Digital Living 2010

1. Digital Living 2010 How the living room is going digital and the strategic forces involved digdia (dĭj-dēa) – Digital Living opportunities empowered by digital media

2. Agenda • ChangeThe next wave has startedand it affects the entire value chain • Hot Spots • Caution Please do not reproduce or distribute these slides without permission. These slides may have terms and concept that are not familiar to the reader. If you are in the S.F. Bay Area, I’d be happy to present these to your group (gary.sasaki@digdia.com)

3. DVD DTVs and related (DVRs, DVDR, etc.) $25B  $65B The Next Wave Consumers are shifting their $ from the PC room into the DTV room Mosaic VHS PCs and related (Printers, PDAs, etc.) IBM PC Color TV $70B  $80B WW estimates 02 06 1960 1970 1980 2000 2010 1990 Digital TV, Digital Video Recorder (PVR), DVD Recorder

4. Freed after DTV WiFi, et al 60-69 Clearance TV Mobile 30MHz Satl. DAR etc. Govt. Ham Mobile 3GHz Maritime etc. Aircraft, Navigation, Telemetry, etc FM,etc Over the Air Spectrum Allocation Change Economics Several non-consumer issues are pushing for change • Spectrum = $ to Federal Budget • One 6 MHz Analog channel = 4 SDTV channels = $ • Half of Cable’s spectrum wasted on Analog = $* • HDTV creates new consumer demand = $ • One HDTV channel requires 6 MHz Bottom Line: Switching to Digital Makes Money * Ferree proposal may change the economics Standard Digital TV, Digital Audio Radio

5. Integrated Content Services DigitalContent Services Multiple services drive PC-AV networked home Home Theater in a Box DTV drives point-to-point digital cabling (content protection) DVD Content drives HTiB with cables kits CE System Connectivity Evolution Content Services drives change AV Islands Analog world - random boxes with random analog cables 2000 2010 Consumer Electronics, Digital TV

6. Connectivity Enables New Services These services weren’t necessarily envisioned by the infrastructure digital cable pay-per-view, video & TV on demand digital video recorders modem broadband movie downloads over the air DTV movie caching TV over DSL DSL ala carte TV DSL interactive TV 2-way DTV

7. New to industry SW PC Mfr Content MB OEM DRM Comp. Mfr WinTel TV Serv Prov Aggreg. Content DRM CE New to industry HT STB,DVR SW Serv Prov Aggreg. Content DRM WinTel PC Mfr SW PCCE Value Chain Changes SW PC Mfr MB OEM Comp. Mfr WinTel PC

8. Analog Tape Digital Tape Tape Fades TV Card Slots Memory Cards Consumable Memory Cards Film Camera Phone Digital Camera Photo-Video Cameras Digital Media Drives Devices Control of Media Format is Control of Ecosystem VHS DVD DVD±R HD Optical Ophra’s DVD Cam HD Recorders HDD DVR Format Wars time

9. Agenda • Change • Hot Spots • Lots of problems to solve =Lots of opportunities • Caution

10. Intel’s LCOS trying for another “Intel Inside” Sony SXRD (aka LCOS) in a Front Projector Evolving Display Engines In “PC speak”, Display engines are in the “80486” Phase TI – DLP xHD3 “1080x1920”* with “SmoothPicture” • In the wings: • SED (surface-conduction electron-emitting display) • OLED (organic light emitting display) • New PDP configurations • More to come… * It can now be mentioned that this part doesnot have 1080x1920 mirrors. Liquid Crystal on Silicon, Plasma Display Panel

11. From Familiar and not so Familiar Players • Sony • Panasonic • Samsung • Philips • LG • Pioneer • Toshiba • Zenith • Sci.Atlanta • Motorola • TiVo • Digeo (Moxi) • Sharp • Microsoft • HP • D-Link DVD/HDD “Mediaplex” The ordinary DVD player, STB or TiVo boxes are Passé Panasonic AVC Server (2005) • Features galore • Record shows to HDD • Record onto DVD • Handles HDTV • Secure display link • Pause live TV • PiP, multi-tuner • Electronic Program Guide • Memory Card Slot • View Personal Photos/Videos • Link via Internet • Send content to remote room • Play Music, MP3, Internet Radio Of course - price, capacity, features and availability vary

12. HD-DVD (aka AOD) • Toshiba (DVD Forum Chair), NEC, (Microsoft) • Adopted Microsoft’s WMV-HD. Up to ~35 GB (dual layer) • Conventional 0.6 mm protection layer – more easily backwards compatible Blu-Ray vs. HD-DVD vs. Red vs. China Another Format War with less chance of compromise • Blu-Ray: • Sony, Philips, Samsung… + HP & Dell • MPEG2. Up to 54 GB (dual layer) • 0.1mm protection – need caddy, not backwards compatible Samsung Blu-Ray drive “Red” With WMV-HD (9 M bit/sec) an HD movie can fit on a dual layer red laser DVD “China” Avoiding royalties again, this time with their own DVD for HD Advanced Optical Disk, Windows Media Video – High Definition

13. Microsoft – IPTV sending TV over ADSL Disney MovieBeam coming your way Sony Passage breaking the duopoly for conditional access FCC Powell still pushing DTV; adding 2-way MOU, Must Carry, VoIP Getting Better Content to You As more HD content is produced, some subtle issues emerge Panasonic Viera TV 1st with OCAP for 2-way cable services Open Cable Application Platform

14. Samsung 802.11a for sending video to screen Digital Living Network Alliance (formerly DHWG) Toshiba UWB demo, sending 2 HDTV streams (2 yrs away) DENi seems to have faded. HAVi was missing in action. Ultra-Wideband wireless AV Networking it is starting to get serious attention Panasonic Dr. Liao demos 170 Mb/s HomePlug AV Digital Home Working Group, Digital Entertainment Network initiative, Home AV interoperability

15. 2nd Battle File Formats 3rd Battle Media Formats Specified File Formats and Access Rules Organized Media Rules Consumer Rules Media Card Rules Digital Media Wars Removing the Mystery of “What’s on my Media Card?” 1st Battle Logical Formats Dumb or Dumber Memory OS Rules

16. Agenda • Change • Hot Spots • CautionRemember when investing in“sticky eyeballs” was the rage?

17. Some ask “Which will win – TV or PC?” Will the PC successfully win the TV space? Not exactly; anyway, Wrong Question Convergence? New technology often enters as a hybrid until a successful new form evolves.

18. Sony RoomLink • TiVo stand-alone DVR • Microsoft TV Photo Viewer • Philips Pronto Remote • Line Doubler/Scaler • Samsung/Disney MovieLink • Digital Picture Frames • Internet Radio Boxes Useful functions get absorbed Gadgets are for Spies They will go away or be absorbed Gadgets introduce a new function to the consumer, but don’t hold enough value to stand on their own.

19. Make services essential by linking to content and access (e.g. Cable, satellite and TiVo) The emerging digital infrastructure opens up the game to others. Ads will have to offer value or sneak in (e.g. BMWfilms and product placements) We will see more interactive & market-of-one ads Digital Media consumables create an annuity (e.g. recordable DVDs) Photo-Video will create a new opportunity Profit Old business models learn some new tricks Better Performance through Lower Cost Technology (e.g. PCs in the good old days) HD Displays will play this game, Mediaplexes maybe

20. Industries Not Covered Mobility Telematics Telcos Independent Living Gaming Advertising Digital Cinema

21. Digital Living 2010 Gary Sasaki has been in HP Labs in strategic business development, creatively looking at emerging markets and technologies, helping to initiate and grow billion dollar businesses. Prior experiences include leading a 100+ HP R&D lab with three #1 worldwide product lines, and product marketing. Gary is interested in helping & networking with companies that are trying to find growth opportunities in the Digital Consumer Electronics industry by evaluating and positioning strategies, business plans, technologies, markets and competitors; and is willing to present these slides to your group. Suggestions or requests to have these slides presented can be sent to gary.sasaki@digdia.com This presentation is available for free at www.digdia.com Please do not reproduce or distribute these slides without permission. digdia (dĭj-dēa) – Digital Living opportunities empowered by digital media