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Technology Stocks : QUANTUM -- Ignore unavailable to you. Want to Upgrade?

To: Z Analyzer who wrote (8470)	2/17/1999 11:44:00 AM
From: William T. Katz	Read Replies (2) \| Respond to of 9124

RE: Tech in TiVo and Replay From my past understanding of these digital VCR systems, the main costs (component-wise) are the hard drive and the digital encoder. You don't need the encoder if you are pulling down MPEG-2 video like in Satellite TV, but for these boxes to work with standard TV systems, you will need a way to digitize the incoming signals for storage on the hard drives. Until recently, MPEG-2 encoders were very very expensive, as in the thousands to tens of thousands of dollars. But now, we have companies like C-Cube (CUBE), Sony, and a few other players coming out with single chip MPEG-2 encoders that they are targeting for wide-spread consumer use. The prices on these encoders will hopefully get to the $80 (and below) range. My feeling is that these chips will eventually hit $50 within a year and enable a whole slew of new applications. The other possibility is to use an older technology like M-JPEG encoding... those chips were used in video capture cards for the past couple of years. But price/performance-wise, the MPEG-2 encoder is the ticket. So the bill of materials is not likely to get below $150 any time soon so I think it puts a floor on how cheap TiVo and Replay can get their systems. If they offered digital VCRs for even $400, I think they'd get a "reasonable" demand. But a year from now, the drives on those digital VCRs will be more than 2x larger and the cost of the encoders will be less... the digital VCR will get here and be big, the question is when and whether Quantum can capitalize on a backup mechanism for the boxes as well. -Bill