable for restaurant reviews (Apple), Twitter and Facebook for sharing (Apple). This stands in contrast to Google, who is bravely moving to integrate the entire experience (Fiber to Arris/ Motorola Mobility to Chrome and Apps like Maps/ Waze/ Zagat/ Hangout/ Gmail).
These two announcements, while different, convey one consistent message: The pace of change is going to accelerate, particularly for video-based applications. Brian Roberts’ 2012 comment that “Television will change more in the next 5 years than in the previous 50” appears to be more than hype. Apple, Google, Sony (PS4), Samsung, Roku and Microsoft’s X-Box are doing everything possible to ensure that this occurs.
Video is the next frontier, and everyone knows it. Who will stake (and hold) the claim is anyone’s guess. But with deeper integration from Apple and Comcast, it’s going to become more difficult for “software only” solutions to keep pace.
Next week, we turn back to the numbers to see who is dropping price to prop up 2Q wireless net additions. We’ll also provide several “watch for” items related to wireless and wireline earnings. Finally, the Patterson Advisory Group will have a very special announcement concerning one of our clients (RapidScale, an Irvine-based cloud computing company specializing in Desktop as a Service).
If you have friends who would like to be added to this email blog, please have them drop a quick note to email@example.com and we’ll add them to the following week’s issue. Happy Fathers’ Day, and have a terrific week!