Old or new, there’s always something digital to marvel at

Although Apple’s Newton technology stole the Summer Consumer Electronics Show in Chicago for most people interested in something new and different (see story, p. 13), there were other events and trends worth noting for digital media watchers.

One is the fact that the much-vaunted “first year open to consumers” feature of the show did not seem to make very many exhibitors happy. Many said they were planning to pack up and leave before the show was opened to civilians, as opposed to dealers, on Saturday and Sunday.

The great unwashed 80 bazillion. One of the many problems with letting customers on the show floor, said vendors, is that showing them what’s coming may only serve to keep them from buying what’s on the shelves now. “I came here to get buyers, not talk to 80 bazillion people from the street,” was the basic drift.

Here are some highlights.

SONY REAFFIRMS COMMITMENT TO CD TECHNOLOGY

Sony Electronic Publishing Company, the division of Sony Software that was set up in April of last year to exploit digital media opportunities, has spent the last few weeks pushing cd-rom publishing on many fronts. The latest efforts demonstrate Sony’s faith in CD-ROMs as a viable delivery medium for a number of different applications and, more importantly, its faith in the potential marketplace for cd-rom purchases.

During the last two weeks of May, SEPC entered into a number of agreements that it hopes will convince consumers that cd-rom is a viable product category, and simultaneously give SEPC consumer mindshare as a leading publisher of cd-rom titles.

Tie-ins to Sony artists and properties. First, it has promised to create a line of video games for the new Sega Mega cd platform, the cd extension to the Sega Genesis game system. The titles under development include tie-ins to established Sony artists and properties, including theatrical release movies such as Dracula: The Untold Story and Batman Returns. In the Sega booth at CES, the company showed prototypes of the coming Batman game, complete with video sequences. While this was just for demonstration purposes, Sony says it plans to produce live-action as well as music videos for upcoming game titles.

In addition to Sega, Sony has its own cd-based game machine due out next year, called the Play Station. The Play Station was developed with Nintendo, which has its own cd-rom extension to the 16-bit Nintendo Entertainment System in the works. Sony Electronic Publishing will be developing titles for all of these game systems.

The ‘Affiliated Label’ program. Although as usual Sony did not have a presence on the CES show floor, it used its Sony Gallery store in downtown Chicago to launch its “Affiliated Label” program. Under this program, Sony will act as manufacturer, marketer and distributor of various third-party titles. The Affiliated Label program will encompass all three major personal computer formats: dos, Macintosh and mpc.

Titles from companies such as Voyager, Maxwell Electronic Publishing and EBook will be distributed to 4,700 retail outlets, including record and book stores, consumer electronics and computer outlets as well as the more traditional software houses.

“The key part is getting titles into the hands of consumers,” says SEPC president Olaf Olafsson. “So far it hasn’t been a consumer product. It’s been a technology, a niche business. There are more parts manuals on cd-rom than consumer titles.”

Everybody’s happy. It’s also a great deal for producers, at least the ones who were part of the announcement. Independents have spent far too much time and money trying to get the market interested in their wares to keep fighting the battle alone. “We get a flat percentage of the retail price — Sony presses the disc, packages it, and ships it,” said one publisher. “We’re very pleased. It’s a good opportunity for us to partner with a well-known name in the industry.”

Some have said that Sony had no choice but to sponsor such a program — it has too much invested in cd-rom technology to not push it forward. A SEPC division, the Digital Audio Disc Corp. of Terre Haute, IN, is the world’s largest manufacturer of CDs, with 45 percent of the market.

On the hardware side, Sony claims 40 percent of the world market for cd-rom drives, and is a leading vendor of cd Audio as well. While there are still only 1.5 million cd-rom drives installed today, Olafsson claims there will be 2.5 million units in the U.S. alone by the end of 1992, and SEPC’s Robert Headrick says the installed base will rocket to 6.9 million by the end of 1995.

IS CD-I COMING AROUND?

Another surprise of the show was Philips and cd-i. Though consumer response and critical reaction to Compact Disc-Interactive has been underwhelming to date, the company’s absolute dedication to the technology may be paying off.

Not only did Philips publicly demonstrate a working prototype of its full-screen, full-motion digital video module (which it claims will be in stores before Christmas, for “below $200″), but it also showed the prototype of a brand-new and very chic portable cd-i player designed in Japan by Marantz that will be on the market by the end of September. The mpeg decoder chip used in the module is made by C-Cube Microsystems of Milpitas, CA (see Vol. 1, No. 12,
p. 11, for details).

100 titles by year-end. Philips Interactive Media president Bernie Luskin is touting cd-i as “the new Gutenberg,” a new publishing format for everything from full-motion video to electronic books and video games. He says that 100 titles will be shipped for cd-i by the end of 1992 (which will give Sony a run for its money), with “several hundred” on the shelves during 1993.

Philips is also working on a deal with GTE to connect cd-i into cable television systems, and claims it will have a commercial real-time encoding system — encoding being the big bottleneck for digital video titles developers — in 1993.

What’s interesting is that Philips can now fit 72 minutes of VHS-quality, full-screen, full-motion, color video with cd-quality stereo sound (not true Red Book cd audio) on a single compact disc. According to Gaston Bastiaens, director of Philips Interactive Media Systems, this could have real significance for interactive music video and other projects.

Movies on disc? “This will strongly enhance the interactivity of cd-i titles,” he says. “And we are working on developing interactive movies with several studios in this country.” Though Bastiaens refused to state directly that Philips was working on replacing the vcr or the laserdisc player by putting digital movies on cd, he did say that in 1993 the company would be offering a five-disc cd-i carousel that would obviate the problems with length of movie vs. amount of space on a cd. With the carousel, he said, “you would hardly see any break” between disc changes.

“It’s not a new VCR,” he says of CD-I “It’s a movie media system that can play all these things,” including Photo CD discs, CD audio discs and CD-I and CD-ROM XA titles.

Remarkably, Bastiaens claims that Philips is not terribly disappointed with sales of CD-I so far — though by all outside accounts, they’ve been abysmal. “Compared with the first year of CD audio sales, the first year isn’t as good as we wanted, but pretty close,” he says. “By Christmas, when there are more titles and promotion, we’ll pick up sales. ”

PHONES ARE GETTING SMARTER

Michael Grisham, the original inventor of the smart phone and now manager of strategic planning for AT&T’s smart phone systems, was on the show floor to demonstrate the Smart Phone 2100 prototype. It looks very much like a standard, PBX-style telephone except that the Smart Phone 2100 has a liquid-crystal display replacing the traditional keypad that allows customers to touch-screen their way to a whole range of special services that we all hope will eventually be offered by phone.

Some of the services will include banking, bill paying, a “big discount” catalog, and a low-price travel service, according to Grisham. Package deals will be the way to sell the phones, he says. For example, a customer would pay $100 up front and $19.95 a month for access to the services and for the telephone, which they’d own. Grisham says most of the early sales will be package deals like this, but a standalone Smart Phone is likely to cost $400-500.

Although services that consumers actually want are critical to the success of the new generation of smart phones, the software technology that Grisham and team have delivered is very interesting.

The phone is driven by a 16-bit microcontroller (not from either Intel or Motorola) that manages memory, a modem and an object-oriented message set. That message set consists of text objects, choice objects and entry objects — each containing the methods that determine the way they interact with each other — and service providers decide how to snap them together into a user interface.

The Smart Phone software can create macro commands. It can password-protect any button, no matter where it is in the hierarchy. It can download directory assistance information and automatically set up an autodial button for you, if you’d like. If the caller has allowed his or her Caller ID to be received, the Smart Phone can create an autodial for you to return the phone call.

AMAZING RESPONSE

In addition to the welcome news that AT&T has improved the new Video Phone 2500 a bit — it now displays video at 10 frames per second, rather than six (full motion is 30 fps) — (see Vol. 1, No. 9) the big surprise of the show was that on the first day the phone was available, AT&T took $30 million worth of orders. That’s 20,000 phones at the Video Phone 2500’s retail price of $1,500 each.

Despite the rather disconcerting quality of the video picture, it sounds like something may be afoot here — something about video teleconferencing as a way to cut travel budgets, perhaps? A way to get up close and personal with remote colleagues? Or what? Certainly AT&T is breaking ground with a videophone that runs on standard phone lines, and many, many other companies are working on different ways to address this potentially massive market.

David Baron, Denise Caruso