alteraxion > Digital Entertainment Convergence | Consulting, Venture Capital, Strategic Intelligence.

Intel: the next consumer electronics giant?

Intel Hopes to Transform Home Media
By Terril Yue Jones
LA Times

Personal computer makers have long eyed the living room as the next frontier, hoping to revolutionize the way people watch movies, listen to music and record their favorite TV shows.

Persuading people to stick computers in their TV cabinets has been another story: So-called entertainment PCs account for just 3% of U.S. sales.

But the industry's drive to transform home entertainment may get a major boost Saturday when PCs with new innards from Intel Corp. go on sale.

RELEVANCE
If you had not heard, there's a battle of titans brewing - it's called digital convergence. On the one hand you have the New Economy (NE) camp and on the other the Old Economy (OE) camp and the stakes are about $1.0 trillion (give or take a few billion). Thus far the scales are tipping in favour of the NE camp but the battle has barely begun so predictions of victory for either are fairly meaningless.

You'll probably be wondering what the heck I mean by new and old economy camps. Well, by NE I mean those companies that have fully understood, embraced and adapted to the changes brought about by, among others, the Internet and rapidly changing consumer habits and attitudes. By OE I mean those companies still fervently clinging to their long held beliefs, traditions and comparatively narrow mindsets which have served them well in the past but that the future has little or no need for.

This battle is best understood by a quote from a writer of wars past.

"The innovator makes ennemies of all those who prospered under the old order and only lukewarm support is forthcoming from those who would prosper under the new."
Niccolo Machiavelli, "The Prince" (1513)

Intel is but one leading the charge of the new and throughout this blog you'll find references to many other companies that are - some slowly, others rapidly - outwitting established players.

Welcome to the game.

Is Digital Convergence coming with a Big Bang?

BW Online | June 21, 2004 | Big Bang!
By Stephen Baker and Heather Green
With Bruce Einhorn in Hong Kong, Moon Ihlwan in Seoul, Andy Reinhardt in Paris, Jay Greene in Seattle, and Cliff Edwards in San Mateo, Calif.
Business Week

For nearly two decades, industry sages have heralded the coming age of converging digital technology. But it remained an empty slogan. Now, thanks to faster chips, broader bandwidth, and a common Internet standard, technologies are quickly merging. The market for personal digital assistants, so hot in the late '90s, is vanishing as customers get the same functions in a cell phone -- often with a camera to boot. The latest televisions from Royal Philips Electronics and Sony Corp. have enough computing firepower to grab streaming video off the Net. "Convergence is finally really happening," says Gottfried Dutiné, an executive vice-president at Philips. "Digitalization is creating products that can't be categorized as tech or consumer electronics. The walls are coming down."

RELEVANCE
One of the strongest cases to date by the elite business press trumpeting the advent of digital convergence. Business Week states that it is "likely to produce the biggest explosion of innovation since the dawn of the Internet". Considering how big a bang the Internet was, we'd all either brace for cover or start calling our broker to place our bets. Better yet you could become a convergence entrepreneur and really go for it!

Will HP lead the charge from PC to CE?

Technology News: Commentary: HP's Plan To Revolutionize Consumer Electronics
By Rob Enderle
TechNewsWorld

If someone had asked me five years ago if I thought HP -- which, at the time, was struggling in most of its key markets and offered only calculators to the consumer marketplace -- would be a power in this market, I would have been certain of my "no" answer. HP was a printer-workstation-midrange computer company with a strong tools business. It was about as far from a company like Sony as you could get and still stay in the high-tech segment.

Over the past two years, that focus has clearly changed. In looking around at Sony, Thompson Electronics, Matsushita, LG, Samsung, Philips and GE, only Sony talks about the kind of experiences that customers want, and, as I mentioned above, this is more of an exception even for Sony these days. HP, a firm that wasn't even in this class of company a few years back, is starting to showcase the results of its newfound passion for the folks who actually buy consumer electronics.

RELEVANCE
A very good analysis of the current competitive dynamics between hardware manufacturers in the computer and consumer electronics industries. Strong marks for Enderle's description of what ails Sony as well as overall understanding the competencies that players in the digital convergence field must develop and nurture to have any chance to succeed. Customer-centric vs. product-centric strategies play a very big role here and it's astonishing to see how few companies have yet adopted this. Advice: find those companies that still hold on to product-centric strategies and dump the stock ASAP as they're about to get the wake-up call of a lifetime!