One Device To Rule Them All

Monday April 27, 2009 – Stewart Wolpin

MP3 player. PND. digital camera. PMP. camcorder. E-book reader. mobile phone. All popular 21st Century gadgets. And all may be gone, at least in individual form, in five years.

Where will they go? We'll get the first hint sometime in late June/early July when the third generation iPhone appears. If the varying reports are accurate, the new iPhone will have 32 GB of memory, a 3.2 MP camera and video recording capability, along with all the other promised iPhone OS 3.0 improvements and the functionality brought by the nearly 30,000 third-party iPhone apps.

For years, the mobile phone has been absorbing other devices' capabilities, a digital version of the TV show Heroes' power-stealing character Sylar. First, they were just phones. Then they were PDA phones. Then they were camera phones. Then they were text messaging and email phones. Then they were music phones. Then they were Web browsing phones. Then they were multimedia viewing phones. Then they were GPS phones.

Some say the iPhone maybe have been the first cellphone to be the true sum of these disparate capabilities that has conquered the market, but phones running Android, Palm's coming webOS, BlackBerry, Symbian and Windows Mobile "open" cell OSs are not far behind.

Aside from the usual technological advancements and SoC developments, two trends are pushing us closer to one device to rule them all – cheap more copious flash memory and faster mobile networks.

On a gut level you probably realize how cheap flash memory is. But nothing is as dramatic as cold, hard statistics.

Kingston, which makes both flash memory cards and thumb drives, supplied me with its retail SD card pricing over the last few years:

Source: Kingston

You read right. You can now buy a 16 GB high-capacity SD card for nearly half the price of a 2 GB SD card just three years ago.

Memory built into devices also is getting cheaper. Nothing exemplifies this more storage/less money than the Apple iPod Classic. See how prices have remained nearly constant over the last five years while storage capacity has increased six fold:

iPOD CLASSIC	20 GB	30 GB	40 GB	60 GB	80 GB	120 GB
2004	$299		$399
2005		$299		$399
2006		$249		$349
2007					$249
2008						$249

So much more storage for so little money could soon make the hard drive extinct, which means cheaper, lighter, more reliable and less power-hungry laptop PCs in five years – or even sooner – and enable a continued condensing of capabilities into fewer portable devices.

Then there's the coming of LTE (Long Term Evolution), a 4G network technology providing wireless mobile broadband speeds of 6-8 Mbps, 10 times faster than current 3G EV-DO and HSPA networks. Verizon will start offering LTE service sometime in the middle of next year in around a dozen or more markets, with AT&T likely to follow in 2011.

Faster networks aren't just for faster uploads or downloads, although that will be an obvious way to transmit high-resolution geo-tagged photos and videos from cellcams and maybe juice up the early efforts to improve video telephony. Verizon is actually funding a program seeking innovative ways of talking advantage of the LTE's speedier and roomier wireless broadband Autobahn.

What about Sprint's XOHM-branded WiMAX 4G service? After a year, it's available in only two markets, Baltimore and Portland, OR, and Nokia has discontinued the N810, its lone WiMAX handset. Only one new WiMAX handset, the Windows 6.1-powered Samsung Mondi, due in the next few months from Sprint, was announced at CTIA earlier this month.

Five years from now, we may view today’s phones to be as quaint as an 8-track cassette. Future phones may operate on 4G LTE networks, have bright and power-efficient OLED screens, 120 GB flash drives, 8 MP cameras, HD video capture, geo-tagging, video GPS, video telephony and access to thousands of downloadable applications – all for less than $200 (with that pesky 2 year contract).

If consumers want all those functions in one place, this will truly be one device to rule them all.

Internet Video Usage on the Rise

Monday April 20, 2009 – Antonette Goroch

Consumers have a voracious appetite for viewing video content on the Internet. No surprise there. Most of what they are consuming is free of charge, while the providers are supposed to be making money from selling advertising. But what happens when there aren’t enough advertising dollars to support on across-the-board “all you can eat for free” business model?

According to comScore/Media Metrix, Google’s ad-supported YouTube alone generates from 70%-90% of traffic in all world regions. While this clearly has fueled usage, it has failed to generate profits. Indeed, because of the high costs of servicing this bandwidth, Google is consistently operating YouTube at a loss. YouTube’s recent announcement that they will carry full length TV shows and movies from big name studios is an obvious attempt at generating more revenue through advertising.

DTC estimates nearly 400 million Internet viewers worldwide are streaming or downloading some 23 billion videos monthly. The largest concentration of viewers is in the U.S. with more than 150 million viewers. Not coincidentally, the U.S. also has the greatest number of content offerings available via ad supported, subscription and transactional business models. Usage in countries like the U.K., France, Italy, Spain, Japan and South Korea, is increasing exponentially.

Most of that content is made available free to the consumer. Although less than 1% of video streams/downloads are purchased directly by the consumer, there is hope for pay business models as DTC estimates that there was 20% growth pay services in 2008. Apple is the undisputed leader worldwide in premium/pay video downloads, but has more recently been joined by others such as Xbox Live, Amazon, Blockbuster, Netflix, and blinkbox.

It’s not clear how Internet video usage, free or premium, will affect the incumbent pay TV business. At the recent NCTA conference in Washington D.C., the largest cable operators seemed relatively complacent thinking of Internet video (i.e. over-the-top content) as a long term issue, rather than a near term threat. With Internet video providers already attracting hundreds of millions of viewers, pay TV operators may benefit from seeing the explosion of online video consumption as a near-term threat and/or opportunity. Anyone counting on a slowing of appetite for consuming TV and other online video entertainment might lose their seat at the dinner table.

Netbook or Bust?

Monday April 13, 2009 – Maya Jasmin

With the troubled economy, rising unemployment, and uncertain futures weighing heavily on consumer’s purchasing decisions, once deemed recession proof markets are obviously feeling the current recessionary blow. PC is one such market feeling the pain and PC companies are adjusting sales and shipment forecasts down. DTC has revised its PC forecast to reflect the economic effects on the market and expects to see at least a 10% decrease in PC shipments in 2009 as compared to shipments in 2008. While forecasts may seem dim, a mini hero is emerging. The netbook, which comes with a cheap price tag and stylish design, is soaring in popularity and its sales are doing much to keep the personal computing market afloat.

In addition to helping PC shipments remain robust, netbooks may be instrumental in changing how PCs are distributed. Until very recently, buying a computer at a store or online was the only way to acquire one. However, some internet service providers are now offering a new way to purchase hardware. Like cell phones, netbooks are offered for a very low cost (usually around $100) at say a Radio Shack or an AT&T store in select markets. But the purchaser is required to sign up for contracted internet service in exchange for the low-cost machine. The contract is generally for a two year period and service prices range anywhere from $49.99 to $69.99 a month.

While this model has worked for the mobile phone market, is it really transferable to the PC market where consumers are used to buying their hardware in a traditional manner? A netbook for $100 sounds good, but what about being locked into a $60/month internet service contract for 24 months? At that rate your $100 netbook turns into a $1,500 purchase, excluding taxes, surcharges, and fees. Of course, a monthly internet service fee is required whether or not you get the service from the netbook provider, but with the netbook provider you lose the flexibility to shop for a better deal, or just change your mind, at a later date. It all comes down to the wallet, though. With tightened budgets, we’ll have to wait and see if consumers think the new business model represents a short-term good deal, or a long-term lousy deal.

The Ethernet Dilemma

Monday April 6, 2009 – Stewart Wolpin

It is rare that the major consumer electronics companies are so – well, to avoid being completely insulting, let's say short-sighted.

Over the last few months, there have been many new HDTVs that include specialized Web surfing capabilities such as Sony's Bravia Link, Panasonic's Viera Cast, and the Yahoo! Widgetsavailable on some Samsung and Sony models.

All these connected HDTVs and Blu-ray players, however, require an Ethernet jack to connect them to the internet.

Approximately 60 percent of U.S. homes have broadband, and therefore Ethernet, connections. But how many of these U.S. homes have an Ethernet jack in their living room?

I've seen no data to answer this question. I've asked any number of people who would either be in a position to know or would need to know, but all I get is a shrug of the shoulders.

My guess? Hardly any.

And yet, there are no connected HDTVs and no Blu-ray Live decks that include Wi-Fi capabilities.

How do these companies hope to sell any of these connected devices if consumers have no way to connect them?

Why haven't these manufacturers included Wi-Fi connectivity? Good question. I don't think it's cost. Most of the current media streamers such as Apple TV ($230, $330), Myka ($280-$390), the Kodak Theatre HD Player ($300), and the varying streamers from Netgear such as the Digital Entertainer Elite EVA9150 ($400), are equipped with Wi-Fi connectivity. And TiVo offers Wi-Fi adapters for its HD DVRs. It seems Wi-Fi connectivity can be easily built into or included for a living room device without adding appreciably to the price. Perhaps there are issues with consistent quality and/or connectedness, or concerns about signal security that have kept suppliers from incorporating Wi-Fi?

At least the Blu-ray Live deck makers are getting the message. Sony will start to sell its WiFi-enabled BDP-S560 ($350) in July; Samsung hasn't said when it will start selling its as-yet unpriced BD-P4600 and BD-P3600 Blu-ray decks, which will include Wi-Fi dongles.

But that still leaves a lot of connected HDTVs and Blu-ray Live decks with no way to wirelessly connect them – and a lot of advanced products with limited constituency to sell them to. Device makers may have a perfectly good reason for leaving Wi-Fi out of their business plans, but they didn’t include me in on their plans.