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Media Center PC Designed for Early Adopters

The past two months have seen a series of movie download deals involving AOL with Intel, Amazon with six major movie studios, and others, bringing the personal computer closer than ever to a more defined media-centric role.

However, the problem with most current media center PC designs is that they are still conceived for the early-adopter segment in the marketplace. The physical design and the user interface is still lacking mainstream appeal. Therefore, these deals may give the technophile consumers another compelling reason to own media-capable PCs.

Media center capabilities are seen as value-added features that enable PCs to function as mini entertainment systems in addition to their role as Web surfing, email, productivity tools, and increasingly as Voice-over-IP solutions.

IDC believes that the success of media center PCs will be closely linked to the wider availability of content that is now being pushed to consumers. The potential for that success is evidenced by iTunes' sale of 125,000 Disney movies in the first six days of its service offering.

"Today's shipment levels of PCs that serve as digital hubs in living room entertainment systems remain too low to be a factor in the overall consumer PC market. However, shipments of media center-equipped PCs are increasing at a phenomenal rate," says David Daoud, research manager, IDC's Personal Computing and PC Tracker Programs. "The proliferation of broadband in households worldwide is driving increased use of the Internet for media applications, including audio and video playback and downloading in a multitude of formats and quality levels. As a result, IDC finds that PCs are increasingly used as entertainment devices that complement the traditional living room entertainment system, not replace it."

IDC's latest research includes:

- In the short term, PC makers, operating environment and software publishers, and component suppliers will make concerted efforts to raise consumer awareness of media center PCs. Already a large share of the desktops currently sold to the consumer market, and to a certain extent notebooks, ship with Microsoft's Windows XP Media Center Edition as the de facto operating environment. This push is expected to help smooth the transition to Microsoft's Vista Home Premium when it is released early next year. Additionally, Intel and AMD, and other players in the industry, have embarked on similar initiatives to boost consumers' entertainment experience in the home.

- This year, 5.85 million media center PCs will ship worldwide. These systems will have the software and hardware necessary to qualify as media center units, with both the media center operating environment and combined TV tuner and remote control. The value of this market is estimated at nearly $6 billion, with the U.S. market accounting for 46.3 percent of the total.

- In the longer term, based on the most likely scenario, worldwide shipments of media center PCs will expand at a compound annual growth rate (CAGR) of 41.3 percent from 2005 to 2010, with the U.S. market increasing at a CAGR of 34 percent during the same period. In 2010, IDC expects worldwide shipments to reach 27.5 million units, with 9.5 million units absorbed in the United States, generating a worldwide revenue opportunity of $29.4 billion. The U.S. revenue opportunity in 2010 will be $12.6 billion.

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