Quick Takes:

1. Fry's opens #22 in Las Vegas with gambling as the theme (giant slot machines upon entering, huge pictures of 'old Las Vegas, et al.) but not as quickly as they wanted. They probably wanted to open in time for Q4 (you think?) and as a fallback CES (why not?) but the GO was the following week (aw shucks, I gotta go back to Vegas and win back all that ch-ching). Concord and San Marcos, California and Renton, Washington are the next 3 'planned' sites, according to published reports. Regardless, these guys are on their way to becoming the #2 most desirable player in the converged consumer/technology marketplace behind Best Buy (sales reportedly near $2B).
   
   
2. Michael Flink, formerly Executive Vice President, Merchandising and Marketing, is no longer with InterTan (aka Radio Shack of Canada). In other news, the leading consumer electronics retailer announced that fiscal 2003 second quarter sales of its Canadian subsidiary, measured in local currency, were flat with the same quarter last year. For the month of December, sales of the Canadian subsidiary in U.S. dollars were $68,588,000. Measured in local currency, total sales for December were down 2% over the same period a year ago. On a comparable store basis, sales for the month decreased by 5%. "While we are disappointed in the soft sales performance for most of the month of December, sales improved during the week of Christmas and during the post-Christmas period," commented Brian E. Levy, President and Chief Executive Officer.
   
   
3. "Sometime in 2003 many PC users, in corporations, in small businesses and homes, will wake from their hibernation to discover that their selection of technology for computing is extremely compelling compared to 1999. The selection of technologies will be staggering to the newly awakened. WiFi, huge HDDs, unbelievably fast processors, more robust OSs, DVD, CDRW, DVD/CDRW, DVD RAM, LCD monitors.......all these technologies are reasons to upgrade. And the good news, they are all affordable," Mike DeNeffe, Director of Marketing, Transmeta Corp.
   
   
4. Who would've thunk: Venture capital investment activity continued its downward trend in 2002, slipping 35% over 2001. According to preliminary VentureWire figures, U.S. based private companies raised $20.3 billion last year across 2,088 financings, down from a year earlier when startups raised $37.7 billion in 3,226 rounds. Last year's totals were far removed from the boom years of 1999 and 2000, but despite the decline, 2002 remains the fourth-most-active year on record for investment in U.S. startups.
   
   
5. Watch this space: Best Buy Fun Zone, a mobile marketing and entertainment destination features the latest technology offered at Best Buy stores, including products that create a state-of-the-art bedroom, kitchen and high-definition home theater. An interactive gaming area with video game pods featuring the latest video game systems, and egg chair digital music pods complete with interactive video screens. And expandable stage for events. The (mobile) Fun Zone creates the environment of a fully-networked home within the interior of the 53-foot trailer. A series of 14 monitors show the superior picture quality and clarity of flat-panel LCD and plasma TV, using video streamed through an advanced audio/video/Internet network. The Fun Zone also features a touch-panel remote system that controls all of the trailer's audio, video, Internet and lighting devices. Other product highlights include a prototype refrigerator from Whirlpool, a 50-inch wide-screen plasma TV from Pioneer, Alienware computers and a satellite radio system from XM Satellite Radio. The Fun Zone currently features James Bond memorabilia in support of the new film Die Another Day. Items include Bond villain business cards, movie posters and even Oddjob's bowler. It's an idea whose time may be here.
   
   
6. She said: "The choices for traditional retailers in 2003 will be reduced to two: compete on price alone and hope to survive or innovate your merchandising to sell the benefits of new technologies where there is still some margin. Due to the lack of compelling demand generation on the part of the manufacturer and publisher, the responsibility for moving product now resides within the four walls of the retail store. The old mantra, of "retailers don't create demand, they fulfill it" is only true for those retailers who won't be around in 2004. The successful retailers will invest in learning to merchandise, demonstrate and communicate the benefits of new technologies or they will be reduced to play the price game where there is room for only one winner," Ellen Miller, President, Insider Marketing/Insider Creative, Inc.
   
   
7. She said2: "Are brands a dying breed? With extreme pressure on improving gross margins while offering aggressive pricing to consumers, is there any brand equity left at retail? Many key retailers are staging reverse auctions and other similar events that pit vendor against vendor to get the lowest price on similarly featured products. The affect of these auctions is that products are commoditized; they are all perceived to be the same with no value assigned to the brand quality, reputation or service. Unless companies are supporting their own branding campaigns to reach consumers directly to drive demand into the retail stores and create leverage with the buyers, the winners in the end will be those vendors with the lowest cost structure. What will happen to your brand in 2003?" Debbie Meagher, EVP Retail Strategies, Insider Marketing, Inc.
   
   
8. Innovation in consumer IT products has stagnated. Moore's Law has become the millennium equivalent of planned obsolescence. Customers are pinched between hardware legacy and software upgrade issues. They are frustrated that the more money they spend on computers and related products to make themselves more productive, instead ends up costing them in spending more time in integrating what they purchased with what they already own. The result being the continuing devaluation of IT products by the consumer. The definition of innovation to the consumer isn't a faster widget than what they already own, it is solving a problem that they currently have. The companies that invest in understanding and solving the consumers problems will be the companies that will succeed in 2003," Lief Koepsel, Consultant, Sales and Marketing Strategies, Insider Marketing, Inc.
   
   
9. The flattening of retail PC desktop computer sales reveals several major shifts in the consumer market that will affect both manufacturers and retailers.

   a. Good news/bad news: Microsoft has finally given the industry a stable operating system allowing consumers to avoid upgrading their Pentium III PCs. (This logjam should break late next year.)
   
   b. BTO overdrive: More and more consumers are upgrading their current home computers with additional hardware or building their own. Consumers may only be shopping at retail for motherboards, chipsets, fans or cases and cannibalizing their existing home PCs for parts. (This trend depresses retail desktop PC sales growth.)
   
   c. Hitting the road: Retail sales are shifting dramatically to mobile computers which are already in greater demand because of lower prices (renewed competition from resurgent Toshiba), and because of more powerful notebooks and the propagation of Wi-Fi.
   
   d. Connecting the PCs: Installation of home PC networks, wired and/or wireless, represents a key opportunity whether for DIY customers or those seeking a professional installation.
   
   e. Bottom line: New technologies + consumer confusion = retail opportunity. Roger C. Lanctot, Director of advertising analysis, Beyen Corp.

Keith Newman is the Editor and Publisher of ChannelMedia - the Retail Edition. This newsletter is free, courtesy of Vision Events and we are looking for contributors and readers. If you are interested in contributing or sponsoring an article, please contact kanewman@sbcglobal.net.

NEWS

CES Wrap-Up
Reporters Notebook
By Steve Cross

Well, "they" were right. This is the show. Lookout Comdex, CES is the new big boy in town. The organizers said it was about 125,000 but it felt way bigger. On Thursday night, the cab line at the Hilton front door was 2 hours and 15 minutes, according to one of the doormen. That's like the big, hot Comdex years of 98 and 99!!

Lots of folks in the Hilton Lobby, standing by the Elvis statue (did he die or something?) waiting for their respective appointments to show. Must have been 50 suites posted in each of the four Hilton Towers for meetings, and those were just the big suites. Doesn't even count all the meeting rooms all over the place.

Your reporter, in his usual jet-black suit and t-shirt (also black) looked very slick among all the suits and ties. Not tres chic, just habit. Las Vegas, baby!

The 12-volt People Took Over the North Hall!! Not cyborgs, it's a CE industry term for the car guys. Cars have 12-volt electrical systems, get it? Just a ton of sub-woofers, back-of-headset and visor TV-screens, low-rider and chopper cars. I particularly liked the blue chopped and lowered 57-Chevy convertible with the TV-screen, DVD-player, and speakers in the trunk. Tailgater anyone?

Saw a ton of people from our end of the industry looking for stuff new and exciting. Ran into Jackie Trilling from Datavision, Jeff Kirshblum from Harmony (too busy on cell phone to talk both times - thanks Jeff), Steve Alvarez formerly of Campo, good guy Ray Navarette was there looking great. He's back in New York fixing The Wiz after a stint at Fry's. On the vendor side ran into long-time channel supporter Jack Battaglia from Dazzle, and later the same day, his competitor Jerry Thompson at Pinnacle. Hey, Pinnacle brought over Arco Groenenberg to the retail side to take Forest Lee's old job. Where's Forest? Heck, he's back at Dazzle!!! Is this funny or what? These video guys are a crack-up.

Also ran into Steve Schiro from Microsoft. An aside: here's a guy with so much power in the industry that he could be a total jerk and get away with it...and instead he's one of the industry's really good guys. Always has a good word for everyone. Reminds me of Dave Nally at Ingram, another industry class act.

Saw some great stuff from some big channel players. Kodak was showing EasyShare software. Looks like they have decided to apply their fabulous expertise to digital photography. They're the guys (and gals) to do it, too. Spoke with Nancy Carr, Director of Worldwide Marketing, Internet Services and Software, Vice President Digital and Applied Imaging (how's that for a title - do ya think she gets two paychecks?), and she is convinced that digital cameras are just too tough to use. I think she's right. Kodak has seen nearly a million downloads of this software because "People bring back digital cameras because they can't get the pictures out. EasyShare solves that". Man, is she right. I'll bet a lot of you resellers out there are appalled at your digital camera return rates. I hate the software that came with my Olympus digital camera. I'm switching to Kodak.

Ran into the folks from Targus. Boy, talk about a channel leader. Great booth, all blond wood & white walls looked very Scandinavian sleek and modern, tons of activity, lots of people. Veteran Chuck Gangi was in charge and making it happen. Saw the most incredible little USB port replicator for laptops. This will be the road warrior hot item this Spring. 4-ports for $10!!! less than 2" square. It's already in my briefcase.

Steve Esser, VP Sales at Tripplite, was very pleased with his traffic over in the South Hall and the mix of potential resellers. As good as these guys are in supporting the channel; they are finding new outlets in other channels for some of their products. They had a ton of interest from the home theater crowd. Makes sense to protect your expensive equipment with some of the best surge suppression and power management stuff, doesn't it?

Had an odd experience at Vantage Point. These are the guys that make the wall mounts for TVs. I think they're the largest supplier of this stuff worldwide. Funny booth...they had a bar, and were serving drinks (you know - alcoholic beverages!). Have never seen that outside of CeBit Germany. But these wacky Canadians explained to me that they were just saying thanks to their channel partners and all the people that have supported them over the years. Some of their partners were showing up every single day to just hang out and visit. One of the Vantage Point sales guys told me he expected to double sales with some of his resellers as a result. How do you like that approach?

Its funny, but CES is a catch-all show. Everything is there from alarm clocks to home theater and computers. And everything makes sense. Maybe this is the convergence we've all been hearing about for years. Channel guys Recoton were right near Audiovox, Jensen, Acoustic Research, and it all seems to work.

Weird thing in Microsoft's booth. There were quite a few small vignettes: what this stuff looks like in your house, office, etc. Well...in one of the vignettes, there was some guy just sitting on a couch playing a computer game....he was part of the exhibit. I know because I asked. Now isn't that a little weird? I felt like an observer in some surreal science fiction movie.

Chatted with Walt Mossberg in SF on Tues. at MacWorld, prior to flying back to Vegas. I was complimenting him on his Tablet PC article. Then I showed up at Showstoppers, a press event that I get to go to at CES, and saw the fantastic HP/Compaq Tablet PC TC1000 (who names this stuff?). The fellow who demo'd it, Andrew Leach Product Manager gave the best demo I've seen this year (apologies to Paul Leeper at Palm who held the previous honors). I was blown away by the digital ink that can be dropped into text, as text. And the removable keyboard, man! May be close to buying one of these puppies, to replace the 3/4" thin very chic Sharp PC UM10 laptop I usually carry. Really cool piece of gear.

Intel was there with the new Centrino brand. Mobile computing family of chips. Specifically designed for the new thinner/lighter laptops. Should lower the weight and energy requirements of laptops, and will also include some 802.11 stuff built in. I'm figuring we'll see some great new laptops later this year for Fall back-to-school. Would love to see new lightweight stuff with some decent battery life. By the way, if you don't like the name Centrino, the old name was Banias, which is even worse.

Also saw the phone of my dreams...Kyocera 7135 Smartphone. Regular cell phone about the size of the old StarTac I carried for years, with color, Palm 0S, SpeakerPhone, great keypad, Graffiti, everything I want in a phone. Ships this quarter. Verizon and Sprint should have it. National Semi did the chip sets, with a triple phase-lock loop for call quality. Loving this phone. May give the new Samsung a run for its money. Also Palm OS, color, etc. But no speakerphone. These guys are better for me than the IPAQs with the phone, because they have a real keypad. Mostly a phone, with all the phone stuff, plus the Palm and autodialing form the contact built in. Seems to me the IPAQ is really a PDA that just happens to house a phone capability. This is a winner.

But into every life, every show, and every reporter's notebook, some rain must fall. There were a couple of real losers here, but the worst without a doubt was the iCEBOX (yeah, I spelled it right, I checked) from Beyond, a division of Westinghouse. For just under $2300 you can have a TV, DVD, FM radio, and a barely usable internet appliance all in one piece in your kitchen. Nobody has been able to sell any internet appliances, and the rest of the stuff you could buy at Best Buy or Circuit City for about $450. Tell me, please, what were these guys thinking? Did the chairman of Westinghouse have a grandkid who came up with this idea? Jeez....

Overall, a great show. Wonder how many of these guys will have their product ready for RetailVision in March in Chicago. After a couple slow years, I'm awfully jazzed about the industry and very excited about the channels. Hope you are too. See you out there on the road.

PS: Also was at MacWorld. Much busier than the last couple of years, but nowhere near the announced 80,000 people. My guess; closer to 45-50,000. Frankly, not much to excite me but the Mac faithful were salivating over the 17 inch laptops. Replacement for a desktop machine. Has everything in it but the kitchen sink. Makes sense unless you're mobile. Too heavy to lug on planes. Apple has always done well with all-in-one machines. I wish them luck with his one. They also introduced a new web browser. Can't figure that one out. Why would you want to piss off Microsoft when you need MS-Office to stay viable? Oh, well.

Read an archive of Steve's articles and a free excerpt from his new book at http://www.crosschannel.com. Contact Steve Cross at: steve@crosschannel.com, 702-492-7472.

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NEWS

ChannelMedia Q&A with Jay McIntosh
Americas Director of Retail and Consumer Products
Ernst & Young

Q. What are some of the factors impacting retail sales?

A. Retailers are experiencing deflation caused by a slowdown in consumer demand. Perhaps improvements in supply chain spending over the prior few years are resulting in an increase in productivity. But we are seeing an increase in spending and consumers buying more units but prices are just much lower.

Q. What happens in our little world of technology retailing of CE and PC products?

A. In the electronics category it appears that the discounters may have taken some sales away from the specialty stores because of perceived price benefits. As a result, we expect to see some store closings, which will help some of the winners. We are just over-stored, but that was masked by the hot economy.

Based in Chicago, Jay can be reached by phone at 312-879-3385 and by email at jay.mcintosh@ey.com.

NEWS

ChannelMedia Q&A with Keith Kanneg
Senior Director of the Small Business and Construction Market Development
Sybol Technologies

For this month's Q&A, ChannelMedia cornered Keith Kanneg, Senior Director of the Small Business and Construction market development at Symbol Technologies. Keith has over 25 years of experience in the computer industry and joined Symbol in 1991 where he has held a variety of key positions. His responsibilities have included the development of the Symbol software technology center, the developer zone and most recently, the creation of Symbol Captra for Small Business. The Captra product leverages Intuit's QuickBooks SDK with the strengths of Symbol's handheld PDA devices and barcode scanning making it the first integrated application that mobilizes the functionality of QuickBooks.

Q. Keith, if you would, give me a little background on Symbol Technologies?

A. Symbol has always been the leader in the Barcode Industry. Over the past few years, the need for scanning and mobility in small businesses has been increasing. These businesses have looked at big enterprises that use our technology and intuitively knew that we could significantly improve their operations. But the cost of implementation, associated applications and integration has been a significant barrier. Today, with the low cost, simplicity, and attractive form factor of mobile devices and the efforts of Intuit and Symbol, small businesses can now benefit. In 2002, Symbol launched a small business effort and is working very closely with Intuit on delivering handheld applications that are tightly integrated with QuickBooks. Our first product is Symbol Captra and was launched in February 2002. This is a mobile application suite that integrates with QuickBooks 2002 and 2003 (Pro, Premier, Accountant and Enterprise editions).

Captra takes the functionality of QuickBooks and integrates it with a PDA, so the customer can economically take his business on the road. Symbol bar code technology enables the device to be even more valuable by reducing the data entry time. This allows a mobile salesperson to take orders, check pricing and print estimates. The net result is a QuickBooks companion product, Symbol Captra, which we tend to describe as follows:

Captra gives small businesses access to the same powerful Symbol scanning technology that allows larger, high-volume businesses to quickly and accurately manage their business transactions. Designed to increase the productivity of small businesses, this software mobilizes the functionality of QuickBooks and integrates Symbol bar code scanning technology with a handheld device, enabling the efficient creation of invoices, preparation of estimates, issuance of purchase orders, review of pricing, counting of inventory and the ability to update data from virtually anywhere.

Q. Now what's your next trick?

A. In an upcoming version…pilot next week, in fact, we are extending Captra synchronization to be done over a Wide Area Network using a GPRS data network. This leads to synchronization over the web, local area networks, and wireless LANs…giving the QuickBooks customer the greatest flexibility. That is, if they need to process their invoices immediately, once a week, or at the end of the day, they will be able to do that remotely. This enables them to keep their 'sales people' on the road and not returning back to the office to upload the data to QuickBooks.

Q. And what about your retail plans?

A. Symbol is working closely with selected retail outlets to enable the remarketing of Captra and other Symbol products (bundled with Captra). As Symbol products traditionally have not been available through retail stores, we are approaching this cautiously while staying focused on our Small Business efforts.

For more information see http://captra.symbol.com

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RESEARCH

ARS DVD Burning On The Go - Is it For You?
By: Matt Sargent, Director of Research, PC Group

The notebook manufacturers of Sony, Apple, and Toshiba have outdone themselves this holiday season with the introduction of three new systems that establish a new bar from which all future consumer-focused laptop computers will be judged. Each of these new systems includes an integrated DVD-burning optical drive, an option never before offered on a laptop computer and one that is likely to flip the notebook industry on its ear. Users can now turn their laptop computer into a high-end video-editing studio - a mobile editing studio that is. With rapid advances in DVD recording drives, which has caused pricing to decrease dramatically over the last six months, combined with the increased processor capacity now seen in both desktop and notebook, video-editing, once thought to be the domain of high-end workstations, is quickly being recast as a capability available to the every day PC user. The introduction of these three new systems allows that capability to go mobile.

HARDWARE

The three systems offered by Apple, Sony, and Toshiba are definitely not for the bargain hunter priced at $2,999 for the Apple PowerBook (M859LL/A), $2,699 for the Sony Vaio PCG-GRX690 and $2,599 for the Toshiba Satellite 5205-S703 (the Toshiba includes a $100 mail in rebate which reduces the final cost to $2,499). These systems do, however, come packed to the gill with all the bells and whistles any notebook user could possibly want.

All three systems come with 512MB of RAM, 60GB hard drives, FireWire ports (essential for video capture), and generously large displays. Sony goes a step farther in the area of displays by including a gorgeous 16.1" UXGA display, while the Apple utilizes a wide format (1280x854) 15.2" display, and the Toshiba Satellite includes a 15.1" UXGA display. The 16.1" display offered by the Sony offers the most enjoyable viewing experience due to its size. The wide format display offered by the Apple PowerBook, however, should not be overlooked in that it provides an interesting alternative to standard 15" notebook displays, offering a format more appropriate for video viewing.

The PowerBook offers a slightly different optical drive hardware than the two Intel-based systems. The PowerBook, offering a slot loading versus a tray loading DVD burning optical drive is not only appealing visually, but functionally makes a world of difference when inserting DVDs. Tray loading gets the job done, but tends to hang up if the surface underneath the notebook is not completely flush. One of our testers found that opening the DVD tray on the Toshiba and Sony on a rug surface proved difficult, forcing the user to physically pick up the notebook in order to get the tray to completely open. Perhaps a minor complaint, but when you are talking notebooks, ergonomics is key.

Another minor detail difference in the DVD-burning optical drives is that the Apple utilizes a DVD-R drive while the Sony and Toshiba utilize a DVD-RW drive. What this means is that while all three systems can utilize media that can be written once (which is termed "R"), only the Sony and Toshiba can additionally utilize the more expensive, but more flexible, "rewritable" media (termed "RW"). The difference between these two may be less than you think due to the fact that most users utilize the cheaper "R" standard to start with. However, if you are planning to utilize RW media, the PowerBook is obviously not for you.

DVD-BURNING SOFTWARE

Outside of the hardware aspect of DVD-burning optical drives comes the much more important aspect of the software that supports the DVD-burning process. DVD burning is in a transition period evolving from one that only recently was available to high-end video hobbyists, to one that is now available to the everyday user. In discussions with PC manufacturers, many voiced concerns that past DVD-burning solutions failed to make this video editing process user friendly. Sony confronted this problem by scraping the third party software utilized in older systems and created its own DVD-burning software entitled "Click-DVD". The idea behind this product was that professional looking DVD-burning should be as easy as a simple click of your mouse. Sony actually fronted its release of DVD-burning notebooks with a massive marketing campaign focused so intensely on this new software that the hardware itself took a back seat.

ARS testers that reviewed Sony's Click-DVD software gave the Vaio notebook high marks. The DVD-burning process has become substantially more user friendly and professional-level edit features, such as creating a menu page, is now within the grasp of the every day user. What was dramatically underplayed in Sony's marketing of the Vaio, but drew the attention of our eagle-eyed testers, was that Click-DVD was only one of a suite of video editing features offered on the Vaio. The most impressive of which was the inclusion of Adobe Premier. Premier is a high-end, professional video editing software tool that allows for incredible flexibility and creativity. This software typically sells for $500 when purchased separately. This software is definitely not for the user who is not willing to spend considerable time learning the ins and outs, but Premier greatly expands the range of the audience that will find the Sony Vaio appropriate for their video editing tasks.

The Apple PowerBook utilizes the same iDVD software that has been included with DVD-burning desktops for the last year. Apple has publicly boasted their belief that the Mac OS is much more user friendly than Windows XP, particularly when connecting to peripherals such as digital camcorders. Apple's hype appeared to be true to form as the ARS testers were blown away by the ease at which iDVD worked. The Vaio's Click-DVD software was good, but Apple's iDVD clearly won the day when measuring ease of use.

However, with this ease of use, came a relative loss of flexibility. The PowerBook seemed lacking in high-end features and there was the general sense for ARS testers that the Mac iDVD software produced very predictable results. Unlike the Sony Vaio, Apple does not bundle in a higher-end video-editing tool such as Premier. The lack of this tool is somewhat surprising given Apple's focus on high-end users, particularly those looking to Apple as a high-end, flexible tool. As Apple has long had a strong hold with the creative portions of the market, particularly when it comes to artists, designers, etc., the limitations of iDVD would appear to restrict their creative juices.

The Toshiba Satellite 5205-S703 utilizes a video-editing software program by Panasonic entitled MotionDV Studio. Out of the three systems ARS testers reviewed, this system scored on the low end. Panasonic's MotionDV is likely to suffice for the very high-end user who is familiar with video editing, but for users new to video editing, MotionDV will likely cause much confusion. The overall feel from testers was that the Toshiba's editing software was simply not as well integrated with the system in contrast to the Mac's iDVD and Sony's Click DVD. As one tester commented, "I tried to drag and drop my marked footage down to what I thought was the timeline, but it wasn't clear what my next step was." This confusion was similar to the general tone of people that utilized the Satellite.

One particular frustration voiced by testers is that during the process of video capture, it is necessary to toggle between two separate buttons to start and stop the video capturing process. With the Sony and the Apple system, only one button is needed.

One suggestion was that Toshiba should modify the remote control it currently includes with the Satellite 5205-S703 to allow for basic video capturing functions. This would allow a user to roll the tape and more easily start and stop video capture when appropriate. Currently the remote included with the system allows for basic music and video viewing options, but does not come into play in the DVD editing/burning process.

NITTY GRITTY DETAILS

Video:
Getting beyond the basic specifications and the video-editing software there are a few items worth mentioning that differentiate these systems from one another. The first is the video chip utilized by each of these systems - a key element considering that video manipulation will be a major reason for users to purchase one. Apple's PowerBook utilizes the ATI Mobility Radeon 9000, one of the highest end graphics chips currently available for notebook computers, with 64MB of dedicated video RAM. The Sony includes the somewhat more standard ATI Mobility Radeon 7500, but includes only half the video RAM as the PowerBook. The Toshiba includes the Nvidia GeForce4 460, but doubles the amount of VRAM utilized by the Sony Vaio for a total of 64MB of dedicated VRAM.

Wireless:
On the wireless front, both the Toshiba and the Apple include an integrated wireless (802.11b) network card. The Sony Vaio does not include this option.

Weight:
One consideration which did not seem to score high in the minds of the ARS testers, but one in which we still felt was necessary to discuss is overall weight. The Apple PowerBook scored the best at 5.4 pounds compared with the Sony at 8.4 pounds and the Toshiba at 7.7 pounds. Weight has not been found to be a huge concern of consumers within the high-performance notebook segment, which seem to prefer higher performance to lighter weight, but the Apple advantage here is a hard one to ignore. It is not often that you see a three-pound weight advantage among systems of similar performance.

Battery Life:
Along with the weight advantage, the PowerBook appears to have a significant advantage in battery life. Apple lists the PowerBook as having 5.0 hours of battery life. Sony lists the Vaio as having 3.5 hours and Toshiba lists the Satellite as having only 1.9 hours. Manufacturers' listings of batteries' lives are not typically the most valid way to assess relative battery lives, but given the huge gap stated above, it would be hard not to imagine the PowerBook as having a strong advantage here.

Sound:
Despite performing poorly in terms of its video-editing software, it should be noted that the Toshiba has two clear advantages over its competitors in terms of sound and USB. The Satellite was voted the clear winner of the group in terms of sound with its Harman/Kardon sound system and its integrated subwoofer. This system belts out music like no other notebook on the market. This is a significant advantage when integrating music with video editing and gives this system a significant leg up in terms of play back of DVDs. The other advantage lies in the fact that the Satellite utilizes USB 2.0 while the Apple PowerBook and the Sony Vaio utilize USB 1.1. The difference is that USB 2.0 is much faster for transferring data than USB 1.1. USB 2.0 is similar in speed to FireWire and thus users can utilize a USB cable instead of a separate FireWire connector for video capture.

SUMMARY

In evaluating these systems, one quickly comes to realize that all three of these products are clearly in a class by themselves in overall performance, and with features that have never before been offered in a notebook format. In the choice between the systems, one must look at the type of user looking to buy. If the target user is a relative novice to the computing world then the PowerBook, with its extremely easy to use iDVD, is the clear winner.

If the user is more advanced and has a moderate tolerance for working through software, the Sony Vaio is the clear choice given its relative ease of use and its ability to satisfy the higher-end user looking for advanced functionality.

The Toshiba, solid in the hardware used, is clearly the best system in terms of price/performance: The Satellite sells for $200 less than the Vaio and $500 less than the PowerBook, but is lacking in the fluid integration of the DVD-burner and the video editing software. Advanced users who can handle the high-level of frustration created from trying to work through the Toshiba video editing software are likely to be very pleased with the product given its lower price point and equal performance.

Table #1: Detailed DVD-Burning Notebook Specifications

STRENGTHS/WEAKNESS SUMMARY TABLE

RESEARCH


Hits List of Top-Selling Software
Week of December 29 - January 4, 2003

All Categories

Games

Business

Home Education

List is based on units sold by twenty-three channel partners. For more information, please contact NPDTechworld at (703) 376-6200.

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COMMUNITY

Retail Digest

SmartDisk announced its new Rover compact portable USB data storage device that doubles as an MP3 audio player. Small, lightweight and sturdy enough to clip to a shirt, and versatile enough to be used as a USB storage device, Rover is simple and easy to use. The unit slides apart to plug directly into the USB port on a computer and is automatically recognized as a removable storage device. The user can then simply drag and drop music, digital images or data files. Rover holds up to 128 Megabytes of data or 2 hours of MP3 music at 128kbps and allows up to 12 hours continuous play from one AAA alkaline battery. "With a weight of less than an ounce and its built-in clip, Rover is a miniature, dual-purpose tool that puts both data and music at your fingertips wherever you are, from that last minute presentation you wrote on the plane to listening to your favorite music while running," says Charles Klinker, Director, Marketing for SmartDisk.

SmartDisk also introduced its new 60 GB FireWire FireLite(tm) high performance, portable hard drive for consumers and professionals. The FireLite family of drives, including the new FireWire 60 GB version, is being showcased in Booth 1142, The Moscone Center at Macworld Expo, San Francisco. "Our new 60 GB FireWire FireLite offers high performance and sleek design to consumers who continue to demand increased storage capacity and portability for digital imaging, video and music," according to Charles Klinker, Director, Marketing for SmartDisk. FireLite drives are designed for users who require convenient, portable storage to backup critical data, transport and synchronize data between multiple computers, and free up valuable hard disk space on existing computers. They are especially convenient for mobile computing platforms. FireLite drives are ideal for transferring large files between home and office, for storing hours of superior quality video or warehousing huge graphics files. The drives feature performance levels that support direct access of data from FireLite without having to copy it to a personal computer. Featuring a sleek, silver-colored magnesium casing for outstanding durability, FireLite drives are pocket-sized, measuring just 3.25" (W) x 5.0" (D) x 0.75" (H) and weighing about six (6) ounces. Capacities include 20 GB, 40 GB, and now 60GB versions. They are "Mass Storage Class" peripherals, requiring no driver installation when used with operating systems like Mac OS X, Mac OS 9, Windows XP and Windows Me.

3M featured rear projection display technologies from its Optical Systems Division and 3M Precision Optics, Inc. at CES. It marked the first time these technologies will be demonstrated together since 3M Precision Optics, Inc. (formerly Corning Precision Lens, Inc.) was acquired by 3M in December 2002. "Adding 3M Precision Optics, Inc. technologies to Optical Systems expertise in light management and display technologies allows us to provide a broader array of products to the consumer television industry by expanding innovative solutions into new areas," said Andy Wong, Division Vice President, 3M Optical Systems Division. In addition to high performance CRT lenses, some of the technologies on display this week include liquid crystal on silicon (LCOS) microdisplay projection components; high performance projection screens; and digital light processing (DLP) components and engines.

Tweeter recently said that through December 21, 2002, comparable store sales for the quarter are down approximately 10%, and for the first 21 days of December are down 15%. December's results will have a disproportionate effect on earnings, as the month of December was planned to contribute roughly 85% of the profit for the quarter. This weakness in sales is consistent across all regions of the country, including Florida where we employ a more promotional marketing strategy than in our other markets. While sales are still extremely difficult to forecast, today we are projecting negative comparable store sales for the December quarter to be down between 12% and 15%. As a result of this, we expect EPS to be in the range of $0.20 and $0.25 per share for the quarter. This compares to $0.56 per for the same quarter last year. Gross Margin from retail sales is currently running approximately 80 basis points higher than last year and 140 basis points over plan. Some of this gain will be offset, however, by fewer dollars being collected from vendor volume rebate programs, unless these programs can be renegotiated. Jeffrey Stone, President and CEO said, "Sales of flat panel television have been strong as expected all season, our home install teams have been booked through the end of the month for ten days now but the home audio category has been fairly soft this month. The sales mix of all other categories is not much different than our expectations. We are just seeing less traffic across the board, as there appears to be less interest in the products we are selling this holiday season. We have budgeted our business flat for the March quarter and are up against negative 6.7% comparative store sales from last year. We will issue EPS and comparative store sales guidance for the March quarter and the fiscal year when we release earnings for the December quarter, which we expect to do on January 30, 2003."

From on-the-go, enterprise implementers to the most fervent, game-playing enthusiasts, Audiovox Communications Corporation's (ACC) new CDM-9600 wireless handset is the one communications solution that enables wireless phone users to ride the crest of productivity and take full advantage of the myriad of new, exciting entertainment and information services offered by the nation's top carriers. Distinctively styled and attractively appointed, the feature-rich CDM-9600 is CDMA2000 1X-capable and equipped with GPS location positioning technology (system dependent). Plus, with its BREW and Java capabilities (also system dependent) and plethora of other user-demanded features, ACC's new CDM-9600 is a great communications tool for business and recreational use. Sporting a clamshell-styled form factor, ACC's tri-mode CDMA (800 MHz AMPS/CDMA, 1900 MHz PCS), CDM-9600, boasts a 65K-color main display; a built-in digital camera for photo IDs and picture mail; as well as a host of other user-demanded features that are sure to make this phone a big seller. Besides high-speed wireless voice and data connectivity for Web browsing (WAP 5.0 Browser), e-mail and mobile e-commerce functions and two-way short messaging service (SMS), T9â Text Input, ACC's CDM-9600's built-in, 310K-pixel digital camera makes it a perfect tool for business applications where the immediacy of real-time photos can be critical. Also, the CDM-9600's large, nine-line, primary LCD is perfect for displaying incoming callers' pictures for photo IDs. "We've designed the CDM-9600 to meet the expanding wireless needs of business people and all those individuals who need to be on the cutting-edge of the latest advances in telecommunications technology," said ACC President and CEO, Philip Christopher. "For these on-the-go communicators, whether it's for a critical, business application or tapping into one of the new entertainment services being offered by the nation's carriers, ACC's CDM-9600 is the comprehensive communications solution that's sure to fill their bill."

WWW.Update: As brick and mortar retailers continue to bemoan the lukewarm sales results of the 2002 holiday season, their online counterparts are basking in somewhat unexpected double-digit increases. Consumers spent nearly $13.7 billion on Holidays 2002, according to the eSpending Report from The Goldman Sachs Group, Inc., Harris Interactive, and Nielsen//NetRatings. Online spending jumped more than 24% year-over-year, up from $11 billion spent in 2001. Including travel, online spending grew nearly 22% to $15.7 billion. Shoppers surveyed in the eSpending Report noted that more than 16% of their holiday budgets were slated for online purchases, as compared to just 14% during the 2001 season. The survey also showed spending patterns at two ends of the spectrum, with some shoppers spending earlier in the season and others procrastinating until the very last week before Christmas. "With each holiday season e-commerce becomes more of a mainstream activity, attracting a greater mass audience," said Lori Iventosch-James, Director of E-commerce Research, Harris Interactive. "This season shoppers allotted more of their holiday budget to online spending. And this, combined with an increase in the total ecommerce population helped drive year-over-year growth. E-tailers pushing big discounts with free shipping in the beginning of November drove consumers to take advantage of the special savings early," added Iventosh-James. "We also saw an increase in purchases right before Christmas this year, indicating that shoppers felt more comfortable waiting until the last minute and paying for extra shipping charges to get their gifts on time." Consumers spent more than $3.1 billion in books, music, and video/DVD, driving the category to the top spot during the holidays. Year-over-year, the category posted a 40% increase. Rising 20% since 2001, apparel recorded $2.7 million in sales, while consumers spent nearly $2 billion on travel. The top two fastest growing categories for the season were toys and video games and consumer electronics, with shoppers increasing spending for both categories by more than 72%. With nearly $2 billion in sales, consumer electronics claimed the No. 4 ranking among shopping categories, while toys and games posted online spending of more than $1.8 billion. Women comprised 51% of the total online shopping population during the 2002 holiday season, as compared to 49% of males. This shows a slight change from last season when the breakdown was 50/50.

Konica plans to buy rival Minolta, targeting 4,000 job cuts and higher sales after digital cameras made by Sony Corp. and Canon, Inc. eroded its market share. The acquisition, which may be worth about 195 billion yen ($1.6 billion) based on Minolta's market value and debt, will allow a 10 percent reduction in the combined company's workforce by 2005 and increase sales by 24 percent by 2006, according to a joint statement distributed through the Tokyo Stock Exchange. Sales of Japan-made digital cameras rose by almost a half in the first eleven months of last year, eroding sales for Konica and other makers of traditional cameras and film. After buying a company that lost money in the past two fiscal years, Konica would rank fourth in Japan among makers of cameras, printers and copiers. ``It's a big question mark what kind of benefit the purchase will bring", said Yoshiya Morimoto, who helps manage 30 billion yen ($249 million) in equities at Japan Investment Trust Management Co. and sold his Konica stake in December. ``Whether it's digital cameras or copy machines, neither Konica or Minolta has a competitive advantage.''

Konica President Fumio Iwai will head a holding company to be formed by Konica and into which Minolta's operations will be merged. The two companies on Jan. 16 will decide the ratio of shares each shareholder in the two companies will receive after the acquisition. Konica's acquisition of Minolta comes as digital camera makers gain on their film-based counterparts. Sales of Japan-made digital cameras surged 44 percent in the 11 months ended in November from a year ago, compared with a 27 percent decline for film-based cameras, according to the Tokyo-based Camera and Imaging Products Association. Sales of all types of cameras account for a third of Konica's overall sales and about a fifth of Minolta's. The combined company wouldn't crack the top five among Japan's digital camera makers, which record images electronically using computer chips. The new company, with annual sales of 1.05 trillion yen in the fiscal year ended March 31, would lag Canon, Fuji Photo Film Co. and Ricoh Co. in Japan as a camera and copier maker. Moody's Investors Service in May cut Minolta's rating one level to B2, five levels below the lowest investment-grade rating. The U.S. rating company said Minolta's growing dependency on bank borrowing contributed to the cut, and that earlier job cuts and other cost-cutting steps by Minolta may not be enough to counter growing competition.

``Minolta will benefit on the financial side,'' said Seiichiro Iwamoto, who manages 100 billion yen at Fuji Investment Management Co., and who doesn't hold shares of either company. Minolta's shares rose 1.5 percent to close at 536 yen on hopes the merger would help shore up its finances after losses in the past two fiscal years. Konica's shares closed down 0.8 percent at 864 yen. Konica's market capitalization of 311 billion yen is about double that of Minolta. A possible merger could be worth as much as 195 billion yen given Minolta's current market capitalization of 148 billion yen and 46.5 billion yen in long-term debt as of March 31, according to Bloomberg data. Minolta's ratio of debt to assets was 56 percent as of March 31, the highest among Japanese photo equipment and supply companies, acco