The Digital Home is Almost Here

By Michael Greeson, CEO, Co-Founder of The Diffusion Group

The Shot Heard Round the World

In a moment that sent shockwaves through the personal technology industry, Sonos CEO John MacFarlane told the BBC on Tuesday that he thinks the ‘digital home’ is still a decade away from becoming a reality. This pointed comment was picked up by hundreds of electronic and print publications… and not a day after I was speaking with a client on why the concept of the ‘digital home’ is wearing thin. I’m quite familiar with MacFarlane’s message – it’s one TDG has been sharing with its clients for several years.

MacFarlane’s Message

The comment, though harsh, was grounded in the reality that mainstream consumers still have a very poor understanding of what new digital media technologies are all about. For example, although home networks have been available in the mainstream consumer market for almost five years, penetration remains relatively low in most developed nations. Even with greater than 20% of US households now having a broadband home network, only one-in-ten use it for networking media. And without a home network in place, one can’t even begin to think about the home as being ‘digital.’

The implications of this message are profound. Yes, there is tremendous activity in what’s been called the ‘digital home’ space. Yes, there are some very cool and capable products and services being announced. Yes, there is reason to be optimistic about specific ‘digital home’ segments. However, mass-market adoption remains several years away (in MacFarlane’s mind, perhaps a decade or more).

What the Heck is a ‘Digital Home’ Anyway?

I’ve always been a nominalist when it comes to the concept of the ‘digital home.’ A nominalist holds that abstract concepts have no independent existence but instead exist only as names. That is, there is no single ‘object’ to which I can point that by virtue of its characteristics would be known by most people as a ‘digital home.’ This is why definitions are so important – they constitute the parameters in which a concept like ‘digital home’ finds objective meaning. I repeatedly challenge my clients to list the necessary and sufficient conditions by which some ‘thing’ could be identified as a ‘digital home.’ The range of responses is amazing: from those who believe that the existence of a single digital device is enough to qualify as a ‘digital home,’ to those who believe if the home doesn’t think for itself and feature automated security, lighting, irrigation, energy management, and full-on whole-home digital ente rtainment networks it can’t be considered a ‘digital home.’

TDG defines a ‘digital home’ as a residence that has a broadband connection and a home network. Few would disagree that this is the essential infrastructure to which digital devices become ‘connected’ and through which digital services are ‘distributed.’ Even if you disagree with this definition, its appeal seems intuitive if only because of its simplicity (it involves only two components), its observability (it’s easy to ‘see’ if both of these components are in place), and its essentiality (these two components are indispensable to just about any conception of the ‘digital home’). With such a definition in place, it’s easy to speak of the emergence and diffusion of the ‘digital home’ in very specific and meaningful ways.

So Is The Digital Home Really a Decade Off?

According to TDG’s definition, not at all, for it can be easily demonstrated that there are approximately 22-23 million US households that have both (a) a broadband connection, and (b) a home network. This means by definition that about one fourth of all US residences qualify as a ‘digital home.’ Therefore, contending that the ‘digital home’ remains a decade away seems foolish.

MacFarlane seems to define the ‘digital home’ as a home with WiFi networks that stream HD content to various devices in the home. If one holds to this definition, a persuasive argument can indeed be made as to why the ‘digital home’ remains years away from showing itself as a mass-market phenomenon. Given that less than one-in-ten broadband networked households stream media over their home networks (that is, less than 2.5 million US households), MacFarlane’s claim seems quite valid. (Keep in mind that MacFarlane’s company, Sonos, makes devices that leverage a home network to stream digital media around the home, so it’s not at all surprising he would offer a definition of the ‘digital home’ focused on media distribution – it suits his company’s message much better.)

Get to the Point

If this seems like a squabble over semantics and thus is irrelevant to your business concerns, you’ve missed the point. How we conceive of the ‘digital home’ has an enormous impact on our business including how we organize and structure the industry, how we define the value chain, how we frame our expectations, how we design and develop our products, and how we communicate with the consumer. If we conceive of the ‘digital home’ as more of ‘smart home’ featuring automation, monitoring, and control technologies, then the ‘digital home’ may be 20 years away, not just 10. If we conceive of the ‘digital home’ as a broadband networked home, then the ‘digital home’ is here today and is a growing segment which offers opportunities in the here-and-now (opportunities defined by real-world consumer usage behavior around specific types of applications).

Leaders in the ‘digital home’ space such as Microsoft and Intel are feeling the pain of having offered conceptions of the ‘digital home’ that were overly ambitious and focused exclusively on the PC as the center of home communications and entertainment universe. And guess what? This vision remains unfulfilled due in large part to its naïve understanding of consumer behavior and the fact that it was years ahead of the market (a market which both companies believed they could change overnight).

Today’s ‘digital home’ visions seem more muted, more pragmatic, perhaps due to the failure of prior ‘digital home’ initiatives. For example, Intel’s latest ‘digital home’ initiative, Viiv: while ambitious, Viiv is grounded in a deeper understanding of consumer ‘experiences’ that transcend the PC and include a wide variety of digital electronics devices and services. Intel (finally) realizes that it cannot invoke its ‘digital home’ vision overnight but must instead be satisfied with incremental opportunities that are finely tuned to real-world usage behavior. Intel’s Digital Home Group realizes that the ‘digital home’ is a long-term project within which specific opportunities will incrementally present themselves and at a pace guided more by specific usage scenarios than grand visions. As former Digital Home GM Don MacDonald noted in a recent interview, it will take many years to build a Viiv brand because it will take many years for the larger vision of the ‘digital home’ (the MacFarlane vision, if you will) to become real. But MacDonald also understands that companies which are tuned in to this incremental process will be best positioned to identify real opportunities and design products and services to exploit them.

The views expressed here are solely those of the author and do not reflect the beliefs of Digital Trends.

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