A relatively glowing discussion of the market prospects for the Media PC and other elements of digital convergence misses the key issues: Vision of Personal Computers as Heart of Home Entertainment [pdf] — no discussion of how the consumer might feel about the digital rights management (DRM) embedded in these sorts of devices.
The two companies have been thwarted for more than a decade by Hollywood, as well as the cable and satellite television industries, in their efforts to put a wired PC at the center of home entertainment. But now, competing directly against many companies in the consumer electronics industry, Intel and Microsoft are mounting a new charge to try to make the personal computer the hearth of the information age.
[...] The new machines are not just the biggest hope for a computer industry that has been plagued by flat sales and eroding profit margins. They are also the standard bearers for an all-digital crusade the PC industry is waging to break open the satellite and cable industries, undermine powerful consumer electronic giants and restructure both Hollywood and the recording industry.
But consumer electronics makers question whether the PC industry’s grand vision is one that many Americans will want to embrace. Even family-friendly personal computers are still far more complex than today’s home electronics devices, they argue.
[...] The new computers have yet to win widespread endorsement from digital content providers. Despite extensive additional copy protection features in the machines, Hollywood studios remain worried that the systems, because they are connected openly to the Internet, could lead to widespread pirating of movies and songs.
[...] So far, the computer industry’s latest effort to move beyond the desktop PC market has not made a significant dent in the market. The new machines, which were introduced late last year at prices often twice as expensive as conventional PC’s, captured 1.9 percent of all desktop computer sales in the United States in the 12 months through September, according to the NPD Group, a market research firm.
But the initial disappointment has not dimmed Silicon Valley’s enthusiasm.
[...] “We’re not going in that direction,” [Apple Computer's Steve] Jobs said. “We’ve always believed that this convergence between the computer and the television wasn’t going to work.”
See also James Glieck entertaining When the House Starts Talking to Itself — another kind of convergence.