Is it correct to assume that we, as consumers, are going to be happy to have a one-box solution for our entertainment needs, a little television, a little interactive television, a little Web browsing, some game play, and maybe some minor computing tasks such as e-mail, or online banking? Sony, to its credit, has placed a stake in the ground with PlayStation 2, and that's probably the most interesting thing aspect of the company's strategy. On the other hand, the jury is out as to whether the general consumer will be as enamoured of the strategy as the typical gamer. Whatever the eventual outcome of Sony's strategy, the simple fact of the matter is that it is primarily driven by the demands of the experience that the content creates, rather than any specific piece of technology. I don't think many of you are going to be raving about the Emotion Engine if the Ridge Racer is just a dolled up version of the existing one.

That isn't to say that you can't classify the set-top box market as a series of device segments. I have done something akin to the following in the past.

Internet and telephone functions - combined - Most aggressively being pursued by mobile phone vendors. The focus is on e-mail applications, and information feeds such as a stock market ticker. The limitation to greater use is the screen size. I'd go as far as to put handheld devices such as the Palm Pilot in this category in the future. Internet and game console functions - combined - Sega is there today, however, the market for an Internet-enabled game console remains unproven. In addition, the online gaming revenue model is something that still needs work. There are some success stories, but the market has a long, long way to go before it matures, and consumers open up their pocketbooks for it as readily as they are willing to for other commercial activities on the Web. Internet and digital media playback - combined - Consumer electronics manufacturers would like to take their DVD players and turn them into Internet access devices. Does it make sense? Only if Web access is seamless, and consumers could rely on one ISP to deliver a single service to any number of access devices they may have in the home. Only then, will it make sense to add Internet access features to all manner of digital audio and video devices. Internet and digital television services - combined (eg Web Television) - The development of a standard platform across cable, satellite, and POTS may accelerate the market for this type of product, but what's that platform. Microsoft is hedging its bets with Windows CE (WebTV is now based on the Windows CE OS), and the PC. Then there's the question of who gets to deliver the ISP services through which pipe. Again, unless ISPs deliver their services seamlessly across any number of pipes, there is only proprietary markets which will be too fragmented for the kinds of economies of scale that will deliver consumer price points.