Despite Microsoft's announcement that 2012 will be its last CES, the technology trade show is poised for the biggest turnout in years.


Riding a wave that has seen launches of tablets, Android devices and connected TVs over the past couple of years, the upcoming International Consumer Electronics Show in Las Vegas looks for another booster shot of relevance despite Apple's continued absence and Microsoft's recently announced swan song.



Momentum carried by recent years of increased key announcements and positive trade show numbers may have taken a hit with Microsoft announcing that the 2012 show will be its last as an exhibitor and keynoter. In a blog post, Frank Shaw, Microsoft's corporate communications vice president, wrote that the company's product news milestones "generally don't align" with the January timing of CES.


"As we look at all of the new ways we tell our consumer stories -- from product momentum disclosures, to exciting events like our Big Windows Phone, to a range of consumer connection points like Facebook, Twitter, and our retail stores -- it feels like the right time to make this transition," Shaw wrote.


Time will tell whether another tech event will benefit from Microsoft pulling out of the show. CES, however, has been on the positive end of another trade show's demise. The collapse of COMDEX in 2004 -- which some industry observers attribute, in part, to IBM abandoning the show in 1997 – laid out the welcome mat for non-traditional companies to make major announcements in Las Vegas each January. A recent example is Ford Motor Co. launching its Ford Focus Electric at the 2011 CES instead of the North American International Auto Show.


COMDEX's fall also opened the door for CES to become the No. 1 trade show in the United States by attendance. CES registration jumped the first 3 years there wasn't a COMDEX, including 2006 when a record 152,203 attended. The economic downturn saw numbers drop until 2010, and in 2011 CES was just 471 registrants shy of again reaching the 150,000 milestone.


By show floor size alone, CES is the world's largest consumer tech show. The 2012 CES trade show will sprawl across 1.8 million square feet, larger than the 1.6 million square feet of space in 2011. That figure, along with 2,700 exhibitors the hosting Consumer Electronics Association said will be at the show, will equal the 2007 event, held 11 months before what economists peg as the start of the most recent global financial crisis.

ballmer2011ces.jpgMicrosoft CEO Steve Ballmer delivers his keynote address at CES 2011, where he provided updates on Kinect for Xbox 360 and Windows Phone, and also previewed several new Windows PC devices coming to market. Microsoft has said the 2012 CES will be its last. (Flickr photo)


Long-time CES attendee Danielle Levitas, an IDC analyst, has seen the show's ups and downs first-hand.


"It felt like CES was about to explode in 2006, when attendance hit astonishing numbers," Levitas said. "Then the global crisis hit and understandably, attendance dropped. But it has rebounded and seems to be going strong."


For the worldwide media and analysts covering CES, the number of attendees and square footage pale in importance compared to the show-and-tell over four busy days. The CEA expects more than 20,000 new products to be launched at the show, which has one veteran product reviewer upbeat.


"A few years ago there was a sentiment that CES was becoming less relevant because of certain companies dropping out and other reasons, but you don't hear that lately," said Steve Kruschen, better known as "Mr. Gadget" to television and radio audiences.


"What's helped is adding new things," said Kruschen, who is about to attend his 29th CES. "I've long been an advocate that the CEA expand in housewares, which I call kitchen electronics, and consumer-type medical equipment. They were missing the boat by not including those types of products for so many years. By doing so they've kept CES more relevant than ever."


As for the 20,000 product launches organizers said will be made at CES, Kruschen said exhibitors can actually help the show maintain its significance by taking a less is more approach.


"From tablets with usability issues, interface issues and other issues to products that don't fill a need or have an audience -- we journalists are constantly amused, and not in a good way, when we ask ourselves, 'Why on Earth did they introduce that at CES?'"


Ironically, the same company that Kruschen cited as doing a good job in that department is also absent from the long scroll of 2012 CES exhibitors.


"Apple focuses its stuff at a time and place of its choosing, only introducing a product when it's ready," he said. "Too bad others don't do the same."

cesrush.jpgAttendees rush into the Central Hall from the Grand Lobby at the 2011 CES, which came 471 registrants shy of reaching 150,000 in attendance for the first time since 2006. (Flickr photo)


Apple, which in the past said that coming up with a dazzling show and mind-blowing new products every January was "unsustainable," may still be the biggest elephant in the room, but it won't be invisible at CES. Apple will be represented by several attendees, according to the CEA, and it will have strong presence at the expanded iLounge pavilion for companies in the business of Apple hardware and accessories.


The CES Effect


Just as CES draws attendees and exhibitors from many walks of commerce, so does the city that has hosted the event since 1978. Las Vegas is expected to be named North America's No. 1 trade show destination for the 18th straight year when Trade Show News Network's 2011 list is announced.


"CES was one of the first to come here on an annual basis, and it's been great to watch it grow along with Las Vegas as a destination," said Jeremy Handel of the Las Vegas Convention and Visitors Authority.


For the local hospitality scene, CES kicks off the convention season in a big way. MGM Resorts International, whose portfolio includes some of the biggest names on the Strip, said that CES is the highest-grossing trade show for the company annually, even in less than stellar years.


"CES delegates fill our restaurants, shows, retail stores and, of course, our guest rooms, generating nearly 25 percent of our annual room revenue for the month in one week," said Richard Harper, an executive vice president for the company behind
Bellagio, Mandalay Bay, The Mirage, MGM Grand and other major Las Vegas properties.


By the time the last Teamster clocks out, CES 2012 is expected to bring in over $153 million to the Las Vegas area, according to the convention authority, and that doesn't include what attendees will drop in the casinos.


"That's a lot of relevance," Handel said.


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Tablets, Big TVs, Home Automation Technologies, Ultrabooks and Win8 Will Be Buzzworthy, but Analysts Aren't Expecting Any Blockbusters at the Upcoming Consumer Electronics Show



It may be little things with limited sales potential, such as the intelligent Nest digital home thermostat, that will generate the biggest buzz at the 2012 International Consumer Electronics Show (CES).


Technology analysts expect that most new consumer products revealed at the Las Vegas trade show will merely be iterations of things that are already on the market. Despite that outlook, there's hope for innovation in home automation, car technology, Ultrabooks, Win8 and new user experiences (UI).


"We're talking plenty about voice these days because of Siri, and we're talking a lot about gesture because of things like Kinect, but I want to see where UI is going," said Danielle Levitas, vice president of consumer technology at IDC Research."Are we going to see voice integration with remote controls? Are we going to start seeing gesture getting to into the UI experience?"

Danielle-Levitas.jpg"Whether Win 8 is on PC or tablets it's going to be a huge buzz category." -- Danielle Levitas, IDC Research (Flickr photo)

More specifically, Levitas wants to see if there will be any new visual interfaces for connected TVs. "To me, that's where we need to see some significant innovation," she said.


Stepping back, she believes there will be two predominant themes at the 2012 show: connected living room and mobile. "I think where the real innovation is going to be is around home automation and in-car entertainment," she said.


Levitas expects to see news media focus on the latest tablets and large OLED televisions. "The fact of the matter is those two segments are going to be an evolution of where we are today," she said. "The difference this year is that there will be a lot of attention not just around Ultrabooks but Win 8. Whether Win 8 is on PC or tablets it's going to be a huge buzz category."


According to Sara Rottman Epps, a senior research at Forrester Research, several strategists in the computing industry are gearing up for 2012 to be the year of the "Ultrabook" -- new ultrathin and light laptops, often with solid-state drives, such as the Asus Zenbook UX31 and Lenovo IdeaPad U300s.

Mike Feibus.jpg"As we get to the latter half of 2012, Ultrabooks will be making a big push and there will be a lot of innovation in the PC market." -- Mike Feibus, TechKnowledge Strategies (Flickr photo)


"We agree that Ultrabooks' lighter, thinner form will appeal to many consumers," Epps wrote recently at All Things D. According to a Forrester Research survey in September, 21 percent of U.S. online consumers say they're interested in owning one.


Mike Feibus, founder of TechKnowledge Strategies, calls this a "tweener" year for CES.


"In 2011 there was a lot of excitement around smartphones, tablets, the rise of Android and even some 3-D TVs," said Feibus. But he foresees the 2012 show not being as exciting as 2011 and won't have as much to see and talk about as he expects in 2013.


"As we get to the 2013 CES, that's going to be real exciting," he said. "As we get to the latter half of 2012, Ultrabooks will be making a big push and there will be a lot of innovation in the PC market."


Levitas said that people attending CES will see "that a PC can be an "aspirational' product versus just another new PC with a new OS on it."



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Wireless Industry Veteran Leading Intel's Efforts to Deliver a Better Smartphone Experience


MikeBell01.JPGMike Bell holds up an Intel smartphone reference design. (Flickr photo)

Midway through his keynote address at the Intel Developer Forum last fall, Intel President and CEO Paul Otellini demoed slick new software called Pair & Share, easily moving photos from a mysterious Android smartphone to a Windows 7 PC.


Twenty minutes later, Google's Andy Rubin joined Otellini on stage to announce a partnership to ensure that future versions of Android will be optimized for Intel architecture.


Somewhere in the audience Mike Bell was beaming.


This energetic, fast-talking wireless industry veteran only recently took a leadership role on Intel's mobile efforts, promising "that we'll work creatively and tirelessly to make our smartphone strategy a reality."


Last week, Bell was promoted to co-general manager of Intel's new Mobile and Communications Group, which combined four separate business groups into one large mobile division where he will work side by side with Herman Eul, formerly president of Infineon's communication group prior to the company's acquisition by Intel last year. Bell and Eul are now responsible for all of Intel's mobile wireless, handheld and tablet initiatives.


Bell himself only came to Intel in 2010 after leading product development at Palm for 3 years, and before that spent 16 years at Apple as a vice president involved with the iMac, Apple TV and iPhone programs.


Read on for an edited version of a lively, candid conversation with Bell about how the first Intel smartphone will stand apart from the Android crowd.


Last year, you said, "We must significantly accelerate our progress in phones." Has that happened?


Bell: [Holding up a phone, nodding] It's a "Medfield" phone. It's about as thin as an iPhone. It has HDMI and it actually works. You can make phone calls.


It can take 10 eight-megapixel pictures in 1 second, at full resolution. Theoretically, it could take up to 20 16-megapixel pictures in a second -- it has bandwidth to do that -- but I have an eight-megapixel sensor on here.


We've shown that Medfield has as much potential as we've been telling people it has -- which is good, always, to validate what you've been saying.


MikeBell02.JPG"People confuse clever and cluttered -- very different concepts. We want to make the applications and the experience smarter." -- Mike Bell (Flickr photo)

The next step, then, is to ship an Android phone?


Bell: Android phones, yes.


How does that change direction for Intel?


Bell: That's what Apple did, right? Apple reinvented itself. It went from a computer company to a media player and handheld device phone company. If you don't reinvent, you die. It's what you have to do.


How will an Intel phone stand apart from the army of Android phones?


Bell: Well, I'll tell you what we don't want to do. What we don't want to do is something tacky, like spinning 3-D cube interfaces.


My tagline has always been that people confuse clever and cluttered -- very different concepts. We want to make the applications and the experience smarter.


We don't want to make the user experience look too much different, but we want to make the applications better by embedding Intel technology underneath them so that the mapping is better, that the contact management is better, that the calendar is able to do things for you based upon it knowing where you are, what meeting you're supposed to be in. Why can't it make some intelligent decisions for you?


So we want to add technologies underneath the hood that make the experience smarter, more personalized, and more secure as opposed to just tacky.


Is that more difficult to do with Android? Do you end up with your own special version of Android because you have all that extra stuff? Or do you just build layers underneath that Android hooks into?


MikeBell03.JPGMike Bell came to Intel in 2010 from Palm where he led product development. Prior to that Bell spent 16 years at Apple. (Flickr photo)


Bell: In most cases, I think we can be smart about it and build layers. Our challenge is to make our version of the API better than everyone else's.


So we add functionality so that when the app runs on our platform, it gets better and smarter transparently and doesn't have to be recompiled.


In some cases, we may supply our own application that has its own intelligence, but if we do this right, we can probably just make all the applications better on our platform. That's the goal.


Has the new reference design helped change the conversation with OEMs?


Bell: I think they were pretty surprised, because of what we'd been showing them up until then. Some of the feedback we got is they really appreciated our approach. They said, "Oh, you guys get it. You understand that this is what you need to do to be in this space."


Frankly, if we can't prove what you can do with the chipset, why should they believe us? So I think it was really refreshing for them to see not only are we doing slideware but we're actually backing it up with technology that works.


Do the carriers, the service providers, all have different features and things they want for the phone?


Bell: Every one.


Shifting the subject, what brought you to Intel?


Bell: It was the challenge -- similar to having been part of the team that brought Apple back and trying to do the same thing with Palm.


Intel is one of those iconic Silicon Valley companies. It's the chance to help Intel break into a new business and grow the company, to really fundamentally help make that change. I mean, I build gadgets -- how can you not want to build gadgets?



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SSDs Absorb Punishment in Series of Outrageous Torture Tests



ssd_alanfrost.jpgAlan Frost, host of "Adventures with Intel Solid-State Drives," finds creative ways of imperiling SSDs. (Flickr photo)

If Alan Frost loves solid-state drives so much, why does he relish throwing them, smashing them and, yes, even cooking them?


"Awareness," said Frost, and he doesn't mean for himself. Although these solid-state drive (SSD) beatings are available on YouTube for the world to see, he doesn't want star billing.


"It's all about the SSD," said Frost of Intel's NAND Solutions Group.


For the uninitiated, solid-state drives are a storage device without moving parts, making them significantly less susceptible to damage from impact than traditional hard disk drives.


Manufacturers such as Kingston and OCZ tout myriad benefits of solid-state drives, and a Forrester Research report hailed the decreased power consumption and seek time, but it's the sturdiness of SSDs that drives the "Adventures with Intel Solid-State Drives" video series.


Guided by a formula of taking working SSDs from a laptop, torturing them with fervor and then seeing if they still work, the demonstrations test the drives' brawn in a number of far-out ways, including a stunt that had a sedan nearly side-swiping Frost.


"The car came 5 feet away from me going 82 miles an hour," Frost said. "Wasn't the smartest move I've ever done."


Perhaps not, but that video got more than 100,000 views on YouTube in the first few months.

ssd_blackrock.jpgThe debut episode of "Adventures with Intel Solid-State Drives" did show that an SSD could withstand extreme heat, but host Alan Frost standing outside in the heat of Nevada's Black Rock Desert with a frying pan and an egg was actually a ruse for a more daring demonstration. As Frost describes the attributes of the drive, out of nowhere a sedan zooms by, just missing the host but hitting the SSD. Despite being run over and left in a cloud of dust, the SSD worked like a charm when plopped back into the laptop. (Flickr photo)


That was the first of six segments shot in Northern Nevada's Black Rock Desert, a place not unfamiliar with the bizarre, being home of the annual Burning Man event.


In one test, an SSD is run over by a wheel of the 13,000-pound North American Eagle, a converted jet fighter that had its wings lopped off and wheels added to challenge for the land speed record. In another demonstration, an SSD is strapped to the Eagle's frame for a 2 1/2 -mile test run, and survives -- something Frost said a hard drive could not due to the tremendous vibration alone.


In the final ordeal at Black Rock, an Intel SSD and a hard drive were loaded side-by-side in the Eagle's parachute launcher, and after being shot out after the craft reached about 700 mph, both drives were tested and only the SSD, to borrow a line from the classic Timex commercials, took a licking and kept on ticking.


After the success of the Black Rock series, Frost went to Japan to film martial arts experts doing their best to inflict harm on SSDs and hard drives. Karate chops of a 20-year-plus martial arts expert and strikes by sword-wielding men dressed as samurai proved fatal only for the hard drives.


Frost, co-creator Bryce Sanders and other team members are planning even more ways to test SSDs in 2012. Frost is hesitant to divulge what's on the horizon, but he's hoping stars align for Tom Dickson and his Blendtec line of blenders to use an SSD in a future "Will It Blend?" video.


"We contacted him and he asked for too much money, of course. People ask all the time for us to go on that program. I don't see it happening, but we'll keep trying," said Frost, adding that he doubts an SSD will blend. "SSDs can't get wet, so there's nothing wet in them [to blend]."


If the avid sports fan gets his wish, one of Frost's next videos will involve the San Jose Sharks of the National Hockey League.

ssd_hockeyplayers.jpgAlan Frost directs a test demonstration at an ice rink. The hockey players each fired a drive (one SSD and one HDD) into goal net with a slap shot. (Flickr photo)


"The one I really want to do is go to a Sharks practice and have players hit an SSD with a slap shot like they do with a hockey puck," Frost said. "We tried to make this happen a few years ago but the financials never worked out. The Sharks wanted more money than we wanted to spend."


So far, Frost has had to make do with two amateur hockey players shooting an SSD and a HDD into a goal net at a public ice skating rink. The SSD won.


SSDs may be victorious on the ice, but they still have a way to go before they eclipse HDDs in the marketplace. According to market research firm iSuppli, second-quarter 2011 shipments of SSDs climbed "a hefty" 21.4 percent to 3.4 million units, but the market "faces the challenge of a crowded manufacturer base" and "teething pains on the way to becoming a stable market with healthy revenues and margins."


For comparison, HDD shipments in the second quarter totaled 167.1 million units, according to iSuppli. Still, the firm noted, "SSDs continue to deepen their penetration into the market, and the technology is expected to pick up more steam with the recent debut of consumer NAND caching technology from Intel."


For his part, Frost will continue to produce videos guided by a mission to educate and entertain audiences on the ruggedness of SSDs.


"Anyone who looks at the videos will at least be aware of them," he said. "They are a fun way to raise awareness. If half never heard of SSDs before we're serving our point."



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A Serial Entrepreneur Shares Her Secrets for Technology Startup Success and How She Wooed Guy Kawasaki Away From Apple


Duchess-Silicon_Valley01.jpgOutside it looks like a cabin in the woods, but on any given day inside Buck's Restaurant Silicon Valley entrepreneurs and venture capitalists are striking funding deals over breakfast, including such startups as Hotmail, PayPal and Tesla, according to legend. (Flickr photo)

Sand Hill Road in Menlo Park, Calif. is the epicenter of Silicon Valley's venture capital scene, but it's 15 minutes up the road at a diner nestled in the woods where many startup funding deals get hashed out over plates of pancakes and eggs.


Buck's Restaurant in Woodside is where startup veteran Marylene Delbourg-Delphis took time recently to reflect on her legacy as one of the first European women to start a tech company in Silicon Valley.


Decades before organizations such as Women 2.0 and One Million by One Million helped women start their own businesses, Delbourg-Delphis dove in headfirst, developing her own business philosophy defined by friendships and intuition but rooted in a bootstrapping approach aimed at generating revenue before reaching for venture funding.


"Lots of VCs come to Buck's. I really like the energy I find here," Delbourg-Delphis said with a smile.


Legend has it that Hotmail and Tesla were founded at Buck's. Netscape had early-stage meetings at the roadside diner and it's where PayPal secured initial funding. Over a bowl of mixed fruit and a mug of Buck's house coffee, the self-professed serial entrepreneur talked about her early-morning meeting at TalentCircles, a job-recruitment company where she is CEO. It's the most recent of more than 30 companies she has worked on over the years, including Brixlogic, Exemplary and Objective Marketer, all of which were eventually acquired.


"Startups have been my passion, my exclusive passion for the past 25 years," she said.


First Startup


In the mid-1980s, Delbourg-Delphis was studying at l'Ecole Normale Supérieure in Paris when she first used an Apple III.


"I was working on the history of fragrance, and I needed a database to manage my research," she said. "I looked at dBASE and thought it was so anachronistic. There was really nothing simple, visual and easy to use."


Her need turned into an idea that became a business in France. She named the database 4th Dimension, and claims it was the first relational graphical database.


"I was not approaching this from a point of view of a computer scientist, but from a point of view that this is what I really need," she said, underscoring that this simple, humanistic approach is the essence of most successful startups today.


The French-based database business became profitable after 2 years, according to Delbourg-Delphis. During an Apple Expo in France in 1985, she met Apple software evangelist Alain Rossmann, who strongly encouraged her to visit leaders at Apple headquarters in California -- she arranged to arrive in Cupertino post-haste.


Silicon Valley: Florence of the 1980s


When she first set foot in Silicon Valley in 1985, she was fascinated by the sheer concentration of companies all in one place.


Silicon-Valley_Duchess.jpg"I would not go in front of time looking for what I already know. Instead I always look at time as the opportunity to learn something new that can challenge me," said veteran entrepreneur Marylene Delbourg-Delphis. (Flickr photo)

"I looked at this as a renaissance world," she said. "I thought of places like Florence, Rome or Paris, where all of the great minds got together to create things, making these places like the center of the Universe. There is a map of Silicon Valley with names of all of the companies in the area, and I remember looking at this map and saying, this is Florence, only several centuries later."


"This is when I figured that the market was here," she said, and quickly decided to start a U.S. subsidiary of her growing French company, and she named it ACIUS 4th Dimension.


"Being one of the very first European women to start a high-tech company in Silicon Valley, it was out of the question that any VC would fund me," said Delbourg-Delphis. "When I did my startup, VCs would not relate to somebody like me. I had a heavy-duty background in philosophy, was a woman and I was French."


"I believe VCs were willing to fund women entrepreneurs in the early days, but we just did not have many approach us for capital," said DuBose Montgomery, who co-founded Menlo Ventures in 1976. He remembers Sandra Kurtzig as being one of the first women entrepreneurs to convince VCs to back her technology startup ASK Computers, which later became a very successful manufacturing software company acquired by Computer Associates in 1994.


This environment didn't dissuade Delbourg-Delphis. She focused on product development and networking with developers and potential customers, which she says led her privately held startup to generate more than $45 million in revenue in 6 years.


Getting Guy Kawasaki


If there is a line between business and real life, it is blurry if not invisible to Delbourg-Delphis. She believes that the best business relationships develop into true friendships like the one she has with Guy Kawasaki, who today is a top-selling author and successful Internet entrepreneur.


Duchess-Silicon_Valley03.jpg"Silicon Valley is still where you can be genuinely unrealistic and make something real," said veteran entrepreneur Marylene Delbourg-Delphis. "It's still a place where you realize that the future is today." (Flickr photo)

She first met Kawasaki during her early visits to Apple headquarters in 1985. Kawasaki was the company's chief software evangelist, and Delbourg-Delphis described him as someone who always had his hands on products, and the 4th Dimension database was one product he knew well. That same year, Delbourg-Delphis asked Kawasaki if he would join her startup as CEO.


"What's the likelihood of a man coming to work for a woman in the 1980s?" asked Delbourg-Delphis. "But he did. I think he liked how I asked him directly without dramatizing my invitation."


Guy helped me understand American idioms," she added. "I could speak Shakespeare, but I couldn't read the Mercury News."


Kawasaki left ACIUS in 1987 to become an author and speaker, leaving the CEO role to Delbourg-Delphis. Rossmann, who had become a board member at ACIUS, acknowledged that Delbourg-Delphis had built "one of the leading PC databases software companies in the world," capturing a major share of the Apple market.


Delbourg-Delphis left ACIUS in early 1997 at the request of her then 9-year-old daughter Sophie, who wanted to stop traveling back and forth to France and live exclusively in America. After moving permanently to Silicon Valley, she set up Cilantro Productions, her consulting firm where she uses her knowledge and business process management skills to help entrepreneurs.


Democratizing Magic, Intuition over Experience


Silicon Valley has remained a hotbed of innovation for decades because it is continually "democratizing magic," Delbourg-Delphis wrote in a recent article for the French publication Atlantico.


She has never followed a career roadmap, structuring her life instead around interaction with people and her intuition. "I have had a lot of experience, but in a way, I always see experience as something that you must forget," she said. "Experience only helps for routine tasks. I don't use experience as a filter to evaluate new opportunities. I plan when I see and I don't plan to see."


Delbourg-Delphis paused to look around Buck's, turning an ear to nearby chatter about Google, Facebook, Apple, social networking apps and possibly even a deal or two, before offering a parting comment.


"Silicon Valley is a place where you can just do anything, but geography matters less," she said. "With the addition of all sorts of nationalities, far more than anything we saw here 30 years ago, it's a true melting pot for geographies and times. You have people coming from very different backgrounds with completely different histories. It's truly phenomenal. Here people have been used to inventing and innovation for two generations."



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Lego's Familiar Building Bricks Come Alive Using In-Store Technology the Danish Construction Toy Maker Hopes will Enhance the Customer Experience


LegoDigitalBox01.jpgUsing augmented reality, a customer in the Sacramento, Calif. Lego Store gets a better look at the Millennium Falcon set from Lego's Star Wars collection. (Flickr photo)

As brick-and-mortar stores compete not only with themselves, but the convenience of e-commerce, a company whose core product is bricks without the mortar is set on improving an already unique shopping experience.


Digital Box, an interactive kiosk jazzing up branded Lego stores that allows customers to see fully assembled Lego products come alive on screen, was one of the first examples of augmented reality in the retail sector when it debuted in 2008. In a refresh for all Lego stores, older systems are now being replaced with a second-generation model geared to improve the in-store experience for consumers and net sales for the company.


"The Lego Digital Box is unique in that it was one of the first massively implemented in-store AR experiences," said Dr. Thomas Alt, CEO and co-founder of Munich-based Metaio, software provider for both generations. "The initial trial period was so successful in increasing important benchmarks, like customer satisfaction and product sales, that now there is an in-store kiosk in every Lego-branded store in the world."


Augmented reality is the technique of overlaying graphics on a real-world image so the graphics enhance and recontextualize the scene. With Digital Box, customers can see how the Lego products, some with thousands of pieces, will come together without ever opening an actual box. It's not streaming video, but a real-time visual controlled by the individual. When a customer holds up a product to the screen what pops up is a 3-D animation that changes as the box is moved around. Hold up the City Corner set to the camera and the box comes alive with a scene of Lego Minifigures getting on a public bus, patronizing a pizzeria and skateboarding on the sidewalk, just as it might be played when built.


Besides the fun factor, Digital Box can help assess potential return on investment. Is the $240 Lego London Tower Bridge worth the money? What about the investment of time to build from a whopping 4,287 pieces? A 3-D rendering of one of the most ambitious and priciest of Lego's projects, as opposed to just the 2-D box photo, might win over a shopper.


Spending more than $200 on a Lego set wasn't what Shawn Anbiah had in mind when he shopped at the Sacramento, Calif. Lego store on Black Friday, but the high school senior, an admitted technology fan, recognized the value of Digital Box.


"I was just browsing today, but if I was looking for toys to buy as a gift it would definitely help me make a decision," said Anbiah, 17, of Folsom.


Second-Generation Improvements

The most noticeable difference between the first and second generations is capacity. The 3-D experience that has been limited to 24 Lego products as powered by an Intel Xeon Core processor will accommodate 200 with the upgrade to Intel's second-generation Core processor.


"We will now be able to include virtually all of our products, meaning that a consumer will be able to pick products up from pretty much anywhere in the store and have a fun experience with the virtual contents of the box," said Justin Tripp, vice president of Lego retail stores.

LegoDigitalBox02.jpgOne of the first examples of augmented reality in the retail space, Digital Box (along the right-side wall) is a standard feature in Lego brand stores worldwide, including this Denmark location. (Flickr photo)


The latest rev of Digital Box, planned for integration in all 80 Lego brand stores as early as mid- 2012, also improves performance while shrinking the unit's size, according to the Denmark-based company.


"We've increased content and at the same time created an improved customer experience," said Olav Gjerlufsen, digital director of Lego 3-D Flow. "You don't need the huge case with the new design."


Gjerlufsen said he no longer will use "bulky" and "limiting" to describe Digital Box.


"Working closely with Intel's developers helps us create the augmented reality system of the future," said the Lego director. "The built-in graphics of the 'Sandy Bridge' platform improves the overall performance and overcomes some of the bottlenecks we had with the first generation."


For the near-10-fold increase in showcased product, Gjerlufsen said, digital 3-D graphics from Lego Digital, software from Metaio and the multi-threaded Intel chipset have to work in parallel. Doing so overcomes such challenges as recognizing and tracking hundreds of boxes and rendering the multimedia animations smoothly and fast. "Tracking," in this instance, means using the image of the packaging as optical reference for true-to-scale and true-to-position display of the referenced information.


The Bottom Line

Cool as the technology is, it's more important for the international toy giant to keep customers interested in the bricks and plates inside a Lego box than the nuts and bolts inside Digital Box. If the common sight of customers clustered in front of the interactive kiosks is any indication, the Lego Group's foray into augmented reality is a hit.


"Research within stores indicates that customers love the technology and confess that it definitely influences their purchase," Tripp said, adding that the company hasn't taken specific measures to learn if Digital Box drives sales on particular product lines.


Research conducted by Intel in the early stage of development of the second-generation Digital Box found that it's more a marketing tool than a sales tool.


"Digital Box gives a different experience in the store. It's branding, it's more interaction with the public," said Adrian Whelan, Intel's embedded new business director in Europe. "Kids have fun with it, parents can physically see what the product looks like before buying, and sales people are able to get customers of all ages more excited about the products."


No argument from Alt, who said interactive, camera-based experiences have some of the most potent stopping power in the industry.


"Consumers spend up to seven times longer engaged with AR than a poster or print ad," he said. "Also, initial studies show that people are 64 percent more likely to purchase a product after engaging in an AR retail experience."


Growth in the Retail Space

The ink on the final specs of the second-generation Digital Box is barely dry, yet discussion is already underway for a third version that can augment reality for yet another 100 Lego products, according to Whelan. For now, at least as far as the customer-facing side of the Lego Group is concerned, it's all about rolling out Digital Box II.


"Depending on the five-store trial and the budget, I would hope to have [the second generation] in all of our stores by mid-year 2012," Tripp said. "As fast a rollout as possible is desired as our objective at Lego is to innovate and capture children's imagination with both our stores and our products, the Digital Box helps us on this journey."


Lego is hardly alone in using technology to develop engaging retail experiences. Augmented reality is also a reality at Macy's stores this holiday season. As a twist to its 3-year-old "Believe" campaign that invites children to send letters to Santa using special mailboxes in stores, customers with iOS and select Android smartphones can download a mobile app from Metaio that allows them to interact with characters from the animated TV special, "Yes, Virginia." Customers can step in the frame and take a 3-D photo, which can also be uploaded onto a holiday card template to share via email or Facebook.


An example of augmented reality in eRetail is Ray-Ban's Virtual Mirror, which allows online shoppers to virtually try on and sample eyewear while sitting in front of a computer.


Whether augmented reality will become ubiquitous in the retail space is debatable, but its growth is less so, according to Alt, adding that he sees the industry's use of the technology as more of a paradigm than a trend.


"AR is an interface for retail, a visual platform to display information about any given retail product," Alt said. "It's no more of a trend than digital signs, online shopping or even mannequins. Retailers are always looking for efficient, useful ways of displaying their products whether it's in-store, online or mobile. Augmented reality provides a new, engaging way of positioning merchandise in all three venues."



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