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Home is the new tech battleground

Don Clark The Wall Street Journal

Get ready for another round of technology convergence, bringing more choices — and more confusion.

Phone companies are offering TV programming. Cable companies have added phone service. Cellphones are now computers, cameras, video players, navigation and messaging devices. Other gadgets are merging, adding hard drives and Internet connections. Every form of entertainment has turned digital and is zipping around the globe and the home on a high-speed wire, or a wireless network.

The scene has never seemed more chaotic. The extended forecast: more of the same.

Indeed, competitive pressures are likely to cause new products and services to merge. Cable and phone companies are already rushing to offer competing “triple-play” bundles of voice, video and high-speed Internet access, for example, not only to seek more revenues but also to keep customers of their core services from defecting.

“If you don’t have the broadband pipe, five years from now the likelihood that you will keep the entertainment or voice assets diminishes,” says David Dorman, AT&T Corp.’s chief executive officer.

The pressures could push more companies as well as technologies together, with industry giants likely to look for partners and acquisition targets outside their already-consolidating markets.

Forrester Research analyst Ted Schadler, in a new study by the Cambridge, Mass., firm, argues that companies will need to join forces to create offerings that could drive new demand — such as phones that send caller ID information to TV screens, televised sporting events that allow viewers to pick camera angles, and new types of personalized online games.

“The new value is going to be created between industries,” Schadler says.

Many tech-industry executives have spoken about the possibilities of technological convergence but so far, the reality has frequently lagged behind the rhetoric.

Yet some technology combinations have been huge hits. They include the cleverly designed iPod, which married a computer disk drive and music downloaded from the Internet. The latest cellphones, with features like downloadable games and digital cameras, have reached sales volumes that make the PC industry envious. TiVo, combining digital recording and Internet-delivered TV scheduling, helped create the new viewing habit called time-shifting.

Many consumers, of course, are still grappling with much more basic issues — like getting a decent Internet connection. The question of whether they will adopt triple-play bundles is still open.

Industry executives are more excited about revenue-enhancing services that aren’t easily offered unless one company controls multiple services. They include unified voicemail services for both home and cellular phones, or systems to make it easy to program digital video recorders from a cellphone.

Forrester predicts that more consumers will eventually use a single broadband pipe. But that pipe will actually help serve two home networks: one will be a closed service for copyright-protected entertainment content, including high-definition video; the other would mirror the Internet, allowing consumers to move unprotected digital content around the house without restrictions, Forrester predicts.

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