DTV...................................
November 17, 1997, Issue: 1084
Section: Extra: The Next Marketable PC
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Q&A: Gerry Kaufhold -- Pressing digital-TV's on button
By
The battle for the living room is heating up as the industry gets ready for digital TV.
Is it a PC? Is it a TV? Is it a little of both?
To put the digital-TV market in perspective, Corinne Bernstein, EBN's managing editor for supplements, interviewed Gerry Kaufhold, senior analyst at In-Stat Inc.'s Multimedia Service in Kearney, Ariz.
Q. Is the industry finally getting its act together as far as having living-room-friendly digital TV? What is bringing this about?
A. The TV manufacturers, the TV broadcast networks, and the PC manufacturers are competing for consumer living rooms. And each one has a slightly different act, which is slowly coming together.
Virtually every major consumer electronics company will be shipping a digital TV set by the end of calendar 1998. These will initially be at the high end, costing consumers between $1,400 and $2,500. Most people will consider a 36-in. digital TV for $1,500 a good deal; a regular 36-in. TV is about $1,100.
We believe that it will be after 2000 before prices fall below $800 for digital TV sets.
In the United States, the FCC has mandated that each of the top four network-affiliated TV stations in the top 10 cities be on the air with a digital broadcast signal prior to the end of calendar 1999. If this happens, about 30% of U.S. television households will at least be able to tune in a locally broadcast digital- TV signal.
Obviously, the broadcast networks will have to figure out what to broadcast on these new transmitters. Prime-time programs will be where we will see the new digital formats first.
PC manufacturers are testing the waters for digital TV. The primary delivery medium for digital TV on a PC will be DVD-ROM drives that can show high-resolution, noninterlaced video signals today.
By the end of calendar 1998, virtually 100% of new MMX-capable multimedia PCs will be digital-TV-ready. Just watch for Intel Corp.'s advertising campaign, with the colorful, bunny-suited MMX-ers dancing on Broadway with the Rockettes.
The big downside of using MMX PCs as a digital TV is that the monitor will be too small for use in a living room, and Windows 95 and Windows 98 are way, way too complicated for typical consumers to operate.
Q. How soon will the infrastructure be there, and what will it consist of?
A. Surprisingly, about 50% of today's TV programming is already being produced in digital-TV formats, and most studios have as much digital-editing equipment as they do analog-editing equipment. Studios are ready to go.
Not surprisingly, the companies that make TV transmitters and cable-TV head-end equipment had to wait for the FCC to finish up the specifications before they could build digital-TV equipment. The broadcasting-equipment industry is in a race to get the digital-TV transmitting equipment out the door.
Q. How are chip makers preparing for this new technology? What must they do to avoid missing windows of opportunity?
A. All the major semiconductor manufacturers are striking deals with intellectual-property holders and significant consumer electronics OEM customers.
Coincidentally, the design-automation industry is just now hitting its stride with design tools that will greatly help semiconductor companies put their newly acquired intellectual property onto systems-on-a-chip silicon.
One recent example: Motorola Inc.'s Advanced Digital Consumer Division just announced a very broad partnership with Sarnoff Corp. that will let Motorola incorporate Sarnoff intellectual property into silicon. Sarnoff holds fundamental patents on many aspects of the Grand Alliance HDTV broadcasting system.
Motorola is, naturally, also connected to several very large consumer color-television manufacturers that want to use the chips.
Q. Where does HDTV fit in?
A. Technically, HDTV calls for a wide-angle viewing display. The FCC spelled out 18 modes of operation for digital TV sets, and HDTV is the high-end subset of wide-angle or high-resolution modes.
Most digital TVs will support a limited version of HDTV. High-end systems will do true HDTV, with the very wide display screen and ultrahigh-resolution picture quality.
Q. What are the challenges and risks for those addressing the digital-TV market?
A. The biggest challenge is that digital TV is going to propel the entire semiconductor industry into the consumer electronics realm, where volumes are very high, margins are low, and pricing and availability are king. It's a make-or-break business model.
Anybody who is a large semiconductor manufacturer must become a player. And yet the risk is that failure could mean significant financial loss.
Even Intel is moving toward this low-margin consumer electronics model, with the acquisition of the StrongARM technology as part of Intel's purchase of Digital Semiconductors. Even Intel knows that you can't sell a $500 Pentium II into a $300 set-top box.
Q. What will this technology be like in its early forms?
A. This is the age of experimentation. Over the next five years there will be lots of experiments in how digital TV will come to market.
Remember back when home stereo equipment had a switch for different RIAA [Recording Industry Association of America] equalization curves? Or 45 rpm records with their large holes vs. LPs with their small ones?
We've counted more than 12 Internet appliances on the market so far. During the next five years, a variety of products will be rolled out.
Some will be winners; some will last a while; many will fail. Many consumers will have junk in their closets.
Primarily, for expensive digital TVs, there are two pieces: a digital-transmission system and a display monitor. The display monitor has to be able to work with multiple on-screen resolutions, as well as switch between interlaced and noninterlaced modes.
We think that the only way to make an expensive, multiscan, large-screen TV display obsolescence-proof will be to provide many types of inputs: NTSC/PAL analog inputs, SVHS inputs, a VHF tuner input, and at least one kind of digital input, such as an IEEE-1394 input.
One key point is that because the large-screen display is the most expensive part of a digital-TV setup, we believe that the consumer television market is about to undergo a sea change in which the display is disconnected from whatever feeds the signal into it.
We foresee a "dumb" large-screen display with a variety of analog and digital inputs. Consumers can hook up whatever signal source they choose - be it a digital-TV tuner, a cable-TV set-top box, a Direct Broadcast Satellite set-top box, a video game, a DVD player, an Internet appliance, a video CD unit, a VCR, a camcorder, or even an MMX-capable PC with a Pentium II. Consumers will keep the big-screen display in the living room and connect things to it as they see fit.
This is very similar to the PC model - wherein you purchase any computer and hook it up to any size or resolution display you can find. You can throw away the computer, but use the display on whatever you purchase next.
Right now, TV manufacturers don't want to hear about this "dumb display" because it means lower margins. It's a dumb display, after all.
But consumers aren't going to sit still for digital TVs that quickly become obsolete.
Q. Will viewers really want to watch TV on an MMX PC with DVD-ROM?
A. I think the entire PC industry is betting viewers will want to watch a DVD-ROM program on an MMX PC. I think the industry is right.
If you've seen a demonstration of Jim Carrey's "The Mask" on a 17-in. display monitor, it looks great. Plus, you can freeze-frame and slow-motion the image or play scenes back in different languages.
For at least the high-end consumer, purchasing an MMX PC will be an option.
Q. Isn't this an expensive way to watch TV?
A. Not really. By calendar 1998, we'll have DVD-ROM on MMX-capable PCs retailing for less than $1,000. It's not a giant-screen home theater, but it will do great for private viewing, and it's still a full-purpose PC that does work at home and the Internet.
You have to look at the entire package. It's not just a TV, it's a computer plus a TV with built-in DVD-ROM and a high-resolution display.
Q. How will it evolve? Will it evolve into more of a TV or more of a PC?
A. For living-room applications, it has to be more of a TV and less of a PC. Nobody is going to type e-mail from a couch - they'll spill their beverage.
At In-Stat, we have a saying: Nobody has ever had to reboot their TV. That's certainly not the case with a PC. If you have to reboot the system in the middle of the Super Bowl, that's not acceptable.
Q. Will it be a TV with computing functions?
A. It will be a TV with "interactive" functions, which means that the interactive program guide and up-to-the-minute weather or stock quote services will just be there. Consumers won't have to know how or why it works. It will just work.
Consumers may not even know their TV set is accessing the Internet, but they will enjoy the new services that their digital TV set can provide.
It will have the same circuitry as a PC, but the circuitry will be hidden in the background. It will have a super- VGA chip. A lot [of the digital-TV designs] already have microprocessors with an operating system.
There will be pieces of the PC in the living room, yes. A complete PC, no. Of course, Intel and Microsoft Corp. will disagree with that.
Q. How will the new technology compare with other "PC theater" technologies?
A. Today's PC-theater products are too closely coupled with the computer motherboard. Everybody knows that PCs are obsolete in two years, but nobody wants their digital TV to be obsolete in two years.
The new digital-TV technology will be able to communicate with a computer, probably via IEEE-1394 or maybe even Ethernet. But you'll be able to continue upgrading your PC without throwing away your digital TV set.
Copyright (c) 1997 CMP Media Inc.
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