The Digital Home: Fact or Fiction?

The digital home will be a major growth area for the IT industry over the next five years, but confusion about the potential of this emerging market has held back growth, according to attendees at CRN's Channel Roundtable.

Still, most attendees agreed that if executed properly, opportunities abound for resellers and distributors that can successfully tap profit from providing home networking and integration solutions.

Ross Whitelaw, general manager at retail group Leading Edge, says one of the greatest challenges that faces the industry is its ability to see the potential of digital home products at retail level. 'There's a lot of confusion out there right now.

'I think there are very few people who would be in the position of being able to really understand what the potential is and how to get the most out of it and make sure that when the consumer comes into the store - driven by the advertising or the PR or the technology - that they're not going to walk out saying 'What's this all about?' he says.

Whitelaw says only a handful of Leading Edge's members know how to get involved in a revolution that is seeing the convergence of traditional IT and consumer electronics products. 'I reckon that 15 to 20 percent of our members would be able to do it on their own. 'They're saying: "How in the hell do we really get involved with the revolution? Do we have to turn our stores upside down - do we have to invest $250,000 in the business to refurbish it?"

'We know there's an opportunity [but] it scares the crap out of a lot of people because they don't really understand it,' he says.

He adds that there are very few mass-market retailers - with the possible exception of Harvey Norman - that would capitalise on the home networking revolution.
'I'd like to see something happen as an industry to show leadership.

If the suppliers want to capitalise their return, something's got to happen and it need not cost millions of dollars to ensure the sharp end of the stick is primed well to capitalise on the enormous investment that all the suppliers are making in technology and we don't just piss it up against the wall when people walk in the door,' he says.

He adds that the retail and reseller channel must not go into its shell and decide that it's all too hard. 'The people who can take a customer and walk them through the benefits [of home networking] - that's where it's at,' he says.

The digital home is a 'pet subject' of mine, says Andrew Mclean, area sales manager at Intel Australia and New Zealand. 'If you look at the four key growth areas that Intel has identified for the next five years, digital home is one of those four.

'Effectively the way it's being defined is that you've got a convergence between the IT world and the consumer electronics world. All content is going digital, whether it's content through a digital video camera, content coming through broadband, broadcast or a mobile device. It's all digital at the end of the day, so theoretically they should be able to be shared amongst devices throughout the digital home,' he adds.

He says the catchcry for the digital home is 'any content, on any device at any time' - and that's exactly where the market is heading. 'There's a lot of exercises going on at an enablement level - working with the manufacturers to make that happen.
'It's going to be an absolutely huge push in that area and it opens up great opportunities for the channel in Australia. Not only the major mass merchant retailers and IT companies but certainly the local IT companies as well.

'If you look at all these consumer electronics devices - effectively they're built on IT technology right now. It's going to be a leveller - the local organisation will be able to take these building blocks and play in this space. The real key is going out and raising awareness for consumers as to what's going on and what the solutions are that are available to them and making those solutions easy,' he says.

However, Domenic Torre, general manager at networking equipment vendor D-Link Australia and New Zealand, explains that the digital home has not been well portrayed to consumers. 'I don't think people really understand what it is we're throwing out there at them. Yeah we're throwing out Centrino - you have people walking around with notebooks thinking they can connect to the internet.

'The number of phone calls that we get in our company being a supplier or product - people saying: "I bought your wireless NICs, how do I connect to the Internet?"
'The Internet fridge - has that ever been explained properly to people? For crying out loud - all it's doing is replacing your notepad on your fridge so that you can write down that you need milk and at the end of the week it orders it for you,' he says.

Paul Colley, technology and training manager, mobile network products and network marketing group, Sony Australia, adds he works on both the consumer and IT channel and the IT channel is seeing the digital home network as an IT solution. 'It's not an IT solution, it's a consumer solution and it's all about lifestyle. How much of the IT channel is selling digital TV? None,' he says.

He adds that until people can get their heads past the IT world, the market will not take off. 'We've got to push it from not how fast this Wi-Fi standard is, but move it to what can this do for me?'

Vendors are forever teaching channels about selling benefits to customers but when a consumer walks into a store, there are sold on price only.
'I watched digital cameras rise and I think that was a missed opportunity for the IT channel. Digital cameras are being consumed in the millions by the mass merchants - there's no margin left anymore. The IT channel needs to take advantage of new technologies,' he says.

Colley says that the challenge, regardless of products, is to get the whole channel thinking 'consumer' and until that happens they're going to stay in the IT space. 'I imagine that maybe the IT channel will polarise into two different channels. 'The typical IT channel is always going to be there - but maybe the channel needs to say "This is actually a new market" and actually tackle that totally differently,' he says.

He adds: 'The consumer channel is typically not real good at offering a solution - they're good at moving boxes and the IT channel has a history of understanding how things work together but they've just got to migrate that mind-space into a consumer space'.

Intel's Mclean says: 'What we're seeing is some of the IT guys are starting to match-make together with the high-end AV retailers who can sell the 30 and 40 thousand dollar systems and articulate why someone should have that system. 'Some are trying to skill up themselves and some are trying to match-make with people that have complementary skills. It might be the Len Wallace [Sydney hi-fi retailer] type stores,' he says.

Michael Calculli, channel sales manager at local system builder Optima Technology Solutions, claims that resellers focusing on the networking side of the digital home are going to win. 'Consumers are already buying $650 million worth of TVs and DVDs and digital cameras, and the consumers are going: "How can I connect this all together?" And I think that's where the resellers are going to win - wirelessly networking the home and being [the consumer's] service provider for everything.
'There'