Twenty-five per cent of all notebooks sold through the indirect channel in Q1 this year were multimedia notebooks, according to market research firm Romtec. They all had built-in sound, speakers and a CD-Rom and, thinks Romtec PC analyst Chris Herbert, the figures will exceed 50 per cent very soon.
Mike Neame, MD of specialist portable reseller Lapland, says the move to multimedia is happening at breakneck speed. 'If it's not multimedia, you just can't sell it these days.' He says around 80 per cent of the notebooks Lapland sells now have built-in multimedia functionality. 'Remember what happened to notebooks with external floppy disk drives? They just died. The same thing is happening with CD-Rom.'
In other words, multimedia is becoming a standard feature of notebook PCs; it is not a matter of whether the machine has it now or not, it's a matter of what sort of multimedia it has and what sort of performance it delivers. Customers are buying multimedia notebooks because they want the same functionality in a portable as they get on the desktop.
Multimedia is likely to become standard on just about all notebooks within months - even those at the lower end of the market. The inclusion of multimedia features at competitive prices has accelerated competitive pressure. Herbert says that it will saturate at about 80 per cent or 90 per cent of the market, but he can't tell when. 'There will be a certain proportion that wants low weight and longer battery life but most of the market will be screaming for multimedia machines.'
Compaq was the first to latch on to multimedia and the launch of its 5000 series helped it to achieve a 38 per cent share of multimedia notebook sales in Q1 - way above its overall market share of 20 per cent and only just behind Toshiba's 41 per cent of the multimedia notebook sector.
Other manufacturers have also discovered how the inclusion of multimedia features can boost notebook sales. Panasonic and Texas Instruments, for example, each took about six per cent and three per cent of the multimedia notebook market (respectively) in the last quarter. In contrast, Steve Crawley, product marketing manager at AST - whose market share does not register in the multimedia sector - says AST has probably lost opportunities because it has only just come to market with integrated multimedia. Murray McKerlie, product marketing manager at Toshiba, says non-multimedia notebooks could be gone by the end of this year.
Technology advances are helping to put multimedia into the standard required specification. Crawley points out that it is only recently that PCI and full-motion video have started to become available. More significantly, in terms of keeping the cost and size of multimedia notebooks down, miniaturisation has advanced in two key areas. The first is the availability of CD-Rom drives which consume only five watts of power instead of between 10 watts and 15 watts. The second is the integration of sound using just two chips, thanks to the Vibra 16 chip set. It used to take 10 chips or more. As Crawley says: 'There just isn't that much real-estate in a notebook.'
FUEL TO THE FIRE
Applications are driving the adoption of multimedia portables as well, particularly in the corporate market. Neame says more firms are producing CD-Roms which demonstrate their products or services so they need portable multimedia to be able to show these at any time and location. He says multimedia is also used for remote training and information distribution, as it is an effective way of delivering consistent and controlled information.
This requirement has fuelled some demand for external CD-Rom drives which are used to upgrade older models with no multimedia functionality. But generally the requirement is for built-in multimedia, and a diminishing number of systems are available without it.
But Rodney Davies, general manager of NEC's PC division, thinks there is a swing back towards notebooks without CDs. 'We've found that some companies are specifying that they want notebooks without the CD now.
A lot of mobile users don't need it and when they do want it they want it to load software or to play Doom.' Software is now distributed on CD-Rom, but, he says, users generally only require access to the CD drive while they load software.
Nevertheless, the number of notebooks that don't at least have the option to attach a CD-Rom is diminishing. 'There is an area for a more basic notebook without multimedia,' says Pauline King, UK portables product manager for Compaq. 'But you're then getting to a very low cost point and all the notebooks coming out now have multimedia features.'
THE PRICE IS RIGHT
Price is another issue. 'Users can afford multimedia notebooks and people are using them as desktop replacements,' says John Nolan, MD of specialist portable products distributor PPCP. 'They want to replicate what they are doing on their desktops exactly. You can buy a multimedia notebook for u1,700 and that's not much different to what you'd pay for a desktop multimedia system.'
Nolan says the use of multimedia for certain applications has become commonplace in many key industries such as pharmaceuticals and financial services which are starting to use the portable multimedia system as a sales tool.
While prices and margins have remained fairly healthy, the relentless roll towards more functionality at a lower price will mean that built-in audio features and the CD-Rom option no longer carry a premium. Vendors have to build the features to compete and differentiation has to be sought else where. But this is getting harder, even with multimedia options.
Mpeg has been used by some vendors - Panasonic did well because of this with the CF41 system. Other vendors have added their own options, most notably IBM with its built-in Mwave DSP technology and Toshiba's ZV port.
Zoomed Video is causing excitement in some notebook circles. The ZV port is an extension of the 32-bit PCMCIA cardbus specification and it enables an Mpeg decoder to take the strain off the processor and the system card by addressing the graphics chips directly. Toshiba says the performance improvement is massive. The firm will make the ZV available this month when it starts shipping the Tecra 710CDT and 720-CDT notebooks. By freeing-up the system bus, the interchange between video and non-video sections of presentations should be much smoother.
Other firms such as IBM, are going down the DSP route with video, but most are looking at ZV with an open mind. King says Compaq will be watching it closely, and Crawley thinks it is probably a good way of getting full-screen video without incurring the cost of hardware Mpeg. As far as resellers are concerned this argument hardly matters. If the result is the availability of full-speed, full-motion video playback on the notebook at a lower cost, then that is good news for dealers.
PPCP is seeing a great deal of interest in 'TV on the go' type applications for laptops. It supplies PCMCIA cards that enable still photographs or video footage to be captured and edited on the notebook.
Resellers are using these to create some imaginative solutions, says Nolan. For example, at this year's Euro 96 football tournament, notebook PCs equipped with PCMCIA video-capture cards will be used to home in on troublemakers captured on camera. Once captured, the editing functions will be used to blow up the face of the individual for police to identify.
The police can then relay the digital image via GSM connection, back to a central database function where operators will try to match the picture to those already on the database.
More conventional applications might include incorporation of corporate videos, but it is hard to see how video will be a requirement for most users. For that, a horizontal application such as video conferencing would have to take off and even that would not require full-screen, full motion.
In fact, it might not be desirable.
SENSE AND SENSITIVITY
Davies believes there is only a moderate demand for video. 'Some corporates do ask for it, but the truth is that there is not a massive market for it. Quite a lot of corporates specify it just to future-proof themselves.'
NEC is not planning to add Mpeg at the moment. 'Everything has a price and I think, at the moment, we have to sell it as an add-in,' says Davies.
Compaq is taking a similar line. 'I think it will be increasingly important and that's the reason we offer Mpeg 1 as an option today. It is interesting to a sector of our customer base, but it's not in the mainstream,' says King.
In what is clearly a very price-sensitive sector, added cost is a big influence on the vendors. King says: 'I feel that this is the way to go.
We don't want to add technology that some people will use but that other's won't , that adds to the cost.' Davies agrees. He says if it adds to the price and is not essential, it may put off some buyers, corporate buyers in particular. 'They are more interested in the price, performance and failure rates.'
ZV may give corporate buyers video playback at a lower cost, but for now video offers resellers some more room to manoeuvre in comparing the pros and cons of different systems and it will not, for the time being, do any harm to the add-on market. Any extra revenue and profits from notebook sales is usually derived from add-on sales of fax/modem, network and remote access cards. Multimedia products are not as popular, though. Nigel Parry, MD of Portable Add-ons, another specialist distributor, says that modem cards outsell network and multimedia cards by five to one.
Meanwhile, the vendors still have a problem in trying to make their systems stand out from the gathering crowd of multimedia notebooks on the market.
As well as video playback, over the next few months we are likely to see storage techniques becoming a key issue in the notebook market.
Digital video disk (DVD) waits in the wings as vendors continue to wrangle over four-speed, six-speed and eight-speed CD-Rom drives. DVD will increase storage capacity and make it possible to have much more video on a disk.
But power consumption of DVD drives may not appeal to notebook designers at first.
Vendors will need another special feature. In June Siemens Nixdorf will introduce a notebook with a detachable screen that can be used with ordinary overhead projectors. The computer screen sits face-down on the projector and the image is transferred onto the screen on the wall. And Panasonic is rumoured to be preparing a machine with rewritable technology built-in, possibly based on its PD CD-Rom and magneto-optical drive.
The market leaders are likely to stick to their familiar line - price/performance, quality, reliability, and brand. But in the end, the argument is the same.
Multimedia - whether modular or in-built - is already becoming a standard part of the notebook specification and part of the 'anything you can do, I can do better' argument between manufacturers.
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