Speaking of persistence, Microsoft has introduced the 2005 version of Windows XP Media Center Edition 2005. These products, like the main character in a Tennessee Williams play, are the issue of a long line of noble and twisted progenitors and the spawn promises to be even more interesting.

Microsoft

has added several sorely needed features such as support for multiple tuners so that people can watch and record at the same time and also support for CD and DVD burning. The long awaited arrival of mainstream high definition is recognized with support in Windows XP MCE 2005 and so is the requirement to share content around the house with extensions. At this stage of the game though it’s difficult to tell where the real work needs to be done – on the product or for the audience.

It’s possible to sell 300,000 to 500,000 of anything if you’re willing to back it with the marketing dollars. Microsoft sold around 300,000 WebTVs in its rollout year, the first MP3 players from RIO and Creative – expensive and with limited memory hit around 300,000 among the early adopters, and our estimates put the first rollout of the Entertainment PCs based on Microsoft’s Media Edition in the same ballpark. TiVo reached similar levels in its first year. It could be argued, and in fact it has been argued, that it’s cheaper to just give everyone $1000 to use your product. No doubt about it, paradigm shifting is hard work and it’s expensive.

What’s worse, someone could well just waltz right in and win the market after the ground has been tilled and the seeds planted. Look at Apple’s performance with the iPod. Here Creative, Rio, and Samsung have been battling it out with flash players and they were just starting to bring out hard drive players when bam! it’s iPod time. Apple just seemed to have an uncanny understanding of what customers, music lovers, really wanted.

Now it seems everyone has gotten the idea — or rather lots of ideas. Olympus is introducing two digital music players one of which has a camera. Sony has come out with the Net Walkman that it hopes will slow down the iPod juggernaut. Creative is offering the Zen Micro and it’s winning points for sex appeal – a quality not usually associated with the functional Zen players. Before Apple came along digital music players looked like they had been designed by out-of-work designers from the Soviet era. But Zen players are getting smaller, cuter, and they have a much better interface. Samsung, a longtime participant in the early days with its Yepp player is also getting enthusiastic about the phone market and has introduced the SPVC500 smartphone with music playing capabilities. Do customers want these things? Someone thinks so. Don’t ask us, we want everything.

We get the feeling that Sony is just going through the motions with the Net Walkman. It seems that Sony is really putting all its hopes dreams and marketing bucks into the PSP, its new game machine that also plays media including music and videos. This little baby fits right into the Sony world view with support for memory stick and also UMD – Sony’s re-spin on the minidisk. The PSP is in a position to beat both Apple and Microsoft at their games. The PSP will have a huge library of beloved Playstation games plus Sony’s own ever expanding library of movies and music.

So, the question of the day is: aside from millions of dollars what does it take to have a hit consumer electronics product. It may be that this answer is – it takes a system. Apple, Sony, Microsoft, are all addressing the multimedia market with infrastructure – not individual products. Even

Tivo failed to get traction until it teamed up with DirecTV.

The choice for the small company looking for the next big thing is getting clearer – sort of. It will come not from inventing, designing and offering a great product to customers. It will come from inventing, designing, and offering great products to companies who in turn will offer it to customers.

Jon Peddie is the president and founder of Jon Peddie Research.

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