Hype Cycle for Consumer Technologies, 2003
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1 L. Behrens, R. Trinkner, M. McGuire, R. Mogull, D. Haueter, T. Koslowski Strategic Analysis Report 6 June 2003 Hype Cycle for Consumer Technologies, 2003 As digital technologies replace analog for consumer products, high-speed wireless bandwidth will be increasingly important to connect devices for the home. Management Summary Consumer technology products range from the highly adopted to the nearly unknown. The past decade has been characterized by vendors hyping the replacement of previously successful analog technologies with digital technologies, as evidenced by the push toward DVDs, MP3 players, digital cameras and personal digital assistants. Although home broadband has long been considered the technology that would lead toward convergence in consumer devices, the sudden success of DVD players has catalyzed sales of home theaters the convergence of television, stereo systems and DVD media players. Also, rapid adoption of digital cameras likely will lure consumers to adopt other digital products that facilitate content portability and manipulation, such as MP3 players, personal video recorders and digital camcorders. In the future, technologies will converge in the home and car as telematics reaches the Plateau of Productivity. Gartner Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice.
2 6 June
3 CONTENTS 1.0 The Hype Cycle On the Rise Smart Home Appliances Digital Media Centers Satellite Radio Interactive TV High-Definition TV DVD Recorders At the Peak Video on Demand Digital Photo Printers Digital Camcorders Sliding Into the Trough Household Wi-Fi E-Payment Digital TV (Cable or Satellite) Personal Video Recorders Broadband E-Book Readers Telematics Climbing the Slope MP3 Players Home Theater Personal Digital Assistants Wireline Home Networking DVD Players Entering the Plateau Digital Cameras Internet Shopping Game Consoles Conclusion...13 Appendix A:Hype Cycle Definitions June
4 FIGURES Figure 1. Hype Cycle for Consumer Technologies, June
5 1.0 The Hype Cycle Visibility Digital Camcorders Digital Photo Printers VideoonDemand Household Wi-Fi E-Payment Key: Time to Plateau Less than two years Twotofiveyears Five to 10 years More than 10 years Obsolete before Plateau High-Definition TV Satellite Radio DVD Recorders Interactive TV Digital Media Centers Smart Home Appliances Digital TV (Cable or Satellite) Personal Video Recorders Personal Digital Assistants E-Book Readers Broadband Home Theater MP3 Players Telematics Game Consoles Digital Cameras Internet Shopping DVD Players WirelineHomeNetworking As of June 2003 Technology Trigger Peak of Inflated Expectations Trough of Disillusionment Slope of Enlightenment Plateau of Productivity Maturity Source: Gartner Research (June 2003) Figure 1. Hype Cycle for Consumer Technologies, On the Rise 2.1 Smart Home Appliances Definition: Home heavy appliances, such as furnaces, dishwashers and washing machines, that can be connected to the Internet and monitored and controlled remotely. Time to Plateau/Adoption Speed: More than 10 years. Justification for Hype Cycle Position/Adoption Speed: Smart home appliances initially will penetrate homes in experimental subdivisions and high-end homes. Emerging network standards will ease introduction. Business Impact Areas: Remote monitoring and metering, customer relationship management and energy efficiency. Will redefine traditional appliances. Selected Vendors: Echelon, Electrolux, General Electric, LG, Maytag, Samsung and Sunbeam. 6 June
6 2.2 Digital Media Centers Definition: Hubs or gateways by which consumers manage digital media from mixed sources, such as television, radio, photos and Internet audio and video. Time to Plateau/Adoption Speed: Five to 10 years. Justification for Hype Cycle Position/Adoption Speed: The adoption of digital media centers depends on the growth of home networks. Adoption will increase when video can be sent conveniently and costeffectively over wireless networks. Business Impact Areas: Consumer electronics, computer makers, converged devices and digital rights management. Selected Vendors: Digeo, Hewlett-Packard, Microsoft and Prismiq. Analysis by Laura Behrens 2.3 Satellite Radio Definition: Home and car systems that receive stereo radio broadcasts from subscription satellite services across the United States. Will have fewer commercials than FM. Time to Plateau/Adoption Speed: Five to 10 years. Justification for Hype Cycle Position/Adoption Speed: Satellite radio may increase adoption if it is factoryinstalled in cars. Selecting products to retrofit cars may confuse consumers. Business Impact Areas: A challenge to advertisers. Will expand radio to subscription stations, such as cable did for television. Selected Vendors: Sirius and XM Satellite Radio. 2.4 Interactive TV Definition: Two-way television services, including electronic program guides, video-on-demand, interactive advertising, and information and communication services. Time to Plateau/Adoption Speed: Five to 10 years. Justification for Hype Cycle Position/Adoption Speed: Electronic programming guides will become ubiquitous with the success of digital cable and satellite; other interactive TV applications will be impeded by unfriendly user interfaces and other factors. Business Impact Areas: Cable operators, consumer electronics, middleware and set-top-box manufacturers. Selected Vendors: Liberate, Liberty Media, Microsoft Network TV and PowerTV. Analysis by Laura Behrens 2.5 High-Definition TV Definition: The highest-quality television signal. Developed in analog in Japan since the 1960s, it is increasingly delivered digitally worldwide. 6 June
7 Justification for Hype Cycle Position/Adoption Speed: Transition to digital will drive adoption, inhibited somewhat by high prices for high-definition televisions compared to standard-definition televisions. Business Impact Areas: Consumer electronics, cable/satellite/broadcast and technology/systems integration. Selected Vendors: Mitsubishi, Panasonic, Philips, Samsung, Sony, Thomson RCA and Zenith. Analysis by Laura Behrens 2.6 DVD Recorders Definition: Devices that enables users to copy or record DVDs. Drives write-rich content onto a highcapacity DVD. Can be a stand-alone device or a PC component. Justification for Hype Cycle Position/Adoption Speed: There are multiple "write" standards, and many are incompatible. Incompatibility is possible with the installed base of DVD players. Business Impact Areas: Legal issues surrounding digital rights management and multiple write standards. Selected Vendors: Panasonic, Pioneer and Sony. Analysis by Michael McGuire 3.0 At the Peak 3.1 Video on Demand Definition: Video on demand requires a two-way channel for the consumer to interact with video programming in real time. The consumer may pause, fast-forward or rewind. Time to Plateau/Adoption Speed: Five to 10 years. Justification for Hype Cycle Position/Adoption Speed: There will be a wide rollout on cable in 2003 and Resource constraints will limit marketing; satellite push of embedded personal video recorders will blunt impact of cable video on demand. Business Impact Areas: Cable operators, satellite operators, middleware and content providers. Selected Vendors: Concurrent Computer Corp., ncube and SeaChange International. Analysis by Laura Behrens 3.2 Digital Photo Printers Definition: Targeted at the photo printing market. May be inkjet or dye-sublimation, and feature digital memory card readers or displays to view pictures. Justification for Hype Cycle Position/Adoption Speed: Printers targeted at photo printing are expensive, but they will see increased sales as prices decline and the digital camera population grows. Business Impact Areas: Digital imaging/printing and retail photo-finishing market. 6 June
8 Analysis by David Haueter 3.3 Digital Camcorders Definition: Portable electronic recording devices that capture live motion video and audio digitally, and can be connected to PCs for editing purposes. Justification for Hype Cycle Position/Adoption Speed: Digital camcorders are moving out of the earlyadopter stage, with lower-priced models and more availability. Business Impact Areas: Broadband in the home and retail consumer electronics. Analysis by David Haueter 4.0 Sliding Into the Trough 4.1 Household Wi-Fi Definition: Wireless IP network that uses the b standard to pass data between PCs, game consoles or media centers. Allows devices to share broadband without wiring the house. Justification for Hype Cycle Position/Adoption Speed: Household Wi-Fi, or Wireless Fidelity, increasingly is used in early-adopter households to share broadband to avoid household wiring or to enable mobile laptop connectivity. Business Impact Areas: Telecommuting, broadband subscription sharing, digital home and Internet for devices other than PCs. Selected Vendors: Belkin, D-Link Systems, LinkSys Group, Netgear, SMC Networks and US Robotics. 4.2 E-Payment Definition: Using an Internet service to make payments by debiting a checking account or credit card. Some merchants can transfer funds electronically, or the service mails a check. Justification for Hype Cycle Position/Adoption Speed: E-payment is widely used by technical consumers, but it has not been adopted by mainstream consumers. Security fears may limit adoption. Most merchants still require paper checks. Business Impact Areas: Faster processing times, reduced wait for bill payment and lower-cost bill processing. Selected Vendors: Consumer banks and Intuit, PayPal (ebay) and PayTrust. 6 June
9 4.3 Digital TV (Cable or Satellite) Definition: Television transmitted digitally, rather than via an analog signal, and delivered to consumers via cable, satellite or broadcast. Justification for Hype Cycle Position/Adoption Speed: Europe and Asia lead the United States in consumer adoption. U.S. regulators will force most broadcasters to switch to digital by Business Impact Areas: Consumer electronics, cable/satellite/broadcast and technology/systems integration. Selected Vendors: Content delivery providers, such as DirecTV, Dish Network and Sky, and cable providers. Analysis by Laura Behrens 4.4 Personal Video Recorders Definition: Hard-drive-based television recording devices that enable viewers to control live television by pausing, rewinding or recording programs for later viewing. These devices can be stand-alone or integrated into cable/satellite boxes. Justification for Hype Cycle Position/Adoption Speed: There has been limited consumer adoption despite wide availability. Leading vendors have experienced financial difficulties. Personal video recorders are being incorporated into other devices, such as DVD burners. Business Impact Areas: Consumer electronics, television delivery models and television advertising. Selected Vendors: Microsoft and TiVo. Analysis by Rich Mogull 4.5 Broadband Definition: High-speed Internet access, typically via cable or digital subscriber line, that enables consumers to telecommute and download multimedia content more effectively than via dial-up services. Justification for Hype Cycle Position/Adoption Speed: Broadband currently is at about 15 percent adoption, with a consistent growth rate. Adoption will be limited by PC adoption and the shortage of true high-bandwidth content. Business Impact Areas: Media subscriptions, content rights, software distribution, e-commerce and telecommuting. Selected Vendors: AOL Time Warner, Comcast, EarthLink, Qwest Communications and SBC Communications. 6 June
10 4.6 E-Book Readers Definition: Handheld digital devices to store and display text. Most can store many books and have backlit screens and adjustable fonts. Downloadable texts cost slightly less than hardcover books. Time to Plateau/Adoption Speed: Obsolete before Plateau. Justification for Hype Cycle Position/Adoption Speed: E-book readers have failed to lure consumers, despite being environment-friendly by using no paper. They will continue to underwhelm users until newrelease texts cost dramatically less than hardcover books. Business Impact Areas: Digital rights management and content piracy; introduces a new publishing medium; and easy content distribution. Selected Vendors: Franklin and RCA. 4.7 Telematics Definition: Network-enabled cars that provide services such as cell-phone integration, remote diagnostics, roadside assistance access, , vehicle tracking, Global Positioning System navigation and traffic information. Time to Plateau/Adoption Speed: Five to 10 years. Justification for Hype Cycle Position/Adoption Speed: Consumers will remain indifferent to most telematics offerings through However, interest is growing. Business Impact Areas: Tighter relationship between consumers and manufacturers and service centers. Selected Vendors: ATX Technologies, General Motors (OnStar) and T-Mobile Traffic. Analysis by Thilo Koslowksi 5.0 Climbing the Slope 5.1 MP3 Players Definition: Handheld personal audio devices that store and play compressed music files. Tiny, solid-state models store an hour of music; bulkier hard-drive models store hundreds of songs. Time to Plateau/Adoption Speed: Five to 10 years. Justification for Hype Cycle Position/Adoption Speed: MP3 player adoption is increasing. Most products address a niche need for small, lightweight, portable music players; however, home devices are also available. Mainstream adoption of emerging online distribution services, such as Apple's itunes service, could significantly increase MP3 player penetration. Business Impact Areas: Digital rights management and music piracy; challenges other media formats; and content subscriptions. Selected Vendors: Apple, Archos Technology, iriver, Sony and Voyetra Turtle Beach. 6 June
11 5.2 Home Theater Definition: Pre-packaged combination of home-theater components, usually consisting of a DVD player, audio receiver and speakers. Time to Plateau/Adoption Speed: Less than two years. Justification for Hype Cycle Position/Adoption Speed: Home theater systems are available in consumer appliance stores for less than $300. Business Impact Areas: Consumer electronics. Selected Vendors: Panasonic, RCA, Sony and Toshiba. Analysis by Rich Mogull 5.3 Personal Digital Assistants Definition: Handheld devices that manage personal information and serve as a platform for personal productivity software. Time to Plateau/Adoption Speed: Five to 10 years. Justification for Hype Cycle Position/Adoption Speed: Personal digital assistants have been widely adopted in the corporate realm, but they are far less heavily used by consumers. Vendors' emphasis on high-cost models has hampered adoption. Business Impact Areas: Digital content format, electronic wallets and beaming consumer information. Selected Vendors: Compaq Computer, Dell Computer, Handspring, Hewlett-Packard, Palm, Sony and Toshiba. 5.4 Wireline Home Networking Definition: IP-based routers, hubs and cables that pass data between PCs, game consoles or media centers. Enables devices to share a broadband Internet connection. Time to Plateau/Adoption Speed: Less than two years. Justification for Hype Cycle Position/Adoption Speed: Wireline home networking is used in homes with multiple PCs to share broadband. Configuration is near "plug and play," but it often requires technical expertise to troubleshoot problems. Business Impact Areas: Telecommuting, broadband subscription sharing, digital home networking and Internet access for non-pc devices. Selected Vendors: Belkin, LinkSys, NetGear, SMC Networks and US Robotics. 5.5 DVD Players Definition: Used for compact discs with capacities between 4.7GB and 17GB. Used primarily for distributing copyrighted movies and video games. 6 June
12 Time to Plateau/Adoption Speed: Less than two years. Justification for Hype Cycle Position/Adoption Speed: DVD drives are becoming standard in PCs and DVDs are becoming standard for pre-recorded movie distribution. As more vendors manufacture drives and DVDs to a single standard, prices will drop. Business Impact Areas: Copyrighted content distribution and consumer adoption. Selected Vendors: Panasonic, Philips, Samsung and Sony. Analysis by Michael McGuire 6.0 Entering the Plateau 6.1 Digital Cameras Definition: Portable cameras that store photos in a digital format. Primarily designed for taking still photos, but many have video clip and sound capability. Justification for Hype Cycle Position/Adoption Speed: Digital cameras are in approximately 25 percent to 30 percent of households. Sales will continue to increase. Business Impact Areas: Digital imaging/printing, broadband in the home and the PC market. Analysis by David Haueter 6.2 Internet Shopping Definition: Purchasing goods and services via the Internet. Includes mail-order goods and downloaded digital products and services. Time to Plateau/Adoption Speed: Less than two years. Justification for Hype Cycle Position/Adoption Speed: Internet shopping is now the norm for many North American households, especially to purchase discounted items. Business Impact Areas: Channel conflict, customer relationship management, price pressure on consumer goods and market pressure on local "bricks and mortar" merchants. Selected Vendors: Amazon, Barnes & Noble, ebay, Expedia, Hotwire and Priceline. 6.3 Game Consoles Definition: Dedicated game appliances designed for use with televisions, such as the Xbox and PlayStation 2. Time to Plateau/Adoption Speed: Less than two years. Justification for Hype Cycle Position/Adoption Speed: Game consoles have been widely adopted by consumers and are a profitable market. Business Impact Areas: Consumer electronics and mass media. Selected Vendors: Microsoft, Nintendo and Sony. 6 June
13 Analysis by Rich Mogull 7.0 Conclusion Consumer adoption of digital technologies will lead to further convergence, although a primary factor in the widespread emergence of the "digital home" will be the adoption of wireline or high-speed wireless home networking. The anticipated adoption of Wi-Fi home networking and plug-and-play standards will lead in this direction. However, only future higher-bandwidth wireless networking will deliver the quality of service that is necessary for the simplified flow of content and data between devices throughout the house, spurring adoption of devices that consume digital content. 6 June
14 Appendix A: Hype Cycle Definitions Technology Trigger: A breakthrough, public demonstration, product launch or other event generates significant press and industry interest. Peak of Inflated Expectations: During this phase of overenthusiasm and unrealistic projections, a flurry of well-publicized activity by technology leaders results in some successes, but more failures, as the technology is pushed to its limits. The only enterprises making money are conference organizers and magazine publishers. Trough of Disillusionment: Because the technology does not live up to its overinflated expectations, it rapidly becomes unfashionable. Media interest wanes, except for a few cautionary tales. Slope of Enlightenment: Focused experimentation and solid hard work by an increasingly diverse range of organizations lead to a true understanding of the technology's applicability, risks and benefits. Commercial, off-the-shelf methodologies and tools ease the development process. Plateau of Productivity: The real-world benefits of the technology are demonstrated and accepted. Tools and methodologies are increasingly stable as they enter their second and third generations. The final height of the plateau varies according to whether the technology is broadly applicable or benefits only a niche market. Approximately 30 percent of the technology's target audience has or is adopting the technology as it enters the Plateau. Time to Plateau/Adoption Speed: The time required for the technology to reach the Plateau of Productivity. 6 June
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