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Sun 1 Oct 2006 04:00 AM

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Digital revolution will be televised

Digital technology and innovative CE products dominated this year’s instalment of the world’s largest annual consumer electronics exhibition. Michael Thorne reports from IFA in Berlin.

The global consumer electronics industry is set to enjoy continued growth on the back of a digital technology revolution that will transform the lives of consumers. This bold assertion was supported by a number of key industry players at this year’s IFA consumer electronics exhibition in Berlin, Germany. The general consensus was that the future for the consumer electronics industry is bright, very bright.

This year’s show was dominated by a series of buzzwords: high definition television standards, next-generation DVD, convergence, connectivity and lifestyle concepts, to name but a few. The message was clear: consumers are embracing the digital revolution, and all those involved in the consumer electronics, IT and mobile industries stood to benefit from it. In his keynote speech at IFA 2006, Samsung Electronics’ chief executive of digital media business, Gee Sung Choi, claimed this “digital renaissance” was driving growth in the consumer electronics, mobile and IT sectors.

“We are helping to create a digital society in which consumer electronics touches everyone’s lives in a comfortable and convenient way,” he said. “A golden age lies ahead where there will be one mobile TV for each person and multiple digital displays will be found in homes, motor vehicles, at work and elsewhere.”

Choi said the recent FIFA Football World Cup helped to promote the cause of HDTV and mobile TV applications, while the battle between rival next generation DVD formats has commenced in earnest.

Despite evidence to the contrary, he suggested that flat-panel TV manufacturers were the real commercial winners of the World Cup. He cited European consumer electronics sales growth data, which showed the market expanded by 8% in the first half of 2006, up from 6% in 2005 and 4% in 2004.

“We’re about to move into an era of rich digital experiences that will be more satisfying than anything we’ve seen before,” Choi said.

With the Middle East consumer electronics channel booming and the region’s consumers keen to embrace the latest digital technology, many IFA delegates surveyed by ECN predicted the local market could prove a focal point in so-called ‘revolution’.

Meanwhile, in another of the IFA’s keynote speeches, Rudy Provoost, CEO of Philips Consumer Electronics, spoke of a “new approach to convergence”.

He claimed that a new industry-wide cooperative approach was required to ensure improved connectivity between devices developed by different manufacturers. This, he claimed, would enable manufacturers to generate greater margins by developing unique products based on standardised technologies.

“Such an approach would spur a new era of innovation whereby vendors would be able to increase their profitability by developing products boasting unique designs and features,” he said.

Provost added that he found it remarkable that many companies were still talking the language of technology. “Trying to differentiate products in terms of technical specifications and standards is not the correct approach,” he claimed.

In terms of innovative product releases showcasing new design trends, IFA certainly lived up to expectations. Philips touted the coloured ‘ambilight’ backlight technology incorporated in its TVs, while LG showcased the unique aesthetic design of its ‘Chocolate’ mobile handset range. Meanwhile, Sharp showcased its new range of HD-ready Aquos LCD TVs.

The most notable, though predictable, feature of IFA 2006 was the dominance of flat panel displays in a plethora of sizes and applications, which ranged from mobile handsets to massive wall-mounted screens and home-networked appliances.

Flat panel TVs, now firmly established as the key growth segment in the consumer television receiver market, are being touted as a lynchpin in the coming digital revolution.

Provoost claimed these displays would prove a conduit through which consumers will access a host of information and services via the internet, watch digital television services, and access and control home networking applications. He noted that in the past 12 months, consumers worldwide have abandoned traditional CRT receivers for flat-panel TVs.

However, as he also noted, the biggest stumbling block to the coming ‘digital revolution’ is the sheer number of conflicting proprietary technical standards underpinning new consumer electronics applications.

From the numerous HDTV standards in use worldwide to the conflict raging between supporters of rival next-generation DVD Blu-ray and HD DVD devices, the industry remains divided over the best course to take to leverage the commercial potential of digital technology.

Blu-ray and HD DVD proponents waged their battle on the IFA exhibition floor, with supporters of both standards unveiling their first player offerings.

Samsung previewed its BD-P 1000 Blu-ray player ahead of its commercial release in Europe later this month, while Toshiba unveiled its second-generation HD-DVD players (HD-E1 & HD XE1), which are scheduled to hit stores in November. Other vendors, including Philips, also had units on show in a variety of guises, most of which were computer drives.

“HD is having a greater impact on the audio-visual market than any other technology since the introduction of colour TV,” claimed Toshiba’s PR manager, EMEA, Manuel Linnig.

“However common standards are crucial for ensuring the technology realises its true potential in commercial terms. Consumer electronics vendors can play a pivotal role in this process.”

The burgeoning conflict between Blu-ray and HD DVD supporters flies in the face of such advice. While some consumer electronics vendors have vowed to develop unique players capable of supporting both standards, David Steel, VP of Samsung Electronics’ international marketing team, digital media business, argued that this approach would not resolve the issue.

“There are rumours that dual players are being developed and technically it’s probably possible in the same way that an existing DVD player can play a range of formats,” he explained. “However, we don’t believe this is the best solution to the issue. The costs involved in developing a dual-format player would be prohibitive, while supporting two rival formats will impact peripheral industries such as content providers and video rental stores, for example.”

Steel stressed that he believed one format – Blu-ray – would eventually conquer the market.

“This is the way that it has to be, it is the only standard that makes sense,” he argued.

Steel claimed that the development of new digital content distribution channels was playing a major role in shaping consumer electronics product development.

“We have identified a couple of key product categories that we believe will be the focus of major innovation in the next few years,” he said.

“We believe there is huge potential in developing devices that enable consumers to access the huge amount of digital content that is currently available on the internet. The traditional ‘push’ broadcast model is becoming increasingly irrelevant.

“Broadband access, particularly wireless, is at the forefront of the development of new innovative applications such as mobile TV and WiMax.

“I also believe that with the expansion of digital television services, we’re at the stage where we can make home networking a reality. You need to provide access to digital content in the home via a digital TV receiver, DVD player and home theatre system, in order to build a proper digital network.”

Steel claimed that this new era of convergence involving consumer electronics and traditional IT networking technologies would also inspire new approaches to retailing. He suggested that retailers had a key role to play in raising consumer awareness about the benefits of these new technologies.

Power retailers in the Middle East have embraced this message, establishing areas such as ‘convergence zones’ on the shop floor that demonstrate the connectivity and interoperability potential of certain devices on the market. However, the message coming from IFA was that this strategy must be further developed to ensure consumers understand the real-world benefits provided by these products and how they could be potentially utilised in a smart home environment.

A hot topic at IFA focused on the ability of consumers to pick up a product and get a feel for its features and ease of use in-store, with point-of-sales staff demonstrating its inherent connectivity features. Simply, if consumers get an instant feel for a product, they are more likely to purchase it.

Ensuring a product remains easy to use is a sure-fire way to commercial success. This theory also extended to the development of new and unique user-interfaces for a variety of consumer electronics products.

Another hot product category at IFA was flash-based portable music players. An emerging player in this space is SanDisk, which revealed its Sansa player at IFA before subsequently pulling the product from its stand due to a “copyright conflict”.

A company representative assured ECN that the issue related solely to claim made in Germany, and was subject to investigation. It did not impact sales of the new player in international markets.

Flash memory is being trumpeted as a crucial component in the development of new compact portable music players, and holds a number of practical advantages over hard disk drive players such as Apple’s hugely successful iPod.

"We’re about to move into an era of rich digital experiences that will be more satisfying than anything we’ve seen before." Gee Sung Choi, Samsung Electronics’ chief executive of digital media business.

Flash memory-based players are not as susceptible to damage as their hard disk drive rivals, which often break if dropped and can be damaged by magnets. Many flash memory players are also intrinsically compatible with a range of platforms, and do not require software installation or PC upgrades.

The one downside it seems is storage capacity. SanDisk’s 8GB Sansa model is the largest capacity flash memory-based player on the market at present, although it’s memory is expandable using micro SD cards, which can be inserted into the player. Despite its compact dimensions, it remains an unlikely rival to the 80GB-capcity video iPod recently introduced by Apple.

One of the major conclusions to come from this year’s IFA exhibition was the fact that the Middle East is now established as a key global market for the industry’s biggest consumer electronics, IT and mobile handset vendors.

It is crucial that the region’s consumer electronics vendors, distributors and retailers capitalise on this status by pulling together to ensure the newfound commercial opportunities are not wasted.

Retailers must work to educate consumers about the real-world benefits of digital technology, while vendors must continue to work with regional service and content providers to ensure that the markets here keep pace with European, Asian and North American counterparts. The Middle East has established itself as a core growth market for global vendors; embracing the digital revolution will be the key to sustaining this growth.

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