So long Media Centre

September 2, 2011
For an informed view on connected entertainment in the UK & Ireland, visit Cue Entertainment 

Only a few years ago Microsoft trumpeted the Media Centre PC as the must-have consumer entertainment device. The software giant predicted that content owners and hardware manufacturers alike would join the rush to link the TV with the PC in every home.

That failed to happen in anything like the predicted numbers and, today, the very survival of the mass-market personal computer is under threat. What began with hobbyists assembling a potpourri of standard parts to provide basic computing power threatens to return to its roots, taking with it some of the biggest names in the business. Who will need a power-hungry processor and massive disk drive when all the applications and storage they need are up in the Cloud?

Much bigger and more imposing than a mere set-top box, the Media Centre’s shiny black case was intended to sit on the floor alongside the equally imposing large-screen tube TV. Add a remote control and wireless keyboard beside you on the sofa and the world of computing takes its rightful place in the consumers’ living room.

The Media Centre design provided for all manner of goodies to be crammed inside the box, ready to calculate spreadsheets, edit audio and video, compose emails and build custom databases by the score. When mum and dad tired of that, the built-in DVD player, large hard drive (for the time) and integrated TV tuner could provide entertainment until they dropped off. Who wouldn’t want one, at least until static electricity attracted dust to the black plastic case and the noisy cooling fan sucked up all the fluff from the carpet? The answer is very few people considered them and even fewer bought one.

Home Cinema enthusiasts would point out that the inside of a PC is no place for high-quality sound and pictures. Computer geeks said that they preferred to sit 18 inches from a giant screen and play Activision’s latest “Call of Duty” on the most powerful, hand-crafted collection of parts they could afford.

Six years after the Media Centre’s birth, the idea that the living room needs a stand-alone computer seems laughable, even to the most dedicated enthusiast.

Connected TVs are essentially computers linked directly to a large flat screen. Instead of putting it beside the TV, the PC has been miniaturised, placed inside it, and stripped of non-essentials, such as the ability to run an Office suite or complex business software. The connected TV fulfils the task expected of it in all but one area. Either the hard drive is relegated to a network-attached storage device elsewhere in the house or, more likely, it is located somewhere up in the Cloud.

The Sky +HD box and Virgin’s TiVo box are clearly exceptions to this trend but as with the general-purpose computer, the need for a dedicated box beside the TV is on the wane. In fact, the only peripheral intelligent device that should be allowed anywhere near the living room these days is the Blu-ray player, which one industry pundit describes as, “The Trojan horse that will keep physical media relevant for the next decade.”

Today the Media Centre and the PC itself are some way down the slippery slope to irrelevance, as smart devices sweep all before them. Figures released by research organisation IDC in July revealed that three vendors control almost 60% of the US market for personal computers.

Hewlett Packard (HP) tops the table, with around 4.7 million desktop and portable PCs shipped in Q2, 2011, just over 26% of the total market and almost equal to the number shipped in the same quarter of 2010.

In second place was Dell, with 3.9 million units sold in the period, although a 10.2% drop on the year before, it still held a 22% market share.

Apple was in third place with 1.9 million units sold, excluding iPads and iPhones. Significantly, Apple was the only company to show significant growth in Q2, 14.7% up on 2010 and taking its market share from last year’s 9% to 10.7% in the current year.

The data, however, also provided a warning for these companies, as well as for Toshiba and Acer, the next two vendors in the table.

IDC claimed that total US sales of PCs dropped by 750,000 units in the quarter, a fall of 4.2% compared with 2010. Comparable research by Gartner revealed a 5.6% fall in what it said was a smaller total market. Following this trend means that things can only get worse for the PC suppliers over the rest of 2011.

In August, HP shocked the market when it announced it would pull out of personal computing systems to focus on enterprise and public sector companies. A second shock was to follow. The long-anticipated HP TouchPad tablet, launched in June 2011, vanished in a puff of smoke on Aug. 18. At least, everybody thought it did.

In what must be one of the most confused marketing strategies of all time, HP launched its iPad competitor at $499, then deep-discounted, discontinued and re-launched the device in the space of two months.

At the current selling price of $99 (£89 in the UK), the Wall Street Journal said the company is “losing $207 a pop”. Add to that the $1.2 billion that HP spent in July 2010 to acquire the Palm webOS smartphone operating system at the heart of the device and it is easy to see why shareholders are in for a rough ride.

It started so well. HP CEO Leo Apotheker called the TouchPad, “An unbelievably attractive and stunning technology” at its launch in June 2011, adding that would be followed by “wave after wave of technology for the webOS platform”.

Less than two months later, the TouchPad was available at fire-sale prices and only so long as stocks lasted. Samsung is said to be interested in picking up the webOS pieces and has already hired HP’s former VP Marketing Raymond Wah.

On the surface, another round went to Apple. The news from HP was a great boost for the future fortunes of new CEO Tim Cook, who can also rely on the iPad to retain its place in the tablet market, despite the rapid gains made by Android devices.

HP began life in the mid-1930s in a Palo Alto lockup garage and by the 1960s, the company was established as a founding member of the high-tech Silicon Valley community. Now HP is disposing of its PC assets, following the path previously taken by IBM, which sold its personal computing business to the Chinese multinational Lenovo in 2005.

Dell, once the darling of the high-tech sector, has struggled to launch a convincing tablet to compete with the iPad and declining sales of desktop and notebook computers will affect its business disproportionately.

Worst hit of all is Acer, which was renowned for its laptop computers but lost 25% of its US market share in 2011. It’s once-promising tablet has been plagued with problems and there are few signs that it will recover its market position.

With no Media Centre PCs to worry about and strong growth forecast for Connected TVs over the next four years, the home entertainment industry can afford to remain an onlooker. In some ways, the decline of the general-purpose computer could prove a boon to anyone worried about piracy. There are too many “holes” in a PC, through which pirated content can escape. The all-in-one connected TV, supplied with video entertainment from a digital locker in the Cloud or from terrestrial and satellite broadcasters, looks to be a much safer delivery mechanism.

Tablets and other “companion devices” will also have their place in delivering entertainment in the home and on the move. The Media Centre PC, however, such as the one from HP that was used to write this piece, may soon be nothing but a fond memory.