Getting Control of Digital Media

Microsoft and HP as well as smaller names want to help consumers keep better tabs of their growing collection of photos, music, and videos

First, you put a few digital photos of the kids on your computer. Then you loaded up music for your iPod, everything from Belle & Sebastian to Bach. And then you started storing videos on your computer, of baby's first steps or junior's homemade movies. Before you know it, the hard drive on your PC is overflowing with digital media—and you're one serious crash away from losing precious mementos of days gone by.

Where there are challenges, however, there are also opportunities. In the past few months, a new batch of products have been introduced, aimed at helping everyday consumers get control of their digital media. Tech giants such as Microsoft (MSFT) and Hewlett-Packard (HPQ), as well as smaller brands familiar to tech enthusiasts, are jumping into the business. Steve VanRoekel, a senior director at Microsoft, which makes the software for such devices, says this is the "natural next evolution" of computing in the home.

Still, it won't be an easy sell. Consumers may be growing queasy over the possibility of losing their photos, music, and videos. But most aren't propeller-headed geeks. Even though they may know they have a problem, that doesn't necessarily mean they'll be willing to deal with the costs and hassles of the potential solution. "For the average consumer, it's a hard-to-grasp concept," says Oliver Kaven, product manager at Buffalo Technology, one of the leading makers of consumer digital storage products.

Keeping Things Simple

Here's a primer: The whole idea of consumer digital storage is to give people another place to store their digital photos, music, and movies. It's usually a separate box that contains a hard drive much like the one on your computer, and it most often sits beside your PC. You can use it as a backup to your computer, with much of the same data, in case of a crash, or you can use it to hold all of your digital media so your computer doesn't have to bear the burden.

In the past, it was pretty much only geeky do-it-yourselfers who bothered with separate media storage. But now tech companies are trying to push the technology mainstream, with products that are easier-to-use and more attractive to the eye. Microsoft Chairman Bill Gates unveiled new software, called Windows Home Server, for digital media a year ago, at the Consumer Electronics Show. Hewlett-Packard introduced the first device to use the software, its MediaSmart Server, in November. Seagate Technology (STX) has introduced a family of products, called FreeAgent, designed to help consumers back up their digital content (BusinessWeek.com, 1/15/07).

The goal of Home Server products is to keep things simple. The devices come with two cables—one for power and the other to connect to the home computer system. Consumers need to slip a disc into their PC, answer five questions, then they're up and running, with their files backed up automatically every day. "We've stripped away the complexity," says VanRoekel.

Marketing Approaches

Hardware companies are trying to make their products even more useful and give consumers more incentive to buy. "People said, 'I want [a Home Server], but it's got to work with iTunes,'" says Allen Buckner, senior product manager of HP's Managed Home Div. So HP baked software into its MediaSmart Servers that dish up music files through iTunes to multiple PCs at the same time.

Microsoft has put together a marketing campaign, which appears mostly online, aimed at demystifying Home Servers. Videos poke fun at the idea of a "stay-at-home" server, suggesting that kids might mock the idea. The company has even come up with a spoof of a children's picture book called Mommy, Why Is There a Server in the House?

Buffalo Technologies, which caters to the market with products such as its TeraStation, doesn't have the marketing power of Microsoft. So it's tried to focus more narrowly, placing ads in photo enthusiast publications. "People are slowly realizing that they can't leave their files on PCs anymore," Buffalo's Kaven says.

The dilemma is only going to grow. Consumers are getting more powerful cameras and camcorders, and downloading more movies from the Internet. With that kind of tailwind, Forrester Research (FORR) believes the market for consumer servers will hit 4.5 million units by 2012. It's a huge potential opportunity—if companies can figure out the right approach for making the devices appropriate for the mass market.