With a couple of hours to go before this year’s technofest in Las Vegas gets under way, I thought I’d issue a friendly warning to the growing number of firms (Intel, Samsung, LG are culprits so far) who seem to be planning to major on “Smart TV” as a key theme of this year’s show. Even before the doors open we already have a quotation from LG Electronics' Baeguen Kang: "Smart TV is an inevitable trend: As people experienced smartphones and tablet PCs, the larger screen on a TV is very attractive for apps and Web content.” So whatever people do on phones and PCs, they will inevitably do on their TVs? If this is an indication of the strategic thinking behind many of the innovations we are about to see unveiled this week, I can scarcely imagine the horrors which await us. When will manufacturers learn? As Google’s disastrous first attempt at connected TV has neatly demonstrated, people do not want the web on TV. How many times do we have to go through this learning process? What people want on TV is video content, and if that’s going to be “smart” it had better deliver some level of intelligence about what video content viewers are likely to enjoy. As I said in our (free to download) 2011 Predictions report, television viewers don’t want a million things to choose from: they want their TV to tell them what they are likely to enjoy. Surprise me, enlighten me! That has value, and if it unexpectedly appears at this year’s show I’ll be the first to label it “smart”. David Mercer

Hidden away in the depths of the European Commission’s latest household communications survey is a finding that should scare the 4X out of the cable industry: the percentage of EU27 households using cable TV fell by 4% between 2008 and 2009, from 34% to 30%. To put this in context, that means the cable industry lost around 8 million TV household customers in the space of just 12 months. The biggest winner has been digital terrestrial television. The share of households using digital terrestrial rose from 12% to 23%, while the proportion of those using analogue terrestrial fell from 41% to 34%. Satellite also made gains, increasing by 2% to reach 24% of households, and IPTV rose from 2% to 4%. Observant readers will have noted that we have reached a total of 115% of households. The survey allowed for multiple answers because some hosueholds use a combination of different TV access services, usually because they have terrestrial TV (analogue or digital) for one TV set, with cable or satellite piped to another. Cable’s decline has been little short of dramatic in Benelux. For years, visitors to those countries were told that the “only” way to receive television was through a cable network. Even though cable TV penetration strictly speaking never reached the 100% mark, it was certainly in the 90%+ range for many years. Now, according to the viewers themselves at least, cable is used by only 69% of Belgian households, a decline of 18% in one year. This was mirrored precisely by the increase in digital terrestrial usage over the same period. In the Netherlands, cable usage fell to 75% of homes, with digital terrestrial at 21% by the end of 2009. This is not the “cord cutting” which American cable operators are currently fretting over. Stateside, the hot issue is whether cable (and satellite) customers will switch to internet-delivered, OTT TV. In Europe, the threat from digital terrestrial television is currently much greater and already having a marked impact. Where cable used to provide the de facto option for “free”, commercially funded TV channels, it is losing ground rapidly to over-the-air services. The latter, of course, are genuinely free of charge (except for public service TV licence fees in some cases), in contrast to the “basic” fees cable operators have always charged. Here is yet another indication of the huge structural differences between the US and European markets, which strike me every time I travel between the two regions. A couple of days ago, during a meeting with a well-known US software provider looking to enter the European connected TV market, I saw another sign of how US companies can struggle to appreciate these variations when they visit Europe. It may have been more or less abandoned in the US, but free-to-air television in Europe is alive and well. Client Reading: Global Digital Television Forecast: 1H'10

Toshiba's press conference focused almost exclusively on the launch of Cell TV in the US market. We have followed the progress of Cell technology for nearly the past decade, since Toshiba, Sony and IBM began its development. As a reminder, it lies at the heart of the PlayStation 3 system, and Toshiba has always made its intentions clear to launch a range of other consumer devices using the processor technology. Cell TV will use Cell for various capabilities: to deliver 3D pictures from 2D sources; to upscale video, including video from internet sources; and to support “Autoview”, which sets the TV picture automatically and adjusts for the room’s colour temperature. I did not get the chance to examine the performance of Cell in these tasks – I hope to see detailed demonstrations later this week. Cell TV will be Toshiba’s flagship model this year. It will also feature a range of connected TV features, including wireless HD (the WirelessHD standard), 802.11n, DLNA, USB movie, Net TV channels and videophone. Yes, like LG and Panasonic, Toshiba is also entering the rapidly emerging big screen videoconferencing space. The launch of Toshiba’s first Blu-ray player was mentioned more or less in passing, and it will be upgradeable to 3D capability. However, we question Toshiba’s commitment to BD given the company’s belief that “the future of video is online, and discs are in decline”. It seems the bitter legacy of the HD-DVD saga has not been easily forgotten. Client Reading: HDTV: Standards Muddle Clouds Outlook For Wireless Displays

The challenges facing 3D TV were evident from its relative lack of focus at LG’s CES press conference this morning. While brief mention was made of the plans for new 3D-ready TVs to be launched in May this year, much more time was spent on a variety of broadband-enabled features which will be rolled out over the coming months. In particular, the headline-grabbing deal with Skype to bring video conferencing to the big screen caught the attention, and LG was confident enough in its technology to demonstrate a live Skype video call. Such demonstrations in front of the world’s technology press have a terrible habit of going wrong, but this worked, at least in terms of establishing a communications link. On the other hand, the quality of the video was extremely jerky and cut off completely once or twice. For a free service, that’s probably only to be expected, but vendors pushing specialist consumer TV video conferencing systems should take note that the price point for this basic capability is now effectively zero. LG has also redesigned its web TV services known as Netcast, and added various new ones including DivxTV. It claims that more than 110 “channels” are now available. It will offer Netcast on two thirds of its TV line-up in 2010, and virtually every set larger than 32”. Enhanced connectivity will also feature strongly, with most of LG’s new TVs being “wireless-ready”, which means they will require only a dongle for wireless HD connection to compatible devices. The company was cagey about which technology was being used, but Amimon, whose technology lies behind the WHDI 5GHz standard, issued a statement this morning claiming that “the new wireless-ready high-definition televisions and wireless HDTV accessories launched by LG Electronics are based on AMIMON’s wireless 1080p solution”. LG also demonstrated the inevitable “thinnest yet” TV, an LED LCD model only 6.9mm thick. I’m sure we’ll see more entries into this rather tiring pseudo-battle before next Sunday. Thin TVs are great, but there comes a point, and I think we have reached it, where another fraction of a millimeter is unlikely to make much difference to the sales line. And finally 3D, and LG was surprisingly circumspect in its announcements, focusing on its introducion of the first full HD single lens front projector. It said 3D capable TVs and a 3D BD player would be launched later in the year but was light on specifics. It seems a lot of work on the details still needs to be done. Client Reading: HDTV: Standards Muddle Clouds Outlook For Wireless Displays

The depth of the recession in the US consumer electronics market was highlighted today by CEA data which confirmed a decline in dollar revenues in 2009 of 12%. The outlook for 2010 improves but only in the sense that the rate of decline falls to 3%. In the meantime we're hearing news of new 3D TV channels already, with both ESPN and Discovery throwing their hats into the ring. This is great, if expected, news for the many 3D-ready TVs we expect to see over the next few days. At this evening's CES Unveiled event Sensio were showing their passive 3DTV, even though the company today announced its partnership with Visio to launch an active 3DTV later this year. Mitsubishi was also showing its laser 3DTV with the adaptor which will be necessary for compatibility with Blu-ray 3D players when they are lauinched. Logitech was showing its new Lapdesk N700, a laptop “cushion” with in-built speakers designed for enhanced laptop usage in the comfort of the armchair. The peripheral retails at $89.99 and also features an in-built cooling fan to prevent over-hearing, a familiar problem for those many TV viewers who now sit with a laptop on their knees. Logitech have thoughtfully added a grip to help keep the laptop steady, but unfortunately in my case it failed to prevent the Macpro falling to the floor. No damage done, luckily, but perhaps evidence of a need for further improvement in design. Logitech was also demonstrating the fruits of its recently closed acquisition of Lifesize Communications, a videoconferencing specialist. On display was its Passport set-top videoconferencing device. This retails at $2500 and allows anyone with a minimum 2-way 1Mbps broadband connection to communicate using HD video (720p). The service downscales to lower resolutions for slower bandwidth connections. Logitech claims that this device is a third of the price of any other similar product on the market. That may be true today but is unlikely to remain so for much longer. Videoconferencing and telepresence are shaping up to be one of the emerging trends of this CES and we will hear a lot more over the next few days, in addition to the Skype/Panasonic/LG announcement today. Yet another OTT video set-top box was being demonstrated by Syabas with its Popbox product. This grew out of the company’s Popcorn Hour device. The Popbox has been designed to be especially user-friendly, and the user interface does appear attractive and accessible. The service integrates currently 20 “content application channels”, which means things like Netflix, and is working with 200 application developers. It will launch in March 2010 and retail at $129, plus $20 for the optional WiFi module. The Popbox is 1080p-capable, although the only 1080p content was demonstration material. If Syabas manages to sign 1080p deals with content providers it will certainly be a step ahead of most competitors. ProVision CEO Steve Cliffe was confident enough in his company’s wireless HD technology to carry a laptop across the show floor while it streamed 1080i HD content, and there was no loss or deterioration in signal. This UK firm was founded by professors at Bristol University, and uses proprietary error correction and RF management techniques to improve HD video streaming over 802.11n. The company is talking to set-top box and TV manufacturers looking to support HD distribution to multiple home devices. Another UK firm, Imagination Technologies, was launching its Pure digital radio products for the US market. Pure is the leader in the UK but virtually unknown overseas. It will, rightly, tread carefully as it enters the notoriously challenging US market, and will obviously (since the standard is not used) drop DAB from its US product line-up, instead concentrating purely (sorry) on internet radio. Its Sensia product is the highlight of the range and features a full-colour touch screen LCD display as well as additional interactive capabilities like Twitter and Facebook. Pure confirmed to us that video-capable devices are a natural step forward and can be expected in the next year or so. Client Reading: HDTV: Standards Muddle Clouds Outlook For Wireless Displays

Countries, and especially their politicans, get surprisingly animated when global rankings of nations are released. We’ve tried to stir things up a little more by releasing our own version, based on penetration of broadband households. Perhaps it’s a sign that broadband grew out of the communications industry, which generally sees individual people as its primary customers (putting business users to one side for a moment), that households can be ignored as a key metric. Certainly in the world of mobile communications it makes sense to talk about a mobile phone account being attached to an individual user. But broadband is different. Even though many individuals clearly make use of broadband to connect to the internet, the business of broadband is based on selling service to the household as the unit of demand, whether cable, telco or other emerging fixed line provider such as fibre. Once a household is a customer of a broadband service, that household is, generally speaking, free to allow any of its members to use that service at no additional fee. Indeed, the service provider may be unaware of how many users are accessing broadband over any given period of time. Most may put a limit on the number of devices able to access the service (via a wireless LAN or other technologies), but there is no good way to tie that limitation to the number of users sharing those devices. For these reasons we have always used the household, rather than the user, as a key metric when determining the potential for broadband service adoption. That’s not to say that the number of users is not important in other respects, and we track that as well. But the way the broadband business is currently set up (and it doesn’t seem likely to change any time soon) the household is the more important measure. The household is also the target (in the sense of offering universal, high speed access) for the many broadband public policies being developed around the world (see our recent discussion of Australia). So when we look at the percentage of total households in any given country in which broadband is available (ie paid for and used), we find, not surprisingly, that Asia-Pacific countries lead the way, with Korea out in front, as it has been for many years. At the end of last year 95% of Korean households took broadband service, compared to 88% in Singapore and 81% in Hong Kong. But one or two European countries are edging towards the top of the list, led by the Netherlands (85%) and Denmark (82%). It’s not until you reach number 20 (out of a total of 57 countries covered in our research), that the US appears, with household penetration of 60%. Even then, the US is ahead of other “advanced” economies such as Germany (58%), Spain (57%) and Italy (51%). And China, for all the talk of its emerging leadership in all things tech, ranks at number 43 with 21% household penetration. The rural population in China is clearly still way behind leading economies in adoption of PCs and internet access. Here’s the complete ranking: Strategy Analytics: Global Broadband Household Penetration Rankings (2008) 1 South Korea 95% 2 Singapore 88% 3 Netherlands 85% 4 Denmark 82% 5 Taiwan 81% 6 Hong Kong 81% 7 Israel 77% 8 Switzerland 76% 9 Canada 76% 10 Norway 75% 11 Australia 72% 12 Finland 69% 13 France 68% 14 United Kingdom 67% 15 United Arab Em. 65% 16 Japan 64% 17 Sweden 63% 18 Estonia 62% 19 Belgium 62% 20 USA 60% 21 Slovenia 58% 22 Germany 58% 23 Ireland 58% 24 Spain 57% 25 New Zealand 57% 26 Lithuania 51% 27 Italy 51% 28 Austria 50% 29 Portugal 40% 30 Greece 39% 31 Turkey 37% 32 Hungary 34% 33 Slovakia 33% 34Poland 32% 35 Argentina 31% 36 Romania 31% 37 Latvia 30% 38 Czech Republic 28% 39 Mexico 28% 40 Chile 27% 41 Croatia 23% 42 China 21% 43 Malaysia 21% 44Venezuela 17% 45 Brazil 17% 46 Russia 14% 47 Bulgaria 13% 48 Peru 11% 49 Saudi Arabia 7% 50 Thailand 7% 51 Vietnam 7% 52 Philippines 5% 53 Albania 5% 54 Ukraine 4% 55 Egypt 3% 56 India 2% 57 Indonesia 1% Source: Strategy Analytics’ Multiplay Market Dynamics service, June 2009 Twitter: twitter.com/DavidMercer_SA Client Reading: Sputnik Moment: The Call for a National Broadband Policy Asia Pacific Broadband Forecast: 1H09

Pioneer’s plasma TV business is the latest casualty of the recession. The company announced today that it is ceasing TV development immediately, and will close its TV business altogether by March 2010. So it looks like Panasonic will be the only major Japanese vendor left holding the plasma baby in 2010, as I discussed 18 months ago. Koreans Samsung and LG will help to keep plasma going, but are increasingly focused on LCD and well behind Panasonic in the race for PDP market share. Pioneer tried in vain to hold the line on premium, high quality TVs. In fairness it was always going to be difficult even in good economic times. Pioneer’s TVs were generally regarded as some of the best on the market and served as an aspiration for those who could “only” afford a Sony or a Samsung. But the gap between the “mass market” and Pioneer was undoubtedly getting narrower, and Pioneer was going to get caught in the squeeze sooner or later. When Amazon is offering Toshiba 42” 1080p LCD TVs for £499, it becomes harder than ever to justify paying four times the price for a similar sized Pioneer, especially when most retail stores are simply not capable of, or interested in, demonstrating the differences in picture quality. The severe downturn in consumer electronics has accelerated the impact of plasma’s relative decline on Pioneer. What is left of the company’s display technology expertise now resides with Panasonic, and even in this downturn that huge company should be powerful enough to keep plasma alive for a few more years. It will be a long and lonely struggle. Client Reading: Digital Media Devices Global Market Report

At Pepcom's Digital Experience press event we chatted with Yahoo about their approach to web TV. It certainly seems the company, which has been struggling in recent times, has finally been making some progress in its TV strategy. It has signed deals with Samsung, Sony, LG and Visio to incorporate its widgets engine in their internet-enabled TVs. All this talk of internet on the TV screen really does make me feel my age. When I mention that we were having similar discussions 10 or even 20 years ago there is rarely any recognition that interactive TV has been tried many times over, and has usually failed. Of course today's innovators are convinced that the power of today's internet can solve many of the problems that prevented previous interactive TV platforms from becoming successful. There's no doubt that a fast broadband connection straight to the TV is a far cry from those early days of dial-up internet connections. But the question of whether or how many consumers really want to see anything but "television" or "video" on their "TV set" remains unresolved, whatever the technology used to bring them these exciting new services. Yahoo seems to have convinced its partners, for the moment at least, that there is some level of interest in the ability to have internet-based mini-applications on various parts of the TV screen, showing the usual weather, stock prices or latest news. Strategy Analytics research suggests that this type of application is not in fact at the forefront of TV viewers’ expectations from internet TV browser technologies. In fact in a recent survey we carried out for Oregan Networks by our Digital Home Observatory team, widgets and user interface customisation were ranked among the lowest priorities. The highest, not surprisingly, were the ability to access video on demand services from the internet, and to search for video content already stored on the home network. But in various demonstrations we have seen here at CES, not just at Yahoo, video is not given the priority consumers clearly expect. That may well reflect the fact that the various web TV value chain partners – TV manufacturers, platform developers, content owners – are far from confident that today’s internet connections can deliver the sort of video experience consumers are expecting on big screen TVs. And they are obviously right to be nervous in this respect. It will take time and lots of education to overcome the obvious quality and reliability issues. But to build demand for internet enabled TVs there needs to be a greater focus on internet-based video and television services, because this is what consumers think internet TVs should have as a core capability. Everything else is simply icing on the cake, and some people clearly prefer the cake without the icing. Client Reading: Digital Media Survey: An analysis of US Online Premium Video Users

LG kicked us off this morning with a bullish presentation after announcing 16% US revenue growth in 2008. A variety of new technologies were confirmed, including 60GHz WirelessHD connectivity, 3D processing chips that will be ready for future 3D formats, TruMotion 240Hz (which combines 120Hz with backlight switching to create a 240Hz effect), LED backlighting (which gives a 2,000,000:1 contrast ratio), and 25mm thin LCD TVs. The hot LG story is around its deals with internet content providers. Netflix, Youtube, Yahoo and other providers will appear as menu options on a range of connected devices, including TVs. LG also introduced an 802.11n BD player, one of the few integrated wireless enabled BD players on the market. Netgear also gave a strong performance, centered around its ITV2000 internet TV player, launching in summer 2009 at $199. This is a compact, pocket-sized set-top box which will give access to web content, including the inevitable Youtube, without the need for PC connectivity. Netgear also introduced its Digital Entertainer Elite, priced at $399 and available in February. This device incorporates a 500GB HDD and plays HD video at “up to Blu-ray quality”. I suppose that means something close to Blu-ray if the wind is blowing in the right direction. Toshiba, rather strangely, began their press conference by highlighting their leadership in “TV combos”, ie combined TV/DVD players. Not exactly technology innovation, but I suppose they had to find a market leadership story to start with. The new stuff focused on the introduction of internet widgets in TVs and other devices from the likes of Intel, Yahoo and Microsoft. Toshiba highlighted a number of content service providers on their presentation material, including Myspace, CinemaNow, Yahoo and CBS, but the fine print indicated that these names were shown “for demonstration purposes only”, suggesting that partnership deals are still at the negotiation stage. Toshiba’s approach to internet content is based on Microsoft platforms such as the Media Center PC, which is not surprising given its stronghold in the PC market. In the TV space, Toshiba announced the introduction of Dolby Volume, which balances volume levels across different TV channels so that viewers don’t have to keep adjusting volume levels. Dolby told me the technology has been a success in Japan for the past year and is now making its way to the US and Europe. Toshiba also indicated that the long-awaited Cell TV is on the horizon. Using the Cell processor at the heart of the PS3, this will be launched in 2009. Cell TV could allow 6 simultaneous HD streams to be recorded, support the next generation of 4k x 2k panels and allow for 3D graphical interfaces. Client Reading: IFA 2008: Internet and 3D Offer Hope During Europe's CE Recession

Fortunately the snow that hit Las Vegas in December has long since melted, although temperatures were only at freezing point this morning. But we're predicted to have warmer weather and sunshine for the rest of the week as CES gets under way. As I predicted back in November CES attendance is expected to be down this year, although the CEA says exhibitor numbers are about even. But judging from our appointment schedule it seems a lot of companies are choosing to use off-site meeting locations rather than the Convention Center itself. In terms of technology trends, we are looking out for 3D, Internet TV and other connected devices, wireless HD and of course the thinnest, biggest and brightest HDTV displays. LG seems to have started its own show a few days early with lots of press coverage already surrounding its Netflix TVs and 480Hz displays. I'm sure its rivals will appreciate the advance warning... Apart from the big players, we are always watching out for disruptive innovation from emerging companies. I will have a particular focus on user interface this year, as we are launching our Digital Home Observatory capability. I'm sure there will be a few chuckles as well - we certainly need them as a relief from the economic gloom. I'm intrigued by the arrival of Connected Garden Devices, as promised by EasyBloom. It just goes to show that there is no stopping the Internet's influence on every aspect of our lives. Client Reading: IFA 2008: Internet and 3D Offer Hope During Europe's CE Recession