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The January 31, 2006 Issue Provided by System Dynamics Inc.
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CES: The Road To Digital Nirvana

Our verdict from this year's Consumer Electronics Show (CES): we found no revolutionary products. The good news: we saw solid progress in many of the critical areas we highlighted from previous shows, including whole home networking, accommodating video as well as data and voice; and getting entertainment content both around the home and on-the-go.

Here's a summary of some things that grabbed our attention:

  • Whole home entertainment at the applications level--where are we? Over the past few years we have tracked Mediabolic, Digital Deck and DLNA as ways of approaching whole home entertainment. We revisit some companies we've met with before and note the emergence of a new (to consumers) product category called "networked storage."
  • Portable media players and content is now an expanding category. We highlight the new Vongo service from Starz Media Group and some portable media players, both with and without Microsoft's Portable Media Center (PMC) software.
  • Our thoughts on Viiv and Vista: Intel introduced Viiv, the name they have given the "entertainment computer" they have talked about for the last two years. Meanwhile, Microsoft showed the latest version of Vista, the successor to Windows XP. How do they relate and what will they mean?
  • The keynote talk by Larry Page of Google contained a mix of future vision, reprise of achievements, new announcements and a huge dose of entertainment, courtesy of Robin Williams.
  • 802.11n back on track--After some months of confusion, the next generation of Wi-Fi seems headed toward a draft and early products. We cover that in the following article.
  • The End-Game for Whole Home Networking: After tracking powerline, wireless, telephone and coax home networks for many years, we're on the verge of seeing some that really can move HDTV reliably around the home (at least at the physical layer). We've summarized our observations in the last article.

Whole Home Entertainment: Good Things Take Time

We've been told that making a fine wine takes time, good ingredients and skill. The same must be true in creating solutions for whole home entertainment. Many companies are trying to create an easy way for people to interact with and control all the entertainment devices in their home, enabling the devices to be both networked and interoperable. For a really complete solution, we'd like to include legacy home entertainment devices like VCRs--not just the new digital devices.

Just over two years ago, we wrote about several companies and initiatives focused on various aspects of this problem, including DHWG (subsequently renamed DLNA), Digital Deck and Mediabolic. At this year's CES we checked their progress and here's some of what we found.

Digital Deck

Digital Deck, which we visited back in 2003, has hired some new management and has updated their initial approach so that they now align closely with Microsoft and Windows XP. We met with Ted Malone, VP Corporate Strategy and Marketing and Joe Harris, VP Marketing Communications to learn more about what they are doing.

Digital Deck demo at CES --> Click for larger pictureTheir system consists of user-installable software for a Windows XP machine, which provides central storage and management for all home media. The other parts of the system are the "Media Connector" which provides access and control for all the devices and media connected to the home media network and the "Media Connector Remote."

The system uses UPnP for auto-discovery and merges all the video content--from cable or satellite boxes, VCRs and DVD players, and PCs--into one unified guide. The Windows XP machine acts as a PVR for any video source, and any video content is visible on any connected PC.

From the description and demonstration, the system sounds even better than it did two years ago, and we're looking forward to trying it out in our own home. Ted Malone provided great support when he was at TiVo, so we're sure that once systems are available, we'll have the opportunity to put the pieces through their paces. Hopefully, it will prove to be worth waiting for!

Digital Network Living Alliance

The Digital Network Living Alliance (DNLA) had their own TechZone at this year's CES. The efforts of this organization are geared to providing consumers with interoperability between devices over the home network, regardless of the vendor, so any content can be used with any electronic device, anywhere in the home. This was the first year that DLNA showed actual certified products at CES.

One of these DLNA certified products was the Mediabolic M1 Reference Server. Mediabolic provides end-to-end software solutions for connected entertainment products, enabling them to share and play back content from other consumer devices, PCs, and the Internet. Their technologies can be embedded in products like televisions, set-top boxes, and network-attached storage devices. Mediabolic announced at CES that its media server software will be integrated into a future release of the Intel Viiv technology platform so that content on an Intel Viiv-based PC can be shared seamlessly with other PCs and devices throughout the home.

Buffalo TeraStations --> Click for larger pictureOne place where we saw Mediabolic server software in action was in Buffalo's new TeraStation Terabyte Home Server, a DLNA-compatible network-attached storage (NAS) device. The NAS category, which is relatively new to the consumer market, had a prominent place at CES. The need for the category is based on the observation that consumers are accumulating personal media files at an incredible pace, and want these music, photo, and video files to be accessible via their data network for browsing and play-back, anywhere in the home--even if their PC is turned off. The TeraStation Home Server includes media server software from Mediabolic that provides centralized media management and distribution to multiple PCs and connected entertainment products on the home network.

It certainly is a brave new world in which consumers have RAID-based file sharing solutions inexpensively available in their homes!

( www.digitaldeck.com ) ( www.dlna.org ) ( www.mediabolic.com ) ( www.melcoinc.com/english )


Portable Content and Video Media Players

One of our major take-aways from last year's CES was the emergence of products offering another dimension of freedom for the user. This category offers the video user "what you want, where you want it". In an article on CES 2005 we termed it "video on the go"--"Vidi-Go" for short--and wrote: "We believe it is at the early stages of something that will be as big as PVRs and VOD." A year later, the category is thriving.

We were amused to note that the name of one of the new offerings is also derived from "video on the go". The VONGO offering, from major content aggregator Starz Entertainment Group, is a subscription-based, video download service for broadband subscribers in the US. The service works on any broadband or wireless-enabled device that supports Microsoft's Windows Media Player 10 and Portable Media Center (PMC). In addition to an unlimited download subscription service at $9.99 per month, Vongo offers a la carte pay per view movies for $3.99 per film. The subscriber can associate three authorized devices--including personal computers, laptops and portable media players--with the service.

Vongo solves the content protection issue by using Windows Media 10 DRM. Subscription movies can be transferred to devices running Microsoft's PMC software for viewing and can be played on compatible TVs by using the "video out" capabilities on PMC devices.

A less-than-ideal aspect of this announcement is that only a limited set of portable devices support the PMC technology. Those coming soon, which will have version 2 of PMC, are the Toshiba Gigabeat S Series, the LG PM70 and the Tatung V620. The big name missing from that list is clearly the Apple iPod. The stumbling block to the massive take-off of this portable video media business remains the DRM compatibility issue.

The Archos AV 500 was a cool video pllayer --> Click for larger pictureOne very cool device which is not Vongo-compatible is the Archos AV 500 Pocket Digital Video Recorder. One could forgive a typical consumer for not understanding that, since Archos is compatible with Microsoft Windows Media Player 10 and PlaysForSure. The Archos device supports multiple file formats, comes with either a 30 or 100 GB hard drive, a 4" 16:9 screen and weighs in at 9 ounces (30 GB model). Each year we seem to gravitate to the Archos display to see whatever appealing new toys Archos is introducing.

We're delighted to see Starz step up to the challenge of legal video downloads and look forward to a time when the industry will (hopefully) solve the resulting DRM compatibility issues.

( www.vongo.com ) ( www.starz.com ) ( www.toshiba.com ) ( www.lge.com ) ( www.tatung.com ) ( www.apple.com ) ( www.archos.com )


Vista, Viiv and Video

We've been following all the buzz about Vista and Viiv and took a closer look at both during CES. Although sometimes spoken of together--and sometimes used together--they are distinct initiatives which appear to be based on somewhat different visions of the digital home.

Intel's Viiv

Viiv is Intel's new brand name for the "living-room PC" it has been planning for the past few years.

Viiv is not just a desktop PC repackaged for the living room. Viiv is designed for the home entertainment experience of tomorrow, with built-in support for high-definition television and 7.1 multi-channel audio. It also requires a very advanced hardware platform that has more in common with a server than a desktop PC, including dual-core 64-bit processor and RAID storage.

Bryan Peevler of Intel explaining Viiv --> Click for larger pictureAt CES, Intel's booth featured a wide variety of Viiv products and promised many would be on the market this year. Those from traditional PC makers mostly looked like PCs, while those from traditional consumer electronics makers looked like home entertainment components. Intel's emphasis in describing Viiv seemed to be on how their technology provides "a highly integrated Intel platform designed for digital entertainment."

At the show, Intel announced a long list of companies--including NBC Universal, DIRECTV, AOL, Turner Broadcasting--that will provide content for the Viiv platform.

Microsoft's Vista

Vista is Microsoft's new brand name for the next generation of Windows, previously code-named Longhorn, which is expected to replace Windows XP later in 2006. More than half a million people have been testing beta releases of Vista, and Microsoft featured the latest beta release at CES. Vista will feature faster searches for data, music, photos and video content; it will have an updated media player for more easily playing back digital content from any of the home's PCs. In addition it adds support for HD video and "CableCard" technology.

We have long been watching Media Center Edition (MCE), the advanced version of Windows XP designed to make a PC part of home entertainment. Media Center PCs really came into their own this year, selling 5.5 million in 2005. Vista will include the newest version of MCE, and Microsoft is expected to continue pricing MCE as a low-cost add-on so PC manufacturers will include it in a large percentage of consumer PCs. New features in MCE will encourage software developers to make more use of video in their applications.

Different Positioning or Divergent Architectural Views?

With Viiv and Vista, Intel and Microsoft seem to be expressing somewhat divergent views on the role of home networking. For Microsoft, the Media Center product line is divided between Media Center PCs (MCPCs) located anywhere in the house and Media Center Extenders (MCXs) located next to and connected to TV sets and audio systems. A home network interconnects the MCPCs and the MCXs. Microsoft's new Xbox 360 is not only a high-powered game machine, it's also a high-power MCX with full support for high-definition video and 7.1 audio.

With Viiv, Intel seems to be promoting a more "all in one" approach. Viiv incorporates all of the MCPC and MCX functions in a single box, and also requires a much more high-powered processor, chip set and storage than Microsoft requires in a MCPC. While Vista and the next version of MCE can be retrofitted to existing PCs, Viiv will require a completely new system.

As long-time believers in distributed architectures and home networking, we're puzzled by Intel's approach. The living room doesn't seem like the ideal place for all this computing horsepower. Many home entertainment centers don't have available space for these new systems. The advanced processors are likely to run hot and require cooling fans -- hardly appropriate while watching TV.

There are obviously strong commercial interests at work here. Microsoft would like to generate revenue from licensing Vista/MCE and Windows CE/MCX on as many separate devices as possible. Intel would love to obsolete all existing home computers so it can sell millions of new chips.

Intel has been promoting home networking for many years. All of its promotion on "the digital home" features devices connected by networks. It is a leading player in DLNA, which is making good progress in working out standardized ways media servers and players can work with each other. It has taken leadership positions in both Wi-Fi and HomePlug, as alternative forms of "no new wires" technologies.

So we wonder why Intel has put its marketing power behind an approach which moves everything to the living room, rather than distributing it around the house. Is it just to sell more chips, or is there something deeper here?


Keynote Focus: Larry Page of Google

For the last three years, we've stood in the press line in order to hear Bill Gates' annual CES talk. We found that it generally set the tone for many of the products Microsoft and others would work toward delivering in the next few years. This year we shifted our "standing in line" time to Google's Larry Page. Perhaps it was a symbolic acknowledgment of what a potent force Google has become on the consumer scene.

Google's Larry Page speaking at CES --> Click for larger picturePage, wearing a white lab coat to symbolize Google's experimentation and invention, provided a tantalizing mix of future vision, reprise of achievements, new announcements and a huge dose of entertainment.

In the future vision area, several of Page's topics sounded broad enough that they struck this listener as akin to "the search for world peace" -- but perhaps putting a man on the moon once sounded about as grandiose. One of his hot buttons focused on the maze of different connection technologies--including USB, Wi-Fi, Bluetooth--and how different consumer devices require different connections. He also talked about electrical power and the problem of power adapter clutter. "What we really need are adapters .. standards for security, discovery, peering and forwarding to the internet .. we also needs standards for protocols ,.. audio, video, displays..." Page also talked about the $100 computer project with MIT to make the internet accessible in places it can't currently be afforded.

Google may be a bit "full of itself" but it is hard not to take very seriously an organization which describes its mission as "organizing the world's information and making it universally accessible and usable" and seems to be on its way to doing that.

Google Maps on a mobile phone --> Click for larger pictureAs Page summarized a litany of Google introductions over the past year, it sounded like quite a substantial list. It included Google Talk, Google Earth, Google Local Mobile and several Wi-Fi projects for understanding free services provided through advertiser support.

In the new announcements arena, Page talked about:

  • An expansion of Google Video, a download service that allows anybody to sell videos, as contrasted with the earlier version which searched and uploaded it.
  • Google video store, a pay-per-download repository of video programming, including a partnership with CBS for content like CBS TV Classics, NBA games and Charlie Rose shows. It will also accommodate consumer-provided video, where the consumer (content producer) decides how much they want to charge for the material. It uses the new Google Video Player, which allows the user to watch only the parts of a program they want.
  • Google Pack, which bundles some previously-available Google tools (like Google Earth, Google Desktop, Picasa, Google Toolbar) and adds others like Mozilla Firefox with Google Toolbar and Ad-Aware SE Personal. The software includes Google Updater, which grabs the latest updates and can install everything automatically.

Page explained that many of the new initiatives come out of Google's policy called "20 Percent Time", which encourages employee experimentation by letting them work on their own projects about one day a week.

Robin Williams at CES --> Click for larger pictureThe entertainment part of the talk started when comedian Robin Williams came onstage in the role of a "Google Brain". Williams provided his usual wit in giving straight-faced and tremendously funny answers to search queries from Page. The audience (including this observer) ate it up.

For our money, waiting in line for the Google talk was the right place to be this year.

( www.google.com )