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The Holidays Ride on Trojan-Horse Hardware

Don't underestimate the technology Trojan Horse.

Mari Silbey

November 7, 2016

4 Min Read
The Holidays Ride on Trojan-Horse Hardware

It's that time of year again. The time when cheapish gadgets take over holiday wish lists and help set the technology agenda for the year to come. In recent seasons, the Roku box, Chromecast stick and Amazon Echo have all had their day, finding that sweet-spot price somewhere south of $150 and soaring to the top of shopping cart manifests.

It's a strategy that works not only for holiday gift-giving, but also for promotional giveaways -- like the bundling of a free Roku box with Sling TV or, as Variety has uncovered, the promise of a free Apple TV or Fire TV stick with the launch of AT&T Inc. (NYSE: T)'s DirecTV Now streaming service.

The importance of these gift-worthy gadgets goes far beyond basic sales and distribution, however. These connected products play an important role as technology Trojan Horses, and their impact shouldn't be underestimated by industry watchers or the companies creating applications that run on top of these holiday toys.

Figure 1:

Consider the Roku platform. In its first incarnation, the Roku box brought Netflix to the living room. Those bright red Netflix DVD envelopes were one thing, but it was Roku Inc. hardware that ushered in Netflix Inc. (Nasdaq: NFLX)'s streaming service, helping it crush the video rental competition, drive up bandwidth demand and goose pay-TV's video-on-demand market. (See Roku Racks Up 7.6M in Monthly Active Users.)

Roku and its media streaming brethren are also now the enablers of further video experimentation. The Roku Ultra offers one of the cheapest consumer entry points for 4K and HDR video, and allows content providers to dole out new high-resolution and high-luminance video incrementally, rather than investing wholesale in 4K Ultra HD broadcast channels before that investment is likely to pay dividends.

On the advertising front, Facebook is reportedly planning to use both the Roku and the Apple TV as outlets for new TV advertising. The social media network is already an advertising king, but it's through streaming media boxes that Facebook may finally get its hands on lucrative television ad budgets.

Want to know more about video and TV market trends? Check out our dedicated video services content channel here on Light Reading.

Consider next Google (Nasdaq: GOOG)'s Chromecast stick. If there was ever a TV Trojan Horse, it's the Chromecast device that started selling for as little as $35 back in 2013. Google's TV stick made it possible to connect mobile applications to the flat-screen display. Every consumer who picked one up on a whim or added it to the stocking-stuffer list found that, over time, more and more content could be "cast" from phone or tablet to TV. It's the gift that keeps on giving.

Equally important, from an industry perspective, the Chromecast this year is an anchor product in Google's connected home strategy. Whether you bought one of the original Chromecast sticks or waited for the Chromecast Ultra, the little-TV-device-that-could now takes on further prominence through its connection to the Google Home hub. The Google Home is Google's answer to the Amazon Echo. It answers questions, streams audio, controls Internet-of-Things gadgets like connected light bulbs, and, thanks to the Chromecast, acts as a voice interface to the TV. (See Google Home Could Be Pay-TV's Nightmare.)

And what about the Amazon Echo? At its simplest, the Echo is a connected speaker. But, surprise! It's also arguably the first product to get mainstream consumers excited about having a smart home. The fact that the Echo was a hit during the 2015 holiday season means Amazon.com Inc. (Nasdaq: AMZN)'s already had a full year to build up a smart home ecosystem of applications. Apple and Google own the mobile operating system world, but Amazon's giving itself a good shot to be one of the top players with a smart home OS.

The moral of the story here is that, for as much as we talk about software and virtualization, there is still a major role for hardware in influencing the direction of technology. Of all the pay-TV and broadband operators in the US, Comcast Corp. (Nasdaq: CMCSA, CMCSK) may be the one that has best understood that lesson as it relates to the connected home. However, even Comcast with its X1 platform doesn't have a compelling retail product to sell during the holiday shopping season. (See Cable Is Eyeing Its Retail Options.)

It's a channel that service providers have yet to conquer, and given retail hardware's impact, maybe it's one they should.

— Mari Silbey, Senior Editor, Cable/Video, Light Reading

About the Author(s)

Mari Silbey

Senior Editor, Cable/Video

Mari Silbey is a senior editor covering broadband infrastructure, video delivery, smart cities and all things cable. Previously, she worked independently for nearly a decade, contributing to trade publications, authoring custom research reports and consulting for a variety of corporate and association clients. Among her storied (and sometimes dubious) achievements, Mari launched the corporate blog for Motorola's Home division way back in 2007, ran a content development program for Limelight Networks and did her best to entertain the video nerd masses as a long-time columnist for the media blog Zatz Not Funny. She is based in Washington, D.C.

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