Out of the Box

Two of the most acute editorial minds in the business used this final week before the introduction of the iPad to weigh in on its impact. Lance Ulanoff says that the iPad, while successful, won’t be a game changer whereas Mike Elgan characterizes the iPad as a paradigm shift and the dawn of the era of “MPG” (Multitouch, Physics, Gestures) computing.

in fact, the perspectives are not irreconcilable. Lance discusses the iPad as a product standing on its own merits whereas Mike discusses it more as a symbol of what the future of computing could hold. There is a certain approachability and natural quality about “MPG” that I believe helped the iPhone broaden the smartphone market even before apps came on the scene. However, that doesn’t mean that the difference is necessarily enough to force a new device class into consumers’ hands, particularly when there is significant and well-understood quasi-competition such as netbooks..

Indeed, Mike characterizes Microsoft’s Surface table as an “MPG” device, but price size and other factors have prevented Surface from cracking the mass market or even the consumer market. That said, I believe Microsoft is working on ways to make at least part of Surface available on smaller LCDs

I found it an interesting coincidence that, in a recent Laptop Magazine piece, fellow analysts Tim Bajarin, Roger Kay, and Michael Gartenberg – all long-time Apple watchers – agreed with me that first year estimates for the iPad are in the five million unit range. As I noted in that article, it’s an auspicious start, but doesn’t necessarily mean that the iPad will displace anything or becoming so much of a need-to-have that it becomes firmly established as the elusive “fourth screen.”

At Showstoppers this week, I had the opportunity to catch up with Zagg, makers of the Invisible Shield and a number of other neat accessories that the company as showing at the event.. One question I had was how a company that focused on inexpensive mobile accessories such as screen protectors got interested in making a high-end home AV multimedia tour de force such as the mighty Zaggbox.

Zagg’s nonobvious answer is that, in selling so many iPhone accessories, the company amassed a database of digital media enthusiasts who cried out for a solution like the Zaggbox, which is expected to sell for somewhere between $800 to $1,000. In any case, before going out on such a limb, the company plans to float the product and get feedback on it at the EHX trade show, where  it may come face-to-face with its first customers, custom installers.

How niche can you get? The iPhone, which will surely attract more than 100,000 applications by the end of next year, can assume the functionality of a slew of devices – MP3 players, portable navigation devices, digital cameras and camcorders, language translators, electronic dictionaries, remote controls, stopwatches, voice recorders, flashlights and more.

Nonetheless, two products came to light this week that specialize in snippets of functionality – information appliances of sorts to use the mid-’90s terminology. The $199 pictured Red Light Camera Detector, available exclusively from New York specialty retailer  Hammacher ("We were here before The Sharper Image was a blurry idea.") Schlemmer uses a database of red light cameras and GPS to alert drivers when they are approaching such a monitored intersection.

While I can’t remember the last Hammacher product to attract so much attention online, much of it has been negative, surrounding its duplication of functionality and requirement of manual updating. Indeed, this seems more like a $99 or less product, particularly given the plummeting prices of portable navigation devices that cold easily replicate its functionality. Still, many ignore or don’t realize, though, that Hammacher and Brookstone customers are driven more by novelty and design and usually aren’t concerned about purchase optimization.

The second and decidedly plainer looking device is the WikiReader, a gadget from open source wireless developers OpenMoko. Yet, the WikiReader is not wireless. It too relies on regular updates that are delivered via microSD card. Sure, it’s functionality is also replicated by a number of iPhone applications or even any handset with a decent Web browser. Still, the notion of a reasonable $99 encyclopedia that can be toted nearly everywhere has a certain downmarket appeal. While it is no substitute for a real Internet connection, it would be nice to see it patch a few open spaces in the digital divide.

Market potential aside, both of these products would be greatly added by some level of free wireless Internet access; neither would consume much bandwidth. The infrequency with which they’d need to be updated might even be an opportunity to revisit the old paging networks. (Don’t laugh. Remember the BlackBerry started there.) But  I see their ilk as more likely candidates for that elusive white-space network. One thing’s for sure. We’ve not seen the last of service-specific devices.

I agree with almost all the points that Rick Clancy makes as he places his bet that Blu-ray discs will be around for far greater than five years. That said, I actually think few in the industry would disagree with that. The question I’ve been asked more often is how long will Blu-ray grow, especially compared to the decade or so of growth that DVD saw, and how deep will its penetration reach, at least in the U.S..

Compared to the near monopoly that DVD had as a format for selling movies, Blu-ray will face more competition, including stronger legacy competition in the DVD. However, barring any breakthroughs such as DECE changing the nature of downloads, Blu-ray will continue to offer a superior convenience factor for movie buying.. (As for rentals, digital distribution may make inroads there more quickly.) Therefore, I think that Blu-ray will grow for more than the next five years, and see it starting to peter out in about seven or eight years.

Recent Apple patents showing a flip-design iPhone and a DVR that might be able to exchange guide data with an iPhone (as well as give talk show hosts really bad haircuts) remind us that, while Apple has shared technology (operating systems, video and graphics support, iTunes support) among its entrants in each of the “three-screen” products — Mac, iPhone/iPod, and Apple TV, there really hasn’t been that much active collaboration among them at this point outside of being able to start a TV show or movie on one device and finish it on another (a cool feature, to be sure).

It’s fine for Apple to move slowly here. Consumers don’t buy “synergy”, they buy products. But just as I’ve credited the Apple store with providing an environment for letting consumers experience the iPod and expose the iPhone (particularly during the holiday season), Apple’s retail presence could make some of these difficult home networking concepts more palatable. The living room is definitely the weakest link and while the DVR market has been an extremely tough not to crack, Apple TV remains Apple’s weakest link in the chain.

Could Toshiba become the most progressive consumer electronics company when it comes to digital distribution?

As I and others have noted, HD DVD was never the primary factor in slowing the adoption of Blu-ray. According to NPD’s research, satisfaction with existing DVD players was the most cited reason among those who had no plans to purchase a high-definition disc player when we surveyed consumers last year. Therefore, the end of HD DVD has not meant a free pass for Blu-ray.

In an interview with the WSJ, Toshiba’s Atsutoshi Nishida points out the value of a diversified corporate portfolio, noting that HD DVD was but one of 45 strategic product groups within the electronics conglomerate. He also divulges plans to stay or become relevant in the twin forces squeezing Blu-ray from the past (upconverting DVDs) and the future (digital downloads) to continue to compete indirectly with Blu-ray. Nishida points to wired technologies that are becoming wireless (a reference to HDMI?).

Of course, Toshiba’s PC strength to which Nishida refers is in notebooks, and most of the connectivity scenarios he discusses have been focused on stationery PCs (although that is changing). In any case, it seems clear that Toshiba will have more occasion to work closely with its HD DVD promotion partner Microsoft. The conspiracy theorists may have been wrong, but the format war has brought at least one major electronics company to look beyond the disc.

In speaking with several reporters about the victory, I noted NPD’s research last year that found satisfaction with existing DVD players to be a more common reason for abstaining from the high-definition disc market than the format war with HD-DVD. As digital media gadfly and PR veteran par excellence Andy Marken notes, “The difference is now the BD folks won’t be able to blame Toshiba for holding back the success of high def disc sales.”

Blu-ray was the second must-win AV standards war after LCD vs. plasma that the company has won in the past few years by leveraging selective specification superiority — curious for the consumer electronics company that is so frequently identified with being a lifestyle brand. Blu-ray’s main technical difference vs. HD-DVD was that it offered 50 GB per disc as opposed to 30 GB.

Sony and the BDA didn’t make the capacity argument directly to consumers as much to the trade media, particularly before studio support became more relevant. However, Sony was the first company to proselytize 1080p or “full HD” to consumers, which has helped to give large-screen LCD the upper hand.

Further momentum behind BD can only help promote 1080p TVs (not that they seem to need much help). It will also be very interesting to see how much the standardization of Blu-ray now helps sell the PS3 after the PS3 was kind enough to do the same for Blu-ray since 2006. Sony’s content holdings may not have been enough to overcome the challenges of UMD as a movie format, but the virtually guaranteed support of Blu-ray by Sony Pictures was a validation of Sony’s integration of hardware and content. Of course, the equal loyalty of Disney and Fox was critical as well.

If you were wondering why Steve Jobs sneaked in some enhancements to the iPhone’s location capabilities in advance of the February SDK unveiling, tonight may have provided a clue. In advance of its official release at GSMA Mobile World Congress (and the first shipments of the Dash Express), Garmin unveiled its Nuviphone, which combines communication, navigation and some basic MP3 playback features — Industrial design inspiration courtesy you-know-who. Wilson Rothman has captured my pointing out the name’s similarity to a certain popular interactive voice response system.

Garmin isn’t releasing specifications or a features list given that the device won’t ship until the third quarter. On the data front, though, the Nuviphone will support at least POP and IMAP email and Web browsing. It also takes digital stills an video and — here’s the slick part — geotags them so you can send a photo to another Nuviphone, after which that recipient can be directed to where the photo was taken. The Nuviphone has a 3.5″ screen but a wider aspect ratio than the iPhone.

As for other comparisons, it’s not a smartphone in that it does not have an open OS. Garmin says that developing an SDK is technically possible but not something the company is pursuing. (I think it should.) And I also don’t expect the Internet or media features to set a new bar.

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This week’s Switched On, which should be posted later today, discusses HP’s discontinuation of its Digital Entertainment Center living room form factor PCs and Microsoft’s struggles to advance PC form factors. As far as I know, CEPro broke the story. Those who follow the convergence or PC retail space should read Julie Jacobson’s excellent series of articles about HP’s experience with the DEC in the custom installer channel. Part II looks at HP’s experience with the custom install channel earlier in the article, but the third part of the article, which I believe was posted today, delves deeper into why HP is leaning toward its MediaSmart TVs.

I akso had to chuckle as Julie found this way to sidestep an “off the record” comment:

Although HP spokesperson Pat Kinley did not want me to quote her as saying that the HP product and interface is simpler to use than the MCE solution, PC World did quote her: “We have other products on the market now and future products that I can’t talk about that perform essentially the same function in a way that’s easier for the consumer [to use].”

The article concludes with HP trying to position more as competition for AppleTV vs. Media Center Extenders, but you can’t compete with one without competing against the other, as Microsoft has been driving home with its comparisons between the Xbox 360 and AppleTV. In any case, building well-implemented DMR capabilities into the TV is a good differentiator for now, and most consumers would likely prefer no external box to even a small one like AppleTV, but with Pioneer, Sharp and surely others to follow, how long will it be before this falls too far below the consumer purchase criteria list to matter?

I’m delighted to see that my college friend, fellow former Cornell Daily Sun columnist, author and economics commentator Daniel Gross is. (I’ve been, too.) Dan runs some numbers in Slate and determines that the market for functional wristwear is on the decline. Indeed, the humble watch is often overlooked when thinking about competition among portable multifunction gadgets, especially cell phones, that have more glamorous cannibalistic features such as playing digital music and games, taking video and even GPS capabilities.

Dan focuses attention on Fossil, in particular its now somewhat ironically named Relic brand of basic timepieces. Dan provides a strong case that — unlike with digital cameras, iPods or DS Lites – cell phones and their tethered digital rivals may indeed be cleaning the clock of watches.

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