Thursday, June 21, 2007

Opening Comments

Summary information from Day 2: CONNECTIONS™ May 2007, hosted in Santa Clara, CA.

Opening Comments
Presented by: Kurt Scherf, Vice President and Principal Analyst, Parks Associates

Summary of this session:
Kurt Scherf, vice president and principal analyst for Parks Associates, began Day 2 with an overview of Parks Associates’ latest research across a number of digital lifestyles product and service categories. Scherf reminded the audience of a key point made at the CONNECTIONS™ 2006 conference – that industry consolidation in broadband and access spaces was indicative of the importance of facilities-based service providers in deploying many of tomorrow’s consumer technology offerings. Further, this consolidation is evidence that service providers and their equipment vendors are working to establish seamless end-to-end links between their services and their customers in order to provide a rich array of bundled services offerings and to further strengthen the bond between carrier and customer.

He provided examples of the major consolidation in the past year, just in the broadband and access areas. As examples, he noted Motorola’s acquisition of Broadbus, Cisco’s purchase of WebEx and Ashley Laurent, Ericsson buying Tandberg and Redback, the Alcatel-Lucent merger, and NDS acquiring Jungo.

With this major consolidation in place, a key focus for the next year will be the deployment of actual consumer products and services across the digital lifestyles value chain, including such categories as Data & Voice, Multimedia/Entertainment, Home & Lifestyle Management, and Value-added Services.

Already carriers in the broadband and television services areas are expanding their portfolios of offerings. Competition between and among providers is a key driver for companies desiring to strengthen their services. Residential broadband penetration will exceed 50% of U.S. households this year, and broadband and television service providers will focus on three key tenets as they market their services – Cost, Convenience, and Convergence.

A new area for growth will certainly be in the “Web 2.0” or social networking/media spaces, Scherf said. Parks Associates conducted a significant study in 2006 – Digital Media Habits – that explored consumers and their habits as they relate to self-created and social media. There are definite areas of interest and potential, particularly in how younger consumers are expressing themselves through Web sites and via content sharing. However, there are many questions about how (or if at all) social and community networking will be a significant revenue-generating business.

Home networking has reached new heights, Scherf said, and there is a renewed focus on multimedia and entertainment networks, particularly now that Apple has entered the fray with its own media receiver. Also significant is the involvement of the service provider community in pushing not only data and voice networking platforms but also entertainment (multiroom DVR) solutions. 2007 and 2008 will be significant years for the reintroduction of media adapter devices and for a renewed focus on consumer storage that places as much emphasis on content sharing as it does on safe and secure backup and safekeeping of digital media. In total, Parks Associates expects more than 900 million devices to be deployed in home networks by the end of 2011.

Home and lifestyle management trends indicate some interesting growth opportunities. Remote management solutions – including Web cameras and two-way access – will continue to see growth in the next few years, and the service provider community will be key to deploying more of these to consumers. This sector will also benefit from the current popularity of advanced entertainment solutions because both high-end home theater and multiroom audio could provide a good framework for higher growth of home controls. Health management is also an interesting area of growth. Parks Associates is projecting a $2.1 billion market for enhanced remote and home healthcare applications under four main areas – Acute Care Monitoring, Wellness Monitoring, Geriatric Monitoring, and E-health Services.

Finally, Parks Associates is continuing to watch the development of digital home support and service offerings. This sector, with the promise of reducing the complexity of consumer technologies such as home networking, broadband, and digital devices, abounds with opportunities. Parks Associates has outlined nine major areas where different players could enter and succeed in enhanced customer support – everything from enhanced security and automated fixes to professional technical support and the role of “digital home advisor” services.

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