Apple and Microsoft battle for control of future living rooms

“When Microsoft introduced its long-awaited Xbox 360 console on May 12 in an MTV special, its intentions went beyond just fun and games, The company called the long-awaited product a ‘future-generation game and entertainment system.’ While Xbox 360 promises to offer video games compatible with HDTV, fast processing and a lot of memory, Microsoft also noted that the system can play DVDs and CDs, stream music from MP3 players, and network with the company’s ‘Media Center’ PCs to stream digital content around the house, among other tasks,” Knowledge@Wharton reports.

“Microsoft’s market: The increasingly crowded living room. In fact, the parade of technology companies targeting home entertainment is a long one. Dell Computer sells TVs. Apple Computer’s iMac Mini is viewed by analysts as a potential entertainment server. Media-ready PCs abound from the likes of Hewlett-Packard. These technology stalwarts are selling wares that were typically offered by consumer electronic giants such as Sony. But do they have what it takes to compete in your living room? Is the so-called digital living room — in which audio and visual content is available on demand and combined with Internet and other applications in one seamless environment — fact or fantasy? Who will the winners ultimately be? Wharton experts say the digital living room is becoming a reality, but slowly,” Knowledge@Wharton reports.

“Eric Clemons, professor of operations and information management at Wharton, says digital content on demand is really just a start… In many cases, the move to target consumers makes sense even if profit margins are lower, says Clemons. ‘Things like (Nintendo’s) Gameboy or Xbox may be low margin, but sometimes they are not — like iPod,’ he says. ‘But the content is generally not low margin, so if Apple or Microsoft can own a piece of the content business they can sell content as well.’ Clemons says the other appeal of branching out to more consumer products is the so-called “halo effect” — the Holy Grail that Apple is pursuing with success. By selling iPods, Apple has managed to sell more of its other products such as its iMac… Indeed, Apple offers a host of components that could eventually be used to create a digital living room. Fader says one of Apple’s most underrated products is the ‘AirPort Express,’ a small, plug-in device that can connect to the Internet, print and stream iTunes music throughout home networks wirelessly,” Knowledge@Wharton reports. “According to Clemons, the company that can piece together a digital living room and offer customers all the entertainment they want in any format will be the big winner.”

Full article here.

Related MacDailyNews articles:
Apple bundles videos with select music albums via iTunes Music Store – May 10, 2005
Apple releases iTunes 4.8; now supports QuickTime video along with contact, calendar transfers – May 09, 2005
With Mac mini Apple CEO Jobs attacks the Achilles heel of Windows dominance: the living room – January 14, 2005
Apple Computer will own the living room, not Microsoft – January 10, 2005
Can Apple crack the living-room conundrum before Microsoft? – December 30, 2004
NY Times: Can Steve Jobs put Apple in the center of your living room? – March 23, 2004


  1. Lets see…a Mac Mini with all the connections you need to connect it to your entertainment system and record or play music, movies or surf the web? iPods that have a video out option? iTunes store with video’s available now? A new video codec? Bluetooth, wireless keyboards, many more hints do you need?

    Pixar, Lucus, distribution channels? Why do you think Apple didn’t buy Tivo?

    I see movies with either by subscription or rented, sent over secure hi-speed connections that can be captured and recorded with restrictions, transfered to a device for travel.

    This isn’t a race, Apple has this thing sewn up. Who could even think about trying to catch up…Micro$oft? Get real, they can’t even copy fast enough and even if they could, they’re not a hardware company.

  2. Once again, the answer is simple.

    No other company can come close to providing the solution the way Apple ALREADY has in place. It’s just a matter of coordinating all of the elements into a more seamless, marketable approach.
    Honestly, the only thing missing right now is more HD video content and a portable player/streamer. Then a communication device that will take us into the next gen of mobile interaction.

    Who in the industry has a better position to develop and launch either of these concepts than Apple? M$ may have more money, but they’ll be too busy for the next twenty years fixing their problems to be able to market a feasible solution.

  3. this reeks of thurrott…

    comparing the mini to the xbox.. *groan

    I just don’t think it’s a fair fight.. the mini was never meant to be this media center thing.. it doesn’t have any appropriate extras (like a remote).. the mini is a switcher desktop solution…

    if apple starts to promote the mini as some kind of living room thing with a base for all your doodads.. okay.. but wait a few days.. (wwdc)

  4. The Mac Mini was never designed to be put in a living room. This has been discussed over and over in forums.

    It’s quiet, small and attractive. That’s all. That doesn’t mean in was designed for your living room. If it was, Apple would have at least added 5.1 audio out.

  5. Apple has a loooooooong way to go here. Microsoft already has a Media PC Operating System. Microsoft already has Xbox and Xbox 360 coming. Microsoft already has game developers on board. Microsoft already has customers and revenue.

    And Apple has what?

    Nada. Zilch. Well, maybe a peanut gallery of GUI afficianados.

    OK, lets look over the horizon a bit. What’s there? Wireless. WiMax (really extreme wireless). Download movies to your Mac or Windows PC from the iMovie Store. Then broadcast those movies to your TV via Apple’s wireless WiMax HDTV Video Express (think Airport Express with more connections, more bandwidth, and a remote control).

    Did I mention that it’s Mac and Windows? Mac first, though.

    I likes it!!!

    Tera Patricks

  6. Apple has nothing to compete with the xbox or psp3 or the next generation game cube from nintendo.
    Those companies are bringing in a new product that apple has nothing.
    apple is a two trick pony: ipod and computers (which have not caught on with the buying public).

  7. Apple’s little secret is that its ‘Digital Hub’ already exists and is already in the hands of around 20 million people.

    Of course Apple will enable a Mac to act as a main home server via AV Airport (very likely a MacMini-type box hidden away in the cupboard) But the bluetooth-enabled HUB (or integrated personal operating device) will have exclusive access to, and control of, all the network’s content via simple, live smart lists – a hierarchy of menus to select from. For example:
    ‘Room’ (Kitchen, Living Room, John’s room, etc) ->
    ‘Terminal’ (hifi, TV, computer, etc)->
    ‘Content’ (TV channel selector, Server movie library, etc)->
    ‘Volume’ etc.

    In line with Apple’s ‘less-is-more’ philosophy, all Terminals will be dumb – that is, they will display absolutely NO network information/menus themselves, their job is only to receive and output whatever content is channelled through to them from instructions and choices made with the hub – which is the iPod.

    Imagine, whilst Microsoft mess around with on-screen graphics, confusing branded eyecandy, countless buttons, lists and choices (all requiring you to be next to a monitor/TV to view and interact with), Apple will have none of it – it will simply announce the iPod is THE remote-control for your whole life.

  8. Have you ever tried to watch the high-Def trailers from Apple? My sister’s 1.6 G5 iMac choked on the 1080i, but was good on the 720. That tells me you will need much more than the Mac mini to have a true entertainment hub, especially for an online store.

  9. People will buy the Xbox 360 to play Halo 3. That’s it. Playstation owns the game market, and the average user will not buy the Xbox to play CDs, MP3s, DVDs, et. al…. just ubergeeks who like to make electronics do other things than what they’re made for.

    Honestly, are there that many people looking at their home entertainment system thinking “I wish I had everything all in one.” I know I’m not. I like components. I like knowing that if my Xbox blows up (and considering the hardware problems the Xbox 1 had, it’ll be likely) that my whole entertainment center isn’t thrashed. I like picking and choosing which brands will play my CDs, DVDs, etc.

    As for downloadable content, I don’t see Microsoft heralding the new age, especially with the XBox 360. I look to see Cable or Satellite companies (companies that control the infrastructure) really determining the next direction.

  10. The insurmountable obstacle to Apple dominance in the living room will always be gaming. If the other companies successfully marry the game console to media delivery (internet, music, movies, etc.) with adequate quality (surround sound, DVD, HD, etc.), people will look to them for complete solutions. There are many more game consoles sold than Tivo-type boxes, etc., and as the vidiot children mature into purchasing adults, that’s the direction they will continue to look.

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