"Digital Hub" Pushers Need Marketing

The rash of recent moves by PC and entertainment system manufacturers to position their wares as the “hub” for a networked home is likely to run into trouble due to lackluster attempts at marketing, according to a new study by the Yankee Group.

Despite posturing by technology players like Nokia, Microsoft, Sony, Apple and others, the Boston-based researcher found that only 6 percent of U.S. homes with PCs have invested in home networking.

According to Yankee, that means that vendors, service providers and retailers of networkable home technology — which include DVDs, interactive TV, game systems and music devices in addition to PCs — have only been able to tap into the tech-savvy “early adopter” segment, a group that requires little in the way of persuasion.

For success with the masses, however, the players eager to push home networking need to increase their efforts on the consumer education front. Of the 40 percent of consumers polled by Yankee that expressed no interest in networking, 78 percent cited “no need” as their chief reason.

Such a statistic suggests the sellers of networkable home technology must more effectively spell out the benefits of what Apple chief Steve Jobs described last month as the “digital hub.” In many cases, that means focusing on things other than price: only 20 percent of those not interested in home connectivity cited pricing as their chief reason for indifference.

Granted, Yankee said that as service providers angle to reach the mass market, price sensitivity will become an important limitation to sales. But in the meantime, and in the vast majority of cases, consumer interest in networking will be derived not from price slashing, but rather by breadth of applications.

“Today’s consumer requires a compelling reason to expand or reapportion their household communications budget beyond traditional products including voice, cable, and Internet,” said Yankee’s Dominic Ainscough, an analyst in the group’s consumer market convergence planning service. “As connectivity allows consumers to drive greater utility from existing products and services, [manufacturers] and providers should emphasize its value in expanding the efficiency of adjacent products, including Internet and devices.”

The report comes amid a host of new products and services designed to consolidate and connect consumers’ home technology. In January, Apple’s Jobs unveiled his company’s new iMac, designed to serve as the focal point for home music and movie watching/production.

Sony Corp. earlier this week took the wraps off its Linux operating system kit, which would allow open-source programmers to begin writing applications for its PlayStation 2 game system — which the Japanese consumer electronics giant has said would eventually serve as a platform for more advance home applications. (It already features a DVD and IEEE 1394 networking.)

Microsoft, while having recently downsized its UltimateTV interactive television unit, maintains a host of product offerings in the area, not the least of which is the XBox game system, which will be able to connect to the Internet via a broadband connection. Finnish mobile phone manufacturer Nokia has had a similar, Linux-based convergence product — dubbed the MediaTerminal — on the market since last year.