Cadence CMO John Bruggeman has been using Samsung Smart TVs as the poster children for the EDA360 vision for nearly a year. He’s talked about how the inclusion of apps in formerly dumb applications such as TVs creates the continuous revenue streams so much enjoyed by Apple through its iPod, iPad, and iPhone products. In fact, continuous revenue streams are certainly one way (but only one way) to effectively offset the enormous cost of creating cutting-edge SoCs for consumer markets. Yesterday Evan Ramstad wrote an article for the Wall Street Journal that describes how 3D, last year’s great margin differentiator for TV sales, has failed to deliver sales. This year, writes Ramstad, it’s all about apps-driven Smart TVs. It takes very little stretch of the imagination to understand 3D’s current lackluster sales performance and it’s no stretch at all to understand the allure of apps-driven Smart TV.
First, consider 3D. Perhaps, as suggested on National Public Radio just last night, 3D is simply an idea whose time is not yet here. Essentially, 3D movies and TV remain a very niched app because the amount of content available in 3D is still small, 3D content delivery is not yet standardized, and you still need to wear those dorky glasses to watch. Is there anything sexier than sitting on the couch with your romantic partner watching a movie while both of you are wearing dark, polarized, horn-rimmed glasses?
You can listen to the 5-minute segment of “All Things Considered” discuss 3D movies and TV with David Cohen of “Variety” here.
In the above mentioned NPR interview, Cohen compares the not-yet-baked state of 3D content delivery to the state of movie sound in the early 1900s. Early attempts failed and there was significant skepticism in the press—until sound finally did succeed starting with the 1927 issue of the feature film “The Jazz Singer.” After that breakthrough film, talkies became a phenomenon. That could still happen with 3D.
However, it’s not likely to happen this year or next—not until the technology acknowledges and overcomes the dork factor.
Now turn your attention to Smart TV, which connects the TV to the Internet to deliver the one ultimate killer app, proven again and again to deliver the goods: SHOPPING. All of us like to shop and the Internet has opened up commerce like never before. It caters to impulse buying the way candy in the checkout aisles of grocery stores appeals to the buying impulse. See a cool watch or pair of shoes on your favorite TV show, click “Buy it now.” It’s a stereotype that “only women like to shop” but go take a look in the Craftsman tool section of your local Sears or in a train hobby shop to see just how much men like to shop. Then there are teens. Take a look in your local mall. I smell dollars there.
Where’s the money in apps-driven TVs and other embedded electronic products? Affiliate sales. Everyone’s working for commission these days. Affiliates get a sliver of the ensuing revenue stream. Why not systems companies? That’s the revenue stream TV makers hope to tap by installing shopping portals in their TVs.
Because these continuous revenue streams are now important to the overall cost/revenue structure of system design, they’re important to the cost/revenue structure of SoC design as well. There’s no use denying it. It’s a fact. You can look it up in the book. The EDA360 book.