Home Technology Media Moms and Digital Dads Sandy

Home Technology: Media Moms and Digital Dads Sandy Teger and David Waks Co-Founders, Broadband. Home. Central. com Interview with Phil Leigh, Raymond James October 18, 2002 Copyright © 2002

What We’ll Be Saying • Broadband access is the foundation for much of what’s changing in home technologies • Broadband access and PC networking are growing • Everything is going digital • The consumer electronics industry has a huge investment in driving sales of networked appliances • The worlds of the PC, home entertainment and telephones are starting to overlap and merge • People are spending their time and money on buying and using “this stuff” because it’s addicting • You ain’t seen nothin’ yet… Copyright © 2002 Slide 2

About Us • Sandy – 18+ years with AT&T; multimedia strategy director • Dave – Founder and R&D director, Prodigy Services Company • Together as System Dynamics Inc. – Specialists in residential broadband – Research and write Report on the Broadband Home • Free monthly Internet newsletter: www. bbhreport. com – Operate Broadband. Home. Central. com as industry resource – Organized and ran five BBH conferences 2000 -2001 – Consult for companies affected by residential broadband • Projects have included strategy, business economics, competitive analysis • www. Broadband. Gurus. com Copyright © 2002 Slide 3

“Broadband Home” • Broadband access and in-home distribution network – Any kind of access – Any kind of network • Multiple broadband devices – PCs and emerging devices • High speed – Megabits: Millions of bits per second – To the home, in the home and from the home • “Always on” connection – Continuous connection – From the home to the outside world – To the home from the outside - can “see” the home from the outside Copyright © 2002 Slide 4

The Emerging Broadband Home ISP Services Copyright © 2002 Broadband Access Home Gateway Cable Modem DSL Fixed Wireless Fiber Satellite Powerline Digital Terrestrial Slide 5

The Promise of Broadband Digital radio and TV everywhere in the home Big jukeboxes of music, movies, TV and games Personal voice and video conferencing Share photos and videos with friends and family Work from home as easily as in the office Control VCRs, AC, lights from anywhere Untethered access Copyright © 2002 Slide 6

Media Mom and Digital Dad Foundation Connected Devices • Cable modem • Multiple PCs – server, service desktops, notebooks • Structured wiring • Nikon digital camera • Home gateway • Sony digital camcorder • Ethernet switches • Replay 4000 DVR • Wi-Fi • Audio. Tron networked digital audio • Creative Nomad MP 3 player Copyright © 2002 Media Applications • Audio. Station • Listen. com • Shutterfly • Gracenote CDDB • Photo. Suite • Video. Wave • …and lots more Slide 7

See this movie on the Web! Our Broadband Home Movie Our Broadband Home An 8 -minute movie showing how we use broadband, networking and digital consumer electronics technologies in our own home. Broadband version for cable modem and DSL (Real. Video, 220 Kbps): www. bbhcentral. com/presentations/BTC 2002 BB. rm Narrowband version for dialup (Real. Video, 20 Kbps): www. bbhcentral. com/presentations/BTC 2002 NB. rm Copyright © 2002 Slide 8

Top Trends (1): Broadband Penetration Increasing • By “broadband” we mean high speed-always on connectivity – In US mostly via cable modem and DSL • On-line HHs grew from 25% in ’ 98 to 51% Sept 2001 • Broadband penetration grew from 1% to 10% during same timeframe – now >13% • Higher income families more likely to have or want broadband: – Income <35 k 4% have, additional 12% interested – 50 -75 k 14% have, 24% interested – over 100 k 28% have, 37% interested • Business and societal forces promoting it – Corporate downsizing, work-at-home and home-based businesses – Cocooning, family-centered activities, post-9/11 reactions Source: NTIA, Leichtman Research Group, Sept. 2002 Copyright © 2002 Slide 9

How Fast Will Broadband Grow? • Factors that could slow it – Little or no competition in most markets • Telcos and cable ops acting like “cozy duopoly”: both raising rates • Affordability and penetration threatened – Current cable modem pricing structure not sustainable • Flat rate for “all you can use” is uneconomic in face of growing bandwidth demands • Alternatives: throttling what users can get, or tiered pricing – Telcos delaying DSL rollouts in fibered areas • Factors that could speed it – Tiered pricing at price points competitive with dial-up – Coherent public policy push • Like the Internet push from Clinton/Gore • It has worked in Korea, Sweden and Canada – It’s reaching “The Tipping Point” • It’s “IN” – the Joneses have it, we gotta get it… • In Jan ’ 02 51% of the online hours were by broadband users • Number of dial-up users declined in 2001—moving to broadband Sources: Nielsen/Net. Ratings; TRI Copyright © 2002 Slide 10

Top Trends (2): PC Networking Increasing • Over 40% of US homes with PCs have more than one PC – Will be 50% in 2 years – And more than 60% of US HHs have PCs today • Once they get broadband they want to share the connection • Multiple ways to network PCs, including – Move them to one room and connect via Ethernet – Structured wiring – “Cat 5” – “No new wires” • Wireless (Wi-Fi, aka 802. 11 b / 802. 11 a) • Existing wiring –Phoneline (Home. PNA) –Power line (Home. Plug) • Wireless networking makes it easy • . . and 802. 11 b standard (a. k. a. “Wi-Fi”) has made it cheap – Belkin Wireless Access Point $59. 99 (after rebate) Copyright © 2002 Slide 11

Ad from New York Times: Sunday, June 9, 2002 Copyright © 2002 Slide 12

Top Trends (3): “Everything Digital” • Video and audio players • Cameras and camcorders • Television • Telephone • New consumer electronics Copyright © 2002 Slide 13

Everything Digital – Video Players Digital Analog Copyright © 2002 Slide 14

Everything Digital – Audio Players Digital Analog Copyright © 2002 Slide 15

Everything Digital – Still Cameras Digital Analog Copyright © 2002 Slide 16

Everything Digital – Camcorders Digital Analog Copyright © 2002 Slide 17

Everything Digital – Satellite Television Digital Copyright © 2002 Slide 18

Everything Digital – Cable Television Digital Analog Copyright © 2002 Slide 19

Everything Digital – Broadcast Television Digital Analog Copyright © 2002 Slide 20

Everything Digital – Broadcast Television Digital Analog Copyright © 2002 Slide 21

Everything Digital – Home Telephone Digital Analog Copyright © 2002 Slide 22

Everything Digital – New Consumer Electronics Digital Analog Copyright © 2002 Slide 23

Everything Digital – Summary Audio Players Video Players Still Cameras Camcorders Satellite TV Cable TV Broadcast TV Telephone New CE Copyright © 2002 Slide 24

Doubts About Digital? • Ask your ten-year-old: – “What’s a 33 rpm record? ” a turntable? ” a movie projector? ” an f-stop? ” • Pretty soon: – “What’s film? ” – “What’s developing? ” – “What’s broadcast? ” Copyright © 2002 Slide 25

Ad in New York Times: Sunday June 9, 2002 Copyright © 2002 Slide 26

Ad in New York Times: Sunday June 9, 2002 Copyright © 2002 Slide 27

Top Trends (4): Networked Consumer Electronics • TVs, stereos, digital cameras, digital video recorders, game consoles, PDAs, etc. are being built to connect and communicate. – Digital, networked appliances is consumer electronics industry’s central strategy for increasing sales • Consumers using this networking stuff – Create and share media (music, photos, videos) – Around the house • Play MP 3 s on speakers anywhere in house • Show digital pictures on home theatre screen – Around the world • Use broadband connection to share family photos, play games – Despite the !*? # complexity • New PC and CE initiatives will make this commonplace – Microsoft “Xbox Live” and “XP Media Center Edition” – Intel “Extended Wireless PC” initiative: audio -> video – Whole-home networked TV coming soon Copyright © 2002 Slide 28

Ad in New York Times: Sunday June 9, 2002 Copyright © 2002 Slide 29

Ad in New York Times: Sunday June 9, 2002 Copyright © 2002 Slide 30

Top Trends (5): New Devices -> New Networking • Different applications need different networks – Data: 10 Mbps and “best efforts” ok – Telephone and audio: need “quality of service” (Qo. S) – Video: needs Qo. S, higher speeds – Home security: needs high reliability • Home “bandwidth budget” growing – New devices need more bandwidth – High Definition video needs ~20 Mbps payload • Structured wiring can do it all – Increasingly built into new homes – But hard to install in existing homes • Today’s “no new wires” networks handle PC networking, but lack speed and Qo. S for video • “No new wires” networks evolving to handle video – “Wi-Fi” now includes 802. 11 a – 54 Mbps – Coax and powerline also promise higher speeds over existing wiring Source: S. Teger and D. Waks, “End User Perspectives on Home Networking”, IEEE Communications, April 2002 Copyright © 2002 Slide 31

Top Trends (6): “Home Gateways” Emerging • New categories of home equipment developing: “Home gateways” and “home servers” – Home gateways centralize certain functions • Enables users to share a broadband connection • May provide firewall, caller ID, routing, … • May also be an enabling platform for consumer residential services – Home media server • Stores multiple types of digital content such as video and audio for use throughout the home – Home gateways and home servers may be separate or combined • Numerous conceptions of what they do – Range from simple (combined “cable/DSL router” and modem) to complex (“all of the above”) – Current versions influenced by history of company producing them • Motorola and Pace: evolved cable set-top – Many companies producing something in this category • Home Director, Samsung, Everex, Uniden, 2 Wire, Ucentric, Philips, … • HP Home Media Center based on new Windows XP “Media Center Edition” • Still evolving Copyright © 2002 Slide 32

“Moxi Media Center” at CES Copyright © 2002 Slide 33

Samsung “Home Media Center” at CES Copyright © 2002 Slide 34

Top Trends (7): Increasing Consumer Expectations • The instant gratification generation – People want what they want, when they want it • Technologies have reinforced the expectations – Video-on-demand from cable companies – Personal video recorders (Ti. Vo, Replay) – My music: MP 3 players, jukeboxes – Broadband, always-on Internet—no wait for dial-up • Needs cut across age and gender, not just techies and elite – Florida Realtor from buyersbroker. com: “lost sales because a neighborhood didn’t have broadband” – Survey of kids ages 8 -17 found Internet most chosen medium if given one choice of TV, radio, telephone or Net • Broadband is a key technology for meeting this expectation Source: Knowledge Networks/Statistical Research (KN/SRI) Copyright © 2002 Slide 35

The New Equation: Broadband + Digital Devices • Broadband is addicting – “I understand now why most people would rather give up cable TV than broadband” (email 10/15/02) • Lots more digital devices coming – Wireless loudspeakers – PDAs with Wi. Fi built-in – Web tablet PCs – Consumer audio and video with built-in networking • Broadband + Digital Devices = – Fun – Addictive – Mutually reinforcing “I'll bet you that anyone who has had the experience of using a home network connected to the Internet at a high speed is addicted … If you're a company, you like selling to addicts--they're reliable, desperate, priceinsensitive customers. “ Stewart Alsop, FORTUNE 10/29/2001: “The Good News Of My Addiction” Copyright © 2002 Slide 36

For More Information: www. broadbandhomecentral. com dave @ bb-home. com sandy @ bb-home. com www. broadbandgurus. com 18 Beaver Ridge Road, Morris Plains, NJ 07950 -1901 (973) 644 -4739 Fax (973) 538 -6003