Home Toys Article
- February 2006 -
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Each December for the past two years, ABI Research surveyed the vast wasteland of year-end roundups and predictions of what the new year would bring, and decided on a different tack. In the often overhyped industries we cover, it seemed important to identify what much-touted developments and wild predictions would not see the light of day in the coming year.
Now it's time to deflate a few more bubbles for 2006.
The Digital Home
The year 2005 has seen a tectonic shift in the digital home ecosystem, a shift that is extending the market opportunities for CE vendors, content producers, service providers and accessory suppliers. Mobile and portable applications have opened doors for traditional and non-traditional (PC centric) CE vendors to extend their reach.
So, the "locus of their focus", which was between HDTV and home networking before 2005, has shifted: portable and mobile applications have been attracting some limelight. Some other trends to watch for include HDTVs with storage and DVR capabilities that in effect eliminate the need for an additional STB in the home; the arrival of HD and Blu-ray DVD players by the second half of 2006; and proliferation of portable devices offered by service providers in an effort to tap into the growing mobile and portable market.
But what's not going to happen in 2006?
Well, we certainly will not see an amicable solution between HD DVD and Blu-ray DVD formats. Set top boxes will not be replaced by media center PCs and other emerging devices in 2006. Another hot button topic is rights management and consumer fair use. The industry will not see unanimous solutions or resolutions in this regard either. From the content perspective, don't hold your breath waiting for full length episodes of HBO's Sopranos or Carnival on your mobile handsets.
No, 2006 will continue to see more of the same: an industry grappling with large issues such as the next-generation optical disc format, rights management, piracy and the commoditization of maturing technologies. 2006 will also open the doors completely for the Internet and broadband as viable channels for the acquisition and distribution of content, stealing some market share from traditional cable and satellite video service providers.
ABI Research also forecasts some interesting trends in mergers and acquisitions between the legacy service providers and Internet giants such as Google and Yahoo!. Traditional service providers and telephone operators are already fighting tooth and nail to keep their profit margins healthy while not losing their market share. Internet portals such as Google and Yahoo! do not have the same kind of content owner relationships as the legacy players. Even though Google and Yahoo! are trying to blaze their own trails in the video distribution industry, they will certainly try to avoid reinventing the wheel yet again. Also Google and Yahoo!, although growing online businesses, do not have as much experience as the legacy players in running a service-oriented operation.
Mobile broadcast video on demand will not be widely available in the United States in 2006
Mobile video services gained a lot of attention in 2005, as every major operator with a 3G network rolled out services offering everything from sports clips to music videos that could be streamed or downloaded to a mobile phone and watched on the small screen. All these videos are available as short clips, from one to five minutes in length, occasionally longer, and are delivered over the cellular network, typically using what's known as an on-demand unicast delivery model. On-demand unicast means that the video clip is sent from the network to a single subscriber on request. The video is streamed to the subscriber, or in some cases downloaded onto the mobile's memory where it can be saved and watched at the subscriber's convenience.
The problem with unicast is that it is an inefficient delivery mechanism, using valuable cellular network bandwidth to deliver videos. This method works fine when there is sufficient excess network capacity, but it is a poor use of the bandwidth for loaded networks. Two companies in the United States are working on solutions to this problem, by building multicast networks that will support delivery of live streaming television services directly to mobile phones using non-cellular networks. The great advantage of these networks is that they can delivery broadcast quality multiple channel video programming on a 24-hour basis to mobile phone customers without impacting the network capacity of the cellular networks.
The two competing networks, from MediaFLO, a subsidiary of QUALCOMM, and Crown Castle Mobile Media, a subsidiary of Crown Castle International, will become commercially available in the second half of 2006 in at least 30 of the top markets in the United States, meaning that more then 80 million people will potentially have access to the services upon commercial launch.
The key word in that last sentence is potentially, since the big question mark surrounding the new services is not whether the networks will be up and running, but whether there will be any compatible handsets available to sell to customers in 2006.
One of the major issues surrounding availability of the new handsets is that it will require integrating a significant new component: the digital broadcast receiver. Associated issues such as power management and graphics processing also have to be addressed. While these are not significant problems in the lab, getting the new handsets on the market quickly will be difficult. Given the design cycle it takes to produce a new handset, typically 12 to 18 months, it's highly unlikely that any operator that signs up to offer the new digital broadcast service to its subscribers will be able to offer more then one or two handset models, none in commercially significant quantities, to their subscribers.
ABI Research believes that in 2006 the networks supporting digital video broadcast will be widely available in the United States. But very few handsets will be on hand, meaning that customers who can't live without their mobile TV will have to stick to unicast services for another year. 2007 will truly be the year of mobile digital broadcast video.
Wi-Fi certified 802.11n products will not appear on the market
There will be no Wi-Fi certified 802.11n products on the market in 2006. There will be Wi-Fi 802.11n semiconductors on the market in 2006 that are based on the early draft of the IEEE 802.11n specification. Some of these chipsets will be worthy of being called pre-802.11n. There will even be equipment products on the market using these chipsets before the year is over, but with Wi-Fi 802.11n certification occurring in 2007, these products will not have gone through interoperability testing yet in 2006.
Lots of people will be traveling in 2006. Better make sure you have your passport. Will it be an electronic document? Probably not.
Outside of the visa waiver program there will not be widespread adoption of e-passports.
A few countries adopted e-passports before the United States put its new visa waiver program requirements in place. During 2006, most e-passport adoption will be due to the visa waiver program. There are other countries interested in using the technology and many will move towards implementation, but they are not being required to do so by a certain date.
Those passports - when they arrive in numbers - will be based on RFID. What won't happen in that field?
EPC IS-driven deployments will not be common across Wal-Mart mandate companies
As companies continue ramping up RFID capabilities, internal infrastructure and external data synchronization issues will hinder multiple site, trading partner-integrated RFID solution deployments. Generation 2 hardware and edge software will play a role in scaling deployments, but there will continue to be a ceiling limiting potential for the EPC IS vision.
Generation 2 RFID UHF shipments will not exceed one billion units, though capacity capabilities across multiple sources will be in place. With Impinj and Philips UHF EPC Generation 2 IC capabilities in place and inlay makers Alien, Avery, Omron, and Rafsec strengthening label converter, printer, and applicator ecosystem relationships daily, the converted EPC Generation 2 tag bottleneck will be at the demand side and not at the supply side. There will be more companies demanding more Generation 2 product, but infrastructure limitations will keep industry demand below 1 billion UHF Generation 2 units in 2006.
Contactless payment momentum will not develop evenly across North America, Europe, and the Asia-Pacific region. Contactless payment markets have exploded in 2005 and growth will continue in 2006. North America, Europe, Japan, South Korea, China, and the rest of Asia are developing differently as consumer preferences differ by region. The same non-linear adoption will begin in late 2006 with extended NFC trials tied to contactless payment and commerce mobile device applications.
There will be no clear winner in the item-level tracking frequency debate. Both UHF and HF will be used at the item level. The choice between frequencies will come down to application and cost. RFID pharmaceutical tracking will be the first widespread deployment of item-level RFID, and that market has yet to decide on a frequency. Even if they do choose one frequency, this will not necessarily affect the other markets for item-level RFID.
There you have it: a hype-free snapshot of what we can really expect to see as we move deeper into the second half of the decade.
Last but not least, we at ABI Research would like to wish all HomeToys' readers a happy and prosperous 2006.
This article combines the insights of a number of ABI Research analysts: Kenneth Hyers (Principal Analyst, Mobile Wireless Research), Erik Michielsen, (Director, RFID and M2M Research), Jake Saunders (Director, Global Forecasting), Sara Shah (Industry Analyst, RFID and M2M Research), Vamsi Sistla (Director, Broadband and Multimedia Research), Philip Solis (Senior Analyst, Wireless Connectivity Research) and Alan Varghese, (Principal Analyst, Wireless Research).
The subjects discussed here are covered in depth by the company's nineteen Research Services. For more information please visit: www.abiresearch.com.