November 23, 2005 4:00 AM PST

Tech firms focus on TV

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Ever since Edward R. Murrow and Ed Sullivan were doing their thing in black and white, the living room television has been the centerpiece of home entertainment.

Then, somewhere along the way, a lot of folks in the high-tech industry got it into their heads that families should gather around the PC to watch their favorite TV programs.

Guess what? The tube still rules. So it's little surprise that the tech industry, led in a most unlikely way by computer networking giant Cisco Systems, is looking to the TV to finally, once and for all, get out of the home office and into the living room.

On Nov. 18, Cisco announced the $7 billion acquisition of video set-top box maker Scientific-Atlanta. Microsoft has a deep home entertainment strategy built around the TV. And Apple Computer watchers speculate that Steve Jobs & Co. are preparing a new TV-centric product. What exactly that product is, or whether it even really exists, is still a mystery.

"For a lot of companies like Cisco and Microsoft, growth opportunities in their traditional markets may be diminishing," said Joe Laszlo, an analyst with Jupiter Research. "But home entertainment is one of the few places left that will grow in the future. And the TV is a centerpiece of that."

For a lot of companies like Cisco and Microsoft, growth opportunities in their traditional markets may be diminishing.
--Joe Laszlo,
analyst

Focusing on the TV as the cornerstone to a home entertainment strategy seems like a no-brainer for technology companies, considering nearly 99 percent of all households in America have a TV set, and most often more than one. On average, American households spend between three and seven hours per day watching television.

By comparison, 55 percent of American homes had a Web-connected PC in 2003, according to U.S. Census data. That's more than triple 1997's total, but still a long way from TV's home penetration.

"TV watching is one of the few activities that most people spend time doing," said Albert Lin, an analyst with American Technologies Research. "It has tremendous mass market appeal."

But the TV market is gearing up for big change as more and more shows and movies are digitized, and as new competitors enter the market. Telephone companies like Verizon Communications and AT&T (formerly SBC Communications), for example, are building new networks to deliver TV service.

Internet companies such as America Online, Google and Yahoo are also getting into the video market. On Tuesday, AOL announced it is funding a start-up called Brightcove, which helps programmers syndicate shows across the Web and collect money from it. Content providers like CBS are also seeking out alternative distribution channels for their shows. CBS recently said it was talking to both Google and Yahoo about helping it distribute some of its TV shows, such as episodes from the "CSI" franchise, across the Internet. Google and Yahoo have both been dabbling in video.

"It's gotten so cheap to deliver video over a network using IP (Internet protocol) that anyone can do it," Lin said. "The biggest expense is getting the rights to the content."

TV is changing in other ways, too. Viewers are using digital video recording services, such as TiVo, that allow people to record and store TV shows and movies and watch them at a later time. Thanks to cable operators, which are now offering similar digital video recorder services, the trend is hitting the mainstream.

But once people have one DVR, they'll want it for every room there's a TV--or so the gadget-happy theory goes. This means that devices are needed to network or shuttle video around the house to different TVs in different rooms.

Tech gets in the act
That's where executives at companies like Cisco, Microsoft and Apple believe they can play a role. Cisco and Microsoft are helping the phone companies and cable operators build networks that can deliver more interactive TV over an Internet protocol network. They're also in the home, helping users view what they can already get on their PCs on their TVs.

"There used to be talk that all entertainment, including video, would converge onto the PC," said Laszlo. "But I think now we're seeing that clearly isn't happening. It's all about bridging the gap between your PC and the TV, so that you can watch TV shows and movies streamed over the Internet on your TV."

11 comments

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Networking within the home
until they take this into account, they will fail on QoS side of
delivery of content. it would be interesting to see one of these
companies partner with a structured wiring company to provide
a true end-to-end solution within the home.
Posted by Adam Lenio (11 comments )
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public or private networks
The internet allows for a true global audience, so it has to be seen how these players work around the network issues
Posted by alansegal (17 comments )
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Mac Mini and TV?
What's the connection between the Mac Mini and TV? I've seen it mentioned before, but it does not seem like an entertainment center device at all. I bought one, just for the novelty, and since I hadn't used a Mac in years.

It does not have integrated component video output, dolby digital output, video input of any kind, or a TV tuner. How could anyone think this is Apple's entry into the media center or DVR market?

Apple definitely knows how to make simple, integrated products. As a TV-to-PC device, the Mac Mini does not qualify.
Posted by just_some_guy (231 comments )
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Simple...
The connection is not one built by Apple, but rather the DIY crowd. A lot of people have turned their Mac minis into DVRs. They have also been turned into car computers and other things. It's all because the Mac mini is small enough and quiet enough to put almost anywhere!
Posted by ddesy (4336 comments )
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Time-to-Market is key.
A company that can provide the home networking gear, the cable box and the DVR technology could prove a powerful combination.

It is not necessary that one company be able to develop a single product that could provide such functionality. Time-to-market is key. All that is required is that a consumer device be created that can access the gear that currently is available (and installed).

Cisco, Microsoft and Apple are the large, Johnny-come-lately, players in the Convergence marketplace. They are struggling to catch-up with the leaner-and-meaner companies that have already introduced consumer electronics products that can do the things mentioned in this article: shuttling video around an in-home network, connecting to portable media players, watching TV and movies that are streamed over the Internet to your TV. (See <a class="jive-link-external" href="http://mybrightbox.com/ppdeagle" target="_newWindow">http://mybrightbox.com/ppdeagle</a> for example)

Joe Laszlo, the Jupiter Research analyst cited in this article, has it absolutely correct: edu-tainment content on the Internet is bypassing the PC and heading straight to the TV in the living room. See <a class="jive-link-external" href="http://my-video-blog.com" target="_newWindow">http://my-video-blog.com</a> for further details.
Posted by ppdeagle (12 comments )
Reply Link Flag
Interesting
That Brightbox appears to be an interesting solution, but it is odd that they try to push some pyramid-scheme marketing. They also have a horrible website, if you just want the product specs/features.

I think that another poster got it right when he said a company needs to provide an easy to use end-to-end solution. Home networking is a big part of that. Wireless networks are still less than optimal, with questionable reception and bandwidth that may be inadequate for HD video. People do want to be able to move videos and photos from their computers to their TVs.

Media Center PCs are an interesting solution, since you put the convergence device right in the living room (less need for the local network). The biggest problem is with tuners. The PC needs tuners with direct support for digital cable and satellite - Microsoft has reached a deal with cable companies already. Also, HDTV support is shoddy, but improving.
Posted by just_some_guy (231 comments )
Link Flag
sounds good, bout time
The convergence is starting
I got tv on the desk top now, those getting together and havin kids make sense

Feel me?
Posted by IKENY (8 comments )
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Message has been deleted.
Posted by IKENY (8 comments )
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Scientific-Atlanta
I can only hope that Cisco's purchase of Scientific-Atlanta will mean
that there is hope for their DVR.

Currently, using it is one of the worst experiences I have ever had.
They clearly have never hired a Usability expert to help them design
their user experience for their set-top boxes and DVRs.

It was so painful to use that I was forced to return it.
Posted by m.meister (278 comments )
Reply Link Flag
Focusing on satellite tv
Focusing on the satellite TV (Directv, Dishnetwork, expressvu and starchoice <a class="jive-link-external" href="http://www.highspeedsat.com/starchoice-tv.htm" target="_newWindow">http://www.highspeedsat.com/starchoice-tv.htm</a> as the cornerstone to a home entertainment strategy seems like a no-brainer for technology companies, considering nearly 99 percent of all households in America have a TV set, and most often more than one. On average, American households spend between three and seven hours per day watching television.
Posted by jordan357 (19 comments )
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