The development of the digital home: a new world at its beginning
The world of concepts concerning the shape of the future home (there is a thin layer of the population for whom it is already the existing home...) has not yet matured enough, and the giants of equipment, solutions, software and communication, are fighting for a market segment whose scope is not yet clear, and each wants to be the center of the future home. The key word is control. Whoever controls the digital house will also make money from it. This is the accepted assumption in the world, which has not yet been fully proven. But, in partial sections of the digital house there are already quite a few successes. We described this in the previous series of articles, especially in regards to the home entertainment services. Digital television and the abundance of devices and game consoles, when accompanied by the phenomenon of the transition from analog telephony to digital telephony, which integrates with the computer into a single system with local links, which has not yet received its final form, gives rise to the need to understand where we are going. John Medwood, co-director of Israel Seed Partners (a venture capital fund), told the D&A conference (Dolev Abramowitz) on the topic of digital entertainment and the digital home revolution, that he feels he is currently living in a world fulfilling his childhood dreams. According to him, it is difficult to predict the future, and especially with regard to the standards of the digital home, but it is possible to learn from what happened in the past. "There used to be a fight in the world between VHS and Betamax, and precisely the less good technology - VHD won" according to John Medwood. "This gives us a picture of the situation that what will win is what will be easy to use and cheap. Israel is a little behind the rest of the world in the matter of a digital home. The world has long been familiar with issues such as: digital radio, digital television, especially flat-screen TVs, PVR devices (Personal Video Recorders, The convergence is already here, and it has begun to take off." According to John Medwood, there are many business opportunities for start-up companies to enter this field. There are extensive merger and acquisition processes, and there are several new players in the neighborhood, such as Philips, NDS, Microsoft, Apple, Cisco, Nokia, Motorola, Samsung, HP, Intel, IBM, and others, who each want to take over the field in a different way, and lead it towards the solutions which they developed.
Who will lead and according to what standard?
The big question being asked: who will rule the digital house. Several analysts are trying to answer this question, the main ones of which we will present here, but it is clear that there is no agreement even among the analysts on the expected development of this market.
Kobi Gershoni, research director, D&A: "The content providers, the infrastructure providers, the equipment providers, the service providers, the software providers, are all candidates to take over the digital home. We at D&A have developed a three-dimensional digital map, which maps all the players in the value chain of the digital home , end to end. It starts with the content creation, content collection, content transmission, end to end distribution, content collection At home, its integration and distribution to end devices, end-to-end applications, and end-to-end equipment viewed by the home user. There are companies that are at certain points in the value chain, and there are companies that have come in to provide solutions for the entire value chain, from end to end. They usually do this by acquiring successful niche companies, that operate in the various areas of the digital home value chain. Intel and NDS are prominent examples of such companies Some quite interesting acquisitions, the most prominent of which concerns Israel, and this is the acquisition of the OPlus company from Yokneam, which deals in digital screens, mainly in HDTV (High Definition TeleVision) screens. We will see this direction develop for other giant companies that will look to expand their capabilities to provide end-to-end solutions."
According to Kurt Scharf, vice president and chief analyst, Park Associates (a research firm specializing in the field of the digital home), the digital home did not start today. This is a phenomenon whose roots lie in the 70s of the last century. "The big change today, that the big providers like the communication providers, are entering this field", according to Kurt Scharf. According to him, the home customers began to create an increasing global demand for the field of home networks. It's a new market born in the wake of broadband, even though home networks have been around for a long time. "Nowadays customers are no longer afraid of a network, and they know how to install an Ethernet network or a wireless WLAN network in their home" Kurt describes the change. "In a normal home that already has several computers, several televisions, creating a single network is a need that develops rapidly as a result of this situation. There are still many setbacks to reach this goal. Creating home apps is not an easy task. We must offer customers solutions that are very easy to implement. Very easy and simple to operate, with a very basic understanding. This is a basic condition in this field. The field of security and maintaining contents also requires a solution. Without it, the market will not take off." The field of games (game consoles) is successful and is taking off in the home field, because according to Kurt Scharf, game manufacturers maintain the rules of ease and security. Hence, without solutions to these problems, the market will remain without market leaders in the field of digital home entertainment, and there is strong competition in different directions. According to him, we are only in the initial stage of the development of the market, and there are at least two more stages ahead of us that we have not yet reached, where it is possible to get solutions in which everything can be shared on the network, with the second stage including the integration of drives and printers. The third stage is content sharing, and all this in combination with voice sharing (mainly VoIP and video) on the home network. It is necessary to solve the quality problems - QoS, management and control of the contents, protection of the contents (for example: DRM or OMA standards), integration of contents from applications that already exist at home such as game consoles, and so on. The RG (Residential Gateway) - "the home gateway", is a key tool for performing the integration and merger between all the components of the network. It is necessary first of all to unite networks at home. Every digital home has several networks: the telephony network, the cable network, an Ethernet network and a wireless network. This is step one. At the same time, you need to combine contents and unite them on one pipe, so that they all move according to the needs of the user at home. According to Kurt Scharf, this is really not easy, and not a short process. The major media providers want to control this process and provide content on-demand through them, so that they will be both the infrastructure providers and the content providers. Therefore, a struggle began between the cable service providers and the old Bezeq providers and between them and the satellite providers. New players have also entered this market, and there are very interesting phenomena in this area, with mutual effects between companies, mergers and acquisitions, and collaborations that were unthinkable before. In his opinion, there will be a transition from an RG that provides a single service to an RG that provides multiple services. According to Park Associates, in 2005 there will be 1.1 million multi-service RG devices and 2.6 million single RG units sold worldwide. Regarding the future, many companies that enter the field present proprietary solutions, which creates difficulty in uniformity and mutual compatibility, and certainly without cooperation between the manufacturers and between the devices from different manufacturers, it will not succeed. According to the researchers, such cooperation will happen, as it happened in the entire IT world. Today, computers know how to easily talk to each other, and it doesn't matter who made the computer and what runs on it. This is expected to happen in the field of the digital home. There will be a PVR / DVR (Digital Video Recorder)-like combination in all the rooms of the house, and a data warehouse will be needed to store the local content. There will be many models of selling content to the end customer. The search of the content producers is how to reach an overall agreement on the content protection method - RDM. The introduction of high resolution technologies: HD as for HDTV televisions, will exacerbate the need to store content in high volumes, and this will require an increase in databases both for the content providers and for the home user. Today the market is divided between digital services on the home computer, which is 24% of the market in the US, 13% of the market there is in mobile devices such as iPode, and the DVR is in low percentages, but is gaining momentum and is now catching up in the market. The DRV is being pushed by the major telecommunications and cable providers, and also by the satellite providers. This year the number of PVR / DVR users will reach 8 million customers in the USA. It is not yet clear who is winning this race, and we will probably see in the coming years a market that is still very fragmented between PC solutions, solutions around the TV, and independent device solutions, especially separate devices for music, video and games. There are areas in the US where IPTV (Internet Protocol Television Services) is the leading model, and this is having success in several areas this year. But, it is hard to know if there will be a single winner in this market as well. There is competition between manufacturers and providers of IPTV solutions, and Microsoft as well as other giants are trying to penetrate this market.
In studies published for example by ECI, it appears that 24% of home users in the world operate P2P applications, which occupy 92% of the volume of bandwidth in the global broadband Internet. 65% of users run HTTP applications (like a browser), but browser applications take up only 7% of the bandwidth of the world wide web. This phenomenon requires reference to the contents and uses of the home users. Without control over this area and ensuring the quality of the connectivity, users will be in trouble for lack of quality, for example in the voice services. The home network already transmits everything, and if you want to transmit all digital content on it, you need to understand what this transport means, and how to control the bandwidth at home and outside the home.
"The market did start, but it wasn't until 2006 that we saw a real living and breathing market," according to analyst Peter King, director of research, Strategy Analytics. "At the moment, it's a very fragmented market. What's driving the market is the entertainment sector. Entertainment comes mainly from television, and a little from broadband internet. Today in Europe, customers pay an average of 100 euros per month for these two services: television and internet. It's not clear why continue to pay separately. The question that arises: will the media providers also be the content providers for the digital home? Our answer: we have not reached the right economic model yet In our opinion, simplify the operation, improve the customer experience and better protect content. Above all, we need to take care of the quality of the connectivity" According to Strategy Analytics, there are too many standards in the market. These are obstacles that need to be removed and moved on with. According to Peter King, it is clear today that the demand for quality television is the strongest demand. DVR/PVR is currently in its infancy, on the other hand, the DVD is successful everywhere in the world and is at its peak. This is also the case in areas such as: games and content for mobile devices. In their opinion, in 2008 there will be over 300 million broadband connections in the world, which is about 50% of the homes in the developed western world. IP is moving into the world of digital television, and this will allow better control of the customers in their content, and personalization. The cable and satellite providers all over the world are fighting the local Bezeq companies or each other, all to control the transition to DVR, to VOD, to HDTV, and to all the future capabilities of the digital home. Music has become a self-evident thing in the world, and the same will happen in the future with video. Devices such as plasma or LCD televisions, as well as DVRs, DVDs and more are leading in these areas. According to Peter King, the LCD devices will occupy an important place in the world of the future television, and they will pass the sales of the plasma type television. Game devices such as Xbox and PS3 bring a new world of entertainment to homes, and later they will be integrated into the vision of the digital home. The last step will be the integration of the mobile phones, which will then be smart phones with multimedia capabilities. Customers want to share information they have between the devices they own. That is why it is necessary to create mechanisms to protect the contents as they pass between the devices in the house, so that they will not leak out. The compatibility and standardization is the key to the solution. It is necessary to know Peter King to invest a lot in the education of the market, because today the awareness of the field of the digital home is very low. Of course, the lack of uniform protection standards makes it difficult for services to develop. The market is currently waiting for the 802.11n standard that will give the largest bandwidths in WLAN, and according to Peter this is necessary to provide wireless connections at home for HDTV broadcasts. Some places will use the coax cable, some places will use PON fiber, some will use UWB. The segmentation in the forms of broadband connection at home will not disappear soon in his opinion. At this point, he predicts that PC-based products will be the leaders in the field of digital content. Devices with PC capabilities that have converters or integrated TV converters will be released on the market, and they will be provided by the major infrastructure providers in the world of communication. From 2007, in his opinion, the increase and takeover of television converters will begin, which will contain advanced capabilities, and they will take over the field of home entertainment over time, and lead it in a long-term view.
What is Intel looking for in the digital home?
Intel sees the digital home as an important business opportunity, and therefore entered this field with all its vigor. "We have established focus and development groups for the field of the digital home," notes Glenda Dorshek, vice president of the digital home group and CEO of the consumer products group at Intel. "The transition between the vision and reality came thanks to the push of Andy Grove, the chairman of Intel, who repeatedly emphasized that the changes in the global market in the digital field are an outstanding opportunity for Intel. We believe in combining voice over IP, along with gaming and home entertainment, under one roof. The world is going in the direction of the cell phone, and there will be MP3 players as well as TV sets. The wisdom is to combine mobile and stationary devices." According to Glenda Dorshak, it is clear that the direction is a fusion of capabilities within one device. It's a $400 billion global market, $108 billion of which is in mobile devices. It is a market of mass consumption, huge in its dimensions. What helps this development is the continued development of components and processors according to Moore's Law. The direction: the content is digital and the devices will be small, light and portable, with full connectivity. According to her, Intel is working hard to develop more powerful data processing systems to handle multimedia. This is the main thing in the field of end customer requirements. The customer wants high quality entertainment. Therefore, it is necessary to develop more powerful multimedia machines, with powerful processors, huge and fast memories, large storage areas, fast communication methods. Customers are also moving to produce content themselves in ever-increasing volumes. The customers take pictures with digital cameras and digital video films. The customers want to keep these contents with them and manage them easily. The next step in mobile connectivity according to Intel is WiMAX. The wireless will take over and integrate into all existing broadband methods. Home networks is a market that started to flourish, of course with the spread of broadband. There is a desire to share content and distribute content within the home and between homes. New technologies will compete in the home including technologies such as Home-PLUG (network on the electrical wires), UWB (very fast broadband wireless for short distances). These are essential developments to achieve very large bandwidths in the home field. The IPTV has started, and it is in Intel's estimation an important component of the range of capabilities to implement the vision of the digital home. According to Glenda Dorshak, Intel has extensive IPTV trials in 17 countries around the world. They provide many services there, from VOD (video on demand) to information, voice, instant messaging, games and Internet applications. The devices of the next generation in IPTV will support HD (High Definition), and Intel has already started an experiment in Japan and other countries to provide IPTV services in HD. Intel also invests R&D in the development of digital televisions, a new area for Intel, and in this field Intel cooperates with many companies that develop new applications for digital television. According to her, there is already a strong momentum in the market for the next Olympic Games in China. Many are building applications for Intel around the Olympic Games, which will all be broadcast in HD, and will integrate with all the capabilities of digital services around these competitions. Intel announced in May 2005 a new processor developed for the needs of the digital home. This processor will fit into many devices, especially mobile devices. The digital home according to Intel's vision will contain several elements: personal content, a home security center, a remote link exchange, a home entertainment center, home automation, and entertainment in the private car, so that the user can move from home to his car and watch or use the same content anywhere. All this, according to Intel, will fit into the VoIP revolution, which is a huge market in itself. The VOD market has already started, the gaming market is booming, and it already reaches 3.6 billion dollars in 2005, with an expected 14.3 billion dollars in 2009. One of the strongest fields that will develop around the digital home will be the field of remote health. This field will reach everywhere. The reason: in 2050 there will be over 2 billion people aged 60 and over in the world. This is a population that consumes health services on a large scale. These processes have already begun in several places in the world, for example in Canada, where the issue is developing nicely. The older populations receive or buy a home network camera connected to a neighborhood or regional health center, or to the personal doctor or the hospital. There are about 1.6 billion homes in the world, and this, in Intel's opinion, is a tremendous opportunity to try and position Intel as a leader in the home sector.
Phillips' point of view
Intel is not the only giant that wants to lead the field of digital entertainment in the digital home. "We see that convergence is a real thing happening, and it's a tremendous opportunity for Philips to bring all the content to every customer on every device and everywhere," declares Cesar Waringer, Vice President and CTO, Philips Electronics. "We believe that this is the answer to the demands of the consumers. Quality is the most important thing for us. On the other hand, simplicity is the basis of success, and compatibility, the protection of the contents, is also important to us, because without this, the content providers will not provide quality contents to homes. We also need to think about how to handle On the subject of collection, and on the subject of system management. We are a 30 billion dollar company in 2004, and the largest company in Europe. Our company consists of many groups with product lines diverse, meeting the needs in all areas of life, from medical equipment, to lighting fixtures for apartments, to areas such as digital television. Networks are currently used for many needs, from distance learning, remote work, and more. Digitization has pushed the entertainment market , which went from analog to digital. This enables the development of new applications, enables personalization, system integration and application integration." Philips has many partnerships, one of the most important is with Microsoft, and this is to present the content in the best way to the customer. Consolidation is reaching every corner, and it will happen wirelessly as well, according to them. The result: Philips introduced televisions that work inside passenger vehicles and small mobile devices that receive television in an easy and intuitive way. These capabilities exist both for the PC and for Internet connections. "We have developed solutions for home entertainment systems that are connected by WiFi between all parts," boasts Caesar Warringer. "We even connected the speakers and the TV with WiFi, and this is already available to customers who want a home entertainment center without wires. We have turned a dream into a reality, and customers are beginning to discover this new world. Connecting content producers is essential to the success of this future market. For you, we have joined the major studios in Hollywood, and we We are currently connecting the technology to the content, to give the applications of the future to the end customers. We also work in conjunction with Intel and Microsoft and many other companies, to achieve compatibility In this field, it is necessary to achieve a simple application, with a simple and convenient operation for customers. Today, we are still in the 'tower of Babel', and there is still a lot of work ahead of us The forms of communication: wired, cellular, and cable. QoS is a key word and an important parameter to achieve the goal, because customers will not accept receiving services at a medium or low level I hope that the incompatibility of the analog world between the standards of the Consumer Electronics world will begin to disappear. Microsoft is very helpful in this area, because we know that without compatibility this market will not take off take off".
In conclusion: there is a battle of giants here for a very large potential market, and we will follow closely who will win this fascinating battle, which is only at the beginning of its journey.
