Media Server Market To Double In 2004

Average consumers may be unaware of it, but media server technology is beginning to infiltrate their homes as TiVO and satellite/cable television providers put set-top boxes into their very own hands.

In fact, In-Stat/MDR predicts worldwide unit shipments of media server products will almost double in 2004 to more than 6 million units. In 2005, total product shipments will reach 10.3 million units, with PCs accounting for 1.8 million units and standalone products capturing 8.5 million units. By 2008, the market will triple again to 31 million units overall (split between 10.9 million PCs and 20.1 million consumer devices). And the vast majority of these products will continue to be standalone consumer electronic devices or set-top boxes.

"The biggest portion of growth is coming from satellite providers who are starting to deploy devices into the household at low cost or no cost," said Michael Paxton, senior analyst at In-Stat, the Scottsdale, Ariz.-based market research firm. "That's what will spark the growth over the next 24 to 36 months. This is still not an inexpensive object that can be bought for $200 or less."

Today, less than 25 percent of media server products shipped are PC-based devices based on an operating system such as Microsoft's Media Center Edition OS, said Paxton. Unit shipments of PC-based media server products are projected to rise rapidly from 2006 to 2008 as consumers begin to demand a richer and more full-featured media experience from their PCs, he added.

"We will see more PC products incorporating consumer electronics' abilities and becoming multimedia focused devices, rather than productivity devices," he added. "By 2008, the split will probably be 35 percent PC and 65 percent consumer electronics."Today, Hewlett Packard's Media Center PC, which first entered the digital media and entertainment marketing arena in 2002, is the market leader for PC-based media server products, according to the company.

Continuing to build on its momentum in this space,, last month the vendor unveiled the HP Digital Entertainment Center, which allows consumers to manage music, television programs, movies and photographs from one, remote-controlled device.

"The core technologies are similar [to the current Media PC] but it's evolving in different ways of how the hardware is grouped within the home," said Ghadiali. "This product gives users a centralized place to aggregate, store and consume digital content. Customers want more control of what they watch and when they watch it."

Content developers see the projected growth of the media server market as a mixed blessing. On one hand, these systems may encourage digital content piracy, caution some providers. On the other hand, there is an opportunity to offer new "pay-per-view" or "pay-per-listen" services.

"The major challenges are already behind us. The turmoil that the industry and consumers have gone through with peer-to-peer networks has subsided," said Ghadiali. "We are getting to a point where content providers and consumers understand each other's perspective. The digital revolution caught people off guard with how it happened and how quickly it happened but now we have learned those lessons. I don't think we'll go through the same things with video that we did with music."Already, some basic types of services are available. A buyer of an HP Media Center PC, for example, can access movie-on-demand services, including MovieLink and CinemaNow. "The vehicles for digital content are at a cost where the market is about to break loose," said Ghadiali. "Vendors are just beginning to tap into this market, and we will see creative new services where users can tap into all types of content through a single, seamless interface."

Hailey Lynne McKeefry of Professional Ink is a freelance writer based in Belmont, Calif.