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The end of the PC industry (as we know it)

The end of the PC industry (as we know it)

Say goodbye to traditional notions of a PC company. Times have changed and PC vendors will increasingly move away from selling just computers and peripherals to also offering consumer electronics products, including television sets, according to the chief executive at one of the world’s largest semi-conductor makers.

The result is a home computing environment that will be more tightly tied into areas, such as entertainment, that were once considered the domain of consumer electronics companies.

“The computer manufacturers are all going into the consumer electronics space,” said Scott McGregor, president and chief executive officer (CEO) of Philips Semi-conductor International, which supplies chips to both computer makers and consumer electronics companies.

The blurring distinction between the PC and consumer electronics industries is a trend that has been under way for a couple of years, led by the release of Apple Computers’ iPod music player in 2001 and the entry of consumer electronics companies, such as Sony, into the PC market.

Customer demand

Mobile handset makers, such as Nokia and Sony Ericsson Mobile Communications, have also played their part, boosting the capabilities of handsets with features like MP3 playback and increasing their ability to be connected with PCs and the Internet.

In May, Gateway raised eyebrows among analysts by announcing plans to offer a range of consumer electronics devices, including Microsoft’s Xbox game console, flat-panel liquid crystal display (LCD) televisions and home theatre systems, while it also works to build its enterprise computing and service businesses.

Other computer vendors were expected to push into the market for consumer electronics, including Dell, which was expected to begin selling its own line of LCD TVs towards the end of this year, said David Hsieh, director of Taiwan market research at DisplaySearch, a company that tracks the flat-panel display market.

“It’s very clear that Dell wants to get more recognition in the [consumer] electronics area,” Hsieh said.

Dell was working with LCD panel makers in South Korea and Taiwan on its plans to offer LCD TVs, he said.

Its move into the market was part of a wider industry trend among PC vendors, and more companies were expected to follow suit.

“Based on our customer inform­ation, we believe every major laptop maker is going into the consumer electronics space and will sell TVs,” McGregor said.

At the heart of this shift in the nature of PC companies was the widening popularity of digital media, increased connectivity among consumer electronics devices, and the growing reach of broadband Internet access.

In response to customer demand, LCD TV sets would be produced that offer Internet access, wireless network connectivity and include memory-card slots that allowed users to view pictures taken using digital cameras, Hsieh said.

One such vendor was Toshiba, which has announced a range of flat-panel television sets in Japan that incorporate an IEEE1394 interface and memory card slots for Smart Media, Secure Digital (SD), Multimedia Card (MMC) and Memory Stick as well as Ethernet connectivity to allow for firmware upgrades.

The first planned firmware upgrade for the TV sets includes a Web browser that would allow users to surf the Internet from their TVs.

Another company leading the development of consumer electronics products that offer capabilities more often associated with PCs is Sony. The company recently introduced its PEGA-VR100K video recorder, which can be connected to a television and contains a television tuner and connectors for a satellite receiver or DVD player.

The PEGA-VR100K can record video in MPEG4 format on a Memory Stick card. The recorded video, between 250 minutes and 1000 minutes on a 1GB Memory Stick, can be played back on a Clié personal digital assistant (PDA) from Sony.

“We believe there’s a change going on in consumer electronics. In the past people thought of them as isolated boxes,” McGregor said. “That’s not going to be true any more.”

Another reason for the convergence of the consumer electronics and PC industries was the continued strength of consumer demand for electronics and IT products, even while corporate demand has remained soft in recent years. Recognising that consumers were still willing to spend money on new products, computing hardware makers have been quick to respond by developing new digital cameras, MP3 players, and home PCs designed to operate as entertainment systems.

“We believe the future growth of IT spending will come from individual consumers and the home,” chairman and CEO of BenQ, K Y Chen, said.

Moving quickly

The PC industry’s move into consumer electronics turned up the heat on traditional consumer electronics makers, which did not share their rivals’ experience with integrating many of the functions found in desktop PCs and notebooks or with the pricing pressure faced by PC vendors that had consistently driven down prices as technology advanced, Hsieh said.

As a result, computer vendors would likely be the first to build more functions into consumer electronics devices, followed by consumer electronics companies, he said.

“Consumer electronics companies are not so familiar with the PC area and they would like to stick with the (basic) TV features,” Hsieh said.

Via’s associate vice-president of marketing, Richard Brown, said convergence between the consumer electronics and PC industries appeared to be moving quickly but he cautioned that there was still a long way to go.

While consumer electronics companies had to adapt to the technology integration and pricing pressures of the PC industry, PC makers would have to get used to working with many different types of devices rather than a standalone desktop PC or notebook, he said.

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