The Problem with Convergence
Wednesday, March 12, 2003
Quick quiz: Name a successful electronic or digital convergence device other than the clock-radio.
Did you say MP3-camera or video-telephone? Did wristwatch-PDA come to mind? No fair counting Dick Tracy's Wrist Communicator.
How about Internet refrigerator? Camcorder-browser-voice recorder? Phone-browser-camera?
Yesterday at the South by Southwest Interactive conference in Austin, Texas, representatives from Sony and Microsoft were pressed to describe their visions of convergence in the home.
Convergence has been a popular word in recent years, applied to everything from giant company mergers to the mingling and melding of consumer products. There seems to be an irresistible human urge to converge things despite ample evidence that most successful products should simply be left alone. How else to explain the "spork" or AOL Time Warner (parent of FORTUNE's publisher)?
Adam Horowitz of Business 2.0 magazine moderated a panel called "Convergence Devices of the Future." He invited Eric Gould Bear of Microsoft's Windows Hardware Innovation Group and Mark Hanson of Sony's VAIO PC division to discuss the question: "What appliance wins out as the centerpiece of the living room of tomorrow: the television, the computer, or the gaming station?"
It was a tricky question, and the panelists artfully dodged it. (I was on the panel to represent the consumer's interests.)
Sony's official answer would have to be "all of the above." Consider: The Japanese electronics giant recently launched (in Japan) a TV-based hardware platform called Cocoon, which is sort of like a Web-enabled TiVo hard disk recorder on steroids; it's easy to see Cocoon evolving to grab entertainment and information not just from the Internet and from video broadcast sources, but also from Sony's vast libraries of movies and music, and from the hard disks of VAIO PCs around the house.
Sony also sees its VAIO computers as more than just computing devices. Sony was first to add a TiVo-like hard disk video recorder feature called GigaPocket to its desktop PCs, and it claims to have been first to include a IEEE 1394 port for attaching digital video cameras. Video, audio, and info all converge in the PC.
But guess what? Despite those cool technologies, more than half of Sony Corporation's profits last year came from the PlayStation video game machine. Sony has put tens of millions of them into play, and the next logical step is to add Internet access and local storage, transforming the PS2 into the home's portal for games, music, and other forms of entertainment.
If you skip the living room part of the question, Sony is also trying to figure out how to crack the convergence conundrum through its Sony-Ericsson joint partnership, creating mobile handsets that combine voice and data communications with video, music, and games.
Microsoft is no less ambitious. The software colossus sees the PC as the brains of the converged household, acting as traffic manager and control hub for all sorts of digital media that are shuttled, either wirelessly or over wires, to various other devices in the home. Televisions, other PCs, Smart Displays, tablet PCs, automobile dashboards, handheld computers, surround-sound systems, digital picture frames - the company has lots of very smart people, including Mr. Bear, working to define the standards for the converged future.
But Microsoft is also spending billions of dollars to develop and promote its Xbox, a game console that, not coincidentally, connects to the Internet and turns the TV set into more than just a video monitor. It's not a new idea for Microsoft, which has bankrolled and mothballed projects including WebTV and UltimateTV. Microsoft may not make television sets, but it brings convergence to other people's TVs.
With its PocketPC Edition handhelds, Microsoft has converged wireless data, communications, games, video, music, digital photos - well, you get the picture.
What becomes obvious is that we're not really talking about convergence into one universal device, but rather an evolving array of digital devices that overlap in function and - in theory, at least - communicate with one another.
Mr. Hanson gives this example: He takes his camcorder into the backyard to take video of his children at play. When he walks back into the house, he wants the camcorder to automatically communicate with other devices in the home. The TV might offer to display the video. The computer might offer to store the video, or to e-mail it to grandma. The game console might offer to incorporate images of the kids into a game. He wants to download music from Sony's online music service and transfer it to the music player in his car. He wants to order a Sony movie through his VAIO and have it streamed to the Sony Wega TV in the bedroom.
This isn't convergence; it's divergence.
And here's what's wrong with the picture:
It's far too complicated for a consumer audience, unless the consumers have a technical degree from the University of Pluto. Most Americans still connect to the Internet over dial-up modems. The VCR clock is still blinking 12:00. When consumers go to the electronics store to buy home networking gear, more often than not they return it because it's just too hard to figure out. That's not an exaggeration: The return rate for home networking products is well over 50 percent, according to retailers.
And that's just for connecting computers, not to mention a United Nations of devices that use different communications protocols, different operating systems, and different media formats.
Sony and Microsoft don't even know how to explain to Ma and Pa and the kids why they should want their PC to communicate with the TV. Stop someone on the street and ask, "Are you frustrated because you want to stream video from your PC to the video monitor in your bedroom?" Chances are you'll get slapped.
Electronics stores aren't going to help. Camcorders, aisle 1. PCs, aisle 6. Televisions, aisle 13. Computers, aisle 25. With the possible exception of the dedicated retail stores operated by Apple and Gateway, there's no easy way for people to see how all these "convergence" devices are supposed to work together.
Apple has done a masterful job of showing consumers how easy it is to get connected to the Internet, rip and burn music to CDs, edit home movies onto DVDs, synchronize calendars and contacts between a computer and a portable device, set up wireless networks at home, and so on. Nobody does it better than Apple.
And yet, Apple still struggles to get even 5% of the market.
I'm glad Microsoft, Sony, IBM, and other companies are planning for the coming era when all devices are smart and all of them communicate with one another. But for now, it all seems like a solution in search of a demand. Here's an idea: Start by making the devices in my home less confounding, and then we can talk about convergence.
