Trend tracker

GL: With every other generation there have been reasonably significant levels of multiple platform ownership because the titles are so important.

What about sales of Microsoft Media Center PCs? How are they tracking?

GL: It's all about understanding what the actual expectations were. All other things considered - like digital conflict and consumers replacing analogue products with digital equivalents without thinking about true convergence - the sales have been surprisingly high. Clearly there is something happening in terms of an initial move towards consumers adopting the digital home. It was never going to be a case of the household population moving the PC from the study into the living room and running everything out of it overnight but in the past six months Media Center Edition is about 6 per cent of desktop sales.

In the US that figure is much higher but that is largely because vendors like HP are shipping all consumer PCs with Media Center Edition as the installed operating system. Is that how the market will grow HERE?

GL: Definitely, the impetus in that market will definitely be more push than pull. I think Intel's Viiv initiative will help with the gradual build. It's a continuous move and there is inevitability about the world changing. But to my mind it's all about timescale. I keep hearing very short periods of time being mentioned like 20 per cent of Australian homes being fully networked within three years. I can't see it personally. It is a continuous process but a slower one than a lot of other opinions I hear. For example, 20 per cent of Australian households is a large number, especially when you consider our retail sales figures are showing that 30 per cent of screen sales are still CRT. Those aren't people preparing for a digital home. We still have a market size of 250,000 VCRs a year. It's going to be a long, slow build.

What about the sales channels for these digital products. The mass merchants in the past couple of years have very much dominated. How do you see channels developing?

GL: The whole area of channel trends will be fascinating during the next 3-5 years. There will be a lot more happening within the channels than within the concept of convergence. There are existing global trends that will come to Australia. In Europe particularly there has been a very strong shift of commodity products into the mass merchants. The food retailer Aldi has 35 per cent of the PC market in Germany. Branded products will go specialist. There has been a huge fallout of small generalist independent retailers across Europe and we will see those things happening in Australia. On top of that we have the convergence of IT and consumer electronics products and suppliers. I see mass merchandisers like food stores selling the no brand products and the branded products going through the likes of Harvey Norman and Dick Smith. The small IT resellers will be restricted to selling hardware to SME as the large corporate suppliers move more towards services.

Is that a viable business for the smaller IT resellers?

GL: Not for the number that currently exists. There will be some fall out. In the last 10-15 years the European market has seen an enormous reduction in the number of shop fronts while retaining square footage. In other words, a smaller number of retailers have bigger stores. You need a point of difference either from a product point of view or through services and support.

Have troubleshooting services been something that people in Europe with networking skills have been able to make a business from?

GL: It's not something we have tried to measure but anecdotally there's not been much of it in fairness.

On a personal level, how much have you adopted the digital lifestyle?

GL: It depends how you define it. I don't yet have an MP3 player but was probably one of the first to have a digital camera. I have a set-top box, DVD player and flat-panel screen. But it is still the same set up as when technology was analogue. I'm not a complete Luddite but I wouldn't say I'm living the digital lifestyle. I just like to take advantage of the things digital products can do.

What is your favourite piece of consumer technology?

GL: The voice recognition computer in my car is absolutely brilliant for controlling communications and entertainment. All I have to do is get it to understand Geordie.

How will the market have changed in give years?

GL: The biggest single difference will be that some older categories like CRT screens and VHS recorders will have gone. There will be a continued trend towards early adopters building some sort of digital entertainment hub but I believe the vast majority of acquisitions will still be people making discreet purchases or linking small numbers of devices together. These will not be breakthrough behaviour changes.