Monday, September 17, 2001
Where are We Now?
Base on the stage of the present PC down market, we have to ask the question: “Where are we now?” The answer is that the PC industry is in a major state of transition. We are at the end of the ‘Internet Boom’. During this year, we saw the Dot Com crash, coincidentally with the general economic slowdown. Many of the failure were built on false market assumptions. Does this indicate the end of an era for the PC Industry? We do not think so because we have many powerful assets to build forward.
Where Have We Been?
History tells us that we were at the “DOS Text Generation” during 1980-1988. We did basic applications using the DOS system. It was very hard to use and was only for the very committed users. It was also very expensive.
It then came the “GUI Generation” that lasted form 1989 to 1994. We saw 2D acceleration, basic multimedia and the acceptance of home PC. Through the standardization effort, we had real universal user interface and peripheral standards. This resulted in huge demand for MIPS, memory and storage.
The “Internet Generation” started in 1995. It created tremendous demand for additional performance. It also brought about personal productivity improvements. PC filled new role for casual entertainment (including 3D) as well as a new type of connectivity. The common denominator is that each generation had enabled the one that followed.
Key Difference for the Future
In the future, growth will not be driven by just one ‘Killer Application’. It would include many applications, form factors and different types of content to fit different types of users.
We will see new growth that expands upon the same foundation we have established. The focus will be on the center of the market where volume potential is highest. However, we should expect a slow and steady recovery. Not a replay of the past, or a return to the days of the Internet Boom. Instead, we should reap the residual benefits from the Internet Boom generation.
We see the ‘First Time Buyer’ is becoming an endangered species. There will be fewer and fewer first time users. There will be the smarter users who won’t fall for the hypes. They know how to judge value and are not afraid of technology.
This new generation will look for increase in mobility and in productivity through Public WAN. We will see massive PC penetration as a result of lower price points. Performance will not be the top concern. We will achieve over 50% penetration into the homes. We will see competitive PC sales over e-commerce. We will see the wide spread of broadband and peer-to-peer computing. We will see more servers and communication infrastructures. We will see more digital contents and file sharing.
Pass Technology Transitions
What can we learn form the past? We can learn a lot of lessons from the previous generations. ‘Streaming’ digital media seemed like a good idea. However, from the user’s perspective, owning and controlling it is better. A strong example was the popularity of Napster MP3 versus the Play-per-Play Music that never gain enough acceptance.
While broadcast TV seemed to be adequate, but many users prefer to own their own DVDs, CDs and tapes. They want to use them when and where they wanted. In the next generation design, we must reflect these lessons. Our digital products must be consistent with our non-digital lifestyles.
Barriers to the Digital Lifestyle
There are still many barriers to the digital lifestyle. First is the ‘MIPS’. Is the speed and performance of our CPU sufficient for the new applications? Would there be easy-to-use software for the applications? Would the Internet infrastructure become a free-flow conduit for that lifestyle? How much time and money would the consumer afford? What will be the adequate bandwidth? What kind of content will be preferred?
Is Broadband the Answer?
Present broadband penetration in the US is approximately 6-10 million users. That can triple by 2004 to 2005. The primary benefits of broadband is the fast download, the always on feature and the double usage as a phone line. However, regardless of the speed boost, user’s habits have not really changed. Audio and video ‘Streaming’ mentality is still questionable. Rather, picture capture, storage, and share is a more common model.
The lessons from the previous generations may be that while ‘Streaming’ digital media sounds like a good idea, but the user would prefer owning and controlling his own habits. While broadcast TV is adequate, consumers still prefer to own DVD and CD so they can play them anytime they wanted. Well, we should review and learn from history.
Evolution of the Digital Lifestyle
‘Streaming’ turns out to be a distant and impersonal side of digital video entertainment. Users would prefer to deal in terms of files (not linear access tapes). That allows them random access, manageable transfer, edit and archive. Consumers seem to prefer to capture, clip and archive or send this type of data to distant storage when the service becomes ready.
Computing Vision
The industry will move towards distributed client/server architecture. That means multiple PCs in the household. All PCs are both client and server, depending on what data and resources are required. Centers of activity will be determined by the distribution of resources and data in the home. A Media PC will sit at in the living room to display media content. A desktop PC will be placed in the den for broadband Internet. A communication PC in the kitchen will manage voice communication between all the voice-over-IP phones attached to each PC in the home.
Clint Server Relationships
The array of information servers and information clients will be expanded. The desktop PC will be located in the den or other common areas. Internet connection will be through HPNA (home networking protocol) , or wireless (802.11 or Bluetooth).
The media PC will be located in the family room. The connection will be client-to-desktop. It will have Internet access and will also be the server to all PCs for digital TV storage (like Tivo) and media content. It will be used to browse an online TV guide, and request to download (recorded) content. Its client software will be able to search, schedule, identify and resolve conflicts. When completed, availability of file is reported, and can automatically be transferred to the client PC. Consumer can also preview, and edit contents. He can also store and distribute as desired.
The information PCs will be located in bedrooms and other light duty environments. They will be stand-alone basic PCs acting as clients to all other servers.
There are also the mobile PC (notebook/ Webpad/ and tablet) that can provide multiple usage convenience.
The communication PC is in the kitchen. It will serve as the contact database server and also the VOIP controller to all the house phones. No more long distance charges or separated phone lines for phones in the house. Each PC can generate one or many dial tones. VideoPhone (not video conferencing) will come into the home. The VOIP phones will have PBX features which can route calls to any PC, any phone and to any location worldwide. It will also monitor and manage home security as well as appliance conditions. It will act as client to all other servers.
Summary
What is changing? In summary, the ‘old’ segments and form factors are changing. The desktops, mobiles, servers and workstations will no longer be sufficiently differentiate from each other. Most platforms will have generous performance headroom for applications. The lines between ‘high-end’ and ‘value’, ‘consumer’ and ‘enterprise’ PC will be blurred. The multi PC home will be more common as new PCs are added and old ones remain. All these PCs will be fully utilized when connected.
The requirement to achieve the digital lifestyle is to have all CPUs equipped with basic peripheral features at low cost. They will have to support mainstream performance DRAM as well as mainstream UMA graphics option. I/O connection and form factor will become the differentiators. The difference will be what data sources can be connected to? Or what acceleration resources can it offer? They will be designed to focus on a new generation of digital media consumers.
By: Bert McComas, InQuest Market Research
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