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Digital Devices Duel for Supremacy

A whole decade ago, in a galaxy that now seems light years away, I was a neophyte tech reporter covering a TCI press conference.

TCI was the largest cable operator, and John Malone, its CEO, had just caused a major hubbub. With clear regulatory waters on tap from the anticipated 1996 Telecommunications Act, Malone and the cable guys were sitting atop billions in fat stock and a new fat pipe as well: hybrid fiber-coaxial, capable of true broadband 750 Mhz capacity.

In a speech he offered his dramatic dream--the 500-channel universe.

Malone had the elements of his strategy lined up, very much reflecting the engineering philosophy that dominated TCI and the other major operators: Lay that fat pipe into homes, hook it up to advanced digital set-top boxes, and content providers would prostrate themselves to get past the cable gatekeeper.

A few days later... another rival, another vision. This one from Bill Gates. Microsoft's chief architect may be singing a different tune now, but back then, Gates had just been blindsided and Microsoft was struggling with its Internet Explorer browser.

Unable or unwilling to see the logical evolution in mobility, storage and computing power of competing devices, Gates was fixated on preserving his Windows hegemony. Microsoft first tinkered with WebTV, an unqualified bust, but Gates would not waiver in boosting the PC as the digital home gatekeeper.

Fast forward 10 years and what happened? The Web, consolidation, tech bubble burst, cell phones, digital video recorders, HDTV, wireless, Napster, Google, eBay, Netflix, iPod... and so it goes.

Now the digital home domain teeters at another major tipping point.


Analysts have been handicapping the prospects of various central control devices for broadband media content. While the cable box and PC are still frontrunners, they have some expected, as well as unlikely, company.

Microsoft and other major PC players are still pushing the home media center concept of a central "black box" that's essentially a server with a wireless connection to devices that access it.

But Microsoft is also hedging its bets. Console gaming platforms like Xbox (see, Bill ain't all that dumb) merely need an attachment to add the ability to manage digital music and pictures, as well as software. It can already play DVDs.

Satellite operators, who have been adding subscribers at a faster clip than cable in recent months, have also been adding DVR-equipped set-top boxes; these have achieved a greater penetration percentage than their comparable cable competitors, and are also more likely than cable to be hooked up to HDTVs.

Speaking of HDTVs, HP has been bolstering its inventory of LCD screens that integrate digital media management.

And while it may sound batty, Motorola, Samsung and other cell phone manufacturers have been stepping up development of the ultimate handheld that can control thermostats and lighting or monitor video surveillance--in addition to handling e-mail, video, music or photo chores.

Samsung has gotten even more ambitious. Why limit yourself to a device when you can build a digital home from scratch?

In Korea the company has already sold more than 6,000 networked homes, and has partnered with two U.S. home builders to integrate networking gear, for up to $10,000 a pop.


While all these options sound wonderful, they also beget a plethora of problems. The boom in online game playing has already triggered worries that broadband networks must evolve to retain carrying capacity. To this headache add a possible spike in video downloading, particularly feature film swapping--the FCC recently ruled this is legal within a given home network account--and broadband can get narrow pretty fast.

There have been increasing consumer complaints as well about the lack of upload capacity for home broadband accounts. Downloading may be a snap, but users who actually want to send their home digital video or photo album hit snags.

Finally the usual furor over standards rages unabated. Next generation DVD, wireless, and digital rights management issues are all under heated dispute.

Nonetheless, analysts expect a quickening pace of mergers and alliances involving unlikely partners. Netflix and TiVo recently put the brakes on their proposed merger after running afoul of Hollywood, but Google, AOL, Sony, Yahoo! and others are all casting about for dance partners (and of course Apple's got to find something to put in its video iPod).

While many of these companies offer amazing technologies and experiences, consumers remain remarkably fickle and sensitive, making any forecast cloudy.

I may have been naive when I heard Malone and Gates so long ago, but I do remember feeling vague doubts about their grandiose schemes, and not just because of the stench of hubris that pervaded the conference halls. I hadn't become so starry-eyed by my newfound reporter's perch that I failed to notice the brewing anger of consumers maddened by Microsoft's inflexibility and cable operators' abysmal customer service.

Entrenched players in the digital home may have first mover advantages, but if they can't provide transparent services and care for customers, then no amount of technical wizardry will enchant.

You can reach Will at