Wave Report

What we experienced last week was not the COMDEX of old. It was more like a consumer electronics show. Digital cameras were everywhere, color printers for digital photographs showed up in many booths, audio players were in numbers and form factors not seen before and large screen displays (many for television sets) populated the booths. Even in the Toshiba and HP booths the PC was hardly evident. The HP booth seemed more like a big demo and not its more traditional product focused booth. As much as Bill Gates and Michael Dell stated it is not the end of the PC era the floor certainly reflected the fact that the PC is taking a back seat.

COMDEX began as a distributor show but one would hardly know it from the attendees present this year. The show floor was a melting pot of every user category with a heavy emphasis on the end user. We saw many a senior citizen asking detailed questions in large and small booths. In Microsoft it seemed like this was a large free technical support exhibit. In the Windows 2000 corner we waited 20 minutes while one user asked detailed questions from a technical support lead.

Bluetooth is in. Over and over again we saw Bluetooth products or concept designs. What is interesting is that removing cords has unleashed a wave of ID (Industrial Design) - much of it very innovative. In fact, we might go so far as to state that Bluetooth is a disruptive technology - it has unleashed product concepts which do not look like prior products.

LCD or flat panel display freedom. The number of very creative products leveraging the power of any size flat panel display availability was overwhelming. Booth after booth had large - 50" and above - displays. The quality was stunning and it was not infrequent for crowds to stand around just looking at the displays. The most striking applications of the displays came with paper size displays. Here is where the Japanese and Korean companies dominate the market. When one controls the supply they determine the usage and price point. Taiwan is seeking to play a large role in LCD manufacturing but they are way behind the curve. An example of the LCD availability issue is the Compaq iPAQ Pocket PC. The WAVE Report spoke to them in many booths and the party line is - we cannot get parts to ramp up the production. However, when we responded that Compaq did not forecast the demand accurately and we believe is the real issue they only agreed. The lead times are 4 - 6 months and the buyer cannot make major changes in product unit demands and expect a quick response from the LCD suppliers. Compaq is watching unit sales walk away.

It was announced that 200,000 would attend Comdex this year - down from past years. The Sands convention center was empty of exhibits on the lower floor and the upper floor was not full. Past shows have filled the Sands and over the last three years it has continued to shrink. We estimate that only 40% of the Sands was occupied with actual exhibitors. In fact, the Sands used to be the showcase for multimedia, but this has faded from the scene. Now the vast majority of the exhibitors on this upper floor are foreign. Many countries have their own booth sections with many small linked booths.

These included:

Austrian Federal Economic Council Pavilion, State Government of Baja California Pavilion, Barbados Industrial Pavilion, Belgian Region of Wallonia-AWEX Pavilion, British Pavilion, Canada Pavilion, Dubai Government Pavilion, Eastern Caribbean Investment Pavilion, Electronic Industries Association Korea Pavilion, Finpro - Finnish Foreign Trade and Wireless Internet Pavilion, The Flemish Pavilion, French Pavilion, German Federal Ministry Pavilion, Hong Kong Trade Development Council Pavilion, ICEX Pavilion, IESC Pavilion, KOSA Pavilion, NASSCOM India Pavilion, The Netherlands Pavilion, Singapore Trade Pavilion, Swedish Pavilion, Taipei Hsien Computer Association Pavilion, and Thailand Pavilion.

The show also various had hot spots:

Biometropolis Hot Spot, COMDEX Start-Up City Hot Spot, Digital Home Networking Hot Spot, Linux Embedded Solutions Hot Spot, e-Mobility Wireless Hot Spot, MP3 Hot Spot and Streaming Media Hot Spot.

***Bill Gates Keynote

(November 13)

The Sunday night Bill Gates keynote has become an accepted event from which the show launches. Getting in proved to be difficult - worse than any prior keynote. There was a continual stream of people between the MGM Convention Center and the Grand Garden Arena seeking tickets for seats while the Arena was essentially closed. After multiple trips back and forth we were fortunate to get a ticket with a front row seat from which to take pictures.

The Tablet PC was the hit of the keynote. The first part of the address was focused on strategic directions for the PC and software. The bottom line was XML and an appeal that there would be value parity between the PC and server. A cute video was shown which begs the question - "Does Bill have enough to do?" As important as all of this was it seemed secondary to the demos. Bill tried to pull it together at the end but by that time the audience was anxious to go after 1:40.

Two elements of the Tablet PC stood out - demo unit itself and inking. No attempt was made to show the various functional capabilities of the hardware and only the pen was demonstrated. It was disclosed that it is a fully functional PC using the Whistler OS and with 128MB of memory. The demo unit was quite slick and the display integration stood out.

The stylist and ink interaction drew the greatest response. Ink examples were shown very close to actual writing and the integration of the pen with the drawing was excellent. The inking capabilities were highlighted the best when the table operated like a sheet of paper when writing was shown on the tablet. Various functions such as text substitution, opening a region within text and moving text. These were impressive. The automatic features to correct drawings were also very well received.

Microsoft scored big time with the Tablet PC at COMDEX.

***Carly Fiorina Keynote

(November 14)

When Carly Fiorina became the CEO of Hewlett Packard in July 1999 she began to make some changes within the company. She changed the company’s goals, making them more aggressive and rewarding risk takers, she changed the focus from products to e-services and made “invent” the catchword for consumer recognition. Carly spoke at Comdex Fall 2000 in Las Vegas this past week, to outline the HP strategies and talk about the new digital economy.

She began her keynote by reflecting on the past instead of predicting the future as many technology executives are prone to do. She compared the renaissance of medieval times to today’s digital revolution stating that in both circumstances, there was a shift from following the thinking of a small few, to benefiting from the “everyday acts of many.” Coincidently, this is how Fiorina runs HP as well – focusing on interdependent business units and traveling around the world asking the opinions of customers and employees alike.

According to Fiorina, the future will revolve around simple information appliances, always-on infrastructure and useful e-services. These three principles will transition the industry and consumers away from a focus on technology towards devices that are, “So easy to use that the user’s creativity will come to the forefront.” An important aspect of this transition will be open standards, systems and technologies, and Carly again used the example of the Renaissance period to stress that we should keep things open – not revert to closed systems (that eventually put an end to the Medieval period).

HP’s Internet strategy takes into account five interconnected models for the services it will provide. These models represent different user bases or requirements that will need to be addressed. The first, the personal creativity net, includes open Internet services defined by users that would use transparent technology for ease of use. To illustrate the importance of this premise, HP performed the “100 Camera Project,” in which they sent a digital camera, PC and printer to 100 people around the world and instructed them to take as many pictures as possible. The pictures were e-mailed back to HP, as well as to friends and relatives. Most of the people were very successful and many surprised themselves and others with their ability to take quality photographs with such equipment. With this example, HP wanted to prove that people and their experiences could be put first, before technology – and still have revenue generating products.

Carly also talked about e-services. She described them as not only traditional services made digital, but as services that would transform the customer experience – and whole industries. This would support the second principle – the business transformation net and would include printers that print stamps and movie tickets, wireless links connecting cell phones and printers allowing the printer to print e-mails and phone messages, as well as new business-to-business services.

The third Internet transformation is the mobile net. This has begun to happen, but as Carly described, American’s have a PC centric view of the future of mobility. She believes, like the Europeans and the Japanese, that the whole Internet will not be transformed onto a cell phone but instead bursty transactions will be built allowing a user to receive the information they want, where and when they want it – in the airport, elevator, home or office. SMS is a $10 billion dollar market in Europe – 8% of their total mobile revenue. Messaging, scheduling, transactions, searching, streaming, Bluetooth – all these applications will have a part in the mobility net.

The do it for me net expands the mobility net by making devices intelligent. She stressed though that this does not mean smart everything, just smart enough to do a specific set of services. HP is designing a printer that has a chip in its ink cartridge. When the ink is low, the chip will alert the user as well as use e-services to place an order for another cartridge. The cartridge only has to be smart enough for that one service. Meanwhile a phone might have to become much more intelligent – in order to, for instance, use location based services for Las Vegas restaurants and weather when in Las Vegas, but when in Boston, find restaurants and weather in that city.

HP is working on “Cool Town” technologies to federate appliance to this degree. This will allow every device to become a resource or service to other devices. This will allow a user to check the ETA of their bus, pay for a soda with their phone or connect their phone, printer and the Web to print anything on the Internet (a partnership they have with Nokia, is promoting this specific goal).

There will also be service-to-service federation, similar to peer-to-peer computing, that will couple services and applications, as well as e-service to e-service federation, that will combine applications for customized services. This initiative will use software from their acquisition of Bluestone Software.

Throughout her keynote, Carly stressed the importance of open standards and technologies to facilitate an empowering net. This model illustrates the idea that actions become cumulative in an open system improving our way of life. She stated that there are 4 billion people in the world that don’t use technology today – if the industry found a way to harness their ideas and innovations, the future market (5-10 years out) would be not only about computing, but about ideas and sharing. Their E-Inclusion project is trying to develop this knowledge sharing and spread digital divide solutions that will help less fortunate societies share their ideas and harness their own power.

In one year, Carly Fiorina has demonstrated the power of change and revolution within the digital industry. After hearing her speak, many HP employees have been struck with how well, “She gets it” and understands what is necessary. The WAVE Report felt the same way and were equally impressed with her ease on stage, her leadership ability and her empowering ideas.

2055.2 Company Studies

***Logitech

Logitech was present in the Bluetooth pavilion being sponsored by Motorola. In the booth they had a number of their HID (Human Interface Device) units which included Bluetooth.

Bluetooth is a technology demonstration in conjunction with the relationship Logitech announced with Motorola earlier this year. A key issues about bringing Bluetooth to market are price and power consumption. Price, at this point, is not the major issue. The reasons are: consumers are looking for cool products and the sales of the wireless kits have shown this and OEMs are seeking to differentiate their offerings. Bluetooth has become something of a pull factor with OEMs. That is, when OEMs put Bluetooth on their systems they need to use it and HID is a good example of the technology.

They have done extensive studies with their buyers and feel that the "natural" battery lifetime tolerance is 3 months. However, they are hoping to achieve 8 months.

In the booth they were showing 2 devices in a Bluetooth piconet.

***Toshiba

The hottest section of the Toshiba booth was around the exhibit showing concept products. This is normally the domain of Sony, teasing the attendees with new products and here Toshiba had the best future showcase seen at COMDEX. Some of the outstanding concepts were:

A dual display notepad. This was massive fold open display. There were only a few push buttons but the display was the device – equivalent to a 20” display.

Many of the devices use the SD memory form factor.

Multiple SD based audio players were show - excellent ID. Also used Bluetooth.

A TV-Data center based on a 15" 16 X 9 display.

3 PDA design concepts.

A home server supporting wireless.

***Sony

Past experience has conditioned us to expect much from Sony when it comes to new product innovation. They did not disappoint and we were blown away.

Concept PC

This is the integration of a pen with a 15" screen to become as interactive surface with a PC underneath. The pen positioning is 0.5mm. This product is likely to go retail Q1 2001. The screen is 1024 X 768 and the pen to surface interaction is RF. We were most impressed with the pen, which is pressure sensitive, has a rocker switch which enables right and left mouse click and erasure capabilities. At the back of the pen is a plastic surface, which depresses into the case of the pen, which looks like a pencil eraser. When applied to Photoshop for example, which support erasure, the drawing disappears and does so in a pressure sensitive manner. The overall movement in Windows was fast and natural.

In the future products section of the booth was an array of current, forthcoming and future products. Take aways include:

Sony is introducing a new memory stick that is called Duo. It is approximately 1/2 the size of the existing Memory Stick. What this does is to enable a whole new generation of devices.

There are going to be two classes of memory sticks - white for SDMI compliant and blue for the existing.

Showed was a concept called the snake which was an orange band about ½” wide and about 16" long. One can wrap the around one's head and it looks like a headband. At one end is a video camera and the other a socket for the Duo memory card. One can record up to 6 minutes of video.

Another existing product is a handheld digital audio recorder, NW-MS9 Memory Stick Walkman, which records on memory sticks. This unit comes in two versions - with and without Dragon ($299 and $249). When the memory stick is inserted into the PC, on the Dragon version, the voice recording is automatically converted to text.

The latest digital video camera, DCR-PC110, due for release in Q1 2001 for $1999, fits into the palm of one's hand. It has a 1m pixel-imaging sensor and can be used for video or stills but given the resolution it is best for video. It will record on digital tape but in this unit it will record compressed video on a memory stick. One only needs to remove the memory stick, place it in the PC and the video is immediately available.

A tiny 3.3m pixel digital camera which will store up to 1000 JPEG images on a memory stick and will do up to 160 minutes of MPEG movies. It also has a 3X optical zoom.

Also shown as future concepts were:

An imaging camera at the end of a memory stick;

A memory stick Duo in the form of a partial headband that has an ear phone and plays audio;

Bluetooth headset;

Bluetooth cell phone and audio player;

***PC - EPhone

PC - EPhone presented Cybird, a product that uses Windows CE as the OS, to offer a full function browser appliance using a VGA display on a 4" TFT screen. It is horizontally positioned so that the unit seems odd in shape compared to most PDAs however this is not a disadvantage. The list of features is impressive: built in CDMA or GSM phone, Bluetooth including a remote control Bluetooth device, IrDA, PC Card slot, Lithium ion battery, 32MB of flash, 16MB of RAM, Strong Arm 206MHz processor and voice communications. The product was demonstrated by accessing Yahoo over a CDMA network. The price is expected to be $1,200 with availability Q1 2001.

The PC-EPhone is ahead of its time. The CDMA network, without 3G, is too slow for a full screen experience. Windows CE is too limiting for a full screen experience. The cost is too high.

It is very clear that in the handheld market product positioning will segmented by screen resolution. It begins with the small screen cell phone at the low end, the PDA in the middle with screens set by 240 X 320 resolutions with a vertical form factor and the high end with VGA resolution and higher. The Cybird fits into the high end and as a result competes with tablets. At this upper end of the market virtually all products lack a keyboard and input is left to voice commands and virtual screen keyboards. Inking is a feature not a hardware platform.

What Cybird brings is a full PC screen experience to the hand held form factor - no WAP or other limiting content distribution factors. A missing element is a keyboard but with Bluetooth it is easy to add or carry about using a fold up form factor. This product shows that connectivity is not a problem - just embed the right standards, and with Bluetooth in the current device, a key right decisions has been made.

***Hauppauge WinTV-PVR

Hauppauge showed their WinTV-PVR product, model 880 which uses a 125-channel cable-ready television receiver to offer television viewing and recording on a PC, FM radio and scheduling capabilities. WinTV-PVR takes up no system resources, so the user can surf the Internet without a loss of performance.

The PVR can be used to record television shows to disk using MPEG2 compression or to burn the shows onto CD ROM for playback on home DVD players. It offers instant replay and pause capabilities, and can be viewed in a small window or full screen.

The system can also be used to create Microsoft AVI or MPG movies and for videoconferencing, using any Windows-based conferencing software.

WinTV products need a PC with a Pentium processor, PCI slot for WinTV pci boards, a sound card, CD ROM drive, VGA card and Windows 98/2000.

***Raindrop Geomagic Showcases 3D Photography

(November 13)

Raindrop Geomagic demonstrated its 3D photography technologies at ImageScape 2000. The company’s Geomagic Studio 3.0 software allows 3D photos to be created by capturing (photographing) physical objects, then digitally reproducing them for output in different formats. The 3D photos can be used for interactive 3D web visualization, custom manufacturing of built-to-order products, 3D printing of solid objects, and to add unlimited angles and lighting effects to 2D images.

Version 3.0 expands upon the automated processes defined by previous versions of Raindrop Geomagic’s software. Geomagic Studio is already being used by more than 300 designers, media professionals, engineers and manufacturers worldwide to reinvent their processes for everything from custom jet interiors, to motorcycle parts, to 3D media streaming, to dental implants and facial reconstruction. Capabilities in Geomagic Studio 3.0, combined with Raindrop Geomagic’s strategic industry alliances, have the potential to spawn industries based on 3D photography, including:

Interactive, collaborative 3D e-commerce, including 3D catalogs, digital showrooms and product avatars.

· Made-to-fit businesses, including custom-fitted apparel; man-machine interfaces for auto and aerospace products; medical prostheses, implants and replacement joints; and transforming old parts into new for digital inventories and reproductions.

Businesses that take advantage of 3D models of people, objects and environments that haven’t been captured or are too expensive to capture using conventional CAD/CAM modeling, including custom toys and games, avatars of children and pets, and preservation of antiquities.

E-commerce for built-to-order products that are too expensive (customized cars or corporate jets) or too numerous (hundreds of varieties of a product) to stock and show.

http://www.geomagic.com

2055.3 Other Events

***Taiwan Technology Unleashed

This was an event to introduce the changes that Taiwan is making to shift its industry from being just a commodity supplier of IT components and systems to software and IP. The Vice Minister of Economic Affairs came and gave a talk on the plan the government has launched. There were other talks, including one on the status of the IT industry. Key points made by the Minister included:

A 6-point program has been launched by the government to expand the role of Taiwan in the global IT market. Some elements include:

Greater protection of IP,

Support for entrepreneurial efforts in application software, broadband and telecommunications;

Promotion for IT and Internet use;

Development of incubators for company creation including fostering this from Universities;

Putting and emphasis on the knowledge economy;

Creating consolidated government support for the population and businesses including one stop government services; and

Narrowing the digital divide and extending Internet access.

It was claimed that Taiwan would encompass and become an advanced knowledge based economy in 10 years. They intend that the use of broadband would match that in the US and Taiwan would become known as the "Green Silicon Island."

The speakers also stated that there would be multiple software development parks created and that this support would also extend to Universities. The first such park is in downtown Taipei. Since there are are 6 million Internet users in Taiwan and 150 ISPs, Taiwan is considering having a peering location.

There are 7 FPD fabs in Taiwan and in the large area LCDs they have 14% market share. The companies are making $6 billion in investment in upstream technologies for LCD production. At the FPD conference which the WAVE Report attended in Taiwan in June, a shortfall identified was the lack of indigenous production of materials and equipment to support LCD production in Taiwan. As a result Taiwanese LCD company would be totally dependent on the licensors for support, materials and supplies. Taiwan appears to have gotten the message and this investment will allow for greater cost control and eventually lower prices for LCD panels.

Some of the market stats provided include:

OEMs spent the following in Taiwan:

Compaq - $9.3 billion

IBM - $5.0 billion

HP - $4.5 billion

Dell - $4.0 billion

Apple - $2.5 billion

The Hsinchu Science-based Industrial Park (HSBIP) companies generated $13.14 billion in sales in the first half of 2000;

25 factories are being constructed in the new Tainan Science-based Industrial Park (TSBIP) and in 2000 it expects to achieve $1.25 billion in sales;

Taiwan has accomplished the following:

Become the number 1 foundry for semiconductors in the world - 64.6% of the market;

The IC design industry is 2nd only to the US with $2.6 billion in sales;

It has the largest share in notebook production with 55%;

Taiwan will produce $1.36 billion in Information Appliances in 2000, a 62% jump over 1999;

It has 57% of the thin client devices and will produce 710,000 units in 2000;

Motherboard production is 64% of the world market;

***ImageScape 2000

The keynote for ImageScape 2000 was Mike Viken, President of Personal Network Solutions for Sony. Mike described how Sony has combined their operations in consumer electronics and digital imaging to capture the new consumer market of converging solutions for audio, data and (eventually) video.

The challenge they are facing is as imaging (the specific focus of his talk) resolutions increase on consumer and professional devices, storage needs to improve as well. MPEG video only adds to this problem. Sharing is also another challenge they are trying to solve. Companies like Spotlife, ImageStation and Smashcast are helping to spur growth in this area, but much is still yet to be done.

Good things are happening though. Digital camera sales have doubled in the last year, and according to a consumer survey, are second on the wish list for this Christmas season - after DVD players. Interestingly enough, the cameras are second - finishing before even Playstation 2 consoles. This is a very significant point about the market.

Portable devices will play a large role in this market, since they offer an installed base of 10 million users in the US. Mike described a scene where a father takes a digital picture of his daughter’s graduation, and immediately sends it to his son’s walkman at another university and to a car navigation system for the grandparents to see when they started the ignition, on the next trip to the store. Until wireless connectivity is in place, high capacity removable storage, like memory stick and smart media, will facilitate image exchange.

The key to this market, in Mike’s eyes (in keeping with Carly Fiorina’s speech yesterday) is to make the devices easy, convenient and fun. The consumer should not be concerned with security, formatting or the technology needed to take pictures and share them. They should only be concerned with taking pictures and sharing them with friends and family. That is Sony’s imaging goal.

Imaging products that we thought worth mentioning are as follows:

LG - Videophones

LG (Lucky Goldstar) had two units in the booth. VP-200 is for PSTN is priced at $500 and will be available in May. The VP-1000 was in prototype form and intended for broadband Internet. It will be priced at $600 and available in April.

Daeyang E&C - Mobil Personal Display

On display were three models of head mounted personal displays. The models include: DH-4000VP, DH-4500VP and DH-4500MPV and they all have 1.44m pixels for an 800 X 600 color display. The virtual image size is 45" at 2m which implies a 32 deg viewing angle. Pricing will be from $999 to $1,299 with a release in March. 2 or 3 distributors will be available in the US. Target markets include both vertical and consumer.

Samsung - YUP - P600D FM Video

A tiny video playback unit with video camera. Very neat and almost so small it is hard to hold. Uses smart media and has Li-ion battery. Got coverage by CNN and CBS at show. The screen is so small we wonder is this is practical.

***Bluetooth Pavilion

There were at least 20 companies in the Bluetooth pavilion. We focused our attention on what stood out.

Blue2Space

The booth sign said it all - 1000m Bluetooth. Using a high gain antenna Blue2Space is able to transmit up to 1000m using only the 1mw standard Bluetooth. They had in the booth a set up which ran 500' to the other antenna and Bluetooth receiver. What is being proposed is a wireless LAN that uses long distance Blue2Space antennas to connect nodes on a Bluetooth network. The local distribution can be accomplished with 802.11b or Bluetooth. In coming months they are promising a repeater to extend the distance between their high gain antennas called the BlueBall Accessor.

JTDC

In the booth was a concept product of a video camera attached to eyeglasses and Bluetooth connectivity. This is expected as a product in April 2001 with pricing in the $200 - $250 range. This competes directly with the Sony future product that is worn on the head and whose output goes directly to a Memory Stick.

Ensure Technologies

Ensure Technologies has had a presence for some years in "intelligent security solutions." The demonstration had two parts: a Bluetooth card in a portable and a Bluetooth enabled badge which the demonstrator had clipped to his belt. As he walked away from the portable the machine he was logged off and as he got closer the machine his sign on was activated again. In the booth was a sample of the final badge and the ID was very good. Battery life is expected to be 12 - 18 months. The current product is 900MHz based and costs $180. The Bluetooth product is expected to cost less and will reach the market in January. Distribution will be with integrators and direct.

To unsubscribe also use the Wave Report Home page or send the preformatted UNSUBSCRIBE message:

The WAVE Report may be redistributed in full for individual readership and posted to newsgroups, Web, and FTP sites. This publication may not be reprinted or redistributed for profit. Short quotes are permitted but must be attributed to the WAVE Report. 4th Wave retains the copyright to the WAVE Report.