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DAVE GUSSOWThe computer industry is giving consumer electronics giants a run for their money as digital devices gain popularity.
LAS VEGAS - It takes up to five years for a traditional consumer electronics company to design and bring to market a new TV. That's too slow, and the product that results is too expensive, particularly in the digital age, says Intel president Paul Otellini.
So the giant chip maker that dominates the computing world is getting into the TV business, introducing a new chip for digital TVs that it says will cut development time to as little as nine months and make sets more affordable for consumers.
Next year, Otellini predicts, a 50-inch high-definition, rear projection TV could cost about $1,800, far less than today's models. Intel's chip is based on new Liquid Crystal on Silicon technology.
And in a further step toward its vision of the digital home, Intel also will introduce a new computer called the Entertainment PC that will act as the engine for a family's entertainment and communications, from TV to video games to music.
Unlike today's personal computers, the machine is aimed at managing content, not creating it, Otellini says, and he estimates that prices could range from $599 to $799.
"We are about to usher in a new era of consumer electronics," Otellini said at the Consumer Electronics Show.
The giant trade show here traditionally has been the playing field for consumer electronics giants such as Panasonic, Toshiba, Sony and Philips. But in recent years, the computer industry has had an increasing presence as digital devices began to take over the market.
Increasingly, companies such as Dell, Gateway, Microsoft and Hewlett-Packard have begun selling big-screen TVs, music players and other gadgets, in part to fill the revenue gap as the growth in PC sales has slowed. The lineup of speakers at the trade show included Microsoft chairman Bill Gates, HP CEO Carly Fiorina and Otellini.
The increasing influence has not gone unnoticed by the consumer electronics companies, many of which talked this week about how they're trying to adapt.
"Competition is growing more fierce," said Rudy Provoost, CEO of Philips Consumer Electronics Global Sales and Services. "Powerful new players have entered our space. Some of them are from overseas, in particular China, and some from other industries. Convergence is accelerating. All of these dynamics are the reason why we are reinventing our company and developing a new business model."
Analysts say consumer electronics companies have cause for concern. "That's not their preferred way of doing business," said Stephen Baker, an analyst at the NPD Group research firm. But it won't necessarily be easy for Intel, which will have a learning curve as it enters a new market.
"I don't see it as being new competition," Otellini said. "Every one of those companies is a customer. Our intent is not to threaten them. Our intent is to make technology available."
Yet during his speech, Otellini made several challenges to the big consumer electronics companies. He announced a $200-million fund that will invest in companies - mostly small ones - that will develop hardware and software for digital content that can be used in multiple devices. The spoils, he said, "go to the fleet of foot."
Beyond the business intrigue of how all this plays out is what will happen for consumers. Otellini demonstrated the Entertainment PC, which may be on the market this year.
Instead of a keyboard, the PC will have a remote control, moving the user from 2 feet away on a traditional PC to 10 feet away - couch potato range.
An executive took a photo of Otellini on stage, and it was wirelessly transmitted from the camera and displayed on a TV. They recorded segments of a TV cooking show. They played a video game. They listened to music.
Intel's new device is essentially a "smart box" that can coordinate and control other devices ranging from a personal computer to a video game box and a stereo system. It will run a version of Microsoft's Media Center software.
The popularity and success of wireless networking with WiFi technology played a key role in the move, Otellini said. Intel has been promoting WiFi in its Centrino notebook computer chip and the development of mobile "hot spots" for Internet access.
A critical part for the new initiative, Otellini says, is getting the entertainment industry to participate. The system will have digital encryption to protect copyrights. At one point, he brought actor Morgan Freeman on stage. If the technology succeeds by 2005, Freeman said, he would like to see one of his movies due out that year available at home the same day it debuts in theaters.
"It's no longer about gadgets," Otellini said. "It's about what you do."
- Dave Gussow can be reached at gussow@sptimes.com or 727 771-4328.