Digital Lifestyles Reference Guide

Predictions for 2006

Last updated Dec 30, 2005.

I can’t claim credit for the Digital Lifestyles predictions for 2005, as I had the week off when predictions were made at the end of 2004. The only glaring error in last year’s crystal ball is the assumption that losing DirecTV as a customer would kill Tivo. During 2005, Tivo picked up Comcast as a partner and didn’t lose steam in the interim without DirecTV as a partner. 2005 predictions accurately called the iTunes cell phone and iPod video, with a near miss on the iPod PDA.

Even without any divination or future sight, 2006 is shaping up to be one of the biggest in consumer computing in ages. Apple is making the shift to Intel chipsets during 2006, which should translate to better laptop pricing and performance boosts across their entire product line. Microsoft will finally release Windows Vista at the end of 2006, which should benefit consumers from a security perspective while greatly enhancing the digital media experience with better Windows Media components and a whole new experience in Windows Media Center.

On with my predictions for 2006:

Lackluster sales of ATRAK format audio prompted Sony to add support for Windows Media to the PSP and a handful of other devices in 2005. Expect this to expand to Windows Media DRM in 2006, making services like MTV URGE and Napster To Go part of the PSP experience. With Sony on board as a device manufacturer, we’ll finally see devices with an experience rivaling the iPod in both consumer cool and service offerings.

Along the lines of iPod competition, MTV URGE will capture 30% of the online music business by the end of 2006, which will come primarily from new customers without stealing market share from anyone. Apple remains dominant thru 2006 but starts to see their market erode in 2007 from increased competition thanks to the MTV marketing juggernaut of VH1, MTV and CMT.

HDTV prices continue to drop even as demand continues to increase. The first $300 27-inch HDTV will hit the market in 2006, doubling the number of households with HDTV as the price and screen size finally come in line with a sweet spot where spouses stop arguing about where you’re going to put that huge screen or why you’d want to watch a screen smaller than the one we already have. The shift to more HD programming will result in a net decrease in file sharing as consumers attempt to beef up their computers and storage space to make up for the massive increase in file sizes of HD programming and additional computing power required for rendering.

Apple will upgrade the iPod video offering to 640x480, making television output acceptable to most viewers. This increase in quality will drive up the demand for portable video players and subsequently on demand video content. The standard drive size for an iPod will be 100GB by year end.

A competitor to Apple’s iTunes Music Store, TV Shows, will capitalize on RSS as a secure delivery mechanism for subscription television. Consumers will be presented with an option to subscribe to their favorite shows in a season pass and get them automatically instead of logging into iTMS every week. When people figure out they can actually subscribe to stuff they’ve heard of via RSS, the demand for independent video subscriptions will also increase dramatically.

Xbox Live will begin offering video on demand through the interface before the end of 2006. Live subscribers will get access to a Movielink-type service where they can rent movies for $2-3, downloaded to their Xbox using credits purchased through Xbox Live.

Sony’s PlayStation 3 will bomb in large part due to lack of an interactive strategy. Gamers will become addicted to Xbox 360 combined with Xbox Live, where points and ratings offer a direct comparison of skills against other Xbox Live members, which leaves PlayStation 3 out in the cold. With no HD-DVD standard concluded, the inclusion of 1080p support in PS3 won’t matter to consumers because there still won’t be any content available. For the console market, 2006 will be game over at Sony.

Video blog Rocketboom will sign a deal with one of the cable networks to take their show from online to mainstream broadcast marking the first major transition of an Internet series to an old media model. The effort will bomb because most people won’t get the humor, but Rocketboom will remain highly successful online and on demand.

Cell phone companies will begin a race to offer the fastest data lines across the country, with Cingular EDGE and Verizon’s EVDO network leading the way. This will become the fastest growing market in the cellular industry as frequent travelers start dumping their cable and DSL ISP in favor of something that works everywhere. To go along with faster data plans, every major cell phone carrier will offer a cell phone with a minimum of 4GB of storage for music and video content on demand.