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TMO Reports - Analyst: Goodbye PC. Hello Game Machines & Entertainment Servers in the Living Room
by , 3:30 PM EST, November 29th, 2004
As technology becomes cheaper, faster and more powerful, game machines like those from Sony and Microsoft or versatile entertainment servers will beat out the personal computer for supremacy in the living room, according to one industry watcher. One capable player could be Apple Computer, the analyst believes, who has the upper hand with devices like the iPod and software like iTunes and iDVD.
Merrill Lynch analyst Steven Milunovich wrote in a industry trends commentary Monday that game machines "will be the next advanced platform", which could have "important strategic implications.
"The future of microprocessors, storage devices, and development environments could be driven by the booming video game industry," he wrote.
In a research note obtained by The Mac Observer, Mr. Milunovich wrote, "it's premature to know which (if any) device will become the centerpiece of the digital family room of the future. Still, we doubt that PCs (even Media Center PCs) will win because they are too complex and unstable. It strikes us as more likely that either (1) the game console will move up market to become the leading device or (2) a new system we dub the entertainment server will be created."
Mr. Milunovich said he believes Apple is a "likely candidate" to build such an entertainment server because the company "knows how to create audio and image management for the masses." He wrote that he believes such a device would be based on iPod, iTunes, iPhoto, iDVD, and AirPort Express products. "A 200 (gigabyte) Apple server at a reasonable price and possibly with PVR technology could be Apple's next category killer."
A possible Apple entertainment server would store 250 DVD videos and would be a separate device from cable boxes, video game consoles, and other personal video recorders, he believes.
Mr. Milunovich cautioned entertainment servers need to be bare bones and uncomplicated, much like the easy use of today's televisions.
"PC operating systems (Apple included) have too many unnecessary features and, in our opinion, are too unstable to be the foundation of a family room entertainment server...We believe Apple could combine its iTunes, iPhoto, iDVD and AirPort Express technology on top of an embedded Linux (operating system) (possibly a scaled down MacOS) to field an entertainment server. It might connect to the Internet, but would likely not be used for Web surfing. By not trying to replace the PC or pull PC functions into the family room, it has a chance to be stable enough for entertainment use."
Mr. Milunovich warned that whoever wins the war of the living room, some companies will be winners and losers as well. "Microsoft may have more to lose given its PC dominance," he wrote. "We don't expect Intel will be in any of the upcoming game machines and, therefore, believe it is at risk...Apple has a chance to take center stage in a potentially large market."
Observer Comments
Mon Nov 29, 2004 6:46 pm Subject: Apple is probably gun shy on this one
Apple tried the "set-top box" years ago and quickly got out of it. They may not be willing to try it again. iTunes, iPhoto, and iDVD all require a full computer interface, mouse, and keyboard in order to really use their complete features. TiVo is already positioning itself for downloadable, digital movies. Apple might be able to come up with a combination of all of those technologies in a set-top box but what does that really do for the average consumer? A digital library ("server"?) box for music, photos, movies, and TV shows? I suppose that's what the analyst is getting at. Might be a market for it...
Analysts continue to amaze me. I refuse to believe that Apple would put Linux on a home entertainment server, were they even to make one. Clearly, they would either use Mac OS X (possibly scaled down) or a purpose-built OS, as they did on the iPod. But Linux would offer no advantage over OS X, and Apple would have a PR nightmare once word leaked that they chose Linux over their own OS.
Mon Nov 29, 2004 9:11 pm Subject: Apple/TiVo Alliance?
If I had to make a bet on the most likely scenario, it would be some sort of alliance between Apple and TiVo. Alas, I only have a "Series 1" TiVo box, but the Series 2 has a Home Media feature and TiVo Desktop software that allows music and photo sharing, as well as some other spiffy features.
I get the sense that, although out for a number of years, Microsoft's Media Center PC is only a blip on the radar when compared to the number of TiVo units. Plus, TiVo owners seem to be almost, if not more, enthuiastic about their platform than Mac users. And last I checked, TiVo is running a version of Linux on a PowerPC chip.
Hmm ... why not extrapolate to Apple bought out TiVo and relaunch it as an Entertainment Server? Recall that Apple relaunched SoundJam as iTunes.
In another development, Sony will be launching a home server (based on IBM's Cell processor) for broadband content, probably next year. Will Apple's entertainment server also based on Cell processor or G5?
Tue Nov 30, 2004 12:55 am Subject: Apple + TiVo = Profit?
Good call, Mace. With Apple 4B+ pile of cash, and TiVo's market cap of around 400M, Apple could easily purchase them.
As I indicated in my prior post, I think a TiVo/Apple combo would be a great winner. Although the Microsoft Media Center PC may have the technology, TiVo definitely has the mindshare, and (more importantly) the rabidly loyal users that would complement Apple well.
QuoteYes, when you have the Tivo Desktop software started on your Mac, it will announce iTunes playlists and iPhoto albums using Rendez... er... OpenTalk. The Tivo will then see them. Since the home media option is now free, all series 2 Tivos support this. The music player is a bit awkward to use but not too bad (it only supports mp3). The photo viewer is very good and images look amazingly crisp on my TV. And while these features are kind of cool, I find I use them very very rarely.mloader wrote:
Doesn't TiVo use rendezvous? Or support it in some way?
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