issue: April 2007 APPLIANCE Magazine
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by Tim Somheil, Editor
Why can’t our consumer electronics all just work together?
In many ways, consumer electronics bring people together like never before. We communicate—instantly, globally, inexpensively. The consumer electronics industry itself seems continually amazed at the level of electronic sophistication that can be crammed into a tiny metal case.
The 2007 Consumer Electronics Show (CES) is vast by any measure, and it’s somewhat ironic that the most significant single consumer electronics device on the market was not officially on exhibit there. That industry-changing device, the iPod, was out in California, where Macworld San Francisco 2007 was taking place at the same time. CES promoters must have been chagrined that the one consumer electronics product announcement snagging the most media coverage of the week came out of Macworld, with the unveiling of the long-awaited iPod phone, or iPhone.
iPod was still everywhere at CES in the form of the massive iPod accessories business that now seems to encompass every aspect of home entertainment. Even brands like RCA, which makes competing digital audio players, were eagerly launching new accessories for the iPod.
MP3 players drive the audio market, and the CEA projects that MP3 players will account for 90 percent of the U.S. $6 billion in revenues for the portable entertainment market. Thirty-four million MP3 players shipped in 2006 and an additional 41 million are expected to ship in 2007.
Other product categories that will see substantial growth in 2007 are PCs, accessories and digital imaging devices. In 2006, shipment volumes of laptops eclipsed their desktop counterparts. CE accessory sales also will grow in 2007, to $11 billion, in large part due to consumer’s growing need for all things portable. Total digital imaging shipments are expected to exceed 32 million units, with revenues projected to reach $8 billion, making 2006 and 2007 the best revenue years for this category.
Much of the big news at CES 2007 was about next-generation, high-definition DVD, infamously offered in two competing formats: Blu-ray and HD DVD. These units were unveiled at CES 2006 and launched at retail in mid-2006. At CES 2007, the makers of both format players launched more advanced and even second design-generation models.
Consumers are Confused
Yes, the CE industry is right in the middle of another format war, much like the infamous Beta-vs.-VHS conflict. The industry saw it coming, knew it would hurt everybody involved and took some steps to head it off, but in the end the spirit of compromise wasn’t strong enough.
There is a certain consumer segment that gets excited by every new innovation to hit the consumer electronics market, and some of us are just thrilled when our gadgets work the way they’re supposed to. It’s the latter group that Thomson (Paris) brand RCA is targeting with its EZ201 Small Wonder Digital Camcorder, scheduled to launch before midyear. The unit is engineered for ease of use, which means designing it to not present the user with battery or file manipulation challenges. It runs on 2 standard AA-size batteries that last up to 2 hours, and records to on-board memory and additional SD removable memory. It connects directly to a TV for viewing, or it can be plugged to a computer using a built-in sliding USB arm. RCA says that unit will work without installing software on the PC, because the software is built into the camera itself. The 1.5-inch LCD display will flip out 180 degrees and rotate so the user can be in the shot. Part of its easy use comes from its portability. The unit is about the size of a deck of cards and fits in a pocket.
Dan Collishaw, chief operating officer of Thomson’s Audio/Video business, said the camcorder represents the next evolution in simplifying video recording and at-home archiving. “The new array of choices and technologies…scare some consumers,” Collishaw said at CES. “Many will rely on trusted and proven brand names to deliver innovations with products that work right out of the box.”
Now, as expected, the competing formats of next-generation DVD technology are bogging down the development of next-gen DVD as a whole. Some companies doggedly support Blu-ray, others swear their loyalty to HD DVD, and consumers mostly watch from the sidelines.
Competing claims and heavy marketing means that neither format is perceived by the public as clearly superior. Most potential buyers simply refuse to spend big bucks for a player that could be obsolete in a few years.
At CES, the conflict remained largely unaddressed. Blu-ray DVD format proponents like Pioneer and HD DVD supporters such as Toshiba held to their positions, assuring journalists that they are committed to their chosen format and have no plans of changing course. New product launches were aimed at making each format more attractive.
Toshiba (Tokyo) used CES for the official unveiling of new triple-layer HD DVD-ROM disc technology with a capacity of 51 gigabytes (GB), putting it on-par with Blu-ray in terms of storage capacity. The disc format should be approved in 2007 and when it hits the market it will erase one of the advantages touted by Blu-ray over HD DVD. The new ROM disc stores 17 GB of data on each of its three layers. Toshiba says continued improvement in disc mastering technology achieved further minimization in the recording pit. The new disc shares the same disc structure as standard DVD and previously announced HD DVD formats: two 0.6-mm thick discs bonded back-to-back. 51 GB gives the disc about 7 hours of video capacity at a sampling rate of 17 mbps.
Toshiba is already selling its second-generation HD DVD players, and at a pre-CES press event showed its new SD-H903A HD DVD writer for the first time. The unit allows for high-definition video editing and content creation on PCs and media centers, in HD DVD and legacy formats.
Lower prices are making next-gen DVD players affordable for more potential buyers—but will that actually motivate them to buy? The real financial risk for the consumer is in the media itself. Committing to one format or another means investing thousands of dollars in movies to play on it—money down the drain if the chosen format goes the way of the Betamax.
Even some industry players have decided to take the wait-and-see approach. Thomson’s RCA, which launched the HDV5000 HD DVD at CES in 2006, said this year that it was putting its next-gen DVD player on hold.
“We’ve been in the market over the last several months with an RCA HD DVD player…and we have sold out,” said Thomson General Manager of Audio/Video, Dwight Sakuma, at a pre-CES press event attended by APPLIANCE. “Right now, though, we have no plans to market an HD DVD or Blu-ray product in 2007—until we feel there is better clarity about which format consumers prefer.”
LG Electronics (Seoul, Korea) is taking a more proactive approach to the problem. LG kicked off the press sessions on the day before CES’s official opening, and the product it unveiled was one of the significant launches of this CES—the Super Multi Blue Player, the first unit on the market that can play both next-generation disc formats, Blu-ray and HD DVD.
LG, until now, was firmly in the Blu-ray camp, and LG President and Chief Technology Officer Dr. Hee Gook Lee told the CES press gathering that the company remains committed to Blu-ray as its next-gen DVD format of choice.
But LG’s move has the potential to be hugely beneficial for the consuming public, and that can only help the CE industry overall. It could even be precedent-setting for the entire industry. ABI Research was quick to generate a post-CES study that forecast that universal players will become the norm in the disc-player world. The rest of the industry will have no choice but to release multi-disc players to stay competitive, the research firm believes (and said others are already being developed).
“Customers are no longer forced to choose between the two formats,” said Dr. Hee Gook Lee. “As full HDTV is already gaining ground, we are hoping that the Super Multi Blue Player will play the trigger role in expanding and advancing both full HD TV and high-definition DVD market volume together.”
Early reaction to the LG universal player dismissed it as a niche product, based on its U.S. $1,200 price tag. But this assumes that prices will remain high.
“That $1,200 price would seem to be more about matching Blu-ray player prices than about reflecting the cost of producing a universal player,” notes Steve Wilson, ABI’s principal analyst of consumer electronics. “There’s no reason universal players should cost significantly more than HD or Blu-ray players.”
He believes prices will come down quickly when other universal players emerge, such as a Samsung unit expected out soon.
Costs to manufacture universal players will also come down when fully integrated chipsets reach the market. At $200, ABI says, true mass adoption starts. Believe it or not, ABI expects the market to get to that point by 2009. It forecast unit sales of 2.4 million players in 2007, growing to 22 million units in 2011.
More Confusion or a Solution?
Sure to confuse consumers even more is the emergence of yet another disc format, the Versatile Multilayer Disc (VMD) technology from London-based New Medium Enterprise (NME), Inc. The technology offers a number of advantages—not the least of which is lower cost for the high-definition video players.
The VMD disc is the size and thickness of a DVD disc, but the VMD is made using a multi-layering technique that adds about 5 GB of storage space per layer, up to an amazing 20 layers. The result is said to be a disc with potential data storage of 100 GB.
Part of what makes Blu-Ray and HD DVD more expensive is that both players use a blue-violet laser with a frequency wavelength of 405 nm, compared to the standard DVD player’s less costly red laser. When the formats were being developed, blue laser technology was seen as the only technology that would enable storage of the massive amounts of data needed on one disc to achieve HD video. NME’s layering technology allows the use of the red laser in a player, but the discs are made with a multilayer technology that exploits unused space between layers of a standard DVD and still achieves enough data storage for HD video.
Interestingly, the layering innovation could also be used with a blue laser, according to NME, creating a disc with even more data storage.
NME is ready with content deals and has distribution agreements to distribute players in international markets by mid-2007.
“The red laser-based VMD format and players are a natural successor to DVD market, allowing consumers to get high-definition for a fraction of the cost of today’s HD-DVD or Blu-ray discs and players,” says NME CEO Mahesh Jayanarayan.
The last thing the industry needs is yet another high definition DVD format, but the players’ $199 price tag could win over consumers.
One of the most significant developments from the Blu-ray camp actually occurred after CES, when Sony Corporation (Tokyo) announced that it would launch its second Blu-ray Disc (BD) player at a price of about $600. It’s a significant price decrease for a unit with 1080p upscaling through HDMI, meaning it will play most standard DVDs to 1080p capable HDTVs with improved picture performance. Most existing HD DVD players in the same price range don’t have the upscaling capability.
LCD Vs. Plasma
U.S. consumers may be just as confused about flat-panel TV technology as they are about next-gen DVD. But in the case of TV, the confusion isn’t hurting business one bit. Flat-panel TV sales continue to soar, and the switch to all digital TV in the U.S., on March 1, 2007, can only help lift sales higher. On that date, all U.S. devices containing a TV tuner must have a digital tuner (some devices may still be sold with an analog tuner in addition to a digital tuner).
CES organizer the Consumer Electronics Association (CEA) and the producers themselves cited market studies showing that consumers remain unclear about the differences between their two main flat-screen TV options: LCD and plasma. Judging from the language used in new product announcements at the show, consumers are not likely to get clarification in 2007. New technologies in LCD panels are seeking to close the performance gaps with plasma, while plasma proponents dismiss the possibility of LCD technology ever matching plasma’s image quality.
LCD Gets Bigger, Blacker, Sharper
Sharp Corporation (Osaka, Japan) out-sized all the competition when it unveiled a whopping 108-inch LCD panel. It’s the biggest flat-screen TV ever made public. As Sharp Electronics Corp. Chairman and CEO Toshihiko Fujimoto said at the unveiling, the new screen is bigger than any LCD or plasma screen on the market.
LCD makers are working diligently to address other image-quality shortcomings in the technology compared to plasma display panels (PDPs). One big complaint about LCD is blurring when the image moves quickly. LCD makers are responding with various methods of doubling the 60 Hz display rate of LCD to generate a crisp image, even during high-speed action.
Toshiba’s ClearFrame technology may be the technology to watch. It doubles the frame rate from 60 frames per second to 120 frames per second using Motion Vector Frame Interpolation. This process analyzes the current image frame and the upcoming frame and generates an in-between frame—essentially creating 60 new video frames per second. This is said to virtually eliminate all flicker, while reducing motion blur.
Competing 120 Hz technologies insert black frames between the displayed frames, which does reduce blur, but Toshiba says the black frames may degrade image brightness. Another technology is inverse gama curve, which, Toshiba claims, does not reduce blur as effectively.
Plasma Innovates to Keep the Top Spot
Plasma screen producers are not buying claims by LCD makers that LCD is approaching or exceeding the visual capabilities of plasma, and they are enhancing PDP displays in brightly lit environments, where LCDs have typically been the better choice.
Pioneer Corporation (Tokyo) has re-engineered its PDP technology from the ground up, and the first prototypes were at CES. Ken Shioda, general manager of product planning for displays at Pioneer Corporation, told the media that the new PDP beats LCD displays under any conditions. By essentially remaking its plasma TVs from scratch, Shioda said, “We are not simply making marginal improvements…rather we are making a quantum leap in all areas that impact the viewer experience.”
Panasonic, the brand of Osaka, Japan-based Matsushita, also dedicated much of its large press conference addressing plasma superiority. Jeff Cove, vice president, technology and alliances, Panasonic Corporation of North America, and Panasonic plasma expert “Mac” Makita debunked some of the perceived disadvantages of plasma. They said burn-in, for example, has not been an issue since the first generation of plasma screens. The perception of the short life of plasma screens is also not true, with current Panasonic plasma screens expected to last 60,000 hours before reaching half-brightness. The reflection problem with plasma screens was never an issue with consumers, Makita suggested—rather, the issue was dreamed up as part of a different plasma company’s marketing scheme. As far as the need to have a plasma screen’s gas “recharged”—Makita dismissed this as an urban legend, without any basis in fact.
Panasonic said it will continue to offer LCD TV in smaller screens (under 40 inches), but maintained that only plasma can offer true high-definition image quality in large size screens. Those very large displays are the screens more consumers want as they seek to bring truly “eventful” video experiences in their homes.