Connected Consumer Winners and Losers of 2009

1Executive Summary

As the year winds to a close, GigaOM Pro’s crack team of contributors takes a look back at what went right, what went wrong, and for whom.

Winners

Prime View International

Read more in this report.

Read more in this report.

There’s nothing quite like supplying both sides in a war. Except perhaps, supplying all sides in a wild free-for-all, which is where Prime View International of Taiwan found itself in 2009. Since acquiring the assets of E-Ink in June, PVI is both the leading provider of electrophoretic e-paper displays used in e-book readers, and the leading e-book reader OEM, assembling finished devices for Amazon (Kindle), Barnes & Noble (Nook), Sony (Reader), Interead (Cooler) and the upcoming device from Plastic Logic. And e-book readers have emerged as one of the hottest categories heading into the Christmas season. If there’s a downside for PVI, it’s the challenge of keeping up with demand and allocating its production capacity among its competing customers. Both Barnes & Noble and Sony have faced product shortages as they try to fulfill orders for their  e-readers. At some point, that will spur someone else to get into the assembly business to compete with PVI. — Paul Sweeting

Vizio

It’s not easy to be disruptive within such long-established product categories like TV sets. But 8-year-old Vizio has shown it can be done. From a standing start in 2002, it has zoomed into the top ranks of flat-screen HDTV brands in the U.S., right up there with the likes of Samsung, Sony, Toshiba and Philips. Through the first three-quarters of 2009, Vizio had achieved 87 percent year-on-year growth, compared with the industry average of 11 percent, and was likely to finish the year as No. 1 or 2 (along with Samsung) in flat-screen market share. Its secret? Outsourced manufacturing and extremely low overhead keeps prices low and lets Vizio shift screen sizes and technologies quickly in response to changes in the market. — Paul Sweeting

Hulu

With the addition of Disney/ABC, Hulu locked up content from three of the four big broadcast networks. Not only did this extend Hulu’s exclusive access to hit shows from ABC, FOX and NBC for another two years (well, a year and a half at this point), but it also blocked rival YouTube from gaining access to long-form premium content from the big networks (part of a big premium content push the video giant made all year). Hulu has been putting all that content to good use, as it kicked off the year with a Super Bowl ad that gave its traffic stats a big shot in the arm, but it closed out the year with an even bigger jump, generating 856 million streams, thanks to ABC’s content and the new fall season. It’s been a rocky year for CEO Jason Kilar & Co., but Hulu’s becoming a household name for the place to catch up on missed TV programs. — Chris Albrecht

Boxee

Here’s a startup feel-good story if ever there was one. With fewer than 10 employees and operating on a shoestring budget, Boxee became an instant phenomenon with the alpha launch of its media center software. In the past year it has shown phenomenal growth for a company with no marketing budget and no real revenue stream. Before it even reached beta, Boxee had managed to collect nearly a million users, had raised $10 million in financing, and has embarked on a consumer electronics strategy. With all that behind it, the company is ready to start executing on its plan to become the software powering digital video viewing. — Ryan Lawler

Apple

As we look forward to 2010, Apple faces more challenges than ever to its dominance: Android phones are eclipsing the iPhone as the new “it” phone; iTunes is showing its age in a world of Spotify and Hulu; and Apple TV needs a serious revamp. But for all of Apple’s challenges, it’s still the digital lifestyle kingpin. It boasts more than 30 million iPhones and nearly as many iPod touches sold, more than 2 billion apps downloaded, and its computer business continues to eat into Windows’. Sure, it’s seeing more competition, but that’s what happens when you’ve sat at the top for so long. And who knows? It may have another trick up its sleeve to keep the winning streak alive. — Michael Wolf

Losers

Hulu

Hulu celebrated its official one-year anniversary with us openly asking if we needed it anymore. Sure, it got Disney content, but that just meant it had one more master to serve, and its masters proved who really pulls Hulu’s strings. FX, Fox’s cable network, yanked “It’s Always Sunny in Philadelphia” episodes off the site, and Hulu was pressured into dropping Boxee, which resulted in a very public cat and mouse game between the two (not to mention the tiff it got into with CBS’ TV.com). Under pressure to turn those digital dimes into dollars, Hulu’s less-is-more approach to advertising could be a thing of the past. A subscription service seems imminent for the site, and its future has yet to be determined as TV Everywhere initiatives bring more premium content online (to subscribers only). Oh, and if that wasn’t enough, one of those TV Everywhere companies, Comcast, just bought NBC, so it now owns a chunk of Hulu. — Chris Albrecht

Nintendo

WiiAfter two solid years of rocking the video console world with the Wii, Nintendo took a digger in 2009. The company washed down eight straight months of falling Wii sales with a stock price drop of 60 percent since the beginning of the year. While the game console competition, especially Microsoft’s Xbox, took the lead on integrating the worlds of the web and entertainment, Apple’s iPhone and its posse of developers have overtaken the Wii and DS’ casual gaming mindshare, and Sony sparked hardware sales with a new, slim version of the PS3. And it won’t get easier for Nintendo next year; Sony and Microsoft are both prepping next-generation motion-sensor controllers. Though updates like Netflix rentals will surely help in the interim, at this rate, it may take a new version of the Wii for Nintendo to dig itself out something that’s not due till at least 2011. — Liz Gannes

Blockbuster

It’s easy to point out all the places where Blockbuster went wrong: It stalled on a digital strategy until Netflix had already eaten its lunch, then launched a digital video service to compete with Netflix’s Watch Instantly streaming service. The only problem? It was built on a set-top box that was practically unusable. It tried to follow in the footsteps of Redbox, launching its own DVD kiosk service, but hasn’t gotten much traction on that front, either. And the company has been forced to shut down hundreds of stores, with questions looming about whether or not it can even remain solvent. In other words, it’s spent the last year or so trying to emulate the success of its competitors, but doing so poorly. Given all that, it’s hard to see how the company will turn things around. — Ryan Lawler

Sony

Despite some small victories in 2009, Sony, the one-time digital living room ruler, continued to look more like the king of lost opportunities. Sure, it added Netflix to the PS3, dropped the price on its last-place console (a year too late), and Blu-ray finally looks to be coming around – but overall Sony continued to lose ground due to bad moves and more nimble competitors. It launched yet another iteration of the aging PSP platform when it should have released a game phone, and the company watched as upstart Vizio continued to steal all the connected HDTV thunder.  As 2009 drew to a close, Sir Howard once again talked a good game, but where Sony falls short is not grandiose statements; it’s execution. — Michael Wolf

Blu-ray

blurayBlu-ray managed to show some signs of life toward the end of 2009, thanks to severe discounting of both the hardware and software. Both Wal-Mart and Best Buy were offering players for under $100, while Blu-ray movies were going for as little as $5 as part of promotional bundles with players. Absent that discounting, however, Blu-ray has struggled to persuade consumers to upgrade their DVD players. More critically, the format has been a failure at staunching the hemorrhage of consumer spending out of the packaged media category, which continues to plummet. Meanwhile, digital delivery of high-def video has become an increasingly viable alternative to Blu-ray. Given enough time, Blu-ray will eventually overtake DVD’s market share in what’s left of the packaged media category. But as a strategic move, it’s already a flop. —Paul Sweeting

That’s our list. Who do you think we missed?

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  1. I’ll admit to having turned my nose up at Vizio in years past, but I can’t help but be impressed by the company’s growth. And from what I’ve witnessed at my local Target parking lot, a lot of folks are taking Vizios home for the holidays. That, and Vizio isn’t bellyaching about new TV energy efficiency standards (see our knock against the CEA – http://pro.gigaom.com/2009/12/green-it-winners-and-losers-of-2009/).

    Also, while Blu-ray delivers delicious hi-def, I can’t muster excitement for the format (my own collection is tiny). Netflix streaming + Xbox 360 = many lazy evenings around here.

    Good choices!

  2. @Pedro – I have a Xbox360 and a PS3 – and I find myself hardly ever using the PS3 except for the occasional game and DVD playback (usually not a Blu-ray). As for disk playback, I tend to think regular DVDs on my 360 and my PS3 look great, so I have no incentive to really buy Blu-ray or rent it until there is price-parity.

    Bottom line – Blu-ray isn’t a huge driver for me in making video-buying/renting decisions, and I think most other people are the same way.

  3. Having just returned from CES, I’d add DLNA to the list of winners. They’ve got a lot of CE companies that have built it into products and the functionality looked seamlessly integrated. From Thomson showing femtocells to Samsung phone pictures flipping right onto the big screens and Windows7 PC’s finding all the different devices without real effort (like with the old WMC) – I thought it was very exciting for consumers.

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