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Technology Stocks : Zenith - One and Only -- Ignore unavailable to you. Want to Upgrade?

To: Terry Berg who wrote (3692)	12/21/1997 12:11:00 AM
From: Robert Utne	Read Replies (1) \| Respond to of 6570

Terry, 100% agree about the CES. Hope Zenith has all their ducks in order. Given: 1. Taking LGE's press release at face value, Zenith will be selling 64" HDTV projection sets in April. 2. No other CE manufacturer has announced the delivery of HDTV sets prior to next Fall. 3. Zenith will be the first distributor of Divx players, starting in April. RCA and Panasonic will be selling Divx players later in the year. 4. According to Video magazine, the DBS companies will be the first to transmit HDTV to their approximately seven million US subscribers. 5. HBO promises HDTV content by next Summer with a number of other cable systems and broadcasting companies to begin HDTV services later in '98. 6. Americast, a direct competitor to the cable companies, has signed a $1 billion contract with Zenith to provide STBs. Zenith's STBs offer four-way reception: satellite, MMDS, terrestrial broadcasts and cable. Only Comcast, among cable companies has expressed the need to deliver HDTV to its subscibers. Conclusions: 1. Zenith has a significant marketing advantage over its competitors from April-September, 1998 by being the sole supplier of HDTV sets and Divx players. 2. DBS companies will provide consumers with HDTV prior to any other transmission source. Comcast may be an ally (regardless of Bill's $1 billion investment). Recommendations to Zenith: 1. Enter into an early exclusive marketing agreement with both DirecTV and Echostar. DirecTV/USSB has the greatest number of subscribers, has ties with Time Warner (and possibly News Corp) and the best sports content while Echostar has the greatest number of satellites and future coverage area and is already set to transmit in Dolby Surround Sound. The combined subscribers of these companies is over 4 million and could jump to 8 million within 12 months based on a successful launch of HDTV. 2. Focus on HDTV and Divx in 1998. Zenith will be first to introduce both product categories thus will attract the early Home Theater buyers. As Gary Shapiro of CEMA has stated, HDTV demand will exceed supply during the introductory period. Thus, the temptation will be to price HDTVs at sky-high prices. On the other hand, Zenith doesn't want to appear to be gouging its customers. 3. Play the pricing issue both ways. At the International CES, announce that from April-September 1998, deluxe HDTVs (Zenith/Inteq) will sell at $8,000-$10,000 and full-featured Divx/Inteq players at $1,000. Also announce that a "standard" Zenith version will be introduced in October costing less than $5,000 for an HDTV set and $500 for a Divx/Zenith player and be available for purchase on the Internet or your local Zenith dealer. 4. Place maximum effort on getting the Americast cast to commit to STB deliveries and pursue Comcast and others to be "best of breed" partners. 5. Don't get stuck in the "Wintelcast" games. They will just blow smoke up your ass while plotting to destroy Zenith's VSBi transmissions in their quests to take over the world's living rooms. 6. Charge a minimum licensing fee of $10 per "box" to every CE, PC and STB manufacturer capable of receiving and displaying VSBi transmissions.