Sky's latest digital TV results demonstrate perfectly how it is fighting two battles at the same time. Churn continues to rise - now up to 11.9%, compared to below 10% not long ago - and the company is having to add more and more customers just to stand still, the inevitable consequence of any maturing market. Gross additions were excellent - 432,000 - but net was only 183k, lower than City forecasts.

So Sky has to keep finding more and more new customers to keep growing, and the law of averages says that can't go on for ever. But certainly, with some 17 million UK households not currently taking Sky's pay digital TV services, the company will feel it has plenty more room for growth. It will display confidence externally that it can take on and beat the growing number of competitors, although I suspect internally Sky is acknowledging the real threat of competing platforms, led by Freeview and now joined by BT and other broadband providers.

I suspect we will see the company push customer lock-in technologies like Sky+ even more aggressively this year to try to stem that rising churn rate. For all its faults (see previous blogs) Sky+ is something that is very hard to let go of once you've had it.

BTW, if any reader knows the ins and outs of Blogger's global sites, could they let me know how to find the English language site when I'm travelling abroad, as I always seem to get the local version. Currently in Japan, it is largely through guess work that I've managed to post this blog at all....

Nintendo helped create the modern videogames industry, and the company remains a leading force and is financially successful. In spite of this, Strategy Analytics’ games reports over the years (in which I have been the principal contributor) have cast doubt on the company’s fixed console strategy, and we were proved largely right with the GameCube, which was a major disappointment and drastically missed all Nintendo’s own projections.

I try not to let my personal preferences influence my professional analysis: I admire the passion displayed by the dedicated followers of the various systems, as indicated by the copious flames that fill my inbox every time my name is attached to a particular pronouncement. For what it’s worth, I have only ever bought Nintendo’s consoles (fixed or portable), for myself or my children. But this has not stopped me taking the view that in the fixed market, Nintendo stands little chance of market leadership in the battle against Sony and Microsoft.

Latest reports of Nintendo’s recent results in the specialist and business media have an unswervingly positive slant. Financially, the company continues to be extremely strong, and this is supported principally by the company’s domination in handheld gaming (where Sony’s PSP is rapidly losing ground). But surely even Nintendo cannot pretend that its Wii console is meeting expectations. It sold 3.2 million in the first quarter, 20% below its target. But from all the press reports you would think the Wii was already market leader and set to sweep the world.

Take this from Business Week: “Nintendo's Wii console has blown away Sony's PlayStation 3 in the early stages of the hotly contested battle for next-gen gaming consoles.” Putting journalistic hyperbole aside, the facts are that Nintendo missed its target for global Wii sales by 20% while Sony was within 10% of meeting its own (admittedly reduced) target. And while consumers spent $800m on Wii consoles, they spent $900m on PS3s. Blown away, indeed?

I have mentioned before that Sony’s games PR is dire. Whatever Nintendo’s PR people are doing, Sony should learn from it, and fast. The PS3 certainly has major challenges ahead, but it’s nowhere near the disaster the press and some financial analysts are painting it. And the world’s leading console platform is still, wait for it, the PS2. By contrast, Nintendo still has a lot to prove if the Wii is really going to revive the company’s fortunes. If its commercial performance is a good as the PR spin, it has every chance of success. The bottom line is, this is a battle that will be fought over years, not in a few weeks before Christmas.

Loewe AG, the German manufacturer of high end TVs and consumer electronics, announced 2006 results today. Sales were up 7% to €341m, and the company made EBIT profit of €13.2m. Loewe's name is familiar to German consumers but little known elsewhere in Europe. It is lucky to have survived at all: it nearly vanished altogether in the early part of this decade after the company missed the transition to flat panel TV.

Loewe was always a higher end brand - not as exclusive as Bang & Olufsen, but certainly a significant cut above the Sonys and Panasonics of the world. Until the early 2000s it ticked along fairly nicely as a purveyor of upmarket, large screen TVs finished off with modern designs and aimed at the comfortably affluent looking for something to help them stand out from the crowd.

In 2001 and 2002 flat panel technologies began to penetrate these larger screen segments, but Loewe management was poorly prepared for the speed of the transition. Particularly as its "tube" TVs were aimed at affluent buyers, Loewe was badly affected when those customers became the first to switch to plasma and LCD TVs, even though prices of the flat panels at that time were still very high. Loewe's CRT (cathode ray tube) products became caught in a downward price and sales spiral and the company reported collapsing revenues and a huge loss in 2003. Only in 2004 did it begin to switch seriously to LCD, but by that time the damage had been done. An investment by its long term manufacturing partner, Sharp, the Japanese LCD specialist, saved Loewe and ensured its survival.

In October last year the company was given a "Turnaround of the Year" award, reflecting its transformation after the 2003 disaster. I feel a duty to mention that Strategy Analytics had carried out consumer research in 2000 that identified a strong willingness by consumers to spend significant premiums on "wall-hanging TV", some years before the market for such products had got off the ground. We were surprised by the strength of those findings at the time, but they proved to be prophetic, as flat panels have more or less replaced CRTs in most segments within the space of barely five years. It is never easy for any company, and particularly niche players, to commit significant invesment on the basis of such research, but one has to wonder whether Loewe might have saved themselves several years of turmoil if they had been willing to place that bet at the time.

Another convergence merger is announced. Arris and Tandberg are to join forces: as they put it, "The newly created company will have the scale and the critical mass to lead the market for converged voice, data and video systems".

There is no question that the emerging technologies across media, communications and services are creating disruption and opportunities. It will be interesting to track over the next couple of years whether Arris/Tandberg and the myriad of other convergence-driven mergers really improve business performance and shareholder returns.

Not that Arris/Tandberg will necessarily fail. But there seems to be a growing tendency to assume and accept that, to play in the "convergence era", whatever that ends up meaning, any single company must be able to offer a wide portfolio of products to meet any possible customer requirement, and that focusing on a core competency is a bit too last year.

Has "convergence" just become a new way of excusing a tech-driven round of mega-mergers and acquisitions, the way that anything "internet" justified excessive investments nearly 10 years ago? "It's OK, shareholders: trust us, this is a convergence play. We can't describe convergence, but we know it's going to be good."

...after the out-of-this-world experience of Las Vegas, that is. A visit to retirement-age parents in suburban Essex is a good way to be reminded of the down-to-earth realities of how digital technologies are used by typical users, in contrast to the techno-geeks that frequent CES.

A few months ago my parents purchased a smart new Sony Bravia 32" LCD TV with integrated digital terrestrial (DVB-T/Freeview for anyone searching these terms on Google). It's worth noting, particularly for Americans that buy and never use the ATSC capability of their IDTVs, how easy the original installation process was and how impressive the results. Plug in device, tune in channels and enjoy. Use existing roof-top aerial installation. There really was little else too it, and the transformation from analogue terrestrial was indeed like moving from night to day.

Visiting the same household this weekend I was therefore surprised to see a 14:9 image on the 16:9 digital display. The explanation, apparently, is that one of the two main users prefers the analogue teletext service, with which he has become familiar over the past 20 years, and therefore often tunes the set to analogue broadcasts. 14:9 images are regularly transmitted by the BBC's analogue channels.

One of my many personal peeves is the apparent irrelevance to many people of the basic shape of the TV picture they are supposed to be watching. Ever since the arrival of 16:9 TVs in the early/mid 1990s I have lost count of the number of widescreen TVs on which 4:3 pictures are happily viewed in various distorted formats by an apparently oblivious audience. And then I spend my time with firms like Silicon Image who want to squeeze the next ounce of image quality out of displays, while apparently failing to realise that the vast majority of TV viewers don't even seem to recognise when the basic picture shape is distorted.

OK, maybe I'm being a little unfair - my parents do tune digital channels on a regular basis, and watch full 16:9 pictures, although we did have an interesting debate as to whether these were truer to life than 4:3. But after I demonstrated the BBC's digital interactive text services, I was told this was the first time they had been seen, and that in any case they were more difficult to read as they didn't fill the whole screen (they are designed around a live picture-in-picture video feed).

It's a familiar story from the UK (not that the UK is by any means unique) of rapid technology adoption but variable and misguided usage of that technology. These particular Freeview "users" were unaware of the impending switch-off of their analogue signals. Once the UK's digital transition begins in earnest next year I suspect we will be hearing a lot more from the analogue minority that remains.

On another subject, I was watching The Simpsons on Sky One on a friend's Hi-Def Sky Digital system today. And then we switched to Sky One HD expecting to see the same programme transformed. But of course it turned out to be an extremely old episode that just about merited the description colour, never mind HD. To be fair, Sky's small print does not claim HD for every programme on its HD channels, and they clearly label each programme that is actually transmitted in HD format. Sky admits that only a "selection" of programmes will be in HD. "Selection" is certainly the word - between 12.30am tonight and midnight tomorrow only 4 out of 24 hours' programming on Sky One HD are broadcast in HD.

The big picture behind all this? For all the talk from the industry about transforming the experience for users, the reality is that the majority of consumers are happy with a lot less than the best the industry has to offer. And many of them pay for experiences without really understanding what they are supposed to be getting for their money. A sober and useful reminder of real-world issues after the hype of the CES and Apple jamborees.

Some final thoughts on the Show as we head back to the UK.

I covered the LG dual-format BD/HD-DVD launch, and this got a lot of general press attention. The reality on the ground is that it will have little impact on the market situation. The major content providers remain firmly behind BD, PS3 is picking up speed, and BD disc sales are beginning to enter the DVD radar. Toshiba is left holding the HD-DVD baby, and is likely to be little more than a minor player in the next-gen market by this time next year.

Earlier I pointed out how tough it is to keep raising the video quality benchmark year after year. I spent some time with Silicon Image, the company behind the HDMI digital connectivity standard, and their demonstrations suggest there is still much room for progress. Next steps for displays are 10-bit colour, and in the long term 3D is likely to be realistic. OK, I know, we've been hearing that since the first CES 40 years ago, but it's one of those things whose time will inevitably come. I just hope I live to see it.

A dominant theme at CES is what I call Internet TV (as opposed to IPTV, which tends to refer to managed, operator-delivered services). Microsoft have confirmed their intention to add internet TV to the Xbox 360 (something we've predicted since day one). More significantly, Sony announced that future Bravia TVs will be IP-enabled and are demonstrating their Internet Video Link device, which delivers managed internet video content to TV sets. Deals have been struck so far with AOL, Yahoo! and Grouper. FCC Chairman Kevin J. Martin and Commissioner Tate happened to be getting the demonstration when I dropped by (their schedule took priority, naturally enough...). I imagine there are some interesting debates at regulators right now over what exactly they should be calling this thing that gets TV and video content to the TV without involving the TV "providers" they like to regulate.

Cisco is the other firm to watch. Chairman and CEO John Chambers gave a typically powerful keynote suggesting that his firm would be enabling the transformation of consumer electronics over the next five years to a completely IP-based environment. Ambitious timing, perhaps, but a company with this sort of record and business performance cannot be ignored. Whether Cisco's strategy pans out or not, the transformation of digital devices in this timeframe is certainly assured.

Vista is a big part of the show of course. One interesting aspect of the new OS is the Sideshow feature. This extends selected capabilities of the PC to a variety of connected devices by adding what Microsoft calls "gadgets" (add-in programs) to the PC. These programs update the relevant device with information and allow it to access the computer whether or not it is switched on. This concept raises the possibility that, as long as a PC user has access to the Internet, he can always access media or information stored on that PC. This is yet another example of the extension of the network to the individual - the connected consumer.

Hitachi gave some interesting perspectives on the ongoing plasma/LCD debate. The company claims to be independent of the debate, although in reality it has more invested in plasma than LCD. It sells both technologies, and positions plasma as preferable above 37" and LCD below. Even with the increase in LCD sizes Hitachi believes plasma will win the large screen battle because of the inherent benefits of the technology. One of the clearest of these, reduced blurring in high motion content, is being shown at Hitachi's booth in a side-by-side demonstration. LCD proponents of course will tell a different story...

Every major brand needs a world first at CES and Hitachi's was the 1TB (terabyte) hard drive. So expect to see these in PCs later this year.

Sling Media is the TiVo of the late 2000's. From a standing start in early 2005, the company's name has come to represent everything about the emerging connected entertainment world. It doesn't reveal sales numbers, but many international road warriers (shouldn't that be Sky Warriers?) confined to business hotel rooms are already familiar with the Slingbox's ability to banish the restriction to local television in unfamiliar languages to the history books. The size of the company's booth at the emerging technology exhibits at the Sands give testament to its growth and profitability.

Sling continues to shake up the media world with the launch of new devices. Highlight at CES is probably the SlingProjector, which mirrors whatever content is displayed on a PC screen on another display. This is Sling's answer to the problem of getting web content such as Youtube videos onto the TV; many other solutions are offered elsewhere at CES.

I'll be posting photos from the Show as soon as I can.

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.