The digital lifestyle is becoming a reality, but not all technologies are taking off as fast as others. The digital camera is now the de facto means of taking photos, digital camcorders are widespread and DVD/hard disk drive recorders have helped kill off the old VCR. Large
flat-panel displays – both plasma and LCD – are eating into the long-held dominance of CRT TVs, while television and movies are about to go through their biggest overhaul in the coming year with the arrival of high definition TV (HDTV).
Creating your own home cinema can now cost as little as £150 with a DVD-based all-in-one package, while projectors costing as little as £500 are finding their way into many living rooms. Thanks to the MP3 music format and the global popularity of the iPod, music has also gone digital. As a result, we are now seeing the next step of people wanting to take the music from their headphones and wirelessly stream it from their players to living room hi-fi’s, or around the home to other systems. You would think then that Media Center PCs, which can deal with most of this digital content, would be more popular?
At the tail-end of 2004, vendors were saying that 2005 was the year when Media Center PCs – based on Microsoft’s Windows XP Media Center Edition 2005 (MCE) – were going to hit the big time. Now, at the tail-end of 2005, it is clear that the boom has failed to materialise. To be fair though, this doesn’t mean that Media Center PCs have failed, just that preparations for their moment in the limelight have taken longer than expected. Right now, the start of a potential boom is underway.
“I still think it’s still early days, but I feel these systems have finally taken hold this year,” said John Turner, business manager at audiovisual (AV) distributor Midwich. “We are seeing them gain a presence in the high
street with Dixons and Comet. Sales of Media Center PCs – especially those that don’t look like PCs – are really taking off.”
Marc Engall, channel sales director EMEA for Elonex, added: “I think the early adopters kicked in in 2005. Right now there is lots of growth. These people really started to understand what Media Center PCs are all about, thanks to a lot of marketing of the technology by PC makers Intel and Microsoft.”
Elsa Opitz, research manager at IDC’s PC Tracker division, said: “This quarter especially, Media Center PCs will get a lot of attention and finally grow, although the size of the market is difficult to predict right now.
“The problem in this space was that PC vendors were creating the products, but they were largely relying on Microsoft to do the promotion. In fact, there was a lack of promotion from both sides. This has changed.”
While Media Center PCs may be consumer oriented, there is still a lot of opportunity for the channel. The UK’s leading PC builder Elonex has signed a distribution deal with Midwich for its Media Center PC range, hoping to push its offerings beyond the web and retailers, and into the smaller outlets and AV VAR community. It also helps that nearly every PC manufacturer is now onboard.
Opitz said: “Every vendor is doing a Media Center format factor now – even Dell has become involved. More effort is going into promoting this digital home concept.”
David Weeks, Windows product manager at Microsoft, said: “Sales of MCE are going very well now. We have expanded it out to 19 new geographies – a lot of northern Europe is covered. The release of the operating system to the system builder channel last year also had a big impact. According to research we have done, by 2009 around 53 million units of MCE will ship worldwide. This year it will be 12 to 13 million units.”
It is vital that the PC, heavily disguised as a Media Center PC, breaks out of the bedroom or study, and into the living room. Desktop PC sales are slowing and everyone in the chain – from chip manufacturers to LCD monitor makers – knows that they need to find a new route into the home to make up for the revenue shortfall. A lot more money is being spent on home-entertainment devices, and with everything going digital the Media Center PC has a good chance of becoming the entertainment hub of many households. However, there are some barriers to be overcome.
Engall claimed: “Media Center PCs can slow the decline of PCs in general, and for the reseller they can provide them with margins they can no longer get on regular PCs. They just need to get out there and sell it.”
Opitz agreed: “Media Center PCs can help slow the decrease in PC sales, but in order for them to get wider adoption the price may have to come down. At the moment, the average prices are falling slightly, but in the future they may have to come down more. Look at notebooks, they are so cheap and the market is growing.”
One thing that will help Media PCs achieve the low price points will be working with the high-street chains, which are not exactly known for their generous returns to suppliers. Still, mass-market acceptance of Media Center PCs is needed and the high street remains the only real route to get there. The decision by Dixons and Comet to create separate Media Center PC sections in their stores across hundreds of UK locations is a huge boost. With mainstream marketing still slow to arrive, most people will get their first glimpse of Media Center PCs on the high street.
“The high street has been watching this technology with interest and has started to take them on now,” said Engall. “Dixons and Comet have created in-store sections for them, separate from PCs. Comet has a section in over 100 stores, selling systems from us and Acer. It’s absolutely vital that the high street get on board because it’s where the consumer checks for all new technologies.”
According to Opitz: “The presence in Comet is definitely an important step for the technology and now Dixons, in its quarterly magazine, has a feature on the whole digital home story, incorporating Media Center PCs. There is still a lot of complexity to these products, but with dedicated sections in-store retailers can explain and demonstrate the products to customers. Technologies for the home need the high-street profile. E-tailers are not yet doing much on this front, although people that need convincing tend to go to retail outlets.”
Engall added: “Buying a Media Center PC is an emotional buy, like any piece of consumer electronics (CE) kit. Also, Media Center PCs have to be sold on experience not off the page. It’s very difficult to sell these devices on just the concept.”
Part of the appeal of Media Center PCs will be that newer designs bear no resemblance to traditional PCs. Even the ‘PC’ part of the name has proved a stumbling block for many customers that instantly think of big, loud grey boxes skulking in the corner of the living room, spoiling their carefully designed contemporary decor. There are some PC-looking Media Center PCs out there, but these are targeted at gamers, students and enthusiasts that want the ability to upgrade key components while retaining the multimedia functionality of the MCE operating system.
However, these are not the models that are going to break into UK living rooms. The ones that will look like DVD players and set-top-boxes and, in the case of Elonex’s Lumina, a flat-panel TV with media Center PC in-built. The aesthetic element of these devices is key.
Weeks recalled: “When we first released it, the OEMs had systems as traditional PC format boxes that were not acceptable in the living room. But now, there are some great small form-factor devices out there.”
Opitz added: “We are seeing a lot of sexy and stylish devices now that consumers can visualise in the living room. Before that, Media Center PCs were just normal looking PCs running the MCE operating system that, apart from poor looks, were also too loud. Vendors have realised that they need to bring in devices that look like existing consumer electronics devices. It’s not just aesthetics, but if you want to put a Media Centre PC in your room, it has to sit well beside the increasingly stylish AV kit.”
On the technology front, Intel has finally put some muscle behind its support for the Media Center PC with its Viiv (pronounced ‘Vive’) platform. Intel is hoping Viiv will do for Media Center what Centrino did for notebooks. Up until relatively recently, Intel has paid little more than lip service to Media Center PCs, with Microsoft and PC builders doing most of the running. Intel is now hanging its hat on the digital home concept and so Viiv was announced a few months ago. It’s a branding programme for living-room PCs, prescribing a certain set of technologies that a system must have before getting the all-important Viiv logo.
Weeks said: “Viiv will be brilliant for the Media PC market. The Viiv chipset and brand is the new P4 or Centrino – we certainly expect to see a lot of promotion around this.”
Turner was more guarded. “If the marketing dollars for Viiv are there, then it will make a difference,” he said.
Despite the Intel and Microsoft backing, there are still barriers to the take up of Media Center PCs. Firstly, they are PCs and offer so much functionality that consumers will remain confused. They are expensive compared to many CE devices. Many CE devices are now converging too, offering features that make up part of the Media PC pitch, but that are cheaper to buy and easier to use. From dedicated media streaming devices to DVD/HDD recorders, and set-top boxes with tuners and hard drives in-built, the competition for the digital living room is cut-throat.
“There is still the issue of complexity to overcome,” argued Opitz. “The average consumer device is plug-and-play, but here you need to know how to use a PC. Also, consumers still go for products that only do a couple of things, but understanding a multi-functional device like a Media Center PC can be hard for them to grasp.”
The digital home is not a potential market, it’s the guaranteed future. The big marketing machine for Media Center PC technology is about to swing into action. If VARs and PC builders can keep the sales message simple there’s a good chance that 2006 will be the year that 2005 was supposed to be.
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