Ross Rubin, NPD Techworld: I’d like to distinguish between two trends that the digital transition brings us. One is quality of experience, which you’re speaking to in terms of the immersion, the home theater, the speakers and the large flat-panel or microdisplay TV. The other is the flexibility of media and moving it around, and I don’t think they’re always on the same parallel path.
One of the things I’ve been struck by at CES is that after many years of talking about the notion of a home network, we’re finally seeing vendors actually step up with products that are network-aware. Companies are starting to embrace power line standards for moving products across network, and we’ll see faster wireless standards this year for moving stuff around.
If you happen to be one of the more technical users and you’re willing to give this stuff a stab on your own, there will be more options out there. For most consumers it will be a second PC as a media center. We have to consider that these things are still being sold, as promulgated by Intel and Microsoft, as platforms with the flexibility of a PC. The customer looks at that and says, “OK, this is my second PC that I’m going to be putting in the living room.”
In terms of getting that stuff around the home, I think we’re seeing a greater commitment by the manufacturers to embrace this, but not necessarily moving in tandem with that quality experience, which for now remains primarily a local experience, that living room experience.
One of the issues that retailers face is bridging those two things, because today it’s pretty straightforward to bring home a DVD, pop it in and enjoy a high-quality experience once it’s all been set up. Throughout 2006 and beyond it’s going to start to become easier to get a photo or piece of music off your PC, but it’s not necessarily going to be easy to have your cake and eat it too in terms of bringing those two together. That’s where the opportunity lies.
Dan Schwab, D&H Distributing: The gaming consoles are one way into the home that’s already in the living room. You see what Microsoft and Intel are doing with Viiv and Media Center this year. That’s the first time you really start seeing the usage models. Heretofore not many of the retailers or tier-one OEMs have been driving that in their ads, with all of the functionality. I think you’re going to see that more and more this year, which is going to bubble up the consumer demand.
There’s not one format. Some people are going to have home servers. Some are going to be running it off their gaming consoles. I don’t think there really is one clear winner, which is very healthy for the industry. That’s why they look to a lot of the people in this room as experts for advice, just like on the DVD formats. If there is always a clear winner, over time things become commoditized and there are fewer opportunities for the entire marketplace.
Joe McGuire, Tweeter Home Entertainment Group: We’ve done a fair number of home installs through Media Center PC and partnered up with Microsoft to experiment with our store here in Las Vegas. What we learned is that Media Center PC in that context is not an over-the-counter retail product. We would tell you that in that context, Media Center PC is absolutely a high-end install product.
We found that it will operate just fine to manage content. But the way that it interconnects with the other devices in your house, and the amount of programming care and feeding that needs to happen to make it a robust installation, it is still hard to do. Even as far as that technology has come — not just for the server but for all of the disparate pieces that it needs to talk to and be aware of — it still requires frequent truck rolls back to the customer.
Many of us, particularly those who have a teenager living at home, own $1,000 of digital content stuck on a hard drive someplace. What people now want is a shared experience, and to be able to move the content around to where they are. The technology exists today to do all of that, but it’s expensive, and it’s hard to do it in a robust way so that your house works. Just like we all used to joke 10 years ago about the blue screen of death, nobody wants to reboot their house. The tolerance and patience for that simply doesn’t exist, and so the technology around how to make that happen still has a couple of cycles to go before it becomes widespread so that far more people can do it.
You can enjoy the ability to seamlessly move content around your house today, but you’re going to spend $40,000 or $50,000 in order to do it, which puts it into a realm where it’s out of the reach of most people.
Richard Glikes, HTSA: Give us a call.
Rubin: The competencies involved in those kinds of installations are different from what we’ve seen in the traditional custom install channel, where a lot of the solutions that are still available now are based on that analog world. Stringing analog S-video cables around the house is very reliable, but it isn’t going to necessarily be able to grow and expand and bring in these new kinds of services that you get as you start introducing a PC, like satellite radio, Internet protocol television and other new sources of content that are finding a variety of ways into the home.
McGuire: Some of the very first people that will use that technology are the installers. Our installers couldn’t be more excited that you can now reliably distribute audio over an 802.something network. They couldn’t be more excited that there is actually a lighting control that uses ZigBee. All of a sudden the number of miles that you’re running inside of somebody’s house is getting cut out by technology, which is actually the start of the trend that will take those jobs that now are $50,000 jobs and start to move them to $10,000, $15,000 and $20,000 jobs.
That still sounds like a tremendous amount of money, but you’re going to see the cost of having that benefit in your house get cut in half very quickly. The reality is that people will start to treat that like any other home renovation, like another decoration. If you’re going to redo a room, for anybody around the table who has done it, $20,000 is not an unusual amount to spend.
I think you’re going to see the install channel itself among the first to embrace some of these technologies because it will make their jobs easier. Being on your back in a crawlspace or doing the rafter dance because you’re trying to get wires across is hard work. If you can accomplish the same task and not have to do all of that, even though you’ll still have to do some of it, it will make your installation easier and give you a more robust solution for the customer.
Where now maybe you have to send a crew of two or three people to live with somebody for a week or two, you might be able to take that down to just several days because you’re using technology to make the job simpler.
Michael Vitelli, Best Buy: Best Buy today has almost two independent home service teams, one being the Geek Squad. The way I think of it is — if it’s wireless, it’s the Geek squad. If I’m cutting a hole and pulling wire, it’s the home installation team, which we decided to bring in-house over a year ago to make sure we were using only our own employees.
What’s interesting is that it’s becoming more common that it’s a pair that ends up going to the home as you step up the installation: the person who’s skilled in the aesthetics of doing some of the work and then someone who has that technical knowledge of networking. That’s a great team to send. For the basic network things, the Geek Squad can go out and do that, and for the simple home installations, i.e., “I want my plasma TV on the wall,” we have a person that is just doing that.
It is going to get increasingly more complex. It will be interesting over the next couple of years.
