Some have questioned the notion of a social network focused on music, but we have seen a number of companies trying more media-focused approaches, including Apple’s competitor Microsoft, which married music and social networking with Zune in the name of discovery. Others include Copia and GoodReads, which have created social network for books, and gdgt, which has done it around electronics community reviews and desirability. Facebook, of course, is a platform for sharing all manner of media, but media discovery hasn’t been well-integrated.

What Zune mostly has over Ping is the ability to share full-length tracks with other subscribers. Discovery is an incentive to keep paying the membership fee. With Ping, there is no membership fee, but one is limited to sharing 30-second samples. In this respect, Ping is really more like the community reviews and forums on Amazon that help to drive commerce. Indeed, Ping is integrated into the iTunes store on the iPod touch and iPhone. It’s social networking not as an ad-supported end, but in support of commerce.

However, as both companies realize, they are not completely above the fray. In Q1, for example, as Verizon went on a smartphone tear that marked the rise of the original Droid, Samsung pulled far ahead of LG, which suffered as more Verizon customers adopted smartphones instead of its feature phones that are popular at the carriers. In Q2, as Verizon ended its buy one-get one smartphone promotion, LG made up some lost ground with Samsung. LG also launched the Ally, its first Android smartphone, at Verizon Wireless.

For its part, Samsung, which has dabbled in the Android market with the Moment at Sprint and the Behold II at T-Mobile, has made a multi-carrier assault with four flavors of its Galaxy S device. The Captivate and Vibrant have already launched on the nation’s largest GSM carriers, while the Epic 4G and Fascinate remain on tap for Sprint and Verizon. As Samsung pushes forward on Android and Bada, and as LG becomes a lead Microsoft partner for Windows Phone 7, the next year will help to determine if thee market leaders have been sleeping giants in the smartphone market.

Best Buy has not yet rolled out enhancements to its store to promote CinemaNow and its music service Napster in-house although that is coming, according to Ryan Pirozzi, director of digital video at Best Buy. Rather, the company is now taking steps to drive connected televisions, including having connectivity products in its AV sections instead of pushing people to the computing section to purchase them. And while it is easy to get caught up in a vision of everything-everywhere Best Buy says it will start by focusing on the big-screen experience targeting TVs and Blu-ray players. It will offer a la carte buying and renting while continuing to evaluate other models.

One question that has been looming in the background has been whether Best Buy and Walmart will seek to block each other’s digital video services. Best Buy says that it will keep TV services a level playing field and not block Vudu or other competitive services. Indeed, at Google IO, Best Buy CEO offered the retailer’s support for Google TV. As I noted in an article I wrote for the Tech Illustrated publication NPD distributed at CES 2010, there are several reasons why TVs may not evolve to have open Internet access the way TVs and mobile phones do, but Best Buy’s restraint should simplify SKU management for manufacturers and service choice acquisition for consumers.

On the other hand, Best Buy will be far from a passive provider of digital content. The company is looking to link its Napster CinemaNow and Rewards programs, which could enable interesting bundling capabilities or promotions for the company’s best customers. Still, Best Buy has no illusions that the over-the-top video business will be anything but a slow march for the next few years as broadband and home networks evolve.

Still, that exclusivity has made it difficult for consumers who would like to kick the Kindle’s keyboard before buying the product, an advantage that Amazon’s old rival Barnes & Noble has — and is exploiting — with its Nook device. While the Nook also began as a device distributed exclusively via its retailer, both products will now be sold indirectly, with the Nook on the shelves at Best Buy and the Kindle coming to Target.

 
The expanded distribution makes sense given the state of the e-reader market. Like other portable digital content devices, such as MP3 players, e-readers are high-tech products that appeal to consumers at Best Buy, and the retailer is devoting shelf space to them. However, like digital picture frames, they are also lifestyle products that have relatively strong appeal for women, hence the Target fit. NPD’s research has also indicated that e-readers are popular gift items, and having e-readers present at these retailers will enable them to partake further of the fourth-quarter frenzy of the holiday sales season.

 
Ultimately, both Amazon and Barnes & Noble care more about their digital bookstores than their digital book readers. Barnes & Noble, for example, is also the default bookstore on the forthcoming Plastic Logic and RCA devices, and Amazon, of course, will be happy to sell you a book to read on your iPad as well as on its Kindle. By opening up distribution, these retailers maximize their potential to sell more of their literary candy by having their candy machines in the homes of consumers who might not be as inclined to visit a physical or online bookseller. It also sets the stage for having a broader, more mainstream variety of content available to e-readers beyond bestsellers.

Paul, therefore, has good precedent to suspect that cable companies will frown upon Hulu’s offerings. But there’s also at least one reason why they might not. Putting a price on the value of the Hulu service enables cable companies to position their own TV Everywhere services directly against Hulu. This is far more challenging to do against a free service consumed by people unwilling to pay for subscription TV regardless of how it is delivered.

Paul also notes that Internet-connected televisions (which could be easy targets for blocking unless manufacturers strike deals with Hulu) are growing in popularity, but so are other pathways to the TV. According to NPD’s Retail Tracking Service, networked content devices have seen strong growth since the beginning of the year. Some of this has been due to lower-priced networked music products from Sonos and Roku. But the most significant new entrant has been Netgear’s Push2TV WiDi receiver that works with the new video projection technology integrated into certain notebooks using Intel Core i3 and Core i5 processors. Dell, Toshiba, and Sony have been among the earliest to support WiDi, while Netgear has been the first out of the gate with a receiver that works with all these brands.

The lesson behind WiDi’s success is that consumers will go to the trouble of bridging the PC and television if you lower the technical and financial barriers to doing so, and it bodes well for future technologies that seek to simplify wireless HD video transmission such as WirelessHD and WHDI. Perhaps by the time those technologies are ready for the masses, Hulu — or whatever version of its service that meets with MSO approval — will offer great flexibility at a price that entices consumers.

Revenue stream diversification in the cellular service market is also working in Best Buy’s favor. While Best Buy Mobile enables the retailer to gain more experience with the subscription model, increasingly we will see models for connected devices that are either fully subsidized (such as those for e-readers such as the Kindle) or pay per use plans such as the iPad. At AT&T’s briefing at CTIA, it was clear that the carrier is opening its doors to a wide array of devices that include the familiar (PNDs) to the emerging (the OpenPeak Web tablet) to the quirky (a connected dog collar). Regardless of whether it’s participating in the heart of the cellular market or preparing for the next generation of mobile electronics, retailers will need to master the art of selling the connected product.

Indeed, the lifetime subscription option haunts TiVo whenever it tries to upgrade its hardware, since the lifetime subscription is tied to the life of the device, not the owner. Upgrading from TiVo’s Series 3 to its new Series 4 means the customer has to purchase another lifetime subscription to avoid monthly bills. Lifetime subscribers, then, are less likely to upgrade, particularly given that TiVo Premiere focuses on polishing features already available to Series 3 owners, as opposed to offering extensive new capabilities.

Because of this, subsidized distribution of cable and satellite DVRs, and a host of TV sets and Blu-ray players offering many of its broadband entertainment features without any subscription, it will be a challenge for TiVo Premiere to reverse the fortunes of the DVR category at retail. In 2009, there were only 4 percent fewer DVR units sold at retail than in 2008, but 2008 was a miserable year for the category, with units down almost 40 percent. However, with prices starting at $299, the TiVo Premiere should at least restore some of the declines we’ve seen in average selling prices, which fell to $214 last year as TiVo closed out Series 3 inventory.

Sri Peruvemba, VP of Marketing at EInk, cited the accuracy of DisplaySearch’s forecasts for e-paper as he told a compelling story about the wide array of e-readers we’ve seen introduced since the debut of the Sony Reader, particularly outside the U.S.

During the Q&A session, one attendee acknowledged the potential for these products to enable “a library in your pocket” as transformative for developing nations. Sri also noted that the arrival of textbooks for e-readers, which are seen by many as the key to driving strong growth beyond leisure readers, is coming sooner rather than later.

On the other hand, he was nonplussed about the iPad, falling back on the superior readability and battery life of e-paper. He also noted that the forthcoming Apple slate would be much heavier than a typical e-reader - a factor that consumers would feel as they tried to hold the device in one hand for extended sessions.

As noted in NPD’s e-Reader’s Snapshot report last year, consumers interested in e-readers want content such as newspapers and magazines. These publications’ need for color, interactive multimedia, and video were cited as opportunities by Brian Gally, senior product director for Qualcomm MEMS Technologies, which has developed the Mirasol display.

While a Mirasol device prototype I saw at the show was certainly impressive, what was even more impressive was the best-in-class battery life improvements the company claims we will see for these devices. These claims will be put to the test soon, as Qualcomm notes that we’ll see products using Mirasol displays launch before the end of the year. For EInk’s part, Sri countered that it would offer color e-paper products before the end of the year, and that it had video working in the labs.

In my questions following the presentations, panelists addressed how cash-strapped publishers would be able to afford investing in reinventing their magazines developing expensive video and multimedia assets, and how the greater content consumption demands would affect the free cellular access that has helped to enable the Kindle’s success.

There were no clear answers, but both men expressed great confidence that a wide array of display opportunities ranging from power-hungry high-volume handsets to large flexible digital signage would provide plenty of room to maneuver around the LCD juggernaut. Indeed, in their worlds, the future is so bright one will need a reflective display.

We have certainly seen large retailers buy into these kinds of services before, such as Best Buy’s nascent acquisition of Napster in 2008. Since then, Roxio snapped up CinemaNow, which also offered a mix of models of obtaining video-on-demand, but Vudu was further along in its ties to consuming content on televisions and thus a more robust competitor to DVDs and Blu-ray discs, particularly with its relatively high video quality. Vudu had also emerged as one of the key alternatives to Netflix for digital viewing, and its lack of a subscription requirement has made it more palatable to studios for digital distribution of movies day-and-date with the DVD/Blu-ray version.

As I blogged before regarding the Barnes & Noble Nook, there are untapped opportunities for retailers to more tightly tie digital distribution with the in-store experience. While Vudu currently doesn’t support mobile devices that consumers could physically bring to Walmart stores, consumers could rent an older catalog title via Vudu and get a discount coupon to pick up the modern remake on Blu-ray in the store.

Certainly, attributes of the iPad held appeal for some e-reader owners. According to NPD’s recent report, e-Reader Owners: Attitudes and Usage, about a quarter of e-reader owners expressed interest in having a touch screen in their next e-reader, and a third of e-reader owners said that they wanted a color screen in such a device. Apple platforms also featured prominently as alternative devices for e-reading, with the iPhone serving that role for nearly a fifth of e-reader owners aged 18 to 34.

However, e-reader owners overall seem to appreciate the fixed purpose and optimization of their device, with about 40 percent of e-reader owners saying they were looking for more battery life in their next e-reader whereas the iPad offers less than e-paper-based devices. Furthermore, the majority of e-reader owners said they had taken advantage of no supplementary functions, such as Internet access or playing back music, on their e-reader. (Yet, part of this could be attributable to these experiences being less engaging than they are on the iPad; Barnes & Noble noted this when explaining its decision to exclude Web browsing functionality from its Nook.) Then there are the pricing differences, not just the $240 premium that the least expensive iPad holds versus the Kindle 2, but in Amazon’s subsidized wireless broadband that can be justified due to the limited and transaction-oriented nature of its 3G access.

The iBooks functionality of the iPad has received disproportionate attention because it is new, because it touches a growing category that attracted many new entrants at CES, because it addresses another device that has wedged itself into that narrow chasm between smartphone and notebook, and because it captures the optimism of a media that generates words.

While the iPad may signify the kind of device that represents much of the future of e-reading, it is something new. Rather than throwing cold water on the Kindle, the iBooks feature will ultimately compete far more for attention with the device’s other content-consumption features for those who see the value in a converged product.