Saturday, January 10, 2004

CES

I've been reading reports from the Consumer Electronics Show with half and eye, because it's good to be fore-armed against whatever ill conceived gadgets are being cooked up for your living room.

The number one story for me is how PC makes are entering the consumer electronics market and vica versa.

In my mind, much of this is desperation on the part of HP, Gateway, and other PC OEMs (and MSFT). The commodity PC story is an old one, Dell built a company to make boxes are cheaply as possible, Windows became good enough, and the rest is history.

Another part of the story is how new consumer electronic functionalities require PC bits such as harddrives, 802.11x connectivity, networking, and some sort of organizational software. Folks believe that digital content is going to drive adoption, and the hardware makers are trying to make deals with the content owners to 1) put in DRM strong enough to make content immune to Napster while 2) still making a machine someone wants to buy.

The most prevalent form of content restriction to date has been regional encording, whereby a DVD/VHS tape/console game bought in one country would not function in another (as far as I know, CDs never had any such restriction). Most people did not care because everything they did with that content was regional, and the industry could price discriminate between countries without too much trouble. It's actually remarkable to find how many things are incompatible across national borders.

The DRM schemes the content industry are asking for now are much more invasive, and will absolutely damage the adoption of new devices. Manufacturers need "open content" to make the devices valuable again, but I don't see a market for that developing until closed content is well and truly closed. I am glad to see the RIAA going after consumers to enforce current copyright laws because the alternative is more idiot legislation like the DMCA (I think this also suggests that the Content industry knows it can pass no more Copyright Extension acts or DMCA IIs. No legislator wants to be associated with suing children).

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