The living room stampede

The living room stampede

A large number of vendors are moving into the digital home market and have released products where the audio, the visual and the computing experience are converged into one. This convergence has been on the cards for some time and arguably vendors have been ready and waiting for the right market conditions to launch their products.

According to Harvey Norman’s national product manager of hardware, Paul Schnell, the drop in price of large LCD and plasma screens as well as projectors has been the key trigger behind the recent spate of PC home theatre product launches in Australia.

“The problem up until now was what TVs do you rig the home entertainment system up to that support the kind of resolutions used on a PC, without having to fork out over $8000. But over the last three to six months, plasmas and LCDs have dropped in price significantly while projectors have dropped in price by around 50 per cent,” Schnell said. “So now resellers can bundle these PCs with big screens at a pricepoint that is acceptable for many consumers.”

One of the biggest challenges resellers face is deciding which kind of display format to sell with the entertainment system, as well as which components and peripherals to bundle with it while keeping the pricepoint down.

“Different consumers will have different requirements, some are the applications loaded onto the PC, some may be the design, some may be the LCD — but pricing at the end of the day will be the key driver,” Gartner analyst, Andy Woo, said.

“At this point I believe consumers still pay a premium for “digital-centric PC” so to speak. Take Acer Aspire as an example – it’s unique and has great potential moving ahead but the pricing is still an inhibitor.”

LCD vs projector

While wide-screen LCD TV screens are the most suitable display for home entertainment systems, they are still far too costly to be a viable option for consumers. Traditional TVs or rear projection TVs do not offer the resolutions needed to use computer applications. Wide-screen plasmas are appealing but again, the technology is too expensive and many consumers are becoming savvy about the relative shortcomings of plasma — their low refresh rate make them poor for computer use, plus they have a tendency of burning out very quickly particularly, for example, if users leave a screen saver on.

While many vendors are showcasing their entertainment systems with 15-inch LCD screens that are within a consumer’s price range, the screens are far too small to be a practicable option.

Schnell said it would be a good 18 months before, widescreen LCD TVs would reach an acceptable pricepoint for consumers and effectively replace conventional TVs.

In the interim, LCD projectors have become a popular display format for the entertainment systems, and retailers such as Harvey Norman are bundling their systems with both digital light projectors (DLPs) and LCD projectors. These projectors provide the WOW factor that really get consumers’ heads turning.

“We’re bundling the Acer Aspire RC501 entertainment centre with a 23-inch TFT, or more recently with the Epson EMP-S1 LCD projector that retails for $1999. The entertainment centre and projector retails for around $3999,” Schnell said.

“Resellers have to be careful how they position DLP projectors with these home entertainment PC systems. Our electrical area sells them more as part of a home entertainment centre while our PC hardware area sells the projectors more as a companion to a notebook.“

It is critical to understand who your customer is as this will largely determine what types of screens are appropriate.

For users that are interested in using their entertainment centres for home theatre 90 per cent of the time, digital light projectors (DLPs) offer advantages over LCD projectors, such as higher contrast video with deeper black levels.

However, users that intend to use their entertainment systems for displaying PC applications as well as for home theatre, LCD projectors are the most suitable display. LCD projectors deliver a sharper image than DLP at any given resolution and produce significantly higher ANSI lumen outputs than DLPs which are required for viewing PC applications. Subsequently the lamp life of an LCD projector is shorter (a $360 lamp will last around 2000 hours) than that of DLP or home theatre projectors which are designed around less lumens and therefore less light.

Early LCD projectors suffered from visible pixelation, or the “screendoor effect” — it looks like you are viewing the image through a screendoor — and poorer black levels and contrast to DLPs, however these problems have been greatly resolved in the latest LCD projectors by higher resolutions (XGA resolution of 1024x768dpi) and reduced interpixel gaps so pixels are more dense and less visible.

“DLP or home theatre projectors aren’t perfect for these PC entertainment centres, but they’re certainly workable and certainly an attractive offer to the customer. Schnell said.

“I think it’s important that you present these systems with LCD screens and projectors. You can’t just display them on a 15-inch LCD and expect it to sell because they’re gimmicky and too small, and suited to the study. You want this to be more of a bedroom/lounge room PC. This is what this product category, as it emerges, is all about. The PC in the study is going to become a thing of the past, the PC will become more of an integrated part of what you do in the lounge room.

“We had a store that had an Acer entertainment system hooked up to an LCD screen — it took the screen down and hooked it up to a projector and it had an instant effect in terms of sell projector through.”

Convergence between the consumer electronics and PC industries appears to be moving quickly but that there’s still a long way to go. The entertainment centre is still a very niche product and a lot of vendors are holding off releasing their products in Australia until Microsoft launches its Media Centre operating system here.

The launch of Microsoft Media Centre operating system in Australia, scheduled for September 2004, will bring with it a huge marketing extravaganza that will help further promote the local home entertainment market and build consumer awareness, Alloys International product manager, Phil Gibbs, said.

“Media Centre is a conduit to selling this concept and provides the simple front end that will further complement the existing systems.”

Microsoft launched the first version of Media Centre in August last year and recently released the 2004 edition overseas overseas.

The newest edition offers new features such as FM radio with pause and rewind features (“time shifting”), station pre-sets, and a seek function; widescreen TV (16:9 display) support. It offers better TV picture quality due to more advanced video hardware drivers and improved display calibration software and enhanced services for digital photos.

“Core to the product is an enhanced TV experience, delivering new functionality around Personal Video Recording (PVR) and Electronic Program Guide (EPG) services,” Microsoft senior manager of strategic development, home and entertainment division, said John Gillhespy, said.

PVR lets users browse up to 14 days of upcoming TV programming and select category filters to display the kinds of programs the users want, such as sports, movies or kids shows.

“To date the Windows Media Centre Edition has only been released in markets where PVR and EPG services are established and well understood,” Gillhespy said. “As these have not evolved in Australia at this stage, we will have to work with local suppliers to establish these services, before we can release the product in Australia.”

In the meantime, the home entertainment systems are not expected to make a huge impact over Christmas.

“I don’t think we’ll see big uptake on these products for Christmas,” Schnell said. “Like any new technology, it’ll start off quietly and then gradually gain momentum. We like to get positioned early and we’ve put a bit of advertising behind it, but we’re not going to go nuts with it until we feel it’s starting to kick and I think that’s three to six months away.

“We need more brands competing in this space in Australia to attract more attention to the market and I can’t see that happening for another three months.”

At this stage, resellers should be positioning themselves for this market and educating themselves and their customers about the new technologies and how they are integrated into the new home entertainment PC and how to sell the digital living concept.

“The objection from customers at the moment is less about the pricepoint and more about accepting the technology and understanding it,” Schnell said. “And for us the biggest challenge is making sure we go to market with the right strategy. Right now it’s about building customer awareness, but real mass merchant sales will come in the next six months.”

The PC industry’s move into consumer electronics turns up the heat on traditional consumer electronics makers, which do not share their rivals’ experience with integrating many of the functions found in desktop PCs and notebooks or with the pricing pressure faced by PC vendors that has consistently driven down prices as technology has advanced. As a result, computer vendors will likely be the first to build more functions into consumer electronics devices, followed by consumer electronics companies.

“It is still very niche,” Schnell said. “I don’t think it’ll have an immediate effect on consumer electronics businesses. Over time it will have an impact but it’s a couple of years away yet and I think our business will evolve with those changes in customer demand.”

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