Summary. This Bulletin discusses the major technology trends in consumer electronics and new products from Apple’s competitors in the Consumer Market. Apple competes with many consumer products besides other home computers. Continuing education and advertising are still required to motivate people to buy a PC instead of other products.
The Show was a bit on the slow side this time, with no major new technology to spark the crowd. Attendance was officially estimated at 90,000, but did not appear to be much more than 80,000 based on previous shows of that size.
Digital Audio Tape [DAT] products were shown by all the major audio manufacturers, usually in the form of a top-of-the-line $1500-$2000 full-featured unit. DAT units were generally shown along with the rest of the line and not highlighted. A few companies actu ally have them on their dealer price lists and claim DAT will be shipped in the spring. However, DAT was not pushed heavily since legislation on CopyCode (CBS’ copy pro tection scheme) is still pending. Sony and Hewlett-Packard are exploring the use of DAT as backup devices for computers. One tiny DAT cassette can hold a gigabyte of data.
Compact Disc Technologies: Sony is pushing 3-inch audio disks that hold up to 20 minutes of music and cost $3 to $6. The product is aimed at expanding the CD market to cost-concious younger buyers under 25 years old who buy 40% of all prerecorded music but so far have ignored CDs because of their high prices. Most existing players require the smaller CDs to be fitted with a plastic adapter ring. Meanwhile, prices on regular CDs may finally be coming down—the Warner family of labels announced some 270 titles were re duced from $15.98 list to $12.98. Some smaller labels now have titles as low as $9.95.
CD-ROM, CD-I, DVI had zero presence. These are clearly (and correctly) not seen as consumer technologies by any of the major consumer electronics firms yet. A precursor to all three of these technologies is CD + Graphics, announced originally with CD-Audio but never implemented. It makes use of "subcode jacks" that most high-end players include. CD+G allows text and simple graphics to be stored on the disk and shown on a TV screen while the disk is playing. Applications include artist pictures, album art, liner notes and credits. CD+Graphics will be launched at the June CES.
CD-Video players were shown by a few individual vendors in a very low-key fashion. This was in sharp contrast to the Summer CES' huge CD-V consortium booth. The new format combines 7 minutes of LaserVision analog video with up to 20 minutes of digital audio on a standard compact disk. It has been held back due to technical media problems, lack of mastering facilities and royalty issues. CD-V disks begin shipping in June.
Television Technology. Toshiba showed a prototype 3-D TV using alternating LCD shutter glasses developed by JVC and currently being used by SEGA in its 3-D video games. The flicker is very unacceptable. Toshiba also showed a "flickerless" system that was substantially better, but still annoying. Brightness and resolution are no better than current TVs, but depth and depth accuracy are quite good. Fisher also showed 3-D TV using polarized cardboard glasses and a large projection screen. The Fisher system was much better than Toshiba's in all the above aspects as well as being much cheaper to pro duce, broadcast and view. The glasses were more comfortable, too.
Several incompatible techniques for High and Improved Definition Television [HDTV and IDTV] are being bandied about globally in search of commercial support. None are compatible with existing television sets. Some are compatible with existing broadcast systems and as such are poor compromises. Some are dependent on DBS [Direct Broadcast Satellite] which require digital receivers and dish antennae and thus are very expensive. Different systems have been shown in previous years, but only one was on display this time. Sanyo showed a prototype that utilizes compression schemes that it claims are “adaptable” to current broadcast techniques. A beautiful, 110-inch projection screen was displayed with near-35mm theater film quality. A specially produced videotape of native folk dancing and costumes and stunning scenery was shown with excellent color depth and rendition, very good resolution and with very few of the video anomalies and artifacts normal to the NTSC, PAL and SECAM systems. As promising as the demon stration was, Sanyo was mum about any futures on the system other than to speculate on possible use in business closed-circuit teleconferencing.
Videotape Technology. Toshiba, JVC and many others showed S-VHS VCRs and compatible monitors. Super-VHS is a recording technology that finally matches [and ex ceeds] broadcast quality. It requires special decks and tape and is incompatible with exist ing VHS systems (VHS tape will play on S-VHS deck but not the reverse). For best re sults a special monitor is also needed. Toshiba's product was especially exciting in its use of digital special effects, editing and indexing. It's the first VHS VCR that could be practi cally used for Interactive Video with PC-control.
Sony Bites the ßeta Bullet. One day after the show closed, Sony announced back in Tokyo that it will be showing VHS VCRs in June. They will be OEMed from Hitachi; Sony will make its own later this year. It will still be selling Superßeta and EDßeta (Extended Definition), both superior to VHS HQ and S-VHS, respectively. Apparently, Sony finally decided that a 7 to 8% protected market share wasn't enough and is looking forward to immediately grabbing a good-sized chunk of the VHS market as well.
Videogames are hot again, with Nintendo's and Sega's booths being among the biggest and most popular. Nintendo had a banner year, selling more than 8 million cartridges worth over $173 million in the U.S. alone. (This ranks Nintendo behind Lotus at $286 million with the third largest U.S. software revenues!) Nintendo also sold over 3 million game consoles. Its 25 licensees sold another $225 million game cartridges. Game, sound and graphics quality are all improved and sometimes rival computer games.
Office-At-Home Products. The CES’ official designation for work-at-home and home-based businesses, OAH products were everywhere. Dozens of Japanese companies showed TADs [Telephone Answering Devices], telephones of every type imaginable [speaker, cordless, picture, intercom and integrated], facsimile machines and FaxPhones, and personal copiers and faxcopiers. Personal computers are just beginning to be con sidered a part of this concept. As PCs and OAH become clear in the minds of office equip ment and consumer electronics dealers, channel demand for PCs should grow.
Home Control/Monitoring. The “Holy Grail of Home Control,” an AC-wiring based system, came one step closer to reality when NEC unveiled Spectrum AC. This new tech nology allows existing AC wiring, outlets and plugs to be used as a 9600 baud LAN for intelligent communications between various proposed products including consumer elec tronics, appliances, alarm systems and personal computers. The prototype “black box” uses an 11 MHz 8-bit CPU that modulates the control and monitoring signals in several frequency bands across a spectrum from 10 KHz to 450 KHz. This spectrum method avoids all the noise inherent to the AC lines as well as provides error correction and multi ple channels on the standard 3-wire AC “home bus.” It will probably be several years before Spectrum AC is a real product, but it is certainly the most promising technology yet.
Home Computers. None of the Top Five home computer suppliers were present. IBM, Apple and Tandy never show at CES and surprisingly neither did Atari or Commodore.
Franklin Computer appears to be doing well with their Apple II clones and is diversi fying into dedicated, handheld computers for typing instruction, word games, dictionaries and thesauruses. Models include the Spelling Ace, Word Wiz, Spellmaster, Word Master and Language Master. The latest version unveiled is the Pocket Spelling Ace with a vertical orientation and the size and shape of a pocket calculator. There were no new CPU prod ucts shown and Franklin’s distribution still is mostly dependent on Sears.
Video Technologies. The Laser 128 line has expanded to include accessories such as joystick, mouse, 5.25 and 3.5-inch floppy disk drives, carrying cases, monitors and stands, a full line of cables and an RF converter. A new two-slot expansion box that docks to the open slot port on the left side of the Laser 128 should help overcome the blatant safety problems caused by exposed add-on boards. The Laser 128 retails for $479.95 and the triple-speed 128EX goes for $579.95. Dealer pricing is $350 and $390, respectively. Video Tech is copying Franklin again as it moves into the dictionary computer market. (It is also moving into the musical keyboard market with Casio-clones called “Rhythmic.”)
Video Technologies continues to branch out in the MS-DOS world as well. In addition to its existing $599 Laser Compact XT [an XT in a //c-like case], the firm unveiled the $699 Laser Compact XTE which adds EGA and LIM Extended Memory support to an already long list of features and the $800 Laser Turbo XT, a very standard three-piece system.
Amstrad’s booths and its new portable attracted a lot of interest. Amstrad has been wildly successful in the UK and in Europe, but has never been able to gain a foothold in the U.S. market. The company showed its PCW 9512 word processor, two dot-matrix printers, the PC 1512 IBM-clone, and the new PPC 512 portable. The portable’s unusual design sports a flip-out full-size keyboard and a flip-up backlit LCD. Folded up, the unit is about the size of two keyboards stacked together with a sturdy handle on the left side. The PPC 512 features an 8 MHz 80C86, 512 KB RAM, 1 or 2 720 KB 3.5-inch drives, serial, parallel and video ports, MDA and CGA built-in, AC Adapter, 8-hour battery operation from 10 alkaline C-cells, MS-DOS 3.3 and 101-key AT-style keyboard. Dimensions are 17.75 by 9 by 4 inches. It weighs 11 lbs. excluding batteries and costs $995 with one floppy. Booth officials claimed 20 MB hard disk capability in June.
While the Blue Chip and Hyundai booths were roundly ignored by dealers, Vendex Pacific’s HeadStart PC-clone was well received. The Vendex booth featured guest ap pearances by King Kong Bundy, a heavyweight pro wrestler who testifies in Vendex ads that he “learned to use the system in 23 minutes.” The HeadStart’s claim to fame is that it is the first MS-DOS system that is “so easy to use it instantly brings out the genius in you.” Vendex is actively targeting business computerphobes by offering ease of use, one-year full warranty, optional warranty extension to 2 or 3 years, optional On Site Service and, for only $49.95, OnSite Set Up for the most timid. This service sends someone to your desk to set up the system, install the software and utilities and give a personalized orientation. The $995 HeadStart Turbo complete system comes with the XTree DOS-shell, an excellent manual and the AT Skill Builder tutorial disk as well as the Executive Writer, Executive Filer and MyCalc productivity programs. A 20 MB hard disk can be added for $549.
Epson’s Apex line of IBM-clones for the mass merchant channel was shown but was overshadowed by Vendex. Sharp’s portable MS-DOS systems, the PC-4500 line, is slick and well-positioned toward the Toshiba T1100 intenders.
Psion Ltd. from Watertown, CT unveiled the world’s first handheld computer advertised to be “compatible with Lotus’ 1-2-3.” The Organiser II is 5.6” long, 3” wide and 1.1” deep. It weighs 8.8 oz and uses an 8-bit 6800 type CPU at 1 MHz. There are 36 multi function rubber calculator-style keys and a 2-line x 16-character LCD screen. A 32K ROM holds the operating system, the OPL language and applications software. “DataPak” RAM cartridges in 128K or 64K sizes plug into the side. A 9600 baud RS-232 port at the top of the unit connects to an optional Magnetic Card reader, a Barcode reader, parallel communi cations or a host computer (IBM PC compatible). It runs two to six months on a standard 9-volt alkaline battery. Software DataPaks include Finance, Math, Oxford Spelling Checker, and Spreadsheet (which can import, save or export DIF files to/from Lotus 1-2-3.) Built-in functions include Filer, Diary, Secretary, Calculator, 8 Alarm Clocks, Calendar, OPL programming language and online help. Organiser II lists at $995.
Apple Presence. Apple was represented by the IIGS at several software and distribu tors' booths, but we clearly did not have the software presence we have had in the past due to fewer releases for the Apple II line and a developer shift toward Nintendo and Sega.
Strangest Item at the show was from Toshiba. The Tosbax stereo jacket is a fashion able, puffy all-white jacket with removeable sleeves and four speakers built into the shoulder pads and in the breast pockets. The internal wiring is invisible and connects your existing Walkman-style tape or CD player which fits into the right front pocket and is connected to an amplifier in the left front pocket. The whole assembly weighs just 3.5 lbs., feels pretty good, looks spiffy and sounds absolutely terrible. Yours for only $179!
Market Statistics. The consumer electronics market continues to grow at a steady pace. Total U.S. revenues last year are estimated at about $32 billion. Growth this year is ex pected to be in the 5 to 6% range. The audio segment is being fueled by CD and is grow ing faster than video. Although camcorder sales are hot, total tabletop VCR ship ments from Japan are expected to drop slightly for the third straight year. This is due to the Koreans as well as a nearly saturated market. VCR penetration in U.S. households now stands at 49%. More VCR sales this year are expected to go to upgrades and second units than to new buyers. MTS (Stereo TV) was available on 30% of the Color TVs sold last year reaching about 7% household penetration. Other penetration rates were: TV-98%, Color TV-93%, projection TV-4%, Camcorder-3%, Compact Audio system-54%, Component Audio-43%, CD player-7%, TAD-18%, Cordless Telephone-18%, Videogame-38% and Home Computer-16%. (All data extrapolated from EIA/CEG.)
Conclusion. In the broadest view, consumer electronics products continue to be Apple’s major competition on the Home segment. All PCs sold into this market must compete for the same limited amount of discretionary income that each household has to spend. All home PCs must vie with the latest VCR, 35mm SLR, dishwasher, CD player, car stereo, monitor/TV, etc. for emotional mindshare and intention to buy. To the great majority of people, a home computer is not nearly as useful, fun, interesting, exciting, useable or affordable as a (fill in your favorite consumer electronics product here). Until the Home Market is better educated and better motivated, Apple is competing as much with GE/RCA, Sony, Pioneer and Sharp as it is with Commodore, Atari, Tandy and the clones.
