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Johanne Torres[January 3, 2005]

2005 'Digital Home' Efforts Will Require Cross-Industry Partnerships

BY JOHANNE TORRES


When my friend Rafael told me last June that he was quitting his sales job at an electronics store in a local San Juan mall to join a Puerto Rico-based “smart home” company, I told him it was a crazy move. Back then I thought these kinds of technologies had a long way to go. Now that I have seen the power of residential VoIP, I believe that the “smart/digital homes” concept will rapidly follow the trend with nationwide adoption.


The many mergers and acquisitions during 2004 between telecoms, cellular and cable companies are sure to fuel the engines to take “smart/digital homes” from concept to reality. Ten industries, including consumer electronics, PC, content, games, telecommunications and cable are vying for control of the digital home. According to "The Battle for the Digital Home," a new report from Forrester Research Inc., while some industries are better positioned for success, all must focus on capturing and controlling new revenue streams through key cross-industry partnerships and acquisitions, say the firm’s analysts.

The research firm places each industry into one of three categories: leaders (cable, game, PC and software industries); challengers (content, portal and telco industries); and long shots (consumer electronics, retail and satellite TV industries). The report makes recommendations for each industry for changes that can advance market position in the digital home, an environment in which devices connect to one of two networks: 1) a closed, wired entertainment network for digital TV and video on-demand and 2) an open, wireless data network for Web browsing, e-mail, music, photos and Voice over IP (VoIP).

According to the firm’s evaluation of the overall market, communications companies will have to prove themselves in this very tight competitive arena. "Businesses in every industry must fight to protect their assets, retain customers and stave off competitors. Ten years ago, cable companies owned TV in the living room. Today they compete with satellite TV -- and they'll soon compete with telcos -- for customers," says Forrester Research VP Ted Schadler. "Companies that master skills like experience design and customized delivery will lead the way by creating services and products that earn consumers' loyalty."

The study reveals that there will be no winner-take-all industry in the battle for the digital home. Analysts concluded that success will reside with businesses that partner outside their industries to establish six new power positions that will control the lion's share of consumer spending: personal entertainment, intelligent devices, application-device combinations, immersive experiences, collaborative experiences, and core services.

Because the digital home power positions traverse industry lines, Forrester sees many partnerships forming during the next three years. Potential digital home alliances include:

  • A joint venture between the NFL and FOX to create an immersive experience where sports fans can choose viewer-selected camera angles and split-screen content.
  • Sony's acquisition of Clear Channel to combine Sony's music and devices business with Clear Channel's radio stations to offer personalized time-shifted digital radio.
  • Google's acquisition of TV Guide's interactive program guide, allowing it to deliver a best-in-class personalized media application -- video search.
  • A partnership between Microsoft and BellSouth, Verizon and SBC to provide an operating platform for IPTV.
  • Disney's acquisition of Electronic Arts. With EA's sports games, Disney/ESPN becomes the premier sports brand on PCs, TV, and game consoles.
  • Apple's acquisition of TiVo, providing Apple with a service platform for TV and video on-demand.

I believe 2005 will be a very successful year for telecoms, thanks to these key mergers and acquisitions. The integration of different technologies in our homes will revolutionize the way we communicate, work and play. It definitely opens the door to many work-at-home opportunities, and enables employees to enjoy the flexibility of being reachable even when remote. As for my friend Rafael, well, they cut his hours after a few months at the “smart/digital homes” job. He was happy to report that the business picked up at the end of the year, resulting in increased full-time hours and even overtime!


Johanne Torres is contributing editor for TMCnet.com and Internet Telephony magazine. Previously, she was assistant editor for EContent magazine in Connecticut. She can be reached by e-mail at jtorres@tmcnet.com.

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