At CES, A Star Is Stillborn

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Digital television was supposed to be the star of thismonth's Consumer Electronics Show, showcasing the high-definition and digital TV setsthat retailers should be putting on their shelves by autumn. Instead, TV manufacturersfrom Sony to Sharp to Philips to RCA kicked off their campaigns to create lowerexpectations about DTV delivery.

They and others unveiled a perfunctory line of high-tech,very high-priced digital sets, acknowledging that they plan to sell only a few tens ofthousands of units in limited markets (where broadcasters begin DTV telecasts) this year.

RCA tried to bolster some hopes, announcing a deal withDirecTV, which will deliver DSS transmissions of HDTV later this year, thus offering thesatellite audience a chance to use those RCA receivers.

To complicate the digital TV debut, the television setmakers showed equipment built around several different technical architectures, furthersuggesting that the DTV market will be fragmented upon introduction. Although ostensiblysupporting all 18 Grand Alliance formats, some makers emphasized the 1080-interlacedformat, while others concentrated on 780-progressive and 480-progressive formats -- thelatter favored by computer companies that are pushing their own versions of digital TV.

Some big-brand TV makers, notably Panasonic, didn'teven demonstrate a DTV set, but merely offered a stand-alone set-top decoder that canreceive and convert DTV signals for viewing on existing TV monitors. Although Panasonicwas coy about pricing, its set-top is likely to debut in the $700-plus range -- whichwould be a bargain compared to the $3,000 to $10,000 price tags tentatively placed on thefull DTV and HDTV sets.

That combination of extravagant pricing and limitedavailability left retailers scratching their heads about what they really will be able tosell this year. And they weren't even thinking about the broadcasters' ongoingefforts to postpone the mandated launch of digital TV in 10 top markets by November. Itadded up to a somber launch for a product that has been hyped for so many years.

The Consumer Electronics Manufacturers Association, whichruns CES, kept its word to provide dozens of live DTV and HDTV exhibits at the Las Vegasshow.

Sadly, the transmissions (from local HDTV experimentaltowers) were limited to the usual prototype fare: ice skating, nature shots and stocksports footage.

Hence, even the visuals didn't convey the impact ofthe DVD element displayed on adjacent monitors.

Perhaps it's too dramatic to characterize DTV as'stillborn.' Given the decade-long promises that HDTV is just around the corner,some might say it was 'still born again.' Among the definitions of'stillborn' is 'unsuccessful from the beginning,' and truthfully, thatmay be a bit harsh for this attractive technology. While skeptics are already saying thatthere's no mass market for these systems, DTV's immediate -- and verycompetitive -- challenges came from other parts of CES.

As amply reported elsewhere, TCI and Silicon Valley usedthe unusual venue of the Consumer Electronics Show to unveil their set-top box plans.TCI's dual deal with Microsoft and Sun Microsystems (respectively for Windows CEoperating systems and PersonalJava programming language) reminded the retailers who werepaying attention that they may soon have the chance to sell a digital set-top box onbehalf of the cable industry. Thanks to other recent deals, notably Sony's buy-in toNextLevel (to be renamed General Instruments on Feb. 2), brand names are coming to thecable set-top. (Sorry, Zenith, we know you're there already).

Indeed, the opportunity to sell those new boxes, whateverthey might be, was on many minds in Las Vegas. Tandy Corp. chairman John Roach told me hewants to figure out how those deals will give RadioShack an annuity by selling cablehardware. He'd like to develop relationships similar to Tandy's pact with SprintPCS, in which the retailer gets an ongoing revenue stream based on usage of the devices itsells. Of course, that structure is completely alien to cable companies. As mega-retailersenter the digital set-top box business, an entirely new financial model may be developed.It could be one that diverts retailers toward the cable digital box and away from thevaporous HDTV equipment.

CES is always a melting pot of gizmos and hype. Thisyear's computer-centric digital binge augurs the arrival of an evermore perplexeddigital viewing audience. And that's for high, low and medium definitions.

Iway Patrol Columnist Gary Arlen particularly enjoyed BillGates' and Scott McNealy's cross-barbed satirical 'commercials' shownduring their CES speeches.

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