Price Compression Continues: Thinking about buying a new flat panel TV? You might want to hold off for a few more months as prices continue to drop. Even in January, traditionally one of the strongest months for TV sales as viewers gear up for the Super Bowl, set prices fell another three percent. And by the end of 2007, the year-to-year price compression could reach anywhere from 30 percent (according to Sony ) to 35 percent, as forecast by the industry analyst group iSupply.
While great for consumers, retailers and manufacturers are none too pleased at this trend., and are trying to put the brakes on. At the recent Display Search Flat-Panel Display Conference, Sony vp Randy Waynick lit into “certain” CE makers who fought for market share last year at the cost of profit – noting “It’s very easy to sell a dollar for a nickel.” His barbs were largely directed at Panasonic, which set off one round of the flat panel price war by both dropping the prices of its plasma screens, and by eliminating restrictions on retailers “lowest advertised price” which could mention the Panasonic name. That sparked the likes of Wal-Mart and Amazon.com to advertise a 42-inch HD Panasonic set for under $1,300. Other retailers had to fall in line and some, like Circuit City and Office Max, wound up with much lower profits than anticipated. According to Dave Workman of the PRO Buying Group – a collective merchandise buyer for small and mid-sized stores – “It’s as if someone sent the sheriff away on vacation, passed pistols out to everyone in town and said ‘Have a blast’. . . It was like a Gunfight at the O.K. Corral to see who could be the last man standing. “ And the war ain’t over.
Costco Tightens Return Policy: Maybe related to the above, Costco’s virtually unlimited return policy for consumer electronics is going “bye-bye “ next month. But the replacement plan will still be superior to the competition’s. This big box club store will now add a two year extension to manufacturers’ warranties, and instigate a free technical support line. All widescreen TVs 32-inches and larger will include free in-home service during the extended warranty period. Costco also is discontinuing sales of all glass tube (CRT) TVs, which have been slow movers and enjoy a slim profit margin.
Cheap DTV Boxes Won’t Do HDTV: LG Electronics, RCA and Samsung are now gearing up to make and sell inexpensive set top tuners/decoders for nabbing digital TV channels and converting them to a signal that can be displayed on an old fashioned analog TV. The manufacturers’ incentive is the $1.5 billion rebate program to consumers that the Department of Commerce has just announced for such box purchases, to ease the transition of viewers to digital TV when analog channels are supposed to go “dark,” on or before February 17, 2009.
Any household will be able to put in a request for one or two coupons, each worth $40 towards the purchase of a box. (Coupons cannot be combined, nor used for fancier products containing a digital tuner.) The most basic digital TV tuning/converting box, like the kind LG Electronics will sell, is likely to go for $60-$75. RCA will counter with a slightly spiffier, $100 or so variant which also displays basic electronic programming guide information and can steer a smart antenna. But none of these cheap digital TV receivers will fill the bill, if you already have an HD-ready monitor and now want a broadcast HD tuner . “As this program (of rebates and cheap boxes) has been set up, the inexpensive tuners/converters can only output a standard definition 480i (interlaced lines) signal,” shared LG Electronics’ vp of government relations John Taylor. “On top of that, the video output options are limited to RF (channel 3 or 4) or composite video.” So no, the devices won’t even deliver an S-Video or component grade standard definition picture.
Consumers can start to request rebate coupons in January, 2008 from a source as yet un-determined. Boxes will hit retail shelves “at the same time as the coupons are actually distributed,” said Taylor. Think April, 2008.
HD Downloads: Microsoft chief Bill Gates has proclaimed that the future of high def movie purchases lies with on-line streaming or downloads to set top boxes, rather than with packaged media like HD-DVD or Blu-Ray discs. But I’m guessing Bill hasn’t played “average Joe,” downloading that free HD episode of “South Park” which Microsoft’s Xbox Live service is now offering to Xbox 360 customers.
I did just that last week, making the connection through my bargain priced DSL line that throughputs data at about one megabits per second. The commercial-free, 22 minute episode took more than five hours to download! Ouch.
The good news – the end product looked terrific, and wasn’t the typical “South Park” construction paper cutout animation. The premise of this episode was that the kids buy Asian swords at a flea market, then imagine themselves as Samurai superheroes. That was reason enough for the show’s cartoonists to go hog wild with detailed Japanese graphic representations, which really looked terrific on my HD screen.
(Don’t have five hours to kill, waiting for this download? If you buy an HD-DVD drive for the Xbox 360 in the next few weeks, the retailer will give you a free copy of the same “South Park” episode on HD-DVD disc.)
There’s another reason Mr. Gates’s window of perception is a little off. High speed internet service providers may not sit idly by while you suck the system dry with high intensity, HD downloads. Don’t be surprised if they demand more money, maybe put a meter on your service to charge you for excess use, or simply cut you off. Already, reports the Boston Globe, Comcast has started to reign in New England area customers who make severe demands on the system with their bandwidth taxing movie downloads and video calling.
Here’s the issue. With broadband service delivered via cable, capacity is shared within a neighborhood “node.” So if one person is being too piggy, all other users connected in the node suffer with decreased performance. And eventually, the hog has to be taken the slaughter. (With DSL, by comparison, each phone line connection is dedicated to just that the one user/household.)
Downloading is “certain to increase dramatically over the next five years,” said Matt Davis, a research director of IDC Corporation. “And even if it’s double or triple or quadruple, it’s going to place a lot of pressure on networks that are being pressured right now.”
Even just downloading a standard definition movie can be time and bandwidth consuming , admitted program executive Tara Maitra of TiVo, in our recent chat. Her company has just hooked up with Amazon.com to offer the latter’s Unbox movie download service. For $1.99 and up, Unbox can deliver a TV show or movie via Ethernet hookup directly to a customer’s TiVo Series2 or Series3 DVR. With a 1 Mbps broadband connection, an average length movie can be yours to enjoy in “near DVD quality” in about five hours , Maitra said. With a speedy 5 Mpbs connection, the movie is ready to watch in “only” an hour.
TiVo hopes to also deliver HD downloads to its new Series3 DVRs, which already have broadcast and cable HD TV tuners. But that can’t happen until film studios and Amazon start to code movies in a more efficient MPEG-4 format.