PC companies will move away from selling just computers and peripherals to offering consumer electronics products, including television sets, a chief executive at one of the world's largest semiconductor makers predicted.
"The computer manufacturers are all going into the consumer electronics space," said Scott McGregor, the president and chief executive officer of Philips Semiconductor., which supplies chips to both computer makers and consumer electronics companies.
It is a trend that has been under way for a couple of years, led by the release of Apple's iPod music player in 2001 and the entry of consumer electronics companies, such as Sony, into the PC market.
Mobile phone makers, such as Nokia and Sony Ericsson, have also played their part, boosting the capabilities of handsets with features such as MP3 playback and the ability to connect with PCs and the internet.
In May, Gateway raised eyebrows among analysts by announcing its intention to offer a range of consumer electronics devices, including Microsoft's Xbox game console, flat-panel LCD televisions and home theatre systems, while it continued to build its enterprise computing and service businesses.
Dell is 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 market research company which tracks the flat-panel display market, including LCD TVs.
"It's very clear that Dell wants to get more recognition in the consumer electronics area," Hsieh said, noting that Dell is working with LCD panel makers in South Korea and Taiwan on its plans to offer LCD TVs.
More companies are 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 is the widening popularity of digital media, increased connectivity among consumer electronics devices, and the growing reach of broadband internet. In response to customer demand, LCD TV sets with internet access, wireless network connectivity and memory-card slots are expected to make their mark, Hsieh said.
Toshiba, for example, has announced a range of flat-panel television sets in Japan which 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 will allow users to surf the internet from their TVs.
Last week Sony 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 1,000 minutes on a 1Gbyte Memory Stick, can be played back on Sony's Clie personal digital assistant.
"There's a change going on in consumer electronics, that in the past people thought of them as isolated boxes," McGregor said. "That's not going to be true any more."
Recognising that consumers are still willing to spend money on new products, computing hardware makers have been quick to respond by developing 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," said KY Chen, chairman and CEO of BenQ, a Taiwanese company offering a range of products, including LCD TVs, MP3 players, digital cameras, notebook PCs and digital projectors targeting consumers.
The PC industry's move into consumer electronics turns up the heat on traditional consumer electronics makers, which do 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 companies as technology has advanced, Hsieh said. As a result, they are more likely to be the first to build more functions into consumer electronics devices, followed by consumer electronics companies.
One consumer electronics company that has not shied away from making a push into the computer market is Tokyo-based Teac.
Teac unveiled its TMM-2020 home entertainment PC at the Internationale Funkausstellung show in Berlin last week. Based on a 1GHz C3 processor from Via Technologies which does not require a noisy cooling fan, the TMM-2020 runs Microsoft's Windows XP and is designed to fit into a TV or stereo cabinet. It can be operated using a remote control or infrared keyboard and allows users to record television shows, watch DVDs or surf the internet.
"In the longer term, we're going to see more and more of these devices being developed," said Richard Brown, Via's assistant vice president of marketing.
Convergence between the consumer electronics and PC industries appears to be moving quickly, but Brown cautioned that there is still a long way to go. While consumer electronics companies have to adapt to the technology integration and pricing pressures of the PC industry, PC makers will have to get used to working with many different types of devices rather than a standalone desktop PC or notebook, he said.
Sumner Lemon writes for IDG News Service
This was first published in September 2003