We live in crazy and chaotic times. Lately, the scales have tilted to more negative than positive. As a result, we are challenged to grow our business and hit our financial goals. But like the Golden Rule says, “you gotta learn to take the bad with the good.” Further, I would contend that people who can adapt in these times will be stronger professionally and personally. But that doesn’t mean I want to remain in the economic stupor forever. For this month’s ChanneLife I focused on some examples of people who are trying to shake things up a bit…..

1. Tweeter has hired Philo Pappas as Senior Vice President/Chief Merchandising Officer. "We are very pleased to have someone with Philo's wealth of merchandising and business experience join us," says Jeff Stone, President and CEO of Tweeter Home Entertainment Group. "His insights related to merchandising systems, processes and controls associated with a multi-billion dollar company will be critical as our organization continues to grow. Coming from such a diverse background, he also brings fresh insight into future strategy discussions. Over the last 18 months we have been focusing on evolving the management team, and Philo will fill a key position in that evolution." (That’s just what I would have said, along with, ”Congratulations and good luck!”
   
2. Polycom tapped Tom Stemberg, Chairman and Co-founder of Staples, to its Board of Directors. Stemberg opened the first Staples store in 1986, served as Chief Executive Officer for 15 years, and currently serves as Chairman responsible for strategic and entrepreneurial projects. Polycom looks forward to leveraging Stemberg’s expertise to grow Polycom and expand the market for its interactive communications products.
   
3. The word from McAfee Security is direct: Finally, a brand name that is channel-focused is directing its energy toward Enemy #1 of Enterprise productivity – SPAM. The Company recently released SpamKillerä for Microsoft Exchange Small Business, and is looking to help Resellers develop practices around e-mail management, privacy, spam and the additional opportunities that will arise from a service-led sales approach. “This is a hot technology today and we know someone will sell it. We want our Resellers to become expert on this and use it to get into new accounts and sell deeper into their existing accounts,” said McAfee/Network Associates Channel Chief, Mike Menagay. “With this product, we are not asking Resellers to choose between us and Symantec or Trend, it’s just us. There are some competitive products but they don’t have scale, size, and the technical depth that we do. We also believe there is pent-up demand for this. We are bringing spam into the big leagues,” Menagay said. According to a recent report by Ferris Research, Inc., spam will cost U.S. businesses over $10 billion in 2003. As this figure is set to continue rising, the need to deploy an effective anti-spam solution has become even more crucial. The McAfee SpamKiller family addresses this business-critical problem with a multi-tiered defense for the e-mail server and Internet gateway. Because SpamKiller scans each incoming e-mail as it reaches the server using a pre-defined set of hundreds of rules to proactively detect and quarantine spam, employees no longer have to waste time determining what is valid e-mail and what is spam. And the threat of inappropriate content reaching employee inboxes is significantly reduced, which helps limit organizations' HR, financial and legal liability. Additionally, the SpamKiller technology uses a highly accurate scoring system to determine whether a particular e-mail is spam. With the extensive set of rules that run behind SpamKiller, each e-mail receives a positive or negative score to determine its overall spam rating, and once spam is detected, messages are either delivered to the end users inbox, personal junk mail folder or a system-wide junk folder. Pricing for 101-250 nodes is $20.38 per node (this is a 2-year subscription that includes support for the first year).
   
4. Even though the value PC processor segment is relatively crowded, Intel's plans for clock speed superiority should keep it well ahead of its competitors in this market. According to In-Stat/MDR (http://www.MDRonline.com), Intel's mobile value processors will breeze to 2.7GHz at the end of 2004 as it balances challenges from competitors AMD, VIA and Transmeta and maintains power dissipation within desired mobile limits but without the benefit of the power management capabilities of the performance segment. Mobile value would appear to be Intel's weakest position, given the competition of AMD's Athlon XP-M, VIA's C3, and Transmeta's Crusoe. "AMD, Transmeta and VIA will offer different combinations of performance, power and price, but Intel's dominant market share in the value market is not in any danger," said Kevin Krewell, with In-Stat/MDR. "Intel should be more concerned that the rise of `good-enough' computing increases the appeal of the low-cost Celeron processors and puts further pressure on Intel's already decreasing ASPs."
   
5. Microsoft has made tremendous progress in positioning Windows CE and its derivatives as one of the leading software platforms for a large variety of electronic devices including as PDAs, Smartphones, consumer electronics devices and many other information appliances. Most of the devices that are starting to use Windows CE and other software platforms are already in volume production. This means that Windows CE device sales will grow at very high rate as shown in the table below. Most Windows CE platform competitors only compete in a single or a few product segments. Only software platforms using embedded Linux versions are competing across the board. Even though embedded Linux is behind Windows CE in most segments, the long-term battle will be between these two software platforms. The only exception is handheld device categories where Palm and Symbian are the strongest competitors to Microsoft's Pocket PC. Computer hardware and software platforms have started to invade many electronics device categories and will become the preferred system architecture for an increasing portion of electronics devices. Only the simplest devices with fixed functionality will avoid this trend. "Microsoft is taking advantage of the inevitable penetration of microprocessors and embedded software platforms into all electronics devices," says Dr. Egil Juliussen, the author of the report. "It is not a question if this will happen, but a question of when it will happen for each device category. eTForecasts publishes market research reports for the PC, PDA, information appliances and Internet industries. For more information see www.etforecasts.com.
   
6. EMachines, Inc., the fastest-growing PC company in the United States according to IDC, today announced its new spring line-up of affordable, high-performance PCs featuring upgraded Intel(R)-based processors starting at $399. In addition to increasing the processing speeds and adding Ethernet networking capability throughout its new products, the Irvine-based PC provider has doubled the memory of its $499 and $599 models, the T2245 and T2385, for faster, more efficient use. In addition, T2385 offers a larger hard drive for greater storage capability. For multimedia aficionados, these two models also include DVD and CD-RW drives for movie and music playback and CD recording. eMachines' new array of PCs also incorporate Microsoft(R) Windows(R) XP Home Edition to enhance users' digital photography, music and video experience, while augmenting reliability and security. "With the introduction of our new spring line-up, we offer consumers and businesses best-in-value PCs for virtually any computing application for home or office use," said eMachines' President and CEO Wayne Inouye. "We also continue to vigorously support our products by offering one of the most innovative and comprehensive Customer Care programs in the industry."
   
7. Back in the day when I was editing Computer Retail Week, FAO Schwarz’s 5th Avenue store in NYC was my benchmark for customer-driven merchandising. Alas, their days as benchmark for an industry in need of inspiration may be no longer. FAO, Inc. (FAOOQ), parent of the storied FAO Schwarz toy store, said on Monday it lost the funding it needed to emerge from bankruptcy and may have to shut down. The collapse of the financing comes just a week after FAO had said it arranged for $77 million to fund its emergence from bankruptcy, which had been set for Friday. The company's right to use cash that is collateral for its loans expires that day, unless extended by the lenders. FAO, based in King of Prussia, Pennsylvania, said it lost the funding because of ``unexpected complications.'' ``Due to a difference in the final terms between our equity investors and our bank lenders, the equity financing was withdrawn,” said FAO spokesman, Alan Marcus. The Retailer, which also runs the Zany Brainy and Right Start chains, said it is now exploring all alternatives, including obtaining replacement equity funding in order to complete its confirmed plan, a sale of all or portions of its operations, and liquidation. The Right Start sells toys for infants and toddlers, while Zany Brainy specializes in educational toys. Last week, FAO said a bankruptcy court judge approved its reorganization plan and that it had a commitment for up to $77 million in bank financing. The company sought court protection after failing to persuade lead lender Wells Fargo Retail Finance to relax credit terms. FAO has struggled to compete with discounters like Wal-Mart Stores, Inc. (WMT) and rivals such as Toys R Us, Inc. (TOY).
   
8. RadioShack announced first quarter net income of $56.6 million or 33 cents per diluted share for the quarter ended March 31, 2003, compared with net income of $57.6 million or 31 cents per diluted share for the first quarter a year ago. Same store sales during the quarter increased 5 percent over the prior year. Total sales increased 3 percent to $1,070 million, compared to total sales of $1,034 million a year ago. Sales of wireless communications products grew 14 percent during the three months.
   
9. Hot New “Play” - Turning the boom in DVD player sales into a new income opportunity for franchisers, a Silicon Valley company called DVDPlay today launched the nation's first equivalent of an ATM for the entertainment industry. Automated Entertainment Machines, or AEMs, enable franchisers to rent or sell DVDs and run TV spot advertising and movie trailers through strategically positioned stand-alone machines in high-traffic locations such as fast food restaurants, drug stores, convenience stores and universities. The AEM's debut comes as DVD players are outselling all other home electronic devices. Industry observers estimate the number of DVD-ready households in the United States, already at 50 percent today, will reach 80 percent within three years. Described as "the big red machine with the small footprint," an AEM looks and functions like a bank's ATM, while offering the instant gratification of on-the-spot DVD access at a favorite coffee house or without an extra stop on a shopping trip. Unlike standard movie rental stores, AEMs are open 24/7. Unlike online movie rental services, there's no wait. Additionally, users will be able to access any machine from their home or office PC to check availability and reserve the movie to be picked up later. "We expect the adoption of AEMs to accelerate quickly and one day be on a par with now ubiquitous ATMs," said Dee Cravens, Executive Vice-President and Chief Marketing Officer of DVDPlay. "Industry analysts estimate that DVD worldwide sales and rental revenues will continue to grow exponentially, doubling to $40 billion by 2007. These numbers may surprise potential franchisees and other entrepreneurs looking for safe, new investment opportunities in an unsettled economy. "DVDPlay generates revenue for franchises in three important ways: rental fees, late fees and DVD sales revenue. Rental fees are created every time a customer uses an AEM to rent a DVD. Late fees are based on the terms set for the rental agreement. Typically, late fees accrue on an estimated 15% of all rentals, providing a significant source of additional revenue every month. Some consumers prefer to purchase the DVD outright which gives the franchisee another easy way to bring in extra revenue. Finally, franchisees can add advertising on the machine's large flat panel screen, e-mail promotions and membership loyalty programs as additional revenue streams. Each U.S. Area of Dominant Influence (ADI) will have one or more designated franchiser, depending on the number of households and the territory desired; franchisees will be able to place numerous machines within a given city or territory. Unlike other franchise opportunities, this means that there will be no local competition to compete for customers. Franchisees who sign up early will have the advantage of the most desirable U.S. markets. DVDPlay offers customer support, designed to help new franchisees get started with every aspect of the business. This includes things such as onsite training, in field sales assistance, installation, maintenance and operating manuals. Furthermore, all franchisees are supported 24/7 via a personal, secure and safe administrative site. DVDPlay AEMs are complete, stand-alone intelligent machines, compact in size and connected via the Internet. They are capable of dispensing, receiving, renting and selling DVDs, CDs and DVD games. The machines are easy to use and require point-of-purchase payment in the form of a credit. The first step is to select a DVD by following a friendly touch-screen menu, swipe a credit card for payment and leave an e-mail address to receive special discounts and promotions in the future. Returns are simple; customers press one button on the touch screen and slip their DVD into the designated slot. DVDPlay automatically restocks the DVD so it's ready for the next customer. If customers forget to return DVDs on time, the machine automatically adds late charges to their transactions and notifies the customer via e-mail. All receipts are instantly sent by e-mail. DVDPlay's AEMS are being tested in four states --New York, North Carolina, Texas and California. For example, Duane Reed drug stores in Manhattan and The Pantry in North Carolina are currently testing AEMs under development agreements with Video Vending New York, Inc. with promising results. Additional AEMs will be rolled out nationwide when DVDPlay finalizes its franchising agreements.
   
10. Psst. Here’s a tip: Batteries……Valence Technology announced that Best Buy has selected the N-Charge(tm) Power System as its standard notebook battery accessory. The N-Charge system will be marketed and sold via Best Buy's online Web site. "As a leading Retailer, Best Buy offers the latest technology and products to meet the everyday computer and electronics needs of its extensive customer base," said Stephan Godevais, Chairman and CEO of Valence. "Having the N-Charge system selected by Best Buy is a significant accomplishment for us as we continue to expand our distribution channels. We look forward to working with Best Buy and helping to provide its customers with a solution which addresses their growing demand for more power." "Valence's N-Charge system is a great solution for the power problem that many of our mobile customers are faced with today," said Michele Azar, Business General Manager, Computer Peripherals and Accessories for Best Buy. "We've been searching for a universal product that would not only provide additional power to resolve this issue, but would also be compatible with and support the various notebook brands and models we carry. We have found it in the N-Charge system."

I'm always looking for more “success stories,” news and highlights. Please send your submissions to me at kanewman@sbcglobal.net.

NEWS

Channel Digest

Footnote: we generally disregard PR releases hyping market share but in this case it seems to be relevant…Customer preference for quality, affordable computer systems moved Dell again into the No. 1 position of worldwide suppliers, based on quarterly results released by industry analysts today. "Our customers trust us to deliver the best products and services to meet the needs of their enterprises, whether they are operating multi-national companies or e-mailing a child's photo from a home system," said Michael Dell, Chairman and CEO. "Our goal is to provide unprecedented value and service to all customers, and today's rankings are positive validation that we are achieving that goal." IDC and Gartner, Inc. reported Dell shipped nearly 6 million units during the first quarter, about 500,000 more than the next systems supplier. The reports include all shipments of servers, notebooks and desktop systems. Wait, there’s more: The following is a statement from HP regarding worldwide PC market share numbers for the first quarter of calendar year 2003. "As we have consistently said, the No. 1 market share position is a two-horse race between HP and Dell, and the see-saw battle will continue well into the future," said Jim McDonnell, Vice President of Marketing, HP Personal Systems Group. "HP and Dell are virtually neck and neck for the third consecutive quarter with just over 500,000 of the more than 34 million units shipped worldwide separating the two companies. "HP continues to hold a significant lead in key global markets such as Europe, with the No. 1 position at 20.6 percent share -- more than 50 percent greater than the nearest competitor. In the long term, proven product innovation and competitive pricing, two of our strengths, will continue to play key roles in our industry, as demonstrated by the demand for our recently introduced Media Center PC and Tablet PC. And as we move forward, our strong international presence and the strength of our global network of partners will continue to provide real value to our customers -- and set us apart in the marketplace."

Now the Final Word from Gartner:

The PC industry is starting 2003 on a better note, as worldwide PC shipments totaled 34.5 million units in the first quarter of 2003, a 5.5 percent increase from the same period last year, according to preliminary results from Gartner. "Worldwide first quarter 2003 results were slightly ahead of expectations, but even so do not signal a major return to buying. Aggressive price cutting was an important factor in maintaining PC shipment growth during the first quarter," said Charles Smulders, Vice President of Gartner's computing platforms worldwide group. "The PC market felt some impact from the outbreak of hostilities in Iraq in the second half of March, following generally better-than-expected performances in January and February. SARS (Severe Acute Respiratory Syndrome) did not play a major factor in the growth levels on a worldwide basis." Dell was the No. 1 Vendor for PC shipments worldwide (see Table 1), and it experienced the strongest growth rate among the top-tier Vendors. Hewlett-Packard slipped to the No. 2 position as its shipments declined 5.7 percent in the first quarter.

Table 1
Preliminary Worldwide PC Vendor Unit Shipment Estimates for 1Q03 (Thousands of Units)

Note: Data includes desk-based PCs, mobile PCs and IA32 servers. HPand Compaq are reported as one company. If combining Fujitsu andFujitsu Siemens, the combined shipments would be in fourth place in the worldwide PC market.

Source: Gartner Dataquest (April 2003)

U.S. PC shipments totaled 11.8 million units in the first quarter of 2003, a 7.7 percent increase from the first quarter of 2002 (see Table 2). The U.S. PC market received a boost from a strong consumer market. After the holiday season, the first quarter is usually a quieter quarter for consumer sales, however, Gartner analysts said desk-based PC sales were stronger than anticipated.

Table 2
Preliminary U.S. PC Vendor Unit Shipment Estimates for 1Q03 (Thousands of Units)

Note: Data includes desk-based PCs, mobile PCs and IA32 servers. HPand Compaq are reported as one company.

Source: Gartner Dataquest (April 2003)

More from Gartner on a related topic: Mobile PC growth continued to outpace the desktop PC segment. Tablet PCs and the launch of Intel's Centrino mobile platform continues to bring attention to the mobile PC, but were not major factors in driving shipments. "Centrino is focused at the corporate market initially. In addition to budget issues, it will take time for that community to qualify it within their IT environments," Smulders said. "The marketing campaign around Centrino, however, is raising general awareness of the benefits of wireless mobile form factors." Additional information is available in the Gartner Dataquest Perspective "Preliminary 1Q03 PC Market Results-Slightly Better than Expected," examines the current state of the worldwide PC industry. It also looks at what trends are developing, and how the top-tier Vendors are performing. These results are preliminary. Final statistics will be available soon to clients of Gartner's PC Quarterly Statistics Worldwide by Region program. This program offers a comprehensive and timely picture of the worldwide PC market, allowing product planning, distribution, marketing and sales organizations to keep abreast of key issues and their future implications around the globe. To subscribe to this program, please call 408-468-8000. Additional research can be found on Gartner's Hardware and Systems Focus Area on Gartner's Web site at www.gartner.com/1_researchanalysis/focus/hwmkt_fa.html.

BDS Marketing has been named a finalist in the American Business Awards competition. The sales and marketing services firm was recognized for its work on behalf of Motorola’s Personal Communications Sector, the unit that manufactures and sells wireless telephones. The firm’s multifaceted campaign resulted in a 25 percent increase in marketshare – from 20.8 percent to 26 percent – within a mere 12 months. BDS Marketing’s "Team Motorola" retail services team was recognized in the Best Marketing Team category, where it is competing with two other finalists -- FedEx Corporation and I-many. Winners will be announced on April 30 at a nationally broadcast awards show hosted by Charles Osgood, host of CBS Sunday Morning and commentator for the CBS Radio Network.. "We’re very proud of our work for Motorola, which has significantly strengthened its retail presence, boosted sales and enhanced its brand awareness, especially among the key youth segment," said Kristen des Chatelets, BDS Marketing’s chief marketing officer.

American Power Conversion was selected as “Vendor of the Year,” by CompUSA in the peripherals category and APC’s new TravelPower Case was given the “Best of RetailVision Award”ä in the accessories category, and was nominated for a “Best of RetailVision Award” in the merchandising category. The recognition by CompUSA honored the company’s high performance, account management, quality products, and customer support for CompUSA. The RetailVision award, voted on by the channel’s leading Retailers, honor excellence for product innovation, channel strategy, and presentation.

Intel cut the price of its fastest microprocessors for desktop and laptop PCs by as much as 38 percent. The price of Intel's Pentium 4 microprocessor running at 3 gigahertz was cut 32 percent to $401 from $589. The price of the mobile Pentium 4 chip running at 2.4 gigahertz was cut 38 percent to $348. Intel last made price cuts in February.

PC Connection entered into an agreement with Sun Microsystems, in which PC Connection will sell and support Sun’s StorEdge Storage Solutions, Sun software, and entry-level Sun Fire line of UNIX servers on the Solaris 8 operating environment.

Lexmark reported first-quarter earnings of $94.6 million, or 73 cents per share, up from its year-ago profit of $71.5 million, or 53 cents per share, and a penny ahead of Wall Street's consensus view. Revenue rose to $1.11 billion in the three months ended March 31 from $1.05 billion in the same period a year earlier. Looking ahead, the Lexington, KY, maker of computer printers and related products forecast earnings of 70 to 80 cents per share in the second quarter, with year-over-year revenue growth in the low- to mid-single digits.

Intuit and LandWare announced the availability of Pocket Quicken 2.0 for the Pocket PC platform. Packed with the same features and enhancements as the award-winning Palm OS version, Pocket Quicken 2.0 for Pocket PC represents the most comprehensive handheld personal financial application available for Quicken customers. Pocket Quicken’s excellent connectivity to the desktop instantly mobilizes consumers’ financial data with a single ActiveSync, enabling on-the-go access to account details, credit limits, transaction histories, exchange rates and more. "With Pocket Quicken, millions of Quicken users can now take advantage of the full range of Pocket PC devices," said Mark Spain, Director of the Mobile Devices Division at Microsoft Corp. "We are thrilled to have Quicken join the growing list of popular PC applications that are now available on the Pocket PC.”

Channel Digest is about your news. What have you done lately?. Please send your submissions to me at kanewman@sbcglobal.net.

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RESEARCH

Picture Reliability in Projectors: Separating DLP Projectors From the Pack?
By: Christina Lawson, Research Analyst, Projectors/Plasma Displays

In today’s crowded projector market it is often difficult and at times impossible for customers to grasp the advantages and disadvantages of products at their disposal. Vendors in the projector market are constantly looking for ways to pull their product away from the pack and will often tout their projectors’ ease of use, brightness, weight, and total cost of ownership (TCO) advantages to sell their products. Picture reliability over time is one way the projector’s TCO can be calculated. Projectors that offer greater picture reliability over time will allow users to hold on to their projectors for a longer period of time. This assumption, of course, presumes that users will not replace their projector until the unit is obsolete, rather than when something brighter, lighter, and better is available. Texas Instruments, sole proprietor of the popular DLP technology, recently contracted an outside research firm, Munsel Color Science Laboratory at the Rochester Institute of Technology, to investigate picture reliability in DLP and LCD projectors. TI expects that these results will push DLP-based projectors to a higher tier in the projector hierarchy. The projectors chosen to participate in this study projected various images for approximately 4,000 hours. The initial test results, recently announced by TI, asserts that DLP-based projectors demonstrated superior picture reliability over the test period while the LCD-based projectors suffered optical degradation that were catastrophic. The images provided below show the drastic differences in DLP (pictured left) and LCD (pictured right) projector images after 3,312 hours of projection. The study revealed that LCD-based projectors produced a visible picture defect after 2,500 hours of operation. DLP-based projectors, however, did not produce a visible picture defect well beyond 4,000 hours of operation. Failure occurred in the blue, red, and green channel polarizer and panels of LCD-based projectors. Given these results, it appears that LCD-based projectors fail at approximately the same time a single lamp would fail. Meanwhile, DLP-based projectors’ image quality was proven to outlast that of LCD projectors by 37 percent.

Projector Vendors who are DLP purists will likely cheer and embrace the study for all that its worth. The study provides evidence that these DLP projectors are superior to LCD offerings in terms of picture reliability and TCO. Pure DLP projector Vendors include Dell, HP, and the newest player of them all, Gateway. At the same time, there are Vendors who offer both LCD and DLP-based projectors. In these organizations it is unlikely that the results in this study will be used to market and sell any of their products at the expense of half (or more than half) of their product lines. This study, however, should be taken seriously by all players in the industry. Vendors that offer both LCD and DLP-based projectors must take this evidence and validate it internally and use their findings along with those from the TI study to effectively plan future product strategies. Vendors that offer both LCD and DLP projectors include: InFocus Corporation, ViewSonic, Sony, and Toshiba.

Driving down projector TCO will inevitably lure new customers into the market. The educational and consumer markets, both particularly young and promising for the maturing projector industry, have not reached their potential due, in part, to the cost of maintaining the projector (i.e. lamp replacements, unit replacements). The educational market remains apprehensive in making the leap from traditional overhead projectors to multimedia projection techniques. In order to engage this segment, Vendors must provide as much reassurance as possible that technologies they upgrade to today will continue to be used three, four, and even five years from now. That being said, the picture reliability advantage that DLP technology has over LCD technology is a viable selling point. DLP projectors’ ability to provide greater picture reliability as compared to their LCD counterparts will also engage the consumer market. Because consumers are not accustomed to constantly investing in their television sets, a projector that needs a $500 lamp replacement every 2,000 hours is a hard sell. Projectors are not positioned as a replacement for the consumer television. Rather, projectors are successfully positioned as an added home theater component; a specialty item that is used for big sports games, family home movie night, or showing off summer vacation slides. Proponents of LCD technology will likely argue that the image quality three years from now of a projector one buys today may not be of importance. If one assumes that a projector is used an average of 900 hours per year, LCD-based projectors that fail image quality tests after 2,500 hours would last an end-user at least 2.5 years from the date of purchase.

At the same time, because the projector industry is constantly evolving, end-users cannot be assured that their projector will not be obsolete in two or three years based solely on picture reliability rates. The industry will change with the realization of the LCoS projector and new benchmarks in terms of resolution, brightness, and contrast. While many projectors are traded in and/or discarded after only a few years of use, the picture reliability factor is not necessarily negated during the buying process. On the contrary, most end-users will not likely anticipate trading in/up their new projectors on the day of purchase. Thus, the security of knowing that the projector they purchase today will still project a quality image three years from now is a strong selling point that manufacturers, Resellers, and end-users will likely take seriously.

Despite the changes and flux incurred by the projector industry, ARS believes that picture reliability will affect the product road maps of Vendors and the buying decisions of end-users in all market segments. This new evidence that DLP-based projectors offer greater picture reliability as compared to LCD-based projectors will open new opportunities within the consumer and education markets, as well as strengthen selling points into corporations and small business. Although the TI study does not definitively prove the superiority of DLP-based projectors over LCD-based projectors, its results provide evidence that DLP-based projectors effectively have lower TCO because their picture reliability over time is greater. Thus, this study suggests DLP-based projectors may just give LCD-based projectors a run for their money.

RESEARCH

HOW LOW DID HP GO? : A Second Look at How HP Color LaserJets Set The Pace (As Well As The Prices) For Domestic Color Page Printers
By: Bridget Kester, Printers Industry Analyst

As a slow economy continues to plague the industry, manufacturers are searching for the perfect price point to gain market share while at the same time remaining profitable. HP, with its strong brand name, has long been the market leader and has set the pricing trend. In January 2002, ARS took a look at HP’s pricing of its Color LaserJet printers and its impact on the market. During the time since this analysis, HP continued its role as market leader by completing its merger with Compaq Computer in May 2002, introducing replacement models for its printer lineup, and adding an entry-level color laser printer. Here we will take a second look at HP’s color laser printer pricing strategy, how it relates to its monochrome pricing, and what this means for the industry in the coming years. Previously, ARS asked the question: How low will HP go when setting prices for its new benchmark products? The question arose as HP was on the verge of unveiling its next generation of laser printers and pricing had not yet been set. Would HP continue its trend of significantly lowering prices with each new model? In October 1998, HP’s Color LaserJet 4500N ($2,900) replaced the Color LaserJet 5M ($4,900), representing a 40 percent decrease. Then, in October 2000, the 4550N, at $2,400, replaced the 4500N, a 17 percent drop in price. How much further could HP go?

In January 2002, ARS recommended that rather than perpetuate a destructive cycle of price erosion for a technology segment that justifies substantial investment in research and development, HP should adopt a new pricing strategy for its next generation Color LaserJet printers. ARS suggested a strategy more in line with more mature market segments, such as monochrome lasers; HP has been a leader in the monochrome laser segment for more than 15 years, using a simple pricing strategy: more product, same price.

Apparently by the time HP introduced its next-generation color laser printer, the LaserJet 4600N, HP thought the color page printer market had matured enough to adopt a pricing strategy more like the one used for its monochrome products. HP introduced the LaserJet 4600N for $2,300, a mere $50 below the average street price for the existing LaserJet 4550N – representing less than a two percent price decrease. Prices appear to have stabilized around the $2,300 price point. As shown in the chart above, the market tends to mimic the market leader and has kept average street prices consistently 25-30 percent below the market leader.

Although HP is holding the line at the $2,300 mark for Base Network Model A4 color page printers, overall HP A4 Color LaserJet prices have lowered with the addition of a new entry-level color laser. With the Color LaserJet 2500 series, HP enters the sub-$1,000 range for color laser printing, expanding the breadth of HP color laser printers to now cover the low-end as well as the high end. As a result, HP’s average A4 color LaserJet price is closer in line with the market average of $1,570.

As the market leader with a solid brand name, HP historically enjoyed the luxury of almost never having to drop prices of its page printers; street prices of its Color LaserJets only fell when new models replaced old ones. If history were to repeat itself, the $999 Color LaserJet 2500L introductory price point would have been just a beginning point and HP would have continued to lower its price on each successive entry-level model introduction. However, with increased competition in the entry-level segment, HP was forced to alter its game plan. Only five months after it was introduced, HP lowered its street price on the Color LaserJet 2500L by 6 percent, to $899. The entry-level market could be a tough arena for the market leader. While the HP brand was able to command a higher price in other segments, it is proving to be a bit more difficult amongst the more cost-conscious entry-level buyers. HP and Minolta-QMS are currently fighting a battle in the segment, trying to gain market share by lowering prices or offering incentives, while other manufacturers such as Okidata are also entering the segment. Minolta-QMS was the first to enter the sub-$1,000 segment when it introduced the Magicolor 2300 Desklaser for $799 in September 2002. HP quickly responded with the LaserJet 2500L, first available in October 2002 for $999. The two manufacturers have been battling each other in the segment, causing HP to lower its price on the HP 2500L to $899. In January 2003, Okidata joined the competition with the introduction of the Oki C5100N LED entry-level printer for $999.

The manufacturers are jockeying for market leadership by introducing products for lower and lower prices, forcing them to produce even more stripped down versions. HP and Minolta-QMS have come out with additional models to capture customers that are looking for an even lower price point. The Minolta-QMS Magicolor 2300W, announced at the end of March, is a Windows-only, non-network version of the Magicolor 2300 Desklaser offered for $699. As early as the first week of April, HP is expected to announce the LaserJet 1500, another model in the LaserJet 2500 series, for an estimated street price of $799. The LaserJet 1500 is a stripped down version of the LaserJet 2500L. It is a host-based version that has a 150-MHz processor compared to a 300MHz processor, 16MB standard memory versus 64MB standard memory, a USB interface only, and is not compatible with Windows NT or Macintosh versions 8.6 or higher, like the LaserJet 2500L.

As it has historically, HP is expected to continue introducing new models for successively lower prices. At a certain point color laser printer prices will be low enough to become a viable option for the average entry-level monochrome laser printer user and prices will stabilize. So, the one remaining question is: How low will HP go in the color entry-level segment?

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COMMUNITY Changing Channels: Can This One Be Saved? Do We Care? By ChannelMedia Columnist Steve Cross

Apple is looking at Vivendi to purchase Universal Music. How odd. Or is it? If you were Apple, what would you do with several billion in cash? Build more desktop machines? I don't think so. How do these guys survive, and after the years of their messing with Vendors and their Retailers, do any of us care anymore?

But it’s a good question, I think. I remember the mid-80's and early 90's, when the Mac was a cultural and business phenomenon. During at least one of those years, Apple was #1 in laptop sales at retail, with something like a 22% market share. Then their elitist mentality, poor marketing, and an all-out assault on their (prior) exclusivity of user interface by the folks in Redmond tossed them on the slagheap of declining market share.

At some point Apple became mostly irrelevant, except for the video and graphics applications. You don't “need” a Mac for anything else. Why else would they be a 3% market share player? Then came the iMac, and later the iPod. Industrial design made them relevant, at least for a source of styling and possibly new ideas. They make money, but on lower unit sales each year.

I ask again, what would you do if you had their several billion in cash? Well, they are the Quicktime guys, the iPod guys, the industrial design wizards of this age. I'd pour the dough into leading the handheld market for consumer applications of video. Quicktime is MPEG-4. Add AAC audio to it, and you have fabulous interactivity, awesome compresion, all in a stylish form factor. Buy a studio, repurpose all the video archives, convert them to MPEG-4, sell them again (how many White Albums by the Beatles do we each own???!!!), and make dough hand over fist. Build in the Digital Rights Management stuff so all the artists will feel confident licensing their music and video. Then slam the market. Be the total first mover and leader. That's what I'd do.

Then I'd take the most litigious firm on the planet (Apple is next to Disney on this) and go after all the companies stealing legitimate music from the artists. And I'd go after the users. Pardon me, but at least half of us reading this article make our livings from protected copyrights and prior-art patents. How hypocritical is it to profit off copyrights and then steal somebody else's copyrighted materials, and pretend it isn't just plain wrong? I'd sue the pants off everyone, just to clear a space for the launch of this new market. Heck, Apple has BILLIONS in cash. Then I'd blow the doors off the market with this new space. Handhelds, portables, PDAs, telephone handsets. Become a consumer company. Oh, yeah, and start treating the Retailers like real partners.

Apple could become relevant. Just by using my plan. See, I'm not as dumb as I look......

Steve Cross is Director of Channel Sales at iVast, world leader in MPEG-4 end-to-end solutions. Scross@ivast.com, 702-492-7472.

COMMUNITY

Asset Creation, Mining, Management…Broadcasters Learning to Do More for Less
By G.A. “Andy” Marken
Andy@markencom.com

Networks, local stations, cable groups and companies are quickly finding that they can do more for less and they can take advantage of content long ago shoved into drawers, closets and basements. Big (and expensive) production capabilities are rapidly being replaced with low-cost, high-performance PCs, video production software, DVD production devices and large – very large – video asset libraries. Consumer electronics products have quickly moved up-scale in capabilities and features while more far-sighted broadcast hardware and software producers have been moved down the food chain with compact, easier-to-use, more powerful and more economic solutions. In between, a totally new product category has emerged – digital asset management. It was clearly obvious at this year’s National Association of Broadcast (NAB) conference in Las Vegas as long-time, established exhibitors struggled to show how they fit into the new market category. At the same time, firms from the CE and IT industries boldly staked their claim on helping firms create, produce, manage and use new and existing video content. Video producers – television, Hollywood and corporate – have always focused on creating newer, better and more dramatic content which had a relatively short use life before it was retired.

Even though the video assets disappeared from the organization’s main production floor, they weren’t simply thrown aside. Sometimes huge areas were set aside to protect and preserve the video content for the time when it might be needed. The challenge increasingly has been that the referenced video content has been needed quickly, but locating it sometimes takes hours or days. When it was located, there was always a question as to whether it was still useable. The combination of the war, the economy and budgets that demanded new solutions that would quickly produce a profit were heavily featured at this year’s NAB show. Firms like Apple, HP, Sun and SGI joined forces with firms like Pinnacle Systems, Ulead, InterVideo, Adobe and Sonic (Solutions and Foundry) to show standard and HD production solutions that didn’t require board-level approval. Storage and distribution was another major focal point for NAB visitors as DVD slowly began its trek to replace tape in many applications. Sony showed the broadest range of storage solutions with their SuperMulti drives that wrote both +/-R/RW media, as well as their next generation blue laser drive/media that allowed 23+GB of digital data to be stored on a single-sided disc. At the same time, firms like Microboards, Primera and Rimage showed production companies how they could quickly, easily and economically produce and distribute custom content in hours rather than days/weeks.

But it was the high capacity digital libraries that fired up the imagination of network, local station, Hollywood and corporate content producers. Whether they were going to use the systems for digital storage of dailies, video asset libraries or lights-out broadcast facilities; operation and facilities managers were quick to grasp the staff, quality and asset preservation potential that they could achieve with the new DVD libraries. Firms like Leitch, Rorke, ASACA, Globalstor and SeaChange demonstrated how inexpensive it was to store days and weeks of new and historical video content that could be quickly accessed so the right commercial, ID, news or entertainment segment was on the air at a moments notice. Many of the attendees who had grown up in the fragile tape environment almost immediately saw the potential for having keystroke access to any video segment from hundreds of hours of content stored in a 3-foot by 3-foot jukebox. But it was the underlying fabric of digital asset management that created the greatest excitement because it suddenly brought all of the components together making everything available.

To highlight the importance and value of asset management, a new association made its debut at NAB. GSAM (“Gee-Sam” – Global Society of Asset Management) was announced at the show with founding members that included Ascent Media, Artesia, Avid and RightsLine. An international association, GSAM was formed to focus on the emerging Digital Asset Management arena. Richard Eberhart, GSAM Executive Director, pointed out that historically broadcasters and organizations have only focused on developing content, but these firms increasingly understand that the content is a valuable and reusable asset that can be mined and used again and again. “Effective control of the media and metadata is going to be the key to their success in the future,” he emphasized. Like the MPEG and DVD Forums, GSAM hopes to influence standards that will promote openness and interoperability between the organization’s systems. The organization hopes to stimulate the sharing of lessons learned as well as bring together and share the expertise of thought leaders in the industry. Two trends are driving Digital Asset Management today. The first is every organization’s need to concisely demonstrate the economic viability of any acquisition. Secondly, as we have seen over the past two-three years, the broadcast and production industries are rapidly moving to a digital, file-based technology and infrastructure.

Gone with the smoke-filled conference rooms of yesterday are the concepts of own the biggest and most expensive content production facility in town or purchase the latest bells and whistles so the guy down the street doesn’t get there first. Sound economic justification has had to replace the freeflow of money to acquire technology. Every media content development/delivery organization is forced to explain every expenditure in terms of how it will deliver added value, enhance efficiency or meet a specific need. Today’s budgets are increasingly being invested on strategic initiatives. The initiatives are designed to enable the organizations to achieve tactical and evolutionary growth, rather than venture too close to the revolutionary change chasm.

Because of the industry’s focus on near-term benefits and rapid payback, the emphasis by the emerging hardware, software and integration leaders focused less attention on bleeding edge technology and more attention on solutions that meet strategic and tactical needs and produce a rapid return-on-investment. Rather than being a technology advance, digital asset management solutions are being discussed in terms of business needs. The solutions are being discussed as an underlying infrastructure for production, asset utilization and playback.

At NAB, and in fact across the industry, digital media is becoming ubiquitous in production and distribution activities. At this year’s show, more than 80 firms highlighted the asset or content management capabilities of their products/solutions. It was obvious on the display floor and in the working sessions that as the industry moves rapidly to digital and HD production, products must support digital, file-based media. Increasingly, purchasing organizations also think in terms of being able to support, access and display that media content for years. The trend has forced asset technology management to think about the total lifecycle of content development and distribution – immediately and in the future. Echoing the importance of Digital Asset Management, Sun Microsystems unveiled their end-to-end DAM reference architecture, while HP continued to stress their series of recommendations. By following the reference guidelines of these firms, media businesses can deploy a complete content management system for television and rich media enterprises. The fairly flexible and open reference guide will enable media businesses to leverage and extend their legacy platforms into next generation DAM systems. Sun officials contend that the reference architecture will be an important tool to help both sides of the media organizations – media technology and business – minimize the costs and optimize the results of transitioning to tomorrow’s distributed content data center infrastructure.

Key DAM Areas
Directly and indirectly, Sun and other NAB firms in the digital asset management category identified a number of key application/solution/business areas. These include:

• Video Repositories, Archives – The normal venue for digital asset management, this includes catalog, search, management, retrieving and archiving digital video assets. Usually these are finished elements rather than in-production work. Typically managed finished or approved media elements not in production content.
• Content Management, Digital Storage – This is nearline storage solutions for digital content. These products move the content to video servers for automation and playback.
• Broadcast Automation, Playback – Because these applications are unique, firms such as Crispin, Encoda and Sundance typically offer these solutions that are integrated into larger solutions.
• Asset Management in Digital Production – These products usually include Non-Linear Editing (NLE) tools, graphic and audio production environments, as well as graphics and effects applications. Low-resolution, prosy-based applications have been introduced in this category that support the ability to create, edit, browse, search and produce quality work with a standard desktop or notebook computer. Firms like AVID, Apple, Adobe, Sonic, InterVideo, Ulead and Pinnacle Systems have unveiled a wide range of high-performance, economic and easy-to-use products in this category.
• News, Sports Production Asset Management – News and sports production solutions have improved significantly in both price and performance over the past two years. Digital content can be taken directly from incoming news and sports feeds. The feeds are stored on digital servers and the content is immediately available to the news and sports production teams using search, select, drag and drop.
• Facilities Management – These products include long-term organizational and physical content management and storage.
• Corporate Media Management – This area encompasses business and corporate information and assets including Powerpoint presentations to images, logos and media Ids and similar assets.
• Digital Distribution, Delivery – This is becoming an increasingly popular and crowded category because it encompasses both revenue generation and ad spot delivery, as well as the rapidly growing area of digital content distribution from such firms as RealNetworks, AT&T, NTT and others. It is also an area which Microsoft is showing great interest in entering.
• Middleware – Available since the first ENIAC was put into use, this software category has found a new career in the broadcast and entertainment environments. Middleware provides the ability to seamlessly search, find and leverage digital assets throughout their life. While middleware offers considerable promise, it also requires significant integration and software development.

Unlike many of the company’s initiatives, Sun’s DAM reference architecture follows the less formal recommendations of HP and is surprisingly open. While Sun’s objective was to stimulate and simplify the specification and implementation of the company’s proven platform, media technology and business management can also implement Linux, Mac and Windows-based hardware and software solutions into the architecture, if they choose. To broaden appeal, the company has also partnered with major firms including Harris Automation, Sony Electronics, Telestream, Thomson Grass Valley, Virage and others.

DAM is becoming an area of primary concern for broadcast television networks and stations, cable and satellite networks, media creation and distribution firms, as well as corporations that want to develop and take advantage of their own scalable, available content solutions. The challenge which Sun and most of the other digital asset management suppliers quickly pass over when talking with executives in the broadcast, entertainment and corporate content arena is that none of the solutions are simply plug-and-play. They require the assistance of seasoned systems integrators. Unlike traditional software development and IT integration firms, these integrators also require extensive experience and expertise in the broadcast and digital media environments.

Requiring equal parts of art, science and technology, digital asset management is rapidly becoming the major underpinnings of the broadcast and entertainment industries. Open standards are slowly – and painfully – emerging to ensure these organizations move into the brave new world of interoperable, readily and immediately available content production and delivery.

At the same time, the standards and solutions also have to encompass business and production workflow that will quickly and economically deliver benefits to the content owners, broadcasters, deliverers and users. Ideally, organizations want an integrated media management solution that will work across all of their media-driven business and workflow areas. The solutions will allow these firms to search, find, repurpose and manage their digital content anywhere and anytime to meet specific application requirements.

Competition Forces Change
As competitive pressure from conventional and new sources force broadcast, entertainment and corporate management to take a new look at all of their digital assets, those being developed as well as those hidden in cabinets and storage rooms, new requirements and new solutions will emerge. They are forcing asset and business management to select specific Vendors and specific products/solutions based on both short and long-term media production and management goals.

The organizations that make a very comfortable living catering to the network and Hollywood executives are going to have to aggressively and painfully reinvent themselves as younger, more aggressive and more agile hardware, software and integration players deliver a greater range of features and capabilities at a lower overall cost. Content developers and owners are finding that there is still significant profit available if they are able to efficiently and effectively manage, manipulate and share their information and media.

The evolving family of digital asset management products, solutions and solution integrators can potentially enable NAB members to achieve their goals.

G.A. "Andy" Marken is President of Marken Communications, Inc., a 25-year-old marketing and communications agency, specializing in content development, management, storage and delivery. The agency's experience includes work with firms such as: AT&T/CERFnet, ASACA, InfoValue, Matsushita/Panasonic, Pinnacle Systems, Mitsubishi Chemical, Recordable DVD Council, Verbatim, InterVideo, Philips and Plasmon Data.
He can be reached at Andy@markencom.com.