Out of the Box

I got my little envelope of analog entertainment life extension this weekend courtesy of Uncle Sam. According to Broadcast & Cable, Gary Shapiro, head of the Consumer Electronics Association, says that the government should give consumers more time to redeem the coupons. There has already been some online discussion advising consumers to wait for prices to come down before using their coupons but, really, with Wal-Mart enabling consumers to keep over-the-air goodness flowing into a chunky channel changer for less than $10,  there’s not much incentive left to delay.

While CEA has a much better consumer-friendly track record than trade organizations for, say, content industries, it’s still a bit counterintuitive that Gary, whose organization represents the world’s largest TV manufacturers,  backs a product that delays the purchase of a new digital television. It leads one to question how big an impact the analog cutoff will have on TV buying. I’m sure there will be a bump, particularly in smaller screen sizes. However, particularly with a shaky economy, it will be challenging to convince those prepared to make an under-$50 investment to a digital television at mainstream sizes.

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In speaking with several reporters about the victory, I noted NPD’s research last year that found satisfaction with existing DVD players to be a more common reason for abstaining from the high-definition disc market than the format war with HD-DVD. As digital media gadfly and PR veteran par excellence Andy Marken notes, “The difference is now the BD folks won’t be able to blame Toshiba for holding back the success of high def disc sales.”

Blu-ray was the second must-win AV standards war after LCD vs. plasma that the company has won in the past few years by leveraging selective specification superiority — curious for the consumer electronics company that is so frequently identified with being a lifestyle brand. Blu-ray’s main technical difference vs. HD-DVD was that it offered 50 GB per disc as opposed to 30 GB.

Sony and the BDA didn’t make the capacity argument directly to consumers as much to the trade media, particularly before studio support became more relevant. However, Sony was the first company to proselytize 1080p or “full HD” to consumers, which has helped to give large-screen LCD the upper hand.

Further momentum behind BD can only help promote 1080p TVs (not that they seem to need much help). It will also be very interesting to see how much the standardization of Blu-ray now helps sell the PS3 after the PS3 was kind enough to do the same for Blu-ray since 2006. Sony’s content holdings may not have been enough to overcome the challenges of UMD as a movie format, but the virtually guaranteed support of Blu-ray by Sony Pictures was a validation of Sony’s integration of hardware and content. Of course, the equal loyalty of Disney and Fox was critical as well.

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Jeremy Toeman and Dave Zatz weighed in yesterday on the Netflix announcement that it will be partnering with LG on what it hopes will be the first of “100 Netflix-capable boxes” (putting its aspirational numbers significantly behind the thousand gPhones that Eric Schmidt is pursuing).

Jeremy notes the challenges of bringing a “fifth box” into the living room. It’s true that the standalone home network/broadband content access device has struggled for a number of reasons that I’ve explored in depth elsewhere. The alternative is easier said than done, though. Jeremy writes:

The “smart” marketing of the (rumored) $799 HD/Blu-Ray player will simply label it as having Netflix “built in” or something like that.

Right idea, wrong Trojan horse. The problem is that no amount of smart marketing will dramatically expand the market for a $799 dual-format high-def disc player, which is being hampered by nearly as many problems as Internet set-top boxes. There are standard-definition DVD players, of course, but that market has been completely commoditized.

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There were a couple of great posts by my colleagues on the DisplaySearch blog this week. Ross Young writes about the challenges of accommodating a state-of-the-art 1080p LCD television in the space allocated for an older 4 X 3 television in a cabinet that is decidedly more difficult to upgrade. Meanwhile, Paul Erickson discusses the impact of the Paramount repeat about-face with respect to the high-definition disc wars, a topic about which there have been some crazy conspiracy theories. I agree with him that this will serve to prolong the war and will have more to say on that shortly.

Speaking of DisplaySearch and the high-definition format war, its HDTV Conference will be the place to hear about the latest from many of the principal companies and alliances involved. Check out this panel lineup for the next-gen DVD hardware outlook panel on October 11th (the conference’s second day) in LA:

• Moderator: Paul Erickson, Director of DVD and HD Market Research, DisplaySearch
• Chris Walker, Sr. Manager Product Planning and Marketing Blu-ray and Optical Disc Products, Pioneer
• Jodi Sally, Vice President of Marketing, Digital A/V Group, Toshiba
• Kevin Collins, Director of HD DVD Evangelism, Consumer Media Technology Group, Microsoft Corp.
• Chris Fawcett, Vice President Home Video, Sony Electronics Inc.
• Tim Alessi, Director, Product Development and Advertising, LGE

I’ll also be speaking on a panel later that day on digital home connectivity.

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No, I’m not impersonating Fake Steve impersonating Bono, I’m referring to Hitachi’s upcoming Blu-ray camcorders that the company describes as recording in “full HD.” This was surprising to me as consumer camcorders do not record in progressive scan and other companies, such as Sony, have used that term to refer specifically to 1080p. Now the question is whether Hitachi and other plasma TV companies will call 1080i sets “full HD”. That ship has probably sailed as they’re now planning to bring margin back into the business with their own 1080p sets, trying to beat LCD  at its own game, but more confusion will reign.

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A little over a decade ago it was as fashionable to praise Sony and bash Apple as the reverse is today. The New York Times indulges in the latter. One retail consultant cited in the story exhibits impressive buzzword proficiency in griping that Sony Style stores are not “energized” and “shop-able.” Another floats closer to Earth in saying that Sony’s stores lack an “emotional connection” before concocting that Apple store visitors just “walk in, absorb the fumes and feel like the smartest technophile in the world.” Hey, if Apple could patent that magical vapor, they sure wouldn’t need the Genius Bars.

Randall Stross, the piece’s author, also takes aim at those foolish but uncited analysts who predicted Apple store failure. Judging from the prediction, though, it sounds like they were financial analysts. As the article notes, flagship stores are now all the rage and there may be more to come.

I’m probably not on the record for it but, Gateway stores be damned, I knew the Apple stores would be at least a partial success because of the company’s well-established brand loyalty. However, that would have extended only to the then-faithful. I thought that much of the Apple stores’ growth would cannibalize that of independent dealers and surely some of it has. (That said, I recently stopped in at Tekserve, where I received the usual excellent level of service, to find it thriving as I’d never seen it — and I used to live around the block from it. Tekserve complements the Apple store very effectively, and its strong focus on Mac repairs has probably paid off handsomely as Apple has revitalized.).

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My friend and fellow Engadget columnist Jeremy Toeman takes HP to task for promoting “HDTV 2.0,” a marketing sobriquet for the notion of a television connected… to home networks and the Internet at least. What does this have to do with “HD”? Not much, except that the higher resolution makes it easier to display text and the more generally available digital inputs facilitate the attachment of computing devices. (Tracing the tortured history of digital television in the U.S. through Grand Alliance days, it looks like Microsoft in retrospect won the war over progressive scan.)

Does having another marketing term such as “HDTV 2.0″ add to the confusion? Yes. Does “full HD”? Yes. How about contrast ratios and refresh rates and three different microdisplay technologies? In terms of impact, HP will be lucky if the notion of connected television becomes important enough in consumers’ minds to raise any fear, uncertainty or doubt. This is particularly true for tasks other than receiving on-demand video over IP, where the goal is to emulate the familiar, evolving mainstream cable experience. But HP is still free to compete in the marketplace of ideas. The TV, so often a big piece of passive glass for which intelligence extends only to image processing, has a timely opportunity to play a larger role in the home network as consumers seek to minimize the clutter of the home theater.

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Erica Ogg at News.com’s gadgets blog writes that Slingbox support of AppleTV would open the “intriguing new possibility” of streaming music from iTunes on your home computer to your cell phone. I’d recommend that she check out Avvenu’s smartphone client. I have used the desktop version of the Avvenu music service and think it’s the slickest remote PC music experience I’ve seen yet.

Nevertheless, Sling Media’s race to support AppleTV raises questions about how this support will differ from that of its own forthcoming hard drive-equipped television accessory, the SlingCatcher. SlingCatcher stands to be a triple-threat, capable of receiving content from a PC, Slingbox, or the Internet. It’s the third source that might benefit from having a Slingbox and SlingCatcher (or perhaps a future combination of them) connected to the same television.  And with an expected street price of $200, available for only two thirds of the price. Of course, Sling won’t have access to Apple’s advertising budget, so perhaps supporting AppleTV is the least they can do to thank Apple for resurrecting the digital media adapter category.

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This week’s Switched On, which should be posted later today, discusses HP’s discontinuation of its Digital Entertainment Center living room form factor PCs and Microsoft’s struggles to advance PC form factors. As far as I know, CEPro broke the story. Those who follow the convergence or PC retail space should read Julie Jacobson’s excellent series of articles about HP’s experience with the DEC in the custom installer channel. Part II looks at HP’s experience with the custom install channel earlier in the article, but the third part of the article, which I believe was posted today, delves deeper into why HP is leaning toward its MediaSmart TVs.

I akso had to chuckle as Julie found this way to sidestep an “off the record” comment:

Although HP spokesperson Pat Kinley did not want me to quote her as saying that the HP product and interface is simpler to use than the MCE solution, PC World did quote her: “We have other products on the market now and future products that I can’t talk about that perform essentially the same function in a way that’s easier for the consumer [to use].”

The article concludes with HP trying to position more as competition for AppleTV vs. Media Center Extenders, but you can’t compete with one without competing against the other, as Microsoft has been driving home with its comparisons between the Xbox 360 and AppleTV. In any case, building well-implemented DMR capabilities into the TV is a good differentiator for now, and most consumers would likely prefer no external box to even a small one like AppleTV, but with Pioneer, Sharp and surely others to follow, how long will it be before this falls too far below the consumer purchase criteria list to matter?

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I spoke with a reporter yesterday about the changes we’ve seen in television over the past few years. I described it as fundamentally a destructon of the integrated programming supply chain. We’ve gone from three major broadcasat networks to scores of cable and satellite networks, video games, Internet content, networked PC content, even user interfaces for things like DVD players. I touched on the advent of “cellivision” offerings like MediaFLO, but didn’t focus too much on the transport.

But that may be opening up as well. At CES, Samsung announced work on A-VSB (Advanced Vestigal Side Band), a broadcast technology that will deliver over-the-air channels to mobile devices, but which isn’t a cellular offering like FLO or DVB-H. Now its homeland rival LG is set to match Samsung’s awkward acronym-forming prowess. LG will take the stage at NAB to debut MPHT (Mobile Pedestrian Handheld Technology), an in-band broadcasting technology with what sounds like a similar application.

Looks like there may be salvation for the handheld television market yet. Vive la Watchman!

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