1998's Top Ten. Look at #1.....................................
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Multimedia Week's Year in Review: A Look at the Top 10 Events of 1998
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10. SGI Concedes to NT
On the content-creation front, Silicon Graphics Inc. [SGI] acknowledged the need to price its hardware lower and announced plans to deliver a Windows NT line in 1998. The company has been tight-lipped about particulars.
Moves to combine its OpenGL API with Direct3D and make it easier for Windows developers to create 3-D content indicate SGI is serious about NT. That's good news for Microsoft. It's too soon to tell if SGI will be able to win back the customers it drove away to NT manufacturers.
9. Apple Cozies up to Microsoft
Following Gil Amelio's resignation as CEO in July, Apple Computer Inc. [AAPL] accepted a $150 million investment from Microsoft as part of an agreement to end litigation between the companies. Apple also agreed to make Internet Explorer the default browser in upcoming Macintosh operating systems.
Throughout the year, Apple continued to lose key personnel and tie its future more closely to Microsoft. The company released a cross-platform version of the QuickTime authoring environment that runs on the Mac and Windows 95.
The company also stopped licensing upgrades to the Mac OS, putting an end to the Mac clone business. Apple's goals for 1998 are to become profitable and find a new CEO.
8. Creative Technology Gets its House in Order
After a dismal 1996 in which Creative Technology Ltd. [CREAF] had to take a loss on excessive CD-ROM drive inventory, demand for the AWE 64 sound card and operational improvements helped the company return to the Sound Blaster glory days when margins were high.
Creative also set the stage for entry into the home theater market with an acquisition of Cambridge SoundWorks Inc. for about $29 million in December. The company broadened its OEM presence later that month by spending $77 million to acquire Ensoniq Corp., a low-cost supplier of PCI audio that doesn't require DSPs.
The company's stock has yet to show sustained upward movement.
Creative offered the most aggressively priced DVD-ROM upgrade kits on the market and should do well in that category this year.
7. Microsoft Buys WebTV
WebTV Networks Inc.'s [MSFT] reference design in and of itself represents little financial gain for Microsoft, but it serves as another inroad for the proliferation of Windows.
Look for Microsoft to move Windows CE to WebTV and sign on several more licensees for the hardware. Microsoft also is likely to use WebTV to gain a foothold in the Digital TV market.
WebTV made licensing gains last year thanks to NetChannel's purchase of ViewCall. Rather than deal with an unknown company, Hitachi Home Electronics Inc. and Mitsubishi Electronics America Inc. changed dance partners and decided to sell products based on WebTV's design and interface.
6. CE Forces Embrace the Net
In the hopes of revitalizing the TV industry before Digital TV hits, every major consumer electronics company, and even some tier-two players, came out with Net-enabled products.
Thomson Consumer Electronics and Philips Consumer Electronics [PHG] took bold steps into unknown PC-TV territory and also offered low-cost approaches via Web boxes. Sony Electronics Inc., Mitsubishi and most other consumer electronics companies, took a more conservative approach to Net TV devices.
Look for more Web entry into the home in '98 to come via cable set-top boxes and DBS add-in cards.
5. DVD Crawls Out of the Gate
Several manufacturers shipped DVD-Video players last spring, but the platform has not been the success hardware vendors had hoped.
According to the Consumer Electronics Manufacturers Association, 338,927 units shipped to dealers as of Dec. 26. -- a figure far less than the 500,000 units manufacturers expected to sell.
Unfortunately, format conflicts that hampered DVD's release last year show no signs of resolution. Companies are fighting over rewritable DVD, which could push back the release of that product until '99.
Most PC makers began offering DVD-ROM models in the fall but have met with disappointing results. Micron Electronics Inc. [MUEI] is the only company reporting better-than-expected sales of DVD-ROM.
4. Multimedia Processors Gain a Second Life
Chromatic Research Inc. found a home for its Mpact chip thanks to the need for low-cost DVD decoders. The company claimed design wins with board manufacturers and PC makers Gateway 2000 Inc. [GATE] and Micron.
Philips Semiconductors' TriMedia chip was pretty much given up for dead, but the company has sparked interest from companies building Digital TV hardware. Philips Consumer Electronics is banking part of its DTV strategy on TriMedia and Samsung plans to use the chip in set-tops.
3. Intel Tries to Buys Into 3D
Intel underscored a commitment to graphics and made known its attempt to shape the future of that industry with a $420 million bid to purchase Chips and Technologies Inc. [CHPS] in August. The development hit a snag when the Justice Department began investigating the purchase as an antitrust matter, and has yet to hand down a final decision on the merger.
Should the merger get the thumbs up, Intel will gain another hook into the PC's core architecture by ensuring desktops need more processing power to handle the demands of 3D. C& T's intellectual property, along with the Intel 740 3-D chip designed with Lockheed Martin Corp.'s [LMT] Real3D subsidiary, gives the company another offering it can tie into its processor strategy and help control pricing.
2. Government Cracks Down on Intel, Microsoft
The Department of Justice took its strongest stance yet against Microsoft Corp. [MSFT], mandating the company debundle Internet Explorer from Windows 95 OEM products. Meanwhile, the Federal Trade Commission has thrown a wrench into Intel's purchase of C&T by challenging the transaction under the Hart-Scott-Rodino Antitrust Act. These government actions, particularly in the case of Internet Explorer, are good news for start-ups and small companies trying to put their stamp on the PC and software industries. The goal is to curb the power of these industry leaders and prevent monopolies so other companies have a fair shot at selling their innovations.
1. Full-function PCs Dip Below $1,000
Compaq Computer Corp. [CPQ] led the sub-$1,000 PC momentum and pushed low prices to further its position as the market share leader in the consumer market. The price shift caught IBM Corp. [IBM] by surprise and forced the company to redirect its fourth-quarter efforts toward mid-range priced PCs. Look for IBM to continue trimming its high-end multimedia PCs in early '98 and increase distribution of low-priced desktops.
Cyrix Corp. [NSM] and Advanced Micro Devices [AMD] gave OEMs the option of low-cost processors, which helped spur the sub-$1,000 movement. For the first time, PC companies have an incentive to buy non-Intel processors, at least until Pentium II pricing dips low enough in mid-'98 so the chip giant can compete in that product sphere.
Cyrix got additional fab and respect when National Semiconductor Corp. [NSM] bought the company for roughly $550 million in November.
Component suppliers are hoping they can cash in on the trend by moving volume parts in early '98 with scaled back versions of DVD decoders, audio and video cards. Look for C-Cube Microsystems Inc. [CUBE] and Creative Technology Ltd. [CREAF] to take advantage of the sub-$1,000 market in '98. |
