The digital revolution is being led by several industries, including semi-conductor, communications industry, entertainment, consumer electronics, and of course computer; key enabling technologies for the digital revolution include the conversion from analog to digital communications and the Internet Protocol (IP). For the consumer, convergence means more features in a single device, while for the media providers and conglomerates it means remaining competitive in the struggle for market dominance. For device manufacturers, the ability to produce innovative devices will increasingly be the driver for retaining customers as penetration rates of devices increase. Customers are demanding new functionalities, meaning that manufacturers are responding by developing a range of converged devices, such as mobile phones with mp3 players, cameras and email access, or video recorders with hard drives. Technological challenges touch on several areas, including user interface, software, hardware, communications, semi-conductor, and manufacturing. Challenges on the hardware, communications, semi-conductor, and manufacturing fronts are the usual - faster, smaller, cheaper, and more reliable.

Table of Contents
The Future of Convergence
Executive Summary 8
The digital revolution 8
Converged mobile devices 9
Portable content jukeboxes 10
The Internet, TV and the PC 11
Personal video recorders 11
Conclusions 12
Chapter 1 The digital revolution 16
Summary 16
Introduction 16
Converged devices 17
Convergence of content providers 19
Fixed Mobile Convergence 20
Convergence challenges 21
The content owner market today 22
Chapter 2 Converged mobile devices 24
Summary 24
Introduction 25
Market context and sizing 26
The PDA market 28
Market analysis 31
The smartphone market 32
Market sizing 33
Smartphone operating systems 34
The mobile Internet 35
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Mobile email 37
Music on the move 39
The mobile phone as ‘iPod killer’ 40
Brand building 40
Sony ‘Walkman’-branded phones 41
Apple’s response 42
Challenges 44
Camera phones and video 45
Digital camcorder phones and ‘multimedia computers’ 45
Nokia leads the way 45
Mobile TV 47
Market sizing 48
By handset 48
By subscriber revenue 49
Technical challenges 50
WiFi and Voice-over-IP mobile phones 52
Hard-drive mobile phones 53
Chapter 3 Portable content jukeboxes 56
Summary 56
Introduction 56
The emergence of the mobile phone 57
Consumer electronics market today 58
Portable content jukeboxes 59
What content? 60
Competing devices 62
Laptop 62
The converged camera 63
Mobile phone 63
Nokia N-Gage 64
Sony PSP 65
Conclusions 67
Chapter 4 The Internet, TV and the PC 70
Summary 70
Introduction 70
IPTV has the potential to change the broadcasting landscape 71
Broadband penetration is essential for IPTV’s success 71
Increasing broadband penetration rates within Europe will speed up
the development of IPTV services. 72
IPTV vs. cable TV 73
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The consumer – the only winner? 74
IPTV market sizing 75
Europe 75
North America 75
Internet-based TV: the future? 76
TV and the PC: targeting web-based on-demand content 77
Conclusions 77
Video streaming market development 77
The alliance of content and distribution 78
On-demand TV and the broadband home 78
Chapter 5 Personal video recorders 80
Summary 80
Introduction 81
Market drivers 82
Personal video recorders 84
Market sizing 84
Conclusions 86
Only a pay-TV product? 86
Likely to watch more TV programs 86
Changes required in advertising models 86
Chapter 6 Conclusions 90
Summary 90
Convergent strategies for the future 90
Why the mobile will rule the end-game 90
The importance of the network operator 91
Product control to limit the potential of the game-playing-mobile 92
The opportunity for the content owners 93
Required: scaleable content distribution platforms 93
A centralized content database 94
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List of Figures
Figure 2.1: Global handsets by device, 2004 vs. 2010 28
Figure 2.2: Examples of Business Handsets – PalmOne Treo 650, RIM Blackberry 7230 & Nokia
9500 Communicator 29
Figure 2.3: Examples of Smartphone Devices: Orange SPV-C500, O2 xda IIs & RIM Blackberry
7100v 33
Figure 2.4: Examples of Nokia’s E-Series of Business Phones for Mobile Email Access 38
Figure 2.5: ‘Sony Walkman’-branded mp3 mobile phones, W850 and W710 42
Figure 2.6: Motorola’s Rokr ‘iTunes’ mobile phone 43
Figure 2.7: Nokia’s N93 digital camcorder mobile phone 46
Figure 2.8: Nokia’s N73 ‘multimedia computer’ 46
Figure 2.9: Portable video devices 47
Figure 2.10: Global broadcast TV to mobile revenue ($m), 2004-2009 49
Figure 2.11: Global broadcast TV to mobile revenue ($m) by region, 2004-2009 50
Figure 2.12: Samsung’s 8GB HDD mobile phone, SHG-i310 53
Figure 3.13: Examples of portable content jukeboxes 59
Figure 3.14: In usage terms the PCJ is a subset of the mp3 market 60
Figure 3.15: BenQ DC s40: the converged camera and mp3 player 63
Figure 3.16: The Nokia N-Gage 64
Figure 3.17: The Sony PSP 65
Figure 4.18: Consumer broadband access on the technology adoption curve 72
Figure 4.19: The relative demand for broadband and narrowband services 72
Figure 4.20: Household broadband penetration by country, 2004-2008 73
Figure 4.21: Digital TV growth in Europe, 2004-2009 75
Figure 4.22: Digital TV growth in the US, 2004-2009 76
Figure 5.23: VoD and PVR installed base in Europe, 2000 - 2005 82
Figure 5.24: Personal video recorder forecast (millions), 2004-2009 85
Figure 6.25: Impact of time on the price/value of different content 94
Figure 6.26: Simplified secured content distribution platform 95
List of Tables
Table 2.1: Global handset shipments (millions), 2004-2009 26
Table 2.2: Global smartphone shipments (in millions), 2003-2010 34
Table 2.3: Advanced OS volume sales and market share, 2005 35
Table 2.4: Global mobile TV handset shipments (in millions), 2004-2009 48
Table 2.5: EMEA mobile TV handset shipments (in millions), 2004-2009 48
Table 2.6: US mobile TV handset shipments (in millions), 2004-2009 48
Table 2.7: Asia Pacific mobile TV handset shipments (in millions), 2004-2009 49
Table 5.8: Personal video recorder forecast (millions), 2004-2009 85