The much-awaited launch of Intel's digital entertainment platform, Viiv, has been a mixed blessing for local manufacturers. While Intel's marketing push has stimulated interest in entertainment systems, it has also led to a crash in sales of locally manufactured Media Center Edition (MCE) PCs.
According to managing director of digital entertainment system manufacturer Claritas, Andy Welch, sales of non-Viiv Media Center units fell to zero following Intel's launch. The company was now building Viiv models.
Product manager for Pioneer Computers, Jeff Li, said he was still managing to sell non-Viiv systems but only at massively reduced prices.
National sales manager for Altech Computers, Kevin Hartin, said the Viiv launch brought deliberations with major retailers to an abrupt and untimely halt. He was also concerned that the functionality demonstrated at the Viiv launch would not be available until the arrival of Viiv 1.5, which was earmarked for June.
"The larger retailers have basically told us that if we aren't putting forward a Viiv Media Center PC we shouldn't bother," Hartin said. "Viiv is a great product and it's really going to stimulate Media Center sales going forward. But at the moment it can't do what customers expect it to and there are perfectly good Media Center systems that we can't give away."
As a result of the slump, local manufacturers want Microsoft to work more closely with Intel for future launches, and to allocate more marketing funds to promoting locally developed products through IT and AV channels.
"On the big picture they are working well together," Pioneer's Li said. "But on some issues they just don't seem to be working together at all."
Director of Window's client business for Microsoft Australia, Jeff Putt, said both vendors have been working very closely on the promotion and marketing of digital entertainment technologies.
"We meet with Intel on a weekly basis to support the marketing and sales of both Media Center and Viiv," Putt said. "We are already investing a significant part of our marketing budget selling the digital entertainment experience, and you can expect to see that effort increase throughout 2006."
Moreover, Putt rejected claims that non-Viiv MCE sales had bottomed out following the Intel launch.
"We're not seeing any downturn in non-Viiv Media Center sales," he said.
Similarly, Intel national marketing manager, Kate Burleigh, said it was working closely with Microsoft to present the convergence message and had already spent more than $500,000 on marketing the digital-home platform.
"When a new system is released it's pretty typical in the PC industry for sales of previous systems to drop," Burleigh said. "We are interested in working with everyone to create the most user-friendly system and a healthy market."