Monthly Archives: July 2006

Big HDTV Sale for Dell

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I know that this makes two Dell items in a row, but this one is on a different subject. You may be having a hard time deciding which HDTV to buy, but what if you were buying nearly 500 HDTVs at once? This was the problem faced by the folks who run the American Airlines Center – home of the NBA Dallas Mavericks (owned by HDTV-proponent Mark Cuban) — when planning upgrades to the venue’s displays. On Friday, Dell announced that they will be providing the HDTVs throughout the Center.

185 42-inch plasma HDTVs will be installed in the 144 luxury suites and common areas. Upscale areas will get 23 50-inch plasma HDTVs. In addition, they will install 276 23- and 32-inch LCD HDTVs for digital entertainment and signage in the concourse.

That’s a lot of TVs on one order, but this is part of the market known as the hospitality segment. Flat screen HDTVs are being installed in thousands of hotel rooms – and cruise ship cabins — every year. A large number of these sales are made directly by the manufacturer, rather than through some retailer or installer. At this point, flat panel screens enhance the guest experience and provide a luxury component that can give a hotel or other location a competitive edge. As this trend continues, however, such venues will have to move up to flat panels just to keep pace with the competition.

Can’t make up your mind between a plasma and an LCD HDTV? Professor Poor’s Guide to Buying HDTV will help you make the best choice.

When Is a Store Not a Store?

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You walk into a store. You find a product that you like. You ask the salesperson for one. You’re told that they don’t have any in the store. In fact, they don’t have any of the products on hand for sale. Huh?!

It sounds crazy, but that’s exactly what Dell has done in opening its first company-owned store, in Northpark Center Mall in Dallas, Texas. And later this year, a second one will open in West Nyack, NY. But you won’t be able to take home any Dell products from these stores. These new operations are actually a logical extension to the 170 kiosks already in operation in malls and airports around the country; they don’t stock any product, either.

Instead, customers are able to place orders for the products, which are delivered directly to the buyer’s home or office. This has been successful, as it gives prospective buyers a chance to see and touch the products on display, an experience not available over the Internet. And you get to make a traditional purchase face to face with a real person, which some people may prefer over ordering on the Internet. And these stores will let Dell display more of the company’s products along with various accessories than 12 or so items that fit in a kiosk.

Buying a display product — especially an HDTV — is difficult using the Web, as you can’t really see what you’re getting. This is one reason that many studies have shown that people research their HDTV purchase on the Internet, but then buy locally at a retail store. Dell’s kiosk and store approach preserves the company’s direct sales strategy. And unlike Sony and Pioneer who also have opened retail stores, Dell doesn’t have to worry about competing against other retailers who also carry their products.

Another LCD Maker Cuts Back

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This week, AU Optronics (AUO) announced that it’s cutting back on its capital expenditure plans. Taiwan’s largest LCD manufacturer, AUO said that it will cut the expansion budget by about a third — from about $3 billion to $2 billion — and is postponing additional capacity on its Gen6 and Gen7.5 production lines.

Different manufacturers are responding to the current oversupply of LCD panels in different ways. LG.Philips LCD and AUO are two of the largest companies, and they are cutting back. Samsung is forging ahead, however, and Sharp has announced plans to build a Gen10 plant. It’s not at all clear who will be in a better position once the current excess inventory works its way through the channels.

The good news for buyers, however, is that prices will have to come down as a result of the glut, as everyone along the distribution chain will be anxious to convert this inventory into cash. September still looks like a good time to plan to shop.

Are you shopping for a new HDTV? Avoid expensive mistakes; read Professor Poor’s Guide to Buying HDTV before you buy.

Barney and Betty on iTunes

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Is there any money to be made in downloading television shows from the Internet? Multiple choice: How many videos have been bought and downloaded from iTunes so far? (A) 1.5 million (B) 3.5 million (C) 15 million (D) 35 million. And the answer is (D); at $1.99 a pop, that works out to nearly $70 million in sales.

That figure is enough to get the attention of Warner Brothers, and they just announced a deal to post episodes from some of its most popular shows including “Friends” and “Babylon 5″. Hanna Barbera fans will be please to know that “The Flinstones” and “The Jetsons” episodes will also be available.

Okay, 35 million videos is impressive, but keep in mind that this is less than one quarter of the people who watched the SuperBowl last year. Internet distribution of video content is growing rapidly, but is not threatening the traditional mass-market programming… at least not yet. Still, the major content producers are slowly discovering what the indies already know; the Internet is a great way to reach a narrow audience. I expect to see video content distribution on the Internet to keep growing rapidly.

HDMI Costs Reduced

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I’m the first to admit that the alphabet soup of television technology and organizations is one of the main reasons that people’s eyes glaze over when we start to discuss the subject. Even HDTV is an FLA (four-letter acronym). But we need to use the abbreviation today in order to discuss news about HDMI.

HDMI is the interface that makes HD possible for many displays. It is a digital connection that can carry both the video and audio signals, and because it supports some forms of copy protection, some content producers in Hollywood have decreed that it is the only way to see their programming in high definition.

As with most technology, however, the inventors of HDMI extract a fee from other companies that want to use it. A number of new connections have been announced in the past year — some of which have been discussed here — and implicit in their creation is that it provides a way around the HDMI licensing fees. The company that created HDMI — Silicon Image – has now countered with an announcement of their own. They are cutting the licensing fee by one-third starting this fall. The fee will drop from $15,000 to $10,000. That $5,000 savings times more than 400 licensees means more than a $2 million drop in revenues. Silicon Image is also forging partnerships with Chinese consumer electronics manufacturers, in hopes of shoring up the use of HDMI in Chinese products. The growth that could result from this effort would likely eclipse the loss of revenues from the lower fees.

Silicon Image’s strategy strikes me as a smart way to fend off the competition and maintain HDMI’s place in the HDTV market. An accountant friend once gave me some sage advice: “Pigs get fat, but hogs get slaughtered.” It does not pay to be greedy.

HDTV on Your Laptop

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Artec T14A USB ASTC digital TV tuner

You may have read some of my posts here where I make the case where the cut-off of analog over-the-air broadcast signals will be a non-issue by the time February 2009 finally rolls around. My contention is that there will be plenty of low cost ATSC digital tuners available as add-on products by then. As evidence, I point to the T14A from Artec. NOTE: I have not tested this product, and am not reviewing it here. My point is simply that it exists.

The T14A is a USB device designed to plug into a laptop or desktop computer running Windows XP or Media Center Edition. Connect it to an antenna suitable for digital signal reception, and you get digital TV on your computer. If the programming is broadcast in HD, then you’ll get HD on your screen. And it currently sells for less than $90.

Okay, if a Taiwanese company can squeeze all this into a device the size of a USB thumb drive and sell it at this price, then I would expect that they could build and sell a device for a regular analog TV today for half that. It’s simply a matter of increased demand that will motivate companies like Artec go after the legacy TV tuner upgrade market. It’s too soon for that, however; American consumers won’t really start getting anxious about their broadcast TV until 2008. I have no doubt, however that inexpensive solutions will flourish in the second half of 2008, and there’s no reason to worry about the end of analog broadcasts.

A Big HDTV Built for You!

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Panasonic has made it official. The company has announced that it will start shipping its 103-inch plasma HDTV in December. The 1080p TH-103PZ600U will reportedly be built to order, and will be covered by a three-year warranty. Better measure your wall to make sure you have room; it will be about 90 inches wide by 50 inches tall, about the size of a full sheet of plywood. Oh, and you better start saving your pocket change if you hope to save up enough to buy one when they go on sale. The price tag at this point is a cool $70,000. That’s about the price of a new 2006 BMW 6-series.

Frankly, I expect that relatively few of these will ship, and most will go to mansions in southern California and southern Florida and Long Island and similar haunts of the rich and famous. If I wanted a display this large, I’d go for a front projection system; for a small fraction of the cost, I could have a as big an image and get the sound system and furniture to go with it. But I expect that I’m not the target market that Panasonic has in mind.

Reader Question: Buy Now?

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Q: I’m looking to buy a 32″ LCD HDTV within the next six months. The model I’m considering costs about $1,600 in stores and $1,200 online. What will it cost six months from now? Should I wait for a higher resolution 32-inch model?

A: I also would like to know what that LCD will cost in six months. If I knew for sure, I could parlay that one fact into enough to fund my retirement. It is true that prices have fallen a lot in the first half of this year. I would expect a flattening of prices, were it not for the widely discussed inventory backlogs and production slowdowns experienced by most LCD manufacturers these days. Instead, I expect that the manufacturers won’t be able to wait until the holiday buying season for sales to pick up, so I think we’ll see some price cutting in September or possibly even next month. The industry may undercut their holiday sales as a result, but I don’t think most will be able to live with the lack of cash flow, and even the successful companies will have to cut prices to remain competitive. So I’d look to September as a good time to evaluate prices; it is true they still could drop again at the holidays, but then you’d also have to miss two or three months of HDTV, and you have to consider what that’s worth to you.

As for waiting for a higher resolution model, the key question is how far you will sit from the screen. The one you’re considering is a 720p model (or a Wide XGA model that is slightly higher than 720p). If you wait for a 1080p 32-inch TV, you’d have to sit less than four feet from the screen in order to see the difference between it and a 720p image. I suspect that you’re not planning to be that close, so you might want to go ahead and get the 720p version.

Uncertain about what size or resolution HDTV to get? Professor Poor’s Guide to Buying HDTV has all the information you need to be sure.

A La Carte Won’t Work

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Kagan Research held an audio conference last week explaining why unbundling of cable and satellite programming won’t work. Many groups have been calling for “a la carte” pricing of television programming, so that consumers don’t have to pay for channels that they don’t watch. Kagan makes some good points as to why this won’t work.

First, they make the point that the average cost per channel in a basic package has dropped from $.75 in 2000 to $.71 in 2005. How can this be when cable costs are rising? The answer is that more channels are being included in the basic packages. And the profit margins for cable companies have actually declined; the fees they pay for the programming have risen faster. And it’s not that the channel producers are getting rich, either; ESPN appears to be expensive, but the fees for the rights to cover sporting events are high. Finally, new services such as digital signal, video recording, and HD content have also increased the service costs.

I agree that there is more to watch now than ever before, though I’m not convinced that all consumers want access to all the channels that they have. Still, the penetration of cable and satellite services in the US market is high, and revenue growth is most likely to come from expanding services rather than increasing the subscriber base. (Ever wonder why the satellite companies are willing to make such amazing deals in order to get new customers?) A move to a la carte pricing for individual channels would likely result in a big hit in revenues for these services, so I don’t expect to see it as an option any time soon.

Can’t Beat Them? Join Them!

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NBC did an about face this month when the company announced plans to make promotional clips of the network’s shows available on YouTube. Previously, they had demanded that clips (posted by others) be taken down due to copyright violations. Now, in addition to posting their own clips, NBC apparently will also start advertising on the YouTube site.

What caused the turn around? Maybe it was the 13 million unique visitors each month. If NBC’s content was already appearing on the site, then clearly there was some demand for it. And it’s better to have control over the content and quality of the posted clips, rather than rely on images that someone captured off their television screen with a Web cam.

I see three important points in this story. First, content producers continue to explore new avenues for distribution and promotion, and the Web is playing an expanded role in this experimentation. Next, it would appear that as much as people seem to love the shaky, poorly-exposed, oddly-composed videography of the home-brewed clips that launched YouTube and similar sites, the novelty may be wearing off a little and demand for more polished, professional production values are creeping back in. But most of all, it looks as though my theories about the “iPodding” of video are becoming reality as people want to take more control over what they watch, and where, and when.