"We're not just a TV company anymore, and I'm not willing to bet that in five years we know the difference between a PC peripheral and a TV." So said Thomson Consumer Electronics (TCE) senior executive VP Jim Meyer at a media briefing in New York, during which the company's expansion into a variety of information-delivery boxes was a major topic.
The newest item, Meyer said, is an agreement to invest $15 million in GeoCast Network Systems and to develop, produce and market through retail in 2001, a box to deliver to PCs, and later to TVs, information and entertainment sent over-air by local TV stations.
The box, which will have a hard disk drive, has a target price of $300, and TCE has a one-year exclusive in consumer distribution channels, said Meyer. Importantly, he noted, the service is ad supported, "so it's free, just like broadcast TV -- and 'free' is a good word."
In other, non-TV products, TCE just got CableLabs certification for a second-generation cable modem. "Right now our cable business is great, and we see this as a big, big business for us next year" said Meyer. The company has just begun shipping its $649 DTC-100 combination over-air analog/digital and satellite digital/HDTV receiver, with Best Buy offering it on a national basis. TCE is now looking to tie in with a cable operator to supply digital set-top boxes.
TCE also is planning to support with receivers a spring launch in Denver and Phoenix of Command Audio, a service that allows consumers to select from a list of 200 the type of radio programs they want to receive. The radios, which have an updateable six-hour memory, will retail for under $200. The subscription service is $14.99 a month. TCE is also seriously looking at what opportunities the coming of digital satellite radio may offer.
But while it's not the only business, TV is still TCE's biggest. Meyer noted that by the end of this year the company is expected to ship more than 1.5 million color TVs with built-in Guide+ onscreen program guides. He expects to see that at more than 4 million in 2000 as TCE adds the feature to all RCA and ProScan sets 19" and over.
"I'm bullish on TV" sales, Meyer stated, but he is concerned with the ongoing price erosion in all areas. While business in November "was good for everybody, including us ... the pricing was as aggressive as I've ever seen."
Meyer said that now "there is significant competition for prime space [at retail], particularly at the lead price points. I'd love for you to print that I think it will get better in the first half," he told the assembled journalists, "but I think it's going to be a tough first half."
On the plus side, Meyer said TCE is "essentially sold out" of DVD players -- though "what they sell for at average retails is a different matter" -- and DirecTv "is our hottest business by far right now, even hotter than DVD." And that, he noted, is before the start of local channel availability via satellite, a development that "is going to be a major shot in the arm for the business," particularly in major markets.
Another optimistic sign, said senior sales VP Mike O'Hara, is that reports from retail show consumers have a higher than expected interest in digital TV, as opposed to big-tube analog. "They are very interested in digital-ready and HDTV and are considering purchases at a level higher than anticipated."
TCE utilized a following press conference, in part, to demonstrate the effectiveness of the 8-VSB modulation scheme selected for the ATSC's digital television standard. The signal transmission and reception system is currently under attack by Sinclair Broadcasting and others who feel the COFDM system used in Europe is more effective for signal reception in urban and mobile applications.
Meyer put a rabbit-ear antenna -- $6.99 at RadioShack -- on top of a new fully integrated RCA 38W" HDTV set that produced a perfect 1080i picture from the local digital signals of WCBS-TV. This illustrated the contention of Meyer and others that 8-VSB will work effectively in even the densest urban areas, where signal reflection off buildings and passing vehicles can sometimes cause lesser-quality DTV-tuners to lock up.
The new set, RCA model F38310, will ship in the late spring. The ProScan PS38000, which is a similarly configured fully integrated HDTV set, will ship at the same time, according to TMM executives. Pricing on both will be announced at the CES.
To show the effectiveness of its DTC-100 decoder, TCE showed the same channel decoded by the set-top box and displayed on a high-resolution monitor. O'Hara then demonstrated the digital signal compared with the reception of a local NTSC analog broadcast. An attempt to receive a VHF analog signal failed entirely, and a UHF channel was pulled in full of ghosts and other distortion.
"Even in the largest city in America, in a high-multipath environment, on the first floor, surrounded by skyscrapers, using an off-the-shelf antenna purchased yesterday, digital TV works like a charm," said O'Hara. "I think you have to question the motives of some in the broadcast industry who may be trying to delay the digital TV transition for their own special interests."
In audio, Thomson entered the CD-R/RW market with a dual-well recorder, said it will enter the DVD-Audio market, and announced plans to add Windows Media Audio (WMA) playback capability and USB compatibility to its Lyra solid-state audio portable.
The dual-well CDRW21, due in April at a suggested $549, features 2x recording speed, sampling-rate converter, pause-free consecutive play between discs, ability to copy HDCD encoding, manual CD titling, CD synch to eliminate false starts when recording begins, two microphone inputs, and ability to add sound effects.
In DVD-Audio, TCE will show a mockup DVD-AV player at CES under the ProScan brand "to let customers know we will be present in the product category." The company had targeted Christmas 2000 sales before the music industry and DVD Forum's Copyright Protection Technical Working Group (CPTGW) decided to revisit the choice of the format's encryption system. He nonetheless called Christmas sales of the ProScan product "still feasible."
DVD-AV players are needed, the spokesman said, "to maintain a stair step of features," now that some DVD-V models are selling at $149.
In adding to the Lyra's capabilities, Thomson in late January will offer a software download to add WMA playback capability to complement MP3 and RealAudio G2 playback. At that time, a second music-management software package -- Music Match Jukebox -- will also be available to download. Thomson purchased a 20% equity stake this year in the software's developer. The Lyra currently ships with Real Jukebox.
A downloadable software patch to give the device USB compatibility will probably be available around the same time in January, the company said.
Thomson has decided to skip Phase I SDMI and go directly to Phase II when that spec is completed, advanced audio manager Jeff Scott said. Nonetheless, like some non-compliant portables, the Lyra already incorporates some copy-protection safeguards.
Meyer called the Lyra launch "a success for Thomson Multimedia" but noted that "our biggest problem is supply." Demand, he said, is "skewed to the higher-end model," and it's "tough to keep up." The current Lyra is advertised at $199 when sold with a 32MB removable Compact Flash card and $249 when sold with a 64MB card. -- Additional reporting by Joseph Palenchar and Greg Tarr