Reframing Digital Entertainment

As prices fall and services expand, digital frames are poised to become the new media hearth

by Olga Kharif

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As Alan Phillips' family gathers around the table in their kitchen's breakfast nook, they're greeted by a massive, 22-inch wall-mounted photo frame. But it's not displaying shots of the kids, or the latest trip to Orlando. This frame serves as a screen that broadcasts news headlines, box scores, and traffic snarls around Boston's Big Dig.

The frame picks up these feeds from FrameChannel.com, a sort of a YouTube for digital photo frames, owned by Frame Media, a startup run by Phillips. The service lets digital frame owners sign up for more than 300 types of content such as National Geographic nature shots, Garfield cartoons, and Bible quotes, delivered to subscribers' frames through wireless Internet connections.

Sales Are Taking Off

Phillips is hoping to benefit from demand for digital frames, which has taken off thanks to tech advances and the proliferation of in-home wireless connections. Digital frames could eventually supplant other electronic devices, including music players and some computers. The Consumer Electronics Assn. expects 3.26 million digital photo frames to be sold this year—more than double the figure for 2006—generating $310 million in revenue. For the first time, digital photo frames made it onto the CEA's list of consumer electronics best sellers this year a group that includes Apple (AAPL) iPod accessories and GPS navigation devices.

Digital frames are hardly new. Eastman Kodak (EK) first released one in 1999, for $300, but at that price it found few takers. Microsoft (MSFT) tried to breathe new life into the devices in 2004, with the company's chairman, Bill Gates, demonstrating one at the Consumer Electronics Show that year. But interest in digital frames is on the rise as frame prices plummet and more homes adopt wireless fidelity, or Wi-Fi, Internet connections that make it easy to zip photos and other content from device to device.

More than half of all digital frames sold in 2010 will be able to connect wirelessly to a network, up from 4% currently, according to Steven Joe, CEO of frames maker D-Link Systems. These devices won't just display news headlines and some of the 1.7 billion digital photos snapped each day around the world. They'll also play songs, Internet video, and Web radio broadcasts. "Once the frame becomes wireless, it becomes an information appliance," says Frame Media's Phillips. "We believe this will be the fourth screen, and it will be in multiple rooms within the house."

And with a broader range of screen sizes (a 40-inch display is expected to debut some time this year), digital photo frames might also compete with PCs, TVs, and other electronics for users' time and attention. "Frames could supplant portable media players," says Jack Rieger, a product marketing manager for Kodak's consumer digital group (BusinessWeek,com, 1/30/08). "There are so many directions this category could go into, it could bump into a lot of different products."

An All-Purpose Device

Typically used in kitchens and bedrooms, frames can double as alarm clocks and electronic calendars, notifying users that a movie they've wanted to watch is about to start, or that school got canceled this morning. Researchers at Microsoft, which recently teamed up with electronics maker Samsung on digital photo frame software, are developing programs that would turn frames into gateways to online social networks, offering a rundown of what friends are up to.