DVD Insider #42 - Beta Hunger, Plugging the HighDef Holes, Mobile Grows
Microsoft once again proved that the most valuable word in the advertising world is "FREE!" With their usual aplomb they said they were finally going to release Longhorn. But since they have missed so many target dates for the product, they decided they better change the name to Vista. Since it was now a "new"/different product they would only be able to rollout a beta product. And that they would only let people who had no lives take a copy off MS's hands -- for free. Every tech editor/reviewer worth his/her salt has a copy, has spent hours rebooting it and writing about it. Every 3rd party software engineer has his/her copy. Every 12-15 year old geek has his/her copy. One copy each was downloaded in China, Russia and India. People are writing about and complaining about what it has, what it doesn't have, what it should have, and what it should eventually become. It is brilliant marketing! They tell you right up front it isn't very interesting and there's not much to it. But ask you to waste your time to tell them exactly what you'd like it to ultimately look like, feel like, act like and be. Like the infamous Apple Lemmings ad all of the technical dignitaries rush forward to prove that -- well to prove something. MS will take all of the valuable research and development work you provide, analyze and prioritize it at the Redmond campus, add the top 10, put out another beta for these folks to test, review and provide feedback on. After billions of column inches and tens of thousands of free techie testing and detailed analysis a final gold copy of Vista will be released in 2007? Hundreds of millions of licenses will be sold. Millions will be copied. We will declare that everything has to run on Vista. Because that's what "everyone" is using! At that time we'll have the same conversation we had a few weeks ago with the president of a PC User Group, "Does the software run on Win 98 because that's the OS a lot of our members use?" and "Can you burn CDs with it because many of our members use Adaptec CD Creator?" The industry is so far ahead of the mainstream we often forget that ordinary mortals are where the real profits lie. Don't think so? Let's look at the numbers: In the U.S. there are about 150 million households and worldwide what 8-10X? PC sales WW this year - about 199 million U.S. homes with broadband - '05 - 42.3 mil; '10 - 77.6 mil WW DVD recorder sales in '05 - 21 mil WW DVD drive sales in '05 - 63 mil HDTV sales WW - '05 - 15.5 mil; in '09 - 52 mil 85% of U.S. homes have at least one DVD player Cellphone sales WW in '05 - 750 mil U.S. installed base of audio players (iPod, etc) - '05 - 41.6 mil; '09 - 67.9 mil Panasonic reportedly has 60% of the plasma TV sales. Sony has 60% of the game system market. InterVideo's WinDVD has about 150 million users worldwide. There is an estimated 15 million video post protection seats (HW/SW system) in the world. The collective industries (PC, CE) are cherry picking. They sell the early adopters and the community influential. These in turn sell the risk-takers. Slowly and painfully the products move to the safe-buy folks. The industry's marketing folks follow the phone solicitation and spam/phishing rules of engagement - hit enough households or PC screens and you'll make enough hits to make it profitable. Then they focus on selling those same folks more neat "stuff" and show how quickly we're penetrating the market. Ultimately, they drop the price to the point where it becomes an impulse buy. Explain, inform, educate? Who has the time or the desire? In our "leave no child behind" climate we've found that this takes time and money. So, let's just skim the cream off the top and then move on to the next cup (generation of technology). High Def - Plugging All the Holes Let's use another example near and dear to our heart -- DVD. You read the results of the BD and HD "third party" consumer studies done among early adopters. Surprise, each won their respective study. But look deeper: Which do you like, Blu-ray or HD-DVD? 58% said Blu-ray. What is the difference between DVD+, DVD-, DVD-RW? 58% didn't have a clue. How do you program your VCR? Surprise, 58%. Which do you like, HD DVD or BD? 47% liked HD. If two separate incompatible formats are available which will you buy? 45% will sit this one out. But by the time Hollywood has its way with the standards and Congress you may not care if either technology emerges. What Neither Said. Content owners sit in both camps. Their participation has nothing to do with supporting one format or the other. What they don't want is another CSS fiasco. They are covering all of the bases before content is made available. They are working to ensure unauthorized copying, playback and distribution of HD content. They have and are working on copy protection schemes to cover every scenario! HD contents will include copy control information. Before the start of recording, copy control information within the digital broadcast signal is detected. If copying is allowed, (after content authentication interactivity occur as explained later) the contents and copy control information are encrypted and recorded on the disc. During playback, the recorded contents and copy control information will be decoded and output only from a device on which the contents protection technology is installed. High Def broadcast content will be protected with a 128-bit key that will change hundreds of times during playback. A unique ID code will be required or each disc (and disk) and each legal recorder/player will have a device key and RKB (renewable key block) the content protection technology will be implemented in the interface that will output playback content. TV sets will have to be equipped with a HDMI digital interface if you are going to enjoy content in the High Def format or the TV will downgrade the image to 480p. Recently perpendicular recording was announced for hard drives that will first be used in the very small (1-1.8-in) drives. Hollywood is now looking at how they can dictate, legislate or manage DRM (digital rights management) on the high-capacity drives that will be implemented in portable devices - AV players, multi-purpose cell phones, notebooks, huge capacity TV recorders. You know Hollywood is already holding "strategy" meetings at Seagate, Hitachi, Maxtor, WD and Toshiba. Can't wait to see the new toys at January's CES! With the recent Grokster win under it's belt, Hollywood, the RIAA (record folks) and IFPI (International Federation of Phonographic Industries) continue to press their litigious strategy which is having an effect at the manufacturer, portal, software and consumer level. The gun-to-the-head approach has corporate attention. More importantly, consumers are showing that they are interested in doing the right thing without the threat of being drug into court. Mobile Everything, Maybe Our household is like yours - "typical." We all are increasingly connected but online activities vary. It isn't all music downloads and stealing videos (Fig 1).  For us, the laptop is a business tool (fig 2) staying in touch. For us, the longer battery life the better. High-speed and WiFi access don't even ask.  My wife uses her phone/PDA tracks the stock market with a fervor and has been known to go online in a store to comparison shop. Our son goes on a daytrip with his MP3 player, BlackBerry and cellphone. Our daughter is really into IMing, uses the camera in her cellphone regularly It's typical use of technology in a technology hotspot. But hotspots aren't the ROW or the sale of PC and CE products would more closely parallel census numbers. Despite the hopes and fears of Hollywood, their content doesn't seem to have the wholesale appeal and/or danger of being sent and downloaded everywhere. The early adopters have played with video downloads and found them either less than exciting or disruptive to their multitasking. News, music, personal contact -- that's a whole different ballgame. While the RIAA may take credit for people increasing the volume of legal music downloads (it has tripled this year) but the fact is the new services have gotten better at their offerings and payment options. It's no wonder that Apple is rumored ready to launch its own cell/iPod and the mobile telecommunications firms are in heavy discussions with the content providers to get their piece of the music download pie (Fig 3). But storefronts are not in danger of going out of business because most of us will continue to buy CDs.  Video download is immensely popular in Japan, slightly popular in Europe and has been greeted with less than enthusiasm in the U.S. According to a recent In-Stat report only about 1/8th of mobile phone users are interested in buying mobile video content and 2/3rd weren't interested at all. Not that it is anything to sneeze at because customers will go from this year's estimated 1.1 million to 30 million in 2010. But that's still way short of the number of people who want to download music. Two areas the industry will have to address sooner rather than later are the growing interest in online gaming and gambling. Lots of honest and unscrupulous folks are ready to meet the demand but how do we manage age verification and monitor problem gamblers when we are having such a difficulty in controlling identity theft? If mobile device manufacturers, software producers and P2P providers don't solve it you can bet governments will! by the DVD Insider |
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