Dreaming of a Blu Christmas

Price compression, evident in Blu-Ray players, is rampant in the home consumer electronics industry, reports the WSJ.

Point solution devices will face price compression until they are integrated into multipurpose devices, like XBox 360 and PS3. Over the past 10 years, the mobile phone has merged digital cameras, phones, and small computers leveraging decreasing electronics costs. In the same vein, integrated stereos combined amplifiers, tuners and tape decks in the late 80s and early 90s. Following this path, the Blu-Ray DVD, dedicated streaming devices and video game consoles, will be merged into a single unit.

Today, video gaming consoles give us a view into what a unified box might be. They offer streamed HD content, local and web based gaming, web browsing and connectivity to home networks. The next generations of these boxes will continue to improve performance slowly, but will instead seek higher margins through the provision of premium content as hardware, like Blu-Ray, hurtles toward commoditization.