Wednesday, January 9, 2008

Of note from CES, Day 2

Lots more cool stuff on day 2. But first, a rant, which leads to a couple of points...

In 1999, I paid $2,000 for Sony's most bad-ass 32" tube, the Wega 32XBR450. Moments after I wrestled the nearly 200-pound beast into place and fired it up, my then 9 year-old brother-in-law stopped by with my father-in-law. In the truest sense of "from the mouths of babes", he immediately blurted out "Dude, your new TV sucks". And he had a point.

You see, even though this was an HD-ready tube (supporting display of all 18 Grand Alliance formats...which is a comment that horribly dates me, I'm sure), I was watching a football game on one of our local O&O's. And, as is the wont of the video service crowd, my satellite provider had compressed the crap out of the signal, to the point where all my beautiful new TV was doing was making a crappy signal look bigger and crappier. I tried to enlighten the youngster by explaining that the lousy quality of the source was heightened by just *how good* the new TV actually was. He wasn't buying it, until I fired up a DVD on the then state-of-the-art Sony DVD player I'd also bought. Like the Wega, the DVD player was cutting edge--with features like progressive scan, component connectivity, de-interlacing, reverse 3:2 pulldown, the whole nine yards. Once he saw how great video *could* look on the Wega, he admitted that the TV was in fact sufficiently bad-ass. But, I'd had to turn off broadcast TV and fire up a DVD just to show him how good the new TV was. In my own living room, I was doing a demo.

"To impress a 9 year-old?", you say incredulously. Well, yeah. We're all proud of our new gadgets, particularly the main TV in the home. To have anyone, even (especially?) a little kid, tell you that the TV for which you've just paid lots of hard-earned bucks is anything less than awesome is simply not acceptable.

Which leads me to my point.

If you're a TV manufacturer doing a demo, anytime, anywhere, USE A QUALITY SOURCE for Pete's sake. Holy cow...the number of TV manufacturers at shows like CES, IFA, and the like is off the charts.. Consistently, the vast majority of tier 2 and tier 3 TV players show their content after running the source/s through 8-, 16-, or 32-port splitters, often poor quality ones at that. Tier 2 and 3 brands (e.g., Hisense, Konka) who are unknown to the American consumer are always at the key shows, spending millions of dollars on their presence, trying to rise above the din to break through to retailers and white labelers. Yet, these tier 2 & 3 brands seem content to chintz on the source, resulting in their TVs looking like crap. I saw a demo today from one of the tier 3 players, whose booths I always blast past at shows, since their TVs on display are such low quality (or so it seems). However, the demo I saw today was via a directly-connected HD-DVD player. Even though all the TVs on the exterior of the booth looked like garbage due to a lousy source, and would thus never compel me to even walk into their booth, this one looked fantastic. And it was the same TV as the ones on display outside, which looked brutal.

This isn't rocket science, folks. Garbage in, garbage out. Heck, it's so obvious, even a 9 year-old can tell the difference.

Hopefully you've stuck with me this far, as I'm going to make another point, this one perhaps more salient to today's market. I've seen a lot of TVs over the first two days of the show, running the gamut from freakin' spectacular to not so much. The more TVs I see, the more I wish that there was a way to see inside them, a method to figure out just whose components make up the innards of any given brand's (or line's) televisions. For years, people have bought on brand, and most folks still do. I was hellaciously brand loyal to Sony for many, many years, just as I've been loyal to brands like Nike and Ralph Lauren. But, as I look at replacing the behemoth 32XBR450 which still graces (dominates?) our living room, I'll certainly be looking much further afield than Sony. Two years ago, if you'd told me that you were going to do a bake-off between a Sony TV and an Olevia TV, I wouldn't have even shown up. C'mon...Olevia, by Syntax-Brillian? Who? Versus Sony? You're spending too much time in Amsterdam. Yet, lots of demos at CES 2008 compare their products against Sony TVs, and shine by comparison to the Sony.

Now, I've spec'd enough demos in my day to understand that what you see on the show floor often bears little resemblence to reality. Never confuse selling wth installing. Heck, the group I ran at Microsft had prototyping as part of our charter; through our work with the proto team in Redmond, we well learned from their motto of "fake is the future". That's not a knock against Microsoft, by any means. When you're trying to inspire people at a trade show, you use all the weapons in your arsenal, product availability be damned, and Microsoft has done so extremely well over the years.

Am I saying that people are gaming demos to look good at Sony's expense? No, not really. What I *am* saying is that you can place two TVs side-by-side, one from well-known vendor A, and one from not-so-well-known vendor B, playing the same source content from the same type of player so you can do a true side-by-side comparison. You might expect that vendor A will have a better product, based on brand equity built over many, many years.

And often, you'd be wrong.

Been to Costco lately? Have you seen how Vizio TVs are blasting their way out the door? Heck, William Wang and his team have re-written the manual on how to launch a consumer electronics product, even though they've spent little money on branding until recently. What's the key to Vizio's success? Well, that's a topic for another time. But, what I will say now is that the Vizios and Olevias of the world are putting higher and higher quality components inside of their products to enable them to compete better and better with the Sonys and Pioneers of the world, and not asking you to pay hundreds of dollars more for that slapped-on brand name badge. I'm not knocking or promoting anyone in particular here. But, it's public record that Samsung has out-Sony'd Sony over the past few years by innovating much more quickly, bringing products to market which consumers want, at price points they're willing to bear. As tier 3's innovate to move up to tier 2's and tier 2's innovate to move up to tier 1's, the apple cart is being upset more and more frequently. And, since there's not a lot of room at the top of any consumer sector pyramid, some players are going to drop down a notch. Apples falling, if you will.

I'm to the point where I don't want to buy a TV from Sony, or Sharp, or Vizio, or anyone else in particular. I want to know whose guts are inside before I pull the trigger. This week, I've seen motion compensation, noise reduction, and scaling demos which will knock your socks off. Syntax-Brillian (the Olevia guys) has a demo of a number of TVs using various video processors that's awesome, particularly the TVs they're showing in their home mock-up which use the Silicon Optix chipset. I wish that today there was a way to figure out at retail exactly whose TVs had a given video processing chipset inside of them, as those TVs would shoot to the top of my consideration list. To my knowledge, Silicon Optix are the only ones who've made the commitment to try to build their ingredient as a brand, under their HQV (Hollywood Quality Video) logo, for which I commend them.

Branding an ingredient is an absolute bear, perhaps akin to using your nose to push a wet noodle up a hill in the rain into the wind, barefoot. A number thrown around the industry a few years ago is that Intel supposedly spent on the order of $350 million to bring Centrino to market. That's not marketing/ad spend...that's the whole kit and kaboodle, including R&D. But, a reasonable chunk of that was in fact spent on the actual marketing of the Centrino brand. Whether you're an Intel fan or not, I can guarantee you that if you're reading this, you know the Centrino brand, and you know "Intel inside". But, when was the last time you bought a computer from Intel?


You buy from Dell, or H-P, or Lenovo, or Apple. You don't buy *from* Intel, but you might buy *because* of Intel. Similarly, I predict a day in the not-too-distant future where you don't just buy Sony or Vizio or Mitsubishi as brands, but you buy "HQV inside" (or the equivalent). Executed properly, it wouldn't take a company like Silicon Optix (or Genesis, Sigma, Micronas, or anyone else in video processing) $350 million (or anywhere near that) to launch their ingredient brand. And, by lifting the value and corresponding brand equity of the consumer brand (let's say with Olevia, in the case of today's demo), the rising tide lifts the ships of the consumer brand, the ingredient brand, and the retailer's brand, too.

The retailer, you say? Well, sure. For consistency's sake, let's stick with the case of Olevia as the consumer brand and Silicon Optix as the ingredient brand. What if the combination of an Olevia TV with HQV inside brought an extra 10 points of margin into play, 10 points which even when divvied up are sacred points to everyone in the supply chain? That's huge. Circuit City was absolutely hammered in calendar Q4 '06 due to the fact that flat panel margins fell off the cliff, and they couldn't react. This wasn't margin erosion. This was a sea change in the market, one from which Circuit City is still struggling to recover. Every point is sacred (which sounds better if you hum along to the Monty Python know what I'm talking about). Rising above the din when you have dozens of companies making a similar product (in this case, flat panel displays) is tough. I believe that taking a serious look at ingredient branding could be the way ahead, at relatively minimal cost--buying more because of what's inside, rather than simply what the brand badge says. I don't mean to imply that Centrino and "Intel inside" are the reason that Intel's doing so well, and AMD, not so much. But, when I think of Intel, I think of Centrino and "Intel inside". When I think of AMD, what do I think of? I don't, and that's my point here. Just as I have a lot of friends at Intel, I have a lot of friends at AMD, and it pains me that they really don't have anything I can point to as a consumer brand. AMD Live! hasn't gone so well (although it's done better than Intel's Viiv, by a longshot), but that's the only thing that really comes to mind as a consumer brand. Sure, AMD has some awesome offerings for gamers, but if you the reader ask your parents to name a slogan from Intel and from AMD, I'd bet you'd get an answer and a quizzical look, in that order. Branding is key. Overlook the brand, even an ingredient brand, at your peril.

Thanks for staying with me this long. If you've read all the way down here, you're probably not actually at the show. But, if you are, run, don't walk, to the Dolby booth to see their demo of HDR (high dynamic range) TV. HDR has been around for quite awhile in still photography; the combination of a good camera which allows exposure bracketing along with an application enabling you to combine the bracketed exposures into a single image results in some awesome imagery on-screen. However, translating an HDR image from a screen onto photo paper leaves a lot to be desired. Accordingly, I'd never really considered HDR as a video technology. Now that I've seen HDR TV in the Dolby booth, I want one. Now. If you're here at the show, make sure you check it out.

Tomorrow, more on various wireless video delivery solutions...

1 comment:

  1. The analogy of "Intel inside" for the TV world would be so helpful for us as consumers, but I can tell you from insider knowledge that the Tier 1 TV brands will fight against it tooth and nail! The longer they can keep the mainstream consumer thinking that the quality is better just because it is a Sony, the better. And their real fear is that the TV becomes just a passive display monitor - and that's why they're all rushing to differentiate themselves by all sorts of input and tuner related specs, not to mention internal disk drives, etc -- even though the passive display monitor (one with super quality, of course) is exactly what we (the super knowledgeable early adopter) would like.