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WHAT’S THE LONG TERM OUTLOOK FOR THE SET TOP
BOX BATTLE?
The Apple, Bandai, Sega, and 3DO announcement this month
points to equipment manufacturers’ struggle to exploit the large
number of households that still do not own PCs. The assumption is these
households are technical novices who fear the complexity of full-blown
PCs.
Examining this assumption, a recent survey by San Francisco, Calif.
market research firm Odyssey shows in the past year, the percent of
households owning PC rose 2% from 32% in July last year to 35% in January
this year. (See related story at left.)
Applications proven to draw equipment sales to households without PCs
thus far are video games, audio compact disks, and prerecorded video
tapes. Game makers are betting households will buy video games that
provide high resolution 3D graphics and full motion video.
Connection to on-line services and the Internet were added to the initial
game system specifications when the Internet hype hit last year. Furthermore,
the connectivity was added to allow players to compete against one another
or play games that contained an on-line component as well as a CD ROM
component.
Adding Internet browsing to game systems is relatively easy. However,
the game system cannot store information found on the network. This
is a serious flaw all in set-top box solutions with Internet browsing
capability. Users are by nature acquisitive, otherwise, demand for higher
capacity disk storage would not continue unabated.
Of the two other applications, playing prerecorded audio and video,
consumers still have separate equipment. In the near future, however,
there will be a wholesale replacement of the installed base of video
cassette recorders with CD-size digital video disks. CD players equipped
to decompress MPEG II will play the high-capacity encoded video disks.
Current video games and set-top boxes will not play these DVD disks.
Ultimately consumers will want one component in their home entertainment
center that will provide all functions in a single box, audio and video
CDs, video games, and Internet browsing. PC vendors believe this box
will be a PC not a dedicated box (see related story on page 6).
The question for the set-top and game equipment suppliers is “what
is the application that will drive consumers to buy another component
for their entertainment center?” The answer for video game makers
is obvious. The answer for set-top box vendors is Internet browsing,
an application that so far has been a PC solution.
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