Plasma TV boosts Gateway picture - (42 " HDTV flat-panel display for $3,000)

The San Diego Union Tribune ^ | December 28, 2002 | Bruce V. Bigelow

[Ernest_at_the_Beach]

Plasma TV boosts Gateway picture

Low-price strategy, booming sales make some analysts enthusiastic

By Bruce V. Bigelow
STAFF WRITER

December 28, 2002

When Richard Doherty learned that Gateway, the build-to-order computer maker, was introducing a 42-inch plasma television for the holidays, he thought, "Oh, that'll be a good adjunct to their stores."

When he found out the Poway company would sell the giant flat-panel display for $3,000, Doherty thought, "Oh my God. They're going to change everything."

Though precise sales numbers on the plasma TV haven't been released, it's apparent that the computer maker has scored a coup – at least with analysts like Doherty.

Perhaps more importantly, Gateway might now have a product with the potential for sales growth not seen since the mid-1990s, when runaway personal computer sales drove double-digit revenue growth for the company.

As new government standards for broadcasting digital TV signals go into effect in coming years, some analysts predict the demand for plasma TVs could grow by 70 percent a year through 2008.

"We are constantly looking at the type of new product categories that made us so successful in the PC business," said Gateway's Gui Kahl, a digital solutions manager who guided the plasma TV launch.

In terms of current sales, Kahl and other Gateway officials will say only that holiday sales of the new TV have been running "significantly ahead" of their own internal forecast, whatever that may be.

Yet market researchers like Doherty, who works for the Envisioneering Group of Seaford, N.Y., say they're impressed, and that's a yuletide blessing for Gateway, which has been struggling to shake off losses for the past two years.

"The $3,000, 42-inch plasma TV turned a lot of heads here at Aberdeen and in the marketplace," echoed Peter Kastner, who heads the Boston-based Aberdeen Group's digital consumer technology practice. "The reason is the price point, plain and simple."

With Gateway's plasma TV priced at $2,999, analysts said the company is underselling similar-sized products by 30 percent to 50 percent.

The new TV uses plasma – a mixture of gases – arrayed in tiny gas-filled cells sandwiched between two thin sheets of glass. Using advanced electronics, an electrical current stimulates each cell, or pixel, to produce light and color – creating a vivid, steady picture.

Gateway does not make the flat-panel TV – which is thin enough to hang on a wall – and some analysts believe the original supplier is Sampo of Taiwan. In any event, the timing of Gateway's entry was impeccable.

"Retailers are telling us the Gateway entry this fall has cut in half the sales of similar-sized plasma TVs on both coasts," Doherty said.

Doherty also was enthusiastic about the consistent approach Gateway takes in educating consumers about digital TV on its Web site and in the company's nationwide chain of 272 stores.

Unlike big box consumer electronics retailers, Gateway also ensures that the digital electronic products it sells will work together when consumers get home.

"The second-biggest problem for high-definition TV in America, after confusion over cable and broadcast standards, has been the horrible experiences at consumer electronics retail stores," Doherty said. "Gateway makes sure that everything plays together."

In the last three months of 2002, Doherty estimates, total sales of plasma TVs in the United States could reach 25,000 – equivalent to all previous plasma TV sales. Gateway "clearly stands a chance to get up to 20 percent of that," Doherty added.

Still, other analysts caution those are small numbers – even for a high-priced product.

"It is a 'wow' item, and as prices come down, they will become more popular," said Michelle Abraham, a multimedia analyst for In-Stat/MDR near Phoenix. "But I don't see where they ever move into the mainstream in the next 10 years. It's always going to be more expensive than a comparably sized TV."

Josh Bernoff of Boston-based Forrester Research agreed, saying, "Even at $2,999, there aren't very many people willing to buy" the product.

He also doubts that sales of plasma TVs will come anywhere close to 70 percent compounded annual growth.

Nevertheless, Bernoff conceded that Gateway's sales approach can be an advantage as consumers who want their own home theaters "get into that zone where it gets complicated to hook up."

Besides, Bernoff added, "one of the reason retailers have big, fancy expensive products is that it gets people into the store so they can see all the other neat, fancy equipment that's on sale."

In the end, Bernoff said, Gateway's tactic makes sense for a company that is heavily dependent on consumer sales.

"They're just looking for other stuff they can sell," he said. "Clearly anyone who only sells computers is going to have trouble right now, and diversification is the only solution."

---

Bruce Bigelow: (619) 293-1314;

[Ernest_at_the_Beach]

I would like one of them!

Unclear whether can be hooked to Personal computer!

[goldstategop]

They're too big to be put on a desktop. The Plasma TV's are really meant to be hung on a wall so you can enjoy the feeling of being in a home theater. Right now they're still expensive but once TV manufacturers agree on a universal High Definition broadcasting format, they should become the wave of the future. Its just a matter of time before Joe Six Pack will buy one to set up in the family living room.

[bonesmccoy]

Absolutely PC's display on plasma.

In fact, we're researching the resolution. It looks like NTSC and HDTV are really out of the question. PC driven multimedia is the key for high resolution graphics, good surround sound, and faster ability to spread info.

I visited a GTW center and they have the Plasma display connected via VGA to a Windows MediaCenter PC. Total cost is less than a single display (about $6000 for the plasma display plus the most expensive PC on the market with DVD burner).

KISS HOLLYWIERDO'S GOOD BYE!

Very soon, Freepers can begin using MediaCenter PC to do what DavidDennis did during his historic romp through the Simon Campaign. Except, we can begin reporting from various cities and take cameras to City Council meetings ourselves and make our own news reports on the activities in those areas.

Citizen Vigilante Reporting teams are around the next fiscal year.

God bless MSFT and the GTW guys.

[dogbyte12]

I think it is the wave of the future actually. With a Plasma tv, and a tiny stereo such as a Bose, you actually don't have your equipment dictating spacing in rooms.

Perhaps soon, our furniture will actually be just furniture.

My next computer purchase will be a thin monitor. Having to waste so much space in my office, just to fit my damn monitor against the wall is something I could do without. It would be nice to get a smaller desk, and have room for another book case.

[bonesmccoy]

I don't give a rip about the HDTV format. Their HDTV format is totally nullified by Freepers using Digital cameras (stills with 3.1 Megapixels and above) or Digital Video (need to set standard for high-res consumer digital video cameras).

Bottom line is clear.

The display can be big. It's the camera that counts.

DV is the way to go. The Calif. Freepers are on top of it.

I can tell from watching your activity in the Simon Campaign.

That David Dennis dude is about 3 years ahead of everyone else. Freepers should do what that guy is doing and distribute cameras and MediaCenter PC's to the key players.

Go out and form small 2-3 person teams to Commando record various public hearings at city council or planning commission level. If citizens in Cypress had done that, it would have precluded the city council from stomping on that church's property rights in favor of a CostCo.

[goldstategop]

You can buy a flat panel TFT monitor for as little as $600. Even less if you look on Ebay for a good deal. A 15" provides as much picture coverage as a comparable 17" CRT monitor and takes up less space alongside the computer. Needless to say, flat panel displays just look cool and they put CRT monitors to shame.

[Ernest_at_the_Beach]

Guess I ought to go down to the local Gateway Center and take a look!

[goldstategop]

What's wrong with HDTV? From what I hear its the next and greatest coming thing in technology.

[sigSEGV]

Keep in mind, this display is not really high definition. Its really just slightly better resolution than normal TV.

[ContentiousObjector]

This is alot like the Apple iPod in a way, and I wouldn't be suprised given how poorly Macs are doing these days if before to long Apple is making more money from the iPod than they are from their computers, looks like the same applies to Gateway

I was thinking about bringing one of these home for Christmas, unfortunetly December-January are very expensive months in this house, so it will have to wait a few months.

[bonesmccoy]

They home builders are building living spaces with niches for wide screen or high def.

I've noted that it's silly to buy a plasma for home theatre. If you're building a home theatre, just get your PC and a LCD projector (1600 bucks at dell.com).

I assembled a great 5.1 surround home theatre based on the following:
LCD projector ($1800)
Yamaha5.1 surround system ($200)
Laptop ($1400)

Picture image at night time is 14 diagonal projected on a big flat white wall.

Sound is decoded through the Yamaha box and with DolbySurroundSound systems is actually surround.

Buy Star Wars Attack of the Clones DVD Widescreen edition and enjoy your hometheatre. Snuggle bunny with loved one (who puts up with your expensive habit) only to discover she converts your home theatre with one VCR input into a giant Home and Garden Channel display (AUUUUGHHHH!)

Merry Christmas freepers

[rintense]

Yep. I get an add every Sunday for one of these from Gateway. I am SOOO tempted...

[goldstategop]

Yup. There's no denying it looks cool though.

[bonesmccoy]

Dude...Hollywood is dead. With the DVD rippers and new MediaCenterPC's, you can pop out a secondary CD drive and insert a DVD drive. Reinitialize and begin ripping "home movies" on DVD.

Cool isn't it?

You just have to make sure your family and friends have DVD players on their TV's that read DVD-RAM DVD's.

There are several different DVD standards.

Freepers who are into home production (like that David Dennis dude) should get into MediaCenter PC's from Gateway, HP, or Alienware.

Alienware looks a little souped up for need. After all, NTSC TV frames are not as sophisticated as rendering 3-D graphics on the fly with thousands of polygons per sec.

[Ernest_at_the_Beach]

Fascinating!

[goldstategop]

LOL! You sound like T'Pol today!

[Jhoffa_]

I am filled with naked lust.. and I barely even watch TV.

Ohhh, hatchitachi!

[bonesmccoy]

Hi,
great question. I've been observing the video format debates for the last 20 years.

Beta vs. VHS was really a Japanese format vs. European format issue.

DVD is similar, but the advancements in digital processing has curtailed the actual format for recording.

It appears to me that the format for recording data is really irrelevant at this juncture. Whether the data is encoded on tape, CD, DVD, or hard drive; the data is digital.

Analog means of recording video signals have gone the way of the dodo.

So, what's left to consider?

The PC revolution in the early 1980's needed a killer app to ignite the market. Word processors like Wang were the rage in big companies. Laser Printing ignited Apple Mac sales and if you recall the initial marketing of the Mac was in conjunction with the initial laser printers.

Now, with the implosion of the .COMs the tech industry needs to reignite sales. What takes more bandwidth, more memory, and more CPU power? VIDEO.

VIDEO encoding has been in the works at MSFT for 6 years plus now. I've been following their work at Redmond through their NetShow product. They morphed it into Windows Media Technology. At the very point MSFT began compressing video and feeding it out to hobbyists, Clinton hit the company with his infamous litigation.

Why?

If MSFT had rolled out this process two years ago, the Demonrats would have lost control of Hollywood's propaganda engines.

Now, the jig is up anyway. People are using the internet and democratizing the politics of the world. Freepers are exchanging pics and thoughts like we are.

What if the Freepers began having the right to quickly produce their own documentaries on a display standard that matches big theatres (see my posting above on LCD projectors)?

Digital format LCD projectors match theatre experiences for small rooms (i.e. 10-15 people at a time).

So, the HDTV standard is not relevant. Broadcast HDTV will not reach widespread acceptance before PC based digital TV standards. If the GTW system reaches widespread sales (which GTW says is happening due to the price point), it will force other plasma TV manufacturers to make HDTV standards as secondary. Sony, Phillips, et al will not fight to protect HDTV. They will shift and include some HDTV functionality but will prioritize the s-VGA plug and make sure that the Windows guys have drivers for their displays.

The price point of the plasmas has to match LCD projectors for the plasmas to gain. The other factor is that the LCD's are only good if the lamp is strong and the room can be dimmed. If you look at how plasmas are displayed, they often are in dimmed floor space. HDTV is not the standard.

The standard is now Windows Media Center Technology and there's not a darn thing Hollywood can do about it.

[Vince Ferrer]

I would like one of them! Unclear whether can be hooked to Personal computer!

Yes, they can. I have seen one at my local Gateway store, and admit they are really cool. I hardly watch any tv, so I have never been able to justify buying a big screen tv.

But this one, because it can hook up to a computer at good resolution, is really tempting. It can even do a split screen with half the screen a computer monitor, and the other half playing a dvd. I think it would be better on my eyes to look at a monitor several feet away than right in front of me too.

I think they will become standard equipment in conference rooms and trade show displays too.

[Jhoffa_]