LAGUNA NIGUEL, California -- The infobahn may be winding a lot more slowly into living rooms than pundits predict, according to the opening panel at the Digital Living Room conference.
The prognosis for the near-term adoption of a digital lifestyle was bearish: The VCR will remain king of TV recording for years. PCs aren't ready to hook up to consumer appliances. Home LANs are nowhere near ready for prime time. And only about 20 percent of American homes will have access to broadband by 2003, making many of the futuristic services predicted by cable-modem, wireless, and DSL providers mere fantasy for most people.
Altogether a pretty depressing forecast, considering the audience that heard it. But there was more.
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Major companies that don't get more aggressive with their digital consumer strategies -- including Kodak and Compaq -- may find themselves left in the dust. In that event, the likely winners would be Microsoft, by virtue of its overwhelming presence in every aspect of the Internet; Hollywood companies such as Disney and Warner Bros. that have carefully thought out Internet strategies; and companies such as MP3.com, which specialize in downloadable music, video, or games.
Products designed to take over the functions of VCRs, such as TiVo and Replay devices, will see themselves outdistanced by their lowly cousins for years to come unless they can dramatically lower their prices, according to Ross Rubin, vice president of Jupiter Communications.
"We forget that consumers buy things that are US$99 or $199 (for their living rooms)," Rubin said. "When you have something at $799, it's hard to compete."
The PC industry's dream of leaping into the living room is also far from reality, stymied by a lack of agreement on standards between computer companies and consumer electronics manufacturers.
"It's a big morass," said Kevin Fong, general partner at the Mayfield Fund. "Nobody's talking to anybody else."
As for home LANs, "It's a joke," Fong said, noting that early solutions from Intel and Diamond are not user-friendly enough to make significant consumer inroads.
While broadband home hookups are proceeding rapidly, they won't reach more than a fifth of American households by 2003, restricting the potential market for high-speed services such as AtHome. And HDTV is still very early on the adoption curve. Still, a growing percentage of American consumers will begin to access the Internet from their living rooms, giving an edge to companies with downloadable content such as MP3.com, or strong brands such as Disney and Warner Bros., panelists said.
"In the whole Silicon Valley-Hollywood competition (in the consumer marketplace), you would have to give the edge to Hollywood in branding," said Lewis Henderson, head of new media for the William Morris Agency.
Asked to give thumbs-up, thumbs-down judgments of new products and services, panelists pointed earthward to the strategies of Kodak and Compaq. Kodak has been too slow to move from its traditional chemicals and paper business to the digital world, said Kevin Surace, an adviser to General Magic, who moderated the panel.
"They're moving from a market where there's only one or two major players (in paper and chemicals) to one where there are dozens of potential competitors (in digital imaging), and where they don't have an obvious advantage," he said.
As for Compaq, it has failed to develop an aggressive strategy for selling computers over the Web, Jupiter's Ross said. "They have yet to wake up to what Dell has done to them for the last few years."
