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Sun 23 May 2004 04:00 AM

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Digital home faces rip and replace barriers

The networked digital home is being embraced by vendors and channel players alike. Getting consumers on board, and persuading them to invest in these new technologies, poses a tough marketing challenge for the industry.

The benefits of a networked digital home with all entertainment devices interconnected are fairly obvious. Imagine a home where the content of CDs, DVDs, digital music files, web access, downloadable movies and digital photography is whooshed around the home in a seamless fashion allowing users to access these media on whatever device they wish.

With a souped-up PC sitting at the heart of the home network and acting as a media server, the concept of the digital home revolves around flexibility, convergence and ease of use.

While the technology is already out there to turn this vision into a reality, IT vendors and channel partners serving this consumer market still face a tough task building demand and driving sales. First off, they have to contend with the fact that most consumers already have separate devices for each of these functions — a standalone PC, a DVD player, a couple of CD players and televisions scattered around the home. To persuade consumers to invest in the digital home, the IT community needs to clearly articulate the benefits that interconnection brings.

In some ways, it is possible to draw a parallel between the enterprise software market and the development of networked digital homes. ERP vendors selling expensive integrated software suites have to demonstrate to potential customers the benefits the new system offers over legacy applications. This means showing a tangible return on investment (ROI), clear total cost of ownership (TCO) improvement and the benefits derived from application integration. If they do this well, ERP vendors can occasionally persuade customers to ‘rip and replace’ their entire IT systems. More commonly though, customers will embark on a gradual project of application integration and slowly shift over from legacy applications to a new software suite.

Expect this situation to be replicated in the consumer market as the IT community puts its marketing muscle behind selling kit destined for networked digital homes. Consumers are a wary bunch and it will be a small minority of cash-rich, tech-savvy IT enthusiasts that rip out all their existing entertainment devices and replace them with the comprehensive set of new products required to build the digital home.

To hit the masses, the digital home evangelists currently have to come up with specialist devices that act as a bridge between the old non-networked home and the new digital dream. This means little wireless boxes that plug into the back of a CD player allowing digital music files to be fed into it from a PC. Similar devices are coming out to transform TVs into digital displays capable of playing downloadable movies from the internet and DVDs being run through the souped-up PC. This is the equivalent of systems integration in the home environment: traditionally standalone devices being hooked up together.

The technology behind the digital home revolution is impressive. At Intel’s recent partner get-together in Madrid, the mock-ups of apartments with an array of devices connected wirelessly attracted a great deal of interest. But nagging doubts still remain: the reliability of the network, the propensity for PCs to crash more often than a stereo, and the compatibility of all the devices being used. With so many different media sources being pulled together, the emergence of clear standards will also be of critical importance to the success of the digital home.

In many ways, vendors of complex enterprise ERP systems have an advantage when it comes to selling their products. For them, measuring TCO and ROI has been turned into a precise science where case studies and calculators deal with real numbers to assess cost savings. In the digital home network, many of those concepts have to be discarded and a more emotive sales and marketing approach must be taken. The consumer market deals with intangible benefits that vendors and resellers cannot really put a value on.

Ten years from now, wireless networked digital homes will be the norm in many markets. Right now, we’re at the very beginning of what should be an exponential growth curve. It will happen, but IT vendors, channel partners and retailers will have to work hard to build the vision, create the correct products for appropriate market segments at the right time, and communicate the benefits clearly to consumers.

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