Is The Digital Convergence Honeymoon Over?

At D&H Distributing's Mid-Atlantic Show in Hershey, Pa., June 6, several solution providers and digital integrators noted that the sales of digital products haven't approached the massive hype applied to the digital market a couple of years ago when vendors from both markets clamored to get their products out as quickly as they could. Now some of those same vendors seem to be scaling back their convergence efforts. Most recently, Hewlett-Packard suspended production of its Digital Entertainment Center (DEC) line of Media Center PCs.

Slide Show: Divining The Digital Future
At The D&H Technology Show

CRN assembled seven channel executives at the show for a roundtable discussion to talk about the future of digital. The executives agreed the market hasn't lived up to expectations but said there's no single reason why convergence hasn't been more successful.

"I think the forecasts were wrong for it. The industry saw a tidal wave of expectations, but it's really more of a rising tide," said Ted Houser, general manager of Glick Audio and Video, a Lancaster, Pa., integrator. "The tidal wave of anticipation you're looking at is why you see vendors backing out."

Houser added that the services industry hasn't been able to keep up with the technology as well.

"The product is a commodity. The real solution is our skill. That's what has hindered growth. There's not a whole lot of skill and ability out there to sell these solutions," he said.

But all the executives were bullish on the digital future in the long term, including David Kaplan, executive director of Digital Delivery Group, a consortium of regional digital distributors.

"My experience is that things happen quickly in their own sweet time. It's just a matter of time," Kaplan said. "Maybe we're moving glacially, but we're moving from the attachment to the TV world to the network world. There was a time I said products don't converge, they diverge. But I have come to the conclusion that it is an absolute, an inevitability."

Mike Halasz, president of Northshore Technological, Erie, Pa., said the true success of digital convergence lies not in the hands of vendors or analysts, but in the integrators and dealers selling the solutions.

"It's us. We're the only ones that are going to make it stick. It takes a unique skill set to pull disparate products into something that works together for a customer's needs," Halasz said.

He then cited statements made last month by one vendor CEO that convergence is not going to happen.

"He said convergence is a violation of the laws of nature. It's entropy. Things want to move apart. What does that mean for us? HP just pulled DEC because it's not in their best interest. They're all going to act in their own best interests. There's not enough altruism."

But at least one panelist, Jon Layish, president of Red Barn Computers, Binghamton, N.Y., said he has found his services niche with a big help from a vendor in his local market. He's developed a relationship with Time Warner Cable to install home theatre PCs and Internet service into the homes of consumers.

"We've really been excited. We've got major support from Time Warner. They're giving us quite a bit of free advertising to push the concept," he said.

Several of the panelists said the one vendor likely to jumpstart the convergence revolution is Apple, and more specifically with its upcoming AppleTV box.