04.09.2007 — With its Digital Entertainment Center, HP had the best-selling Media Center PC in a CE form factor.

But HP is dropping the DEC, so that leaves only one major brand in the business: Sony. Alienware is coming, but we'll get to that a little later.

Back in October 2005, Sony entered the Media Center market with the XL1 Digital Living System. Nice product, I said back then, but wrong channel. The company planned to offer the elegant looking system through its Vaio division, and only through retail. The computer guys at Sony would be handling the product, not the A/V guys.

Furthermore, Sony was only interested in the mass market, not the specialty custom integration market.

With the introduction of the XL1, I spoke with many of the Sony managers who worked with custom integrators and specialty A/V retailers. They actually knew very little about the XL1, and certainly could not offer the Vaio products to their manufacturer-direct A/V dealers.

Here's what I wrote back then:

At a time when Microsoft and MCE makers are trying to convince folks that the MCE is not a computer, Sony goes and labels its "Digital Living System" with the Vaio brand.

Vaio, you're in for some headaches.

Worse, the XL1 will only be sold through retailers. Evidently, Sony believes the units will fly of the shelf and consumers will install and configure them joyfully. Microsoft claims that some 4 million MCEs have been sold, but what they don't tell you is that only a tiny, tiny fraction of these are living-room form factors. Most are just desktop PCs with an extra piece of $40 software loaded in.

More than a year later, Vaio product manager Xavier Lauwaert concedes, "This is definitely an early-adopter model right now. … We heard loud and clear that this was, like you said, the right product but the wrong channel." (By the way, the product manager insists the XL3 was not named after him; it stands for Extended Living Room, not Xavier Lauwaert.)

He explains that Media Center products -- Sony's and otherwise -- "still requires an assisted sale," with resellers demonstrating the product in the "proper environment."

Right, we know how well the mass marketers do that.

On the other hand, Lauwaert acknowledges, "The [custom A/V] channel actually wants to sell it. They're not just hoping it will sell sitting on a shelf."

Sony Warms up to A/V Channel with XL2

By the second generation of the Digital Living System (XL2), introduced in mid-2006, Sony was starting to recognize that maybe the best prospects for selling MEDIA CENTER was through ENTERTAINMENT specialists, not COMPUTER specialists.

"We started opening up to A/V dealers," Lauwaert says. "We have our traditional, established IT channel, but we used our internal sales team who was traditionally more focused on A/V products, and asked them to start messaging this product to their own channel.

But it is the XL3 that Lauwaert says will really interest the channel. "XL3 is the product that I wanted to ship originally," he says. "We've reached the point where technology enables us to come in with a very, very strong HD story, justifying why you would want this in your living room."

The product features a Blu-ray read/write drive, and will probably be the first major brand of Media Center PC to ship with a CableCard solution in mid-April. (Other companies, including Niveus, have shipped perhaps a handful of CableCard-enabled units, but I don't believe any has shipped production units, what with the delays from ATI, which makes the digital cable tuners.)

Sony's XL3 fed life high-def cable content through a built-in CableCard to a TV in the Exceptional Innovation booth at EHX Spring in March.

We saw the XL3 in action at the Exceptional Innovation booth at the Electronic House Expo in March, where the product was streaming real live digital cable, including premium channels, through its internal CableCard tuner.

Lauwaert's group showed the XL3 earlier this year at the Sony Open House, where A/V integrators "had an unprecedented level of interest in the [XL3/Media Center] platform," Lauwaert says. "To me it was sort of a turning point. It takes time to be appreciated."

CONTINUED: Will Sony Commit Long-Term to the XL3 Media Center?