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Leading the Market Requires Knowing the Market - Michael Greeson, Parks Associates

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OSGi World Congress 2003

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Leading the Market Requires Knowing the Market - Michael Greeson, Parks Associates

  1. 1. OSGi World Congress © 2003 Parks Associates “Leading the Market Requires Knowing the Market”
  2. 2. OSGi World Congress © 2003 Parks Associates Who is Parks Associates? Consumer research and consulting firm specializing in emerging residential technologies, the services they enable, and the business models made possible by these technologies. Primary areas of concentration: broadband connectivity, digital consumer electronics, home networking, broadband- enabled services, home media usage, mobile telephony, among other topics. 17 years of experience in just the residential space.
  3. 3. OSGi World Congress © 2003 Parks Associates Who do we serve?
  4. 4. OSGi World Congress © 2003 Parks Associates The Digital Home: The U.S. as a Case Study
  5. 5. OSGi World Congress © 2003 Parks Associates Why the U.S. as a Case Study in Understanding the Digital Home? 1. It constitutes an unsubsidized market – no bureaucracy is funding the adoption of broadband or broadband-related services (as in South Korea). 2. It has a relatively pragmatic mass-market – not over eager to adopt new technologies, but rather looking for those devices and applications that can add real value to their lives. 3. It is seen as predictive market – if it sells in the U.S. mass market, there exists a strong probability that it will sell well elsewhere.
  6. 6. OSGi World Congress © 2003 Parks Associates The Good News: Internet Adoption Advances into the Mass Market
  7. 7. OSGi World Congress © 2003 Parks Associates 20 million BB HH 43.6 million NB HH Breakdown of U.S. Internet Households: Q2 2003 Total U.S. Internet Households ~60 million Overlap ~ 3 million HH
  8. 8. OSGi World Congress © 2003 Parks Associates 51.5 38.1 31.6 24 44.6 15.5%17.1% 20.6% 31.7% 45.5% 0 10 20 30 40 50 60 2003 2004 2005 2006 2007 0% 10% 20% 30% 40% 50% Cumulative broadband subscribers CAGR Forecast for Broadband Adoption among U.S. Households (millionsofhouseholds) (compoundannualgrowthrate)
  9. 9. OSGi World Congress © 2003 Parks Associates The Good News: Home Network Adoption Ramping Up
  10. 10. OSGi World Congress © 2003 Parks Associates Source: Electronic Living @ Home, Phase II data (Q2 2003) 8.5% 35.7% 0% 10% 20% 30% 40% 50% Dial-Up HH (n = 504) Broadband HH (n = 841) Penetration of PC-Centric Home Networks among Internet Households (Expressed as a % of all Internet households using the specified access technology)
  11. 11. OSGi World Congress © 2003 Parks Associates 3% 3% 9%10% 21% 66% 0.4 1.01.1 2.3 7.2 0% 25% 50% 75% Ethernet Wireless Phoneline Powerline Other Unsure 0 2 4 6 8 % of all networked households # of households (millions) Penetration of Various PC Networking Technologies (Among U.S. Internet HH with home networks, n = 343, multiple responses allowed) Source: Electronic Living @ Home, Phase II data (Q2 2003)
  12. 12. OSGi World Congress © 2003 Parks Associates Forecast Growth of Data Networks Percentage of U.S. Households with a Data LAN 23.6% 25.9% 20.3% 16.9% 13.0% 9.4% 5.9%4.3% 0% 10% 20% 30% 40% 2000 2001 2002 2003 2004 2005 2006 2007 PenetrationofDataLANS(%) Source : Networks in the Home: Analysis and Forecasts (Fourth Edition)
  13. 13. OSGi World Congress © 2003 Parks Associates The Four Waves of Home Network Evolution First Wave: Primary driver for adoption is sharing an Internet connection, peripherals, and files. Ethernet dominant but wireless makes it early move. Second Wave: Drivers shift from “simply sharing” to mobility but applications remain data-centric. Hardware is increasingly hybrid Ethernet/wireless. Third Wave: Data-centric applications give way to entertainment-centric. Content sharing and portability will become increasingly important. Hardware will be bridge-type devices that connect legacy CE to PC – in other words, adapters. Fourth Wave: Entertainment applications expand networking into majority of households. Converged data & entertainment networks lay the groundwork for easy and rapid expansion of home control applications.
  14. 14. OSGi World Congress © 2003 Parks Associates The Bad News: Broadband Service Providers Pushing Their Own Solutions
  15. 15. OSGi World Congress © 2003 Parks Associates The OSGi Position in the Digital Home Value Chain Content Creators & Aggregators Broadband Network Operators Internet Service Providers Residential Consumers
  16. 16. OSGi World Congress © 2003 Parks Associates Broadband Network Operators • To date, no major U.S. broadband network operator has signed on as an OSGi member. • U.S. network operators are instead creating their own service deployment and management environment. • CableHome™ and DSLHome™ are efforts on the part of U.S. broadband network operators to define the network elements (both hardware and software) that must be present in order to deliver and manage services via a broadband-enabled home network environment. • If this proves to be the case, there exists no reason for these operators to concern themselves with OSGi certification.
  17. 17. OSGi World Congress © 2003 Parks Associates Core Business Objectives of CableHome™ •Reduce time to market for compliant products •Standardize technology •Allow for easy upgrades •Enable as many services as possible •Create scaleable architecture •Enable vendor competition •Enable ease-of-use which will spur adoption of networked products • Enable vendor innovation
  18. 18. OSGi World Congress © 2003 Parks Associates Cable Network Home Network CableHome’s Residential Gateway CMTS CH Host CH Host CH Host CH Host Host CableHome™ Device Landscape CableHome™ compliant sub-elements Non-CableHome™ compliant IP devices
  19. 19. OSGi World Congress © 2003 Parks Associates Why Might this be the Case? 1. Consumers show little interest in many of the home services which OSGi places at the center of its value proposition, the “intelligent living services” • Remote home control (lights, irrigation, security) • Networked white goods • Energy management (either provider- or consumer- driven). 2. OSGi has yet to articulate a convincing entertainment-related value proposition, although that is where the market momentum is developing.
  20. 20. OSGi World Congress © 2003 Parks Associates 62% 3% 30% 5% PCs, printers, and PDAs Home phones, cell phones, and message machines TVs, personal video recorders, DVD players, radios, cameras My home sec system, interior/ exterior lighting, and HVAC Preferred Application Clusters among Network Intenders (Among broadband households likely to buy a home network in the next year, n = 317)
  21. 21. OSGi World Congress © 2003 Parks Associates 18% 15% 18% 23% 29% 31% 31% Remote access/control of security systems Remote control of indoor lighting Remote control of outdoor lighting Remote appliance diagnostics Remote HVAC monitoring Remote energy monitoring Remote air quality monitoring Consumer Interest in Various "Smart Home" Applications (Percent interested equals those answering 5 or more on a 7-point interest scale, n = 2,500 U.S. HH)
  22. 22. OSGi World Congress © 2003 Parks Associates Source: Electronic Living @ Home (Q2 2003) 11% 23% 28% 37% 23% 40% 64% 73% PDA Laptop PCs Home theaters Game consoles Digital cameras DVD players Desktop PCs Mobile phones CE Ownership among U.S. Households (n = 1,005)
  23. 23. OSGi World Congress © 2003 Parks Associates (Among U.S. Internet Households) Percent of Internet households rating interest as a 5-7 on a 7-point scale, where "7" means "extremely interested" 42% 22% 8% 31% 0% 20% 40% 60% Movies from ISP Pay-Per-MP3 Service PercentofInternetHouseholds(%) Narrowband Households (n=499) Broadband Households (n=212) Source : E-Home 2001 © 2002 Parks Associates Growing Consumer Interest in Pay-per- Content Internet-Based Services
  24. 24. OSGi World Congress © 2003 Parks Associates (Respondents in broadband households indicating at least an interest of "5" on a 1-7 scale, where "7" means "extremely interested") 57% 51% 0% 20% 40% 60% 80% Q4 2001* Q3 2002 ** PercentageofInterested BroadbandHouseholds(%) * E-Home 2001 , 2001, a survey of 711 U.S. Internet households **Broadband Access @ Home III , 2002, a survey of more than 10,500 U.S. Internet households Growing Consumer Interest in Networking Video Content from PC to TV (Among U.S. Internet households)
  25. 25. OSGi World Congress © 2003 Parks Associates (Respondents in broadband households indicating at least an interest of "5" on a 1-7 scale, where "7" means "extremely interested") 52% 31% 0% 20% 40% 60% 80% Q4 2001* Q3 2002 ** PercentageofInterested BroadbandHouseholds(%) * E-Home 2001 , 2001, a survey of 711 U.S. Internet households **Broadband Access @ Home III , 2002, a survey of more than 10,500 U.S. Internet households Growing Consumer Interest in Networking Music Content from PC to Stereos (Among U.S. Internet households)
  26. 26. OSGi World Congress © 2003 Parks Associates Consumer Interest in Network Applications Between Multiple CE Platforms p (Respondents in Internet households indicating at least an interest of "5" on a 1- 7 scale, where "7" means "extremely interested") 54% 59% 46% 50% 0% 25% 50% 75% 100% DVD Player to Multiple TVs CD/MP3 Player to Multiple Receivers PercentageofInterested InternetHouseolds(%) Broadband Households (n=5,790) Narrowband Households (n=4,676) Source : Broadband Access @ Home III , 2002, a survey of more than 10,500 U.S. Internet households © 2003 Parks Associates (Among U.S. Internet households)
  27. 27. OSGi World Congress © 2003 Parks Associates Take-Aways In terms of the “digital home,” OSGi is pigeon-holed as a “smart home” solution enabling “intelligent living services.” Limits the attraction of the OSGi platform to “fourth wave” home networking services (at least in the eyes of the U.S. broadband providers). Moreover, the next big push for home network adoption will be based on the value of networking PCs and consumer electronics – not home control and management applications. The challenge: repositioning what OSGi means in the digital home. The reward: being embraced by U.S. broadband service providers who can help push new digital devices and services into the home.

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