On March 21, French lawmakers approved a controversial bill that would require digital content bought at any online music store to be playable on any digital music player. The bill has been forwarded to the French Senate and is expected be voted on in May 2006. The law would affect all hardware and service providers; however, everyone is curious about what the immediate impact would be on Apple and its proprietary iPod + iTunes package.
French legislators say that they are not focusing solely on Apple. Instead, they maintain that they are anticipating the future when all entertainment is delivered via online services; and they want to ensure that customers are protected from monopolistic companies controlling content distribution and playback.
But is Apple really a monopoly because it does not allow tracks downloaded from iTunes to be played on any other hardware than the iPod? We don’t think so. Customers do have options when purchasing MP3 players and digital music online; and most of today’s customers realize that they’re buying into a closed system when purchasing an Apple iPod. Additionally, if Apple were a monopoly, it would be controlling only a sliver of a large market. Digital music sales represented 5% of the total worldwide music market in 2005.
It is important to note, however, that by 2010, online sales of digital music are expected to represent almost 1/3 of the worldwide music market. So, Apple’s commanding lead in today’s online music market should not be underestimated. It will be up to competing hardware manufacturers, such as SanDisk and iRiver, to educate customers about Apple iPod+iTunes alternatives.
Meanwhile, we do not expect Apple to open its FairPlay technology to competitors. It’s more likely that Apple will simply exit the French market altogether. While this may seem a bit extreme to some, we believe it won’t negatively impact Apple since France makes up a negligible portion of iPod sales.
For more information on digital audio players and other portable CE devices, be sure to check out In-Stat’s Portable & Emerging Consumer Products service at: http://www.instat.com/catalog/Ccatalogue.asp?id=27
- Stephanie Guza - Industry Analyst
, E-mail:stephanie.guza@reedbusiness.com
High-Definition DVD is Here! (Except for Players and Content)
High-definition is the buzzword that permeates the DVD player market. CES 2006 was supposed to be the extended battleground for the two opposing camps of the blue laser high-definition playback formats. The Blu-ray camp presented product announcements from Blu-ray DVD player manufacturers Sony, Samsung, LG Electronics, and Pioneer. Sony was vague about pricing and the formal release date. The HD-DVD legion was ready. Toshiba announced an HD-DVD player that would be released worldwide in March 2006. Thomson followed suit by announcing the release of an HD-DVD player, through the brand RCA, for summer 2006.
Now we’re at the end of March and nothing is rolling out quite the way that blue laser proponents advertised. LG Electronics shifted gears. At CES, LG Electronics announced plans to develop on the Blu-ray platform. However, by the beginning of March, LG Electronics announced that it would scrap its Blu-ray only plans with the intention to develop a DVD player that would support both Blu-ray and HD-DVD playback. Sony, which had announced plans to release the BDP-S1 at CES, finally formalized a released date and price (June 2006, MSP US$999). Toshiba announced two HD-DVD players set for March 2006 release. The Toshiba HD-A1 was designed to trump the Blu-ray players with the earlier release date and a more appealing price of US$499. However, Toshiba has since pushed back the release date, it says, to coincide with the release of HD-DVD titles by Warner Home Videos. These setbacks must be frustrating to potential early adopter consumers.
After decades of being able to avoid the consumer confusion and market inhabitance of a format battle, the Blu-ray vs. HD-DVD battle promises to be the second coming of VHS vs. Betamax. Blu-ray is betting on an installed base of Playstation 3’s equipped with Blu-ray drives while Toshiba and its HD-DVD cadre are betting on a manufacturing technology that is closer to standard-definition DVD technology that is initially less expensive to consumers. The prize is significant—millions of dollars in royalties.
The In-Stat report, “Who’s Blu? Next-Generation DVD Players and Recorders,” discusses the technical and business considerations involved in implementing high definition DVD technologies. The report also contains a survey of DVD player/recorder owners and their attitudes about personal video recording, electronic programming guides and convergence usages of DVD players and recorders. In-Stat forecasts the unit and revenue volumes for standard definition and blue laser DVD players and recorders through 2010, and the Bill of Materials for DVD players and recorders in standard and high-definition formats are also provided.
Last week, cable TV operator Cablevision Systems Corporation announced that it was “launching a groundbreaking technical trial” of a new networked Personal Video Recorder (N-PVR) system. The system will allow Cablevision subscribers to record TV shows and movies onto a network video server located at the cable headend. The advantage of an N-PVR system comes from its lower costs. Specifically, such a system means that cable operators could provide time-shifted video services without deploying expensive, hard drive-enabled set top boxes in the home.
Cablevision, which is calling the system a “remote storage digital video recorder (RS-DVR) service,” plans to provide each participant in the trial with 80 gigabytes of dedicated space on the network server. The service would reportedly support both SD and HD formats, and it would offer a user interface similar to existing PVR services.
Cablevision readily acknowledged that past attempts to start up network-based PVR services had failed due to content protection and copyright disagreements with TV programmers and movie studios. However, the cable operator also stated that they believed their system would be considered “fair use” of programming as defined by the 1984 Sony Betamax copyright case. The Betamax case stated that it was legal for TV viewers to record and replay TV shows on their VCRs, without seeking permission form the copyright holder, as long as the recording was for personal use only. The ruling is often cited as the legal basis for MP3 downloads, CD burners, and virtually all in-home PVR products.
While Cablevision was trumpeting its announcement, the movie studios and cable programmers remained largely silent. Most noted that they needed to learn more about the system before commenting, although at least one stated that Cablevision seemed to be directly challenging the studios instead of coordinating with them. In-Stat tends to doubt that Cablevision will get a free pass on this service without some kind of legal challenge from the content developers, but that challenge is probably a few months away.
Meanwhile, other cable operators like Comcast and Time Warner Cable have been making positive comments about Cablevision and its N-PVR system. Of course, since Cablevision has “taken the point” on this technology and could be stepping into a legal minefield, it’s not surprising that the largest cable operators are cheering them on from the rear.
Cablevision’s N-PVR service will most certainly be a hot topic at next week’s National Cable Show in Atlanta. In-Stat will continue to track and report on this issue in several of its Multimedia services, to include Multimedia Entertainment Equipment and Multimedia Broadband Services.
Luminary Micro Announces 32-bit Microcontrollers for $1.00
Luminary Micro, a fabless semiconductor company that designs, markets, and sells ARM® Cortex™-M3 processor-based microcontrollers, announced the availability of the first members of its Stellaris™ family of 32-bit microcontrollers (MCUs), with an entry-level price of $1.00. The Stellaris family is the world’s first silicon implementation of the ARM Cortex-M3 processor, and is the first time that ARM, based in the UK, has enabled a start-up company to be a lead licensing partner for one of its microprocessors. The first two members of the Stellaris family – the LM3S101 and LM3S012 – are available now.
The Stellaris line of MCUs is targeted at embedded and industrial applications, such as building and home automation; factory automation and control; and industrial control power devices. The combined embedded and industrial markets represent over $1.4 billion in total available market (TAM) opportunities for these products.
For the first time ever, embedded microcontroller system designers can utilize 32-bit performance for the same price as their current 8- and 16-bit microcontroller designs. These designers prefer the ARM architecture because it gives them access to an open architecture of silicon implementations and an expansive third-party vendor network of software tools, operating systems, hardware and support – more than any other processor in the world. ARM has a greater than 80 percent market share in some embedded 32-bit processor markets, with ARM Partners shipping at a rate exceeding 1.5 billion units a year.
The battle for MCU leadership, or to be put more accurately, the push for the already ongoing migration of 4-bit MCUs to 8-bit MCUs, and 8-bit MCUs to 16-bit MCUs, and so on, continues. Luminary Micro, has announced its introduction of the Stellaris family of 32-bit MCUs, which is based on the ARM Cortex-M# processor. With an enviable price of $1.00 in volume, this will quickly quench anyone’s arguments regarding the price of this type product, along with conversion expense. This product will certainly open a whole new host of lower cost applications, and as of this point in time, Luminary already has a rapidly growing number of companies joining Luminary’s design house program, thus speaking strongly for their product offering. This agreement is also a first for ARM, which also speaks highly of Luminary’s product family.
