Despite Interest, Portable Media Centers Will Suffer From Limited Demand

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TDG Research predicts that demand for portable media centers will be limited to hobbyists and early adopters for at least the next two years.

Despite the success of portable music players such as Apple’s iPod, portable media centers (PMCs) – including, but not limited to, the Windows-operated devices now available – will likely experience a slow start in the journey toward mainstream adoption. According to the latest report from TDG Research, there are several factors that will limit the ability of PMCs to reach the majority of consumers—factors including the numerous substitute products, high unit prices, and an overt dependence on the home PC for media content.

“No doubt these devices will be popular among early adopters and technology enthusiasts – they will be the coolest new media device on store shelves for the next several months, and early adopters tend be to less price sensitive and are typically more familiar with using their personal PC for media consumption,” says Dale Gilliam, analyst with TDG Research. “While we have seen strong interest in PMCs, most consumers are quite sensitive to the $500 price tag these units carry. Our latest research suggests that interest is converted to actual purchase behavior at around $300, well below current pricing models.”

Other important findings of the study include:

•    The early market for PMCs will be limited to those Internet consumers who already use the PC for media purposes. Unlike digital music, less than 30% of Internet consumers have digital video files stored on their computer – that vast majority of which are short video clips or home movies. Moreover, only 1.5% of Internet consumers currently use on online movie download service such as CinemaNow or MovieLink.

•    Competition from less-expensive application specific alternatives such as portable photo viewers, multimedia cell phones, and full-featured portable game consoles will further hinder demand for PMCs.

•    The “build it and they will come” strategy pushed by Microsoft and other PMC players is unlikely to be successful given the limited availability of high quality video content. While this is improving, we are still years away from seeing mainstream consumers downloading movies from the web to a portable video device. This finding is further complicated by digital rights and copy protection issues.

•    Content partnerships are indeed being announced (e.g., Microsoft’s partnership with CinemaNow and MLB.com to provide video content), but even these agreements are limited in scope. CinemaNow’s PMC download offerings contain but a portion of their video library, and most selections are of less-than-blockbuster caliber.

TDG Research offers a further analysis of such factors and forecasts for PMCs in the recently completed Portable Media Centers: A Competitive Analysis and Forecast. A second edition of Consumer Interest in Portable Media Centers, based on TDG’s latest consumer study, will be available in December.

About TDG Research –

TDG Research is a “think tank” of consumer technology analysts charged with providing timely, actionable intelligence designed to best position new consumer technologies for rapid diffusion. Our team is committed to providing market research and strategic consulting services based on conservative, real-world analysis and market forecasts grounded in consumer research. For more information about TDG Research, visit our website at http://www.tdgresearch.com or email [email protected]

Press Contact:

Andy Tarczon

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214-677-9723

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