Global Economics

TV Rules at Berlin Electronics Show


Slide Show >>Consumer electronics have come a long way since 1933, the first time a television set was displayed at the International Radio Exposition in Berlin. Or maybe not.

A look at the newest products on display at this year's IFA (from the German Internationale Funkausstellung), which runs Sept. 1-6, reveals that many of the latest devices have the same fundamental purpose as the Loewe model that amazed Berliners in 1933. They let you watch TV.

In fact, the overwhelming first impression a visitor gets upon arriving at the exposition, which fills 26 huge halls and bills itself as the largest in the world, is that there are an awful lot of TV screens. Whether it's on cutting-edge handheld DVD players, mobile phones, tricked-up PCs, or giant LCDs, the predominant medium on display at the Berlin show is good ol' moving pictures. (And for whatever reason, half the screens at the expo seem to be showing the children's animated film Finding Nemo (DIS), the most popular demo movie.)

Look closer, though, and there is real progress to report. The coming debut of Microsoft's (MSFT) Windows Vista operating system, scheduled for January, has given a shove to development of so-called media centers, boxes that look like DVD players but boast the functions of a PC.

When Microsoft threw a party for the press at a rooftop restaurant in Berlin on the evening of Aug. 31, there was nary a PC in sight. Microsoft employees demonstrated the workings of Vista on media centers by companies such as Japan's Yakumo.

E-COMMERCE VIA REMOTE. No question, Windows on a jumbo screen opens up intriguing possibilities. It's possible to watch a football game while writing an e-mail, and still have room for widgets such as a stock ticker or calculator at the edge of the screen. The consumer version of Vista is geared heavily to entertainment use, with functions designed to help users organize photos, music, and video.

E-commerce companies are already thinking of ways to make use of the extra real estate. Hamburg catalog retailer Otto Group, for example, has worked with Microsoft to develop an interface that makes online shopping feel more like window shopping.

Instead of clicking from one menu to the next, the customer uses the mouse pointer—or a TV remote control—to move along a display that curves continuously across the screen. Customers can click on products for more information or to buy.

Such applications will only pay off if customers have the right equipment at home. So far, media centers constitute a relatively small market. Fujitsu-Siemens (SI) sold about 10,000 in Europe, the Middle East, and Africa last year, vs. 100,000 televisions.

SELLING THE PUBLIC. Will Vista give media centers new impetus? Barbara Schädler, chief marketing officer for the joint venture of Japan's Fujitsu and Germany's Siemens, is not expecting an immediate boom.

She says customers still need to be convinced that the $1,500 systems are worth the extra money. For that reason, Fujitsu-Siemens is training employees of retail distributors on how to explain the benefits of media centers, which include game-playing or easy recording of TV programs on hard drives. "We have to tell the people in the showrooms what these devices can do," Schädler says, speaking above the throb of dozens of TVs and sound systems at the Berlin show.

Schädler doesn't hide her annoyance at Microsoft's decision to delay launch of the consumer version of Vista until January, which will be a blow to Christmas sales. "January is the absolute worst timing," she says.

Still, if media centers catch on, they could be a boon to companies such as Fujitsu-Siemens or Toshiba (TOSBF) that already have expertise in both computers and consumer electronics. "The electronics companies have no experience with networking, and the PC market moves much more quickly. We're used to that, and they're not," Schädler says.

The potential shift to media centers also opens up opportunities for smaller companies such as Yakumo, which introduced its mediaXline II at midyear. The Yakumo machine, which costs $1,000, not including the display or accessories such as a wireless keyboard, is already designed to run Vista. A company representative said Yakumo expects Vista to be good for sales.

NEW AGE COMES INTO FOCUS. People have been talking about digital convergence for a decade without it actually arriving. But IFA does show that manufacturers are getting closer to an age when the boundary between television and computing blurs, and TV programming will be available wherever and whenever viewers want it.

IFA 2006 is full of technology for viewing TV on mobile phones or in the car. You can watch programs on your own schedule thanks to built-in hard drives. You can shoot your own videos, which you can edit on your media center and easily upload to the Internet, where a potential audience of millions awaits.

Screens are getting bigger and the quality more luscious. Germany's Fraunhofer Institute, the sprawling, government-supported research organization that invented MP3 technology, even demonstrated the media center of the future. The system displays a TV image on the inside of a dome, giving viewers the feeling they're in the middle of the action.

The DVD that the Institute chose to show off the system was, naturally, Finding Nemo. Which serves as a reminder that all TV devices are only as good as the content they are built to convey. But at least those Beverly Hillbillies reruns never looked better.


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