Security - Beyond the PC to include smartphones and consumer electronics

Mocana is a company to which I was recently introduced. The company specializes in security for non-PC devices - including mobile, datacom, smart trid, federal, consumer, industrial and medical. The company today announced C-Series financing from Symantec. In its press release, Symantec indicated that enhancements to mobile security would be its inital thrust with the investment.

This was not Symantec's only move in the last week to strengthen its portfolio beyond the PC. On May 19, the company announced that it was acquiring VeriSign, which makes solutions to help protect online identities.

McAfee is apparently not resting in its bid to expand security beyond ant-malware protection. On Tuesday, it announced that it was acquiring Trust Digital, which has developed a mobile security platform largely used by enterprises.

We'll have a couple of sessions at the upcoming CONNECTIONS conference on "cloud media" and its impact on entertainment and services business models. As we continue to look at this subject, security will be a huge issue. I would look to these ISVs as active partipants in mobile, cloud, and consumer electronics applications.

May 27, 2010 - Internet music streamed through the entire house!

If you want the extended version of the saga regarding trying to play Internet radio through my AV system and through the in-ceiling speakers, click here. Otherwise, the short story is that I hadn't found a way to stream my favorite Internet radio station through the AV receiver to enjoy a whole-house experience. I'd tried different media adapters, the ZVBox, and even a direct laptop-to-receiver connection, but nothing worked. The direct connection came closest, but with a really annoying buzzing sound.

Today, thanks to the help of a Verizon technician, I've got a clear stream from WOI FM from Ames and Des Moines (yes, there is classical music in Iowa) playing throughout the house! The Verizon technician ran some updates on the Media Manager software, and he tried to get WGUC out of Cincinnati running first. However, he told me that because radio stations tend to be all over the board with exactly how they are distributing their streams (even if they all use either Windows Media Player, Real, Flash, or other solutions), Verizon can't support every stream. I thought that this was an interesting point. They've managed to put YouTube on my TV in a really nice application, but audio will still give them problems in some cases.

At any rate, it's a cool application, and one that will come in handy, particularly on those work-at-home days or the hour on Sunday mornings when I have time to read the paper and listen to some baroque or St. Paul Sunday morning.

TiVo: It's a UI, not an OS

Some clarification on the blog post yesterday. TiVo is supplying Best Buy (Insignia brand products) with its UI that will provide access to online content services such as Amazon Video On Demand. I would say that this then puts the TiVo offering more on par with DivX TV. The choices for heavy lifting for connected TVs (at least for embedded solutions) is more IBM, Google, and Yahoo!

Add TiVo to the list of Connected TV "OS" Providers?

Looks like we need to add TiVo to the list of connected TV "OS" players. TiVo is working with Best Buy to integrate TiVo's software and advanced television services into broadband-connected Insignia televisions.

Verizon's FiOS continues to impress

I had written about some of Verizon's new features through the Media Manager, including access to YouTube. Sunday afternoons during the baseball season are fun for my son and me. If the Cubs win at Wrigley, they play "Go Cubs Go." As they were on the road yesterday (here in Arlington, actually), the Rangers' PA folks weren't gracious enough to crank up the music (even though half the stadium was Cubs fans). So, I found the clip on YouTube, turned on all of the music zones, and we jammed to it after the win.

I've also written about my quest to try to play my favorite Internet radio station throughout the home's speakers. Verizon now gives me that option, although I tried several times to get a couple of the radio stations configured and playing, and so far haven't had any luck.

Finally, we had some fun last night watching my four-year-old follow along to Evolution of Dance. These guys are really raising the bar on entertainment, at least for our home!

Google TV - Searching for Success

For at least a year or so, I've been doing my best to categorize all of the different solutions that are specially designed to bring Web content and applications to a "connected TV." I'm putting the term in quotes because there will be different ways to experience connectivity between the Internet and the display other than an embedded solution. For example:

• Connected game consoles: In the U.S., penetration of Internet-connected game consoles jumped 38% between 2008 and 2009, and are now at about 30 million households. We know that the console is being heavily implemented as a set-top box, as more than one-third of Microsoft Xbox 360 users are watching video on at least a monthly basis. We believe that online video revenues at the game console alone brought Microsoft and Sony north of $500 million in 2009.
• Connected TVs: Penetration is quite limited to date, but we expect that unit sales worldwide will exceed 130 million by 2014. In short, Web connectivity will soon become a built-in ubiquity in most televisions.
• Connected Blu-ray Players: Just bought a flat-panel TV and don't feel like replacing it for a Web-connected set? For a smaller investment, many Blu-ray Disc players come equipped with many of the same content services as what you'll find on the high-definition displays.
• Networked Digital Media Players: These are the devices such as Apple TV, the Roku player, and others that provide a relatively lower-cost option to connect a TV to online video services. Although we're projecting a pretty quick peak of sales in the U.S. followed by a decline as online video access becomes embedded into consumer electronics products, alternative set-top box platforms may have more significance in international markets, where they may actually be branded by broadband and pay-TV operators.

The market potential for Web-connected consumer electronics is significant, with annual worldwide shipments nearing 300 million units by 2014.

In light of this opportunity, 30+ technology companies are all aimed at bringing Web services to consumer electronics. Among them are companies in the "Connected Television OS" area that are working to build in applications and Web services directly into the TV itself. Among them are:

• Accenture;
• DivX;
• Google;
• IBM; and
• Yahoo!

Of course, while there are companies advocating an embedded solution, companies such as ActiveVideo Networks and Clearleap argue that Web services and interactivity can be delivered with transcoding done in the headend. Further, companies like Vuze indicate that the PC in the home is capable of transcoding and serving as an intermediary between the home computer and the television. So, there's plenty of room for debate.

Google is entering the market at a time where there is much indecision about what will be the ideal technology solution that will benefit the TV manufacturer, content owners, and advertisers. Certainly, Google's presence in Web advertising, including delivery and analytics, provide it with a huge potential for scale. One problem that has been troubling to the television manufacturers is how big their share of any potential revenue for online content might be. To date, the business models between television manufacturers and content providers or aggregators have been revenue sharing based on online video orders. So, the TV manufacturer may get a few pennies per VoD order. In a time when online video revenues on connected CE devices other than the game console are forecast to be around $180 million in 2010 and growing to perhaps $800 million by 2014, it won't be a a huge revenue stream. So, a deal with Google that can add advertising revenue to transactional monies would be a gain for the manufacturers.

Is Search Really a Problem?

So, while Google comes armed with the business model, I do wonder if Google has developed a solution for a problem that I'm not convinced is as dire as they indicate. After all, they lead their explanation video about Google TV discussing why it's difficult for consumers to find the content that they want on TV. Really? We might quibble about the benefits or detriments of the various electronic program guides that are in use today, but I think that the EPG is doing an increasingly effective job of allowing for search and discovery. And, if the Google TV use model means I literally have a Logitech keyboard positioned on my knees to manually type in search entries, I'm not convinced that this use case is going to attract many folks. Granted, the keyboard in the living room is going to be unecessary for most folks, as smartphones, tablet computers, and other interfaces allow for more text entry, but I'm just not sold on search (as Google presents it) as the killer app here. The television service providers are innovating every day with their own program guides, search, discovery, and recommendations. I don't think anyone will be lacking with decent search options for their TV.

Where are the Content Partners?

Another issue with Google is how much high quality content they'll bring to the table. Google's main content partner today is Sony. They will need to bring a number of major content players into the fold to have a successful solution. I'm sure that Best Buy will probably offer up Roxio CinemaNow content, but they'll have to expand beyond that. What's driving the demand for connected TVs is premium content, as the results from our recently completed Digital Media Evolution II study indicates.

I think that providing premium video-on-demand content is going to continue to be an area where the pay-TV providers excel. A couple of weeks ago, I had some time to try to catch up on video-on-demand. With credits available on my VUDU account, I tried that platform first. What I quickly found is that my Verizon FiOS service had the same movies, and the high-definition versions were available a whole lot quicker than the download for VUDU's HDX format. Now, The Wall Street Journal is reporting that the studios and the operators are in discussions to signficantly reduce the window between the theater and pay-TV availability. This makes sense. Interactive digital TV services are already in more than 40% of U.S. households. By 2014, it'll be more than 60%. That's a huge scale that the pay-TV operators have as an advantage. So, what are the online services going to offer that's any better?

Is the Walled Garden Really the Evil Empire?

Related to this point, Google's foray into a very open Internet approach is being much ballyhooed as a way of throwing off the shackles of the walled gardens provided by TV service providers and today's connected CE offerings. I'd argue that this latest round of consumer research would indicate that demand for open Internet access isn't what's driving consumers to a connected TV. They want good content, and they want it easy to find. Take a second look at the chart. I'm just not convinced that consumers want an open Internet experience for calendaring, music, photos, and commerce. I'm much more convinced that tailored applications - including tru2way, EBIF, LUA-based interactive features (available today from more and more pay-TV operators) are going to bring the Interactivity of the Web without the "Wild West" component of many fits and starts with searching, text entry, the back button, etc. If the walled garden approaches can deliver this in a controlled environment that doesn't overwhelm the average user and helps a provider deliver the highest-quality content available, then I don't see why everyone would necessarily want a browser-based approach in their connected TV.

Will Service Providers Care?

DISH Network is a partner here, but will Google find additional service providers to join? One question is what's in it for the providers? For DISH, a current lack of good interactive applications would be a reason for joining the fold. But, will you see the cable industry or AT&T or Verizon knocking on Google's door anytime soon? I doubt it. These companies are already developing their own interactive applications and services. In fact, if you compare the revenue potential between the online and pay-TV worlds, it's clear operators will still control the lion's share of revenues for services such as premium VoD and for interactive advertising. The revenues in the online world are certainly nothing to sneeze at, but the operators don't have to cede control to Google in order to pocket some serious revenues in the next few years.

Multi-platform Measurement

I do think that Google's entrance will now start to help refine how providers of online assets will work with consumer electronics companies to implement more multi-platform content and multi-screen audience measurement. The measurement and reporting is a particular area where some work is needed. The more that content providers, online companies, and CE manufacturers can work together to build consistent reporting and feedback mechanisms into their products, the more effective they will be in monetizing their Web services and attract more premium partners.

See You in a Few Weeks

This announcement certainly comes at an intriguing time, and we've got all kinds of speakers and sessions at the CONNECTIONS™ 2010 event that will speak directly to the rise of connected consumer electronics, digital content, and evolving business cases. We have keynotes, presentations, and discussions with many of today's leading vendors of connected TV and digital media solutions - among them 2Wire, Actiontec, ActiveVideo Networks, Alcatel-Lucent, Allegro Software, Alticast, Arxan Technologies, AT&T, BigBand Networks, BridgeCo, Cisco Systems, Comcast Interactive Media, Comcast Spotlight, comScore Inc., DivX Networks, Epix, ExtendMedia, Gigle Networks, IBM, Intel, Intertrust (representing Marlin), Latens, MEC (WPP’s Group M), MOD Systems, Motorola, Navic at Microsoft, NDS, Nielsen Online, Opera, Orange/France Telecom, PacketVideo, RedMere, Rovi, Roxio CinemaNow, Samsung, Sony, Technicolor, thePlatform, Verimatrix, Verizon, Vuze, XSpanD, Yahoo!, and Zenverge Check out our lineup, and we hope that you can make it to Santa Clara in a few weeks!

Intel's GM to keynote at CONNECTIONS

INTEL's GM for Retail CE, Wilfred Martis, will be the new keynote at the CONNECTIONS Digital Living Conference June 8-10 in Santa Clara. He will be discussing "Smart TVs: Ready for Primetime."

Martis joins other keynotes including:

-- Joseph Ambeault, Director, Product Development & Management, VERIZON - The Service Provider and the Connected Home
-- Scott Birnbaum, VP, SAMSUNG - TV Technology in the New Age of Consumer Buying
-- Mitch Singer, CTO, SONY - Entertainment in a Connected World

Nearly 20% of U.S. broadband households have a PC-to-TV connection and the vast majority is using a DIY solution (like game consoles) to stream online video. Parks Associates forecasts Web-connected consumer electronics will grow from 57 million devices in 2009 to more than 200 million by 2013, with Web-connected TV shipments exceeding 80 million units by 2013.

For advanced advertising, U.S. revenues for online video advertising will exceed $1.3 billion in 2010. Almost 50% of heads-of-household aged 18-34 indifferent to targeted advertising, while 42% aged 25-54 and 25% aged 55 or older are similarly neutral.

For more information about the CONNECTIONS Conference, visit www.connectionsus.com.

Mossberg recommends the extended warranty for the laptop - 25% of consumers agree

In today's Wall Street Journal, Walt Mossberg recommends the purchase of an extended warranty for a laptop. About a quarter of laptop buyers are following his advice. In our last U.S. study - Customer Support in the Digital Home, 23% of laptop buyers indicated that they had purchased the extended warranty.

U.S. online video advertising revenue will exceed $1.3 billion in 2010

Steady growth in online video viewership, combined with the ability to target specific viewers based on preferences and viewing history, will push U.S. revenues for online video advertising over $1.3 billion in 2010.

Online Video Advertising: Strategies & Results, finds large percentages of consumers, especially younger consumers, have yet to form a strong opinion regarding targeted advertising. These advertisements include commercials shown before an online video or overlays displayed during the show, with the content based on the user’s Internet, TV, and mobile usage and viewing habits.

Among U.S. broadband households, almost 50% of heads-of-household aged 18-34 are indifferent to targeted advertising, while 42% aged 25-54 and 25% aged 55 or older are similarly neutral. The younger age groups are more receptive to the concept of targeted advertising, and advertisers place a premium on the ability to reach these demographics.

While online video does not yet have the same audience reach as traditional broadcast and cable TV, the medium continues to grow its user base, and increased content offerings via TV Everywhere initiatives will bring in more viewers and boost advertising revenues. Currently over 50% of heads-of-household 25-54 watch online video at least weekly, and the percentage jumps to 75% for ages 18-34.

Parks Associates cited in Financial Times

Google and Intel are expected to announce a significant breakthrough into consumer electronics and the broadcast industry this week with the launch of a “Smart TV” platform reported a recent Financial Times' article.

With TVs, Blu-ray players and set-top boxes rapidly adding wired or wireless internet connectivity to their features, a host of companies are tailoring and integrating web-based content for living room entertainment.

“If you had asked me a year ago, I would have said no way Intel and Google could make an impression,” said Kurt Scherf, principal analyst at Parks Associates. “But Intel looks to have gained some traction and the operating system space is so wide open that it’s a case of why not Google at this point.”

Google is expected to call on its Android developer community this week to create applications for TVs and its software could prove popular if it also promises advertising revenues for TV manufacturers.

“Consumer electronics manufacturers want a piece of this [advertising] pie and Google is the player in this very crowded space that can immediately offer them revenue share,” said Mr Scherf.

To view the full Financial Times article, click here.

Security Monitoring Fees for U.S. households have increased 15% since 2007

Home security companies have avoided the worst of the recession due to a stable core of consumers who have kept their monitoring services despite rising fees.

In a recent report Home Systems: Home Security - Analysis and Forecasts, Parks Associates finds the average monitoring fee for a U.S. household increased from $28.60 to $32 between 2008 and 2010. This rise has kept revenues from home security relatively stable, despite declines in overall sales due to weak home sales and catastrophic drops in new starts. This strategy relies on a group of existing customers who will retain their service despite rising monthly costs, which has been successful but has its limits.

IP technologies open the door on all industries to new, nontraditional competitors. Moving forward, the security industry must be careful not to raise monthly fees too quickly, or it risks accelerating entry of these new players. Continued aggressive fee increases may create short-term benefits but risk long-term turbulence. Instead, security companies need to reposition to win new customers, rather than expecting their existing customers to carry the burden.

Integrators and Home Networking

Each year, Parks Associates surveys installing dealers throughout the U.S. through its ongoing Channel and Consumer Monitor project, and as we launch our 2010 survey this week, we are taking a look at some of the more prominent trends over the past few years and how they are impacting the dealer market and related industries.

One significant trend has been the rising awareness of home networking, specifically no-new-wires networking technologies as valuable solutions for dealers' businesses. For example, based on our last survey, more than one-half of integrators are familiar with Wi-Fi (based on the 802.11n standard), and 19% are familiar with at least one type of powerline connectivity media (e.g., HomePlug, Powerline HD, HD-PLC).

Want to know more? Click here to subscribe to the Home Systems Monthly Newsletter from Parks Associates.

50% of U.S. households are interested in home energy monitoring

Home monitoring and controls companies will need to take alternate, more indirect routes to reach mass-market status, according to international research firm Parks Associates.

Almost 50% of U.S. households are very interested in an energy-monitoring device, with nearly 80% willing to pay $100 provided it saves 10-30% on their electricity bill. Energy applications are popular now because of the need for cost savings, but in the end, all home systems will need to be interconnected. By embedding their technologies into energy-related appliances and systems, controls and monitoring companies can get a foothold in the home and start to build traction on a mass scale with consumers.

Controls and monitoring companies can form strategic partnerships with system manufacturers, service providers, and utilities to build these inroads. Many utilities have smart grid programs, which have partnership opportunities, but the popularity of energy solutions has attracted new, nontraditional players. For example, Intel recently announced a sensor that monitors power usage throughout a home and shows the homeowner the amount of power used by different appliances and systems.

Director of Health Reseach featured on ViodiTV

Harry Wang, Director of Health and Mobile Research, Parks Associates was featured on ViodiTV's coverage at the Broadband Properties Summit in Dallas, Texas.

Harry is very excited about next 5 years for the telemedicine/telehealth industry. A number of factors are in play to help overcome consumer inertia to widespread adoption of telemedicine. Ubiquitous wireline and wireless broadband and devices are giving consumers lower cost, more efficient and sometimes more effective alternatives to having to make the trek to their doctors’ offices.

To view the full video, click here.

For additional information about digital health, visit www.parksassociates.com/digitalhealth/.

U.S. consumers still unaware of smart grid benefits

Parks Associates research indicates over 40% of consumers unfamiliar with term “Smart Grid.”

Consumer knowledge of smart grid technologies is low, even as utilities have deployed 13 million smart meters to U.S. households. In the report, “Residential Energy Management: Opportunities for Digital Systems and Services,” only 11% of U.S. consumers are familiar with the term “Smart Grid.” This low awareness poses a risk to future deployment plans and opens the door for communications service providers to grab market share from utilities by offering their own energy monitoring solutions.

Utilities plan to deploy more than 50 million smart meters by 2014, but they need to improve their educational outreach if they want consumers to embrace this technology.

Consumers in Texas and California have filed lawsuits in which they blame smart meters for unexpected hikes in their electricity bills. The backlash from these stories threatens customer compliance with future smart grid deployments and could disrupt utility plans to create a more robust, interconnected grid that offers advanced services such as monitoring and time-of-use billing.

Parks Associates supports Chronic Care & Prevention Congress

Parks Associates is supporting The 4th Chronic Care & Prevention Congress to be held from May 11-13 in Alexandria, Virginia.

The 4th Chronic Care & Prevention Congress brings together major stakeholders – employers, healthcare plans, providers and government agencies - in an executive networking environment to discuss best practices and partnership initiatives for the management of chronic disease and the implementation of prevention and wellness strategies. More Info

Advanced Advertising Session addresses new content distribution models, ad solutions, and revenue opportunities

Parks Associates is hosting a special research presentation, “Advanced Advertising: Engaging the Digitally Connected Generation,” sponsored by Chase Paymentech, on Wednesday, May 5, at Digital Hollywood in Santa Monica, Calif.

Parks Associates estimates revenue from addressable, interactive TV advertising will reach $133 million in 2010 and will increase to $4.3 billion by 2014. Digital media technologies (DVR, advanced TV, Internet, and mobile) have changed the game for service providers, technologists, content owners, and advertisers, creating new content distribution models, ad delivery solutions, audience measurement capabilities, and revenue opportunities.

Join Heather Way, Research Analyst, Parks Associates, as she will discuss strategies for industry players and investors to capitalize on digital media platforms and services in order to build revenues and increase consumer engagement.

Parks Associates will be in Booth #2 during Digital Hollywood, May 3-6.

Request your complimentary pass to attend the research presentation by completing this online form.