“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.
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