Tech's future: It's all about fun

From iPods to Web-surfing TVs, consumers clamor for digital toys.

There is no ambiguity about Kimberly Meyer's marching orders. Her daughter does not want just any MP3 player to listen to the music she downloads from the Web. No, her Christmas list is as precise as a Martha Stewart recipe for Bundt cake: She wants an Apple mini iPod - and she wants it in lime green.

Mrs. Meyer's daughter is not some tech-geek devotee of all things Apple. In fact, Meyer can't think of a single Apple item in the entire house. But this isn't about gigabytes and USB ports. It's about Madonna, Michelle Branch, and 10,000 songs in your pocket.

With its iPod, Apple has tapped into what many analysts say is the future of American technology: entertainment. And this holiday season, the computer industry as a whole is making its first significant foray into the world of digital cameras and plasma-screen TVs.

The momentum has been building for a while, as tech companies look to new markets now that sales of personal computers have slowed. But the recent rise of the Internet, combined with the explosion of digital media, has fueled the shift by turning every photo, song, film, and TV into nothing more than a package of digital information that can be moved around and played at will.

Now, as technology companies step in with an array of products that give consumers more control over their movies and music, they are recasting Silicon Valley's business sense and revolutionizing an entertainment industry still baffled by the realm of bits and bytes.

"Technology companies understand how to move a word document file around," says Rod Bare, a tech analyst at Morningstar in Minneapolis. "It doesn't take much more effort to move around a music file ... and if you're sitting in a tech company, you're looking at all the information that can be digitized."

Everyone is a movie producer, DJ

In the broadly defined universe of entertainment, that's almost everything - from photo albums to episodes of "The Biggest Loser." Hewlett-Packard, a leader in printing, has already jumped into the digital camera and photo printing markets. Microsoft, which introduced its XBox game system several years ago, has reintroduced a brand of Web TV that allows users to surf the Internet by TV. And Dell now sells MP3s and flat-panel TVs on its website.

It's just the beginning. This year, both Dell and HP are offering Media Centers - computers that work like a normal machines but are specifically tailored to help users manage their digital music and photos. The next generation media center, which is just now entering the market, is a computer that hooks up to the TV and looks like a VCR. Through a remote control, users can record TV like a TiVo, play music like an MP3, and show movies that are saved on a computer in the den through a wireless Web connection.

"It's a growing trend," says Venancio Figueroa, a spokesman for Dell. "If you look at the usage model ... the PC is moving from a productivity tool to an entertainment platform."

On one hand, as computers become a more seamless part of everyday life, it moves America closer to the digital home. Yet it also underscores the increasing importance of entertainment and the individual in contemporary culture, as the ever more on-demand world spawned by the Web allows users to tailor every aspect of the media to their tastes.

"It turns out, the Internet revolution was not a technology revolution but a media revolution," says Paul Saffo of the Institute for the Future in Menlo Park, Calif. "It's a shift from mass media to personal media."

Speaking cosmically, he is by no means certain that this is an entirely good thing: "Digital technology is so bewitching that it risks turning everything into entertainment ... and the lesson from Rome onward is that all great civilizations fail by turning everything into entertainment."

Certainly, it will put more power in the hands of each consumer. He suggests that the greatest symbol of the mass media was the TV. "It delivered the world to your living room, but all you can do is press your nose to the window and watch," he says.

Personal media makes each person a participant. Recording TV on a computer allows users to potentially edit out commercials and watch programs any time they choose. With music, people can download one song at a time and build their own albums. As the more tech-savvy members of society have begun doing this on their own, Silicon Valley has jumped in to make it easier for everyone.

Creating buzz with new gadgets

Moreover, Apple has found that makina a foray into entertainment can create a buzz that boosts stock prices. "If you want to be highly valued, you have to be visible and people have to like what you sell," says Rob Enderle of the Enderle Group in San Jose, Calif. Today, with laptops little more exciting than toasters, he says, businesses are looking for "a popular product people get excited about."

The excitement about the iPod has shown itself in ways both familiar and peculiar. With Apple's MP3 on virtually every hot gift list, sales are strong. Market analysts forecast that Apple will sell 3.5 million iPods during the Christmas quarter. Yet one schoolteacher's love for the iPod has taken a unique twist. He has created his own 60-second commercial for the iPod. Although it was only posted a few weeks ago, the online ad has already drawn 37,000 hits, according to Wired News. It's the first consumer-generated ad industry watchers can recall.

Consumers in control

While the ad might help Apple, the personalizing of the media hints at something more troubling for the entertainment industry. If computer users can mix and burn their own CDs, for instance, why would they buy CDs from the store? If TV viewers of the future can program their recorders to skip ads at will, how will networks pay their bills? In many ways, technology companies are fueling a future that Hollywood is desperate to avoid.

"The control-points are broken," says Mike McGuire, an analyst for Gartner G2 in San Jose. "What these [tech] companies are doing is reacting to the phenomenon that the consumer is in absolute control."

By the looks of it, Meyer's daughter is in control at home. Meyer, who refused to give her real name, says she has already bought an iPod for her husband with the idea that he and his daughter could share. Her trip to the Apple store here in Walnut Creek, Calif., suggests that didn't work.

The same is true in front of the Apple store a half hour away in Emeryville, where Ron Kirk says it took him 3-1/2 weeks to find an iPod for his daughter last Christmas. This year, he's here to buy her a new carrying case. "She loves it," he laughs.

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