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HDMI Costs Reduced

July 25, 2006 | Author: Ibex Marketing

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.