Conclusion: Betting on Convergence

Microsoft’s home entertainment strategy is predicated on convergence: the idea that consumers will pay for the convenience of having a single device-the PC-as the command-and-control center for all of their digital entertainment needs in the home. Historically, however, the market has favored divergence in nearly all consumer technology products, from home electronics to mobile devices.

To succeed, Microsoft must not only get consumers and partners to buy into the idea of convergence but must also overcome challenges such as making its digital media technologies easier to use, explaining a confusing array of products, aligning partners to support critical pieces of its strategy in a consistent and coherent fashion, and price pressure in a rapidly changing market.

Why a Computer?

The most significant challenge to Microsoft’s home entertainment strategy is habit: consumers are already accustomed to using dedicated consumer electronics devices for home entertainment, such as DVD players, digital video recorders, radio tuners, CD players, televisions, and stereos. Occasionally, consumers might buy a home theater system that lets them combine two or more of these functions in a single device.