John Gapper: Competition in the digital living room
By John Gapper
Sunday, January 08, 2006
Posted: 02:45 PM EST (19:45 London)
Take a peek into your living room. It is getting crowded in there. Bill Gates of Microsoft sits on a sofa beside Paul Otellini of Intel (NASDAQ:INTC) . Sir Howard Stringer of Sony wrestles in the corner with Atsutoshi Nishida of Toshiba. Terry Semel of Yahoo walks in with Larry Page of Google (NASDAQ:GOOG) . Steve Jobs of Apple (NASDAQ:AAPL) could arrive at any moment.
So it seemed at the International Consumer Electronics Show in Las Vegas last week. Convergence of media, software and technology has been predicted for so long that the term became old-hat before there was much sign of the reality. The flurry of deals between friends and jostling among rivals last week suggested that maybe, just maybe, convergence is finally coming to fruition.
Take Mr Gates's presentation at the Las Vegas show. The biggest thing he had to unveil was ostensibly Windows Vista, the long-delayed new version of its Windows operating system. But that was a yawn. It looked pretty but several things that he trumpeted as Vista's best new features had a distinctly familiar look.
Still, never underestimate Microsoft's determination to plug away at something until it gets it right. In this case, the product is Windows Media Centre, the version of its operating system for television. This is now sleeker and more elegant: an entertainment hub and hard-disk recorder that allows people to watch television programmes and store and display photos and music.
Televisions and computers have led separate lives but they are coming together. Millions of people are connecting to the internet over broadband, allowing them to download music and films. The cathode-ray television set is on the way out, increasingly displaced by flat-panel monitors. Many households have home networks that should allow them to move content around among devices, given the right software. And it is becoming common to watch television programmes captured on hard-disk recorders, which are small computers.
Companies can see the potential this creates and they want their slice of it. Indeed, several aspire to the biggest slice: becoming the "platform" that all electronic devices work through and on which films, television shows, photos and songs are kept. Having witnessed Apple's dominance in digital music, they are rushing to gain a similar status in home entertainment.The tabular content relating to this article is not available to view. Apologies in advance for the inconvenience caused.
The loudest battle is the stand-off between two competing high-definition video disc standards: Sony's brainchild Blu-Ray and HD-DVD, which is being promoted by Toshiba (and backed by Microsoft, among others). For Sony, Blu-Ray is a chance to re-establish its technology leadership after a rough patch.
HD-DVD had the edge last week. Toshiba will launch a player in March for $499, while Samsung's Blu-Ray equivalent will cost double that. Sony still has an ace up its sleeve – it will build Blu-Ray players into its new Playstation 3 games console – and Blu-Ray discs have more capacity. But it will be hard to get consumers to buy something with a strange name unless the price is right.
Meanwhile, Google and Yahoo tussled with Microsoft over how data and entertainment are stored and displayed. Microsoft is building the capacity to arrange and catalogue photos, for example, into Vista and Media Centre. Yahoo's Go service, which it unveiled last week, holds all material centrally, allowing members to view it on computers, mobile phones and television.
Google's video downloading service will allow people to purchase videos, including television shows from CBS, at up to $1.99 each. They will be replayed on Google's own software and covered by a copy-protection program its engineers have written, rather than Microsoft's version. To rub it in, Google has included Firefox in the pack of free software that it launched in Las Vegas.
But none of this ejects Microsoft from the living room. Whichever alliance wins the high-definition DVD fight, its player could be connected to a network with Microsoft's Media Centre at its heart. Yahoo Go uses Media Centre to get images on to television and even Google Video software runs on Windows.
So the biggest issue for Microsoft, as always, is the need to repel any challenge to Windows. That means its trickiest fight could be not with Sony, Yahoo or Google but with Apple. If Apple managed to extend its digital music dominance into the living room by creating a more popular entertainment hub than Media Centre, that would really hurt.
Mr Jobs does not visit the Las Vegas show, preferring to keep his powder dry for Apple's Macworld gathering in San Francisco this week, so he remains hard to predict. But, if he harbours such ambitions, he may get help not from Microsoft's rivals but from one of its long-standing technology partners: Intel.
In the past, the roles in the "Wintel" alliance were well defined. Intel made the chips that powered computers and Microsoft contributed the operating software. But Intel, which has already reached a deal to supply chips for Apple's Macintosh computers, now has bigger ambitions under Mr Otellini. It wants not only to supply chips but to create its own technology standards.
That is the thinking behind Viiv, the home entertainment platform that it launched last week. So far, Intel has "played nice" with Microsoft, as one Intel executive says. The companies jointly developed software for Viiv and the launch version works with Media Centre and uses Microsoft copy-protection software.
But Viiv could equally form the backbone of an Apple entertainment hub, a possibility that Intel does not rule out. There were hints of this nascent tension last week. Mr Gates joked about mispronouncing Viiv (which rhymes with "five") and Mr Otellini made his own jab when there was a glitch in Yahoo's presentation about Go. "Oops, I think it's a Windows problem," he said.
Spoken in jest, but it illustrates the competitive reality of software, media and consumer electronics convergence. With so many companies trying to crowd into the living room, it is hardly surprising that there are divisions. You can already see the fights among rivals. Just wait for the tussles between friends.This column now appears on Mondays |
