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Tiny Screens May Be Big

25 Jun, 2004 By: Jessica Wolf

The current market for handheld video players is about as big as the approximately 3-inch screens the trendy gadgets feature.

Technophiles and early adopters have largely driven sales of the few products available in the United States, from manufacturers like Archos, RCA, HandHeld Entertainment and GoVideo. But the booming cell-phone market and the growing popularity of MP3 players are serving as a training ground, manufacturers said. Even Nintendo is tapping into its well-trained portable gamer audience with this summer's release of Game Boy Advance Video's $19.99 add-on feature that will allow users to watch animated programs like “Pok?mon” and “SpongeBob SquarePants.”

High prices, complicated downloading and digital rights management issues are keeping the pureplay handheld video hardware out of the mainstream market now, but that should change within the next five years, said Kevin Brangan, VP of product marketing, audio for GoVideo.

GoVideo offers the PVP4040 Pocket Cinema portable audio/video player, which has a 3.5-inch screen, an internal 128MB memory and plays MPEG-4 video and MP3 audio. It's still on the higher-end of pricing at $299.99.

“Personal video as we know it, it's where MP3 was really four years ago,” Brangan said. “It's going to come along, and it will be the next big thing. But it will take a while because of content issues.”

Accessibility to, and ease of, downloading content will be key, Brangan said. Software programs to convert content into MPG4, DivX or Flash files, which most players on the market use, will have to be easy to use and understand.

Content suppliers are still a little wary of the burgeoning technology, Brangan said. Making sure rights holders get paid for handheld content will likely be solved by subscription models, he added.

“The studios will come to realize the same thing the [record] labels did [with music downloads], which is, ‘Oh my gosh, there's a lot of money to be had,’ he said.

Price is another major adoption factor, Brangan said. Prices are still high for the handful of players on the market in the United States.

“When you want the masses to adopt something, it's got to be $79 to $199,” he said.

Pretty much alone in that price range is HandHeld Entertainment's $149 ZVUE personal video player (available only at zvue.com or Discovery Channel stores), which won the Consumer Electronics Association 2004 Innovations Award in the personal electronics category. The ZVUE player works with proprietary software Zflicks, which converts video files directly dragged from a PC through a USB cable or onto a memory card. In March, the company signed a licensing agreement with DivXNetworks Inc. to integrate DivX video decoder technology into the ZVUE for playback of DivX and MPEG-4 compatible files.

The Consumer Electronics Association (CEA) is keeping an eye on the handheld video market, said Sean Wargo, director of industry analysis, though there's not much to report yet when it comes to sales figures. “It's certainly very much too early to tell whether it will be a mainstream phenomenon or just a niche one,” he said. But our increasingly mobile society boosts its potential, he said. “I would expect it to start showing up in our reports in January.”

Right now, the big hitters in the tiny market are products that boast hard-disk drives like the Archos AV320 ($499.99) and the RCA Lyra RD2780 ($399.99), both of which contain a 20GB hard drive in their slim 1-inch by 5-inch size.

Hard-disk drives can play a big role in the future of the handheld market, offering content storage options that are increasingly attractive to users on the go, said Amy Dalphy manager of hard-disk drives for Toshiba.

“I think there's really hard evidence that America has begun to embrace mobility — it started in the notebook market,” Dalphy said.

The convergence of music and video playback ability in handheld hardware will further fuel adoption, she added.

Nearly all handheld video players also play MP3 files, so the market is wide open for those current consumers, though Apple, arguably the leader in MP3 players, has yet to unveil a video counterpart to its popular iPod. In a Reuters report earlier this month, Apple marketing exec Greg Jozswiak said Apple has no plans yet for a video iPod.

Meanwhile, Apple competitor Microsoft is readying for release in Europe later this year the Portable Media Center, a handheld player with 20GB-40GB of storage, the result of a partnership with Creative Technology. Sony already has two personal video players available in Japan — the HMP-A1, which has a 3.5-inch LCD display and a 20GB hard drive, and the slightly smaller VGF-AP1, which has a 2.2-inch screen.

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