DVD Insider - Phones, Photos, Videos, More

Posted by DVD Insider on Thursday, October 13, 2005 - 05:03 pm:

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DVD Insider #46

- Phones, Snapshots, Music
- Mobile Video
- A Little Bit of Storage


Once when we were young our parents took us to visit the Grand Canyon. We sat on the edge of the gorge and watched the sun dance across the etched landscape and the clouds overhead. We sat there for more than an hour listening to absolutely…nothing!

In today’s ADD world people would swear you were on drugs if you did that…sitting there that long, looking at and listening to nothing!

If we were to do it now we would have to have our digital camera and our camphone as well as our iPod as well as our PSP and notebook hoping there was a WiFi hotspot close at hand. That way you could take a good photo with the camera and grab some snaps with the camphone to send shots to people halfway across the country to show them the huge hole in the ground. The MP3 player and PSP are just for entertainment because how long can you listen to the wind or look at erosion?

Change is Constant
Multitasking and constantly being in touch is expected, accepted. Or as Peter Drucker said, “everyone has accepted by now that change is unavoidable. In a period of upheaval…change is the norm.” We are becoming so connected, some are beginning to wonder aloud if we are becoming less connected.

We can’t go too long without checking email. Our cell phone is on 24x7 (on vibrate in meetings/public events and off on plane trips). Music fills our office during the day while others in the office listen to Internet radio while working. Our CFO has a small window on her system open all the time monitoring the stock market.

Silence and solitude are more distracting than chatter and commotion.

It is no wonder that portable devices are in such high demand and are the technologies we expect to upgrade most frequently (Figure 1). According to InfoTrends, more than 740 million mobile phones will be sold worldwide this year and 50 percent will be camphones. By 2009 at least 85 percent of the mobile phones will have at least camera capabilities

Different But Equal
Kristy Holch, group director of InfoTrends, noted that household penetration of digital cameras still surpasses camphones in the U.S. where they have only recently taken hold (figure 2). She points out that there is a big difference in units sold, household penetration and usage. For example in our household everyone has upgraded to a camphone+. The kids use theirs for video clips which they arduously save to their notebooks or send to friends. The wife uses hers for remodeling ideas and impulse shots. We use ours for our IMing and …calls! But we share the digital camera when we want “good” photos.

We expect to use our cellphone for more but we’ll see what the next generation of units offer. And if you believe all of the announcements out of IBC last month, CTIA this month and even the InfoTrends Digital Imaging Conference; next year could be the year.

Just a “few” issues to be worked out but we’ll come back to that in a minute because while video is on the horizon, music is here and NOW!

The Music Play
Hardware, software, content owners and service providers are saying what Estelle Reiner (mother of Rob Reiner) said after watching Meg Ryan explain intimate relationships in When Harry Met Sally…“I’ll have what she’s having.”

According to a recent report there are more than 75 different MP3 players available…and more on the way. It simply proves how well Jobs has built the image for iPod and iTunes.

While Apple still has the biggest chunk of sales, everyone is bent on becoming their replacement in a rapidly growing market (Figure 3).

But buying download music shouldn’t be any more difficult than going to the grocery store. The problem is that the iTunes music Store, MSN Music, Napster, Real’s Music Store, Rhapsody, Sony Connect, Yahoo Music, Amazon and the rest have different protocols and don’t sell the same bundle of bits. They have to deal with the licensing organizations to have the right inventory and after all of that your store(s) may not have the artist, album or song you want.

Whether your “service” lets you buy it once or rent by the month, they each have their pros and cons. And the number of subscribers in both camps is almost the same. Then too there is always the manufacturers’ bigger-is-better sales proposition giving you more capacity in a smaller package.

What drives the hardware and service frenzy are the facts (gathered from IDC, Forrester, Informa, Gartner) that:
- 50% of dig music player owners have less than 100 songs on them
- 1000 songs are enough for 90% of music lovers
- 13 bln songs available on peer-to-peer nets
- 16% of online adults buy 99c tracks, 17% choose subscription
- 46.4 mln digital music players were sold in 2004, 132 mln will be sold in 2009
- iTunes sold its 570,000,000th digital song in Q3, ’05
- Apple sold over 21 mln iPods in Q3, ’05
- Brits bought 5.26 mln music tracks in Q1 ’05 and 2.5 mln in the last 2 months
- By 2007, 1/3 of music will be sold online
- Music subscription services will generate $890 mln in 2009
- Online music market will reach $1 bln this year, $4.4 bln in 2008

You would think the music industry would be excited about the download channel but it is still bent on suing its customers into submission. The RIAA renewed its music lawsuit efforts across the country and has racked up more than 14,000 suits since Sept 2003. The suits have dried up a number of online sources and have reduced traffic at others. Kaaza user numbers are down dramatically as are those of eDonkey.

Content Offerings
Despite the less than overwhelming acceptance of Apple’s Rokr musicphone, mobile convergence is coming and it will continue because everyone sees $$$$$.

Depending upon the carrier and the amount of money you want to spend monthly; you can already download ring tones (about $450 million in the US this year), play interactive games, use GPS services, conduct multimedia messaging and more. It’s easy to see why service providers can give you a camphone+ with your service contract because multimedia drives usage minutes and produces really big service bills (Figure 4) and it will only get bigger!

The potential is almost overwhelming and is certainly irresistible. We publicly discuss and plan for cellphone photo exchange, personal videos, movie services and even TV. In the Pacific Basin and Europe consumers already spend tens of millions of dollars on phone-based illicit downloads. Just remember what Bill Maher said and double it for your phoneporn…”TV sex channels don’t expand our horizons, don’t make us better people and don’t come in clearly enough.”

Yankee Group estimates that mobile phone "questionable content" will be a $196 million by 2009. The “service” sales will still be well shy of the projected $1.2 billion for ring tones…but it will ring someone’s chimes !!!

The range of mobile content and cellphone usage is amazing and is rapidly gaining momentum (Figure 5) around the globe. While the types of usage varies from area to area; music, multimedia images, music and games lead the types of content accessed. These are followed by news, sport clips, movie previews/video clips and full feature films.

Best of all the service providers offer flexible payment programs – deduct from pre-pay credits, SMS or call to premium rate number, mobile WAP site, add to monthly bill, web site transaction, subscription, credit card payment.

Mobile TV
Whether it’s IBC, CTIA, CEATEC and we’re certain this year’s CES; the second big thing (right behind home entertainment systems/networks) will be mobile TV. It sounds cool. It sounds exciting. It sounds like profits. It sounds like another technical hassle.

While countries like Korea, Japan and areas of Europe have deployed or are testing it already technobabel reigns. There’s DMB (Digital Multimedia Broadcast), DVB-H (Digital Video Broadcast-Handheld) and Qualcomm’s MediaFLO.

We have gone from “why would anyone watch TV on their cellphone?” to everyone getting their horses in shape for the race.

If you think home networking is a tough puzzle to solve you should see the IPTV Rubik’s cube – frequency availability, network planning, infrastructure cost to handset antenna design, availability of interoperable TV handsets, country-by-country backroom politics and SIGs. Then there are also the DRM issues as well as content licensing and residuals.

Hey we’re talking serious bucks here!

Storing It All
“We aren’t in an information age, we are in an entertainment age,” Tony Robbins.

Folks who have MP3 players or digital cameras have it made. A GB of flash memory can store 250 songs or 1000 4Mpixel photos. If they have one of the new PMPs (portable media players) they can store 15 hours of MPEG-4 or 4.8 hours of DVD video.

For these types of units flash will probably be sufficient. They are extremely rugged, are shock resistant and require very little power. In addition, the capacity is doubling annually, prices are dropping 40 percent every year and they already give low capacity 0.85-inch HDs a serious price/performance run for their money. (Figure 6)

But we aren’t talking ordinary people here. We’re talking the always-on, always-connected society! InfoTrend’s Kristy Holch sees the camera/camcorder market growing steadily as video podcasting takes off while the camphone will quickly evolve into a gotta have infotainment tool that is an individual’s constant companion. The morphed phone will take its place next to the laptop as an always with you work, communications, entertainment device (Figure 7)

The drive industry has never shaken it’s Al Shugart, Finis Connor heritage…they eat their young!!!

The 14-inch drives begot the 12-inch begot the 8-inch begot the 5.25-inch begot the 3.5-inch begot 2.5-inch begot the 1.8-inch begot the 1-inch begot the 0.85-inch. With each new member of the family they got faster, higher in capacity, tougher (not invulnerable) and cheaper.

While chips are eating into the 0.85-inch product applications, the drive manufacturers are far from worried about their livelihood. What they are doing is redefining where hard drives fit (Figure 8).

People are grabbing and packratting everything – videos, photos, music, emails, web data, ??? -- and that spells big storage that right now only the hard drive can provide. Much to the delight of drive manufacturers like Seagate, Maxtor, WD, Hitachi and Toshiba the future looks bright…not hugely profitable but bright.

These firms develop new, higher capacity HDs in each of the form factor categories even before the latest has hit the streets. Just when they looked like they were running out of writing space they found a new mantra…perpendicular recording.

They scour the backstreets of all of the usual target cities pushing mobile everything. While the 3.5-inch drives is the commodity market (Figure 9), the 2.5-inch and sub-2.5 markets will be their future. Especially with the new intelligent shock protection that kicks in when the device falls just a few inches.

To paraphrase Field of Dreams…”If you build it, they will fill it.”

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