Welcome To
The McGuinness Report:^™
Issue Two – August 10^th, 2005

Each issue we will bring you news, analysis, and insight into the paradigm shift in personal computing, occurring as we speak! 

Can Sony Figure It Out In Time?

Over the last few years, the big buzzword was convergence.  Convergence of this and that – phones and PDAs, digital still and video cameras with sound recording, and the list goes on and on. 

Today we have a flatter market with some clear dominant platforms.  In audio, there are countless MP3 players – even my bedroom DVD player plays MP3s & JPGs, but Apple’s rebirth product, the iPOD is the BIG winner in this category.  Now, most wannabe MP3 players, copy the feel of the iPOD.  You have to give it to Apple, they know how to design, and this time, they hit the mark at the right moment.  They deserve this market, so totally squandered by the Microsoft camp.

Media Players

However, media is more than sound.  It is entertainment in several forms:  movies, games, music, pictures, books, presentations, news, and more…  While we have seen significant convergence in some categories, each one thus far has come up short; short in capabilities; short in features; short on compatibility; short on price!

Products like the Apple iPOD are wonderful for music and sound – a huge niche in itself.  The product is superbly designed to be simple and easy, yet as we are seeing from the explosion of accessories, rich in its capability.  But its problem is it is just audio – fine for the market it now serves, better than any other device – so far!  On top of that, they have created a whole new channel for the music biz with their iTUNES marketplace, with over half a billion songs sold, with countless copy-cats - even WalMart is in on it!  Can the local mall music store be long for this world?

But what about total media convergence? 
(A.k.a., what have you done for me lately?)

Enter the new crop of media players…  Ironically, Apple was the one that started this niche, almost 20 years ago!  Once upon a time, there was something called the “Knowledge Navigator”.  Apple shared its vision of these devices in a series of futuristic videos at one of their early share-holder meetings.  The video that most impressed me was one of children in a classroom, holding small handheld color media players, participating digitally in a classroom presentation displayed on a large (blackboard sized) flat-panel display!  Seems to me we have arrived at Apple’s vision, but where is Apple?  Why has apple not introduced their full media player yet?

Personal Media Centers

Interestingly, it has been the PC and Game camps that have carried us to this vision.  We have large hi-def screens in abundance now – though price is still out of reach for most – and don’t even get me started on power consumption!  And we have a whole host of small hand-helds – from Palm PCs & PDA, to the new crop of dedicated media players (a.k.a. Personal Media Centers – per Microsoft), and not to be ignored by any means, is our hero: the Sony PlayStation Portable!

Today we have a number of new and not so new multi-media players.  We have seen the attempts at e-Book players, which have largely been a failure, except in very narrow niche markets (for visually impaired persons for example).  But we are also seeing a push from the PC side of the world around something Microsoft calls Personal Media Centers.

Creative Labs has a pair of these products.  The First is the “ZEN Personal Media Center” which claims to allow the user to “Watch up to 85 hours of video, listen to over 9,000 songs and view tens of thousands of photos. Its intuitive Microsoft interface offers familiar, fast and easy access to all your favorite digital media and gives you the freedom to take it with you anywhere” all on a 20GB hard drive, and a list price of a whopping $499!  Compaq sells a real laptop for around $500 – which would you rather have for the money?

The second called “ZEN Vision” is a photo album, video and MP3 player.  They claim to allow the user to play “tens of thousands of photos, up to 120 hours of videos, and 15,000 songs – everywhere” on a 30GB hard drive.  This is the better of CreativeLabs products with a list of $399, and it even has a built-in AM/FM radio which is cool!  However, the problem with both is media itself – specifically interchangeability. 

Both players rely on a USB connection to download content into the player – implying that you do this from a desktop or laptop – if you have a laptop, why spend another $400 on a clunky player?  The ZEN Vision product does offer a Flash memory card adaptor, but it’s still the same problem – need a source computer to download your media.  With the iPOD type products, the import is simple and the benefits of compact size and functionality make them good solutions for replacing the CD (or god-forbid a cassette) player.  The Personal Media Players appears to be nothing so much as an attempt to put Windows and the Microsoft Windows Media Player in our pockets again!  At least the 3x5inch size makes it possible.  Frankly, without a real media drive, they just don’t measure up!

However, We Want More!

Here again we see the brilliance of Sony in their PlayStation Portable.  Good features for media playing, plus world class games, plus a real optical media drive!  And while sales seem robust, something is lacking!  What is lacking is the kind of creativity displayed by Apple!

SONY HAS IT ALL!  The market savvy, the channels, and the horsepower to pull it all off!  But they are not, quite creating the buzz they need.  Part of this may be the lack of a major technology partner to endorse and support their platform, thus keeping it in its own little box.  Yet we have seen the power of this device, and know it can be THE major media & entertainment hand-held device!

Perhaps Sony needs a couple of new approaches to its market.

Perhaps on the marketing and buzz side, they should look strongly to Apple’s model.  Razor and Razorblade! 

Sony needs to rally the accessory partners and software developers to be truly innovative and revolutionary!  This is what will set the PSP apart – applications!  Needed are all manner of widgets to create cool apps, from keyboards, to GPS, to Cell Phone pug-ins, to universal remote controls, to… who knows what?  It has the games, and it has the best way to view movies.  Does it also have the best way to deliver them?

In walking through any number of retailers, and online vendors, one fact screams out.  Media distribution is going to be the key to Sony’s PSP’s success.  Apple figured this out with their iPOD – you have to make it consumer possible, and even friendly.  I don’t think the Personal Media Center folks understand that yet.  Sony helped to solve the problem with delivering on their new UMD optical discs, but this too has a problem: namely shelf space and product depth.

In retail, floor space is money.  Right now, retailers are investing large amounts of floor space for media for the PSP; few of them doing it well.  Most are mixing the movies in with the games, so it is sometimes difficult to tell what’s a movie, and what’s game.  This is deadly – consumer confusion has killed far too many worthy products in the past.  Sony needs a better answer, but purpose built kiosks and gondolas will face retailer resistance if large enough to present the current PSP media well.  What Sony needs is a new (old?) paradigm!

In 1982, a little start-up company in Campbell, California, invented “electronic software downloading”.  Yes, what we all enjoy today on the web, had to be invented by someone, and that someone was ROMOX!

(Visit the ROMOX historical site: http://www.timmcguinness.us/1982-1985/romox_esd/index.htm)

ROMOX created a complete end-to-end solution, placing complete libraries in-store, at places like: Sears, Kmart, 7-11, drugs stores, and many more.  In that era, the focus was on the software of the day – cartridge based games.  However, the vision of that idea may be what’s needed today!

Sony needs to find a way, the keep or shrink its floor space, while increasing availability of its proprietary media.  In store-kiosks is a major part of what could be their answer, but they also need to break new ground, as Apple did, and create a online solution.  This brings with it a whole host of new issues, such as a UMD writer for PCs.  But with the Kiosk network approach, with the technology now available, it would be easy and fast to buy any PSP media, have it written onto a UMD on the spot – giving access to the full library of PSP titles with little impact on the retailers!  We did it once, it can be done again.  Because, if Sony fails to leverage the technology available to solve market and channels problems that exist now, no amount of creative applications will overcome these problems.

I am confident that Sony has a clue, and does understand these issues far better than most, but they should take a page from Apple’s Playbook – distribution and software availability is the key to the hardware’s success!

A Quick Look At Microsoft!

From the “What the heck are you thinking department”!  What is Microsoft thinking by not fixing the price of the XBOX 360 yet?  Are they trying to make it an EX-BOX 360 before it starts?  This has created a whole series of issues at the consumer and retail levels, with confusion everywhere, making it very difficult to create the advance orders and ground swell needed for a successful launch.  Come on MS, get off the pot and get the word out on the final price!  We know you are going to loose money on each unit sold, this is a razorblade business – the money is always in the blades, so accept it and move on.  Your customers are waiting!

Tim McGuinness, Ph.D.
The McGuinness Report:
August 10th, 2005

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Footnotes:

Electronic Software Distribution was patented, thus every website or service that downloads might be infringing on those patents!  What a thought!  Want to know more, email me!

On a side note regarding the iPOD, we are seeing a new phase in consumer advocacy with electronics emerge too!  Imagine, a class action against Apple because of battery life?  (http://www.appleipodsettlement.com)  Can other actions about advertised claims truthfulness be far behind?  What about past claims about their inkjet printers cost of ownership?  Or the REAL power consumption of every computer maker out there?  What about laptops that burn you lap?  Some manufacturers have been given too many free rides with their products; the ones that deliver on their promises deserve a standing ovation; those that don’t deserve our pity and contempt, and possibly our litigation!

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