More Virtual Products than Reality at CES

Showgoers glimpse a world full of ITV, PDAs, VR and 3DO

The motto of this Summer CES show should have been “You can’t touch this.” So much of what was hot in Chicago was not real — that is to say, the show-stopping “products” exist primarily in development labs today, and are taken out on rare occasions only to whet the appetites of potential consumers.

Slick demos and promises abounded on the floor and in the conference rooms of Chicago’s McCormick Center, and grabby showgoers enthusiastic about acquiring new toys were often gently reminded that they could look, but they better not touch — and forget about buying, at least for right now. The only thing missing was the Oz-like reminder to “please ignore the man behind the curtain.”

3DO GOES HOLLYWOOD, PANASONIC GETS REAL

Undoubtedly the greatest showman in Chicago was Trip Hawkins, president and CEO of 3DO and the star of CES. He gave his 3DO pitch on Thursday morning to a standing-room-only crowd. The company’s press conference to unveil some of the 91 titles in development for the Interactive Multiplayer, and to announce hardware licensing agreements with AT&T and Sanyo, spilled out of two large banquet rooms. (The stock jumped almost $5 a share after Hawkins’s press conference. The IPO has already garnered $48.5 million for the startup.)

Hollywood producers, not known for excessive amounts of patience, stood in line to watch the 3DO demo, and at the Panasonic booth there was a line of people that doubled back and forth on itself, just like the rides at Disneyland — all waiting to get up close and personal with the FZ31 REAL, the company’s 3DO Multiplayer that is expected to be shipped in October.

No 3DO naysayers could be found outside of the press room, where rumors of disgruntled title developers and sticky negotiations regarding silicon and player manufacturing came home to roost among the skeptics. The crowds were besotted, and there was no evidence of dissatisfaction among the third-party developers that shared the booth with 3DO. Companies including Crystal Dynamics, which plans to develop interactive game software exclusively for 3DO, were positively dewy-eyed at being part of the entourage.

During the press conference Hawkins announced plans to enter into the coin-operated game market, with both Atari Games and American Laser Games planning to deliver coin-operated 3DO games by the end of the year. He also stated that the custom graphics chips from Matsushita were “far along,” although he did not elaborate.

Hawkins outlined his full-motion video strategy, which includes support for SuperMac Technology’s Cinepak software-only codec and MPEG-1 when the first Multiplayers are shipped. (The MPEG-1 compression scheme is the same C-Cube-based cartridge that Philips Interactive Media will sell as an add-on to its CD-I players this fall.) Eventually, he says, the Interactive Multiplayer will support the higher quality MPEG-2 compression standard.

According to Hawkins, the 3DO strategy is on track, with the time line as follows: In 1993 the standalone consumer Multiplayer will arrive, with about 20 titles available by Christmas. In 1994, we will see an Interactive Multiplayer with built-in support for MPEG-2 and an analog TV tuner. By 1996, Hawkins says we will see the arrival of a networked system as well as starting price points for the Multiplayer below $200.

Perhaps the most telling statement Hawkins made during his time in the limelight was that backward compatibility is not a prerequisite to success when introducing a new technology platform to the consumer. It is a concept not easily understood by the computer industry, where many of the players, including Microsoft, are struggling to be all-inclusive as they deliver their first consumer devices.

TANDY’S ZOOMER STEALS THE SHOW

Three different types of personal digital assistants (PDA) and communicators were on display at CES, but the Zoomer — a hand-held PDA developed through a joint venture among Tandy, Casio, GeoSystems and others — stole the show.

Zoomer, which is expected to be shipped this fall for between $699 and $899, was designed for people who don’t own a personal computer but are interested in owning a consumer computing device. It runs on GeoSystems’ GEOS operating system and is quite elegant. The basic unit, which weighs about a pound, can connect to DOS computers for information transfer although the device cannot run DOS applications.

AOL built in. Built into the device will be a special version of America Online, the electronic information service, as well as more than 100 applications, including such essentials as a spreadsheet, word processor, daytimer and, of course, an astrology charting application.

An optional keyboard is available. The handwriting recognition in the initial version will recognize printed text only, but the key companies claim recognition of script writing is in development.

According to team members, the Zoomer can take an astonishing 100 hours of constant use before it needs a battery charge — a noteworthy feat if it is true. Skeptics say it can last 100 hours only if nobody touches it once it’s been turned on.

Members from both Palm Computing and Geosystems say they are working with other partners on similar consumer devices. No names were available at press time.

Credibility slipping for Newton. Apple Computer made a lackluster showing during a private press briefing on the current state of its much-touted Newton PDA. Although the device worked, which was not the case when it was demonstrated last month in Japan, the announcement was mostly a repetition of promises already made and the demonstration offered little in the way of new technology for the platform.

The most significant news presented in the briefing was Apple’s new licensing agreements with several major telecommunications companies. According to Gaston Bastiaens, vice president and general manager of Apple’s Personal Interactive Electronics division, U.S. West will work with Apple to “help develop product interfaces for network-based telephone services.”

Similarly, BellSouth has agreed to perform a joint test of a Newton-based display telephone. “The goal is to develop easy-to-use intelligent terminals for telephone services, information transfer, and advanced voice, fax, and electronic messaging,” says Bastiaens. The prototype system exists today and, according to Bastiaens, tests have begun in Orlando, FL. The third partner, Ameritech, has agreed to provide advanced messaging services. Ameritech’s voice messaging customers, for example, will be able to get notices that messages are waiting and be able to read them on a Newton.

In addition to announcing the telecom partnerships, Apple also discussed its entry into the interactive publishing business for Newton applications and titles, as well as CD-ROM. The announcement, while met with little interest at the show, has some interesting ramifications — both positive and negative — on the emerging interactive title market. (For details on Apple’s publishing strategy, see story, p. 29).

Delivery of the Newton into the retail channel will be this fall, according to Bastiaens. The price is still stated to be “well below $1,000.” Bastiaens declined to comment on the Newton’s battery life, though Apple chairman John Sculley figured it to be about eight hours when Newton technology was first announced at Summer CES in 1992. We assume improvements have been made.

Interesting device, wrong price. While the AT&T EO 440 Personal Communicator, which provides fax, electronic mail, cellular phone and personal computing capabilities, will be the only shippable product by the time this article appears in print, its price point — more than $2,000 for a basic unit that cannot do most of the things just mentioned above — left attenders with the feeling they would rather wait for Zoomer, Newton or one of the other PDAs in development.

PHILIPS FMV CARTRIDGE WINS PARAMOUNT DEAL

Heading its competition off at the pass, Philips Interactive Media made its big announcement Wednesday night before the show officially opened. The company, which has been struggling for market share in the consumer channel as well as for respect for its CD-I technology among industry peers and analysts, took the stage Wednesday night with members from Paramount Pictures to announce a multi-year deal that will include the release of more than 50 Paramount-generated movie and entertainment titles for CD-I by Christmas this year. The discs are expected to be priced below $25 apiece.

The Paramount announcement, along with the planned fall release of Philips’ much-touted $250 full-motion video add-on cartridge for its CD-I players, might finally capture the consumer attention the company has fought in vain to garner. (Although Philips claims an installed base of 100,000 units worldwide, most of these players are being used to operate kiosks in business environments.)

Philips, which is paying Paramount a straight licensing fee, will have complete editorial control, selecting the first 50 titles from Paramount’s existing content library as well as from its scheduled new releases. (The CD-I versions of new motion pictures will be simultaneously released with the videotaped versions.) In addition, Philips will have control over marketing, distribution and manufacturing of the Paramount titles.

Despite how attractive Philips is trying to make the deal, there are still some potential drawbacks that might keep consumers away. First, the FMV cartridge, which is not yet available (it was promised for April 1993), is a must-have add-on in order to play the upcoming CD-I releases from Paramount. The add-on puts the system in the $850 price range, and although Hawkins of 3DO claims he has research to the contrary, the jury is still out on whether consumers are willing to pony up close to $1,000 for an interactive player — especially when there is no sign of a single standard in sight.

Also, the Philips add-on cartridge supports the first-generation MPEG standard for compression and can fit only 72 minutes of full-motion video on a standard-size CD. In other words, you will need two discs to see a full-length motion picture. If each disc is $25, does that mean you pay $50 for a movie you could rent for $3? The company did not discuss the possibility of renting the Paramount CD-I titles.

And lastly, Paramount is the only studio supporting the move to CD-I. Trade press reports claimed that no other studio was even considering CD-I as a new distribution medium for movies.

TW GROUP REGAINS CREDIBILITY UNDER HERSHEY

Since Terry Hershey took over as president of Warner New Media six months ago, it is hardly recognizable as the multimedia company founded within Time Warner under Stan Cornyn. The group has changed its name and is now known as the Time Warner Interactive Group. Geoff Holmes, Time Warner’s senior vice president of technology, is now chairman.

Hershey says the name change reflects the group’s effort to reach the entire Time Warner company and it reflects the unit’s broad commitment to interactive media for both the CD-ROM market and the emerging interactive cable industry. “Warner, rather than Time Warner, made no sense,” she says. “We are into interactive. The term ‘new media’ confuses the issue.”

TWIG has also undergone some substantial staffing changes. Hershey has replaced several top executives that remained from Cornyn’s tenure.

Under Hershey’s direction, the group developed a new digital production studio that is housed in TWIG’s Burbank office. She emphasized the studio is not just a lab for research and prototyping; it is where Time Warner will actually produce interactive content.

At CES, the company demonstrated a proprietary cross-platform CD-ROM technology that will allow a single disc to play on multiple computer and consumer devices. The technology will make its commercial debut on a CD sampler of Time Warner titles that will be released in stores later this year.

Hershey, who is working with other business units within Time Warner to create and publish product, says that titles released in 1994 will be representative of the new vision of the Time Warner Interactive Group. Already dismissed by many industry watchers, the group belongs back on the list of interactive publishing houses to watch.

BRUCE DAVIS TO RUN TV GUIDE ON SCREEN

TV Guide On Screen, the News America Publishing Inc. and Liberty Media joint development to create an on-screen TV programming guide, has a new president at the helm. Bruce Davis, former CEO of Mediagenic and Imagic, both successful video software companies, as well as a former member of the Software Publishers Association’s board of directors, was named president of TV Guide On Screen this past May.

Davis, who was making the rounds at CES for the first time in his new position, said he believes TV Guide On Screen’s open architecture software — in this case, the term means it is compatible with every brand of cable converter — guarantees wide acceptance among cable system operators.

A field trial is under way in Denver, in households served by Tele-Communications Inc. of Colorado.

The first deployment of TV Guide On Screen is scheduled for the fall of 1993, using existing analog cable TV converters at several cable operating system locations around the country. According to Davis, the same software will easily adapt to future digital converters in 1994 and beyond.

SEGA DEMOS HOME VR HEADSET

Sega VR, a helmet-like gizmo equipped with stereo headphones that hook up to Sega’s Genesis game system, is the first company to provide a virtual reality headset for the home market. Sega VR places the player in a 360-degree game world with 3D perspective. Sega says at least four VR titles, featuring “shooting, flying, driving and fantasy action” (my, aren’t we surprised by the categories) are in development and should be out this year. According to a Sega spokesperson, the titles will come with ratings, similar to the way movies are today. No prices were made available.

The Sega VR headset, which is still in development and is a little weighty to rest on a person’s head for a prolonged period of time, is expected to be at a trimmer weight of seven ounces for under $200 by Christmas.

Stand and deliver. The list of digital media companies promising product by fall is astounding. We will definitely be watching.

Janice Maloney