IT analysts pick the best of CES

Storage, smartphones and streaming were among the highlights at this week’s CES and Macworld shows, but according to one observer the most significant thing that happened might have taken place off stage.

According to Rob Enderle, a California-based personal computing analyst, several of Microsoft’s OEM partners were seething at Bill Gates’ keynote address, in which their products were given slight attention while he cast the spotlight on the Xbox 360 gaming system and its new Internet Protocol TV capabilities.

It’s another reason why some hardware makers are quietly looking for a PC operating system to compete with Windows, he said.

“A bunch of vendors did a ton of work on custom hardware for (Windows) Vista. It all went by in a quick little film clip” during Gates’ speech, said Enderle. “No sense of what made the hardware different, no sense of what made the hardware cool . . . Then a good chunk of the presentation was on the Xbox, which just torqued off the OEMs.”

Manufacturers of TV set-top boxes and computers built around the Windows XP Media Centre Edition increasingly see Xbox as competition, he said. That’s because through participating service providers the new Xbox IPTV edition will let users record digital video, download and watch movies and music and simultaneously communicate with others online. Service in the U.S. is expected to start late this year. There’s no word on when it will come to Canada.

“It’s being positioned (by Microsoft) as the thing that connects to the TV, instead of a (Windows) Media Centre PC,” said Enderle. “A lot of these guys have done a lot work on Media Centre PCs,” he said. “They are a partner and they really don’t want to see Microsoft positioning a hardware product it builds against theirs.

“Some of them (the manufacturers) felt better by the end of the day because Bill did a number of publicity shots with them and the hardware and calmed down, but some didn’t.”

He agreed Microsoft views its job as promoting its products, but added it’s unwise for to be seen as a competitor to its biggest customers. Do it enough, he warned and manufacturers will find an alternative. 

“In fact right now the back story with the OEMs is they’re aggressively trying to find something they can use like they use AMD against Intel (for CPUs in their computers), except they want to use it against Microsoft. Those statements a while back about Dell wanting to license the Mac OS, they really do, but Apple will never license it to them . . . Eventually these guys are going to find an alternative to Microsoft, and Microsoft itself is driving that behaviour.”

Enderle was one of several industry analysts interviewed by ITBusiness on what they were impressed with at the two shows.

One of the products briefly highlighted by Gates was Toshiba’s Portege R400 laptop, which was co-developed with Microsoft to highlight Vista capabilities. The device, which will start as US$2,595, automatically synchronizes e-mail and calendar events through the integration of Microsoft’s Active Notifications and has a wireless dock. “It’s about a year ahead of everyone else,” said Enderle. 

But he and others acknowledged that Apple Inc. stole the thunder of the thousands of CES vendors by announcing the iPhone and Apple TV, a wireless media centre-IPTV set-top box. 

With its touch-screen interface and promise of easy Web surfing, the iPhone — which won’t come on the U.S. market until June and at an undetermined date in Canada — “will revolutionize the market whether it’s successful or not,” said Enderle.  “This is the UMPC (ultra-moble PC, a format pushed by Intel) done right.” On the other hand, it could be killed by poor battery life, he said.

As for the Apple’s battle with Cisco Systems over the name iPhone, Enderle said it isn’t about money. Cisco isn’t asking a dime, he said, but wants Apple to open up the phone to connectivity to Cisco’s network gear. Apple, notoriously protective of its intellectual property, apparently said no. 

“If the iPhone delivers up to its promise, it is the leader in the smart phone market,” said Kevin Restivo, senior analyst at the Toronto-based SeaBoard Group, which specializes in telecommunications.

However, he cautioned that the world has only seen a demo of the thin device. It has yet to be seen if it can deliver on features such as its push e-mail technology.

As for Apple TV, Enderle noted it was announced by the company last year, which has given Microsoft time to catch up with its IPTV offering. Apple TV’s Achilles heel could be content, he said — so far the company only has the Disney studio behind it, while Microsoft has more providers. However, he wonders how many buyers will want an Xbox as a set-top box. Apple’s advantage in this category is its marketing, he said.

Steve Kovsky, research leader for consumer electronics at Current Analysis, a Sterling, Va., research firm, is also optimistic about Apple TV, saying it “could potentially crack that market wide open.”

Restivo, though, cautioned that connectivity standards are still holding the market back.

Other products that caught Restivo’s eye were the number of cordless telephones that will be coming with Skype installed, including Netgear’s Dual-Mode Cordless Phone with Skype (SPH200D) and Philips’ VoIP841 Cordless Phone, a show award winner. Such devices let users make local calls over landlines and Internet calls via Skype. The Philips unit doesn’t even need a PC. 

These units also caught the eye of William Terrill, associate senior analyst at London, Ont.-based Info-Tech Research, who some come with features such as conferencing and call forwarding that could also appeal to small business.

Restivo was also impressed with Sling Media Inc.’s Sling Catcher, said to be available in the middle of the year, which can wirelessly project any Web site or video content from a PC to a TV.

In a bid to boost the sagging debut of high definition movies, Time Warner announced the TotalHD format, a process for encoding Blu-ray and HD-DVD movies onto one disk so retailers will only have to stock one copy of a movie. In addition, LG announced a US$1,500 HD player that will play both formats. Analysts are divided on whether these approaches will erase consumer doubt over the battling formats.

Kovsky called TotalHD a “promising first step toward solving this rift, ” while Randy Giusto, IDC’s group vice-president for mobility computing and consumer markets observed that its success depends on other movie studios — who loudly back either HD-DVD or Blu-ray — adopting the format.

Kovsky mentioned that fellow analysts were struck by Hewlett-Packard’s TouchSmart PC, which has a 19-in. touch screen so it can be placed in kitchens or living rooms to be what the company calls the “social hub” of the home.

Later this year HP and other manufacturers will deliver home backup and storage appliances built around the new Windows Home Server software that Microsoft announced at CES.  HP’s will be called the MediaSmart Server, but use of the “s” word makes Kovsky wince.

“I don’t think server is a name that’s going to resonate with consumers,” he said. “Nobody backs up – even those smart enough to know better. It’s going to be a long, slow road to establish that class of products with consumers.”

Speaking of storage, Terrill of Info-Tech Research was struck by the number of high-volume storage devices aimed at consumers but which small offices or home offices could take advantage of. 

For example, Netgear showed a unit with network attached storage and RAID capabilities that will sell for US$249, without hard drives. Plug in two 750Gb drives and a company can have 1.5Tb of storage, he said. Seagate’s Maxtor brand had a similar unit.

“Part of the thing that’s really neat is that because they’re aimed at consumers, they have to be extremely simple to set up and use,” he said. 

Terrill also noted groups were showing off technologies that could be of interest to small and home office owners, such as wireless USB extenders from companies like Staccato Communications, and Internet-over-home power lines. This last could be useful to small firms that move a lot, he said.

Looking back, Kovsky said CES this year was “a little bit thin on real innovation.

“I don’t see any new categories emerging that are going to change the face of the consumer electronics industry,” he said. 

There’s always next year.

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Howard Solomon
Howard Solomon
Currently a freelance writer. Former editor of and Computing Canada. An IT journalist since 1997, Howard has written for several of ITWC's sister publications, including Before arriving at ITWC he served as a staff reporter at the Calgary Herald and the Brampton (Ont.) Daily Times.

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