Digital Lifestyle Market - An Interview with Kathleen Maher

In this comprehensive Q&A with Kathleen Maher of Jon Peddie Research, we put the spotlight on the subject of the Digital Lifestyle Market. Kathleen will share her views in the Digital Lifestyle Technology Tracks at VTF2004 Taipei and Beijing. Be sure not to miss Kathleen's presentations!

Kathleen Maher Q&A

Q1: Unlike the PC market, the digital lifestyle market is very fragmented and difficult to define in terms of device categories. How would you define the market and what do you think are the most important product categories that Taiwan manufacturers should focus on?

Kathleen: It is probably easiest to define the digital lifestyle market in terms of the users and what they want to do rather than from the aspect of the device itself. After all, it has been very easy to come up with great ideas and wonderful devices because the technology is so flexible but that doesn't mean people will actually use these things. The set-top box market has been a wonderful educator in this regard. Many devices have been offered and they have varied capabilities but many have also been impractical and overpriced. The industry learned that families watching TV have little interest in stopping and checking their email or playing a game. There is still plenty of opportunity around the TV as a digital hub, but it's important to think about the people living with the device and how they use it.

In the same way, I think it's important for manufacturers to look at the lifestyles of the people they are building devices for. For example, women are taking to the digital lifestyle with considerably more enthusiasm than they showed for 3D applications, gaming, or even computers. Women are often the social planners, organizers, communicators for groups and they are the family historians. Thus, they are users of digital cameras, video, they can record cartoons for kids on the road, and they have to communicate with family members wherever they are. All this said, it's absolutely critical to women that devices work with very little tinkering or setup. The whole point of these devices to women is that they enhance women's tasks and they make it fun. Also, devices should solve well defined problems.

Male users on the other hand enjoy putting together great systems and they like gadgets and devices for the fun of using them. When it comes to gadgets men often enjoy the journey as well as the destination. They tend to play games more than women do. They are more willing to sacrifice some ease of use (with the emphasis on some, no one wants a device that's hard to use) for the latest technology. For example, fairly affluent, reasonably technically adept male users will gravitate toward sophisticated home entertainment systems. They will build the system themselves or they will hire someone to come in and build it.

In addition, these users like portable devices including music players, media players, PC notebooks, etc. Elegance of design is just as important as price.

Families are showing interest in media devices for the home. The Media has attracted a lot of attention from families who are just getting behind the idea of Personal Video Recording. It's taken a while, though and that's an important aspect of the digital lifestyle to remember -- it really is a lifestyle change and so it takes a while. This is especially true for networked media devices -- a market that makes more and more sense as the house fills up with devices that can store and play media. But here, however, ease of use is of critical importance and so people building products for this market need to keep in mind that it is still several years off in terms of the technology. The wireless protocols needed for sharing multimedia are several years away from mainstream use.

I use these three examples to encourage manufacturers to think about their users and the problems their products are designed to solve. Just as important is answering the question, is it easy to use? Is it affordable? As the iPod has dramatically demonstrated that sometimes a very well designed single use device can be astoundingly popular because it meets the needs of its user so well.

Q2: What do you think are the key drivers behind the emergence of the digital lifestyle market?

Kathleen: This is probably the more difficult question since the term digital lifestyle means so many things. I really think of the digital camera as one of the key drivers of the digital lifestyle because it educated do many people as to what "digital" really means. It means taking something that seems hard, plastic, analog -- a picture, a CD, a TV, a radio, etc. -- and converting it to bits and bytes that can be easily transferred via wires or airwaves. I think the digital camera made that metaphor clear for people and once they got it, they began thinking about what they could do with digital media. Today there is a wealth of important drivers for the digital lifestyle. Perhaps the most important driver is the channel. For example the Internet give users a practical outlet for their media. Pictures can be emailed, web pages can be built with images and music, and music and video can be downloaded and uploaded. In the same way, optical media, CDs and DVDs give users a way to store, protect, and share content. Users are more inclined to go through a lot of work creating slide shows, web pages, videos, etc. when there is an easy way to store and share that work. Also, people want to be able to save the content they download using their computer or PVR and so optical media paired with hard drives has emerged as an interesting feature for digital devices. Finally, it seems clear that practical DRM approaches which reassure content holders is helping to move the industry in productive directions because content providers can see a revenue stream and, in addition to making good content more available will even help develop the industry with advertising and promotion. We have seen this trend play itself out twice now with DVD and digital music. We believe we will see the same thing happen in TV with HDTV and from the movie studios with DIVx/MPEG4-AVC/WM9. Sadly, the studios have shown no inclination to learn from experience and move straight to the building phase instead of going through resistance and denial first.

Q3: What are the key challenges that the PC industry faces in entering and building the digital lifestyle market?

Kathleen: The PC industry has had its own steep learning curves. It has taken a while for the PC industry to be able to produce an entertainment PC that is easy to use, has instant on, has true plug-and-play, and provides only the functionality users want. This is a critical year for the PC industry has so many initiatives are coming to fruition. For example, the DHWG (Digital Home Working Group) will soon have a set of guidelines for users, UPnP will be a reality, wired solutions like HomePNA and HomePlug will come to market, and more users will have USB 2.0 and 802.11g. And, just listing all these approaches makes the obvious point that there are no solutions, there are combinations of solutions and that's confusing for vendors and consumers alike.

Q4: What role do you think that Taiwan motherboard, notebook, and PC manufacturers will play in the digital lifestyle market? Will they repeat the success they have had in the PC market?

Kathleen: Taiwan's motherboard, notebook and PC manufacturers have some challenges to overcome -- not the least of which is their creativity and ingenuity. The market is going to shake itself out and in the process there will be a lot of devices that are presented to the market and that will fail. Taiwan's manufacturers will build a lot of these devices. The trick will be to try and eliminate as much of the error as possible and go straight to the winners.

The great thing about Taiwan's manufacturers is that they are absolutely fearless and for that reason they could well be the ones who introduce the breakthrough devices.

Instead of being the builders of other people's designs as is often the case in the Taiwan's motherboard, notebook, and PC business, Taiwanese companies are building their own designs and going to the market with their own brands. It is possible Taiwan's manufacturers can leapfrog their success in the traditional PC markets and create their own digital lifestyle markets.