2007 was the year of digital music. 2008 is going to be the year of digital video.

At last week's Mac World Expo, we saw Apple and Fox take up this cause and turn attention on the living room. Again.

The battle for a device the unites the living room and offers multiple forms of media has been raging for years with no clear victor and not even much enthusiasm from consumers.

The goal is a single device that would offer multiple services and SIMPLIFY the user experience for a reasonable price.

To date, no one company has come close to this goal. Instead there is a whole roster of devices for watching TV, movies, downloads and music and and even larger list of ways to connect them to your TV and stereo. There is a lack of consumer understanding, too much complexity and prices are too high.

But companies keep trying, hoping to hit a home run. Will we see an iPhone of the living room in 2008? A device that breaks through past barriers and offers a totally new user experience?

CableTV

The most natural unifying device is your cable box. Most people already pay for cable TV (or satellite) and the box connects to their TV and stereo.

But the cable companies have been unable to offer a compelling product for years and years. Much like cell phone companies, they seem more interested in maintaining the monopoly of their closed networks than they are in offering new services.

Along these lines, cable has the problem of cost. In my area, getting an HD DVR from my cable company costs a mint: $70/mo for the basic digital cable channels, $9/mo for the HD digital DVR, and $9/mo for the HD channels. In other words, cable charges almost $1,000 a year to watch their TV and music channels, WITH commercials. Ouch! Downloaded movies are an extra cost and you can forget about the surfing the internet, youTube videos or watching a DVD or high-definition DVD. You will need an additional device for those features.

Tivo & other STB's

Another long-time set-top-box is Tivo. Tivo was the first big product to introduce the DVR functionality. The DVR raised the bar for living functionality but it pretty much languished until it was featured prominently in the script of HBO's Sex in the City.

Tivo is a great product but their problem was telling: consumers did not know what a DVR was. It is the kind of feature that you dont understand until you see it. Anyone that has one loves it but it is hard to make sales unless consumers know they want it.

Tivo has been around for years but has struggled financially. Recently they added download support from AmazonUnbox but at its heart the Tivo is basically a cable or satellite TV STB not a universal living room device.

Recently Slingbox and Netflix/LG are entering this space as well but they all face the same challenge Tivo does: They have to offer a service that consumers understand enough to want and at a price that is low enough for consumers to see value.

video game players

Video game companies are a natural fit for a unifying a device. Millions of households already have one. It is already connected to the TV and the stereo. All they have to do is add the cool new features and you have the universal device, right?

Xbox360

Microsoft made the first play for this position with the Xbox360 but the 360 solution is lacking.

On the hardware front, the cables they provide are not long enough to connect the TV and the stereo in households like mine; this requires the purchase of an additional cable which adds to cost and complexity. There is no HDMI cable option. No wireless ethernet. The device is loud, known for quality problems such as overheating, and does not have the sleek look many would like in their living room. The hard-drive is very small, very expensive and not something a user can upgrade themselves -- you HAVE to purchase one from Microsoft. DVD is included but an HD-DVD player is extra and there is no Blue-Ray option.

On the service side, Microsoft charges extra for online access (in addition to whatever you pay for the internet connection itself). There is no internet browser, and downloaded movies are an extra fee. If you have a Windows PC, you can serve music from it but not if you have a Mac or Linux PC.

PS3

The PS3 on the other hand is one of the best platforms out there. Although it too falls short, it addresses almost all of the short-comings the Xbox360 has, and represents a solid platform that could be improved with better software.

The PS3 has HDMI connections for your stereo and TV. It is solid hardware with no quality problems and looks nice enough for public display. It also has Blue-Ray for watching HD or DVD movies and it offers free wireless ethernet access. You get a decent HDD in the system and there are clear instructions for replacing it with your own, 3rd party drive. It will even let you install another O/S if you like that sort of thing.

The PS3 has media center features right out of the box with a (lousy) web browser and support for UPnP access to movies and music (although that feature does not work terribly well yet for remote content).

Similar to Tivo, the biggest headwind for Sony, if not all players, may be consumer mindset. During the Mac World Expo, a user of a mac website posted a question about whether he should buy a PS3 or an AppleTV device. Rather than get an evaluation of the pros and cons, he was flamed and his question was attacked with passion and vitriol. To those users the "PS3 and AppleTV are NOT THE SAME!!!"; they are "APPLES AND ORANGES!"; "the AppleTV is for watching low quality video; the PS3 is for high quality video and games."

The unexpected and harsh reaction suggests to me that many consumers are not ready for a unifying device. In their minds, you are EITHER a video device OR a game machine. You cannot be both. These consumers want a device that does one thing and are not able to grok a device that does all those things.

I see the PS3 as a mutli-media device that offers the game functionality for free but that is clearly not how many people see it.

closing

It appears that in addition to all the hardware, software and legal challenges out there, there is an additional struggle for the living room in consumer's minds. Before we can see demand for such a device, consumers need to understand that it could exist and they need to want it. As a result, we may be stuck with specialized devices for years to come.