Perhaps I am becoming more of a curmudgeon, but as I get older I get more selective about who I want to spend time with—whether on-line or in person.

My 12-year old son and his real-life physical friends are diametrically opposite in their perspective—they accept anyone who “friends” them (and when did “friend” become a verb anyhow?) on Xbox Live, World of Warcraft, or whatever other on-line social network they are part of.

I also find that I fight a constant battle against information overload—whether from news services, blogs, Facebook updates, Tweets, or e-mail—to the point that I’ve gotten selective about how much new information I expose myself to, and when. I therefore miss a lot of stuff my family considers highly important, such as a video of an octopus carrying a coconut shell or the trailer for James Cameron’s Avatar. And don’t even get me started on e-mail—although I will say that by installing filters on my mail server I limit my daily intake to what I deem to be high priority e-mail (like from my wife … and Jon Peddie, of course) and the rest of it collects virtual dust until I decide I have nothing better to do—two weeks of low priority e-mail amounts to about eight thousand messages, most of which I file or delete without reading.

However, on-line communications are an addiction too, and I find that for all of my curmudgeonliness, I need to be able to have regular access to Google and my high priority e-mail, regardless of where I am.

With my world travels over the last few years, connectivity has generally not been an issue, and I have even been able to get online from places as remote as Machu Picchu, the Galapagos Islands (while on a boat, no less), Morocco, and Fiji. I expect to put that world connectivity concept to the test in February when I will be aboard a boat in the Antarctic for a few weeks. A satellite tracker I wanted to buy was not guaranteed to work that far south, so I guess I’ll be following in the proverbial footsteps of Scott and Shackleton in possibly not having Internet access at the South Pole.

But I digress. I have been told that this column is supposed to consist of my predictions for 2010, so here goes:

Personal, in-the-home, 3D (stereo) displays will continue to be a source of great interest to technology pundits and will continue to lack any real penetration into the home in 2010. Why? Because common folks are just now getting themselves into 1080p flat panels (and 2D) and 3D (stereo) content will continue to be a slow dribble. 2009 hasn’t really even made it as the year of high definition yet, although cheap Blu-ray players this Christmas are helping. I predict 3D (stereo) home displays will remain a novelty until at least 2012, when the Mayans allegedly predict the world will end, in which case it just won’t matter.

Everyone will continue to be all atwitter about spending face time in their on-line social spaces, linked into everyone else, and countless hours of productivity will continue to be wasted in business and personal lives. The big development in this arena in 2010 will be the slow but increasing proliferation of information filtering technology to feed people only the information they think they want from all the various social networks and news sites out there. Right now the filtering technology, for the most part, has to be manually set-up (e.g. Google Alerts), but there’s a huge future for intelligent agents, which can use AI methods to learn more about likes and dislikes. A hint of this already exists in application sites like Pandora, where intelligent heuristics use your likes and dislikes to tailor music stations to your desires. And Facebook has a “like” indicator you can apply to senseless drivel you may enjoy, and there’s a large outcry asking for a “dislike” option too. Once that becomes implemented, can preference-based intelligent filtering be far behind?

The English language will continue to devolve on-line. I used to think it was just a transitory phase for teens, but when I recently received an e-mail from a founding partner of a mid-size law firm in New York written in “shortlish” (shorthand English), I knew the English language as we knew it was doomed. And apparently giving folks keyboards— physical or virtual—doesn’t prevent them from being too lazy to spell out words and use proper punctuation. No surprise there, I suppose.

Physical media sales will continue to drop. Microsoft has it right. There is no need to put to put a Blu-ray disc drive in the Xbox 360. Just download what you need—or stream it if your connection permits, and even Sony is heading that way. For myself, I know that compared to prior years, where I would purchase dozens of new DVDs and high definition movie discs, in 2009 I purchased a mere fraction of the discs of prior years. Instead, I have made sizable donations to Apple’s iTunes and Amazon’s Digital Downloads in exchange for TV shows and movies in both standard and high definition because of the convenience and portability of downloaded content (I can’t stream well enough where I live to make that viable). And more people I speak with say they are doing the same. And with companies like Redbox making physical media rentals as cheap as a dollar, it makes even less sense for someone to shell out big bucks to own a physical copy of a movie (other than companies like Redbox, for example).

Content will still remain King. Witness the big three game console makers, all of whom continue to transition their now ancient (in Moore-years) hardware platforms to finally becoming centerpieces in the average living room, all thanks to ever more pervasive content aggregation ranging from games and movies to YouTube, music, social media feeds. I will add that I am also a big fan of the Apple TV and SlingCatcher, both of which thrive (and depend) on content. And I’m not sure what I would do without the immediacy of content available on my Kindle DX. But of course, with more content bring produced by more people, there’s also more crap, er, noise out there too, which gets back to the whole intelligent filtering technology prediction.

Let me close with an observation on mankind’s self-delusion. The climate talks in Copenhagen ended recently, with little in the way of what anyone considers success. But the reality is that in order to solve a problem you need to understand both its genesis and ramifications. Without such knowledge, and consensus that such knowledge is accurate, all you can do is guess at options, and hope something you implement works, assuming you can get it implemented.

However, worse yet is when people who are not nearly as smart as the scientists studying the issue try to condense things into sound bites and chunks which are perceived to be more manageable. Which is why politicians, among others, are issuing a loud cry for reduced carbon emissions. All the while ignoring the fact that the average, ordinary human being is an excellent carbon emitter, whether in life—breathing, belching, and breaking wind—or in death (by, for example, decomposing). Let’s hope politicians and the governments they implement don’t start taxing us for exhaling, burping, or farting as part of the whole cap and trade approach.

And while everyone continues to bicker about proper ways to reduce greenhouse gas emissions, the world’s oceans creep ever higher, slowly displacing ever-greater numbers of people. Perhaps more attention should be paid to those who are losing their homes, or even their nations, to rising waters and help them adapt to the new reality of less land and more water? That’s probably something that won’t be happening in 2010, I bet.

The new E3 started as all recent E3 shows have – with much-hyped press conferences by the big three console makers: Microsoft, Nintendo, and Sony. However, with all the next generation consoles now shipping, there was not much in the way of earth shattering news for them to reveal. In fact, what was presented amounted mostly to boasts and fluff – style over substance, and most of it was thoroughly predictable.

Attendees fill the Microsoft Press Briefing. (Photo by Jake Richter)

Microsoft

As has been the tradition, Microsoft went first with a press briefing, this time held at the Santa Monica High School Amphitheatre. To help reduce butt pain from sitting on stone benches for nearly two hours, Microsoft was kind enough to provide padded cushions for the event. The press event opened with the Halo theme played by Corporeal, a band of five diehard Halo fans from Libertyville, Illinois followed by Peter Moore, Microsoft’s corporate vice president of the Interactive Entertainment Business in the Entertainment and Devices Division at Microsoft.

Peter started off demonstrating the forthcoming Rock Band game for the Xbox 360 by jamming on stage with members of the Rock Band development team. For this reporter, the scene was reminiscent of the famous Howard Dean “scream” back in the previous U.S. presidential election as Moore butchered the song he was to be playing, while at the same time managing to pause the game in mid-play repeatedly by pressing the wrong buttons on the guitar controller he was attempting to play.

Hey hey, my my, Rock and Roll actually could die: Peter Moore demonstrates Rock Band. (Photo by Jake Richter)

The jam session set much of the tone of the rest of the briefing, which consisted mainly of boasting about how great the Xbox 360 and Xbox Live were, and a preview of a number of new Xbox 360 and Games for Windows titles, just about all of which would be shipping by the Christmas holiday season. Among the Xbox 360 exclusive titles were BioWare’s anticipated Mass Effect, Viva Pinata Party Animals (a party game a la Mario Party, but featuring the oddly cute animals from the Viva Pinata game), Grand Theft Auto 4 (the base game will not be an exclusive, but the add-on chapters available via Xbox Live will be), Project Gotham Racing 4, Ubisoft’s Naruto: Rise of a Ninja, and, of course, Halo 3. Also notable was support from Namco Bandai in the form of Beautiful Katamari, to be released in the fall. Previously Katamari had only been available on the Sony PS2 – the new version will only be on Xbox 360. Exclusives are key for console differentiation, as Microsoft learned painfully when competing against the PS2 with the original Xbox, and now they are taking a page from Sony’s playbook and using it against Sony.

On the Games for Windows side of gaming, it was announced that Gears of War would ship later this year for both Windows Vista and Windows XP. The latter support caught many in the audience by surprise. Later discussions with Microsoft’s Chris Early and JJ Richards confirmed that Microsoft is now firmly supporting Windows XP for both key Games for Windows titles as well as the Games for Windows Live community and multiplayer feature. Previously, Microsoft had seemed to be indicating that they were focusing all their Games for Windows Live efforts solely at Vista. On a related note, even both the Vista/DX10 showcase titles of Crytek’s Crysis and Funcom’s Age of Conan will also come with Windows XP/DX9 support, indicating that Windows XP is far from being dead and ignored.

Jeff Bell, Microsoft’s corporate vice president for global marketing of the Interactive Entertainment Business in the Entertainment and Devices Division, also came out on stage to announce a new deal with Screen Life Games to bring Scene It?, a DVD-based trivia game, to the Xbox 360. Part of the deal involves the release of new, simpler to use (and less intimidating) controllers for the Xbox 360, specifically for use with Scene It? The new controllers will be marketed as “Xbox 360 Big Button Pads.”

Microsoft’s newer, friendlier Xbox 360 debuts with SceneIt? (Photo by Jake Richter)

In addition to these new controllers, Microsoft appears to have finally realized that black and white should not be the only options for regular Xbox 360 controllers, and gamers will find pink, dark blue, and light blue versions available in stores in October.

Peter Moore also unveiled a new Xbox 360 – the Special Edition Halo 3 Console, which featured an “authentic” Spartan green and gold finish and comes with matching controller, a 20GB hard drive, headset, play and charge kit, and an exclusive Halo 3 set of gamer pics and themes. The new console will be available at the launch of Halo 3, set for September 25th, but price was not announced.

The Halo 3 edition controllers will also be made available separately. Oddly, the new console does not include a copy of Halo 3 itself, and when I later asked Jeff Bell about the inclusion of the smaller 20GB drive instead of the Xbox 360 Elite’s 120GB drive he indicated that the decision would be clear when more of Microsoft’s SKUs were revealed during the holiday season.

It has been obvious from the start that Microsoft wants to position the Xbox 360 as the core component in a family entertainment system, especially with the on-going expansion of support for Xbox Live downloads of high definition and standard definition video content in the form of TV shows and even feature length movies. Also at the briefing, Microsoft announced that they had recently signed a deal with Walt Disney Studios that would bring movies from the Disney family of studios – including Touchstone, Miramax, and Hollywood Pictures – to Xbox Live, with 35 films being available starting at the end of the briefing and more being added on an on-going basis. Microsoft already offers over 2,300 hours of premium entertainment content from over a dozen partners via Xbox Live, over 500 hours of which is in high definition.

The Disney content will be offered in the form of “movie rentals”, meaning that there is a finite limit to the number of days the content will be allowed to reside on a user’s Xbox 360. Costs for content range from $3.00 for classic feature films in standard definition to $6.00 for high definition new release movie rentals.

While Apple’s iTunes has a bigger library of standard definition content, Microsoft certainly wins out in the downloadable high-definition arena. Jeff Bell also indicated that the plan is to offer the same content to users of Games for Windows Live (although they may have to change that name) on PCs as the Live technology evolves there. And to counter the problem with how long it takes to download HD video content from Xbox Live, plans are in the works to provide web-based remote download functionality as well as locally scheduled downloads and downloads in the background while the Xbox 360 is being used for other things, such as game play. That means users will continue to have “video on plan” instead of “video on demand” until bandwidth improves, but at least there will be more flexibility for users – not an unreasonable compromise.

Throughout the briefing, numbers were tossed at the audience, intending, no doubt, to impress upon us that Microsoft and the Xbox 360 were above and beyond any possible competition, especially in the light of the fact that, since launch, the Nintendo Wii continues to beat out sales of the Xbox 360 and PS3, and that’s with Wii systems still in very scarce supply.

Moore said that, to date, more than 11.6 million Xbox 360 consoles have been sold world wide (37 countries), and that there are over seven million Xbox Live users – both the free Silver and paid Gold users combined. Bell later added that more than half of those are paid Xbox Live Gold users. Peter also indicated that there is an “astounding” 5.9 game attach rate per console sold, but that is not terribly surprising when you consider that there are approximately 180 Xbox 360 games on the market, compared to mere handfuls for the Wii or PS3. Naturally they will have much lower tie ratios until that changes.

Microsoft also offers over 70 Xbox Live Arcade games for download, and Xbox Live members have spent more than 2.9 billion hours playing games on Xbox Live (of which 65 million is on Xbox Live Arcade games, 230 million hours playing Xbox 360 sports games and the balance is for all other Xbox 360 games).

The Microsoft briefing, while mildly informative, was devoid of the two things most of us had thought would be present – a price cut on the Xbox 360 consoles and an announcement of newer Xbox 360 hardware which runs cooler and quieter (see article this issue on Microsoft’s announced warranty upgrade and service agreements). The things that were announced, however, did reaffirm Microsoft is not resting on its laurels, and is a major force in the game industry.

Nintendo

Nintendo’s press briefing was held at the Santa Monica Civic Center, with Nintendo of America’s president, Reggie Fils-Aime presiding over most of the morning’s events. Serving as a backdrop to the briefing were video sequences, shots of blogs, online news stories, and even the occasional fan-generated video proclaiming the success of Nintendo’s DS and Wii.

As Peter Moore, the previous evening, did for Microsoft, Reggie worked to give the impression that Nintendo was unstoppable, recounting Nintendo’s successes in truly interactive entertainment with the Wii and DS platforms. Reggie was also unabashed about reminding the audience that Nintendo owns the handheld gaming market, both with the Gameboy family of products as well as with the Nintendo DS.

Nintendo’s successes with their unique platforms, and unique content seem to be resonating well with developers too, with nearly 100 titles under development from third parties for the Wii and over 140 titles for the Nintendo DS.

In terms of announcements, the briefing was a bit sparse. A number of new Nintendo titles under development for the Wii were announced, including the much anticipated Super Mario Galaxy (ships November 12), Mario Kart Wii, Super Smash Bros. Brawl (December 3), and Metroid Prime 3: Corruption (August 27). There will also be a “Check Out My Mii” channel coming for the Wii, so that people can show off their Mii avatars and participate in Mii creation competitions.

On the Nintendo DS front, Nintendo will be coming out with The Legend of Zelda: Phantom Hourglass, Brain Age 2, and Flash Focus: Vision Training in Minutes a Day. And third parties like Ubisoft will be coming out with a raft of self-help and instructional titles for the DS as well, with titles such as My Life Coach, My Word Coach, My Spanish Coach, and My French Coach (all in their MyCoach series). Electronic Arts will be releasing a word puzzle game as well. These sorts of titles just further differentiate the Nintendo DS from what one would think of as a traditional hand held game system, a trend started with Nintendo’s own Brain Age title.

The Wii Zapper. (Photo by Jake Richter)

Up until nearly the very end of the briefing, the only hardware related announcements were the Wii Zapper – a $19.99 plastic case which holds both a Wii Remote and Nunchuk in a configuration reminiscent of a small machine gun, to be used with shooting games like the forthcoming Resident Evil: The Umbrella Chronicles, SEGA’s Ghost Squad, and Medal of Honor; and the Wii Wheel – a steering wheel shaped housing for the Wii Remote to be provided with Mario Kart Wii, due out in early 2008.

I was prepared to leaving the briefing yawning when Nintendo’s Mr. Smiley, Shigeru Miyamoto, came out and introduced Wii Fit, a brand new product slated for release during the first half of 2008. Wii Fit consists of both software and a new input device, something currently referred to as the Wii Balance Board.

Shigeru Miyamoto with Wii Balance Board – an integral part of Nintendo’s new Wii Fit series. (Photo by Jake Richter)

The concept is brilliantly simply – use a device which looks like an oversized bathroom scale with two sets of pressure and tilt sensors (that would be the Wii Balance Board) and then develop a bunch of exercise and game software which uses the device inputs to help users improve their balance, and thus a large number of muscles in their legs, back, and stomach. Of course, the software is the real key. The Wii Fit software includes Yoga and Tai-chi-like activities, with the balance board being used to help encourage stable stances. Also included are games that let players use micro-adjustments to tilt a surface with marbles on to roll them into a hole instead of having them fall off the surface.

Jake Richter demonstrates a credible Tree Pose.(Photo: Passerby)

And there is also a dance game that involves stepping on and off the Wii Balance Board in sequences determined by the software. Wii Fit picks up where Wii Sports left off in terms of using a video game system for both fun and fitness. In retrospect, this was probably the single most interesting and exciting thing shown during the new E3. Sure, there were a lot of cool games shown, but none showed as much ingenuity and novelty as Wii Fit.

Sony

As in past years, Sony’s press briefing was held at their Culver City movie studios, but the E3 and Sony invite process had certainly filtered things down. Instead of the several thousand people that Sony’s past gaming briefings had drawn, there were merely many hundreds.

That made things less hectic and crowded.

If there was an overriding theme to the Sony press briefing it could be stated as “Don’t count us out yet. We’re just getting started. Really! We mean it!” While Microsoft touted the scads of new titles available before the end of the calendar year, Sony Computer Entertainment of America president Jack Tretton, introduced titles that should be available by the end of Sony’s current fiscal year, which ends in June of 2008 – a full half year after the major buying period for 2007 ends.

These new titles included Heavenly Sword, Ratchet & Clank Future: Tools of Destruction, Uncharted: Drake’s Fortune, Killzone 2, and Gran Turismo 5 Prologue. Most of the new titles showcased seemed to be first-party titles developed by Sony’s various game development arms.

Tretton reminded the audience that PS2 sales are still going strong, and new titles continue to come out for that old game console, including the best-selling God of War 2, but at the same time, Sony’s news last week of a new 80GB PS3 model that does not include the same PS2 hardware backward-compatibility as the current 60GB PS3 model (now priced $100 lower) seems to poise the PS3 as a PS2 competitor instead of a successor.

The only real news about hardware developments that Sony shared with the audience was the release of a newer and better PlayStation Portable (PSP). The new PSP will be 33 percent lighter than the current model, and 19 percent slimmer, while still maintaining the same screen size and controls, but with faster load times during game play due to new caching functionality. The new PSP can also be charged via the USB port on the device. Something that is lacking in the current model. And battery life has also been improved as part of the new design.

However, more importantly, Sony has added a long overdue feature – the ability to send video output out via a new connector so that UMD movies as well as games can be shown on TVs. This makes the PSP a portable video player to be reckoned with – maybe. Movie studios have not warmed to the UMD video format, nor, for that matter, have consumers.

The new PSP (model PSP-2000) will start shipping in September, and ultimately be available in three colors: Piano Black (the current color), Ceramic White, and Ice Silver. The price will be the same as the current PSP – $169.

Sony also announced two new bundles of the PSP based on the new smaller version. The first is the Daxter PSP Entertainment Pack, which includes the Ice Silver PSP and a Jak & Daxter game. The second is the Star Wars Battlefront PSP Entertainment Pack, which features LucasArts’ new Star Wars Battlefront Renegade Squadron game and a limited edition Ceramic White PSP with a Darth Vader image on it. Both of these packs will cost $199 and be available in October.

Chewbacca to the rescue? Chewbacca shows Jack Tretton the new Star Wars PSP. (Photo by Jake Richter)

One of the more amusing things done during the Sony presentation was the use of the previously announced PlayStation Home virtual world space to compose part of the presentations, with avatars of Jack Tretton and Kaz Hirai doing the “speaking” (no virtual lips were moving, though, making the whole thing seem a bit surreal). Sony has high hopes that their PlayStation Home “world” will provide an online community that is unique enough to be interesting and captivating to a large number of PS3 users, and has been taking steps to provide all sorts of ways that people can customize their environments with static objects as well as dynamic ones, such as photos taken with cell phones and interfaces to download games located on the user’s own PS3.

The PlayStation Network and its adjunct PlayStation Store – Sony’s answer to Microsoft’s Xbox Live – will also see some new content in the coming months, including a weirdly Escher-esque game called Echochrome, as well as WipeOut HD and another game called Pain. And, available either via download purchase or on physical media, will be SOCOM US Navy SEALs: Confrontation and Warhawk. Approximately 40 games and game packs are in development by Sony for download in the next 12 months.

And aware that exclusives can make (or break) a platform, Jack Tretton also announced an exclusive game development deal with NCsoft, maker of the popular MMOs (Massively Multiplayer Online) games Lineage and City of Heroes. No details on what games might be involved in the deal, also it would be likely to involve MMO games, and using existing and new intellectual property owned by NCsoft. However, with sparse details, this announcement felt rather empty.

While the graphics of those titles shown on the big screens from live play, such as Killzone 2, were impressive, there appear to be no truly stand-out titles coming for the PS3 which differentiate themselves from the rest – mostly all are some sort of variant on first person or third person shooters, racing games, or sports games that are also available on other consoles. The only truly unique title I saw in the game demonstration area after the briefing was Media Molecule’s LittleBigPlanet – a game first previewed at the Game Developer’s Conference in March of this year, and while it is a fascinating game and learning tool, it’s not likely to sell lots of PS3s for Sony. The same goes for the innovative Eye of Judgment which I covered after E3 2006, and which may finally make it out this year.

Sony’s presentation was sadly underwhelming. Sure, they showed a lot of cool things, but Sony’s been doing that for several years now where the PS3 has been concerned. Sony needs to stop showing the future and focus soley on delivery quality content. But due to the complexity of the PS3’s architecture, that’s apparently easier said than done. Sony’s former role as the king of console-land seems to have affected their attitude. Perhaps they’ve gotten over-arrogant and just assumed that the masses would flock to them because of the success of the PS2. But gamers can be a fickle lot, as can game developers.

Conclusion

All three of the presentations offered by the console makers were mostly fluff – Nintendo’s Wii Balance Board, Peter Moore’s jam session, and Chewbacca’s appearance with Sony’s Jack Tretton notwithstanding. All three companies can see big gains in the future if they play their cards right, but that will be far, far easier for Microsoft and Nintendo than for Sony.

Game developers follow the money, and the money is in installed base. And the future installed base appears to be with Microsoft and Nintendo, not Sony.

Without a doubt, the old E3 show was getting louder, noisier, and more crowded with each passing year. Exhibitors complained about the costs of exhibiting, the enormous press and analysts corps had to fight brutal gauntlets to find press events and usually had to forgo actual one-on-ones, and attendees were expected to negotiate huge unruly crowds including witless fanboys.

After the 2006 show, several key exhibitors indicated they would not return if the show format remained the same, and thus the old E3 ceased to exist, and from its ashes was born the E3 Media & Business Summit – this year’s “new and improved” E3 show. A three-day event with press conferences and separate invitation-only events from Microsoft, Nintendo, and Sony, followed by presentations from the largest game publishers, including Electronic Arts, THQ, Ubisoft, Take Two, Disney and a few others. Where the old E3 attracted many tens of thousands of attendees, the new E3 Media & Business Summit, was an invite-only event for a couple of thousand members of the media, as well as key buyers and game industry members.

The rest of the conference was conducted either on the tiny show floor of the Barker Hangar, located at the Santa Monica Airport, or in private suites and meeting rooms scattered among a half dozen of Santa Monica’s plush hotels. Exhibits consisted of public demonstrations of new game titles with and hands-on testing. Of the dozens of titles exhibited, most are scheduled for release this fall.

Gone were the booth babes, the masses of gibbering fanboys, and overwhelming noise and lights of the old E3 show floor. At the new E3, it was actually possible to speak with game developers and publishers, as well as spend quality time with some of the new titles in development. The lack of fanboys was most evident at the Nintendo press conference, which in past years was dominated by cheers anytime anyone on stage said “Mario,” “Zelda,” or “New.” Instead, polite clapping was the norm when appropriate.

Game exhibits at the Barker Hangar in Santa Monica. No crowds and plenty of opportunity to play games. (Photo: Jake Richter)

While almost everyone we spoke to seemed to like the new “lite” version of E3, there were some complaints. The most heard complaint from attendees was that the distribution of various events and companies around Santa Monica made it difficult to schedule meetings and to get around. For those who chose to drive or take taxis, the out of pocket costs for parking and transport were significant (as was the traffic). The transportation problem was particularly evident at the remote Barker Hanger location, where visitor volumes were visibly low.

Some developers we spoke to worried that exhibiting content in hotels with poor Internet bandwidth was creating negative impressions of online gaming titles. Others missed the ability to pop out of their booths to check out the competition, as they had been able to do when exhibiting on the show floor at the old E3. But, the same developers and publishers also commented that the cost of participating was far less this year than in previous years, with not much reduction in the value they received. That cost/value proposition probably even applies to Microsoft, which rented out the entire posh Viceroy Hotel – the cost of which would allow most of us to retire in comfort, but still no doubt cheaper than the cost of the huge booth Microsoft had taken out at the old E3.

Our take
From our perspective, the new E3 was far more productive, and certainly less overwhelming than the old E3, although it’s arguable that the new E3 was not particularly enlightening or exciting. But that, perhaps, has more to do with the fact that there were no real breathtaking stories or new products unveiled.

Will there be another E3 Media & Business Summit next year? We believe there will, but the ESA will need to work on improving the issue of distributed venues – shuttle buses alone are not enough, as was evident this year. But as a way to rescue the good parts of the old E3 and dump the bad parts, the ESA should be commended on first pass execution of the new E3.

I guess I qualify as someone on the bleeding edge of technology – I am a geeky consumer with a decent disposable income, and I buy many of the latest tech toys available to me (partly because Jon gets all the freebies, thus I have to pay for my toys).

Case in point, my latest acquisitions include two Sony PS3 consoles, two Nintendo Wii consoles (one each for the living room and the bedroom, of course), a new 1080p 61-inch DLP display from Samsung, a Yahama receiver with three HDMI inputs and 1080p upscaling, an HP Media Entertainment Center, and also two HD-DVD add-on drives for two of the three Xbox 360s I have (living room, bedroom, and office).

Poor Me – I Suffer So

I have also invested in a handful of both HD-DVD and Blu-ray disk movies.

And I have watched movies of both types. I am now a true believer. Not a true believer of HD-DVD over Blu-ray, nor the other way around, but instead a believer in high-definition media playback. I have issued an edict in my household that we should no longer purchase any standard DVDs unless we really want the movies or shows right then and there and they are not yet available in either HD-DVD or Blu-ray formats. I will happily pay the $5-$15 premium for the phenomenal increase in image clarity (see my Blog at blog.richterscale.org for my HD epiphany with the Xbox 360 with King Kong: The Movie on HD-DVD).

What, oh what, to choose? Nothing?

There’s no question that I am among the fortunate few who has the ability to not have to choose between HD-DVD and Blu-ray. I have set things up so that I can play in either of the two primary places I watch movies – my living room and my bedroom. However, for most folks it will ultimately come down to four options:

1. Go with HD-DVD

2. Go with Blu-ray

3. Do nothing until things make more sense

4. Buy a dual HD-DVD/Blu-ray player when/if they become available

Industry reports indicate that option #3 is the most widely adopted at this point. Initial projections by the Consumer Electronics Association (CEA) for sales of stand-alone next-generation DVD players in 2006 were 750,000 units, but the CEA recently downgraded that estimate to a mere 250,000. That number does not include the estimated 1 million Sony PS3 systems (which each include a Blu-ray player by default), nor the number of HD-DVD add-on drives for the Xbox 360 sold in 2006 (a number Microsoft was not ready to provide at press time, although it should be noted that the HD-DVD add-on drive can also be used with a PC and HD-DVD player software such as PowerDVD for HD-DVD from CyberLink).

Consumer angst, confusion, and dissatisfaction have been the key reasons cited for why the high-definition DVD market has been slow to take off. I would add to that the high cost of hardware and the limited supply of decent movie titles.

The dissatisfaction stems from the purchase of HD-capable televisions by consumers who wrongly believe they just plug them in and everything will automatically be shown in high definition.

Sorry buddy, but it just doesn’t work that way. You need a high-definition input signal of some sort, whether it is an over-the-air signal (for which you need an HD tuner) or high-definition content via your set-top box, or high-definition input from your DVD player. And then things get worse (this is where the consumer confusion steps in) in that not all HD televisions are equal. You have to pick resolution (480p, 720p, 1080i, and/or 1080p), connector types (DVI, HDMI, component video, and soon DisplayPort), and now even HDCP (High Definition Copy Protection – required by certain players and even by Windows Vista in particular forms of use when playing back movies). And then consumers have to choose among CRT, LCD, DLP, Plasma, LED, and probably several other types of display technologies in the coming year, plus, of course, rear projection or front projection when applicable. And then there is the plethora of sizes along with relative merits of screen space in the context of the space the screen will be used, never mind aspect ratios. The combinations, variations, and possibilities – never mind the price tags – for new televisions are staggering. Hence the consumer angst – consumers don’t want to accidentally make the wrong decision, which may damn them all to obsolete television hell.

Angst enough to go around

Even as a more educated consumer I find myself frustrated by all this. For example, I wanted to upgrade both the 61-inch DLP TV in my living room and the smaller 32-inch LCD TV in my bedroom to support the latest 1080p and HDCP standards with HDMI input. I managed that just fine for my living room, but I have been told several times by salespeople in electronics store (including most recently at the Samsung showroom at the Columbus Circle Shopping Center in New York City) that 1080p won’t happen on anything less than a 40-inch display. Why the heck not? My soon-to-arrive Dell 24-inch computer display will do 1080p, so why can’t my 32-inch LCD TV? I don’t care that television makers have deemed that a dead zone, sufficient only for 720p/1080i resolution – I am willing to plunk down hard cash to get a 32-inch 1080p/HDCP-capable LCD television so that my PS3 and Xbox 360 will be usable at their upper limits. But even with the dizzying array of options out there, I don’t have this particular option, so I am stuck with a maximum of 1080i output for my PS3, and some doesn’t support HDMI output, but does have a PC VGA output connector and supports VESA mode standards). Sheer madness if you ask me.

HDAWGA – the HD Artificial Weight Gain Syndrome

And, assuming a consumer builds up the courage to actually go out and commit to a particular HD TV, we have the new version of the blinking 12:00 problem that has plagued the average VCR owner for nearly three decades, namely HD Artificial Weight Gain Syndrome (HDAWGS). HDAWGS is exemplified by having standard-definition 4:3 programming displayed in HD 16:9 proportions, making even the most svelte and stunning actress look like she’s been sneaking a few too many Krispy Kremes on the side. The converse of HDAWGS is HDBAS (High Definition Bulimic Actor Syndrome), in which high definition 16:9 content is being displayed in standard-definition 4:3 display modes. HDAWGS and HDBAS are more insidious than flashing 12:00 in that many average consumers just assume various actors have put on or taken off weight for their roles, meaning they don’t know they can program the display output dimensions of their high-definition TVs. Fortunately, the number one reason in 2006 to get a high-definition television was HD sports programming, according to a story I read in a national newspaper recently, so at least the athletes looked to be the right proportion when shown in 16:9 mode. But I digress.

But, if I had to choose…

I may be fortunate in that I don’t need to worry about HD over air or even over set-top box, since on the small Caribbean island of Bonaire where I live (had to get that in here) there is an absolute dearth of high-definition content available from outside signals. So the only HD content I can play is off DVDs or from HD WMV files streamed from my PC to one of my Xbox 360s. That makes high-definition DVDs very important to me.

This brings me back to the topic at hand: namely, the next-generation high-definition DVD standards.

I’ll leave the technical and advanced market analysis of HD-DVD and Blu-ray disk to my fellow JPR analyst, Andy Marken, and instead look at things from a consumer and practicality perspective.

Let me start with my conclusion: I think Blu-ray will have a difficult time overcoming HD-DVD, and ultimately, both standards will continue to be perpetuated because neither can overcome the other.

Perhaps the biggest thing that HD-DVD has going for it, and the biggest thing Blu-ray has going against it, are those two little letters, “H” and “D”. Every new expensive television out there is being promoted as an “HD” TV. Even Sony’s own line of HD TVs are, well, HD TVs. There’s nary a “Blu-ray television” to be found out there. All technical merits of Blu-ray aside, it comes down to a perception issue.

The average consumer of televisions is no different. They see “HD” on a TV, and then “HD” on a DVD player, and poof, they draw a connection. Technologists can argue about the technical superiority of Blu-ray until they are blue in the face, and it won’t convince someone who “knows better” because it’s plain as day to them that HD-DVD goes with HD TV and Blu-ray, well, they don’t know what that goes with. After all, the 2004 U.S. presidential elections turned out not to be about real issues, but about gay marriage – it’s all a matter of perception, whether in politics or in technology standards battles.

What’s in the name?

Sony is in a bind just by virtue of the name they have chosen for their technology – it’s sexy, but elitist, and sounds incompatible. Furthermore, it’s a Blu-ray “disk,” not a Blu-ray “DVD,” so that removes it one step further away from perceived compatibility, and then some not so brilliant marketing person came up with the contraction “BD” to represent Blu-ray Disc, thus resulting in the sale of BD-ROMs, BD players, and other things BD, further confusing an already hopelessly befuddled consumer. And honestly, the average consumer is unlikely to care what color laser is used to read data off the media. They just want it to work and be widely supported.

Existing HD-DVD releases also differentiate from Blu-ray in that a number of HD-DVD titles offer both HD-DVD content on one side and a DVD version on the other side, meaning the same media can be played on both current generation DVD players (and DVD-enabled computers), as well as in HD-DVD players. I have not yet seen any Blu-ray titles that offer this flexibility and comfort from potential HD-DVD obsolescence.

And then there’s the fact that HD-DVD stand-alone players are cheaper than Blu-ray players at the moment. A couple hundred dollars does matter to the average consumer.

The biggest drawback I see to HD-DVD is that a number of film studios are not currently supporting HD-DVD. Most notable are Sony, MGM, 20th Century Fox, and Walt Disney. However, HD-DVD is supported by Warner Bros., Universal, and Paramount. And Warner Bros. and Paramount are actually supporting both formats. Disney, an early Blu-ray supporter, has been reported to consider HD-DVD as well, while 20th Century Fox is seen as the stalwart studio in the Blu-ray camp (in addition to Sony’s own MGM and Sony Pictures). On the flip side, Universal Studios is reported to be unlikely to ever support Blu-ray.

And further muddying the waters and helping ensure that both standards will continue to battle it out are the recent announcements from Warner Bros. and LG. This week at the Consumer Electronics Show in Las Vegas, Warner Bros. Home Video unveiled a new disk format called Total High-Definition Disc (or THD), which contains both Blu-ray and HD-DVD-compatible content. In other words, it’s one disk that will work in both types of players, and an excellent way for movie studios to hedge their bets. And Warner Bros. allegedly also has a patent application filed with the U.S. Patent and Trademark Office for a tri-standard disk, adding traditional DVD to the mix. And on the hardware side, LG Electronics announced the first triple-format HD-DVD/Blu-ray/DVD player at CES – the LG BH100 Super Multi Blue Player (a horrible name for a multi-format disk player), which ships at the beginning of February for $1,199 (see related articles below). That’s potentially a good way for consumers to hedge their bets.

Ignoring for the moment the theoretical technical advantage of being able to slap 50 GBytes of data onto a Blu-ray disk (versus a “mere” 30 GBytes for HD-DVD), Blu-ray’s major benefit is that Sony, MGM, 20th Century Fox, and Disney all back Blu-ray exclusively for the moment. And furthermore, and Sony has significant clout in consumer electronics. Witness the 700,000 or so PS3s sold in 2006 as a serious way of upping the ante. Plus, Sony’s distribution capabilities into non-traditional venues for movie sales, such as the chain of GameStop stores, also improve Blu-ray’s position. GameStop does not sell any HD-DVD titles as a counterpoint to the Blu-ray movies they do sell, and my informal inquiries show that is unlikely to change soon.

But let’s get back to the PS3 as a Blu-ray disk player. There’s no question it works, and works pretty well from a display quality perspective, even on a 1080i display. But it falls far short of a stand-alone player or even Microsoft’s HD-DVD add-on drive for one very simple reason – it lacks an intuitive remote control. You have to use a cryptic on-screen menu combined with the wireless PS3 game controllers to control movies. And at least in the PS3 box I bought, there was no documentation on how to do this. I had to go by trial and error to see which buttons did what (resetting the movie I was watching back to the movie’s very beginning several annoying times during the process).

No documentation on how to do this

Sure, a real DVD-style remote control is a foolishly simply thing, really. So why didn’t Sony include one with the PS3? Or even make one available for sale as an add-on? Microsoft packaged a remote with the HD-DVD add-on drive, and the remote can be used for more than just controlling HD-DVD playback – such as controlling the media center extender functions inherent in the Xbox 360, which is an extra bonus.

Porn and Betamax

It’s been often said that Sony’s Beta-max video tape format, which was technologically superior to VHS, died because the adult movie industry was barred from using Betamax as a distribution medium, and thus gravitated naturally to VHS.

It should also be mentioned that Blu-ray has been compared to Betamax, as well as Sony’s own ailing UMD format, too many times to count. And is Sony doomed to repeat one of the mistakes of the past? It seems like that may be the case, as at least two of the major publishers of adult video content – Wicked and Digital Playground – have said that they have been effectively barred from releasing their titles on Blu-ray disk because no Blu-ray-certified replicator will replicate adult entertainment on Blu-ray media. So, instead, both of these adult video powerhouses have just released their first HD-DVD titles. Ali Joone of Digital Playground told me that that HD-DVD was chosen for him by Sony, because all the replicators he spoke to told him that if they produced his titles on Blu-ray, they would lose their licenses from Sony to replicate Blu-ray media. So he had no choice but to choose HD-DVD as his media, even after being a vocal supporter of Blu-ray just last year. His company is releasing four HD-DVD titles now, and plans to continue to release another four titles every month, while Wicked is releasing one a month starting now.

Vivid, another major publisher of adult video titles, has announced it will ship its first true high-definition title in March, and plans to ship on both HD-DVD and Blu-ray, but I was unable to talk to Steven Hirsh before deadline to find out how his company is managing to publish Blu-ray titles based on the restrictions Wicked and Digital Playground faced.

Does that mean HD-DVD has won? I am not sure how true the Betamax myth is, but I remain firmly convinced that the adult entertainment industry does help drive adoption of new technology, and whither adult entertainment goes (technologically speaking), so do technology standardization and growth. So, perhaps Blu-ray will be another Betamax.

Incidentally, if you think it’s a shock to see the pimples and pores of your favorite actor or actress, just imagine the surprises that await you with high-definition porn. However, unlike the concern Hollywood starlets have exhibited about HD movies showing off all their facial blemishes, adult entertainment performers have no such issues of modesty.

In fact, when I interviewed up and comer Shay Jordan (who started performing just a year ago) about high-definition facial blemishes, her comment was that viewers “shouldn’t be looking at that in her movies, and if they are, and ignoring all the action, then there’s something really wrong with them.”

Where does that leave us?

It leaves us with two competing standards that will likely live a long time, both of which will see less than ideal sales unless they find a way to help consumers get over their angst, confusion, and dissatisfaction. The vendors of HD displays in particular are very aware of this, and are trying to take steps to help consumers – programs such as Panasonic’s Plasma Concierge service, as well as educational presentations by Sony, are examples of this outreach. But so far, it’s not been nearly enough.

The bright star for the future is that Warner Bros. and LG Electronics’s new offerings are only prolonging the pain of competing standards; ironically they will also likely contribute to markedly greater acceptance of high-definition media and media playback among consumers because they offer a “safer” choice. And that is a good thing for those of us who have seen the light of HD.

At CES this week, Warner Home Video unveiled its new Total Hi Def (THD) disk format, a medium that features HD-DVD content on one side, and Blu-ray disk content on the other, in a play to help increase consumer confidence in high-definition content and, thus, sales of high-definition movies.

Barry Meyer, chairman and CEO of Warner Bros. Entertainment, explained that “the market has experienced confusion and hesitation” due to the competing standards of HD-DVD and Blu-ray disk and that “this is a problem desperately in need of a solution.” He went on to say that he hoped industry colleagues and consumers alike would embrace THD technology.

One for all and all for one – Warner Bros. THD is both an HD-DVD and a Blu-ray Disc

Kevin Tsujihara, president of Warner Bros. Home Entertainment, and Ron Sanders, president of Warner Home Video, presented a number of statistics about the high-definition disk market, including a statement that a total of 775,000 high definition playback devices, including game consoles, shipped in 2006 – this includes HD-DVD and Blu-ray. However, these numbers are at odds with Sony’s statement this week that they shipped one million PS3s in 2006, never mind the CEA report of 250,000 stand-alone high-definition players sold in 2006, plus some number of HD-DVD add-on drives for Xbox 360s. It would appear the total number of players sold through the end of 2006 may well actually be between 750,000 and 1.5 million – a rather broad spread, and as every-one is putting a spin on things, it’s not clear if an accurate first-year number will really every be obtainable.

The photo above shows Kevin Tsujihara, Steve Nickerson, and Ron Sanders with mock-ups of Superman Returns on THD media (note the combination blue and red box). Steve holds the demonstration THD disk, which he used to play a clip from the movie on both an HD-DVD player and on a Blu-ray player.

Tsujihara and Sanders further predicted that another 8.7 million players would be sold in 2007, including game consoles, with 2.5 million of those units being HD-DVD and 6.2 millions being Blu-ray (the balance of these presumably being Sony PS3s).

Interestingly, Tsujihara and Sanders also stated their research predicts that there will be $600 million in HD-DVD “software” (a euphemism for titles) sold in 2007, and $400 million of Blu-ray titles, making the high-definition content market a billion-dollar market in 2007. Not a number to sneeze at, but it is noteworthy that they expect more HD-DVD titles to sell than Blu-ray, implying that the PS3 has less of an impact on Blu-ray title sales than Sony might hope.

In customer surveys Warner conducted, they found that among users who had high-definition players, there was 98% user satisfaction with their hardware and high-definition content, with 85% of those surveyed feeling that high-definition content was a great value, and 90% very satisfied with the picture quality. Those are encouraging numbers, and it’s not surprising that this provided Warner with an incentive to get more people to move to high-definition media.

Warner believes that their new THD format can overcome the concerns consumers have about obsolescence, and they have surveys to back this position up as well. Forty-nine percent of the people they surveyed said they would be more likely to buy high-definition players of some sort if content on THD disks became readily available, and 62% felt that that the THD disk format would remove confusion about high-definition choices. Interestingly, 46% of the people Warner surveyed also indicated that THD would allow them to potentially choose different players for their household, for example, an HD-DVD player for the living room and a Blu-ray player for the bedroom.

Under the mottos of “All of the content, none of the risk” and “One world, one disc,” Warner’s Nickerson demonstrated a prototype of the THD disk in both an HD-DVD player and a Blu-ray player, followed by playing the disk in LG’s new BH100 Super Multi Blue Player (see related article below). The clips he played from Superman Returns performed flawlessly. It was probably no coincidence that Superman Returns was chosen, as it is the industry’s top-selling high-definition title in both Blu-ray and HD-DVD formats, and because Superman is wearing both blue and red (the respective packing colors for each of the formats), making Superman an icon of sorts for the unification of Blu-ray and HD-DVD in a single embodiment.

The actual THD media consists of two .6mm disks bonded together – one side is a Blu-ray disk, and the other an HD-DVD disk, and therefore it has the same capacity on each side as a solo disk of the format involved, meaning that the Blu-ray side can hold up to 50 GBytes using dual-layer recording, and the HD-DVD side can hold 30 GBytes. The actual cost of the new hybrid media was not disclosed, but Sanders indicated that the final packaged movie pricing would not be materially more than existing high-definition titles. In terms of production, as long as a production house already has both HD-DVD and Blu-ray manufacturing equipment, they will be able to produce THD media.

Movies on THD disks will start shipping during the second half of 2007, and once THD is in full swing, Warner will ship its titles on THD exclusively – and therefore no longer producing two SKUs for every title.

I asked Sanders and Nickerson about licensing fees Warner might charge to let other studios use the THD format, and they indicated that THD was covered by existing licenses for the individual formats, and that in any event, they wanted to see broad adoption of THD as it could only help retailers and consumers, in turn helping the movie industry. Warner produced statements from Best Buy and Trans World Entertainment to support their position on the potential benefit of THD to the industry at large.

In response to a final question from the audience about the future of the individual formats, Sanders said he expected HD-DVD and Blu-ray to coexist into the future, much as the Xbox 360 and PS3 will continue to co-exist. Not a great analogy, but certainly his company’s efforts with THD will ensure that both formats will continue to be well supported for a long time to come.

This morning, here in Las Vegas at the start of the Consumer Electronics Show, LG Electronics announced that they will be shipping the first multi-format DVD player during the first week of February 2007 via retail channels including Best Buy and Circuit City.

LG’s BH100 multi-format HD-DVD and Blu-ray Disc player

The new LG BD100 player, which goes by the decidedly cryptic name of “Super Multi Blue Player,” will retail for $1,199 and offer playback for HD-DVD, Blu-ray, and standard DVD media using a single tray. Full 1080p output, HDMI-out, and support for a variety of codecs (VL-1/H.264, DDH, DTS HD, and True HD) are also included.

The new player uses a sophisticated beam mirror system to direct the different color laser beams required by the various formats.

LG’s Chief Technology Officer, Dr. H. G. Lee, said that it has been widely perceived that there has been much slower adoption of high-definition DVD players, and that LG believes unification between the competing HD-DVD and Blu-ray standards is possible. LG believes their new BH100 player is a first step toward that unification, and should help consumers overcome the hesitation in committing to high-definition DVD playback, because now they don’t have to choose (although they will need to pay a small premium, of course).

LG’s multi-format HD-DVD and Blu-ray Disc player technology

LG also announced the GGW-H10N Super Multi Blue Drive, an external drive for use with PCs which features support for reading and writing Blu-ray media, DVD, and CD, and can also play HD-DVD. This unit will be available for $1,199 as well, sometime later in Q1 2007.

While the price of the BH100 is not insignificant, it is still cheaper than buying two separate stand-alone players (and about the same price as buying both a PS3, which features Blu-ray, and an Xbox 360 with HD-DVD drive separately), and no doubt the price will come down as volumes increase and as other vendors release multi-format players.

I only wish LG had chosen a better and more descriptive name, like “Universal High Definition Disc Player.”

There were already a number of hints last week that LG would be announcing a multi-format player at CES. Companies and people who had opted to support one of the two HD formats exclusively had guarded comments, but in some cases expressed concern that LG’s product would further delay the eventual success of their chosen standard, and the demise of the competing standard. The same concerns rang even louder when Warner Bros. last week also announced a dual-media disk – the Total High-Definition Disc (or THD), which will play in both HD-DVD and Blu-ray players.

The folks lined up in the halls waiting to see the man. Not so much for what he’d say, most of the people pretty much knew, but just to be near royalty.

Once inside there was an air of excitement – this was an event, we/they were sure of it, and even if it wasn’t, we were going to make it one.

Bill Gates is about to speak: in the hall waiting for the doors to open before Gates’ keynote

For the tenth year in a row, Bill Gates gave the keynote at CES. Gates kicked off his talk by answering the question, How long are you going to keep on doing this? He loves it, he says, and will be back if they invite him, but after next year he’s not sure they’ll want to invite him, because he said he might talk a lot more about infectious diseases than great software. “So if they want me, fine, but they’ve been warned what they would hear about.”

I’ll be back says Bill Gates

Gates said it’s amazing to see the progress over the course of the year, and the Digital Decade is truly happening. He said we see it everywhere we look. We see it in photography: over 2 billion digital photos were taken this last year;

65% of homes are using digital cameras. We see it in the Internet adoption, higher and higher penetration on a worldwide basis, and more and more activity there; whether it’s buying and selling, or whether it’s planning, or being creative, the Internet connected up to the Windows PC and other devices is taking over things that would have been done without it before. Over 40% of U.S. homes now have multiple personal computers.

And if you look at young people, the new generation, they actually spend more time on their Windows PC than they spend watching TV. Now that’s a pretty dramatic change.

It’s (mostly) about Vista

Gates used that backdrop as a lead-in to Vista. For Microsoft, Gates said, “this year it’s a big, big milestone, because the products we’ve been working on for many years that are foundational products are now moving into the marketplace. First, of course,” he said, “that’s Windows Vista. It’s been many years of hard work with millions of people giving us great feedback on that. This is by far the most important release of Windows ever. It’s also the highest quality release that we’ve ever done, whether it’s security, or testing, or usability, all of these things we have learned a lot, driven by the feedback that those hundreds of millions of users are able to provide to us.”

Gates’s speech comes three weeks before Microsoft is due to release Vista to the general public. The much-delayed product is Microsoft’s bid to retain PC market share against incursions from competition by Google, Yahoo, and Apple, as well as that annoying Linux crowd – it’s not easy being king.

Search me

Vista will fight back against the web crowd with a new search engine that can scan both a PC’s hard drive and the Web, and the company for the first time showed the ability for a search query typed into Vista’s Start menu to crawl through the contents of any PC on a home network as well.

“This is by far the most important release of Windows,” said Gates. “Vista and the PC continue to be very, very important.”

Vista will reach to the heavens and find your data

Media, media everywhere

One of the key components of Vista that Gates and his fellow Microsoft colleagues

kept returning to time and time again during his keynote was the media-centricity of Vista. Media Center plays a core role in how PCs become the center of the connected experience, and new features in Vista will include the Sports Lounge, where the latest game scores, clips, channel lineups, and even fantasy teams can be managed by the family sports fanatic.

In addition, Microsoft announced at the keynote that they have signed three new content partners for Media Center and downloadable/viewable content: Showtime, Nickelodeon, and Vongo. And more media partners are apparently on the way.

And, to ensure Vista doesn’t become obsolete, there’s Vista Ultimate, an upgrade from Vista Premium, which will provide users with so-called Ultimate Extras. Such Extras will be downloaded automatically to users’ systems as Microsoft develops new features. Two examples given of such Ultimate Extras were Group Shot – a very cool tool to combine parts of two similar photos (e.g., a family picture in which one person has his eyes closed in one shot, and different person has hers closed in the other – Group Shot would let you select the good parts of both images and combine them so all subjects had their eyes open) – and DreamScene, a new full-motion desktop that allows one to have full-motion video as the desktop background instead of the static pictures we are all used to today.

64-bits to the Office

Vista will usher in the era of 64-bit computing on the desktop, along with Microsoft’s new Office 2007 productivity suite. This will be the first time a new version of Office has arrived with an upgrade to the OS, and Microsoft says both products greatly expand the software’s ability to take advantage of computer memory (which of course continues to get cheaper). The new Office suite also includes a new graphical UI that pretty much gets rid of drop-down menus; Gates said Microsoft’s user studies have shown that the new design works, but acknowledged the danger of confusing customers. Said Gates, “The new user interface was actually a risk, a leap that needed to be taken at some point.”

Justin Hutchinson, group product manager at Microsoft, further demonstrated the Internet integration into the new Office suite by selecting a term in a document, having that term fed to Live Search, the search component of Microsoft’s Live site, and then pulling up the search results.

The term Hutchinson pulled up was the name of a cafe located at the Bellagio Hotel, and Live Search immediately offered a map, which Hutchinson was able to navigate in 3D in real time using, of all things, an Xbox 360 controller, which he said was natively supported by Vista.

Microsoft’s Justin Hutchinson checks out the Bellagio on the PC using an Xbox 360 controller by way of Live Search

Servers at home

Another major new announcement Gates made was that Microsoft was releasing a new server operating system with a very specific target – the home. Intended for homes with multiple networked Vista PCs, Microsoft Windows Home Server is designed to help users of those multiple PCs “easily connect their digital experiences, providing a reliable and familiar way to store, access, share and automatically enhance protection of treasured digital images, music, video and personal documents,” according to Gates.

Among the numerous features of Windows Home Server are an automated cross-network backup service, remote access, and media serving capabilities usable by both PCs and Xbox 360s alike. Because storage capacities and thus backup requirements are growing at a rapid pace, Windows Home Server allows for new drives to be added dynamically and the Home Server operating system will automatically integrate them; Microsoft engineers have tested Windows Home Server with 14 Terabytes of storage, and it reportedly worked flawlessly. Things like network volumes and drive letters will also not be present in order to provide a simpler to use experience for users. The new operating system will be available in the second half of 2007.

Hewlett-Packard announced that it would implement Windows Home Server in a new computer they are calling the HP MediaSmart Server, which the company was also demonstrating on the show floor, integrated with Vista-based Media Entertainment PCs and wireless MediaSmart display panels.

Hewlett-Packard’s MediaSmart Server Based on Windows Home Server

It’s also all about the Xbox 360…

Gates brought out superstar Robbie Bach, king of Xbox 360 and Microsoft’s entertainment efforts, for a chat, and during it Bach, president of Microsoft’s Entertainment Devices division, revealed the company’s plans to start using the Xbox 360 console as a set-top box. Bach said they are working with five telecom companies, including AT&T and British Telecom, to deliver television over Internet lines (known as IPTV) through the Xbox 360.

Bach also announced that through the end of 2006, Microsoft had sold 10.4 million Xbox 360 consoles in 37 countries since launch, and that by the end of last year there were 160 high-definition game titles available for the Xbox 360, with over 300 such titles expected by the end of 2007. And while touting numbers, he indicated that approximately half of all Xbox 360 users – 5 million – were paid members of Xbox Live, which he dubbed “the largest social network on TV”. So far, over 3 billion hours of time have been logged on Xbox Live by members.

Microsoft’s Robbie Bach raves about the Xbox 360

As was already disclosed at E3 last year, Microsoft wants to expand Xbox Live and bring it to the PC and the 200 million Windows gamers out in the world. The so-called “Live on Windows” will roll out this summer.

And also about HD…

Bach went on to point out that movies and TV were also a key part of the whole connected experience, and that high definition was the way of the future. He explained that there were now four ways to get HD video in the Microsoft ecosystem.

First is the HD-DVD drive for the Xbox 360 – Bach would not provide any numbers for sales of the drive, but said Microsoft had “been making as many of these as we possibly can, and they continue to sell out. Demand for this product is incredibly high.” He further indicated that HD-DVD was the top-selling format for 2006.

The second way to get HD is via Windows Media Center. He said 80% of all PCs sold during Christmas were Media Center-enabled, and that there are now 30 million systems running Media Center worldwide. Xbox 360 consoles offer a feature called Media Center Extender, and Bach said that was a way for HD content on a PC to be viewed on the Xbox 360 – by distributing the content over a local area network.

And Xbox Live’s Video Marketplace is the third way to get HD content. Over a thousand hours of video content, including high-definition content, are presently available on Xbox Live and more are being added, including content from Lion’s Gate, which Bach announced had just agreed to release their content via Video Marketplace.

The final HD delivery mechanism is the aforementioned use of the Xbox 360 as an IPTV set-top box. While this has been something of an obvious move, Microsoft does not always do the obvious thing, but in this case the announcement was warmly greeted by the audience. Even more interesting was the ability to use native Xbox 360 features, such as headset voice chat, during TV viewing so that watching television over IPTV on an Xbox 360 becomes a social experience.

Gates returned to say that Microsoft’s ‘ambition is to give you connected experiences 24 hours a day. We admit that when you’re sleeping we haven’t quite figured out what we’re going to do for you there, but the rest of the time, the minute you get in the kitchen and look at that refrigerator, pick up your phone, hear the alarm clock tell you about the traffic; whatever it is, we want you to have the information that you’re interested in.” Talk about information dominance.

With that Gates brought out Mark Fields, president of the Americas for Ford Motor Company. Fields disclosed news from the annual Auto Show going on in Detroit that Ford was going to use Microsoft Auto software in a system called “Synch”.

Mark Fields of Ford Motor Company raves about Synching with Zune

Synch integrates all of the electronic devices – like cell phones, Zunes, and iPods – right into the vehicle, seamlessly, providing voice-command access to phones, automatic address book synchronization, text to speech for text messages, and a variety of other futuristic capabilities. And Synch will not be limited to luxury cars, but will be an affordable option for non-luxury vehicles as well.

Home of the Future

Gates closed his keynote with a demonstration of the Microsoft Home of the Future, in which he showed an intelligent kitchen where a computer helps you prepare food with instructions and guidance, and an intelligent bedroom with display-based walls that could be changed to suit various moods and applications, explaining that connected experiences could go far beyond what exists today. He ended by stressing that users need to provide feedback, however, to help guide Microsoft’s research and efforts in developing tools and experiences for the future.

Gates’s keynote was certainly not earth shattering. In fact it was predictable, in the sense that Microsoft’s vision to be part of every facet of information gathering and viewing was furthered by the new technologies and efforts Gates and his colleagues disclosed. Just about all of these new efforts have a real place in the world, fulfilling various needs and desires (some of those being Microsoft’s and others being those of users). For example, the staff here at JPR doesn’t know of anyone who could not benefit from automated backups of their systems, as the Home Server promises to do. And making driving safer by making today’s technology work in a hands-free, yet highly interactive manner can only be a good thing, right? Likewise, getting people to interact socially at a time when more and more of us are becoming solitary and sedentary couch potatoes is also beneficial.

The so-called connected experience has the potential to usher in a whole new era, but at the same time, there is the danger of becoming too dependent on technology and connecting to people and information remotely.

That’s something Microsoft and Bill Gates don’t talk about, however.

The Intro (by Jon Peddie): “The coming years are going to be even more surprising… Believing as we do that technology is growing at an exponential rate (and not just at Moore’s law rate), some of our colleagues have ventured a guess as to what’s coming in the next few years.”

Jake Richter’s Forecast

HDMI switches – Sales of HMDI switches will grow from virtually none to many thousands as consumers discover they have more devices with HDMI output than their TVs will support.

No cross-platform yet – Portable, cross-platform, online gaming will still not take off, even with Xbox Live being launched across multiple platforms. Device capabilities will still be too divergent to support proper playability.

Video downloads – Downloaded video to consumer electronics devices will continue to grow at a very rapid rate as mobile and living room devices add video storage, playback capability.

More spam please – Spam emails and messages, already at over 90% of all email traffic, will get even worse, forcing people to take draconian efforts to get only the mail they want, without spam.

Wii wins – Nintendo’s Wii sales will surpass Xbox 360 and Sony PS3 sales by early 2008 as more women discover that it is family- and woman-friendly, relatively inexpensive, and provides a good workout.

The Intro (by Jon Peddie): “…With all that was going on, we asked our group of experts what they thought were the top ten events of 2006 in the computer industry. Eight of us participated in the exercise, which gave us a broad range of viewpoints and opinions. Everyone had ideas about the significant things of 2006, and a few of us even agreed with each other. But sometimes the choices aren’t as important as the thinking behind them…”

And here’s what I had to say:

Jake Richter, Senior Analyst

1080p – 1080p TVs become available.

HD-DVD and Blu-ray – HD-DVD and Blu-ray players and content hit the market, and boy do they look great on even 720p TVs (but better on 1080p).

PS3 – Sony ships the PS3.

Vista – Microsoft doesn’t ship Vista (to consumers).

More storage – Media storage capacities went through the roof, with 750-GByte hard disks, and 4-GByte and 8-GByte media cards, enabling more content generation and creation.

Video downloads – Video down-loads hit mainstream with iTunes and Xbox Live.

DRM – Microsoft’s Plays For Sure don’t play so sure on Zune, demonstrating how dangerous committing to DRM really is for consumers and Microsoft’s partners alike.

GPU watts – Just when you think graphics hardware can’t get faster and better, it does, but at the cost of a noticeably higher electric bill.

Wii – Nintendo ships the Wii and then benefits from additional PR when users smack each other and TVs by gesturing too wildly and enthusiastically.

Web 2.0 – Google’s deep pockets help Web 2.0 efforts such as YouTube spread in spite of intellectual property concerns.

As the father of two avid game-playing children (a 9-year-boy and a nearly 11-year-old girl), I have long wanted to explore the career options that might be available to them as professional gamers, and E3 offered the perfect opportunity to do a little research. After all, if there is one place where the world’s best professional gamers could be found at the same time, it would be E3.

I hooked up with two members of the esteemed F-Players at the Fatal1ty booth. As you may know, Fatal1ty is the gamer handle for Johnathan Wendel, perhaps the world’s best-known pro gamer, and the best there is when it comes to merchandising and marketing himself. While John was busy on stage blasting the shorts off some gaming wannabe, I spent a bit of time with Magnus “fojji” Olsson and Alessandro “Stermy” Avallone.

Italian bred and raised, Alessandro (Stermy), now age 19, was of particular interest to me, as he was the youngest competitor to have ever competed in the World Cyber Games – at the tender age of 15. Stermy is now ranked as one of the top three competitive gamers in the world and earns around $120,000 a year. And Swede Magnus (fojii), age 22, is even better than Stermy. Magnus starting competing professionally when he was 17 years old.

The F-Players are the world’s top professional gamers. From left to right, Magnus “fojji” Olsson, Johnathan “Fatal1ty” Wendel, Alessandro “Stermy” Avallone.

The Athletics of Gaming

Both Stermy and fojii stressed that professional gaming is an athletic sport – one requiring long hours of prac-tice, good physical health, dedication, and focus. That focus is now on the PC version of “Quake 4”, a game in which they spend many hours a day refining their strategy and improving their hand/eye coordination and knowledge of the game. The time investment is so great that Stermy still has a year of the Italian version of high school to finish should he want to pursue a university education.

Magnus stressed that a key ability of professional gamers, just as with other athletes, is that they must be able to perform under pressure – and certainly with the whole gaming world watching, and with countless upstarts wanting to test their mettle, the pressure is enormous.

But, as Stermy pointed out, all the practice and training in the world will not help someone if they don’t have natural talent for gaming. And that generally holds true for any other sport, too.

Magnus and Stermy have both been playing video games all their lives, but got into competitive gaming via LAN parties and playing against friends. From there they went to regional events, and ultimately to international events. Stermy has found one of the side benefits of professional gaming is that it real-ly is a very social activity, and as such he has made friends all over the world.

I asked the guys how their families have dealt with their unusual career choice. Magnus indicated that he was lucky in that his parents were supportive from the start. Stermy had to work a bit to make his parents understand that gaming could be a real job, and any concern and reluctance his parents had when he started has now been overcome with the results (and money) he’s bringing home.

So, what would their advice be to a young gamer wanting to go pro? Practice a lot, enter competitions whenever possible, but don’t bet your whole future on your possible success either – keep your options open.

girlz Of destruction

Later that evening, I happened to be having dinner with three of the girlz Of destruction, a professional all-female gaming team assembled with the support of hardware maker VIA and its S3 subsidiary, and discussed many of the same topics with them. While the athletic aspects and analogies Stermy and Magnus raised were stressed by Alana “Ms. X” Reid, Therese “trito” Andersson, and Livia “Liefje” Sophia as well, their take on professional gaming was from the female perspective.

The girlz all universally had encountered some sort of sex bias in their gaming careers, with the most typical being, “But you’re a girl! You can’t play video games,” which would generally be followed with the chauvinist being handed his butt on a platter by the female gamer he had just put down.

They all agreed, however, that parental support was vital in their careers, and that in some cases they had to prove to their parents that they had chosen a worthwhile career path. Several of the girlz (there are seven members of the team) also have other work they do in addition to being a gamer, including going to high school (Barbie – a 16-year-old from Russia) or college (Missy – a 19-year-old American).

And, while the F-Players focus on Quake IV on a PC to the exclusion of all other games, because that’s where the big prize money is, the girlz have pursued a variety of games and platforms because the competition options for women are not as focused, nor nearly as prize-rich. The girlz lacked the intensity that I saw in Magnus and Stermy, but at the same time had a lively spark and general appreciation of life, which I missed in the F-Players. I can’t honestly say whether that was just a male/female difference or one produced by the environments in which we spoke: couches on the noisy E3 show floor vs. a nice dinner at Roy’s Hawaiian Fusion Restaurant. Talking with the girlz was less intimidating by far.

So, what did I learn to pass on to my kids about gaming as a career? Focus on a game with lots of prizes and competitions, play it a lot, kick a lot of butt, but, please, most of all, finish school first.