The Fear of Buying Technology

Today’s technology consumer is faced with a no win situation.  The planned obsolescence model of the 20th century, in which manufacturers made products that would wear out and need to be replaced, has been, well, replaced with a model in which products become obsolete long before they break.  In the PC business the cycle is about 12 weeks!   This rapid upgrade cycle frustrates customers and is stifling purchases in certain categories, especially among older customers.  The NY Times has an interesting article about the fear of buying technology: 

“There is a fundamental shift that is taking place,” says Samir Bhavnani, research director at Current Analysis, a market research firm. “People thought a product would last 10 years. They keep it three years. They upgrade their cellphone every year.”

The frustration and tendency to delay purchase is compounded by the rapid race to the bottom in terms of price.  The TV you would have paid $3000 for last summer, dropped to below $2000 this past fall.  If you bought it then, you probably felt good; that is until you saw the price this past Christmas. 

“But this new form of obsolescence can stymie the consumer because it makes little sense to buy now if the product will be cheaper tomorrow. Knowing when to buy becomes as important as knowing what to buy… Mr. Axtle, who already has a 51-inch Sony flat-panel TV in his “entertainment room,” thinks of TV like he did PCs more than a decade ago. “You’d get the most money could buy,” he said, but it wasn’t enough because the technology changed so quickly, making the PC obsolete in only a few years. “You couldn’t hope to get ahead,” he said.”

This trend is expected to continue through 2007, frustrating both customers and CE retailers.  CE retailers should look for strategies that either take advantage of the new model, like encouraging customers to use the lower prices to replace more than just the family room TV; or they should look for ways that provide alternative products and services that minimize the negative effects of the new model. 

It’s O.K. to Fall Behind the Technology Curve – New York Times


Here’s some gamer trivia….  November, 2006 was the first time all three new home systems would be available to consumers, along with three established portable game devices.  And which company wont the month hands down????  I’m not gloating, but you can’t say I didn’t say so….

The month belonged to……..wait for it…….Nintendo!!!

According to NPD, who keeps track of this kind of stuff, Nintendo sold 55 percent of all video game systems in November, led by the launch of the Wii(TM) home system and the incredible continuing success of the Nintendo DS(TM) portable.  While the Wii sold an average of 70,000 per day during the first 7 days,  the biggest sellers for the month were the Nintendo DS, at almost 920,000 units, and Game Boy® Advance, with nearly 642,000 portables sold.  With Wii and Nintendo GameCube(TM) totals included, Nintendo sold through more than 2.1 million of the 3.9 million systems purchased for the month.

The data also reveals that the Wii title The Legend of Zelda®: Twilight Princess achieved sales of 412,000, representing 87 percent of all Wii purchasers, the highest industry rate of sale for any launch title since introduction of Super Mario® 64 with the Nintendo® 64 a decade ago.

In addition, despite the inclusion of Wii Sports software with every system sale, Wii buyers also purchased an average of two additional games, compared to approximately one game per system for the installed bases of either competing new home system.

Now tell me again what’s so great about the PS3???

Source: Nintendo

The Success of Wii

Seth Godin has a nice post on his blog about the Wii.

“Sony is losing hundreds of dollars on every one they sell, supply is limited and …people are getting shot in the frenzy to buy the game.”

“And yet Nintendo hums along, with great reviews, plenty of supply and a long-term hit on their hands.”

“What’s up?”

While Sony postures itself like an aging rockstar, promoting it’s overpriced, proprietary scheme for dominating your living room, Nintendo continues to focus on the gamer’s experience.  In the end, it’s the experience, not the technology that will win the devotion (and dollars) of gamers.

Microsoft to offer movies, TV shows on game service |

Looks like the predictionfrom fellow WordPress blogger Shsibae was right on the mark as Microsoft announced today that it would rent movies and sell television shows through Internet downloads to its Xbox Live video game service.  

“Microsoft will begin on Nov. 22 to offer standard and high-definition films such as Warner Bros.’  “Superman Returns” and “Jackass: The Movie” from Paramount Pictures through its Xbox Live Marketplace.   Television shows will include Viacom Inc’s  “South Park” and “CSI: NY” from CBS Corp.  Viewers will need the current-generation Xbox 360 console with a hard drive to take advantage of the service.”

Under the rental model, which is reminiscent of the now defunct DivX Disk technology launched by Circuit City Stores back in 1997,  Microsoft customers have a two week window from when they download a movie to watch it, but once they begin watching it they have only 24 hours to keep it. 

With Netflix planning a download service,  Apple’s upcoming iTV,  Amazon’s movie store, On Demand services from cable providers, and Sony’s PS3 video download function (I’ll believe it when I see it), the customer really has a lot of choices.  Which models will survive this tech war?  What will this mean to businesses who sell or rent DVDs?  I can’t say, but it will be fun to watch.

Here are the specifics:

  • Microsoft has not yet disclosed pricing for downloads, but it will be in Microsoft points.
  • Movies will be “rental” only, TV for “purchase” only.
  • At launch there will be over 800 hours of SDTV, and 200 hours of HDTV.
  • Neither TV nor movies are streamed; they are only downloaded, although you can stream short preview clips from the Live interface.
  • You can only download content to your Xbox 360 drive — not to an external drive.
  • Your “purchased” TV programs can be downloaded an infinite amount of times to an infinite amount of consoles; you may also play them back on friends’ 360s with your removable drive.
  • Deleted TV shows can be re-downloaded later; HDTV shows can be re-downloaded in either HDTV or SD.
  • Movies can be watched an unlimited number of times the first 24 hours. Plays after that period will cost the same as the initial download, although the movie data isn’t necessarily deleted. You can keep the movie data on your drive up to 14 days without re-downloading it.
  • Downloads are in VC-1 (aka WMVHD) at 720p, 6.8Mbps video with 5.1 surround.
    An average HD movie download should be between 4-5GB, and a two hour SD movie would be 1.6GB.
  • An average 1 hour (44 min) HDTV download should be about 2.2GB, and an average 1/2 hour (22 min) HDTV download should be about 1GB. A 1 hour SDTV download should be about 600MB, and a 1/2 hour SDTV download should be about 300MB.
  • This service will not be available for MSN TV users, Vongo subscribers, or any other Microsoft partners. It is Xbox Live only.
  • You cannot download programs through the Xbox Live web interface — they can only be transported to your 360’s removable drive.
  • There aren’t any drive announcements being made, but there is a rumor of a 80GB drive coming.  Of course, Microsoft rumors are never true, right?

Launch titles

Aqua Teen Hunger Force
Avatar: The Last Airbender
Batman Forever
Breaking Bonaduce
Chappelle’s Show
Hogan Knows Best
Jackass: The Movie
The Matrix
Nacho Libre
Nicktoons Network Animation Festival
Pimp My Ride
Race Rewind (NASCAR NEXTEL Cup Series races)
Raising the Roofs
The Real World
Robot Chicken
South Park
SpongeBob SquarePants
Star Trek (original)
Superman Returns
50 fights from Ultimate Fighting Championship, and some episodes from The Ultimate Fighter
Microsoft to offer movies, TV shows on game service |

Japan PS3 Quantity Slashed Again…. Is the US Next?

Looks like Sony can’t get a PS3 shortage break. The Nikkei Keizai Shimbun paper reports today that due to component shortages, Sony will only have 80,000 PS3 units ready for Japanese launch instead of the originally planned 100,000 units. That’s a 20% cut. First the European launch gets delayed because of production issues, now the Japanese launch availability is crippled even more than it previously was.

No word yet if the shortage will effect North American units but, if proportional, they could be cut by 380,000 systems.  The PS2 sold out of almost a million units when launched back in March of 2000.

Meanwhile, a new report coming out of the financial services company UBS (available at—paid subscription required) analyzes the number of Wii consoles that have been manufactured prior to launch and pegs the figure at 2 million. In addition, the report states that at least 7 million and potentially as many as 9 million consoles are in the production pipeline and will be ready by year-end. This represents an increase from Nintendo’s publicly-announced target of 6 million Wii consoles by the end of the year.

So let’s review what this means for the holiday shopper:

  • PS3 – production problems, really expensive, FUGETABOUDIT! Your not gonna get one.
  • Wii – Pretty good inventory, cool interface make it more of an experience, reasonable price tag.

Nintendo looks like the clear winner to me.

Hand On the Zune

The old gamers at 2old2play got their arthritic hands on the Zune and offer a full report. The most important detail?

The top of the Zune had a clear glass layer while the exterior had a tactile feel to it, nothing like the hard metal and plastic of the iPod devices. The ‘skin’ of the Zune was a ‘rubberized’ material that had a smooth seductive feel to it. I found myself unable to stop stroking the device, so much that the demo assistant asked me to put it down.

Read the detailed review here: Hands On The Zune [2old2play]

Hollywood Insiders Second Guessing Blu-ray Support

A recent Variety article new window entitled “Pandora’s black box” examines Sony’s PS3/Blu-ray strategy and how, with their seemingly never-ending setback, the movie studios that signed up for the Blu-ray format are feeling a little uneasy.

Despite its many uses, industryites agree that the PS3 will sell primarily on its core vidgaming capabilities.

“PS3 is first and foremost about games,” states Kaz Hirai, head of Sony’s U.S. vidgame division. “That really is the entry point for the majority of people. Oh, and by the way, they’ll get a great Blu-ray player. It’s an excellent by-product.”

That “Trojan horse” strategy is what persuaded many studios to jump aboard Blu-ray, figuring that PS3 sales would put Blu-ray in tens of millions of homes where someone loves to play vidgames.

While some of those studios are taking a wait-and-see approach on the impact of PS3, others are already starting to feel burned by the delays and pricing concerns. “PS3 was a huge deal in our coming aboard Blu-ray,” confirms one top home entertainment exec. “I’m not sure we would have signed on if we had known then what we know now.

No matter how many stand-alone HD DVD or Blu-ray players are sold within the next 12 months, its likely (barring any other unforeseen delays) those sales will be dwarfed by the PS3, so from a pure numbers perspective I can see the allure. Unfortunately for the studios, this may prove completely irrelevant within a few short months. Embedding a Blu-ray player in the PS3 does not mean PS3 owners will be Blu-ray movie buyers.

The HD DVD camp is not sitting still either. Toshiba is moving on to it’s second generation HD DVD player after selling through 70k units of its original line. Add to this unannounced HD DVD players from other manufacturers and the up-coming Xbox 360 HD DVD player and it becomes apparent that dedicated, stand-alone HD DVD playback devices may very well eclipse the insert-number-here of PS3 owners who purchase Blu-ray movies. That insert-number-here figure really is the big unknown and will likely remain so for several months after the PS3’s launch.

The big question is, when do we get back to the business of authoring titles and selling HD disc players in one format and one format only? This is what’s needed to assure the consumer at large their not about to buy into the wrong format. Enter Nielsen’s Video Scan.

On October 12th Nielsen’s VideoScan numbers for the month of August new window alone, revealed that HD DVD movies outsold all other high definition formats by a factor of nearly three to one. This is where the proverbial rubber meets the road folks, VideoScan numbers don’t lie, those numbers are sales not shipments and will factor heavily in future studio support decisions.

So will we see a reversal of this 3:1 margin in favor of Blu-ray, in the months following the PS3’s launch on November 17th? That’s hard to say in all honesty, in a vacuum yes 500K+ players would obviously create an up-surge in Blu-ray sales but of course the format war doesn’t exist in a vacuum.

The new Toshiba players, along with the Xbox add-on will put HD DVD into insert-number-here additional homes and from there who knows where this will go. Two things are certain: HD DVD has established a “beachhead” and the format war will keep most consumers on the sideline for the foreseeable future.

Warner cuts projections on high-def dvd sales due to Blu-ray delays…..

Warner is backing off of that huge golden fourth quarter forecast they predicted a few months back citing Blu-ray hardware delays. According to the studio consumers have only spent $30 million on the new formats which is far less then what was expected and therefore Warner has dropped the amount they are going to spend on the formats. Panasonic, Sony, Pioneer, and Samsung are all going to have players out by Christmas (hopefully) but this hardware was initial suppose to be out, well, now.  It takes time for consumers to warm up to new tech and takes even more time for retailers to put the stuff on sale so more then just the early adapters will buy ’em. Thus Nickerson has indicated that consumers are only going to spend $750 million instead of the the initial $1.5 billion originally forecasted and only $150 million will be spent on Warner’s bread and butter, software. We just wonder what the accountants would be saying if the two formats would have consolidated way back when.

… but did they cut the projections enough???

My previous post discussed Warner revising its projections for high definition DVD.  Even after that, a Motley Fool writer thinks the new numbers are still too high.  He states that Warner’s revised projections are based on the assumption that consumers will adopt the new technology faster than they did the original DVD players. That, in turn, was the fastest-ever ramp-up of a consumer electronics platform in history. The Walkman, the VHS player, CDs, none of these could hold a candle to the early success of DVDs.

PlayStation 3 is supposed to ship within a month now, and Sony is hoping that it will elevate Blu-ray to a common household items, but forecasts indicate low volumes, and we know the console will be very expensive.  Microsoft went the other way with its high-definition support, and has yet to launch its $200 add-on HD DVD player for the Xbox 360. The Redmond giant doesn’t appear comfortable with the HD market prospects just yet.  

Sure high definition DVD looks great, but will inspire millions of us to spend up to $1000 on a first-generation set-top box that can only play one of the two competing formats? Pick the losing format and you’ll end up buying another player in a couple of years. It’s VHS vs. Betamax all over again. That’s hardly the stuff of sales-record legend, and I’d be surprised to see more than a few hundred million in high-definition electronics sales this year, even with the holiday season yet to come.

 With a format war and so many technical complications, the Motley Fool prefers Disney‘s slower wait-and-see approach to Warner spending a lot of money hitting both platforms from the start with high profile titles and interactive features.  

Read the story here 

New technology could nip DVD format war in the bud

According to an article in Computer World, the format war around next-generation DVDs may be over before it has begun, thanks to a breakthrough from a British media technology company.  London-based New Medium Enterprises (NME)  has developed a technology which allows multi-layer hybrid DVDs have Blu-ray on one layer and HD DVD on another, and have lowered the cost of production to just 1.5x the price of regular DVDs.

By putting the same film on a single disc in the two competing formats, movie studios can save money, and consumers do not have to worry if they are buying the right disc for their player.This announcement come just a few weeks after after three employees at movie studio Warner Bros. filed a patent for the application of multiple formats on a single DVD.   NME says there is no patent collision between the two.  The Warner guys patented the idea and MNE is patenting the technology to make it work.

Multiple format DVDs can solve the emerging war between the two new high-capacity DVD formats: Blu-ray, which is backed by Sony Corp. and Toshiba-supported HD-DVD.   Hollywood studios have been choosing sides in the DVD format war, each supporting one of the two formats. Some have said they will produce films in both, in addition to the standard DVD format.

How Apple Will Change the Rules (Again)

While most of the tech bloggers were going gaga last week over Apple’s announcement of new iPod devices and wondering when the iPhone is going to debut, a few guys with much more insight than me were writing about the real stories behind the “iTV” headline. 

I highly recommend both of these outstanding posts.

Carl Howe over at Blackfriars’ Marketing writes a great commentary predicting Apple’s entry in the flat panel TV market.  Lots of big boxers like Home Depot and Office Depot are announcing their entry into this rapidly growing market, following robust profit reports from Circuit City and Best Buy.  While the success of these Johnnies-come-lately is dubious, Howe makes a great case for Apple’s winning in the TV business.

Apple has design icon Jonathan Ive (among many other great designers), one of the best and most powerful brands in the world, incredible differentiation, and is repeatedly ranked number one for product support. It has a chain of 161 stores that generate 67% of the revenue of Best Buy with 10% of the floor space. And most importantly, Apple sells experiences, not low-priced hardware. They’ll offer two or three choices to avoid the tyranny of too much — and amaze everyone again by making more profits on fewer products.

Over at the Mac Observer, John Martellaro’s take on the “iTV” story is that Apple’s strategy:

  • Leverages 4 key competencies (customer inertia , the power of “the culture to influence”, large software development capability, & technical leadership),
  • Will lead to success, and
  • Will simultaneously confuses competitors and the analysts.

The result, Martellaro predicts, is that Apple has a strong chance of owning the game in home video entertainment.

Today, the home entertainment industry is confusing. Customers muddle through. Some dare to ask questions; some just plug it all in and hope things work. Issues linger: Is my 1080i HDTV already obsolete? What is HDCP, HDMI, de-interlacing, scaling, 802.11n? Should I go with cable or satellite? Will Blu-ray finally win? No one company has stood up, with courage, and said: “We have a vision. This is how to do it. Follow us.”

Now, Apple is starting to provide that leadership in home theater. They’re defining an architecture, putting the product pieces into place, and developing leading edge products.

But most importantly, Apple is inserting this orchestrated scheme of pre-planned and well defined technology into a massive technology consumption machine fueled by the consensus thinking on the Internet. If it sucks, it’s history. If it’s cool, it’ll be embraced, and any company that tries to force the issue against this massive thinking machine will fail.

The platform dubbed “iTV” will be revolutionary.  Apple has demonstrated the ability to bring simplicity to complicated things and they appear to be poised to do it again for home theater.  What’s more, iTV will bring video iChat and the internet to the living room.  When they introduce a flat panel display, you can bet it will have an “iSight” camera built into the top bezel just as their computers do now.  iChat, along with inevitable higher bandwidth connections could revolutionize home-based communications and the “internet from the sofa” will certainly bring increased impulse buying online, including of course, movies and more from Apple’s iTunes store.

PS3 price cut by 20%*, now includes HDMI 1.3










Found this over at Engadget:

Looks like all the bellyaching over the price of Sony’s PlayStation 3 has done some good. Sony exec Ken Kutaragi just sent jaws to the floor over at Tokyo Game Show with an announced price cut of the 20GB PS3 base unit from ¥62,790 to ¥49,980 in Japan. Closer to home, we’d be looking at a move from about $538 to $428 (looking at current exchange rates) representing a drop of some 20% when the PS3 hits later this year, or uh, early next if the cut applies across the board. Not exactly cheap when looking at the Wii or Xbox 360, but that Cell processor, Blu-ray Disc player, and HDMI 1.3 output supporting Deep Color will certainly draw a premium. Yeah, you read that correctly, Ken announced HDMI support too, making the 20GB PS3 one fine Hi-Def movie machine on the cheap. Hoozah!

Update: Price reduction confirmed for Japan only. Waiting on rest-of-world price cuts, if any.

Zune Coming Soon…. to Wal-Mart??

Wal-Mart is prominently displaying the new Microsoft Zune on its website, announcing that you will be able to get it at as soon as it is released. Interestingly, I cannot find any reference to Zune on the major CE players sites (Circuit City and Best Buy), or even on Those three are heavily touting the new “remastered” Apple products while Wal-Mart appears to care less. Perhaps that says something about supplier/retailer relationships. It also speaks volumes about Wal-Mart who is stepping up to the plate with what looks to be a very cool item from Microsoft. It is clear from their latest marketing, that Wal-Mart wants to dominate the CE business and taking the lead on new products like Zune helps to establish credibility in that arena. CE retailers would be well advised to remember what happened to Toys’R’Us when Wal-Mart set their sights on the toy business.

It’s Offical, Microsoft Zune is Announced


If Tivo3, Apple Movie Store, iTV, and Wii weren’t enought this week, Microsoft ham made official what most of us have known for a while by announcing their new “Zune” multifunction thingy (more pictures at the bottom of the post).  The player will have a 30GB hard drive, built-in FM tuner, 3.0-inch screen, and 802.11 wireless. It will also come in three colors, black, brown and white. 

You can share content with other Zunes across the wireless network.  You can listen to a track from another person for up to three days, after which you’ll have to buy it from the Zune Marketplace store—their official name for the store.  Zune Marketplace has two purchase options:  per song like iTunes, and unlimited download subscription like Napster.

And while the Apple fanboys have been speculating for months about an iPhone, it looks like Microsoft is serious about it.  At a press conference yesterday, Chris Stephenson, GM for Zune, told the press, “A Zune phone is definitely part of the future of this brand.”


Nintendo Wii Coming To America November 19th for $250


<via Gizmodo & GenDigital>

Expect to play Nintendo Wii in time for Turkey Day. The Date? November 19th. The price? $250.

To come with Wii Sports, which includes golf, bowling, baseball and tennis games controlled by swinging the wii-mote. 25 titles available by end of year. 30 classic games, including Zelda, Super Mario Bros. and Donkey Kong.

The info was accidentally leaked by the Seattle PI by some trigger happy web admin, likely. Your party foul, our news.

At $250, the new system is about half the cost of a juiced up Xbox 360 and less than half the cost of the yet-to-be-released Sony PlayStation3 (who just announced another delay this week which will effect European customers).  The unique selling point of the Wii will be its intuitive wireless “Wii-mote” that, when tilted by the user will produce movement and actions on screen.  If the media campaign promoting the Wii comes off flawlessly Nintendo will have positioned a less costly “fun” and “easy” alternative to the technologically advanced, considerably more expensive Xbox 360 and PlayStation 3.

I think Nintendo will be more successful than most people think.  Here’s why:

  • Sony PS3s are going to be extremely hard to get unless you pay outrageous prices on e-bay. 
  • Early indications have teens and college students pushing for upgraded portable digital music players (the $300 video iPod), premium jeans (Seven for All Mankinds can cost more than $200), and other luxury goods (i.e. competition for limited dollars)
  • Gift-givers might not be willing to spend $500+ on a console system.
  • Wii will come pre-loaded with a series of sports games touting the functionality of the wireless controller.  Games typically do not come bundled with the consoles, so this represents a real “value add”. 

Given these points, I think Nintendo’s Wii will be the sleeper hit of this year’s holiday season.

Wii Dated And Priced For North America [Kotaku]