The Digital Home: Myth And Reality

Imagine a world where devices of all types -- computers, phones, TVs, radios, and cameras -- talk to one another. A world where digital content follows consumers throughout and beyond the home. And a world where digital rights systems keep consumers happy and content owners in business. Welcome to the myth of the digital home -- a single networking environment that allows a household to control and share entertainment, communications, and applications.

Now, wake up and throw some cold water on your face. We're not there yet -- not even close. Here's the reality. Today, a paltry 2.1 million households in the US and 2 million Western European households are using digital home applications. Of the five technology building blocks of the digital home, the network is farthest along (see figure below). Processing intelligence and content have a long way to go. If you have visions of consumers using remote technologies to control the security and lighting in their home via a home network, leave those ideas to your imagination for now.

Despite today's reality, there's no denying that digital homes will arrive. US home networking households will reach 37 million households in 2008. As the applications and content sitting on top of those networks mature, digital homes will cause big changes in consumer and business behavior -- akin to the development of the Internet itself. Throughout history, quantum technology shifts usually have one defining characteristic. The printing press allowed mass communication. The telegraph divorced communication from transportation. Broadcasting allowed instantaneous mass communication. The Internet provided a two-way channel of communication for the first time.

The defining characteristic of the digital home is the liberation of experiences from technology. For the first time, interoperability, networked devices, and cheap storage will unmoor content and applications from particular devices, distribution channels, and locations. We see hints of this happening today. For example, Major League Baseball announced last week that it would distribute mlb.com's All Access service via MSN. This week, it announced it would distribute the same content through an alliance of Comcast, Cablevision, and Charter Communications. So much for exclusivity. In this case, the experience -- content -- divorces from any technology. The PC-based Web started the trend; digital homes will accelerate it.

WIM No. 1: Companies in the distribution business (hardware or wires) must create experiences. That means companies like HP, Compaq, Dell, Comcast, and Verizon will need to move further into developing exclusive services or content, such as home network service and monitoring, video search, and command-and-control applications.

WIM No. 2: Engagement is at a premium. With so many options for content and applications, measuring the gross use -- i.e., reach and frequency of traditional media -- is next to useless. Mobile phones and the PC have already had a huge impact on consumer multitasking for traditional media -- especially the TV.

WIM No. 3: Today's interfaces break down. Today's interface models of mice, keyboards, links, and universal remotes break in a world of the complex digital home. We see that the only way to achieve this complexity of interaction with ease of use for a mass audience is through a voice-enabled universal browser.

WIM No. 4: Batteries and generators take off. In a world of wired homes, the power grid rises in importance. Without stocks of powerful batteries and back-up generators, consumers will flail, as they did in the latest East Coast power outage when people were shocked to find that their cordless phones ran out of gas, and the office toilets didn't flush because they had been replaced by movement-sensing automatic flushers. Ah . . . it all comes back to the banalities of daily life.

Have a great April!


Chris Charron
Devices, Media, & Marketing Group Director

P.S. If you'd like to suggest research for us to write, or if there are data points you are looking to track down, feel free to drop me a line anytime at chrischarron@forrester.com.

Research Referenced In This Issue 2004 Digital Music Forecast (33764) A Manifesto For The Digital Home (16854)    Benchmark June 2003 Data Overview: Covers Forecasts, Devices, Broadband, Online Activities, Telecom, Finance, And Retail (16730) Digital Cable Overtakes Satellite (32332)    Europe's Homes Get PC Home Networking (33777) Few Broadband Subs Will Take Portals' BYOA (33856) Interactive Digital TV Spreads Its European Wings (33951) Multitasking Dilutes Media Attention (33965) Satellite Still Leads Cable In Satisfaction (33986) The Best Media And Portal Site Experiences (33821) The State Of Email Marketing 2004 (33959) To Download Or Stream? (33724) What Do Wi-Fi Consumers Look Like? (33871) Where Google Is Headed (33900)

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