The networked living room

Battles rage for the hearts and minds (and money) of home network users.

Battle 1: Pipe providers

The broadband pipe acts as the first battlefield in the fight between the telecoms and cable companies. Cable operators have spent billions of dollars upgrading their one-way analog networks to two-way digital networks. This lets cable companies provide more channels today, but tomorrow improved networks could translate into new services.

Also: Content is king

Innovations such as IP Television (IPTV) aim to change the nature of video broadcasting. Originally seen as a way for telcos to deliver video, IPTV could benefit the cable operators, enabling them to abandon their multicasting scheme in favor of video on demand. The freed-up bandwidth could better support bandwidth-intensive applications, such as high-definition TV, while also serving as the platform for interactive services.

“For the consumer, the ability to pick exactly the content they want – from a vast array of content, not just 50 channels – when they want it simply makes tremendous sense,” says Cliff Hirsch, publisher of Telecom Trends, an insider newsletter that tracks start-ups and emerging trends. “The question is when will IPTV content be available in a way that satisfies mass-market consumers’ demand for ease-of-use and quality?”

Cable companies also have their eyes on another service: voice. VoIP has found its way into cable bundles, offering consumers all-you-can-use telephone service for much less than traditional costs. But the telcos are firing back; they’re adding video to service packages by teaming with satellite providers. This might be a quick fix, however, as telcos build out fiber-optic networks to have voice, video and data delivered over the same pipe.

For example, SBC Communications rounds out its service bundle with a DISH Networks satellite connection. But the company is in the process of sinking $4 billion to $6 billion into a new fiber network that delivers video directly to the home. Dubbed Project Lightspeed , SBC began trials earlier this year and intend to string fiber to 18 million homes within two or three years.

Battle 2: Consumer electronics defends its turf

Consumer electronics vendors are entrenched. The landscape of the average living room includes names such as Sony, Panasonic and Samsung, not Microsoft, Dell or HP. In the late 1990s, Microsoft tried to enter the living room with WebTV. That effort went nowhere, and today nobody is terribly excited about using their TV to Web surf. Instead, vendors are talking up the idea of sharing photos, music and video from device to device.

Consumer electronics vendors are finding ways to enable content sharing without inviting the PC crowd into the living room. Flash memory card slots are being added to TVs. Ethernet connections are showing up on TVs, DVD players and game consoles. And the industry is developing High-Definition Multimedia Interface (HDMI) as a way to trade video and audio among an array of devices.

While the consumer electronics vendors are well positioned, they have been outflanked in several areas. Sony, for example, was once the king of the personal music player with its Walkman, but Apple beat Sony in the digital music player space with its iPod. While Sony’s PlayStation 2 outsells the Microsoft Xbox, the Redmond company is first to the market with its next-generation device, the Xbox 360. The Xbox 360 can play DVDs, CDs, stream music and link to a PC to stream multimedia content throughout the home.

PC vendors have dreamed about dominating the living room for some time, and it’s easy to see why. The Consumer Electronics Association says consumer electronics shipments reached $113.5 billion in 2004 and will climb to $125.7 billion this year. Dell, Gateway and HP all sell TVs. Intel says its Viiv processors will power the digital living-room revolution. Despite these efforts, most analysts doubt the PC crowd will displace traditional consumer electronics vendors any time soon.

During his keynote speech at the Consumer Electronics Show last January, Bill Gates touted the PC as the center of the digital living room . Several glitches and crashes later, the audience was not convinced.

“Consumers won’t tolerate an unstable environment for TV,” says Van Baker, Gartner’s vice president of research, media industry. He says Microsoft’s Windows Media Center platform, an operating system intended to facilitate consumer electronics-PC convergence, has yet to make significant market gains. Still, more entertainment content is stored on PCs, including photos, music and videos. PCs serve as a gateway to storage and have the flexibility and multifunction features that made convergence possible in the first place. Even if the PC doesn’t win as a home entertainment hub, Microsoft has placed other bets, by partnering with other combatants. For example, Microsoft is delivering set-top boxes to Comcast, working with Motorola on IPTV, teaming with Viacom to develop content, and acquiring Teleo to boost its VoIP portfolio.

Profiting from the war

Without an in-home network, there isn’t a battle to speak of. But leveraging a home network for entertainment purposes has been slowed by competing standards.

“It’s important to realize that there won’t be one standard type of network,” says Paul Alfieri, senior manager of communications for Motorola. “HomePlug, Ultrawideband, Wi-Fi, Bluetooth and Ethernet all have their strong points. That said, there actually is one standard for networking, and that’s IP. With everything becoming digitized, IP allows content to be shared from network to network.”

Having several networks in your home seems to scream out for a hub or gateway to make sense of it all. But Vamsi Sistla disagrees. The director of broadband, digital home and digital media research at ABI says, “the networking vendors are followers, not leaders. Networking is getting pushed down to the reference design level, and you’ll see networking embedded into a number of devices soon.”

But others argue the case for a network gateway.

“A media gateway does more than provide networking. Set-top boxes and gateways serve as the central hub for security, parental controls and access to content from outside of the home,” says Arthur Cinader, director of product management and marketing for media products for 2Wire, a provider of set-top boxes and media gateways.

Victory or quagmire?

Who is best positioned in the battle for the network living room? Among the analysts and industry insiders we talked to, there was no clear consensus. We’re still early in this fight, and we’re even seeing some unusual partnerships taking place, such as those Microsoft has been forging with pipe providers (who were once seen competitors).

“The PC and [consumer electronics] worlds are converging,” Sistla says. “And we’re even seeing consolidation among pipe providers and content providers.”

In other words, combatants quickly shift sides, and the battle lines are constantly changing. What does that mean for you, the IT expert with an eye on linking everything? It probably means adopting a wait-and-see attitude.

“If you really know what you’re doing, the networked living room is feasible, but it’s not easy. There are too many installation steps, no troubleshooting tools and few management tools,” Baker says.

However, one promising development is that several companies, such as Pure Networks and Single Click Systems, are starting to release new management tools that shield consumers from the technical complexities of the networked living room. “It’s a step in the right direction,” Baker says, “but we still have a long way to go.”

Vance is  a freelance writer living in Mesilla, N.M. He can be reached at jeff@sandstormmedia.net.