ENVISIONEERING -- Informed Intelligence for Decision Makers Nov. 18, 1996 IN THIS ISSUE Free DVD for PCs? Christmas ('97, That Is) Could Be Early Web TV Shows Browsing Isn't Slow Internet "At Risk" From Access Charges? Pay-Per-Use Not New An Open Letter On HDTV: All It Takes Is One Word -- Yes! IN SHORT Intel in Motown? In Sight Of The Grail? How the Mighty Have Fallen Free DVD for PCs? Christmas ('97, That Is) Could Be Early By TOM CLARKSON Forget '96 already. If you want to see the exciting future for the PC, look to Christmas '97. That's when DVD will be a virtually free addition in desktop systems. As the CD-ROM drive eventually became a standard on the desktop PC, the higher capacity DVD drives will be embraced quickly by PC manufacturers looking to differentiate their product. They will be seen on higher end systems early next year. Consumer electronics giants' drive to make DVD a success, combined with intense margin pressure in the PC market, should force prices to plummet throughout 1997. History is repeating itself. Just as multimedia upgrade kits signaled the beginning of the CD-ROM revolution, DVD upgrade kits (look around the Comdex floor, there should be plenty of them) are just now being unveiled by companies such as Diamond Multimedia Systems Inc. The Diamond kit will use Toshiba DVD drives that, including high-end video and graphics components, should sell for between $600 and $1,000 when it starts shipping in the first quarter of next year. But Diamond chief executive Bill Schroeder believes the price will fall sharply as DVD becomes more widespread. Another reason that DVD will be free on the PC is that the Intel MMX chip will be capable of processing both MPEG2 and AC-3 (Dolby Digital -- the heart of the DVD protocols) totally in software by Christmas 1997. A 200Mhz MMX should be able to do the job just fine, and it is likely to be the basic engine for mainstream PCs by late next year. Both Mediamatics Inc. and CompCore Multimedia Inc. have announced software versions of a DVD player. Mediamatics' DVD Express A/V Player includes a full MPEG-1 and -2 video and audio decoder, an AC-3 audio decoder, and scalable bandwidth management optimized for MMX processors. CompCore's Soft DVD technology (in beta now) inlcudes much of the same, but also supports VGA graphics chips that implement motion compensation acceleration. CompCore will also produce a software-hardware hybrid called Accelerated Soft DVD that will support the most popular of the MPEG-2 and AC-3 accelarator ships. If history does indeed repeat, Microsoft will adopt the Mediamatics approach in Windows 97, the next version of its operating system, just as they did with the Mediamatics MPEG-1 Codec, making software DVD playback a standard PC feature by the summer of 1997. So, look at what you could have next year: DVD drives at the same price point as 8XCD; Intel producing the right processor at the right price; Microsoft solidly backing DVD, and lots of content to be played now that the DVD intellectual property issues have been resolved. And DVD not only will be free on the PC, it will be high quality. Convergence PCs, such as the Gateway Destination and others that will be on the market, are already capable of doing end-to-end playback of the DVD datastream, resulting in a very high quality image. Who knows? If downward PC cost trends continue on track, the PC you get for Christmas '97 might also double as the family home theatre. And maybe that TV you buy will come with Windows included, running interactive DVD software from Mediamatics. (Further information on the above can be had from Mediamatics at www.mediamatics.com, and for CompCore from Ron Richter at ron@compcore.com). [ Back To Top ]   Web TV Shows Browsing Isn't Slow By RICHARD DOHERTY No PC, workstation or laptop user that I know brags about their Internet browsing experiences getting better. But, for WebTV users, that's exactly what's happening. Web TV delivers a ten-second faster interconnect, MIDI music files and Progressive Networks' RealAudio delivery, even finer TV display optimization controls. All in an under $330, 33.6 kilobaud modem set top box which magically transfers VGA-resolution graphics to even the humblest of NTSC TV sets. Within two weeks, WebTV networks will begin downloading version 1.1 of the WebTV operating system to all existing owners. The upgrade will be unobtrusive, and will take a few minutes to fill the internal Flash memory. Then, users will notice substantial improvement in an already great system. Later, sometime this winter (I'll bet around the Winter CES), version 1.2 will deliver even more customization features, such as user selectable privacy settings, and an automatic test of a user's telephone that will determine the exact length and type of call-waiting tone being used. Under the hood of the Web TV system, Kanji characters are supported by dual byte text handling. To come are new, easily discerned audio cues for the blind, a nice touch that should broaden the pleasure of the Internet for quite a few people. Fortunately, much of the Internet's value can still be gained through the spoken word and, increasingly, RealAudio radio shows and MIDI background music will be the kind of things that define the Internet for many users. WebTV is also an intelligent son-of-a-gun. Out of sight of the owner, it learns from its environment. When a Beta user of Version 1.1 had to rapidly disconnect his Sony WebTV from its phone jack and power outlet in the middle of a download, it was smart enough to automatically finish the download when reconnected hours later and miles away. Try that with your average PC modem and Internet Service Provider's PPP connect string in the middle of a download of Netscape or a Microsoft Internet Explorer upgrade. I dare you! So, for $19.95 a month, Web TV customers not only get unlimited Internet access but also a subscription to automatic performance enhancements. Contrast this with the cost curve of keeping a consumer PC current for more than 18 months. Like all truly great enhancements, all these actions are transparent to the user. One day the customer walks in and things just work better, and ISP access providers are silently, secretly switched if pass through packet performance suffers. It's like being told your car was serviced, cleaned and its gas tank topped off, all while you were getting a nice cool drink in the bar next door. There are plenty for lessons for the computer industry from this, and it would be advised to pay attention. For one thing, when you tout "services" as such a keen part of your unique value proposition, you had better make sure that the digital communications services and content you tap makes the user experience better, not worse. [ Back To Top ]   Internet "At Risk" From Access Charges? By BRIAN ROBINSON The official announcement last week of the DATA (Digital Affordable Telecommunications Access) Coalition is also the sound of a starting gun for what is likely to prove a tense and acrimonious year. At the end of it, users of the telcom system will know just what all the hype over the Internet and other fabulous-sounding data services is going to cost them. And it will cost. Even the most rabid "free" services proponent will admit that, even while denouncing the fact. The explosion of the Internet has occurred on the back of decades of government subsidy and a slow-moving regulatory system that hasn't been able to keep pace. But it's starting to catch up. The arguments on both sides are pretty straightforward. The local telcos say the growth in Internet traffic is threatening to overwhelm the whole telcom system, that Internet providers have had it too easy, and that they should start paying their fair share for access to the system. The DATA Coalition, as the opposition, says that's fine but that data users of the system shouldn't be paying for the parts of the voice network they don't inhabit and that oh, by the way, we think you telcos have been lousy about developing advanced, data-only technology for the new era. Underlying all of this is a sense of foreboding on both sides. The telcos, who until now have been raking in the dough from relatively staid and predictable voice traffic with a little data on the side, have been somewhat unhinged by the pace of the Internet expansion. They don't have much of a clue of what's going on, and the potential for such things as Internet telephony scares them silly. Access charges, at least, are something they know about and give them a feeling they can have some control over what is happening. The data-centric industry (computer makers, software companies, chip makers etc.) don't know much about telcom, but do understand the value of cost and price in a consumer market, which the Internet universe now is. At the equivalent of $20 a pop for a month of unlimited access to the Internet, they can envisage many more users (i.e. buyers of Internet products and services) joining the flood over the next few years. Put the price of access much above that (and probably not that much above), and the flood could dry to a trickle. DATA Coalition members feel the health and continued growth of the Internet are at stake in these issues, and they are likely correct. The Federal Communications Commission will be debating overall telecom access charges over the next few months. Meanwhile, telcos will be examining how to accomodate their pricing to the Internet and digital data age. And no doubt Congress, sensing a politically hot subject, will feel the need to weigh in. What will emerge at the end of all of this for users -- you and me -- I'm afraid to even think about right now. [ Back To Top ]   Pay-Per-Use Not New By RICHARD DOHERTY Think pay-per-use computing is a new phenomenon? Not so new as you might think, especially if you take the concept beyond the simple idea of payment for direct service. In fact, in industrial times, it can be traced back at least a century to King Gillette and his disposable safety razors. Imagine it. Buy one razor for not much money, and then pay for ever for blades. If only Gillette had also copyrighted the term razor blades, just think of the residuals! In the modern computer world, pay-per-use is an established part of the business. Consider what's needed to put out all the breathless text that's composed on computers. Ink Jet cartridge ownership all but subsidizes H-P and Canon printers, faxes, copiers. In fact, the money paid out for fax toner cartridges and drum replacements in the first year often comes to more than that ladled out for the base machine. The Canon Copier folks started all that twelve years ago with a higher tech spin on Gillette, by combining the photo conductor drum and toner unit into a single throwaway unit. And, while the overall cost of owning a copier went up, the perceived lower cost of copying appealed to tens of millions who bought in. And the list goes on. Sophisticated cellular phones can be had for a penny down, but in reality are paid for by the first 2.4 years of services and calls Radiomail pagers are paid for by the message unit. US Robotics/Megahertz pagers "rent" for only $15 a month, so long as you take $45 of data service each month. Other kinds of pagers are paid for by the cost of the first 100 pages and, soon, fifty pages. But, the laws of capitalism being what they are, what's to bet we see that number creeping up again to the first 75 pages, and then 100, and then 150? Upgrading a PC over a five-year lifetime costs far more than just about anything else. Mercedes, MRI scanners, concrete mixers, luxury yachts, heart-lung, you name it.. You won't find many that, compared to the original price of the equipment, take so much to stay "competitive" as the common desktop PC. Indeed, pay-per-use computing will soon be the only way to go. Imagine a $299 laptop with a fixed disk capacity. But, as you add apps and increase your use of system capacity, you have to buy another refill of 100 megabyte modules. Imagine lower cost LCD screens that actually dim and burnout over time, like a fading laser printer toner cartridge and drum. A new one? Just $149 a pop, fix you right up. Imagine an era with data "Fire sales" on excess near-term system capacity. A hastily dispatched pager "Ad" reaches your pocketronic device offering a special on PCS voice or data units pre-paid and ordered within the next five minutes and, by the way, they must be used by the end of the week. Once they know who and where you are, it's all a matter of price. They will nickel and dime and megabyte you, and you won't feel a thing. And, now that every packet costs, how about sponsorship for the device, making it truly "free." The possibilities are endless: Computers, messagers, pagers, phones all carrying Joe Camel's logo. Packets. Can't live with 'em, can't communicate a darn without 'em. [ Back To Top ]   An Open Letter On HDTV: All It Takes Is One Word -- Yes! By RICHARD DOHERTY In all my 23 years of working in and observing the broadcasting, consumer electronics and computer industries, I have never seen talented friends quarrel over such innocuous details. I'm talking about the warring sides now bickering over HDTV. Instead, these Johnny-Come-Lately's from the computer industry should be reaching for their wallets instead and celebrating the benefits HDTV could very quickly begin to deliver. The fact is, Hollywood would have a broad smile on its collective face from even the most hesitant rollout of advanced television systems rather than trying to start from scratch with a clean sheet. That would be cold comfort to the scores of consumer electronics and broadcast/telecine businesses that have bet hundreds of millions of dollars on HDTV. Companies are already situated to take advantage of an HDTV market. There are several consumer electronics makers who also have PC divisions. They are ready and willing to start cranking out TV sets that will satisfy both broadcaster and PC industry demands. And where will the current face-off take us? Will Steven Spielberg, who believes the aspect ratios on HDTV screens need to be at least 2:1, ban people from watching his films on old RCA round color TVs or monochrome TVs? If Spielberg and other film directors want a larger audience to appreciate their films' finesse and detail, then HDTV is a better way. This winter the first 16:9, 42-inch diagonal flat panel TV screens come to market. They are triple-threat entertainment wonders, for those who can afford them. They will show line-doubled NTSC analog TV at new levels of quality, HDTV interlaced or progressive scan Standard Definition video, and progressive scan PC video. What my Long Island neighbor Spielberg probably doesn't appreciate is that millions of Americans watched Jurassic Park with ghosts and image reflections that marred the image he spent months crafting -- Analog ghost imperfections which are done away with in the Advanced TV system. Indecision at this point is deadly. It's an insult to the thousands of Americans who have labored for nearly a decade to bring the benefits of Advanced TV to American consumers. American companies have taken the risks. Now they deserve the rewards. Don't believe me about the danger in holding back? Then consider that in Europe PAL- plus already delivers better TV images of "Jurassic Park" than any American can get, even from LaserDisk. Europeans also are starting to make hybrid analog and digital TV receivers superior to American designs. Delays in enacting a North American HDTV standard set the stage for this situation. It's hard to swallow argument that the current HDTV proposed standard doesn't cater to future technologies. New technologies will continue to develop, but the time for HDTV alternatives has passed. Apple Computer, Microsoft and other companies had a fair chance to give their opinions, but the election is over. Now Federal Communications Commission must decide. Too much has been invested. Too many jobs are at stake. I'm not saying that the proposed standard is obviously deficient. But it's a roadmap to digital theater and broadcast display resolutions that exceed our current ability to manufacture. European and Asian proposals do not. After the FCC makes its decision, then Hollywood, sports broadcasters, PC makers and silicon architects can address the upper ranges of MPEG II extensibility. That will give us something to wonder about in the decades to come. Monday morning quarterbacking is easy, but this game began 50 years ago. The PC industry would do well to be locked in a room that shows the care with which video architects have evolved the state of the art 1946 TV. That TV, the first 1954 color set, the1967 Trinitron and the latest 16:9 CinemaScreen RCA set can all play all the broadcasts in North America. What 50 month-old PC can play in today's world? The PC industry should also be reminded that the personal computer began, in the Apple II and others, in the form of a TV-attached display. Once the FCC decides on a standard, American companies can begin to capitalize globally on their many years of technology investment. And boy, does this nation need a kick in the aging patent pool! If the standard is postponed, there better be a way to extend companies' patents. Patent coverage time should reflect their market capitalization time. If Hollywood wants better imagery, let them show it using two-page, 16:10 aspect ratio CRTs such as the new one from Sony. It's a great $2,700 monitor, fed by a Pentium Pro PC and 32 MBytes of memory. Let this become part of the electronic cinema, where PC processing and all progressive displays will change the way movies are shot, distributed and viewed. Very soon, Advanced TV will offer the best near-term, deliverable entertainment quality anywhere on earth. Please, Hollywood, leave consumers alone. You stunted VCR growth, only to have Motion Pictures Association of America Chairman Jack Valenti admit sheepishly (20 years later) that "maybe I was wrong about VCRs." We do not have the time for a Hollywood influenced delay of HDTV. Advanced TV will soon deliver room-sized, eye-popping entertainment for far less cost than PC-style solutions, which are years from mass scale pricing potential. And to the senior members of the FCC's Advanced Television Systems Committee, which has overseen the standard-making process: Stop taking potshots at computer and Hollywood interests you do not understand. I, for one, hope to celebrate this Thanksgiving with a toast to my soon-to-be-outdone home TV sets and video projectors. Within the year, they will be joined by a new HDTV system or two.Then, in a few more years, my children's generation will have the right to criticize this generation's HDTV design work and usher in the Ultra-Definition TV era. From the HDTV world, I will applaud their right to try. However, I do not applaud political efforts designed to upset the apple cart at the eleventh hour. The same people who are politicking so loudly left the playing field voluntarily some time ago. Now they want back in on their own terms. Why aren't these same Hollywood experts applying their concerns to special wide screen modes of DVD movie and DVD-ROM, thereby making their product more palatable and watchable to modern audiences? Hollywood should concentrate on getting the price of theater tickets down and begin delivering DVD movies to eager audiences. Likewise, personal computer makers should deliver a better implementable plan than the ATSC or move aside. HDTV is coming on fast, and it won't wait for industries which make their products obsolete every eighteen months with items that are generally far from consumer reliability. Consumer electronics usually run 99.99 percent of the time, not 90 percent. People don't need to reboot their TVs -- yet. Let's get the HDTV market up and running next year, without waiting for resolution of all concerns and conflicts. I humbly propose the following three bridge products: Advanced TV translation/decoders (Transcoders) that will re-map HDTV signals and digital image quality to anyone's TV set. Retail ownership and cable lease will be possible. Hybrid TVs, capable of progressive scan 640 x 480 resolution, that can be produced for a few dollars over traditional analog NTSC sets. Sure, the screen aspect ratio is wrong, but these are bridge products. Flat screen, hang-on-the-wall high-resolution video displays. Perhaps more than any other produtcs these flat-panel screens -- once the stuff of science fiction -- demonstrate that the consumer and computer electronics industries can work together. They show high quality, line-doubled television, interlaced HDTV, progressive scan HDTV and computer imagery right out of the box. We need that locked room badly. The two sides must get together, butt heads, draw blood, and open the door with an agreement that will let this whole thing move ahead now. Indecision is the worst problem. Coordinated approval gave the world color TV and tremendous benefits. Risks taken by RCA Sarnoff and CBS Labs forty years ago led to billions of dollars in infrastructure investments and global leadership for the FCC-approved NTSC color TV system's designers. The HDTV Story So Far The Federal Communications Commission is unlikely to announce a final decision on a U.S. HDTV standard this year and, with the computer industry and FCC chairman Reed Hundt seemingly set against the current proposal, it could be well into next year before it comes. Once the Grand Alliance of broadcasters and TV set makers made their final recommendation on a terrestrial HDTV broadcast standard last year, after eight years of development and testing, it should have been a matter of months before the affirmation was handed down. However, the computer industry has complained that the proposal does not adequately take into account its interoperability needs. Powerful voices in Hollywood have also said the standard does not cater for the future needs of the film industry. Broadcasters and other backers of the Grand Alliance proposal have been in talks with the computer industry for the past few weeks to see if there is a way past the objections, but as of last week there seemed to have been little headway. The FCC, meanwhile, is still grinding through the process. Robert Graves, chairman of the Advanced Television Systems Committee, said Friday that it now looks "tight" for the commission to complete all the necessary paper work by the end of the year and that, realistically, it will probably be January before there will be a decision. Whether or not it will happen even then is still open to question. Three of the FCC's commissioners, a majority, are apparently in favor of the proposed standard. But with chairman Reed's opposition, and skepticism in Congress that the government should even be involved in setting industry standards, even if a favorable decision is handed down it may not be the last word. [ Back To Top ]   IN SHORT....... Intel in Motown? Perhaps that's the next stop for the chip king, which is looking to capitalize on the current connectivity and mobility trend with something it calls the 'Connected Car PC'. Yes, it's serious. Seeking revenue growth and expansion Intel is trying everything to grow the market for Pentiums. Evidently, the home, set-top boxes, laptops, PDAs, etc. have not been enough as it is now targeting the automobile as a platform. Development tools and a reference platform are apparently already available, although it's not clear if the platform includes the automobile. A developer conference is also planned. So, Intel thinks it has the answer. The wise developer may choose to partner with BMW. At least you can say you need a nice German car for development work. Given Intel's enthusiasm for this one popular mode of transport, we can only conclude that the Airplane Seat PC is next. [ Back To Top ]   In Sight Of The Grail? Today, a group of companies including Hewlett-Packard, Microsoft and IBM will announce in Washington a "breakthrough agreement" that will enable export of strong encryption products. This follows an announcement Friday by President Clinton of an executive order liberalizing exports of products containing strong encryption. The issue has become a major headache for U.S. companies, whose products routinely include strong encryption, to the point of threatening such things as expansion of the Internet and electronic commerce. For example, Web TV, a manufacturer of an innovative Internet browsing system (see this issue, page 2) was denied an export license because of the policy. [ Back To Top ]   How the Mighty Have Fallen In a blurb touting its success as a second-hand marketer, ONSALE, a company that sells old computers over the Internet, said it had recently sold an IBM mainframe computer for $12,250. ONSALE claims to sell over $1 million worth of computers and electronics a week, with prices normally ranging from $50 to $5,000. The sale of the mainframe, it said, is an important milestone because it shows products between $10,000 and $20,000 can successfully be sold online. Maybe. However, you can't help but feel a little sad at this sign of the final decline of a perhaps more glamorous era, before the coming of the ubiquitous PC. It seems that even mighty Big Blue, which once sold its mainframes for many millions of dollars, can't get much for its scrap iron these days. [ Back To Top ] Questions, Comments? We would like to hear from you! All contents are Copyright © 1998, The Envisioneering Group.