By Forrester Research
Special to CNET News.com
January 9, 2004, 1:30PM PT
By Jed Kolko, Principal Analyst
At this year's Consumer Electronics Show, the vision of video throughout and beyond the home took a big step forward. Microsoft and the PC industry--not traditional electronics brands--stole the show. But consumer adoption of new video devices is still a long way off.
CES 2004 offered nothing as radically category-busting as last year's watches and ovens. Yet what the show lacked in drama, it made up for in a coherent vision: Video that is free to move throughout and beyond the home. Three nascent categories show the promise of unshackled video.
Media receivers that send PC images and music to the living room. Microsoft announced the Windows Media Center Extender, a networked set-top box that puts an XP Media Center Edition PC's digital content--along with the user interface--on a television. Roku unveiled a media receiver that gorgeously displays digital images on a high-definition television. Both are major improvements over Hewlett-Packard's Digital Media Receiver, which was 2003's best attempt at linking the PC and the TV.
Portable media players that store and play back digital video files. As with media receivers, portable media players aren't really brand-new: Archos has been selling 1-inch and 4-inch video players for months. But the Microsoft Portable Media Center design, which powers a remarkably sharp-screened model by Creative Labs, stores and plays back digital media without first capturing it as a lower-quality analog stream as the Archos players do. Microsoft also announced that EMI Music, Napster and CinemaNow will make their content, including music videos, playable on the device. And Portable Media Centers will sync with PC-based content using Windows Media Player. Media Center PC owners will be able to transfer recorded TV programs to the device for viewing on the go.
Score one for the PC industry
PC makers will build Microsoft-powered peripherals. The Windows Media Center Extender will come in two form factors: a separate set-top box, and an all-in-one LCD TV that includes the Extender software. Guess who Microsoft announced as its OEM partners for these consumer electronics devices? Computer makers HP, Gateway, Dell and Alienware, plus only two major consumer electronics brands: Samsung and Tatung.
Consumers will need faster home networks. All of these new technologies--except the Portable Media Centers--depend on consumers having home networks that are fast enough to transmit video. Today's Wi-Fi standard, 802.11b, isn't. Unshackled video will push consumers to upgrade to the faster 802.11g standard, install a wired network or wait for the unofficial next wireless flavor, 802.11n. And when consumers get networked or renetworked, the revenue will flow to the gear makers, the broadband Internet service providers, even the portal sites--not the traditional CE companies.
Coming--eventually--to a virtual theater near you
Home networking adoption among the mainstream. Home networks--a prerequisite for unshackled video--are in only 8 percent of households today. And the main reason households get networks is to share a broadband connection across multiple computers, not to try out advanced entertainment applications. Before home networking adoption reaches 20 percent in 2006, the potential base for new video devices will be small.
Content protection for television programming. All the major technology companies promise to adhere to digital rights--HP CEP Carly Fiorina even made it a major theme of her CES keynote. Right now, restrictions on copying television programming are few: Archos users can capture analog-out streams as freely as they make VCR tapes, and content owners have not enabled broadcast flags that could prevent hard-drive recording of programming. But as consumers start sharing their unshackled video, a backlash is inevitable. Just the threat of backlash will be enough to slow down innovations--so TiVo users shouldn't plan to be able to copy recorded programs easily to Portable Media Centers soon.
© 2004, Forrester Research, Inc. All rights reserved. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change.