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Digital Media Adapters Lack a Market Leader

The installed base of Digital Media Adapters (DMAs) -- those freestanding or embedded devices that allow users to route audiovisual content to their TVs and stereo systems -- is expected to number about 184 million in 2012.

However, according to a new study from ABI Research, only a little more than 11 percent of those will be dedicated standalone devices, and in contrast approximately 85 percent will be embedded in game consoles.

"Game consoles increasingly include DMA functionality, helping to grow the market," says principal analyst Steve Wilson. "The manufacturers are aiming to make their consoles more like media center devices, rather than being just for gaming. The advantage they have is market share: their products ship in large volumes. The big question is whether gamers will actually make use of this added functionality built into their consoles."

DMAs are being embedded in other kinds of devices too, although in much lower numbers. Televisions, set-top boxes, and DVD players are all logical candidates for the technology. Sony recently introduced its Bravia Internet Video Link, for example, which will connect its Bravia line of TVs to specific Internet sites offering online entertainment.

A few other high-end TV makers are apparently following similar paths.

"People want fewer boxes in their homes, not more," says Wilson, "so the opportunity is there for consumer electronics manufacturers to embed this technology; although so far it is largely the computer network manufacturers who are embracing the concept, rather than CE vendors."

Companies now coming to market are aiming to offer a complete solution rather than a simple box that can connect up to a PC. Microsoft and Sony both have online content sites and ABI Research expects that trend to continue with other vendors. DMAs are increasingly providing connectivity directly to the internet as well as the home PC.

ABI Research expects that when the Microsoft Media Center Extender (MCX) 2.0 technology comes to market in the autumn, there will be another surge in interest in products of this type. That said, I believe that it's not at all clear that Microsoft has created the right environment for a successful business model.

Clearly, their prior attempts to crack the market have failed to create any meaningful momentum. Likewise, the attempts by Intel and AMD have been heavy on PR campaigns and light on user adoption and associated market penetration results. To date, a substantive market leader is yet to emerge.

Translation: the DMA market is still a wide-open opportunity -- awaiting real innovation.

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