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by Digital Tech Consulting

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NAB Goes OTT

Monday April 26, 2010 – Antonette Goroch

Over-the-Top (OTT) content, referring to content delivered to the TV over the Internet, exclusive of any pay TV content package was as hot a topic as was 3D at the recent NAB show and well it should have been. The trend is causing plenty of hand wringing and opportunity searching – a sure sign of big business shifts to come.

The trend was well illustrated with the current wave of Internet connected CE devices, such as TVs, STBs and virtually every other device with some connection to the television, on display on the show floor. Fear of piracy and lost revenues had previously kept content providers from allowing quality brands and shows outside the walled gardens of pay TV systems, but with the convergence of TV and Internet now a mainstream reality, attitudes are changing—and threatening those very same walled gardens with new competition.

Indeed, over the past year, major content providers, such as NBC Universal, Fox Broadcasting Co., CBS Corp., and ABC Inc. have shown themselves to be both willing and able to take advantage of OTT through sites such as Hulu and YouTube, as well as content hosted through their own sites via services such as Veoh Networks--pushing Internet video usage to new heights. Many in the industry are quick to brush this “threat” off, saying that OTT content isn’t an adequate replacement for multichannel pay TV packages in either breadth or quality of service.

But such pronouncements miss the point: The landscape for the delivery of television content is changing, and both business models and value chains will change along with it, like it or not.

There are a handful of pay TV operators rising to the challenge, seeking to forestall their own obsolescence through initiatives that integrate OTT as part of the pay TV experience. Examples include several European operators, such as BSkyB (DTH satellite) and Free Telecom (IPTV), who offer “catch up” TV and on-demand access via the Internet to subscribers.

Most of the mature multichannel markets are all ready fairly stagnant in terms of new subscribers, and even a small decrease in subscribership will be costly to pay TV operators already scrambling in a competitive multiplatform environment. It is likely that success will ultimately come to those who can see OTT as a competitive opportunity—not a threat.

iPad is iFun

Monday April 19, 2010 – Stewart Wolpin

A warning to HP and other PC companies with the upcoming Slate tablet PC and other post-iPad tablet PCs: Stop trying to sell your new devices by touting alleged technical superiorities. Resist emphasizing faster processors, array of connecting jacks and memory slots, Flash compatibility, 1080p video playback, built-in cameras/video recorders, and that they run Windows 7.

What HP and Microsoft and all tablet makers to follow have missed is that iPad is not a tablet PC.

Ever since the late and tragically under-appreciated Ed Roberts introduced his MITS Altair personal computer in 1975, the PC has been championed as an enhanced productivity tool. The justification for its purchase has always been something like "It'll help me work faster and easier and better." The iPad, however, may be the first "personal computer" not designed as an enhanced productivity tool. This is why some folks can't figure out what it does – it doesn't "do" anything, at least work-related.

Not that iPad can't be a productivity tool – I'm writing this column on an iPad using Apple's Pages word processing program and mailed the draft to myself using iPad's excellent email program.

But even as I'm writing this, I want to hit the Home key and tap on iBook to continue e-reading James McManus' poker history "Cowboys Full." I want to watch Paul McCartney's "Good Evening New York City" concert I synced from iTunes or stream a movie from my queue on Netflix. I want to touch-surf the Web. I want to play EA's addictive (for a writer, anyway) Scrabble. I want to browse my photos. I want to check the lowlights of yesterday's Mets' loss on MLB.com's At Bat 2010 app (I'm a masochist). I want to do anything but tap tap this column. I want to play.

Rather than enhancing productivity, iPad enhances fun.

If you ask any of the more than half a million iPad purchasers why they bought one, they will do their best hem and haw stammering Ralph Kramden, unable to come up with a fully realized rationalization. Though ultimately unexpressed, they bought it not because they needed it, but because they wanted it. They intuitively knew, given the thousands of available apps and games, the easy touch access and Apple's seamless OS/iTunes/app/hardware integration, that iPad would simply be fun to futz with.

But HP Slate and other Microsoft Windows 7 tablet makers think all they need to do is deliver another enhanced productivity tool, a touchscreen/keyboard-less netbooks, yet another enhanced productivity tool in another form factor, to compete with iPad. Touch will make Slate perhaps easier to use, but it won’t likely be described as fun. And that misses the whole point, and why the iPad is a success and why other tablets to come may not be.

HD: Chinese Cable’s Next Big Boom

Monday April 12, 2010 – Antonette Goroch

China, the largest cable market in the world with more than 170 million subscribers total, has come to dominate digital cable STB shipments, having now completed its sixth year of its massive digital transition. Indeed, DTC estimates China made up more than 40% of total worldwide digital cable STB shipments in both 2008 and 2009, and will again in 2010.

Although Chinese cable subscribers are helping to haul in the big numbers, they haven’t done much to advance high-margin services (such as HD, VOD and PVR) or the boxes that receive them. To date, the receivers are almost exclusively low-cost STBs (some have reported per unit prices of under $50), with only basic one-way functionality. Placing digital STBs in the U.S and Western Europe is a higher-margin proposition for suppliers as receivers that can handle HD, VOD and other high-end goodies are common place.  But now that the initial infrastructure has been put in place, it’s only a matter of time before Chinese operators begin offering boxes that receive HD and include high-capacity hard drives for PVR services. 

Hunan Cable Group, one of the largest Chinese cable operators with more than 5 million subscribers, for instance, became the first to announce this March that it would launch an MPEG-4 AVC based HDTV service in 2010, which will include both HD channels and an extensive VOD library. The two largest domestic STB suppliers, like Coship and DVN, each announced they will soon make available new families of HD STBs that support high-end services and decode video in both MPEG-4 AVC and MPEG-2.

To date the digital cable market has been dominated by domestic suppliers. There’s no doubt that Western STB suppliers would like a slice of the higher-margin STB market especially now that  significant market saturation is a reality in the U.S. Western Europe. Whether or not they’ll get it remains to be seen – stay tuned.

It's a Bird, It's a Plane, It's Superphone!

Monday April 5, 2010 – Stewart Wolpin

Apple has been the superstar the last few years when it comes to rolling out truly innovative communications products but it looks like it has some competition after the unveiling of show-stopping superphones at the recently concluded CTIA gathering.  

These new devices, coupled with improved operating systems and large 4-plus-inch screens, speedy processors, accelerometers, HD recording and playback, and high-speed video streaming capabilities, are likely to inflict healthy damage on the portable media and game player categories, as iPhone is already managing to do. In other words, these are likely the next game changers.

Android seems to be the superphone OS of choice. There are now more than a dozen Android models from all four national carriers, and developers seem to be having more fun writing for them thanks to the openness of the Android OS and the multitasking capabilities of the phones. But super BlackBerrys are sure to follow, as will phones running the new Windows Mobile 7 OS, which completely shakes up the icon/app-driven iPhone/Android user interface paradigm. The next superphone rollouts that took starring roles at CTIA, are coming from HTC and Samsung

This doesn't mean Jobs is sitting on his iPads. Stories already are circulating about the next version of the iPhone OS, 4.0, which will add multitasking capabilities. iPad runs on Apple's own 1 GHz A4 Arm processor, which likely will power the iPhone HD (as it's been dubbed) due sometime later this summer, with a more powerful 1.2 GHz chip juicing the imagined 4G iPhone Ultra.

The CTIA stars and future iterations of the iPhone are just the first wave of superphones, and there'll be more super capabilities to follow once Verizon inaugurates its own 4G service later this year, followed by even more superphones from AT&T when it launches its 4G network in 2011. Obviously, no phone booths are needed for this change.

The stars at CTIA were the Sprint HTC Evo the first 4G handset, running on Sprint's growing WiMAX network and Samsung's Android 2.1 Galaxy S 3G.

Checking in on DTV Receivers

Monday March 29, 2010 – Shelby Cunningham

DTC’s recent forecast and analysis on the digital set-top box market estimates that CAGR for digital STB (satellite, cable, terrestrial, IPTV and DCA) shipments will only register about 2% from 2008 through 2014. Any growth is welcome, but if 2% isn’t classified as “flat,” it’s definitely way inside the neighborhood of Flatsville.

DTV receiver shipments hit just under 208 million in 2009 and are expected to reach 217 million in 2011. 

Source: Digital Tech Consulting

It’s not all bad (or flat) news, however. There are a couple of bright spots.  The most growth will come from the IPTV sector.  Despite the never ending proclimations of the death of over-the-air television, DTT STBs will continue to log healthy growth between 2010 and 2013.

DTT STB shipments will drop over the next couple of years now that the U.S. analog TV shut-off is over, but shipments will rise to about 55 million units in 2011 once many counties such as France, UK, Canada and Japan begin their analog shut-offs after 2011. 

China fueled significant growth in digital cable STBs in 2008 and 2009 as many cable operators digitized their analog systems. Although growth will be tempered now that much of the infrastructure is in place, China will continue to fuel digital cable STB shipments during this forecast period.  But digital subscriber growth in China is slowing. Expect future China shipments to come primarily from replacement and multiple box deployments.  Replacement STBs in this mature system will help digital cable STB shipments stay fairly flat, dropping slightly from about 58 million units in 2009 to about 57 million units in 2011. 

The Broadband and Broadcast TV Wedding: Don’t Look for the Invitation Just Yet

Monday March 22, 2010 – Myra Moore

Broadband internet is undeniably the most popular kid in the “hybrid TV” school these days. With terrestrial, satellite, and cable platforms flirting with the idea of letting broadband Internet access join their clubs, it’s no wonder hybrid TV was a prominent topic at the DVB World conference earlier this month.

 The DVB Project has been in the business of getting different broadcast technologies to play together under one umbrella standard ever since digital video broadcasting began. Whether the DVB Project, or other standards-setting bodies, can extend that matchmaking ability into the IP world remains to be seen. The big matchmaking challenge, however, is among the agendas of all the potential players.

Consumer electronics device suppliers, pay TV service providers, pay and free-to-air (FTA) set-top box suppliers, FTA terrestrial  broadcasters, middleware suppliers, content owners, next-gen ISPs, search-engine giants, and consumers all have a stake – and their own interests.

So, which one of the above gets to manage what comes through the internet pipe? Some interests want no restrictions on what comes through the pipe; others only want select web sites and programs to come through the pipe. Then there are those who just want to manage what makes it through the pipe with guides, Widgets and search engines. With the exception of consumers, they have one thing in common – they want to make money from delivering, receiving and/or managing what comes through the pipe. Consumers – they just don’t want to pay for it.

It’s doubtful that there is one interest here that will supersede all others. The recent news that Google is leading a team that includes Intel, Sony and Logitech to create a Google TV platform has some wondering if the Google Giant will have enough heft to be the money collector and the bouncer at the hybrid TV club’s front door. Maybe. But there are other computer/Internet based companies like Yahoo (Widgets) and Microsoft (Ultimate TV), who have created platforms designed to get the internet TV to marry up with broadcast TV platforms.  None of those have yet transformed the way we watch TV.  The two will probably get hitched one day, but we may want to settle in for a long courtship.

How far away is Pay TV on the 3D TV horizon?

Monday March 15, 2010 – Antonette Goroch

Now that HD and DVRs are mainstream in the large developed pay TV markets of the U.S., Europe and Asia; pay TV operators, chip makers and STB makers are casting an eye towards technologies that will drive new STB replacement cycles and premium content packages. It’s no surprise then that 3D TV is garnering increased industry interest, evident on the show floors of CEBit in Hannover, Germany this year.

But just how near is the 3D opportunity for pay TV and how big will it really be?

With 3D movies bringing in record box office results, it’s only natural that Hollywood aftermarket pipelines would soon follow with similar offerings. As 3D TVs, Blu-ray players and a handful of packaged media titles make their way to market this year (leaving trade show floors worldwide littered with sample 3D glasses), pay TV operators are gearing up to launch their own 3D channels in 2010-2011. But pay TV systems face particular inherent challenges to implementing 3D TV, which may make launching 3D more difficult, expensive and time consuming, than in the packaged media industry.

Only a few pay TV systems have announced plans for 3D TV so far: DirecTV (US), BSkyB (UK) and Foxtel (Australia). While these are set to offer a version of 3D TV which can utilize most existing HD AVC/H.264 STBs, this won’t be a full HD (i.e. 1080i to each eye) resolution quality version available via Blu-ray. Rather, the “frame compatible” method works by splitting a single 1080i frame into two right/left half resolution frames. Even this half resolution 3D will require a certain level of upgrade (and thus cost) for STBs via firmware at least, since the key enabling technology for this method is the only recently settled HDMI 1.4 (though the updated HDMI 1.3a can also do a version of this as well). And with this cost, it’s not entirely clear how many consumers will seek to pay a premium for 3D content of a lower comparative quality than other home media options.

To achieve a full 1080i to each eye experience, consumers will need a new STB with technology, probably the MPEG-4 based profile MVC, in use by Blu-ray, embedded at the chip level. Such boxes are not even on the market yet, existing only in demo state. Even chips are not yet available at price levels that make sense for commercial quantities. Further complicating matters, these chips must be specifically designed for the STB context to account for specifics like conditional access and DVR functions.

In reality, any kind of meaningful 3D pay TV is probably at least a few years away.  Even then, it’s not clear whether this will be a mainstream tier product, or merely a small premium niche. Much will depend on the reception of the 3D TVs and Blu-ray players just now making their way into the market. Should these products prove particularly popular, pay TV operators may see greater incentive to invest in new STBs and more compelling 3D offerings more quickly.

3D Obfuscation

Monday March 8, 2010 – Stewart Wolpin

"-ready" – the scariest hyphenate in consumer electronics – is beginning to be indiscriminately slapped to the rear of "3DTV," officially opening the 3DTV obfuscation season. Or, as Elmer Fudd would put it, it's "3D-weady season," which somehow sounds more appropriate.

The "-ready" suffix should be familiar to most folks in the CE business. A decade ago, a burst of alleged HDTVs were confusingly labeled "HDTV-ready," a suffix everyone agreed didn’t mean, forcing the powers-that-be to precisely define "full" HDTV and ordered that HDTVs thus be labeled accurately.

As was the case with HDTV, the term "3D-ready" not only (and still) doesn't mean anything, it further muddies what is already confusing consumers about 3D. It also makes it twice as hard for those of us who have to try and explain all this when we first are forced staunch the misinformation hemorrhage.

It's really rather simple. Right now, there is only full HD 3D, which creates a 1080i frame for each eye.  Full 3D HDTV can be achieved only with a 3D HDTV (not "ready" or "capable" or any other non-instructive descriptive suffix) equipped with HDMI 1.4 connectivity, connected to a 3D Blu-ray player with content encoded in MPEG-4 AVC/H.264 MVC (multiview video codec) and similarly equipped with HDMI 1.4. At some point, there may be half resolution 3D for firmware upgraded legacy HDMI 1.3 devices such as cable and satellite boxes, but none of these products or capabilities are on the immediate horizon and have nothing to do with the relative readiness of a 3D HDTV.

To watch this full 3D HDTV, consumers will need to wear active shutter glasses.

3DTV can be simplified further for consumers by removing all alphanumeric acronyms. All they need to know is:

3D HDTV + 3D Blu-ray + glasses = Avatar @home.

But as with HDTV, manufacturers and retailers seem to take a Looney Tunes approach to mis-explain their high-tech wares.

Take, for example, an email sent out to the media by a national retailer who shall remain nameless (okay, it was Sears) to announce the availability of two Samsung 3D LED LCDs and helpfully dispel three self-proclaimed 3D myths:

• Users are required to wear 3D glasses all the time.

Yes, Panasonsungshiba, spend millions of dollars on advertising and marketing to let people know they can take off their 3D glasses when they're not watching 3D TV. Thanks, because I'm still wearing mine from when I watched Michael Jackson's "Earth Song" 3D video on the Grammys telecast last month.

• After watching 3D and taking off the glasses, regular TV content is going to be fuzzy.

Millions worldwide have collectively spent hundreds of millions to watch Avatar in 3D, and not a single one of these Na'vi nerds found the world fuzzy after removing their 3D glasses. Blue, maybe, but not fuzzy.

• 3D TVs are going to be too expensive for the average household.

This is not a "myth," it's reality. Many homes don't have a large screen HDTV for a good reason: even at $1,000, 42-plus inch HDTVs are too expensive for most, and 3D sets are going to be at the top end of the large screen pricing scale (the cheapest Samsung set on the Sears' site, a 46-inch model, is $2,600). And considering the hardships the economy is causing, trying to convince Mr. and Mrs. America that 3D HDTVs actually represent a good buy is, quite frankly, just plain insulting,.

Worse, the Sears' Samsung 3D HDTV product page, consumers' first introduction to actual 3D HDTV sales spiel, mentions nothing about 3D glasses – not where to get them, not how much they cost, not that they have to be $100 active shutter glasses not cheap cardboard red-green glasses for anaglyph 3D or the Polarized sunglasses they snuck out with from the movie theater – not even that they'll need glasses. Imagine the first automobile salesmen neglecting to mention buyers would need to buy something called "gasoline."

Then there's Sears' "Making 3D Happen" FAQ page. First, there are headers for "Native 3D," "Virtual 3D" and "2D." "Native 3D"? "Virtual 3D"? I've been writing about 3D for more than a year, attending 3D demos and conducting intense Q&As with industry execs over the last few weeks, and I've never heard these terms. And I've not seen a single 2D-to-3D conversion that improved upon century-old stereoscopic postcard viewer.

And the first product descriptive term Sears' FAQ uses? "3D-ready HDTV."

Cue Elmer.

Navigating a DTT System and Analog Shutoff                

Monday March 1, 2010 – Maya Jasmin

So where in the world is there still analog TV? Well, lots of places. Only in select Western European countries and the U.S. has there been analog shut offs, and there are definite lessons that can be learned from those transitions to aid other countries in the planning of a Digital Terrestrial TV (DTT) system or analog shutoff. 

Although these shut offs have been relatively successful transitions, countries yet to make the leap must be careful when trying to emulate the processes used by the “shut off nations.”  Each country must consider their own frameworks, which can be based on political will, government involvement, and the number of consumers using terrestrial TV services. Because of these added considerations proper planning is essential when deciding to make the transition to a DTT system as the slightest mistake can result in dire repercussions for a nation’s TV infrastructure and spectrum management. 

There are several essential factors to consider when deciding if a digital transition is needed and what kind of timeline a nation should develop when planning a transition. 

·         Does it make sense to build a DTT System?

While for many countries the answer to this question is yes, in countries where resources are limited and basic human needs are not being met a DTT transition may not be the best allocation of available resources.  For those countries that decide transitioning is not a priority DTC believes that analog infrastructure will be supported well into the near to mid-term future.

·         How do you begin building a plan and timetable?

While no two countries’ plan and timetable will look exactly the same there are fundamental issues, including but not limited to technical, political, and fiscal realities, which need to be considered in every instance. 

·         Should integrating a DTT System with other digital platforms, such as mobile TV or radio, be considered?  If yes, how will that affect standards and specifications selection?  How will an integrated infrastructure be built?

When addressing this issue, cost savings are the obvious lure, however planning authorities should be careful not to abandon practicality and efficiency in search of a less expensive plan.

·         How do you select transmissions standards and technical specifications?

Choosing transmissions standards and technical specifications can be complicated and many factors should be carefully considered when doing so.  One important thing to remember however is that the selection of transmission standards and technical specifications are fundamentally intertwined.

Addressing these essential factors will help in deciding if it is time for an AtD transition and aid in the outlining of a plan for a DTT system.  However, this only begins to scratch the surface in addressing all that is involved in planning a successful DTT system or AtD transition.  DTC has written a free Essential Guide to Planning a Digital Terrestrial TV Systems and Analog Shut Off that answers many of the questions we’ve posed and you can download it here.  Or contact Myra Moore at 214.915.0930 for further expert consultation.

Keeping Track of the Chinese DTV Market

Monday February 22, 2010 – Shelby Cunningham

Digital TV displays are being sold by the millions in China, and most of those are connected to a digital cable or DTH satellite set-top box, which means most LCD DTVs are nothing more than “DTV ready.”  The market for digital TVs integrated with terrestrial, satellite, cable, or IPTV tuners is only in its most infant stage.  It’s only a matter of time before large numbers of DTVs will include over-the-air tuners and connections to the Internet.

In 2009 DTC estimates that less than 3% of all LCD DTVs shipped in China contained tuners growing to about 6% of the market by 2011. In the meantime, the market for digital TV displays is exploding creating one of the world’s fastest growing digital TV markets.

All industry eyes are on the Chinese market and DTC is now offering a Domestic Chinese LCD DTV Quarterly Tracking Service, which is being produced with China-based RedTech Advisors. The service tracks quarterly shipments, brand market share, and component supplier market share in this rapidly growing market. 

The timing for the tracking service is important. To date, the government regulator (SARFT) has emphasized the digitization of cable systems, but as most of the large cable systems are transitioned from analog to digital (in the 2012-2013 time frame) look for the government to place more emphasis on rolling out digital terrestrial TV.  As more TVs with integrated DTT tuners and Internet access ship into the Chinese market, DTC believes the complexion of the DTV market will change dramatically in the next few years.

Source: Digital Tech Consulting and RedTech Advisors

Is Macworld Dead or Just the Beginning?

Monday February 15, 2010 – Antonette Goroch

This year’s Macworld marked a turning point for Apple, and the media industry at large, in both what was absent and present.

On the one hand Apple, which pulled out as a Macworld exhibitor last year, was gone for the first time, leaving attendance and exhibitors down by double digits. Gone was the traditional keynote from Steve Jobs announcing the latest and greatest in Apple’s technological evolution (the iPad was announced a couple of weeks ago). This absence was symbolic of Apple’s transformation from a niche computer maker with a devoted base of enthusiasts into a multimedia ecosystem of post-living room entertainment for the mainstream.

What dominated Macworld instead were mobile applications, expanding the utility of Apple’s mobile devices. Over 150,000 apps---a vast number---now fill the AppStore, many of which were on display, morphing iPhones, iPods and now iPads into an array of functionalities from entertainment to productivity, and from education to novelty.

The breadth represented is a microcosm of what Apple’s ecosystem has given rise to---a sum greater than its parts. It’s not about just single use devices anymore---a music/video player or a smartphone—but rather a family of devices with the ability to span many functions throughout a person’s daily life. Sure the announcement of the iPad was big news on its own, but it will be the applications and the content that truly give its ultimate value. And, Apple’s deals cut with book publishers, perhaps undoing the current e-books business model, is arguably more innovative than the iPad itself.

Perhaps this year’s Macworld is also symbolic of what Apple will ultimately have to do if its ecosystem is to survive---disappear. Not literally, of course, but in terms of further opening that ecosystem. To some extent Apple has already done this, through the release of its non-DRM iTunes music library last year. Its video library remains a closed system, though, and Apple still screens/controls all the apps in its AppStore, keeping the Apple ecosystem a highly controlled one.

If Apple can successfully transition its ecosystem into a more open one in terms of content and functionality, it will guarantee a future far more expansive than the humble enthusiast beginning embodied by Macworld.

If You Build It, They Will Videophone

Monday February 8, 2010 – Stewart Wolpin

Avatar's success is stoking 3D HDTV excitement, but another, more profound technological and sociological change is about to engulf the living room: the videophone.

Yes, futurists have been prognosticating ubiquitous videophones since, well, since futurists have been prognosticating; in 1964, the Bell System actually initiated a short-lived video telephone service between New York, Washington, D.C., and Chicago, and Dr. Heywood Floyd famously called his daughter on a space station pay video phone in Stanley Kubrick's 2001: A Space Odyssey.

But all videophone efforts, either via standalone phones or TV add-ons, have necessitated the purchase of two phones (it takes two to video chat), and a iPhone-like consumer crush to buy a pair and create a critical mass of videophoning households.

Why hasn't widespread videophoning happened? It's been postulated that phone chatters simply wanted to be heard and not seen. But this assertion is belied by the popularity of PC-based video chatting. It's hard to find either a laptop or desktop PC without a built-in Web cam; it's this "if you build it, they will call" that is the secret to video telephony outside the office.

Skype is supplying this Phone of Dreams solution. A slew of net-enabled models from LG and Panasonic due later this spring will include Skype-powered high-definition videophone capabilities built-in.

Consumers initially will have to buy an LG- or Panasonic-specific webcam, each of which will have four built-in microphones, probably for around $100. But everyone acknowledges these add-on Webcams are a temporary situation. By the fall, it's likely a number of high-end HDTVs will include a webcam and microphone array built into the bezel, just like on PCs. Toshiba's CELL TV, for instance, will include a built-in webcam for videophoning, presumably using Skype, although the company has yet to officially say so.

Within a few years, it's likely all Web-connected HDTVs will include a built-in webcam for videophoning. And as people grow used to videophoning, landline phone makers, seeking any way to boost sagging sales, will launch Skype-powered video phones for other rooms in the house, and LTE-powered cellphones will include forward-facing cameras to enable video calls.

Within a decade, everyone could have videophones in each room of the house, and enable a whole new way of looking – literally – at phone sex.

Chatting it Up: Desktop Video Communications Explodes

Monday February 1, 2010 – Maya Jasmin                    

It’s no longer just for the big shots ensconced in expensively equipped board rooms. High-speed IP networks, low-cost web cams and improved video compression are letting the rest of us in on video conferencing and video chatting.

It has been a foregone conclusion that many consumers would embrace face-to-face video communications when quality improved (dramatically) and costs came way down. That time has come as video communications desktop application software represents a new and rapidly growing market.  That area of growth is fueled by the prolific age of instant messaging where most major market participants include video chat in their applications.  Now all you need is a webcam and a PC to see the faces of your contacts.

A few major desktop software application providers, such as Google (Gmail Video Chat) and Microsoft (Microsoft Live Messenger) use the AVC codec as their video compression technology.  DTC estimates that in 2009 a little over 70 million first-instance downloads of the AVC codec onto PCs came from video instant messaging applications, and we expect 238 million AVC downloads to come from those applications in 2014. 

The main competitor to AVC/H.264 in this market is On2’s proprietary video communication technology, which is used by Skype, AOL IM (AIM), Yahoo! Messenger, TenCent QQ (Asia’s biggest provider), and ooVoo.  Google is still actively pursuing the purchase of On2 so it remains to be seen where this acquisition will lead in terms of the desktop video communications market as a whole. 

With an exact future of this market unknown and no current video technology winner, the field is seemingly wide open for video technology providers and explosive growth.  This market encompasses all demographics of users from giddy school kids to doting grandparents, and every type of personal and business user in between.  With friends, loved ones, and business associates just a click away this is definitely a market to keep an eye on!

Digital Video Downloads 2010: Format War in the Cloud or a Perfect Storm?

Monday January 25, 2010 – Antonette Goroch

With VHS, DVD and Blu-ray formats now battles of the past, are digital video downloads set to be the next big format war in the ongoing evolution of digital entertainment? Maybe not.

This month’s announcement at CES from the Digital Entertainment Content Ecosystem (DECE) consortium of both new members and some vendor selections for DRM/content management again puts a spotlight on the necessary infrastructure for mainstream digital video delivery over the Internet. DECE, backed by 48 members including notables such as Sony, Warner Bros, Cisco, Motorola, Widevine and DivX offers a competing ecosystem to Disney’s recently announced Keychest.  Both efforts are cloud-based digital ecosystems meant to support the notion of “buy once, play everywhere” digital video delivery. Will this set the stage for an ecosystem war? If so, the stakes are high as content owners are trying to hit the right chord for electronic distribution to combat a gradual decline in DVD sales.

Source: Digital Tech Consulting

But a crippling format/ecosystem war may not necessarily be a foregone conclusion.. Though some degree of standardization is necessary for the broad industry support needed to “buy once play everywhere”, there is an increasing tolerance for multiplatform solutions in the marketplace. Theoretically, two ecosystems could coexist peacefully and grow the market for everyone, provided content providers don’t restrict their access to one format or another, thus lessening the value of both.

Recent activity by content providers suggests this may be the case, since they have adopted a strategy of offering programming to many different outlets via differing business models and technologies, rather than locking into just one. Should this tendency continue, the coming year could trigger a radically different landscape for digital entertainment content and its delivery, as these cloud based ecosystems significantly up the value proposition (on the part of both consumers and content providers) for digital downloads.

What Does The e-Book Want To Do When It Grows Up?

Monday January 18, 2010 – Myra Moore

You want to read the book, see the movie, or play the game? How about all three at the same time? Or, maybe little bites of all three at once.  It sounds ridiculous but it’s plausible that the embryonic e-book market could be moving in that direction.

Until now, the e-book and the corresponding reader were pretty cut and dry – a good facsimile of printed text (in shades of gray) on an electronic device. Avid book readers and gadget geeks are the target consumer and several million of us have taken the bait. But now the apparently irresistible urge to turn the e-reader into another electronic Swiss army knife has officially begun.

It was inevitable. First, you add the ability to play back mp3 audio files and load up some photos and the features check -box list begins to grow. The rumors of an Apple device/tablet that includes numerous electronic Swiss army knife implements right down to video playback and 3D capabilities, begs the question: What is an e-book reader, and maybe more importantly, what is an e-book?

We have yet to see an application where text, audio and video have been combined into a single electronic book/program (or whatever we’re going to call another potentially new media format) for view on an e-book reader.  A U.S. startup, Spring Design, announced it will sell an e-reader this year that plays video. It looks like the device keeps up a wall between the video playback (in a small screen at the bottom of the device) and the reading of an e-book.

So I don’t think we have to worry about naming this new hybrid media anytime soon. But the ability to cram multiple promotional messages (read the book! See the movie! Buy the sound track! Play the game! Just push this button!) into one electronic expression has to have marketing execs salivating. Although it sounds like promotional Nirvana, the technology isn’t fully baked enough to enable this kind of application just yet.

My bet is that technology won’t be the big barrier though.  Business models, content ownership, and copy rights hold the greatest promise for inhibiting the production and distribution of hybrid supercharged e-books. Will a publisher, movie studio, music label and content distributor each take a cut of the sale? Will there be revenue sharing among all if a consumer buys another product promoted in the e-book/program? How will all parties that contributed content agree on content security and management? Digital Rights Management (DRM) promises to be an especially thorny issue especially if the supercharged device has e-mail capabilities. Getting all the kids to play nice in the sand box will either take the aplomb of a great diplomat or a huge contract so heavy the involved parties will want to review it on an e-reader.

However this new kind of media and device get created, I’m not sure the avid book readers now buying the Kindle and Sony Reader are the likely buyers.  Although today’s e-readers incorporate truly innovative technology that mimics the printed page and displays that page with minimal power, they’re pretty low-tech devices. Look for a lot of trial-and-error marketing as the stake holders try to figure out what they’re selling and to whom.  

Bringing 3D TV Into the Home

Monday January 11, 2010 - Shelby Cunningham

You couldn’t throw a stick without hitting a 3D TV demo at CES last week. If you wanted to get to get a proper demo, though, you had to wear special glasses. The consumer electronics makers say 3D is so compelling that consumers won’t mind the glasses.  

I’m not sure wearing battery operated glasses while sitting in your own living room may be an attractive situation to some.  I know that I like to multitask while watching TV and movies, and I know I'm not the only one who does that.  And if you're watching TV while wearing special glasses you can't frequently gaze over to the laptop or smartphone. 

The one home entertainment sector that I can see bringing 3D TV into the home quickly and with high numbers is gaming.  My reason for this is simple:  You are generally fully focused on the screen at all times while playing a game.  You have no desire to check Twitter or send an email or Google a random actor's name in the middle of a game and are, therefore, going to have no problem keeping this pair of glasses on and looking at the screen. 

Sony announced pre-CES that the PS3 would be able to play 3D games when hooked up to a 3D TV thanks to a simple firmware update.  While it makes sense that the PS3 will be the first to hit the 3D gaming circuit (they even had demos at CES) because of Sony's line of 3D TVs, the Xbox 360 probably won't be too far behind since the console is already 3D compatible.  Now it's just up to the game makers to create incredible 3D games, as well as the consumers to want to buy the TVs and glasses. 

Wireless HDMI: Bigger than 3D

Monday January 4, 2010 – Stewart Wolpin

While CES will be replete with gaudy 3D HDTV and 3D Blu-ray demonstrations, likely complete with Avatar and Up! clips, a far more consequential innovation will be purposefully well-hidden – wireless HDMI.

Losing the annoying trailing HDMI cable connecting a consumer's A/V stack to their wall-mounted HDTV is an interior decorator's dream, and so a wireless solution is likely to prove far more popular in the real world than 3D.

Unfortunately, there's more than one way to skin this particular cable cat: Wireless HD (WiHD), Wireless Home Digital Interface (WHDI) and WiGig. A handful of companies are backing multiple consortiums: Hitachi, LG, Samsung, Sharp and Sony are all listed as supporters for both WiHD and WHDI, for instance; LG, Samsung and Panasonic are supporters of all three. Chip makers also are doubling up; Broadcom and Intel both are supporters of WiHD and WiGig.

While all three consortiums seek to provide a wireless uncompressed 1080p HDMI connection, each uses slightly different technologies and envisions slightly different usage cases.

WiHD has the simplest mission – provide a wireless HDMI replacement over the recently unlicensed 60 GHz band.

WiGig also operates in the 60 GHz band, but is a more multi-purpose and interoperable standard. WiGig is an extension of standard 802.11 WiFi with complete backward compatibility, the goal to provide a higher bandwidth – 7 gbps, 10 times faster than 802.11n – wireless connection for high-bandwidth functions such as transferring HD video from a camera to a PC.

Both WiHD and WiGig are short-range (10 meter) same-room technologies. Neither is strictly line-of-sight; if you stack your A/V gear underneath or next to your HDTV, the wireless stream will bounce off nearby walls to your HDTV to complete the wireless circuit. Implementation in larger rooms, therefore, could be challenging.

WHDI is a slightly different wireless animal; it aims to connect all devices to any display in your home. WHDI operates in the more flexible 5 GHz band (just like 802.11n), so it does not require line-of-sight and has an up-to 30-meter range, expanding equipment placement flexibility to multiple rooms.

Choosing Sides

At CEDIA a few months back, three HDTV makers – Sony, LG and Panasonic – all exhibited WiHD-enabled HDTVs, but none of these models are widely available.

But next week, several HDTV makers will unveil a slew of sets endowed with WHDI; most of these models will require the purchase of a separate wireless kit consisting of a wireless dongle for the TV and a transceiver STB, likely priced below $400.

The WiGig wireless HDMI specification isn't due until the end of 2010 at the earliest, and the first WiGig-enabled products of any kind likely won't be in stores until 2011.

There's no question consumers will find losing that dangling HDMI cable compelling. Even though a certain amount of consumer confusion is likely to ensue as WHDI and WiHD and its HDTV partners fire multiple marketing salvos when the latest wireless sets hit the market this spring, practical wireless HDMI is bound to be far more popular than the flashier 3D.

Is Cable’s Worst Nightmare About to Come True?

Monday December 28, 2009 – Antonette Goroch

It’s no secret that traditional pay TV operators (whether cable, DTH or telco) have been looking over their shoulders for some time at the prospect of “over the top” content (mainstream broadcast and pay TV content delivered via broadband Internet rather than traditional pay TV networks) gaining widespread traction among their subscribers and threatening their core businesses. Operators have been both terrified of the ramifications broadband holds for their high margin, walled gardens of content, while simultaneously enticed by the possibilities broadband holds for their own bottom lines.

These fears may reach a whole new level of realization next year, as Apple is reported to be in negotiations with ABC and CBS for a new “all you can eat” type monthly subscription content service in 2010. Clearly, the depth, breadth and usability of Apple’s content will be key to the model’s success and there have been few details to emerge regarding this. Still, Apple appears willing to put cash behind its effort, reportedly offering broadcasters (who have the most to lose for any impact this might have on their ad-supported model) from $2-$4 per month per subscriber for inclusion in the service.

The key question is—should Apple secure a fairly decent library of content (analogous say to the level Apple debuted prior services from music to video rental) will consumers, (or perhaps how many consumers?) turn off their rather expensive pay TV subscriptions in favor of a $30 per month on demand access to a handful of their favorite shows?

Pay TV operators have, to date, put their efforts behind massive bundles of TV/phone/Internet services which offer subscribers one flat fee for more content and services than most people could ever use. But how will consumers react if they are able to pay one low flat fee for broadband access, then cherry pick their desired content for desired devices for less money on a more a la carte basis (a model that cable operators have eschewed)?

Content providers have shown more and more willingness to put out their content to as many distribution points as possible—whether Internet, mobile or other alternate platforms—understanding that the landscape of tomorrow is one with multiple distribution outlets rather than one primary means as is the case today with pay TV.

This means Apple may very well have a strong offering come 2010, and pay TV operators might see the real effects of “over the top” content sooner than many may think.

On the 1st day of Christmas…

Monday December 22, 2009 – Maya Jasmin

So Black Friday has come and gone and holiday shopping has officially entered the last minute stage and while hunting down my son’s Christmas requests I was stopped in my tracks by one seemingly harmless item.  Now you may think it’s because I combed the world (both physical and cyber) over and couldn’t find the new hot “it” item, good guess but you would be wrong.  My problem was quite the opposite; I had too many options from which to choose to grant this particular wish to my child

You see, I was trying to decide in which format I should purchase his favorite movie and apparently the makers of the movie weren’t too sure in which format (DVD, BD, electronic download) consumers want to have it either.  My 4 year old has numerous video playback options – laptop, DVD, and BD.

Now maybe I was just delirious from continuous days of holiday shopping but this dilemma kept the movie on my list way longer than need be and got me to thinking how these various avenues of video distribution are faring in today’s marketplace.

According to DTC DVD is still king, currently DTC estimates that over 5 billion pre-recorded units will ship by year end 2009 and 4.8 billion units will ship in 2010.  While decline is projected throughout the entire forecast period 3.5 billion units are still expected to ship in 2014, hardly a number to frown upon.  Internet program buys also boast impressive estimates, coming in at 255 million in 2009 growing to 416 million and 946 million in 2010 and 2014 respectively.  So while this toddler- phased content delivery option has a tall order to fill before it outpaces pre-packaged optical disc shipments, it’s faring pretty well.

Then there’s BD, the once thought heir apparent to DVD.  DTC expects that 262 million BD will ship in 2009 growing to 591 million in 2010.   By 2014 DTC expects that 1.9 billion BD will ship in that same year.  So while BD shipments may never reach the success its predecessor, DVD, reached in its peak, BD is making a name for itself.  Now armed with an arsenal of data and analysis I revisited my movie dilemma and what did I do?

I purchased the BD bundle that comes with a DVD and an electronic download version of the title; I figured there was no way I could go wrong with that.  But I wonder how much longer I’ll be met with that option when purchasing video entertainment.  The fact that the studio bundled an electronic download can’t be a good sign for packaged media.  The day may soon come when I won’t even bother with the disc and just buy the electronic version.  But then I can’t wrap it up, put a red bow around it and put it under the tree.  

3D HDTV Update

Monday December 14, 2009 – Stewart Wolpin

Details about the timing, shape, pricing and availability of 3D HDTV continue to come into focus.

According to XpanD, a leading manufacturer of the active-shutter 3D glasses used in theaters and, the company hopes, in the home, the first 3D HDTVs will be coming in 3Q and 4Q next year. The first sets will likely be plasmas from Panasonic and LCD models from Sony, Vizio and possibly LG, with DLP projectors and LCD sets from Mitsubishi. Philips is expected to follow with its own 3D models in early 2011. All data and consumer grade DLP projectors equipped with Texas Instrument's DLP Link chip available in 2010 will be 3D capable.

Stunningly, XpanD's CEO, Maria Costeira, says the manufacturers expect to sell 100,000 3D HDTVs each in 2010, which sounds wildly optimistic to us.

Glasses Half Filled?

Two sets of glasses are likely to be bundled with each 3D HDTV; additional pairs will be priced between $75 and $150, depending on style and materials used – the technology and the lenses themselves will be the same. Consumers will be able to tote their own glasses to watch stereoscopic 3D movies or sporting events in 3D venues.

As we've previously noted, the glasses will be powered by rechargeable batteries with 250-hour viewing life spans. Users will get a single series of flashes when the glasses are down to four hours of power remaining, reducing the odds of them conking out in the middle of a game, movie or show. Glasses will have microUSB jacks for recharging, the XpanD is planning four-pair charging stations.

XpanD is currently in the design stage of consumer glasses, which will be sleeker and more stylish than the bulky near-goggles used in movie theaters. The company is designing models for particular constituencies, primarily gamers and kids. XpanD plans glasses in a variety of colors for gamers and fashion-forwards, and adorned with licensed characters to entice kids.

3D Broadcasting?

Most of the 3D broadcast action is happening outside the U.S., however. There are three hours of 3D broadcasts in Japan, for instance. FIFA will film up to 2 World Cup games this summer in South Africa for public venue showings; there are no plans to broadcast any of the matches live in 3D.

The U.K. has been the most active 3D market, at least in terms of content. Last year, the BBC broadcast an England vs. Scotland match to a theater in London; organizers of the London 2012 Olympics are planning to shoot some events in 3D, upcoming World Cup; and, Star is planning to launch the U.K.'s first 3D channel sometime next year, aimed initially at the pub market. Star already has shot several sports and entertainment shows in 3D.

All these 3D updates are fascinating, but one 3D pink-elephant-in-the-room question remains: will consumers don glasses to watch TV at home? XpanD says gamers and kids will be the Trojan horses for home TV glasses-wearing, but Costeira admits no one really knows how the whole glasses issue will shake out, probably the most interesting aspect of this entire topic.

U.S. IPTV: Flying High, But Challenges Await

Tuesday December 9, 2009 – Antonette Goroch

Though IPTV growth is has begun to slow in the markets of Europe and Asia, it’s only just heating up in North America. IPTV subscribers in the important U.S. market have climbed dramatically in the last two years, rising from just over 1 million in 2007 to a projected 5 million by year end 2009. While this growth is impressive, garnering attention from many of the largest worldwide IPTV suppliers once disinterested in the mature U.S. pay TV market, the questions of profitability and long term growth are still open ones.

Growth in U.S. IPTV has been driven almost exclusively by the two largest telcos, AT&T and Verizon. Both have seen strong gains all year, with AT&T reaching 1.8 million subscribers at the end of the third quarter, and Verizon’s FIOS TV reaching 2.7 million subscribers. Obtaining such gains in such a saturated market is no small accomplishment, but it surely has come at a high cost. Neither company has released figures on subscriber acquisition costs and few details on revenue per subscriber, both key metrics for long term success.

New subscriber deals typically include free set-top boxes for multiple TVs, free movie packages and no termination fees for disconnection. In many cases add to this the cost of truck rolls, since installation is complex and often includes line upgrade on the premises. Back-of-the-envelope calculations suggest subscriber acquisition costs could easily top $500 per sub, an almost unprecedented number in U.S. pay TV history. AT&T officials recently remarked that their IPTV subscribers would likely generate about $2 billion in bundled voice/data/TV revenues for 2009, but this translates to only $92 per subscriber per month for all three services. Assuming a generous 30% profit margin, it would take more than 18 months for these subscribers to generate enough revenue to justify that initial subscriber acquisition outlay—a tall order given there really is no long-term incentive to stay beyond convenience and service quality.

Clearly, all current efforts are on gaining as many subscribers as quickly as possible, as they should be if these services are to achieve viability. Very soon though, operators will have to shift their focus to what may be the more difficult task of retaining subscribers while reaching profitability.

Plasma HDTV: The Best Man Always Wins?

Monday November 30, 2009 – Stewart Wolpin

Sales of inferior consumer electronics formats often swamp superior all-things-being-equal alternatives, for reasons both mysterious and frustrating. For instance, Beta was clearly superior to VHS in side-by-side videocassette quality tests. Apple OS was and is clearly superior to Windows, yet Windows is the dominant format.

Plasma HDTV is the latest victim of this Bizarro World consumer preference. For a decade, Plasma has been clearly and objectively the superior HDTV technology; every recent LCD technological leap – 240 Hz, LED backlighting, for instance – are designed to pull LCD quality closer to plasma's purity.

Yet LCD TVs far outsell plasma displays. According to CEA, LCD HDTV sales in the U.S. have grown from 1.8 million sets to 26.8 million projected this year, and are expected to continue growing.

U.S. sales of plasma HDTVs, meanwhile, peaked in 2008 at 3.5 million sets, dropping slightly this year, and are expected to fall further in subsequent years.

Why has this happened? Misinformation dissemination on the retail sales floor is the most obvious culprit, according to J.D. Powers, which conducts regular surveys on this specific topic. In the first quarter this year, the survey company found 68.3 percent of salespeople wrong-headedly recommended LCD as the superior technology, a figure that's held pretty steady the last few years.

Continuing the Bizarro theme, in the second quarter the LCD recommendation rate fell to 59.4 percent – when LCD quality was improving – but plasma's recommendation rate held at around 30 percent.

What are salespeople saying to boost LCD purchases? LCD sets last longer. Plasma suffers from image burn. Plasma sets don't last as long. Plasma sets use more power. They reflect ambient light. Each of these claims is either simply wrong or misleading.

Panasonic and the Plasma Display Coalition are fighting back with an information/educational PR blitz touting plasma's advantages and dispelling the annoyingly persistent myths. But the A/V media has been consistent in its praise of plasma vs. LCD to no avail, and it's unlikely this latest PR effort will reach the ears of those hawking HDTVs at retail.

More importantly than why this has happened is what will happen now. Plasma's plunge has pushed plasma pioneer Pioneer out of the TV business, leaving only Panasonic, Samsung and LG selling plasma. As LCD technology improves, the differences between plasma and LCD diminish, which means consumers can concentrate not on quality but on brand choice, where LCD has an enormous advantage, and price, where LCD is gaining ground.

It won't be long before large screen skinny OLED displays enter the marketplace, sadly eroding what's left of the soon-to-be-history plasma HDTV business.

Where will they find $2.5 billion? In a tea cup?

Monday November 23, 2009 – Myra Moore

It’s officially over. The last U.S. DtA converter box coupon has expired and the world’s largest analog shut-off for high-power broadcasters program comes to a close. DTC’s latest estimate for converter boxes shipped into the market is 46.2 million. (From DTC’s converter box tracking service)

DTC estimates the converter box program generated more than $2.5 billion in retail revenue, which came in pretty handy in the midst of the great recession that had many consumers staying out of the stores. They may have not been high-margin sales, but manufacturers and retailers were plenty happy to move those boxes.

How will box suppliers and retailers replace that revenue? With the holiday shopping season officially beginning this week (arriving earlier every year like store Christmas decorations on the heels of Columbus Day), and consumers only unclenching their fists by a small measure, the number of items that can replace the converter box is limited. The stripped-down portable DVD player is one candidate. Many of these are retailing in the $50-$80 range.

Perhaps a more interesting category is the emergence of what I’ll call “tea cup” TVs – little bitty 7” and 9” screens complete with an ATSC tuner, and in some cases, a DVD player. Most TV-only models hover in the $100 range but as we get closer to the end of the holiday selling season, off-brand sets will probably be heavily discounted and perhaps star as loss leaders in the big-box stores.

Some suppliers are finding efficiencies by using existing form factors like digital picture frames to come up with a tea cup TV to carry around in your purse, take to the pediatrician’s waiting room, or in the back seat of the minivan (although over-the-air reception isn’t going to cut it while in motion. Better buy one with a DVD player for the back seat).

And DTC believes that a DtA converter box market will continue for a couple of years. We estimate that there will likely be another 2 million units shipped in the next few years. For one or possibly two vendors and a natural retailer (think Radio Shack) for such a product, the DtA converter box market will continue to live – quietly.

Source: Digital Tech Consulting

Internet Connected DTVs: Steadily Climbing

Monday November 16, 2009 – Shelby Cunningham

Internet connected Digital TVs are making their first big splash in the TV market and DTC is forecasting a rapidly growing market in the Americas, Europe and Asia-Pacific markets.

How these TVs will be used by consumers isn’t entirely clear but they are marketed as a way to pull in Internet video content independent of any gated TV services. The result is a competitive threat to gated TV service providers. What is also unclear is how consumer would manage an ever-increasing growing and fragmented line up of programs.

We assume that the middleware and software whizzes will eventually help consumers from drowning in the sea of unmoored programming and those consumers will want the option to access select video-centric sites on their connected TVs. To that end, DTC estimates that more than 6 million connected IDTVs will ship into these three markets in 2009, tripling to about 18 million units shipped in 2010.  Although IDTVs only make up about 4% of total TV shipments in these regions at the moment, they quickly rise in numbers to 33% of all shipments in 2012. 

Source: Digital Tech Consulting

This fast growth can be attributed to price range and competition amongst suppliers.  Connected DTVs are in the upper price range of TVs, which were not so popular during this economic downturn.  Competition amongst top suppliers will pull IDTVs down into the popular mid-range pricing which will increase shipments, and consumers will start snatching them off the shelves in greater numbers in 2010. 

Will Cisco’s Chinese Power Play Challenge Motorola’s Digital Cable Dominance?

Monday November 9, 2009 – Antonette Goroch

Motorola has dominated digital cable STB shipments for some time, with little challenge to its industry wide hegemony in terms of market share.  Cisco’s latest acquisition, however, might provide one of the most credible threats to this industry order in some time.  Cisco announced last week its intention to buy the STB holdings of Chinese manufacturer DVN Holdings, a leading player in the growing Chinese digital cable STB market.  This move will immediately strengthen Cisco’s position as the second largest cable STB supplier, and draws attention to intense competition in the STB industry, as well as the growing importance of the Chinese market.

Cisco bought its way into cable STBs back in 2005, acquiring the number two U.S. digital cable supplier, Scientific-Atlanta.  Since then, though, Cisco has lost market share—failing to gain traction in international markets that hold the industry’s growth prospects, while new competitors have entered the U.S., Scientific-Atlanta’s core market, posing a threat to existing shipments.

Source: Digital Tech Consulting

This latest acquisition could position Cisco well to strengthen its international presence though, and even challenge market leader Motorola in future years. In units alone, DVN won’t bring Cisco to Motorola’s size, since DVN shipped only about 2.5 million STBs in 2008.  Along with Cisco’s 6.5 million, this would bring the total to only 9 million, just over half of Motorola’s 15 million.  Still, China is the largest cable market in the world, with some 160 million subscribers (and growing), fewer than a third of which have upgraded to digital.  If Cisco’s financial backing can help DVN grow its market share to somewhere between 25%-30% of Chinese shipments, Cisco could be looking at an additional 6-7 million units shipped annually, well within range of Motorola.

E-book v. tablet PC: Who cares?

Monday November 2, 2009 – Stewart Wolpin

With the introductions of the Barnes & Noble Nook, the IREX Reader, the coming Plastic Logic Que proReader (TBA at CES in January) all enjoining the Amazon Kindle and the varying Sony Readers, e-book readers have entered the ballyhoo and hoopla phase of media and gadget geek mindshare.

And further ballyhoo and hoopla will accompany Apple's rumored early 2010 launch of its tablet PC and how it will affect the e-book market.

My response to all this e-book v. tablet PC ballyhoo and hoopla is folderol and balderdash.

E-readers are likely to be this year's version of personal navigation device (PND), which enjoyed its own short-lived ballyhoo and hoopla period.

Let's start with e-book reader sales. Forrester forecasts just 3 million e-book readers will be sold this year, 10 million next year.

A tidy little business to be sure, and certainly the ballyhoo and hoopla surrounding each new e-reader introduction helps spread the e-book gospel a bit further.

But just as consumers discovered they didn't need a standalone PND, they also will discover they don't need a separate $259 e-reader since they likely have one already: an iPhone/iPod Touch, an Android, a Palm Pré or a BlackBerry, or a laptop or netbook PC. All of these smartphones and varying portable PCs offer multiple e-reader apps.

In 2010, a variety of sources estimate that 328 million smartphones will be sold, and a large percentage of these will be the app-happy models mentioned previously.

And it is estimated that shipments of over 180 million portable PCs in 2010, with DTC estimating about 35 million of those will be netbooks.

Between smartphones and portable netbook PCs, we're talking a total of about 514 million e-reading capable devices in 2010, compared to maybe 10 million standalone e-readers. This is like marveling at the suddenly perfect kite-flying breeze – blithely ignoring the F5 tornado behind it.

Equally silly is the speculation surrounding Apple's long-rumored tablet PC. "Experts" have been predicting the domination of the tablet PC for nearly a decade, and they've never been right. Even with the emergence of multi-touch touchscreen technology mainstreamed by Apple and the iPhone, no one has yet made a case why the average technology customer would spend $600-$1000 on a tablet with an exposed 10-inch screen and no physical keyboard when only slightly less cool but far more functional netbooks are half that price.

In other words, technologists are vigorously debating whether a technology the market has shown it's not interested in (tablet PCs) will challenge a product that only a few well-heeled people want (e-book readers).

E-readers have definitely sparked a revolution in how people acquire and read books. But it will be already purchased multifunction devices – smartphones and portable PCs – that will serve more frequently as our e-reader.