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1995: A Watershed Year In CE’s Digital Development

1995 will be remembered as a watershed year, when standards were set for digital CE products that created markets for the next decade and beyond.

A standard for digital high-definition television was recommended to the Federal Communications Commission that November. The recommendation was a triumph for the then-Consumer Electronics Manufacturers Association, or CEMA (now known as the Consumer Electronics Association), and members of the Grand Alliance, a number of research labs including Sarnoff Labs with NBC and Thomson Consumer Electronics, Zenith who worked with AT&T, and Philips and General Instrument in a joint effort with AT&T.

TWICE reported, “The recommendation could lead to an FCC adoption of a standard by the end of 1996 and the start of very limited HDTV broadcast service — along with the sale of the first digital HDTV receivers — by the end of ’97.” Thankfully our coverage qualified that optimistic statement with the following, “The sailing may not be quite that smooth.”

While the standard was adopted by the FCC in 1996, aspects of the standard continue to be debated, tweaked and argued about. The first sets were sold in 1998.

During all of 1995, two new digital video disc formats (and their respective camps) fought it out at conventions and tech seminars worldwide. By December both sides agreed to one format, DVD. For those of you who don’t remember, the two formats were Super Density DVD with a group led by Toshiba, Warner and Matsushita, and the Multimedia CD group backed by Sony and Philips.

Those were just two of the tremendously important stories that broke that year. When you look at a laundry list of developments, it boggles the mind that all was packed into one year. For instance:

  • The one millionth Digital Satellite System receiver was sold at retail. RCA, which had the hardware exclusive for a year starting in 1994, was joined in 1995 by Sony, among others;
  • Microsoft’s Windows 95 operating system debuted that fall, with all the hoopla of a new “Star Wars” installment. There were the first of the “midnight madness” retail openings nationwide, where consumers plunked down $89.95 to get their hands on the software by 12:01 a.m.
  • The first in-dash CD players and sales of car-navigation systems began.
  • LG Electronics bought Zenith, the last U.S.-owned manufacturer of color TV, that fall for $351 million.
  • In January, Microsoft founder Bill Gates made his first International CES keynote speech in Las Vegas, the beginning of a tradition.

During April, the TWICE Consumer Electronics Registry of the top 100 retailers indicated that sales for the elite group grew by 20.5 percent during calendar year 1994, hitting $49.75 billion. Circuit City remained as No. 1 with $4.378 billion in sales, but new No. 2 Best Buy was close on its heels with $4.317 billion. Radio Shack moved down a notch to No. 3 with $2.853 billion.

Perhaps RadioShack’s sales went down a notch because its parent company was spending so much time and money on two other retail operations — Incredible Universe (IU) and Computer City. The size of each IU was an enormous 160,000 square feet to 200,000 square feet, putting a new spin on the idea of “destination stores.” But they proved too big to navigate and too expensive to support, so by 1996 Tandy closed the chain. For other reasons, such as intense competition and overexpansion, Computer City’s ultimate demise began soon after.

Showing how the fortunes of CE retailing can change quickly, early in the year, TWICE profiled Yes! — the combined chain of Michigan-based Fretter that bought Silo from U.K.’s Dixon Group — reporting that its management and the industry felt the newly named chain was streamlined and ready for business. But by the end of November, TWICE reported that Fretter was shutting locations in New England, and it closed soon afterwards.

At CES in January, AT&T showed a peek of today’s online communications with the “Information Center” set-top box that would deliver personalized information and services via telephone lines and TV.

At the fall COMDEX, Sony announced it would introduce a computer line in 1996, which would become Vaio, and it debuted its 32-bit PlayStation video game system.

In a comment during COMDEX that fall, Gary Pearson, Philips’ business development VP/general manager, put what everyone was thinking about convergence at the time into words: “[Computer vendors] had the home office, and we’ve always owned the rest of the house, but now there is a fight for who is going to get the living room and bedroom by producing the TV of the future — the computer companies or the consumer electronics companies.” In a few years, technology, and marketing strategies, would substantially blur the lines between the two.

And TWICE had its eye on this soon-to-be digital world: a blurb in our final edition of the year said that the TWICE Winter CES Daily for 1996 would go online. While TWICE wouldn’t have a Web site of its own until 1997, our coverage appeared on the Winter CES Web site and on a special area of “America Online,” the latter being a key Web portal that would lead consumers into the new online world.