Entertainment PCs—careful, you might step on one

Posted: 12.08.03

I'd like to think it was our enthusiastic forecasts and long-term interest in the Entertainment PC that's attracted all the current interest in the category—in fact, it's just become a category within the last year—but I fear it's all Microsoft's doing, again. I do all the work, they get the credit—sigh, such is life as a soothsayer.


Fujitsu's C90EW EPC

I think it was 1998 when we started talking about the multimedia black box. We then evolved that into the Entertainment PC, which now includes as a subset Microsoft's Media Center PC, which is getting all the attention in the press.

GatewayGateway's 901 EPC

Gateway wants us to know about their new, stylish 901 Media Center, Fujitsu has just announced their FMV-Deskpower C90EW with Microsoft's Media Center software, while InterVideo has announced their InterVideo Home Theater software suite, and so has CyberLink with their new PowerVCR II 3.0 Deluxe. And behind most of these things we find ATI and Hauppauge TV tuners, with Nvidia and Emuzed filling in the cracks.

The EPC is clearly going to be the product of the holidays, and it's safe to say that 2004 will be the year of the Entertainment PC—you can tell your grandchildren you were there when it happened.

There are three platforms of EPCs: the non-MicrosoftÐbased systems running Linux (smallest segment), the Microsoft OS without Media Center software systems (largest segment), and the new Media Center Microsoft XP systems (fastest growing segment).

VWBVWB's MediaReady 4000—this is a PC?

There are also two hardware categories: mobile and fixed. Fixed is the name we've given to what is also called desktop because we don't think the name desktop is appropriate for these EPCs, since many of them will be placed in the entertainment areas of people's homes near the television.

One of the things that helped push the sales of this new/old category was the smart positioning by Microsoft and its first year (2002) partners to position it not as a CE device, but as a PC with CE device features. It consolidated most of the functions and, best of all, gave just one remote to deal with. Some people think the EPC should look more like a PC. Why? To trick the user? It's not a CE device, doesn't boot up like a CE device, and sure as hell isn't as stable or reliable as a CE device—it's a PC, damn it, get over it. Nonetheless, we admit some of the new boxes do look a lot like CE devices.

It also doesn't cost like a CE device, although this year we're going to test the market elasticity of the category as prices are cut almost by half from last year. But, regardless of price, this category will not be embraced by everyone, and any forecast that suggests it will should be thrown away immediately.

VIA's EPC reference design—is this a PC?

VIAThere's also the issue of noise. Only one company, VIA, has a reference design that offers a noiseless system. We just decommissioned a TiVo here at Mt. Tiburon Testing Labs because its disks were so noisy. The TiVo with a built-in tuner also got so hot it had a fan in it (which failed and had to be replaced). So the EPC builders have work to do to get the heat and the noise out.

But the box itself, my beloved EPS, is at risk of being smothered by Digital Darwinism as it molts right before our eyes from a media center to a media distributor. Already the lines (if there ever were any) are blurring and companies are offering Wi-Fi digital distribution systems that have EPC qualities under them. We're just testing a new ATI offering for their All-in-Wonder series that adds Wi-Fi to the mix so the tuner in the main computer (i.e., EPC) can be used remotely by other, less-equipped PCs. The system is actually a disk distributor, so it could theoretically send music files and/or photos to other systems. SnapStream has similar products and concepts.

This is the next trend in EPCs and we'll have to come up with a name for it—EPC distribution system. It still leaves the opportunity/hole with regard to salvaging the consumer's existing CE inventory and products based on concepts like Mediabolic's that tie CE devices to an EPC.

The salvaging of existing CE devices points up another issue, investment. What the PC industry is going to have to learn, perhaps the hard way, is that consumers won't replace their hardware every two years like they do their PCs. And, if there is no trailing edge as I've suggested, then the EPC makers need to build a new business model, fast.

So we're seeing the emergence of a new product category. It will behave a lot all others—too many suppliers, a surge in sales that will bring in more suppliers, rapid price cuts, and finally consolidation to a few suppliers. In the process we'll be inundated with EPCs of every size, color, and functionality. They'll proliferate like rabbits and you'll have to be careful to avoid stepping on one. And this year many of them are going to be under the Christmas tree.