The elusive ‘digital home’ is set to become a mainstream phenomenon this year, but if the channel wants a slice of the action it will need far more than the ability to shift boxes.
The digital home is not an off-the-shelf product. It is not really a product at all, it is a lifestyle — letting consumers access, store, share and create digital content such as music and video using different devices around the home.
The internet and on-demand services are key enablers for the digital home lifestyle, which is why technology giants such as Google and Microsoft have been quick to latch on to the concept.
Then there’s the ‘smart home’ lifestyle, based on home automation functionality such as security, lighting, home theatre and environmental controls. To confuse matters further there is also the ‘digital smart home’ — a marriage of the two that even further blurs the lines between computing and consumer electronic devices. This blurring is known as ‘convergence’, one of the great buzzwords of the digital revolution.
The digital home is set to become the battle ground of the digital revolution, and convergence means the battle will be fought by vendors from a gamut of industries.
Less than a decade ago companies such as Sony, Microsoft, Google and Telstra did not even appear on each other’s radar, but now all are looking to establish a beachhead in the digital lounge room. The adage ‘My enemy’s enemy is my friend’ is difficult to apply when you’re not sure who your friends and enemies are.
Such industry giants will often say the digital home cannot yet be done, but what they mean is it cannot be done on their terms. The limitations are less technical and more concerned with the desire to own the customer, via off-the-shelf products and services, while fighting off the competition.
If the channel understands this new world order it can enjoy the spoils of war, but so far it has struggled to comprehend, let alone deliver, the digital home.
The technology channel is split into two main camps — information technology and consumer electronics.
Ask the IT channel what is the central component of a digital home and they will tell you it is a fast internet connection combined with a wireless home network.
Ask the consumer electronics (CE) channel and they will tell you it is AV gear such as a big-arse television with a digital tuner and surround sound. The answer lies somewhere in between IT and CE devices, says Phil Gibbs, sales manager of Melbourne-based distributor Alloys International.
Gibbs straddles the IT and AV industries, working with innovative vendors, integrators and other players to provide custom digital smart home installations.
"The computer industry does not understand AV — just as the AV industry has got no idea how to deal with computers. This is the paradox and this is where there is going to be a paradigm shift. That’s why the new market is going to be what we call the 'digital smart home market'," Gibbs says.
"What you’re going to find is Intel and Microsoft basically moving into the AV market, but the PC industry doesn’t understand how to sell AV. The PC industry does not sell anything; what they do is find the product everyone buys and then barter it down to the cheapest price.
"The PC industry had big margins in the 1980s and those margins disappeared. The AV industry, probably up to the early 1990s, had big margins and they’re now going through the same issues. With this convergence they’re going to get bloody crucified, because I don’t know any AV shop that’s got a clue about computers."
Audiovisual retailers such as Sydney’s Len Wallis Audio are venturing into the world of convergence, but owner Len Wallis also says it requires vendors and the channel to rethink their view of the world.
"It’s not so much a case that they can’t get the digital home to work, it’s just too much of a hard time for them. It’s easier for these guys to just get their boxes out the door, collect payment and be done with it," Wallis says.
"If somebody comes to us wanting to do something like this, I’d say we would probably spend maybe 20 hours with them before we would even put a screwdriver to it, doing concepts and designs. We’ve got a mock house set up in the showroom which we can take people through."
Training is the key when it comes to seizing the opportunities the digital home offers to the channel, he says.
"If someone wants to get involved with this they have to be willing to take their staff off the floor or their staff out of the vans and intensively train them, which is not hard. Firstly they should be doing Clipsal and C-BUS training. If they want to get involved in some kind of smart home environment they should be talking to people like Crestron or AMX for training," Wallis says.
"You need computer people on your staff as well as your sparkies, or your sparkies have to be trained in the computer industry. That’s the problem, it is a convergence now and it’s no good being an AV guy getting into convergence if you know nothing about computers, and vice versa."
CEDIA is approaching the digital home from the AV side of the fence and therefore better understands that staff must know how to do more than shift cash and carry off-the-shelf devices, says CEDIA board member David Small. Small is also manager of Audioworks, an importer and distributor specialising in custom entertainment products.
"I am a great believer in education and thus Audioworks employs a full-time product trainer and runs product and generic training around Australia regularly," Small says.
"Many of these sessions include an international trainer from one or two of our product companies. This dovetails in with CEDIA’s training and certification program," he says.
"Part of CEDIA’s charter is to educate its members in new technology and to introduce people with different skill sets to one another so in partnership they can design and install a quality, reliable system.
"Just about anyone can cut a hole in a ceiling to fit a flush mount speaker but is it in the right position for the room’s acoustics? What amplification, speakers and room acoustics treatments are required for best results and to meet the wants and budget of the customer? From the PC side, skill sets in programming as well as selecting the best combination of hardware and software to meet the clients’ needs are also very important."
Knowledge and awareness are increasing in the mass market consumer electronics channels, Small says, and it is not too late for them to make a move into the digital home space.
"A company requires a large skill set or good partnerships to integrate all these disciplines. Any channel prepared to put the time, expertise and knowledge base in action could get into the action. There is a large range of opportunities, from content delivery to control and entertainment."
While AV players have industry bodies such as CEDIA to call upon, IT players are much more on their own when it comes to tackling the digital home. The pressure on the IT channel to understand AV has grown with Microsoft’s release of the Windows XP Media Centre Edition (MCE) — a version of the Windows operating system designed to turn a computer into a fully-featured home entertainment device complete with remote control.
Chipmaker Intel is also pushing into the AV space with the release of technologies such as Viiv (rhymes with jive) — designed to allow a computer to act more like a consumer electronics device.
Computers running MCE and Viiv technology, using powerful dual-core processors, can play and record high definition audio and video as well as turn on and off in seconds, like a CE device, rather than in minutes.
Specialist IT retailers such as Melbourne’s Standard Computers are finding they have to do a lot of their own support and systems integration — relying heavily on staff knowledge to play in the digital home market. According to Standard Computers sales consultant Anthony Payne, selling and then supporting a high-end, customised multimedia computer is far more difficult than shifting an off-the-shelf beige box.
"There’s not a lot of support coming through from the channel regarding new AV technology. Most of what we’ve done here at Standard Computers, especially in regards to [Microsoft] Media Centre, has been off our own bat with a number of enthusiasts in the store who have done the research and the hard yards," Payne says.
"We’d consider ourselves to be pretty knowledgeable on Media Centre and we produce a lot of Media Centre boxes quite successfully, but in order to get to this stage we had to do it ourselves first."
Such an investment allows Standard Computers to offer high levels of customer support, which drives customer loyalty. Neither the channel nor the consumer can treat such products the same as a disposable consumer electronics device, Payne says.
"Something like Media Centre is not a set-and-forget device — you have to be bit of a PC enthusiast, I think, to want to embark on it. Media Centre requires PC-style maintenance to stay up and running — unlike your video recorder which, hopefully, will just sit there for 10 years until you throw it out and buy a new one."
Even with the support of specialist IT retailers such as Standard Computers, digital home consumers are still being left to build their own best of breed solutions and do their own systems integration. While enthusiasts and early adopters might be prepared to go to this much trouble in order to experience the digital home lifestyle, shoppers in your average discount electrical goods store need help but are not getting it, says Terry Wiley, business group director of custom research at GfK.
"You can go to any retailer of these products and quite frankly they won’t be able to help you. They certainly won’t come into your home and connect it together, which is the major problem. Until that happens, the digital home ain’t going to happen," Wiley says.
"There’s no reliable, trusted source for the consumer to turn to. There needs to be an integrator and there’s been lots of talk about the IT channel taking on that roll but they’re simply not geared up for it. I think you will inevitably end up with the likes of Harvey Norman doing what Best Buy has done in the US, where you buy your product and someone comes and installs it."
This is exactly what is happening under a new deal between Harvey Norman and Sydney distributor Altech. Harvey Norman is set to sell Altech’s Maestro Media Centre computers, bundled with a one-hour installation and training in the customers’ home, says Altech national sales manager Kevin Hartin.
"Until now you could go into a Harvey Norman store and buy all the bits and pieces you need to complement your Media Centre PC, but they were not necessarily in a position to go out there and do what in the hi-fi world is seen as custom installs," Hartin says.
"One of the components of our Maestro Media Centre system that we see as necessary to take it into some of these channels is to provide onsite warranty services. We offer it through all channels, not just Harvey Norman.
"We’ve partnered up with a company called QuickKnowledge who actually do a lot of the onsite work for Harvey Norman and we’re bundling their 12-month onsite warranty service and also including a one-hour onsite set-up service. Customers will also have the ability to dial a 1300 number and get someone on the phone who understands what’s going on."
Retail giants such as Harvey Norman are sometimes considered more box shifters than specialist retailers. This situation is not helped by the fact that CE and IT departments within many Harvey Norman stores are on individual franchises — limiting convergence expertise.
Hartin is confident structural changes within Harvey Norman will see it well equipped to carry high-end products such as the Maestro Media Centre. "They recognise that convergence is happening. They’ve got the technology centre in at Martin Place, which is a combined IT and CE franchise; they’ve just opened up one in Castle Hill and they have 22 other stores where they’ve actually merged the two franchises into one with joint proprietors," Hartin says.
"They’ve made that commitment so I feel confident that with a product like ours going into those 25 or so stores, we’re going to get the products displayed in the store in the correct manner. I’m talking about a Media Centre plugged into a hi-fi system as opposed to computer speakers, and plugged into a plasma or LCD TV as opposed to a monitor. I feel confident they are now ready and able to sell a Media Centre PC as a component within the home entertainment environment."
Combined IT and AV franchises within Harvey Norman stores are a valuable asset in the company’s push in the digital home market, says Harvey’s computers and communications general manager Rutland Smith. ‘As we see more and more AV products take on IT qualities, we’ll be looking to those stores where they work as one for some guidance to the best way to sell those products.
"Even so, it is not uncommon in any of our stores to get knowledge from a variety of different salespeople no matter what the sale. As we continue to evolve we’re investing very heavily in staff training because we think that’s probably one of our key strengths in the marketplace," Smith says.
Harvey Norman has offered home installation services on some products for several years, Smith says, but he does not believe they are vital in order for digital home products to reach a wider market.
"I don’t think it’s integral to the future, particularly as companies like Microsoft and Intel work together on things like the ‘PlaysForSure’ standard, which will make these products relatively easy to install and operate," he says.
Microsoft and Intel will be pushing the Media Centre hard this year, but it is only one of a whole new generation of IT devices sporting AV features.
Networking specialists Netgear started branching into multimedia products several years ago as affordable broadband and home networking gear put technologies such as music and video streaming in reach of the masses. Such devices let users access digital audio and video content respectively from anywhere in the home, says Netgear Asia Pacific vice-president Ian McLean.
"I think when the music-streaming MP101 was first introduced in 2004, Netgear believed it was the start of the emergence of the broadband and home networking revolution and that it would expand out. The reality is that whilst there was still a lot of interest its time had not yet come, it’s still a fairly young industry."
After limited success with early AV-enabled products, Netgear is more cautious today and considers channel support important for future success. "This is where the channel comes into it in such a big way because I still believe products such as wireless networking are an involved purchasing decision. The good sellers, retailers and mass merchants still are looking for someone to give them some advice. So for Netgear, we have to get out there and educate them as to how this would fit into a total solution," McLean says. "Right at this point in time it seems the end user is happy to pick up the components they need to make the total solution."
One Australian manufacturer that is having success providing such convergence devices is Zensonic. The company is not an established brand like Netgear, but the Adelaide-based vendor has built the Z500 High Definition Network DVD player, a device that lets users access digital music, video and images on their existing television and stereo, plus it is also a traditional CD and DVD player.
Zensonic deals mostly with specialist IT channels, many online, and is approaching the mainstream channel cautiously, says PCRange chief executive Raaj Menon. "To be honest, I don’t think a lot of the sales people really know what the digital home is, all they’re concerned about is, 'Here’s a big TV, here’s a player, and there you go'.
"That’s basically all the do. Education is missing from retail stores, such as showing consumers the difference between standard and high definition. This is the biggest hindrance to uptake up at moment. When people go out to buy something they need to be sold on it; the problem is, people are not doing a good job in selling it," Menon says.
-1.jpg&w=100&c=1&s=0)
.png&w=100&c=1&s=0)
