As the year approaches the end, let’s look back and review some of the impactful events in the digital media business in 2010. Many of those events generated substantial buzz when they just happened, but quickly people forget about them and move their attention on to new things. As a year-end review, this summery is intended to help us relearn these events and gauge their impact on the industry and companies in the future. Events about Google:

Google claimed it was threatened by cyber attacks originated from China in January. Following the event, Google decided to stop censoring search results in China, which put themselves in a direct confronting position with the Chinese government. As the conflict between Google and the Chinese government deepened, Google had to redirect the traffic on its China site to the Hong Kong homepage. Google had not only lost market share to its competitors in China but also lost plenty of talent due to the uncertainty of its business in China. With only a constrained access to the largest Internet market in terms of users, now Google’s growth solely relies on the expansion to other business lines, such as display advertising, Android platform and TV business.

Google’s social network initiatives remained unsuccessful. Google Buzz was introduced in the year, but even with the Gmail integration the service has been forgotten by the public. The once highly buzzed Google Wave was terminated by Google, as most people cannot figure out how to use the innovative service. Despite the popularity of Gmail, the dominant Facebook and the growing Twittier and LinkedIn will only make Google’s future in social media gloomier.

Google unveiled Google TV with its partners Sony, Intel and Logitech. While Google had depicted a splendid picture for the Google TV when it introduced the product, its lack of premium content support and the severe competition from Apple, Microsoft and Amazon already led many to question the feasibility of the product. Sony’s slash on the price in the holiday season for Google TV-embedded TVs magnified the concerns on the product’s outlook. 2011 will be the key year for Google TV’s success. And if Google could build healthy relationship with Hollywood studios for the platform, it would still gain some ground in the new TV business.

Events about Apple:

Apple’s introduction of iPad has clearly changed many aspects of digital media consumption. Publishing and news industry has found a new and more versatile content distribution platform, which seems could further offset the decline of traditional revenue streams. With a bigger screen compared to smart phones, iPad is a better device for mobile video consumption. Movie studios and pay TV companies started to put strong focus on distributing their content through iPads. We expect the iPad to continue its robust growth in the next year, along with its importance to premium content distribution.

Games have always been top-selling apps in Apple’s app store. The introduction of Game Center on iPhones and iPads makes Apple a formidable player in the social game distribution business. Going forward, the gaming piece will continue to augment the appeal of Apple’s platform.

Events about others:

Microsoft’s Kinect has shown signs of good reception in the holiday season. With the tremendous investment put in the project, it finally delivered quality gaming experience to casual gamers, dwarfing Wii’s motion censor device. Although Xbox only accounts for a relatively small portion of Microsoft’s total revenue, the success of the device could pave the way for its home entertainment strategy if implemented correctly. The solid experience of Kinect also counters the argument that Microsoft has lost the innovation capability. In addition, Microsoft struck a deal with ESPN to provide ESPN programs to Xbox Live users.

Netflix keeps up its growth and now has 16 million subscription members. Given its expansion to other devices and other countries, we expect the service to maintain the growth momentum in the coming year. On the other hand, Hulu also adopted a paid revenue model with the introduction of Hulu Plus. But given the limited content catalog, Hulu Plus faces challenges to grow its paid users.

Facebook keeps the ball rolling by introducing a number of new features and services on the platform. Meanwhile, social games gained attraction with their virtual currency revenue model. Games from Zynga and Playdom have gained millions of users, most of which are based on social networks. As the ad rates on social networks remain low, the social gaming business could help Facebook break through its profitability challenge. And the social gaming companies will surely benefit from the secular growth of social networks.

I was with Intel executives by chance today, shortly after the first rumours, based on a New York Times story, that Intel, together with Google, Logitech and Sony, are working on a TV set-top box and service. Intel was demonstrating the capabilities of its Atom platform across a range of CE devices. In particular it was showing how its CE4100 processor combined with the MeeGo middleware joint initiative with Nokia could enable more flexible and more advanced IPTV services in the future. Amino, which has sold more than 4 million IPTV set-top boxes worldwide, was on hand to claim that the Intel platform has allowed it to develop new devices much more quickly than traditional processor platforms from ST, TI and Broadcom. And Telecom Italia is set to become the first major telco customer of an Intel-based IPTV platform when it rolls out new boxes in the next few weeks. Intel claims to be in talks with many other telcos, including tier ones, about deploying its solution. Intel made it clear today that its new platform could support Android, as well as many other OSs, while refusing to confirm the rumours of a partnership with Google. Our view is that it would be very surprising if Google did not enter the TV market before very long. It is certainly possible that Intel and Sony could be key partners, although unlikely if these prove to be exclusive deals for any player. Intel for one has made it clear it will be friends with anyone, whether in service provider or retail models. Intel’s roadmap calls for participation at all levels of the TV market, including entry level devices, but initially its strategy is to drive added value at premium price points. It seems that Intel is finally getting grips with the consumer electronics market after many failed attempts over the years. David Mercer Client Reading: Connected CE Devices: Global Market Forecast and Outlook

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

Strategy Analytics’ recent user experience study concludes that there is a clear opportunity for developers to fill the need for more advanced TV remote controls, especially as TVs and TV peripheral devices add web functionality to the big screen. In particular we found that there was strong interest in a remote control which integrates a touch screen. Respondents would also value access to a full QWERTY keyboard so that browsing and using web sites becomes slicker than is possible with a standard numerical keypad TV remote. Some specialist manufacturers, such as Logitech, have been developing advanced TV remote controls for many years. While these have done a good job, at a price, of bringing control of multiple products through one handheld device, they have yet to successfully solve the challenge of offering easy interaction with increasingly complex TV interfaces on the big screen. I have also previously discussed innovative approaches from Hillcrest Labs, which we also researched in our latest study. The growing interest in touch screens apparently reflects the increased prevalence of touch screen-based mobile phones and other devices. Consumers are clearly becoming more comfortable with the touch screen experience in general, in spite of certain limitations, and it seems likely that this will find its way increasingly into remote control devices for consumer electronics products. CE manufacturers may protest that people are not willing to pay for these capabilities, but our research suggests that, for more sophisticated users at least, prices as high as $300-400 for an advanced device are not necessarily a barrier to purchase. Twitter: twitter.com/DavidMercer_SA Client Reading: Touchscreen Controllers Set to Drive the Connected TV Experience

We spent some time yesterday with Hillcrest Labs's Andy Addis. Hillcrest has been working on improving the TV control experience since the beginning of the decade. The company’s founding principle is that navigation through a world of effectively unlimited television and video content cannot function effectively with the classic remote control/electronic programme guide model. It believes that television interfaces will eventually move towards a pointer-based system. A key challenge was to create a pointing device that works effectively in the standard TV lean-back, 10-ft scenario, where a firm, flat surface is typically unavailable. This led to the “air mouse” concept that is available through Logitech and is the company’s first commercial product. It has also now been extended into the “loop” television control device concept. TV viewers have become used to sitting back on the sofa and controlling channel selection and, more recently, interactive features, over the past 30 years or so. It is worth recalling just what impact the wireless remote control had on TV viewing and usage when it began to penetrate the TV market in the 1970s and 80s. Most people have forgotten the time (if they ever experienced it) when changing channels meant getting up out of the seat and flicking switches on the TV. It’s no wonder that TV channels of that era concentrated on winning eyeballs early in the evening with their best programming, safe in the knowledge that many viewers would stay with whatever shows followed on the same channel, not to say the advertising that funded them. Once viewers were able to control what was on the screen more easily, viewing habits began to change beyond recognition, and channel surfing became the norm. On-screen programme guides have helped viewers cope with the digital era, when hundreds of channels are available. But there’s no question that they are being pushed to their limits by the traditional remote control/EPG combination. Navigating through Sky Digital’s endless channels is a time-consuming and frustrating process. It’s no wonder most viewers spend most time with the channels they know best. Hillcrest’s approach combines the principle of pointing at the screen with a highly visual presentation approach. In demonstrations, the viewer can move the cursor around the screen very rapidly. On-demand movies begin with a wide selection of titles, presented as though they were DVD covers. The details on each title are barely legible at the top level of the menu but they are grouped into genres, and the viewer can easily zoom in to each genre or a specific title that may be of interest. The CES demonstration was shown on a PC as well as a set-top box based on a Sigma Design chipset. On the PC, navigation is very rapid. It slows down somewhat on the set-top box, but is still faster than most of today’s commercial digital TV platforms. The navigation experience is as close to selecting DVDs in a video rental store as I have seen. Hillcrest has integrated most of the usual “digital home” options into its reference guide, including TV channels, music libraries, games and photos. “The Loop” control takes some getting used to, but is easily learnt. There are two buttons, select and back, and sensors and proprietary algorithms mean that the pointer works whatever angle the control is held at. Hillcrest is working with CE manufacturers with a view to licensing its technologies. It has also had interest from digital TV service providers. The company is encouraged by the rapid success of Nintendo’s Wii, which appears to confirm that games players are willing to embrace new control concepts. Persuading several billion TV remote control users to overcome the inevitable inertia and switch to a new concept may take rather longer, so we will look for commercial deals with major CE players and service provider industries for evidence that the lean-back audience is ready for another radical change to their viewing habits. Client Reading: Digital Home Entertainment Devices: Global Market Forecast Q407

Some bits and pieces from today's press conferences and tonight's excellent Digital Experience press event (I should point out that Strategy Analytics clients will get fuller details on this and other CES developments in due course).

LG got the day off to a roaring start by introducing the world's first single-drive Blu-Ray Disc/HD-DVD player. The demonstration even worked first time. But it's not a device that's likely to please the HD-DVD backers or encourage content owners to launch titles on HD-DVD as it doesn't support the HD-DVD interactive platform, iHD.

Pioneer and Panasonic gave us the usual "why plasma is best" indoctrination sessions. At least Panasonic has some products to show: Pioneer spent half an hour telling us how wonderful their completely redesigned plasma technology was but couldn't show us the product. Talk about anti-climax! We'll hopefully see the thing in action if we can struggle through the crowds on the show floor tomorrow.

Toshiba focused on HD-DVD and 1080p. A lacklustre presentation generally, demonstrating once again that if you call something absolutely amazing one year it raises the question why next year's product should be any better. HD-DVD first generation was good. Now there's a new generation. The percentage incremental improvement between the two is probably so small as to be incalculable.

We spent some time looking at Nokia's latest handheld devices. The N76 is a new slimline phone with all the Nseries features except the most important one in my view: WiFi. So I'm still waiting for the perfect phone, but it's tantalisingly close. They're introducing an upgrade to the 770 Internet tablet as well, the N800, which includes loudspeakers, a built-in stand and a webcam. I approve of the focus on sound: my 770 serves as a portable Internet radio but it barely does the job without headphones. The 800 looks like being a significant improvement.

At Digital Experience, a number of companies were showing Bluetooth stereo headphones, including iLuv (www.i-luv.com), which claimed the only noise-cancelling model on the market. I'm a big fan of noise cancelling and have been through several major brands (Sony, Philips, JVC) in the search for the best solution. Bose will be pleased to hear I ended up plumping for their latest model, the Series 3, at considerable expense but worthwhile to the regular plane using music lover. If only they could get rid of the wires.... latest versions of Bluetooth are holding more promise for high quality stereo audio.

Logitech is a company I have admired for some time. Best known for computer mice, they in fact offer a wide range of digital consumer electronics peripherals and control devices. They have recently acquired Slim Devices' internet radio device business, so I will look for evidence that Logitech's financial muscle can drive would should be a rapidly growing market for the millions of wireless home network users around the world.

Finally AOL demonstrated their latest AOL Video offering. We gave them a hard time over claims of DVD or even HD video quality, which they clearly are not offering. But the range of content available is impressive and users willing to spend up to $19.99 on a VHS-quality downloaded movie have plenty of choice. Very little content is paid for today, and that's the challenge for AOL and its content partners. There is some way to go before these models approach the mainstream.