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;

[savedbygrace]

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

14 what?

[theFIRMbss]

>...you actually don't have your equipment dictating spacing in rooms.

Spacing in my rooms
isn't dictated by a
flat TV screen or

a folded-up Bose.
The flatness of my folded
wallet dictates all!

[krb]

I finally caved and bought a Matrox Parhelia. The triple-head desktop mode is absolutely amazing, and it didn't take long for me to figure out how to use it to be measureably more productive.

I have been itching for some time to upgrade another computer to a big-ass flat display. These good deals don't make it easy to resist!

[bonesmccoy]

Dude, here's more.

If you notice the Digital Video cameras have two different data transfer standards. One standard is based upon IEEE-1394 (firewire) and the other is USB.

The new MediaCenter PC's from Hewlett Packard are empty on all shelves in our region (I checked throughout December). Every store that MSFT lists as carrying the product stated that they were unable to keep it on the shelf longer than a few hours.

The price point for the new box is $2500 and typically includes DVD rippers.

I think Mr. Gates is a bit po'd with Hollywood. Is it any wonder why Mr. Eisner had to kiss Mr. Gates hand in NYC?

I saw last week an ad on ABC TV's This Week with George Stephanopoulouse... the ad was for ... you guessed it... MSFT!

So, MSFT dumps ABC some ad revenue! Shows you how desperate the situation is at ABC/Disney. They got tired of paying ABC for Disney cruise line and Disneyland ads. No one watches the ads anyway.

After the MSFT ad was on, I switched back to Tony Snow (THHHHPTTHHHTT! to the Eisner camp).

Back to the DVD burner!

[Cicero]

My last three computers have been notebooks, but I think the next one will have to be a desktop with a flat screen monitor and a DVD burner.

I pass the old notebooks on to my kids, but I can't resist the prospect of burning DVDs.

[krb]

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.

NO!!!! Of all of the competing standards, you happened to name the one of them that doesn't work in DVD players at all!!!

DVD-R and DVD+R (and the respective +/- RW) are the ones that do 4.7GB of data and will also play in most DVD players. DVD-RAM is the one that is strictly data and will not play in players under any circumstance.

If I had to choose today, I'd get the Sony drive that does both + and - R.

[bonesmccoy]

14 FEET (LOL sorry ... in my excitement to report the great results, I neglected to label the data point... my physics prof would be disappointed).

In accordance with his teaching, I shall report the data point as

10 feet plus or minus 4 feet (depending on the zoom)

[rwfromkansas]

I think the idea that these won't be popular in 10 years is truly going to be one of the "idiot" predictions in a decade.

Once the prices fall, they will become popular, just like DVD's. I can't believe anything else will happen.

[bonesmccoy]

Apologies... I hadn't researched that clearly enough. You are correct. I should have said DVD-R/DVD+R.

There is a website which lists compatibilities and various product numbers for DVD players.


From: http://www.dvformat.com/2002/03_mar/features/dvd_standards.htm

First, let's divide the formats up. The first thing to note is that DVD-R and DVD+R disks can only be recorded once. You only get one chance to record your DVD movie to this kind of disk It's like pouring cement, once it is done you'll need to destroy it to change it. Further, DVD-R discs come in two types: DVD-R(A), for "authoring," and DVD-R(G), for "general." Both DVD-R and DVD+R discs will play in most DVD players, even older ones. So if you put your movie on this kind of disk there is a high probability that it will play in your living room. However, DVD-R(A) drives can not record to DVD-R(G) disks, and vice versa.

There are also DVD formats that can be recorded more than once. DVD+RW, DVD-RW and DVD-RAM disks can all be recorded thousands of times. If you don' t like how your DVD movie turns out, you can record a new version right on the same disk. These disks are more like painting a wall -- if you don't like the color you just put on a new coat. Each of these rewritable formats are a little different. DVD-RAM, for instance, was created for storage of computer data -- like backing up your hard drive. If you want to get a DVD writer to back up computer data, DVD-RAM is a solid option. However, if you plan to make your own DVD movies, one of the other formats may be better suited for that activity. Most DVD players can't play DVD-RAM disks.

The DVD-RW and DVD+RW formats are both good for making DVD movies but are essentially engaged in a Beta versus VHS-type battle. The consumer market will ultimately determine which format wins or if they end up combining into a single standard, but it is important to understand that neither is yet a universal standard. Another thing to note is that many DVD players won't play any kind of rewritable disk. Most of the newer players will play these kinds of disks, but if you have an older DVD player it may not. In general, the newer your DVD player, the more likely it is to play all the recordable formats. There are web sites like Apple.com, HomeMovie.com and DVDplusRW.org that list compatible players and formats, but these are not unabridged resources either. Use them as a general guide.

[bonesmccoy]

not for long... the prices are plummeting faster than the initial PC monitor prices did. Since GTW is seeing plasma as a PC monitor, the new application of the digital video format will drive the prices down even faster. I'd say by mid summer the prices will move lower yet.

[rwfromkansas]

Could you explain more at the basic level what the heck you are talking about......

[bonesmccoy]

It won't be long before digital display technology marries the PC enough for:
1. Freeper threads in multimedia
2. Video conferencing from your living room for the price of your DSL/Cable modem line
3. Movies over the web.

[bonesmccoy]

happy to do so...where would like me to start?

[INSENSITIVE GUY]

At that price i just can't see picture quality is worth the difference.Just another gimmick to get sucked into.

[bonesmccoy]

that's why I chose to buy an LCD projector for my laptop. It gives portability. Now, with the system I've got, I have a transportable theatre experience for about 20-30 people at one time.

PC+Projector+Sound system= fun for the whole family... and I do mean WHOLE family.

[Gracey]

What's your opinion of the LCD big screen TV's that have just come out. Wonder if they may have advantages over the plasma.

Anyone out there with insight on Plasma vs LCD?

[rwfromkansas]

I am just confused what you are talking about with the Bill Simon campaign's use of video.....could you explain more what you are talking about there and how it has relevance to us?

Also, what is the difference between a projector and plasma TV?

Thanks...I think I am somewhat beginning to understand your points somewhat...lol. I like technology, so I don't know why I was so out of the loop here.

[rwfromkansas]

I may get that once I get out of college.....it would serve as a wonderful teaching tool (I intend to be a teacher) since I could transmit powerpoint presentations as the lessons.....my handwriting is crap. I can run powerpoint on any old dinky laptop pretty much as well. In a couple years, if I do decide to do this, I would make sure I got one with a DVD player built in (or new enough so I could install one, either external or internal and have it be compatible and work decently). After doing this at school, I could hook the projector up and watch a huge tv screen at home. Heck, on a teacher's salary, that is about the only luxury I would be able to afford....:)

[arielb]

Hollywood is dead? huh? like your own version of the "Blair Witch Project" can compete with the Matrix 2. Yeah I'm sure Spielberg is saying "I'm so scared" with snot dripping from his nose

[savedbygrace]

Plasma will give a prettier picture, but I've heard that it doesn't last nearly as long as an LCD screen. I don't know if "it wears out" is the proper term, but you get the idea.