The ringside seat
It's all over the news these days -- the story of the coming war for your living room. Although it's not generally described in these terms, given the money that's at stake (start adding up the TV industry, the movie industry, the music industry, and the gaming industry), I think it's safe to assume we're on the verge of a battle royal.
Who will control what we watch, play, and listen to for the next couple of decades?
I've been giving this topic a lot of thought recently, both in response to the growing status of Apple (Nasdaq: AAPL ) as not only the premier hardware maker in the digital music space, but as the only online-media distributor with any sort of real credibility with the big content industries and fickle consumers.
It's only a matter of time, a lot of observers seem to believe, before we get a significant convergence between the gizmos we use to relax with in our living rooms. As computers get more powerful, HD television becomes the norm, and more and more users demand the TiVo- (Nasdaq: TiVo ) born experience of video when they want it, how they want it, and where they want it, we'll likely see some major changes in the entire entertainment industry, from how records get made to how movies get released.
As much as I love cool new stuff, I have deeper questions to ponder as a stock follower. Chief among them is: How will this play out for investors? My own bet is that traditional, diversified, consumer electronics brands like Sony and Panasonic are on the way out. My bets for future leaders in the living room are as follows.
Since I mentioned it, I'll start with the little box that could. TiVo, unfortunately, looks to me like it will end up nothing but an outdated verb. This company may have started a revolution, but that beloved little box offers little that can't be duplicated, or improved upon, by any number of competitors.
Keep an eye on Intel (Nasdaq: INTC ) . For all the much-talked-about wars with AMD (NYSE: AMD ) in the server room, Intel seems to do a much better job of getting into people's homes and briefcases. Branded, multifunctional chip sets like Centrino seem to resonate with consumers, and Intel's latest, unveiled in August, Viiv rhymes with jive.
What Intel and Viiv promise is "idiot-resistant" interconnectivity -- my description, not theirs -- between media devices and Windows Media Center PCs. The technology and standards are aimed at a wide variety of products, from traditional computers to form factors more like traditional stereo equipment -- all of which should come on instantly via Quick Resume (Sounds like Robson) technology. If it leads the way to universal and easier-to-use computer-based media machines, Intel will see its products in a lot more places than that funky old Winbox on your desk.
Apple? Here's your real wild card. Although the firm is more tight-lipped than many others in the space, the rumors about a convergence device from Apple have so far gone unfulfilled. Recent entertainment-slanted releases, like the remote control and view-from-a-distance Front Row software that come with the newer iMacs, are a step toward the living room, but not the paradigm-buster that many are expecting. That said, I become more and more convinced that this really is Cupertino's game to win or lose. I base most of that hypothesis on Apple's successes in delivering content in the ways that plugged-in consumers want it. It has been the only outfit with enough muscle to move the music industry, and with the first real download-and-go TV deals, it's making the right moves in the visual realm, too.
I think Dell (Nasdaq: DELL ) is a natural winner in this space, as well. Although some of its consumer products, like its MP3 players, have been perceived as failures -- as has every player when compared to the iPod -- its experience and capacity with high-definition TVs, as well as industry-standard PCs, should give it a formidable set of advantages. As a stock, it's got the advantage of being dropped by the Street for quite some time, making it appear a bargain to several Fools I know.
Finally, dare I say it? Microsoft (Nasdaq: MSFT ) might be the final smart play for your living room. Though Windows "Media Center" PCs have been good for little more than a giggle so far, Mr. Softy tends not to get things wrong forever. Moreover, Microsoft is moving at the market from two sides. In addition to the PCs, Microsoft's Xbox 360 game console has been hailed as a great step forward (even by diehard Mac fans, I might add), with an easy-to-use operating system that makes it easy to set up Internet-enabled services and watch your favorite DVDs.
Foolish bottom line
While I normally don't like to come to investments from this kind of top-down dreaming, I have to admit that in this case, the more I ponder the possibilities, the more I seriously consider buying a basket of all these companies and watching what happens. Of the Big Four named here, only Apple strikes me as a real risk -- and not because I don't think it has what it takes, but because the stock's already priced, to a large degree, as if it will take over this market, which of course isn't certain. But as computers morph from their business-dominated pasts into the integrated, media-serving time-burners of the future, I think it's inconceivable that these Big Four won't lead the way. They might seem big, but they could always get bigger.
For related Foolishness:
Tivo and Dell areMotley Fool Stock Advisorpicks. For a 30-day free trial to the best of Tom and David Gardner's picks, click here.
Seth Jayson wants one of each, please. At the time of publication, he had shares of Microsoft, but no positions in any other firm mentioned. View his stock holdings and Fool profile here. Microsoft is aMotley Fool Inside Valuepick. TiVo and Dell areStock Advisorpicks. Fool rules are here.