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					Huawei Technologies

    2005.10   8

     Who will be king of the house?
                                                                                                  By Liu Shuxun

                            In April of 1997, Microsoft bought the WebTV network in the United States for 425
                            million USD. Two years later they launched an integrated computing, television and
                            Internet access project called the Venus Project in China. Digital home solutions
                            have been evolving ever since with both success and failure. Many new ventures
                            have followed including: Philips’ Streamium, Shanda’s EZ Pod, Lenovo’s digital
                            entertainment center, and various IPTV applications. Yet, not a single solution has
                            met expectations and instead of a highly anticipated boom, the digital home market
                            slouched into a slump. Meanwhile, personal computers have gained popularity at
                            home not only because of technological advances, but also increased affordability.
     The same goes for digital entertainment boxes which have also established a strong home presence. The
     Internet has grown much faster than expected and the market failure of some products can be attributed to
     inappropriate timing, but what products adapt well to the current transition from digital to Internet?

                                              Win-Win / JUN 2009
     Revolutionizing the experience
             Man-machine interaction, the Internet, and the high-definition trends function as
 three engines to power the digital home market and phase out inappropriate solutions. Backward storage
           and synchronization capabilities are beginning to bottleneck the digital home market.

Man-machine interaction

           ccording to Bill Gates at the 2008 International
           Consumer Electronics Show, we will go much
           faster and much further in the second digital
           decade. New modes of interaction between
man and machine are emerging. Natural user interfaces
(NUIs), such as touch, vision, and voice interfaces, will
be more refined and ubiquitous. The mouse and keyboard
will be replaced by more intuitive and natural interactive
methods. The iPhone and Wii for example have brought
us a new era of man-machine interaction.

Intuitive operations
    Before the emergence of Wii, games were usually
played with complicated finger movements, the more
sophisticated the game the more contorted the moves.          Gesture capturing
The Wii interface proves that gamers interact with their
                                                                 Wii consoles rely on game handles to sense movement.
consoles more naturally through body movements making
                                                              The gesture capturing technology enables users to control
it an irresistible combination.
                                                              their devices without a handle. Leading players like
    The Wii Remote can be used as a handheld pointing
                                                              Panasonic, Hitachi, and Toshiba, are extensively exploring
device and has a built in movement sensor that can detect
                                                              this area, so expect more innovation soon. They have
the direction and speed of handle movements in three
                                                              already developed TV sets that allow viewers to turn the
dimensions. The game handle combined with a couple of
                                                              set on and off, switch between channels and choose menus
buttons lets you experience the “real world” and is a big
                                                              options simply by moving their arms.
part of the game.
    The Wii Remote also helps you exercise the upper part     Touch screen
of your body, while Wii Fit is designed for a full-body
workout. Wii Fit can accurately sense your weight and            The single-point touch screen for close-range control
pinpoint your body balance point, allowing you to play        emerged as early as 1982. The University of Toronto
games by balancing your body.                                 developed the world’s first finger-operated multimedia
    Thanks to its novel design and range of apps, Wii is      touch screen, turning fingers into an input device. Since
a hit in Europe and North America even in elder care          then, various touch screen products have been widely
facilities. Their success has breathed new life into the      used in our everyday life, leading us to think of any touch
gaming industry and jumpstarted a new era characterized       screen as a single-finger touch device.
by physical experience.                                          Apple has reshaped our idea of the touch screen. In 2007,

                                                       Win-Win / JUN 2009

     Table 1 HD services of various entertainment devices and set-top boxes (source: Internet)
                                                                                                                            Xbox 360
                                                                                 Amazon               PlayStation 3
                           Apple TV                           Vudu                                                                                              Comcast HD Cable
                                                                                 Unbox+Tivo           Blu-Ray
                                                                                                                            HD-DVD           Xbox LIVE

     HD Format Death       Unlikely                           Running Scared     Less Likely          Less Likely           Already Dead     Less Likely        Unlikely

     Content Resolution    480p, 720p                         720p, 1080p        480p                 720p, 1080p           720p                                720p

     Native Resolution     1280*800                           1920*1080          1366*768             1920*1080             1366*768                            1366*768

     Upscaled Resolution   1080p                              1080p              1080p                1080p                 1080p(new)                          1080p

     Rent SD/HD movies 3USD-5USD                              1USD-4USD          3USD-4USD            Blockbuster/NetFlix   Clearance Bin    3USD-6USD          Some PPV

                                                                                                      15USD DVD or
     Buy SD/HD movies      SD only 10USD-15USD                5USD-20USD         2USD-33USD                                 Clearance Bin    None               None
                                                                                                      ~30USD BR

     Free SD/HD content Podcasts,movie trailers               trailers           trailers             None                  None             trailers           Broadcast Channels

                                                              5000 movies,
     Movie Library Size    1000 movies,100HD                                     Thousands, no HD     350 Blu-Ray           350 HD-DVD       320                ~300 On Demand
                                                              some in HD

     Networking            Fast Wi-Fi N,Ethernet              Ethernet Cable     Ethernet Cable       Wi-Fi,Ethernet        Ethernet Cable                      Cable

                           Can sync sony,movie, video                            Can download                               With Onerous
                                                                                                      With Onerous DRM                       some content can   With DVR and some
     PC Playback           purchases to iTunes on a PC, but   None               purchased content                          DRM and a HD-
                                                                                                      and a Blu-Ray drive                    stream             extra setup
                           not Apple TV movie rentals.                           on PC from Amazon.                         DVD drive

                           Can move iTunes purchases and                                                                                                        DIY with DVR;
     Mobile Playback                                          None               None                 None                  None             None
                           rentals to iPod,iPhone,AppleTV                                                                                                       not simple

                                                                                 99USD 80GB                                 280USD 0GB                          Optional 20USD DVR
                           229USD 40GB                                                                399USD 40GB
     Purchase Price                                           295USD 250GB       299USD 160GB                               349USD 40GB                         is also an extra
                           329USD 160GB                                                               499USD 80GB
                                                                                 599USD 250GB                               449USD 120GB                        150USD/year to rent

     the iPhone, built on advanced multi-touch technology                                           into the latest iPhone model to support the voice search
     was released. Previously, devices able to recognize complex                                    feature, which allows users to speak into the phone to surf
     finger movements (such as the separation and folding of the                                    the Internet. The technology can even distinguish between
     thumb and index finger) seemed like science fiction. Now                                       different accents.
     they are translated into scaling up and down a picture or a                                       Voice input method works well with mobile applications,
     web page. In addition to providing Internet on the fly, it is a                                especially when you need both hands free or when an
     more user-friendly and expandable terminal. Thanks to the                                      elderly or handicapped person wants to control a device
     launch of the iPhone, Apple has achieved remarkable success                                    remotely at home.
     in the mobile market.                                                                             The technology introduced by Google in November
        Not to be outdone, Microsoft launched its Surface                                           2008, is not yet mature enough and can only recognize
     platform in April 2008. Microsoft Surface features a flat                                      a limited number of accents and is prone to voice input
     panel display that allows users to perform a number of                                         errors. Even so, Google moves voice recognition technology
     amazing operations simply by touching the screen. NUI                                          forward and man-machine interaction is enhanced with
     has revolutionized the way users communicate with                                              humans talking freely to machines that respond.
     their computers, giving many users the feeling that they                                          Apart from needed improvements in performance and
     are operating the real thing instead of merely clicking                                        functionality, man-machine interaction knows no bounds.
     buttons.                                                                                       One gesture, one word, one look or even one idea alone
        Surface has also facilitated communication between                                          may be sufficient to operate any home devices in the future.
     machines with touch-based capabilities. When you put a
     device, such as a mobile phone or digital camera anywhere
     on the screen, the Surface screen will immediately present                                     Embracing the HD era
     related menu options, enabling you to display photos and
     video clips stored in the mobile device on the screen.                                            In 1926, John Logie Baird transmitted the very first black
                                                                                                    and white television picture from one room to another.
     Voice search                                                                                   The first color TV broadcast was realized in 1951 and ever
                                                                                                    since, our video experience has been getting better. Just like
        Google has conquered the search engine world with a                                         the shift from the VCR and VCD formats to DVD, analog
     single text-box webpage and now is innovatively taking on                                      video is giving way to digital and today’s high-definition
     mobile search applications. Google search software is built                                    (HD) video is set to lead us from standard to HD.

                                                                               Win-Win / JUN 2009
      HD needs a robust channel and the growth of per capita bandwidth is
  the key to unlocking the performance bottleneck. With substantial bandwidth,
            HD will become commonplace in the digital home market.

   HD capability is now expected in modern television            despite lengthy download times. HD is well on its way to
sets and manufacturers are building HD capability into           becoming the standard from which video quality will be
their leading products. The gaming industry usually stays        judged by a discerning public.
at the forefront of video quality and both game developers          Evidently, display device makers, game console makers,
and game console makers are pursuing incorporation of            media broadcast equipment makers, media control providers
HD video.                                                        and digital device makers have all set the stage for HD.
   On Xbox 360, the NBA Live 09 game is comparable to            The entire digital industry is prepared to profit from HD
the real world with lifelike sweat, beards, even skin lines,     proliferation, which relies heavily on network bandwidth.
making you think that you are watching a live NBA match.            HD needs a robust channel and the growth of per
   In addition to high-definition games, Sony’s PlayStation 3    capita bandwidth is the key to unlocking the performance
(PS3) supports Blue Ray DVD playback through a built-in          bottleneck. With substantial bandwidth, HD will become
Blue Ray CD-ROM drive, but it sells for much less than           commonplace in the digital home market.
Blue Ray DVD players. Obviously, the Blue Ray format
and a low price point are integral to the differentiated
marketing strategy for the PS3.                                  Internet spices up everyday life
    As shown in Table. 1, Shigeru Miyamoto, mastermind of
the sought-after Wii game console, once told German media        Online gaming community
that HD TV was expected to become mainstream in Japan
by 2011 and Wii would play an active role. It is also reported      The Xbox 360, PS3, and Wii are the three leading
that Nintendo is increasing investment in Wii R&D and a          game consoles bringing geographically distributed players
Wii HD version is expected to be available in 2011.              together into the same game over the Internet. Game
   HD has also become the norm for video players and set-        providers have also launched online communities like
top boxes. Apple TV 2.0 supports a HD software decoder           Xbox LIVE, PlayStation Home, and Mii, allowing gamers
and offers a large quantity of online HD videos, movies and      to communicate with each other on the sidelines of games.
TV programs to download. Apple TV’s leading competitors             Based on Xbox LIVE, Xbox once released a game
in North America are also beginning to move toward HD.           handle with a keyboard, enabling Xbox 360 users to chat
   As a leading service provider of online streaming media,      with PC users via MSN.
YouTube unveiled a widescreen HD video player that                  PlayStation Home took it a step further by creating
supports a resolution of 1280 × 720 pixels on December           an exciting virtual world. In this world, users can roam
9, 2008, following its launch of widescreen and HD small-        around the virtual 3D cyberspace disguised as an avatar
screen broadcasting services. This marks YouTube’s full          (user’s animated representation), share ideas with other
entry into the HD market. In early 2009, YouTube built           players, hangout in their own virtual room, watch movies
TV applications into Wii and PS3 devices, hoping to              or game previews in a virtual cinema, even play classic
transfer its mass content to TV screens.                         video games in the virtual video arcade. PlayStation Home
   Hulu, another leading free online video service, also         reaches beyond mere visualization and 3D Xbox LIVE to
launched an HD video page, allowing North American               create a Web2.0-based virtual world. Sony is looking to
users to watch streaming HD videos. For P2P users, an            build its PlayStation Home into a user-centric network
enormous number of HD videos are downloadable from               platform for users to create content and value.
the Internet. For most users, HD videos are preferred               In the Wii community, users can personalize their avatars.

                                                         Win-Win / JUN 2009

           Chumby is always online and integrates an alarm clock, Internet radio,
     digital photo frame capabilities and a wide variety of widgets, which incorporates
      over 1200 free applications, including games, short video clips, news, webcam,
                              and instant messaging services.

                                                   Despite the lack of physical contact in the virtual world, the
                                                   role playing has added a lot of fun in the community.

                                                      In addition to community services, Wii and PS3
                                                   provide web browsers. The Opera browser built into the
                                                   Wii console also tunes the TV display mode. The Wii
                                                   game handle serves as a wireless mouse to easily resize
                                                   web pages using the zoom buttons on the handle and
                                                   even scroll through web pages by dragging the pages in
                                                   different directions. Wii enables you to type text through
                                                   an onscreen keyboard, while PS3 supports external full-
                                                   sized Bluetooth keyboards.
                                                      However, such browsers are far from mature as most
                                                   web pages are designed for a combination of mouse and
                                                   keyboard on a PC. As a result, browsing via TV is rather
                                                   cumbersome even though Wii and PS3 also provide a
                                                   series of customized Internet services, such as a news
                                                   channel and a voting channel.

                                                   Customized services
                                                      Wii presents the news through a 3D globe provided
                                                   by NASA. PS3 has a similar service called Life with
                                                   PlayStation, but with a more realistic 3D globe. News is
                                                   associated with the geographical location where it takes
                                                   place and is visually quite suitable for TV.
                                                      In addition, Wii also provides a voting channel, which
                                                   allows users to cast and post votes freely. The voting
                                                   channel can function as the channel for communication
                                                   between users and vendors and helps Wii explore the
                                                   characteristics of user behavior.
                                                      There will be far more Internet-based Wii and PS3
                                                   applications in the future. The Wii and PS3 platforms
                                                   have a robust scalability that supports a growing number
                                                   of applications.
                                                      Television sets play a central role in homes and
                                                   companies are scrambling to deliver more services than the

                                     Win-Win / JUN 2009
        Diffusion Group and Intel expect an average Internet-connected
home to process up to 2.2 terabits of data stored in ten or more devices by 2010.
  Users are increasingly inclined to effectively manage mass data to ensure the
               security and synchronization of their digital devices.

competition and grow their market share.                        from all the digital devices. Home users tend to store most
   Skyworth, a leading TV manufacturer in China, has            of their data on one hard disk and rarely back up even the
launched CooCaa TV which provides movie downloads               most important information and media. Once the disk
and supports continuous downloading in low-power                fails, the data can be lost.
standby mode in addition to the usual TV functions. The             Since there is a high segmentation of the digital home
TV set turns into a 24/7 integrated Internet device without     market and no unified storage standards, storage on
the hassle of transferring content from other device, while     separate digital home devices cannot be centralized in
fully utilizing home bandwidth. CooCaa TV also delivers         the near future. It is feasible however, to improve digital
Internet content like e-books and news.                         devices in terms of storage and Microsoft and Apple have
   For Internet on the desk or by the bedside, small touch      offered solutions.
screen (3.5’) stand-alone Wi-Fi devices, such as Chumby, also       Microsoft has launched a series of digital home solutions
provide a broad range of Internet services. Chumby is always    including Media Center and Home Server, seeking to
online and integrates an alarm clock, Internet radio, digital   centralize data management through software based on its
photo frame capabilities and a wide variety of widgets.         solid expertise in PC operating systems. This can be a risky
   The online platform incorporates over 1200 free              move as data centralization is vulnerable to security issues.
applications, including games, short video clips, news,             Apple provides a digital storage device called Time
webcam, Email, weather alerts, Facebook, Twitter and            Capsule to enhance the capacity of data backup between
instant messaging services. The Chumby portal is fast and       digital devices. Compact in size and similar to Apple TV,
simple, allowing home users to have instant Internet access.    and as a device designed for use in the living room, Time
   The Internet is pervasive in our everyday lives and          Capsule provides a storage space of up to 1 terabit, aimed
exponentially growing. The digital home market holds great      at providing backup space for Time Machine-enabled
promise as an area that can further utilize the power of the    Mac computers and also access for Apple TV, iPhone, and
Internet to enrich both our lives and the bottom line.          iTouch.
                                                                    In addition to the Microsoft and Apple solutions, there
                                                                is Internet-based cloud computing.
Storage and synchronization                                          Dropbox, based on Amazon’s cloud computing
                                                                platform, is providing a free online storage space of 2GB
   Due to the rising number of digital home devices and         and users can track past changes for each file. Besides
the rapid development of storage technology, storage            strong capability and low-priced service, it is also easy to
costs are falling sharply and capacity is growing. Diffusion    use. Setup is as simple as installing a client on your PC
Group and Intel expect an average Internet-connected            and designating a folder for synchronization. Everything
home to process up to 2.2 terabits of data stored in ten        contained in the folder will be synchronized in real time to
or more devices by 2010. Users are increasingly inclined        the Dropbox server with the cloud computing capability.
to effectively manage mass data to ensure the security and          After you install the client software on different PCs, you
synchronization of their digital devices.                       can use the same login account to share and synchronize
   In average homes, digital media is usually stored in         data in real time between these PCs. In addition to client
various isolated devices, complicating data access. It is a     access, Dropbox supports web access, allowing you to share
dull and arduous task to manually collect and manage data       data between different types of terminals.

                                                        Win-Win / JUN 2009

     Popular home entertainment devices
      Apart from PCs, only entertainment devices like the three leading game consoles (Wii, Xbox 360 and PS3)
                  and video boxes like Apple TV, play a dominant role in the digital home market.

             tatistics from VGChartz show that the leading        entertainment devices must provide powerful core
             three household game consoles have maintained        applications. Both Xbox 360 and PS3 start with high-
             their dominance of the global digital home market.   performance games, while Wii targets popular interactive
             Wii, Xbox 360, and PS3 have sold worldwide           games, a blue ocean market. Apple TV is focused on
     around 50 million, 30 million, and 22 million units          online movies as DVD players are slowly being phased out
     respectively.                                                and is now generally known in the industry as the “DVD
        Wii realized the sales volume in just 28 months,          killer”.
     hitting an all-time high in game console sales. Apple            In sharp contract to these successful market players, the
     has not published its global Apple TV sales volume, but      products aimed at providing a full range of applications
     announced that the sales volume for the last quarter of      have failed to enter the digital home market as they lack
     2008 was three times higher than the same period in 2007.    a clear target and users cannot understand their core
     Industry analysts forecast an accumulated sales volume of    values. Most of the time, one reason alone is enough for a
     over 6.6 million Apple TV units by the end of 2009.          consumer to buy.
        What sets these entertainment devices apart?
                                                                  Strong presence
     The battle in the living room                                   Te l e v i s i o n s t i l l p l a y s a c e n t r a l ro l e a n d t h e s e
                                                                  entertainment boxes seek to establish a strong presence
     Killer apps                                                  in the living room and enhance user experience through
                                                                  the TV set. Digital home devices need to boost their own
       To penetrate the digital home market segment, home         value by creating value for family members.

                                                   Win-Win / JUN 2009
      The previous quandary over whether a digital home centers on the PC
 or TV is now answered as these powerful boxes are combined with the TV set. It
  does not matter which serves as the center, but the combination of computing
                   and large display capabilities counts a lot.

    Wii lets up to four family members join in the              has their eyes glued to the tube. Daily newspapers and
same game, turning the living room into a game room.            magazines have dramatically changed largely because of
Combined with interesting and interactive games, Wii is         the Internet and the TV transformation has just begun.
undoubtedly the ideal fun-filled machine and as the old            What will replace TV as the hub of the living room in
adage goes, “The family that plays together, stays together.”   the near future? The new-generation home boxes are now
Apple TV is less game oriented and aims to bring the            poised to be the undisputed rulers of home entertainment.
family together to watch movies in the living room.             The question is not how or why, but when.
    The living room provides a finite space, home Internet
bandwidth is limited and so is the users’ time, but the
demand for entertainment knows no bounds. How many              The trump card
boxes do we actually need? Despite their presence in the
living room to accommodate varied needs, all these devices      Quasi-PC architecture
must go with the TV, but which one will be used most of
                                                                   The three most popular game consoles and Apple TV
the time?
                                                                are built on a quasi-PC structure with a CPU, graphics
    In addition to core functions, there is a wide variety of
                                                                processing unit (GPU), storage unit and operating system.
useful applications including the previously mentioned
                                                                Except in appearance and hardware integration, their
Wii’s news channels, voting channel and the Opera
                                                                architecture is basically the same as that for ordinary PCs.
browser; PS3’s blue-ray playback, PlayStation Home plus
                                                                They can be regarded as a variation of the PC in different
browser; Xbox 360’s Xbox LIVE, and IPTV capability;
                                                                market segments.
and Apple TV’s movies, music and podcast capabilities. All
                                                                   As well as delivering powerful hardware to support
these applications are designed to monopolize the users’
                                                                performance-sensitive applications, the quasi-PC
time and prepare them for a future leading position in
                                                                architecture has greatly enhanced scalability and error
homes. To remain relevant, these devices need to support
                                                                correction capability for applications.
enhancements and greater functionality in addition to the
                                                                   When it was initially unveiled, Apple TV received a
preset features.
                                                                lukewarm response and was even rated by critics as one
New home entertainment hub                                      of Apple’s worst products. Just one year later, after the
                                                                firmware was upgraded to 2.0, it began to gain favor with
   TV is still playing a pivotal role in the living room as     users who found a completely new box with an improved
most people have grown up watching TV.                          interface and more powerful features. Apple TV definitely
   Even so, traditional TV is out of tune with the Internet     turned the situation around, thanks to creative design and
era as its one-way broadcast model runs counter to the          a series of upgrades.
interactive era. TV users have to endure endless ads and           The previous quandary over whether a digital home
cannot easily determine program content or choose to            centers on the PC or TV is now answered as these
watch their favorite shows anytime. Digital citizens are        powerful boxes are combined with the TV set. It does not
maturing and the new generation is beginning to stay            matter which serves as the center, but the combination of
away from TV although the older generation still firmly         computing and large display capabilities counts a lot.

                                                        Win-Win / JUN 2009

                 We conclude that the common features of these boxes can
          be summarized in the following formula: Roadmap for home entertainment
                     devices = quasi-PC + integration + Internet ethos

     Integrated applications                                           with less distinction between online and offline life. At
                                                                       the same time, the Internet is expanding its influence on
         An integrated application platform is required in             families beyond what a traditional PC can do.
     addition to quasi-PC architecture.                                   Openness is derived from the Internet’s borderless and
         As a game console, Wii provides game capabilities,            distributed architecture, on which all users work toward
     which are incorporated into a Wii channel on the main             boosting Internet development through an open and
     interface. The Wii system is comprised of a broad range           shared platform.
     of channels, with other spare channels marked for future             Interaction has revolutionized the traditional broadcast
     extension. In terms of functionality, Wii serves as an            model, shifting from one-way communication, to two-way
     application platform. Underpinned by game capabilities,           real-time communication between users. Every user can
     the platform delivers a wide variety of applications to           receive, create and distribute information.
     considerably enhance user loyalty.                                   Equality and freedom mean that users are free to
         In the mobile area, the iPhone has become the world’s         access and use the Internet on an equal basis and that the
     largest mobile application platform based on a complete           Internet is organized in a free structure. Internet users are
     industry chain. Numerous third-party manufacturers are            not divided by class but by requirements.
     developing applications for the iPhone platform and the              Geared to the philosophy of creating value for users,
     auxiliary online application market is also maturing. Users       the Web2.0 architecture also incorporates a number
     can easily choose and buy applications through iTunes,            of concepts, such as long tail, social networking, and
     positioning Apple as a virtual operator. As the terminal for      application convergence.
     living room use, Apple TV or the Mac Mini is set to evolve
     into a rich application platform terminal and bring more             The Internet ethos is more or less built into the Xbox,
     variety.                                                          PS3, Wii, Apple TV, and Chumby. For example, Apple
         From the perspective of the industry chain, the application   TV gives each movie ratings and provides user comments.
     platform reflects resource consolidation capability, requiring    Despite the current inability to enter such information
     industry players to deliver more. Each product represents a       directly into Apple TV, the information is collected from
     type of partnership.                                              users. Apple TV also provides long-tail podcast content
                                                                       for users to download and watch for free and recommends
                                                                       videos geared to different tastes. Chumby forms an open
     Internet ethos
                                                                       Web2.0 application platform. Benefiting from growing
        The Internet ethos is characterized by a combination of        Internet use, the three leading game consoles have
     openness, interaction, equality and freedom.                      constructed their own communities that have created value.
        In keeping with the evolution toward Web2.0, the                  We conclude that the common features of these boxes
     Internet has become a grassroot cultural platform and users       can be summarized in the following formula: Roadmap for
     are playing central roles and forming online communities.         home entertainment devices = quasi-PC + integration +
     The Internet is evolving toward a user-centric platform           Internet ethos.

                                                       Win-Win / JUN 2009
Who shapes the future?
To secure a leading position in homes a step-by-step approach is needed to improve computing,
 networking and storage capabilities in the living room. The success of the Xbox 360, PS3, Wii,
              and Apple TV has inspired us to forge ahead through a solution that
                      combines quasi-PC, integration, and Internet ethos.

                                      Win-Win / JUN 2009

                With increasingly improved display capability in the living room
           and the penetration of Internet services into family life, it is imperative to
                enhance man-machine interaction and improve the computing,
                             networking and storage capabilities.

     PC + platform + Internet                                          Storage
                                                                           All families need entertainment, information and

                  he entertainment equipment providers have            communication. As home services diversify, the demand for
                  defined their end-to-end digital home solutions      storage is surfacing. As discussed earlier, most families fail to
                  in the Internet age: A complete E2E solution =       bridge the gap between increasingly growing data and limited
                  PC + platform + Internet.                            storage space by hooking up separate digital storage devices.
         Terminals are founded on quasi-PC architecture.                   In most homes today, the PC is still functioning as a storage
     Integration serves as the linchpin of a platform and the          center, where a huge number of photos, videos and important
     platform should be able to provide diverse applications.          files are kept. However, PCs are not primarily designed for
     Internet-based networking necessitates Internet access and        storage, so they are prone to security risks and cannot be
     ethos.                                                            always online. The storage center will inevitably shift from
         The business model that combines terminal and service         traditional PCs to professional network attached storage (NAS)
     is taking shape. It seems the model is not unique to telecom      devices, creating a profitable opportunity.
     operators. In a way, these entertainment equipment providers
     are virtual operators as they provide terminals, manage users,    Broadband
     collect charges and offer various services. They differ from
     traditional telecom operators only in the use of Internet             Most families pay for Internet access on a monthly basis.
     connection.                                                       Most people work away from home in the daytime and go
                                                                       back home in the evening only to experience heavy traffic and
                                                                       a slow network, then the broadband resources become idle
     Apple’s success story                                             again at midnight.
                                                                           Downloading system patches, software, updates and
        Apple has set itself apart by providing terminals for each     video accounts for a large percentage of Internet usage and
     digital home area, feature-packed iPhones in the mobile area,     is time-consuming. Many families are facing the challenge
     MobileMe in the cloud computing area and powerful iTunes          of maximizing the use of their bandwidth resources. If you
     for connectivity between terminals. Due to Wii and PS3, we        are able to download during off-peak hours by remotely
     regard Nintendo and Sony as fixed network operators. By the       controlling your entertainment devices at home with a
     same token, Apple is comparable to a full service operator.       mobile phone or any other mobile device, time is saved and
     Therefore, it is vital to connect up fixed and mobile terminals   broadband resources fully utilized.
     and provide a cloud computing platform to keep up with the            To date, no digital device can adequately provide a solution.
     growing demand for full service operation.
     Future digital home demands                                          In addition to remote downloads, the user experience will

                                                       Win-Win / JUN 2009
be better if a person can check the download progress on each      to networking power, but many service providers lack this
device at home via a mobile phone.                                 expertise. Entertainment gear makers are able to extensively
    As discussed earlier, Microsoft’s Surface has changed the      explore the digital home market but are still falling behind
manner of machine-to-machine communication by a direct             local market demands.
connection. When you put your mobile phone on the Surface,             Despite the difficulties ahead, local market demands will
photos in the phone will be automatically transferred to the       grow and the burgeoning digital home market has a bright
Surface. This is a typical FMC application.                        outlook.
    Currently, FMC applications and experience are still in the        In summary, man-machine interaction, the Internet,
initial stage and offer great growth potential.                    and the high-definition trends function as three engines to
                                                                   power the digital home market and phase out inappropriate
Localization                                                       solutions. Backward storage and synchronization capabilities
                                                                   are beginning to bottleneck the digital home market.
    We usually describe the Internet as a borderless information
network, where information transmission is largely                     The PC is used in many homes because of strong
independent of culture and geographical location. But things       computing power, extensive applications and robust scalability.
are changing as the Internet becomes a big part of our everyday    With increasingly improved display capability in the living
life.                                                              room and the penetration of Internet services into family
    Many worldwide market leaders have lost ground to local        life, it is imperative to enhance man-machine interaction and
companies. Examples in China are Google’s loss to Baidu,           improve the computing, networking and storage capabilities.
eBay’s loss to Taobao, and MSN’s loss to QQ. When the                  An all-in-one device is not presently a good idea. To secure
Internet is used as a tool to enhance and facilitate people’s      a leading position in homes, a step-by-step approach is needed
lives, success can be contingent upon the awareness of local       to improve computing, networking and storage capabilities in
economic conditions and cultural differences.                      the living room. The success of the Xbox 360, PS3, Wii, and
    Localized services are generally believed to be the next       Apple TV has inspired us to forge ahead through a solution
Internet gold mine. As the gold is being mined, local              that combines quasi-PC, integration, and Internet ethos.
services need solid offline marketing expertise in addition                        Editor: Chen Yuhong

                                                           Win-Win / JUN 2009