Tuesday, January 4, 2011

Thoughts on 2011

It takes almost no time at all between when holiday sales hyping the latest and greatest electronics come to a close and a whole new slate of products starts being promoted.  Today was the start of CES, a major electronics industry event where the gadgets for the coming year get announced.  Lots of these products won't actually hit stores until late in the year, if ever.  Some are just vaporware and others never get out of the starting gate due to a lack of retailer interest.  A few years ago HD-DVD came to a dead stop around this time, leaving many new owners of HD-DVD players stuck with just a tiny library of titles to choose from.  When things flop at CES its big news, successes however take far longer to materialize.

In this post I'll be sharing my thoughts on some of the new toys the coming year will bring.  

Last year, 3D was the new buzzword.  Heralded by Avatar at the box office, TV's and to a lesser extent Blu-Ray players started hawking 3D technology as the next big thing.  In the middle of last year, Nintendo leaked work that its next handheld console would be the glasses-free 3DS.  

At the same time as the buzz on the hardware side was growing, the media side took a downturn. Movie studios and theaters saw 3D as a way to charge extra for tickets and added post-processed 3D effects to movies.  For the most part, these hack jobs were unsuccessful.  Post-processed 3D doesn't look right and is prone to cause eyestrain.  Moreover, many of the effects in these films used 3D to jump out of the movie screen rather than creating the illusion of depth behind the screen, an effect that is tough on the eyes as well as being glaringly bad when poorly executed.  Poor 3D effects just make bad movies worse.

I did like the few films I saw in 3D but in those cases the source material was strong and the 3D effects were intended from the start and well executed.  Animation is well suited to 3D and much like A Bug's Life was the showcase DVD in electronics stores when DVD's first came out, Toy Story 3 will probably be the showcase for 3D Blu-Rays.

However, consumer 3D still has a long way to go.  Bulky, usually expensive glasses are required and because 3D technology relies on each eye only seeing half the total frames, brightness and color saturation suffer.  TV manufacturers are still scrambling to find new and better display technologies to provide a better 3D experience, but in reality the market isn't going to take off any time soon. There isn't enough media and there definitely isn't enough good media.  Some of the top 3D titles are under exclusive license to particular manufacturers for use as promos and thus won't be generally available for at least a year.

With the lack of media and rapidly shifting technology it would seem that buying 3D enabled products would be mistake.  The answer to this is yes and no.  3D is built into the HDMI 1.4 spec, the standard that controls what cables are used to connect devices.  Further, the 3D format itself is unlikely to change.  This means that Blu-Ray players that can handle 3D should not be obsoleted.  For Blu-Ray players 3D is pretty much a non-issue and prices have been dropping quickly.  For breadth of features a PS3 is still the best option but only for those who plan to actually play games on it.

With regard to TVs, the features that make a TV good for 3D also make it provide an excellent 2D experience.  Despite what is likely to be a big marketing push on 3D performance the real value in the coming generation of TVs will be the streaming capabilities added to them.  Features like Vudu for on demand films, Netflix, Pandora and most recently OnLive (streaming gaming) are all coming to TVs.  Many of these features are already in Blu-Ray players and standalone boxes and should slowly migrate to cable boxes as well. 

Streaming Media
This brings me to my next point, streaming media.  I think that 2011 will not be the year of 3D but that it will be the year that streaming media gets huge and becomes ultra-competitive.  The marketplace for streaming media is incredibly fragmented and each provider has their owned walled garden that they hope to keep consumers in.  For music streaming the heavyweights are Pandora and Last.FM, with Spotify gaining dominance in Europe.  For video streaming, Netflix is the champ when it comes to subscription models but there is plenty of competition for on-demand video with Amazon, Walmart (Vudu), Sony, Apple and Microsoft all fighting it out.  

In the next year or two I think a few things will happen.  First, the on-demand video and music download markets will stay relatively unchanged, all the players are too big for there to be any other result.  With music streaming, I think there will be some consolidation as the streaming services look for more leverage in bargaining with the music publishers who have currently hold them hostage.  With the backing of a major retail source such as Amazon, Apple or Walmart, the music streamers would have more power to get favorable deals.  The last big move could be Netflix.  While they are the top in their niche, the sheer volume of network traffic they generate is putting them directly in the firing line of the telecoms.  Because of their market share, Netflix's choice of partners is limited.  They have already come under fire for potential antitrust violations over deals with Walmart.  With Netflix's rapid increase in their use of net resources Amazon or Google could be a good partner if antitrust concerns could be overcome.

Whatever happens, 2011 should be an interesting year.  The percentage of households that have internet based music or video available on their TV will spike dramatically and the gloves will come off in the marketplace.  

Completely changing subjects, one thing that is looking to get very hot this year is tablets.  Last year the Ipad was a big success and the few Android tablets that followed in its wake were hit or miss.  The Android OS was nowhere near as ready for tablets as Apple's OS was for the Ipad launch.  This year, the Android tablet market will catch up and the big question mark will  be how Apple responds.  In terms of price, its unlikely that Apple will be competitive with the lower end of the market.  Android tablets have the potential to fill many niches due to the open nature of the platform but the tablet archetype pioneered by the Ipad could continue to be dominated by Apple.  In the first tablet news from CES, Asus announced a tablet with a sliding keyboard, a tablet with a detachable keyboard and a small (7 inch) tablet.  

One product definitely worth watching is the Nook Color.  While it began as an e-reader running on a significantly customized (and crippled) Android OS, a number of hacks have shown that is has the potential to be a cheap and versatile tablet.  With future official updates possibly opening up the tablet to the Android market it could turn out to be the best deal available for getting a reasonably full featured tablet.  

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