Thursday, May 17, 2007

Top Trends in the Last Year

Parks Associates is currently compiling the key takeways from the 2007 CONNECTIONS conference. One interesting compilation of information came from our own Stuart Sikes, as he opened the conference proceedings on Tuesday, May 1. In introducing our first keynote from Ray Sokola (Motorola), Stuart provided a summary (from the Parks Associates' analyst team) of the top events and trends we all noted from the last 12 months:
  • Broadband penetration in the U.S. will surpass 50% of residences around mid-2007. On a global basis, statistics indicate that we are approaching the 300 million household mark.
  • The two large U.S. telcos – AT&T and Verizon – officially entered the IPTV space in 2006, accounting for more than 200,000 subscribers in their first full year of availability. On a global basis, Europe surpassed Asia in terms of overall subscribers, and we’re seeing much more activity in Europe in terms of cross-border competition among different telecommunications providers. Parks Associates’ year-end 2006 estimate for the total number of IPTV subscribers worldwide sat north of four million.
  • Entertainment content disruption accelerated, as MySpace was bought by News Corp. and YouTube was sold to Google – leading to the “NewTube.”
  • The launch of all the three new game consoles (Microsoft Xbox 360, Sony PlayStation3, and the Nintendo Wii) was significant. The Xbox 360 and its associated content services are now positioned – according to Microsoft – as second only behind Apple for video downloads.
  • Agreement on the underlying protocols that make up the next Wi-Fi standard – 802.11n – was reached. We’re already seeing high volume shipments of Draft-N products, and wireless is aiming at the entertainment and multimedia space.
  • Apple announced a month ago that they had sold 100 million iPods (plus two billion music downloads as of year-end 2006), a testament to consumers’ desire for more accessible and easy-to-use media enjoyment services and products. In addition, the company released AppleTV, which may be a significant boost to the growth of multimedia networks, where PCs and CE seamlessly interoperate to enhance entertainment applications.
  • Microsoft officially launched the Vista OS, which places a new level of media creation and consumption capabilities in front of end-users.
  • Virtual economies are booming, with World of Warcraft claiming nine million subs and Second Life at more than five million users. The online gaming community is becoming more entwined with unique social and commerce applications.
  • Digital rights management issues continue to ebb and flow. High-end media server company Kaleidescape was found to be within compliance of the DVD Copy Control Association's license to the Content Scramble System, the method used to encrypt video and audio data on DVDs. Speculation is that this may open the door to “managed copy,” where the studios agree that consumers can take their owned DVDs and make a copy on a server for safekeeping. On another positive front, the head of the Motion Picture Association of America (MPAA) – Dan Glickman – recently affirmed the studios’ blessing on “authorized copies of the content they purchase.” Further, Steve Jobs at Apple recently discussed the abolition of rights management for digital music. After all, he argues, fewer than 2 billion songs were sold under DRM with digital music services (such as iTunes); at the same time, the music industry sold 20 billion unprotected songs on CDs.
  • At the same time, legal challenges remain in the DRM space. Cablevision was recently blocked by a federal judge from continuing its RS-DVR service, which basically put time-shifting capabilities in the head-end. We view Europe and Asia as much more significant markets for “nDVR” applications. And XM Satellite is being sued by music publishers for allowing subscribers to copy broadcasts to MP3 players.
  • Home control systems companies continued consolidation with Nortek and Legrand acquiring LiteTouch & Gefen and Vantage and US Tec, respectively. BestBuy released its Home System in a Box, called ConnectedLife.Home. BT and Bell Canada marked the entry of telcos into the home security space.
  • Retailers, service providers, and third-party entities are discovering there are significant business opportunites in digital home tech and customer support services. Revenues from Best Buy’s Geek Squad services (including product installation, configuration, troubleshooting, and repair) alone exceed $1 billion in U.S. We’ve also seen other major big box retailers either launch or rebrand their own digital home technology service offerings. Circuit City launched its firedogSM service in September 2006, and OfficeMax® just launched ctrlcenter™ for remote tech support in April 2007. Both CompUSA and Staples rebranded their tech support services, to TechPro and EasyTech, respectively.
This information was previously posted on the Parks Associates' Blog by Kurt Scherf, Vice President, Parks Associates.

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