Six Consumer Electronics Developments To Expect In 2006 (SNE, MSFT, INTC, AAPL)

by: Yankee Group

By Carl Howe

As I prepare to cover the Consumer Electronics Show, I'd like to record consumer technology and marketing predictions for the coming year. Regular blog readers probably won't discover too much new here, but there may be a few surprises lurking nonetheless. As Gandalf says in Lord of the Rings, "The board is set, and the pieces are moving," so let's see if we can predict the winners and losers for 2006. Besides, what else do you expect on the first week of the year and the week of CES?

So without further ado, here are Blackfriars' six technology marketing predictions for 2006:

  1. Flat panels get huge -- literally. In 2006, having a cathode ray tube television will be about as cool as having a dot matrix printer. Price wars between LCD and plasma panel makers will push 42-inch panels routinely below $900 and 50-inch panels under $2,000 by the end of the year, the products that will have consumers drooling will be those with 1080p specs or better and at panel sizes above 50 inches. A great example: Panasonic's new sub-$10,000 65-inch 1080p plasma panel or Sony's new 82-inch LCD.
  2. Blu-Ray wins the high-definition DVD war. Despite Microsoft and Intel weighing in on Toshiba's HD-DVD standard, we predict Blu-Ray will handily win the battle for the next-generation of DVD standards. Why? Because the drive manufacturers have committed to it (we expect to see a Pioneer drive here at CES), the majority of the content providers support it, the Playstation 3 will include it, and Sony will market it as the best possible high-def experience for consumers, not on its technology. Microsoft will try to force users to HD-DVD with Windows Vista support, but by the time that ships, Sony will already have a commanding presence in the market.
  3. Nintendo's Revolution disrupts the gaming market, but Sony's Playstation still dominates. With its new spacially-aware remote control and its low price, Nintendo's next generation system will demonstrate that once again that console success depends more on gameplay than on high-def credentials. Expect to see Playstation 3 to get all the buzz and the lion's share of unit sales, but for Nintendo to sell more units than XBox 360 in Christmas 2006.
  4. Apple cuts the cords again. Apple rocked the PC world when it introduced 802.11 wireless Ethernet support on its computers in 1999. It will do the same in 2006 by being the first computer vendor to commit to and ship products built around ultra-wideband wireless peripherals as well as its existing support for wireless Ethernet and Bluetooth. With communication speeds suitable for high-quality audio, high-resolution photographs, and standard-definition video, expect the only wires on Apple gear for the next few years to be power cords and high-def display connections.
  5. Apple reinvents television. We believe that Apple's big play this year will be introducing an all-in-one flat-panel television system built around an Internet-based content distribution network based on the iTunes Music Store and .Mac. Yes, the system will allow users to watch cable or over-the-air programs, but the primary use will be viewing on-demand paid Internet content. Needless to say, this will change the TV business forever.
  6. Digital Rights Management (DRM) systems will continue to struggle. After Sony's root-kit debacle and despite the hundreds of millions spent marketing Intel's Viiv systems and Microsoft's Media Players, consumers will continue to struggle with content that requires complex set-ups, end user license agreements, and all kinds of use restrictions. We expect Apple's Fairplay technology to continue to dominate simply because it just works on the systems that consumers buy most -- and we don't expect that to change in 2006.

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