Déjà vu And 'Convergence'
By Steve Smith -- TWICE, 1/19/2004
If you've been involved in consumer electronics for a few years you've must have had the same déjà vu experience I've had over the years. Namely when a friend or relative asks about a new format or technology that you've known about for a year or two, it's old news. By the time a product based on that format or technology reaches the stores, you're already impatient, hearing about the format that will replace it.
That's how I felt a couple of times at the record-breaking International CES held earlier this month in Las Vegas. A typical example of this phenomenon is DVD recorders. We've all seen and heard about DVD recorders for years. Now consumers are getting aware of them. Sales are trending upward, so much so that many think that 2004 could be a boom year for the category.
But we in the industry have talked amongst ourselves about Blu-ray, the optical disc recording format for HDTV. Will it upstage DVD recorders in the market? LG says it plans to introduce Blu-ray in the United States this year. Other potential suppliers say a widespread "early" introduction of the format this year will undercut demand, and profit margins, of conventional DVD recorders.
Another example was the talk leading up to CES both inside the industry, and in the consumer press, about computer companies entering the CE business, and vice-versa. That's convergence. Remember "convergence?"
We began to hear the term bandied about starting around 1996 I believe. A year or three after that, when the first TV/PCs came and went out with a whimper, and so did the term "convergence."
Well if you were at CES this month, or read our coverage of the show, the word may be dated to some, but the idea is being implemented. Whether it is "Connected Planet" (Philips), "LifeStream" (Panasonic), "DigitaLibrary" (Pioneer) or "Windows Media Center" (Microsoft), everyone at CES was talking about home networking, or combining individual products for a common goal. Hey, we're talking real "convergence" here, finally, with a capital "C" with heavy hitters like these, and others, marketing and selling actual products.
Of course forms of "convergence" have been happening for the past several years as CE and PC products talk to each other through shared formats. Who would have thought a decade ago that for some the PC would be their main audio system? Who would have believed cellular phones would not only give you voice service, but Internet access and a camera to boot?
Convergence, in terms of the networking of Internet access, voice phone calls, digital audio and HDTV video entertainment, for a majority of consumers is almost within grasp, if you believe the hype. (And this time the hype is pretty accurate.)
Another form of convergence is also taking place, and some would say to the detriment of manufacturers and retailers alike. Shorter and shorter product lifecycles, similar to the PC business, and the entry of PC retailers that work based on a different (read "less profitable") business model are aggressively selling CE products now.
What will be the result of that type of convergence? Well that's really a subject for another time.
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