TECHNOLOGY SPECIAL REPORT

Personal Video Players May Be Next Big Wave

The sight of commuters’ heads bobbing up and down as they listen tomusic on their way to work may be replaced by intent gazes examining theprevious night’s episode of the “Sopranos” or the ninth inning of thebaseball game. Manufacturers are hoping that the next big wave inpersonal entertainment will be portable video players (PVPs), devicesthat feature not only a computer screen for viewing but also hard diskstorage so individuals can carry the content that interests them.

The market for these products is just beginning to emerge, and analystsare split on its future. Some expect the devices to gain significantacceptance once vendors address issues, such as high prices and digital-rights management. Others think that user interest will be limited tovideophiles, and the number of consumers who need a video fix is not asgreat as those who desire music.

The analysts agree that the market is evolving quickly for a coupleof reasons, starting with the popularity of Apple’s iTunes. “Apple demonstrated that consumers will pay for digital content as long as it is inexpensive and easy to download,” Vamsi Sistla, an industry analyst with ABI Research, said.

Spadework Already Completed

With online music sites gaining traction, suppliers’ focus has shiftedto video, an area where some groundwork already has been done. “Vendorshave found that there is a segment of the population that wants to viewvideos as they wait in an airport, sit in an automobile, or relax in ahotel room,” Josh Martin, an industry analyst with InternationalData Corp. (IDC), said.

To date, these consumers have relied on laptop computers and portableDVD players to watch video content. Laptops can be bulky to tote around,and DVD players require that users carry a handful of DVDs along withthe device. PVPs are lightweight, weighing a pound or less, and containhard disk drives that allow storage of up to 50 movies, hundreds of TVshows or thousands of songs.

Technical advances are also playing a role in the PVP interest. Progressin computer chip technology has meant that vendors are now able to fitcomplex video playback technology into handheld devices. Also, thequality of the images has been improving and the screen displays havebeen growing, so clearly defined, color pictures can now be shown on 3inch to 7 inch screens.

A Winning Design?

While PVP screen quality and audio have improved, there are still issueswith the form factor, user interface and battery life. A bevy ofvendors, including Archos, Creative Labs, MobiNote Technology,RCA, Samsung Electronics and Sony are working to address those problems. Yet, there are questions about the proper video distribution mechanism.

Archos, MobiNote Technology and RCA copy video content from VCRs or televisions, while other suppliers depend on computers running operating systems like Microsoft’s Windows XP and its Portable Media Center, a set ofhardware and software specifications licensed to consumer electronicscompanies, to move content.

Digital rights management presents another challenge to the vendors.Since video content can be stored on hard disk drives, users are able totransfer it from device to device. Like record companies, the filmindustry is concerned about piracy and is examining ways to let usersfreely move content while protecting the companies’ financial interest.

High pricing is also a deterrent. Currently, PVPs are in the $400 to$800 range, which is too much for the mass market and limits interest toindividuals who already rely greatly on Tivo recorders and DVD players.

“PVPs are new, the customer base is small and vendors need to recouptheir investments,” ABI Research’s Sistla told TechNewsWorld. “Allof those factors combine to result in high pricing now, but as themarket gains acceptance, pricing will fall — and rather dramatically,” he said.

How Big Is Big?

Most observes think the market will gain acceptance, but the questionis: How big will it be? “Although there won’t be as many users as thosedownloading music, there will be a large number of individualsdownloading video content,” IDC’s Martin told TechNewsWorld.

Users could watch episodes of their favorite TV shows or focus on areasof special interest. “I have copies of every music video ever recordedin a library and like watching them from time to time,” Gartner analyst PaulO’Donohue said. “But what I’ve found is few people — not even my own children — share my passion for watching music videos.”

O’Donohue also says he thinks viewing video content is a different experiencethan listening to music. “If someone watches a video recording on atrain, there is not as much privacy as there is when listening tomusic,” he explained. “Once users pop in earplugs, no one knows whatthey are listening to. On a train, other passengers can see what aperson is viewing, and that will make many users feel uncomfortable.” Asa result, he envisions a relatively small number of consumersdownloading video content.

Which side of this debate is correct will become clear as PVP productsbecome widely available. Vendors spent the spring and early summeroutlining their plans to deliver their wares and expect to ship them involume near the end of the year.

If PVPs wind up under consumers’Christmas trees, they could be carrying them onto trains and buses asthe new year begins.

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