Digital Consumer

Is it a sign of Trouble at’ Mill? Or just another corporate shake-up while business goes on as usual? Microsoft yesterday announced the departure of leading Entertainment and Devices executives Robbie Bach and J. Allard. Microsoft CEO Steve Ballmer will take charge of the division, with Don Mattrick running the Xbox side and Andy Lees the mobile business.

There are clearly problems for Microsoft in its mobile business. All the various iterations of its mobile phone software over the years have failed to make significant market impact as Apple and, now, Google, make the running.

Microsoft’s biggest problem is that consumer is still a relatively small and fragmented part of its overall business. It’s losing out to Apple, and others, in the consumer market because its primary corporate focus continues to be business users of Windows. Apple, which, not through lack of effort, never achieved prominence in business markets, has been able to focus its strategy on the consumer space without the hindrance of adhering to a corporate software strategy.

From Microsoft’s perspective it might seem logical to group Xbox, music players and mobile phones under one roof, but this makes less obvious sense to the outside world. Xbox has been successful largely because it has been left alone to formulate its own strategy focused on games, entertainment and the digital home. Dan Mattrick, whom I met last summer to discuss Xbox strategy, should now try to persuade Ballmer that the Xbox team needs to remain a discrete unit with liberty to forge its own direction, and if necessary outside of the demands of the corporate Windows strategy if necessary.

With the launch of Natal imminent, the continued ramping up of online services based around the Xbox 360, and the plateauing of Xbox 360 sales, Microsoft can ill afford a dilution in focus because of this disruption to the senior management team.

David Mercer

Other Blog Posts Of Interest:
PS3 Global Market Share Reached 31% in Q1 2010
Sony’s PS3 to Win Current Games Console Battle; SA Forecasts 47.5 Million Global Console Market in 2010
Sky Player Finally Arrives Where It Belongs, But Work Still to be Done
TV or Videogame? 1 vs 100 on Xbox Live Offers Lifeline To Appointment Viewing

Client Reading: Taming the Waves: Games Console Life Cycles and Platform Competition

Nokia today introduced its new smartphone, the N8, the first based on the Symbian 3 operating system. It’s got a great 12Mp Carl Zeiss camera, social messaging widgets and Ovi Maps. Symbian 3 allows for user-selected home screens, multi-touch and gesture support and improved UI, graphics and speed through its Broadcom graphics and 680MHz processor. So far, so good. But what we really want to know is, how does it handle video?

As we’ve mentioned previously, Nokia has promoted TV out capability on its N series smartphones for several years, and has talked about one day delivering DVD quality video from handsets to TV screens. Previous smartphones have fallen short but it seems as though the N8 may finally be reaching this goal (although we look forward to seeing this demonstrated in person rather than on a conference call).

The N8 captures HD video (720p) at 25fps. It supports H.264, MPEG-4, VC-1, H.263, Real Video
10, ON2 VP6 and Flash video file formats. Most importantly it features HDMI for output to digital HDTV displays, therefore potentially taking on the role of “set-top box” to the TV screen. Nokia emphasises the ability to play back user-generated video on the TV, but the phone can clearly potentially also serve as a video player for much HD content, rights issues permitting. To emphasise this point, the N8 will come pre-shipped, depending on region, with appropriate “web TV” applications, such as the BBC’s iPlayer in the UK (although it is not clear if these will support HD rather than just SD).

Functionally there is still some way to go. The N8 can push HD video to a 40” LCD over an HDMI cable, but it’s not likely to be a long cable, so to control what’s happening on the big screen the user must keep returning from the sofa to the handset. We mentioned the need for a remote control to Jo Harlow, Nokia’s head of Symbian Devices, who told us it was an interesting idea which she would recommend to her team for consideration. For reference, while we welcome the opportunity to support Nokia’s product development activities, this blog has highlighted this problem previously. Third party vendors will no doubt step into this gap until Nokia brings out its own solution.

In any case there is a genuine question as to whether users will accept the mobile phone functioning as a “set-top box” when it is, after all, their main gateway to personal communications and the handheld web. Even if the N8 can play a 2 hour HD movie on the big screen, will owners be happy to let go of it for that length of time as they relax in the armchair? The answer to that problem will have to be wireless HD connectivity, another subject we have covered extensively.We are sure that this is also on the roadmap of Nokia and other handset vendors over the next couple of years.

David Mercer

Client Reading: Global Audiovisual Market Forecast

I’ve been a bit bemused by one of the more recent hype phrases that has come to dominate discussions in the media technology industry: “three screens”. It’s as though for the first time since the 1920s people are now able to choose the size of display on which they watch TV…

What the phrase is intended to encapsulate, I think, is “three platforms”. In other words, the “broadcast” platform delivers to “TV”, the “wireless” platform to “mobile phones”, and the “internet” (or broadband) platform to “PCs”. Sorry for all the inverted commas, but the fact is that “screen” is becoming ever more divorced from “platform”, and that’s why the three-screen analogy just doesn’t stack up.

In fact, all of these delivery platforms can be used to deliver video to any size of screen. For the last 80 years or more the broadcast industry has been delivering TV to small, and, yes, even handheld, displays. The earliest TVs were indeed only a few inches in diagonal, because the technology behind the cathode ray tube was in its infancy and extremely expensive to execute. And ever since LCD displays were commercialised in the 1980s we’ve been able to buy small, portable handheld TVs which receive broadcast TV. Not many people did buy them, but that’s another story.

So “screens” have come in all shapes and sizes ever since the dawn of the technology, and for many years households have typically owned two or more screens for watching TV. What’s changing is how content is delivered to those screens, and for most sizes of screen people now have several choices in how they access content. Broadcasting still dominates for “big screen” TV, but I can buy broadcast DTV tuner cards and USB sticks for my PC, and I can access broadcast services on mobile phones in many countries. IP broadband dominates for PC “screens”, but that’s because IP connectivity became de facto in the PC market more than a decade ago. If I was brave enough I could install connected devices to bring “TV” via IP to my big screen TV, and the process will surely become easier over the coming years.

To watch TV on my mobile phone I can use the broadcast (see above) or the cellular networks (combined with IP in some cases). Today’s 3G networks don’t tick all the boxes for delivering TV and video, but that may change as 4G comes along. Mobile operators will certainly be targeting users of other “screens” with TV and video services, though they will have a tough job competing with alternative platforms.

So to understand the trends more precisely, media companies really need to think in terms of multiple screens aimed at different user segments and different behaviours. We will all have access to several screens during a typical day, each one is potentially a TV and video display, and each one might be supported by more than one platform. It may not be as neat and simple as the three-screen hype but it does better reflect the complexities, and the opportunities, of the emerging digital media environment.

Twitter: twitter.com/DavidMercer_SA

Client Reading: Digital Media Survey: Italy Country Profile