The Crystal Ball - A Look Ahead

If it weren't for trade shows companies would probably have a hard time announcing (and re-announcing) their "new" stuff. Computex in Taiwan gave us a flavor of what to expect in the computer and CE industries by the end of the year -- more of the same but cheaper and with more bells, whistles. InfoComm is taking an interesting twist as it grows from being professional only to making their products more available to consumers.

At trade shows you quickly realize that there is a lot of truth to John Guare's play and the movie adaptation - Six Degrees of Separation. There may well be billions of people on this planet but manufacturers and show visitors run in the same circle.

Computex
This year that circle - which grew to about 130,000 people - there weren't any breakthroughs, just a lot of refinements of the concepts that had been shown at CES and CeBit early this year. By the time the holidays roll around the friends and friends of friends will have wrung most of the costs out of the products so we will have something we can affordably buy.

Once you sifted through the noise there weren't any killer applications or product breakthroughs you come to expect with major shows. Many attributed this void to the shortened product lifecyles and the need to squeeze pennies out of the products as prices and margins continue to drop. When you are at the product development table most managers will make safe incremental bets and enhance current products rather than rolling the dice on high-risk products.

Dual-core processors from Intel and AMD created a lot of interest at the show, as did the refinements of liquid cooled processing. Then too there was the integration of more and more technology on the same old products to make them "new and exciting."

PCs - desktop and notebook - had cleaner, crisper screens, wireless enhancements, slightly improved batteries, incrementally faster graphic chips, better audio and bigger hard drives. Portable devices - they can hardly be called phones anymore - had better screens, audio/video download capabilities and yes more storage capabilities/options.

Of course the two product categories are important to the industry's health. IDC recently announced that they have begun shipping their second billion PCs and that the growth potential remains strong (Fig 1). That and Microsoft's announcement that they will ship at least some flavor of Longhorn this next year which will mean new versions of the application software will be required by users put the sparkle in a lot of people's eyes.

While Intel and AMD set the ground rules for the dual-core processor discussions, the companies that could benefit most from the products will probably be Taiwan's Via, Taiwan Semiconductor Manufacturing Co (TSMC) and United Microelectronics Corp (UMC) in the audio and video content products. Both are getting a lot of interest in their video, audio and peripheral chips. Microsoft's announcement that they will ship at least some flavor of Longhorn this next year which will mean new versions of the application software will be required by users put the sparkle in a lot of people's eyes.

To build excitement around the system potential of the new chips and product advances, firms showed a variety of cube and notebook home entertainment systems (see sampling of product photos) like Intel's own PC prototype and Asus' new MC cube. Some of the systems delivered the same feel as CE products by incorporating InstantON. On in a flash they opened the world of home entertainment with audio, photo, video and TV content.

As you might expect with some of the firms' ability to mirror ideas (much nicer way to say copy) was the beginning of microminiature PCs. AOpen was one of the first out of the gate with an economic PC Mini. By the time the holidays and CES roll around expect to see a wide array of versions. We can also expect whole families of complimentary storage - like ADS Tech's Mini drive kit -- and digital media players.

Wireless was everywhere at Computex and everything was wireless. Not just mobile solutions (which were huge) but there was a lot of WiFi and home networking solutions around. Depending upon the booth and the company focus people were "explaining" how MC PCs, MC CE, Smart TV or Service Provider CE (Fig 2) solutions were going to be huge in 2006. They were all partially right because people will probably buy multiple home entertainment solutions.

But we have a long way to go. According to a report by the Diffusion Group in May of this year the average number of networked devices worldwide last year were three and that even by 2010 the number would only increase to four. Our bet is few of those are entertainment devices at the present time.

The big challenge will be developing a "must have" demand at the consumer level for networked systems and entertainment.That education has a long way to go. According to a January Harris Interactive survey 95 percent of the people who were asked why they didn't have a home network responded simply that they had no need. Other reasons given included HW/SF price, don't know what to purchase, ease of set-up, compatibility issues and in adequate after-sale support.

The phone manufacturers - who are everywhere in Taiwan - understand that folks now want more than a simple cellphone�ok not you or us but someone does! Units were on display in every shape, color and form. They offered all of the multimedia capabilities people believe they want (Fig 3) or at least those that service providers want to sell. The new units are positioned become MP3 replacements, personal/portable TV sets, email/IM delivery units and oh yes by the way, telephones.

Actually bigger, better screens were everywhere along with the growing promise of wireless entertainment and communications everywhere.

Apple Does Intel
We aren't about to add to the noise level Jobs received when he announced he was shifting to the Intel platform. The press reacted as though Otellini (hint that's Intel's boss) had won the equivalent of the Nobel Peace Prize or the combined worth of HP, Dell and Lenovo.

We know people will fall on the sword for Steve but for gawd sake Apple has less than two percent of the total PC market! People refer to Apple as the only Intel hold out while Waite's Gateway has a greater marketshare and people simply go hohum regarding the firm's success.

Will people really know there's eventually going to be an Intel chip lurking inside the Mac? Probably not. Only the editors/reporters/reviewers who are in lust with the platform know what is really inside.

Apple will probably pass up the Intel marketing money and not put one of those fantastic "Intel Inside" labels on the system and you can be certain that even though he shares the HW platform he won't invite Gates to put Windows on HIS systems!

The key to Apple's limited and mystical success has nothing to do with the processor but the OS and applications. Everything else is sex and sizzle.

To paraphrase Spielberg when he heard people had been standing in line for a week for the latest Star Wars opening�"get a life folks�it's only a computer!"

The biggest surprise to us was the fact that he announced the switch wouldn't really take place until late next year which really gives us to purchase a new G5 right away while they are still available.

Only Steve would have the cajones to fly in the face of business logic and announce a major platform switch so far in advance. We know he knew Adam Osborne and the facts behind the demise of Osborne Computer and the initial purveyor of the "portable" computer (roughly the size and weight of a portable sewing machine). Adam announced the Osborne 2 months before the rollout, production problems stalled shipments and the company went from 100 to ZERO in 2.4 sec. It was so fast and so bad the company is now an MBA case study in many colleges.

Question is, how long will folks stand in line waiting for the next generation Intel-powered Mac? This will be the art of spin at its best. Could be worth another MBA case study???

Seeing at InfoComm
Remember that 6 Degrees? CES used to be consumer toys. NAB used to be broadcaster toys. InfoComm used to be AV folks toys. They are now in each other's toy box.

InfoComm is still about projection systems and viewing solutions (Fig 4). But increasingly the best home theaters are projector-based, not big black box sets.

Most of the products displayed at InfoComm are targeted for business, education, government and religious institution applications. Most are still sold through professional AV dealers and AV specialists but the market potential hasn't gone unnoticed by CE resellers.

With home solutions now available starting below $1,000 the CEDIA dealers/installers will get increasing pressure from the Best Buys, Comp USAs, Fryes and J&Rs of the world. The professional side still represents the greatest profit for the individual participants (Fig 5) but with the lower priced products available even the pros will look long and hard at the "home" products for the office. On the other hand, the consumer segment represents both volume and brand recognition for the manufacturers�that's important to all of us today.

The big players in this area are the same firms that are producing the plasma and LCD sets - Mitsubishi, Panasonic, Sony, Toshiba, Hitachi and Sanyo. Of course they are getting competitive pressure from Dell, HP, BenQ, NEC and Epson who see a whole new world of sales potential. They ranged from Hitachi's high Lumen projector to Dell's pocket-sized projector.

There were some breathtaking LCD and Plasma screens shown but we saw some really exciting DLP projectors. They sorely tempted us to find someone who wanted a really good "big black box" so we could have an automated screen and one of the new DLP projectors. The idea of being able to tuck away your TV viewing when not in use is going to be appealing to lots of people in the years to come!

With the increasing pressure around the globe for TV signals to be sent digitally so HighDef can be everywhere will rejuvenate sales across the entertainment spectrum. According to In-Stat there will be about 15.5 million sets installed this year and that by 2009 the number will increase to a very respectable 52 million. These numbers sound credible when you see the STB and DTV semiconductor projections (Fig 6).

The only thing that can slow this growth down will be price.

While both the HD and BD blue laser teams were at the show promoting their solutions as the way ahead leaders in HighDef content, no one said a word about what agreement had been reached with Hollywood and broadcasters about the broadcast flag issue. If you are unable to time shift your shows, will DVD recorders or set-top boxes make a lot of sense to the consumer?

JVC created a lot of stir with their announcement of a 3/1 video recorder/player and HighDef player. Both used today's red laser technology. Their spokesperson said the player would support IP network streams, HDV's MPEG-2, Windows' Media Video (WMV9) and content from today's HD video camcorders. Both solutions are a little expensive initially but if some of the Taiwan burner, recorder and player manufacturers take notice and JVC ramps production those prices could come down very rapidly.

We agree that there are several HighDef MPEG-2 and MPEG-4 codec standards being talked about right now. But the cost to an OEM of adding 2-3 of them to their units will be significantly less than paying the royalties for either HD or BD (or both) plus the cost of the blue laser read/write mechanisms. Especially if they can store that content on today's low-cost single and double layer DVDs.