Home technology and convergence
An interesting article in the Wall Street Journal ("A New Tech Battle for the Home", January 3, 2005) discusses the shifts in the technology matrix that are changing the borders between market segments and making companies that had little to do with each other into rivals.
This technology convergence is clearest in the way that telephone, cable TV, and internet connectivity are becoming more and more part of the same package. As the article puts it, "Cable and phone companies are already rushing to offer competing 'triple-play' bundles of voice, video, and high-speed Internet access, for example, not only to seek more revenues but also to keep customers of their core services from defecting."
And that voice contact is starting to include local, long distance and cell phone connectivity all in one package. Among the advantages cited in the article for this arrangement are "unified voicemail services for both home and cellular phones, or systems to make it easy to program digital video recorders from a cellphone."
Other areas of digital convergence are in the use of cell phones as cameras or game players; the use of game players as personal computers; TV sets are becoming more like PCs (think TiVo), while PCs, with superior flat screens are becoming like TVs; the use of digital music players (iPod) as storage devices for images and documents. It's not hard to imagining a cell phone getting a mini-hard drive and competing with the iPod or the iPod adding cell phone capability or a camera.
All this will probably end up in more mergers and acquisitions, as the WSJ article notes.
The pressures could push more companies as well as technologies together, with industry giants likely to look for partners and acquisition targets outside their already-consolidating markets. Forrester Research analyst Ted Schadler, in a new study by the Cambridge, Mass., firm, makes a case for such cross-industry acquisitions as Hewlett-Packard Co. buying Eastman Kodak Co., Apple Computer Inc. absorbing TiVo Inc., Walt Disney Co. eating Electronic Arts Inc. and Google Inc. grabbing Gemstar-TV Guide International Group Inc."
Those pairings aren't based on any actual inside knowledge, but they may indicate the kind of thinking that media and electronics firms are toying with as they see once clearly demarcated borders collapse.
The WSJ article points out new products due to be displayed in Ethernet upcoming annual Consumer Electronics Show that will make it easier than ever to convert cable TV shows onto PCs or even cell phones, or to download radio broadcasts onto digital music players.
The technical issues are getting rapidly solved, and much of the convergence is not hard to predict given current technology, including advances in storage, wireless, and data compression. The big problem is in the area of copyrights, where the interest of the content providers and consumers/electronics companies are at odds. Sony, for one, has long been moving in the direction of being both a content providers and a technology developer. Other such combinations of content and technology (AOL-Time Warner) have been rather unsuccessful. Synergy can often be an exercise in cross purposes, and even Sony's hardware development has been hurt by its eagerness to protect its copyrights.
