Convergence

As mentioned in an earlier post you can argue that Microsoft's XBox is more than some overgrown kid/exec's dream of a fun job because it, like Palladium, is a DRM system for secure, restricted content deployment, and as such competes against Sony's PS2. Moreover, since PS2s can run Linux, and you can plug a keyboard and ethernet cable into them, the idea is that console and PC are "converging", just like everything else ultimately will.

Essentially, the thrust was that since content owners didn't want their stuff played on open systems where it could be copied, PCs were going to have to have a special "closed" mode if they wanted to be platforms for new media (post-CD, post-DVD). For Microsoft, this special closed mode is called "Palladium".

How important is it to play DVDs or CDs on personal computers (or a game console)? How important will it be in the future? Given how consumers want PCs to be open and content owners want media players to be closed, how much will these domains "converge"?

For the home market, there is little benefit in converged devices. The consumers does not need to make many tradeoffs between buying a game console, and DVD player, and a PC. I bet that most PS2 owners also own a DVD player and that their willingness-to-pay for the PS2 would be about the same if it did not play DVDs. Same thing with a PC that plays DVDs.

This does not hold in the mobile market, because there are very real tradeoffs between different features and functionalities. It make sense to pick a slower processor for longer battery life on a laptop, but not for a desktop PC. Similarly, carrying a PDA, MP3 player, cell phone, and digital camera is cumbersome for people so convergence makes sense there also. Unfortunately, combined devices are expensive, difficult to use, and don't do anything particularly well, so while in the long run it makes sense for these to converge, in the short run I see ever more *divergence* as manufacturers churn out many models that suit the widely varying needs of consumers.

So back to Sony/PS2 vs Microsoft/XBox. The game console is no threat to the PC (although a $200 GNU/Linux box might be).