Interesting Technology Developments Throughout History

I had an interesting conversation today with an industry contact who reminded me that he's been waiting for the inflection point for his company's solution to occur for about ten years now! It's a reminder that even the most-promising of technologies can take years - and even decades - to reach their full potential. Look at Wi-Fi as an example. Although it seems that wireless networking came out of nowhere to infiltrate every coffee shop, development of the actual 802.11b standard took years, and not many folks gave it much thought as a consumer-facing solution (it was viewed more as an enterprise or vertical market fit inititially). For even longer developments, look at the home controls industry. We love to bring up the early home controls initiatives, characterized (literally) by basement-sized computers. After 50 years of experimentation, home and lifestyle management looks to be on the rise.

Last night's History Channel program Modern Marvels is another case in point on how technology developments can sometimes take surprising turns as they mature over the years. The "70's Technology" showcase on Modern Marvels featured everything from Mr. Coffee, the Microwave, the Pontiac Trans-Am, and the Concord. In addition, there were a couple of TI people interviewed about the use of DSP technologies in calculators and the “Speak and Spell” toy. They also referred to how the early work in LEDs for calculators eventually found its way into the TI DLP solution for high-definition televisions! I actually had a Speak and Spell as a kid – it was a cool educational toy!

At our recent CONNECTIONS conference, we were reminded that the DSP actually has its roots even further removed from bell-bottom pants and bad disco music! The original implementation was for submarine detection! So, yes, there are always a few surprises in this space.

Greg Jones from TI was a keynote speaker at this year's CONNECTIONS conference. Jones serves as the General Manager for DSP Systems Strategic Marketing, and he highlighted the importance of the DSP in building a wider array of needed consumer solutions, noting that DSL services as completely enabled by DSPs.

Jones sees a larger role for DSPs in the future across a wide array of emerging consumer applications. Digital entertainment, he noted, is obviously going to be a key area, as digital signal processing will be a needed ingredient for managing bandwidth use and encoding and decoding for the many different video codecs and formats that require processing. Jones said that there may be 30-40 different codecs to manage.

Beyond entertainment, Jones brought up interesting examples of where signal processing will play a role in improving learning and communications (instant translations during phone calls) and transportation (the nearly-automated automobile). He also mentioned digital healthcare applications as an opportunity for TI to expand its role. Finally, he discussed how DSP technologies will help service providers offer a higher-quality of services by measuring and monitoring traffic and applications with PIQUA solutions.

Cross-National Telco Competition Spurs Europe to IPTV Subscriber Lead

Enhanced digital lifestyle offerings and alternative revenue models are keys to growth

The number of IPTV subscribers will reach nearly 60 million worldwide by year-end 2011, spurred by both aggressive and reactionary telco tactics, according to IPTV: From Quadruple Play to Multiplay. This new report from Parks Associates, which provides forecasts and analyses for the worldwide IPTV market, predicts television choices for European consumers in particular will expand greatly in the next several years, due to a growing number of IPTV providers per country, a surge in digital terrestrial offerings, and a resurgence of cable providers in certain markets.

IPTV: From Quadruple Play to Multiplay covers IPTV deployments in 20 nations and profiles nearly 60 providers. It also examines key IPTV technology, including middleware, applications software, and conditional access providers.

Jordin Sparks and Media Centralization

Now I can confidently say that we've at least made one accurate predication at Connections 2007. JORDIN SPARKS IS THE NEW AMERICAN IDOL. During my session on media centralization and distribution (in another word, multimedia and entertainment home networks), Brian Burch from HP went on record saying if you only learn one thing from this session, it's that Jordin will be the next American Idol. Besides that valuable insight, we also learnt a few other things. The bottomline is despite remaining hurdles, several industry forces are working together to push multimedia networks into consumers' homes. Here are a few highlights:

• Adoption of multimedia networks or connected entertainment is on the rise. Microsoft has already shipped more than 40 million MCE PCs (including Vista PCs) and more than 10 million Xbox 360s that all come with media center extender functions. All the 400,000 set-top boxes shipped by Digeo have multi-room features built in. The solutions are becoming better, although consumers still have issues. No panelist was willing to give out return rates and number of service calls but apparently that’s still a challenge.
• HP commented on the reasons for discontinuing its Digital Entertainment Center product. It’s just a chassis form factor for the installer market. HP is not withdrawing from the media center PC market. It is however focusing more on integrating digital media adapter functions into TVs instead of standalone form factors. Centralized storage device is another focus.
• Consumers are likely to adopt solutions from both retail/device makers and service providers. In the end, whoever makes it easier will gain bigger share. Although DIY solutions might end up saving consumers money, many consumers are willing to pay for multi-room DVR features as a monthly service. Service providers are definitely ramping up their multimedia home networking offerings.
• DLNA is still important but people are talking about it less since they assume it’s a given. There will still be smaller ecosystems focusing on pieces not addressed by DLNA. Service providers also have their own standards and specifications such as CableHome.

Update: Verizon still calling!

1:35 p.m. on Monday. I just received a phone call from Verizon's local dispatch office to follow-up on my in-home tech visit for tomorrow - you know, the one that required two customer service discussions to cancel! Boy, talk about a logistical nightmare for Verizon and frustrating for me as a customer to have to repeat the same message down the chain of command. My words to the second customer service agent this morning, "Look, I'm just trying to save you guys money." Should I be the watchdog for Verizon's customer support costs?

Whole-house DVR video, come heck or high water

Having not been able to get the Media Center's recorded television working successfully with a media adapter solution, I could have easily given up. I'm sure my wife would have appreciated some efforts put to other household chores, like patching and painting over those holes in the bathroom wall. But, I was determined to see at least one project through to completion.

We subscribed to the FiOS TV service last November, and we added the high-def DVR (the Motorola QIP6416) a bit later. So, according to my FiOS contacts and their partners at Actiontec and Jungo, initiating the Home Media DVR features (allowing access to recorded TV programming from any QIP2500 set-top as well as photos and music on a home computer) was a mere order from reality.

On Friday, I placed the order from Verizon's Website, and was told that service would be initiated on 5/18/07. I drove home Friday safely, but with a heighted expediency. Kissed the wife and child quickly as I breezed by them to flip on the televisions. And, faithful blog readers, you know the drill...

No whole-home DVR service. No Media Manager service.

Nada

Zip

Zilch.

I called Verizon's customer support and got connected very quickly with a friendly rep. He assured me that he saw my order and that service would begin in "a couple of hours." Sometimes, he noted, it can take up to 24 hours to start. Okay, so I could live without whole-house recorded video until Saturday.

Saturday came, and still no service. Fortunately, we had better things to do in the morning, but I decided to connect with Verizon via their online chat feature to find out what was happening. I was still convinced that activating the service couldn't be as easy as sending a simple command to the RG and updating the set-tops. I was sure that there was an inside wiring problem, or one of the set-tops was going to need swapping out. My problem, however, turned out to be a whole lot simpler.

The online customer support agent couldn't find any record of me having placed the order on Friday! Even though I had a confirmation for the Friday order, he told me that the numbering and codes were different than the ones his customer service department used. This tells me that Verizon's got a database and CRM problem, at the very least. If an online order confirmation can be seen by one help desk agent but not another, I would think that this is leading to all kinds of confusion. And, keep reading ... you'll find this to be definitely true.

My online agent - Daniel - was great. He got on the phone with someone from FiOS TV, and got a new order placed. He told me that he'd see the order in 10-20 minutes, and we could expect to have the service up and running in no time. To quote from our transcript:

Kurt Scherf: Great. Thanks for your help, Daniel. So, I should expect to see this activated in the next few hours?
DANIEL: Easily.

Best news I'd heard all day!

We ran some more errands and came back to the house later in the afternoon. I ran to the back bedroom, flipped on the TV, and there it was - Recorded TV! I tested it a couple of times, and had shows from the living room up and running in the bedroom. Play, rewind, fast-forward ... it was all there! Finally, an entertainment network up and running! I haven't downloaded and installed the Media Manager software yet, but I'm looking forward to see what the TVs can display in terms of our stored music and photos from the Media Center PC. We recorded the movie "Sideways" yesterday afternoon, and we were able to enjoy watching that before bed last night. Total thumbs-up on the feature!

But of course, the story doesn't end there. Yesterday, I received a voice mail message from Verizon, telling me that a FiOS technician would be at my home on Tuesday, between 8 a.m. and 5 p.m. Uh oh. So, while driving to work this morning, I had to patiently explain to two customer service agents that, yes, I do have the requisite hardware, no, I didn't order an additional DVR, and yes, I'm very happy with the Home Media DVR service. My exact words, "Please do not cancel this service!" I'd better not return home this afternoon to find the feature disabled!

Any service provider that is looking to expand the scale and scope of its service offerings is going to experience some hiccups along the way. Verizon's FiOS service is certainly representative of the challenges facing the company as they seek to better integrate products, services, customer databases, and support. I'm a big fan of the FiOS service itself, and I think that the competition that's here thanks to both AT&T and Verizon's initiatives are going to be quite beneficial to consumers in terms of competitive pricing, new and intriguing value-added features, and improved customer service. It's the customer service issue that worries me a bit, however. As a customer, I shouldn't be expected to have to follow-up three times to check why an order wasn't processed or to cancel an on-site service that wasn't necessary in the first place.

In addition to the spending that the service providers are doing to enhance their networks and deploy new services, my hope is that they're spending as much time understanding what the implementation of new services is going to mean to their customer support efforts. Somehow, disparate operations support systems (OSS) are going to have to be merged in such a way to allow agents for different divisions to have a more seamless look at a customer's records, recent orders, and trouble tickets. And, I suspect that more in the way of automated systems are going to be seen in growing numbers. For example, clients in the home that can detect the types of set-tops installed and whether they're properly configured would go a long way to helping an agent determine if a service such as Home Media DVR can be activated with little hassle.

We recently completed a white paper on the requirements for true end-to-end customer support for the triple-play experience. We have a paper titled Monetizing the Triple-play: The Role of the Customer Experience. We not only walk through the key requirements, but we also outline several opportunities available to service providers and other third-party entities for enhancing customer care with automated as well as remote and on-site technical support services. Feel free to e-mail me if you'd like to request a copy of this paper (scherf@parksassociates.com).

Despite the slight hassles I experienced over the weekend, the feature is great, and I'm looking forward to a little more quality TV time!

Curses! Foiled again!

A Sad Story about a Boy, His Media Center, and the Digital Media Adapter that Almost Could

In an earlier blog, I described my current Media Center set-up, where we've got it conveniently located near a coax outlet, so it's receiving and recording the local channels from our FiOS service. However, we just don't use it to watch TV while in the house, since it's located in our home office. However, I really do like the free Orb Networks software that's loaded on the PC, and I've used the Media Center as my "place-shifting" server when I'm traveling. In fact, we enjoyed watching football (streamed to my laptop using Wi-Fi connections) last fall when we were in Germany for the CONNECTIONS Europe event! And, we've gone as far as to bring the laptop to bed with us and use Orb to watch the recorded shows there. Honestly, it's not a bad experience, especially using the powerline bridges that provide a nice, steady signal.

Obviously, however, this is a stop-gap measure, and it definitely has its frustrations. My laptop, for example, feels the need to download all kinds of security updates and run virus scans every time it's booted. Yeah, I'm sure I could select some options to space those security features out a bit, but security's important, right? Between this activity and my laptop's ever-annoying habit of freezing occasionally, it'll sometimes be a good half-hour to go from cold laptop to watching a program. Okay, okay, I know that a five-year old laptop probably should be replaced any day now, but it continues to work - and work well - well, when it's working, that is!

With the latest media adapters on display at this year's Consumer Electronics Show, I got excited by the possibility of eliminating the laptop from our TV-viewing experience altogether. I finally made the plunge and got a NETGEAR Digital Entertainer HD. I was pretty excited trying it out. And, up until the last minute, when I got that pit-of-my-stomach-realization-that-it-wasn't-going-to-work-how-I-wanted-it-to, the experience really was a good one.

So, first the good news: home networking's come a long way, baby! The out-of-the-box experience really was great. The design of the NETGEAR product is nice - quite slim - and it fit perfectly in a space underneath the television. The TV is older, so I had to make the connections with composite cables - red, yellow, and white. But it was easy! Now, I was originally going to use my HomePlug bridges to connect the device to the router until I remembered that this product uses another networking standard. So, no joy there.

However, the Wi-Fi connection at home is excellent, and the Entertainer HD made a good link. The only slight bug I experienced with establishing the wireless connection was taking several tries to enter in a ten-digit WEP key, being rejected several times, and then realizing that setting the Entertainer for 64-bit encryption was necessary for it to accept my key. I wonder if the average person could have figured this out.

Okay, so I've got the Entertainer HD connected, configured, and ready to go. My next fear was how difficult establishing file sharing was going to be between the Media Center and the adapter. This turned out to be quite easy, actually. NETGEAR includes a CD that gets installed on the computer. It then walks you through a relatively simple wizard to allow you to determine which media folders get shared. As they say, easy, breezy, lemon squeezie!

The Entertainer HD needed to compile all of the thousands of media files, which took a half hour. A word to the wise - don't get impatient and try to use the device before it's completed its initial scan. In my anxiousness to crank it up, I started pushing buttons too early, and the Entertainer began its scan anew. Men, just walk away from the unit. Fix dinner. Take the kid outside to get the mail. Talk to your wife; ask her how her day was. (I did all three things).

Now, the moment of truth! Could I watch my recorded Media Center TV programs on the bedroom TV?

Well, I got access to 6,000 music files. Saw a couple of photo slideshows. Connected to YouTube and saw the greatest soccer goals of all time (scintilating). Got my weather update. Even saw a few .wmv video files that had been stored on the Media Center. Watched them in all their grainy glory…

… But no TV.

Nada.

Zip.

Zilch.

Guess what? At the last minute, defeat was snatched from the jaws of victory. It was like Chicago 2003 and Steve Bartman all over again. The Cubs were going to their first World Series since 1945, and some bonehead ruins it for millions of suffering fans everywhere! But, in the case of this digital home dream unrealized, it was ... drum roll, please ....

Non-supported TV tuners in my Dell Media Center PC! NETGEAR currently lists 13 supported TV tuners, but mine aren't in there. So, I've got plenty of TV shows sitting on the Media Center in a Microsoft Recorded TV format that isn't viewable on an Entertainer HD that only accepts .wmv, .avi, and a few other formats. I frantically did some searches last night, seeing if there was any way to convert the Recorded TV formats, but I didn't find anything.

It was a crushing blow to my ego, and I was sorely disappointed. It was particularly frustrating, since much about the installation and configuration had gone right. It seems that we’re still at a point in which assuring consumers that products and media content actually work together is still dicey! The Digital Living Network Alliance (DLNA) has come a long way in addressing some major interoperability issues, and that was a key takeaway from our recent CONNECTIONS™ conference a couple of weeks ago. I hosted a panel called "Nuts and Bolts," where we discussed the inner workings of the connected home and digital media - from storage to DRM to interoperability between devices and media formats. What was clear from the panelists was the DLNA has really set the stage for some basic agreement about greater interconnectivity between devices, applications, and content. However, the really hard work of figuring out interoperable DRM (or no DRM) plus the interaction between the myriad of media codecs and formats is incredibly challenging and an ongoing task.

My frustrations really lie in the fact that there was no warning that a TV tuner was going to be the root cause of my problem, and it leads to me to wonder how we as an industry are going to convince consumers that we can take their digital media experiences and make them as seamless as possible across devices. What sort of interoperability assurances are going to convince consumers that they won't get left bitterly disappointed if – at the moment of truth - the one bug in the system that renders a solution useless.

We've still got work to do, and hopefully I can talk of more positive digital lifestyles experiences in the next few months (and hopefully by the next CONNECTIONS). In the meantime, I think that Robert Frost best summarizes the situation in which we find ourselves much more poetically than I ever could (from "Stopping by Woods on a Snowy Evening"):

The woods are lovely, dark and deep,
But I have promises to keep,
And miles to go before I sleep,
And miles to go before I sleep.

China, the X Factor for Mobile Broadband

China represents significant market opportunities for mobile broadband due to its large market size, growing number of middle-class consumers, and love for mobile gadgets. Both mobile and broadband services have enjoyed significant growth, with 461 million and 137 million subscribers, respectively, at the end of 2006. Although the government has not yet granted 3G licenses, both Chinese landline and mobile operators show strong interest in 3G, Mobile WiMAX, and future mobile broadband technologies. Facing decelerating landline growth, the two landline operators, China Telecom and China Netcom, are eager to seek new opportunities in the lucrative mobile market. On the other hand, China Mobile and China Unicom, the two mobile carriers, want to leverage mobile broadband to offer new data and entertainment services and WiMAX to offer broadband access services since they lack landline infrastructure.

There is no question that foreign technologies companies will benefit from the Chinese market, but one thing is clear – the Chinese government is using 3G as an opportunity to shift more revenue opportunities to local technology companies such as Huawei, ZTE, Putian, and Datang Mobile. The government is determined to make TD-SCDMA, the often-neglected international 3G standard, a market reality in the 3G horse race. China has spent three years waiting for the technology to mature, and it has convinced the largest mobile operator, China Mobile, to adopt the standard. According to several Chinese newspapers and magazines, including Cai Jing, an authoritative business magazine, China Mobile has quietly launched 3G TD-SCDMA networks in selected cities (starting with the Olympics cities such as Beijing and Qingdao) under the name of “trial networks” and is now ready to issue RFPs for large-scale network and handset equipment purchases. The orders are reported to be worth more than $3 billion, and foreign vendors are expected to partner up with local Chinese companies in order to win the contracts. The Chinese government intends to let China Mobile deploy TD-SCDMA commercial services without an official license in order to ensure that the technology has a head start over UMTS and CDMA EVDO.

The Chinese government may also use the advent of 3G as an opportunity to restructure the telecom industry. According to telecommunications experts in China, both China Telecom and China Netcom will be allowed to enter the mobile market. China Unicom, the smaller mobile operator, is likely to be split into two parts, with China Telecom absorbing its CDMA network and China Netcom getting its GSM network. This way, both China Telecom and China Netcom will have a smoother learning curve for their entry into the mobile market. This arrangement will also help China Unicom to solve some of its challenges, including operating two parallel networks. It is overloading its GSM networks, and its CDMA network is significantly underutilized.[1]
WiMAX companies are paying close attention to the Chinese market since telecom operators in China recently have begun showing more interest in the technology. All four operators own 3.5GHz spectrum in various markets and are either testing the technology or deploying networks in limited markets. Despites significant efforts by Intel to set up partnerships with several key cities in China to develop WiMAX markets, the future of WiMAX faces several uncertainties, including spectrum, regulation, market positioning, and locally-brewed technology alternatives. In China, the 3.5 GHz spectrum was allocated for fixed broadband wireless usage, not mobile, and the narrow bandwidth (less than 4 MHz) limits its usefulness for mobile implementations. The government has not announced any spectrum allocation plans for mobile WiMAX. As a result, most of the WiMAX activities to date are limited to fixed WiMAX (Figure 5-10). For mobile broadband, the Chinese regulators may again favor local technologies. Datang Mobile and other TD-SCDMA constituents are promoting a migration path of evolving TD-SCDMA into TD-HSDPA and TD-SCDMA LTE by leveraging MIMO and OFDMA. They argue that the performance will be at least on par with Mobile WiMAX. Then there’s McWiLL, a little-known technology outside of China, yet a serious potential contender for mobile broadband. McWiLL is a derivative SCDMA technology focusing on broadband Internet applications. It was considered a strong candidate by South Korean operators before the South Korean government decided to promote WiBro instead. Its technology capability has been proven in real-world networks, delivering 2 Mbps at full mobility. It is likely to have support from the government since Chinese companies own most of the IPRs. The main roadblock for McWiLL is the lack of a well-established value chain. It is our opinion that WiMAX may have the best success in China if it figures out a way to integrate with either the TD-SCDMA or McWiLL migration path.
[1] Cai Jing, TD-SCDMA Becomes Reality amidst Heavy Debates, 3G Licensing Further Delayed, Wang Hu, February 2007

Now, this is what I call a useful bit of consumer technology!

I've spent the last week detailing some of the latest trends we discerned from the CONNECTIONS conference a couple of weeks ago. Now, I've got a completely new area of focus for consumer electronics - pest control.

That's right - we've got a rat and/or mouse problem at the house. So, the latest household purchase is a product called the Rat Zapper Ultra. I figure it's worth a shot - heck, it's got to be better than setting some traps and then being forced to clean up the ... eh ... remains. I ordered the extra feature with the package - a remote monitor called the Rat Tale. With 12 feet of cord, I can attach it to the Zapper and hang it down from the attic door. A flashing light will tell me if there's a critter that needs disposing, without me manually checking the unit. Talk about your useful remote home monitoring application!

I told my wife it's an early Father's Day present. There was laughter on the other end of the phone, but I'm going to look like a genius if this pans out. Amazon cannot ship this unit fast enough!

Top Trends in the Last Year

We're continuing to compile the key takeways from the CONNECTIONS conference last week. One interesting compilation of information came from our own Stuart Sikes, as he opened the conference proceedings on Tuesday, May 1. In introducing our first keynote from Ray Sokola (Motorola), Stuart provided a summary (from the Parks' analyst team) of the top events and trends we all noted from the last 12 months. Here's the list:

• Broadband penetration in the U.S. will surpass 50% of residences around mid-2007. On a global basis, statistics indicate that we are approaching the 300 million household mark.
• The two large U.S. telcos – AT&T and Verizon – officially entered the IPTV space in 2006, accounting for more than 200,000 subscribers in their first full year of availability. On a global basis, Europe surpassed Asia in terms of overall subscribers, and we’re seeing much more activity in Europe in terms of cross-border competition among different telecommunications providers. Parks Associates’ year-end 2006 estimate for the total number of IPTV subscribers worldwide sat north of four million.
• Entertainment content disruption accelerated, as MySpace was bought by News Corp. and YouTube was sold to Google – leading to the “NewTube.”
• The launch of all the three new game consoles (Microsoft Xbox 360, Sony PlayStation3, and the Nintendo Wii. The Xbox 360 and its associated content services are now positioned – according to Microsoft – as second only behind Apple for video downloads.
• Agreement on the underlying protocols that make up the next Wi-Fi standard – 802.11n – was reached. We’re already seeing high volume shipments of Draft-N products, and wireless is aiming at the entertainment and multimedia space.
• Apple announced a month ago that they had sold 100 million iPods (plus two billion music downloads as of year-end 2006), a testament to consumers’ desire for more accessible and easy-to-use media enjoyment services and products. In addition, the company released AppleTV, which may be a significant boost to the growth of multimedia networks, where PCs and CE seamlessly interoperate to enhance entertainment applications.
• Microsoft officially launched the Vista operating system, which places a new level of media creation and consumption capabilities in front of end-users.
• Virtual economies are booming. From World of Warcraft's nine million subs and Second Life's more than five million users, the online gaming community is becoming more entwined with unique social and commerce applications.
• Digital rights management issues continue to ebb and flow:

- High-end media server company Kaleidescape was found to be within compliance of the DVD Copy Control Association's license to the Content Scramble System, the method used to encrypt video and audio data on DVDs. Speculation is that this may open the door to “managed copy,” where the studios agree that consumers can take their owned DVDs and make a copy on a server for safekeeping.

- On another positive front, the head of the Motion Picture Association of America (MPAA) – Dan Glickman – recently affirmed the studios’ blessing on “authorized copies of the content they purchase.”

- Always making headlines whenever he speaks, Steve Jobs at Apple recently discussed the abolition of rights management for digital music. After all, he argues, fewer than 2 billion songs were sold under DRM with digital music services (such as iTunes); at the same time, the music industry sold 20 billion unprotected songs on CDs.

- At the same time that some positive news was coming out of the industry, legal challenges remain. Cablevision was recently blocked by a federal judge from continuing its RS-DVR service, which basically put time-shifting capabilities in the head-end. We view Europe and Asia as much more significant markets for “nDVR” applications. And, XM Satellite is being sued by music publishers for allowing subscribers to copy broadcasts to MP3 players.

• Home control systems companies continued consolidation with Nortek and Legrand acquiring LiteTouch & Gefen and Vantage and US Tec, respectively. BestBuy released its Home System in a Box, called ConnectedLife.Home. BT and Bell Canada marked the entry of telcos into the home security space.
• Retailers, service providers, and third-party entities are discovering that there are significant businesses to be built from digital home tech and customer support services. Revenues from Best Buy’s Geek Squad services (including product installation, configuration, troubleshooting, and repair) alone exceed $1 billion in U.S. We’ve also seen other major big box retailers either launch or rebrand their own digital home technology service offerings. Circuit City launched its firedogSM service in September 2006, and OfficeMax® just launched ctrlcenter™ for remote tech support in April 2007. Both CompUSA and Staples rebranded their tech support services, to TechPro and EasyTech, respectively.

No Ad-skipping during VoD?

We’re intrigued by the news from May 8, 2007, where Cox Communications and ABC/Disney have agreed on a deal to offer more ABC and ESPN programming on Cox’s VoD platform (“ABC, Cox Bar Ad Skipping in Video on Demand,” Brooks Barnes, The Wall Street Journal, May 8, 2007.) One key provision in this agreement is that viewers will not have the ability to skip through commercials. However, we’re not sure that this would be a large impediment in greater uptake of ad-supported VoD services. For several quarters now, ABC/Disney executives have reported that their Web video experiments (mainly primetime programming offered at ABC.com) has been successful insofar as it has not led to primetime audience cannibalization, and viewers have a much-stronger association with the few ads that are shown. If consumers know that they’ll receive only a few ads during a VoD stream, we don’t think they’ll mind. It beats primetime programming today, where ads are shown about every five minutes, and there is very little to no measurability of their impact anyway.

This powerline networking stuff actually works!

We tried an experiment last night with some powerline networking equipment, and I was pleased with the results. I had two Ethernet-to-powerline bridges using the HomePlug 1.0 technology. To be honest with you, I hadn't really been able to find a good use for them. With an updated 802.11g wireless router (installed as part of our subscription to the Verizon FiOS broadband and TV service), our wireless coverage was considered "good enough" for Internet and e-mail applications.

However, I am about ready to consider a media adapter solution that can take the content (primarily recorded TV) from our Media Center system in the home office to our bedroom. We've said it for years, and our own use of the Media Center system proves it; recording TV on a PC makes very little sense until you can move that content to a television. So, knowing the vagaries associated with wireless coverage, I wanted to try the powerline nodes to see if we had a workable solution to provide a stronger and consistent signal in the bedroom.

I've got to say that the installation and the end-result were easy and pleasing. I mean, we hear terms such as "play-and-play" all the time in this space, but how many of us have experienced this kind of bliss? With the powerline nodes, setup was as easy as connecting an Ethernet cable from the router to one of the adapters and then plugging in the other adapter in the bedroom and connecting my laptop via Ethernet to it. That's it! Once I connected to the Internet, I ran a bandwidth test, and found a signal from between 1.4 and 2.2 Mbps (our FiOS service is 5 Mbps downstream on the main computer). Now, this was nowhere close to a scientific study, but the speed was decent, in my opinion.

Now, the true test came with streaming some video over the Internet. What we have right now is what I consider a "poor man's multimedia network." We've got the Orb Networks software installed on the Media Center, and I use it to log into the content from my laptop while on the road. So, we tried it last night to catch up on a couple of episodes of CSI. So, we're not talking about 1080p high-definition content, but it was very viewable on the laptop. Given the simplicity of set-up and the end result, I've got a very favorable outlook for where powerline can play a role in the home.

The market for powerline now is starting to bear out its usefulness in terms of ubiquity and performance. At last week's CONNECTIONS conference, we had representatives from the different powerline bodies (HomePlug, CEPCA, and UPA) in attendance, and we had an interesting panel discussion with several of the HomePlug members, including Intel, Texas Instruments, Arkados, Intellon, and Current Communications. The market right now is still in flux, and companies such as Panasonic and DS2, while outside of the HomePlug effort, are still making news with new partners. Panasonic representatives tell us that the HD-PLC technology has the largest volume in Japan, and DS2, which is part of the UPA, has announced large shipments of 200 Mbps powerline technology. However, given HomePlug's backing by a large contingent of companies and the volumes it it shipping (in a May 2 press release from CONNECTIONS, the organization announced that it had shipped nine million products), we view them as the leader at present.

The panel discussion itself wasn't billed as a "why HomePlug is a great technology" session, but I liked the holistic approach that each of the panelists was able to take on the overall subject of why powerline solutions are helping to create a digital home market on a global basis. Questions from the audience were largely directed to Tom Willie from Current Communications (clearly, broadband-over-powerline is a hot subject this year), and there was also an interesting question about the need to see more power strips with surge protection embracing HomePlug solutions. In addition to seeing powerline deployments for data, multimedia, communications, and entertainment networks, I thought that this was a valid point. After all, if the power strip is going to be the point where multiple electronic devices are going to be connected, then it cannot be the barrier for widespread adoption of powerline-based networking products.

I think that my own non-scientific experiment really pointed out the value of a solution like powerline in creating new markets for multimedia and entertainment applications. If the solution really is as easy as plug-and-play and provides decent performance to begin moving video and audio around the home, we are definitely looking at the beginning of solid growth for these solutions. Now, all we need to do is to ensure that all of these new powerline devices account for intuitive device discovery and easy home networking configuration! That'll be a different topic for a different post!

More consolidation in the consumer storage business

It's good to be back blogging again! The analysts were swamped the last few weeks with travel and the preparations for last week's CONNECTIONS™ conference. If you weren't able to join us last week in Santa Clara, we're sorry that we missed you. The level of speakers this year was excellent. With the keynotes coming from the likes of Motorola (Ray Sokola, Chief Technology Officer and Corporate Vice President) Texas Instruments (Greg Jones, General Manager for DSP Systems Strategic Marketing), Cisco Systems (Daniel Scheinman, Senior Vice President and General Manager, Cisco Media Solutions Group), Verizon (Shawn Strickland, Vice President, Video Solutions), HP (John Orcutt, Vice President, Managed Home Business), and Yahoo (Patrick Barry, Vice President, Digital Home), it led to some very visionary thoughts and statements. At the same time, since our analysts were moderating another 27 plenaries and break-out sessions, it provided a very granular look at the specific opportunities and challenges facing our industry. The blog is going to reflect some highlights from the CONNECTIONS conference over the course of the next few weeks, so stay tuned!

In the meantime, the industry continues to move forward. Last week, it was reported that NETGEAR is acquiring Infrant Technologies, the developer of the ReadyNAS™ line of consumer storage products. It's yet one more step, we feel, in a trend to greatly enhance consumer storage by building more tightly-integrated solutions (such as home networking components) around the storage platform, and beginning to implement more media server capabilities within the home network framework.

At the same time, I think you're seeing a real shift away from some of the messaging that is coming from the consumer storage and NAS companies. In the past, the major message that appeared to be coming from these players was mainly one built around the "fear-and-doubt" scenarios involving consumers and media. The common example, of course, is a hard drive or other type of catastrophic computer failure, where years' worth of digital photos are lost forever. Granted, consumers' own lack of awareness about the risks associated with digital media is low, as are the actions they are taking to properly secure their media in a safe backup mode. Our own studies (recently, Managing the Digital Home: Installation and Support Services) finds that more than one-third of consumers aren't even backing up their data and digital media at all! Further, among those who do, the majority are writing to CDs or DVDs, which leads us to believe that they're not doing this on a terribly frequent basis.

So, while increasing consumer education and stressing the importance with secure backup is important, a common refrain now being echoed today is centered mainly on two messages 1) How the NAS and other online storage and content services are helping to diversify the amount of content available to consumers; and 2) that the storage platform can serve as a centerpiece for consumer's desire to share their own content in the form of digital photos and home movies. And, in our opinion, this is a really effective strategy. After all, one of the key data points that came from last year's groundbreaking study Digital Media Habits is that "I want to share" is a desire from consumers that resonates loud and clear. So, you're starting to see systems built around this consumer driver. Not only is a very robust platform for storage a centerpiece, but you see companies paying more attention to building online tools such as portals and media showcases around that storage.

HP's John Orcutt touched on this kind of strategy last week in his keynote address titled The Connected Entertainment Ecosystem. Obviously, HP has made some recent changes to its connected home strategy. No longer will it push the Digital Entertainment Center (DEC) strategy, which relied on a living room PC form factor. Instead, HP's focus is on its MediaSmart TVs and Server devices. Using home networking (which obviously has improved much in the past few years), HP's gamble is that well-developed user interfaces, access to a wider variety of content (from a number of HP partners, including some of the online movies-on-demand services), and a server hidden in the background that is performing many automated back-up features but also key to allowing consumers to share their personal content with friends and family will be a winner. And, based on what we saw in the presentation, we'd have to agree. The user interfaces are beautiful and intuitive, and we love the fact that HP is not talking about "mirrored drives" and "RAID" as key concepts, but developing messaging around ease-of-use and sharing.

Storage will continue to be the heart of the connected home, whether it's in a fixed (media server) or mobile/portable (music player) device. It's a really interesting time to be following this space, as last week's conference and the news announcements leads us to believe that it's going to be front-and-center among a number of key vendors who are putting the connected home pieces together.