News

Term Digital Confusing to Customers

8/16/1998 8:00 PM Eastern

New York -- Digital technology may drive sales of new
consumer-electronics devices, but the term "digital" means different things to
each of those industries. And nobody's sure yet what it means to consumers.

"We have to be careful of what we say and how we say
it," said Gary Shapiro, president of the Consumer Electronics Manufacturers
Association.

Speaking last week at a high-definition television
conference here, sponsored by Kagan Seminars Inc., Shapiro said that when asked what
analog television is, the average American doesn't know that his or her television is
analog today.

"To say 'digital' doesn't mean
much," Shapiro said. "Saying 'high-definition' -- that's when the
meaning goes up."

"I think that it's fair to say that the average
consumer does not have a clear understanding of the whole concept of digital TV,"
said Harry Thibedeau, manager of industry affairs for the Satellite Broadcasting
& Communications Association
, in a telephone interview.

While Thibedeau said consumers will need to be educated
"across the board" about the various forms of digital video, he added, "The
term, 'digital,' is sexy. It clearly has stimulated significant consumer
interest" in direct-broadcast satellite and in some digital-cable services.

The possibilities for consumer confusion are great. Digital
broadcasting can mean HDTV, but it can also refer to multicasting, data or other services
that haven't been defined yet. And consumers must decide between integrated HDTV sets
and digital-terrestrial set-top boxes that can plug into existing analog sets.

DirecTv Inc. will help to subsidize the cost of digital
set-top boxes, bringing the retail price down to the $500 to $800 range, said Larry
Chapman, DirecTv's executive vice president.

Chapman, also speaking at the Kagan seminar, said
incorporating Digital Satellite System technology into those set-top boxes "changes
the value proposition" for consumers by increasing the number of channels from 10 to
200. "At that point, it can be a replacement for cable."

At a separate Kagan panel last Wednesday, Dave Robinson,
senior vice president and general manager for General Instrument Corp.'s
digital-systems business, said the two-way, high-speed, high-capacity pipe is the cable
industry's innate strength, because it enables new technologies, such as
video-on-demand.

"When these applications kick in and kick in big-time,
the consumer numbers [for digital-cable boxes] will top the charts," he said.

Panelists said it's important that consumers
don't confuse digital cable with the ability to pass through high-definition signals.

But even before they're HDTV-capable, digital set-top
boxes from cable, wireless cable and satellite providers already offer inherent
advantages, such as better picture, better sound and electronic programming guides.

"We are living through the midst of a revolution to
digital," Shapiro said. "We don't know it because change moves
slowly."

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