CONSUMER MULTIMEDIA SEMICONDUCTORSAND APPLICATIONS WORLDWIDE 1996
TABLE OF CONTENTSPERSPECTIVES
9601

2/12/96

Digital Dominates the News at the 1996 Winter Consumer
Electronics Show

9602

5/27/96

Consumer Multimedia Chip Technologies: Ready for Prime
Time

9603

8/5/96

C-Cube: The Digital Video Specialist

9604

8/12/96

For Video Game Players, It's Time to "Go Big or Go Home"

9605

9/2/96

Set-Top Box Semiconductor Opportunity

9606

10/21/96

Media Processors Help Bridge the Gap between Computers
and Consumer Electronics

9607

10/28/96

SGS-Thomson: The Right Products, The Right Place, The
Right Time

9608

12/23/96

Nintendo Dehvers the Machine of the Year

MARKET TRENDS
9601

1/29/96

Consumer Electronics Semiconductor Apphcation Markets

9602

10/14/96

Consumer Electronics Semiconductor Apphcation Markets

9603

12/9/96

Consumer Electronics Semiconductor Apphcation Forecast:
Next-Generation Products Promise Blockbuster Markets

REPORTS
9601

1/29/96

New Video Game Hardware: Technology Playing at the
Next Level (Focus Report)

9602

7/8/96

DVD: The Hot New Digital Video Destination for
Semiconductors (Focus Report)

9601

8/5/96Competitive Trends: 1995 Consumer Electronics
Semiconductor Market (Competitive Trends)

Dataquest^ l E R T
251 River Oaks Parkway • San Jose • CA • 95134-1913 • Phone 408-468-8000 • Fax 408-954-1780

Digital Satellite Price War Boosts Chip Opportunity
The full-scale price w^ar that broke out this week among makers of digital direct broadcast satellite(DBS) set-top boxes (STBs) reflects a new competitive dynamic in the STB market that will growsales and result in increased demand for cost-effective application-specific standard products(ASSPs), demodulators, decoders, and other chips.
Thomson Consumer Electronics cut the cost of its Digital Satellite System (DSS) subscriber system
to $199, down from $499. Thomson achieved the price cut through a combination of a $100
discount and a $200 rebate. To qualify for the deal, consumers must subscribe to one year's worthof DBS television programming service from DirecTV at a minimum price of $360. Thomson's
move, which had been expected for several weeks, came in response to a price cut by EchoStar
Communications Corporation, which in early August reduced the cost of its STB equipment to$199, down from $600.
Thomson is the leading maker of digital STBs, with 47.3 percent of worldwide revenue in 1995.
The company sells its DSS STBs under brand names that include RCA and General Electric.
Since it began broadcasts in 1994, more than 1.7 million customers have signed u p for DirecTV, a
DBS television service that works with the Thomson DSS boxes. In contrast, EchoStar—which sells
both services and STBs —has signed about 115,000 subscribers since it began broadcasts in April.
Thus, Thomson's price cuts are expected to have much more far-reaching effects on the market
than EchoStar's. Thomson executives predict the move will significantly expand the market for
digital satellite at the expense of analog cable.

Dataquest Perspective
The digital DBS STB price declines are dramatic, but they are even more remarkable when viewed
in comparison with the analog STB market. The average price of an analog cable STB has been
stuck at $105 for the last 10 years. This is because of the tight control analog cable service
providers have had over the distribution of their equipment. Analog cable service providers rent
their STBs to consumers rather than sell them. When customers no longer needs an analog cablebox, they return it to the service provider, who then rents it to someone else, increasing the Life
span of that equipment and depressing sales of new STBs. Analog STBs tend to be proprietary to
the service provider, eliminating the possibility of consumers choosing which box they want touse.

August 30, 1996

©1996 Dataquest

MSAM-WW-DA-9602

Dataquest Alert

Consumer Multimedia Semiconductors and Applications Worldwide

What a difference standards make! In the DBS market, STB OEMs are building systems thatcomply w^ith the DSS standard, which is licensed out by DirecTV, or the Digital Video
Broadcasting (DVB) standard, an open specification published by a Europe-based group ofcompanies. The emergence of digital STB standards has allowed STB vendors for the first time tocompete on price and technology. Some digital STBs—including the Thomson-manufactured
boxes—now are sold in retail outlets, allowing customers to compare products from numerous
manufacturers and make choices based on price, features, and brand name.
Besides Thomson, manufacturers that have introduced DSS-compatible receivers or that plan toenter the market include Sony, Toshiba America Consumer Products Inc., Uniden America Corp.,
Hughes Network Systems, Sanyo Electric Co. Ltd., Samsung Electronics Co. Ltd., Daew^ooElectronics Co. Ltd., and Matsushita Consumer Electronics Co. Companies offering DVBcompatible systems include EchoStar (with the manufacturing done by Groupe Sagem and SCI
Systems Inc.), Tee-Com, and Pace Micro Technology.
The advent of standards combined with healthy competition has created a new dynamic in the
STB market that will help boost production of digital satellite STB sales to more than 20 million
units by the year 2001, u p from 2.8 million in 1995.
The round of price cuts indicates how far digital DBS providers are wiUing to go to attract new
subscribers. At a selling price of $199, Thomson would lose money on each box it sells. A
Dataquest teardown of a first-generation Thomson-manufactured DSS STB revealed that the
manufacturing cost was about $283.82 and the electronics cost alone was $242.93! Even thoughThomson's second-generation box, introduced earlier this year, achieved some cost reduction byusing more highly integrated silicon, the company would still lose money at a sales price of $199.
However, Thomson is able to offer consumers the $199 deal using a subsidy by DirecTV, which
provides programming for Thomson's STBs. To get the $199 deal, customers must subscribe to
DirecTV's Total Choice television service for one year at a cost of at least $360.
This indicates that the real money in the DBS business is made in selling the services and not theequipment. Thus, OEMs will be looking to reduce the cost of building their STBs in every way
possible to minimize losses. This rush to cut costs will lead equipment makers to use the cheapest,
most highly integrated silicon available. ASSP solutions like LSI Logic Corporation's Integra
chipset, which provides most required STB functions at a price of just $75 in high volume, will
become more attractive. As OEMs turn to ASSPs, they wiU eschew their present approach tobuilding set top boxes, which uses a combination of ASICs and general-purpose standard parts.
The Thomson price cut also is contributing to the trend of digital STBs becoming more of acommodity product. To cut costs, most OEMs will sacrifice differentiated features. However, inthe longer term, digital STBs may incorporate more value-added features, as other delivery
systems, such as digital cable and hybrid fiber coax, promote a higher degree of interactivity thanis possible w^ith DBS.
By Jonathan Cassell

August 30, 1996

©1996 Dataquest

MSAM-WW-DA-9602

9Dataquestj

T p J? IT

251 River Oaks Parkway • San Jose • CA • 95134-1913 • Phone 408-468-8000 • Fax 408-954-1780

Philips and Sony Start Licensing DVD Prematurely
Both Split from DVD Consortium before Group Finalizes Royalty
Structure
Frustrated with the lack of serious progress on finalizing the royalty structure for DVD, Philips
and Sony announced on August 2nd that that the two companies w^iU begin licensing its
patented technologies for DVD players and discs. In spite of impending self-imposed deadlines
to ship the first DVD players by the end of 1996, discussions within the DVD consortium havefailed to be conclusive, and Philips and Sony have decided to move forward in order to avoid
additional delays. Sony has authorized Philips to execute the licensing program on behalf ofthe two companies.
In late 1995, the rival DVD format camps led by Sony/Philips (MMCD) andToshiba/Matsushita (SD) decided to end their battle and form one DVD standard. Although
they continue to stress their ongoing support for the DVD format and consortium, this is aserious break from the unified approach which the DVD industry has pursued for the last eightmonths.
The DVD Consortium was formed after the unification of the standard with one of theobjectives of the Consortium being the pooling of patents to provide the industry with thebenefits of a one-stop-shop approach to licensing. However, one of the implicit objectives of theConsortium was to establish a reasonable total royalty for DVD. Why? Because the market
success of DVD could be seriously inhibited if the total licensing fees force the cost of theplayers above alternative technologies such as CD-ROM and video tape. By bringing aU patent
holders under one committee to hammer out a unified and hopefully reasonable licensing
structure ,all Consortium members hoped to create a win-win situation for all.
How^ever, essential to a unified structure is the fact that every party has to take less for thegreater good. In reality, not everyone wanted to take less and the Consortium has become
stalemated. Because the Consortium hasn't been able to agree on a tinified licensing structure,
there is serious jeopardy that none of the DVD vendors will make their projected end of 1996
delivery. So, rather than wait for the committee to settle on a licensing structure. Philips andSony have broken ranks and are licensing their patents on their own.
DVD shipments will still not get off the ground any faster unless other patent holders also
move forward on their own or the Consortium finally comes to agreement. Philips and Sony do
not own all of the patents needed to manufacture and market a DVD player and discs

August 6, 1996

©1996 Dataquest

MSAM-WW-DA-9601

Consumer Multimedia Semiconductors and Applications Worldwide

according to the existing standard. Any vendor looking to market DVD players will need toobtain licenses from Sony and Philips and from the other individual patent holders as well.
This would result in a departure from the one-stop-shopping objective of the DVD
Consortium.

Dataquest Perspective
The positive outcome of the Philips and Sony action is that it may end the DVD Consortium
stalemate and get all of the patent holders to finally agree on a tmified royalty package. The
scenario with the least negative implication for DVD would be that it becomes even more
expensive because of the free-for-all licensing structure and therefore take longer to be acceptedby the very price elastic consumer market. In the worst case, we may revert to the twostandard scenario that existed prior to December 1995. This scenario could develop as Philips
and Sony look to other nonstandard patent holders to complete the manufacturing patentpackage. While the latter seems less likely to develop because of Philips and Sony's statedobjective to continue to support the work of the DVD Consortium, it still remains a possibility
as the pressure mounts to deliver DVD product sooner rather than later.
There is a very strong probability that the Sony/Philips action will prevent the creation of a
unified standard for writable and rewritable DVD products. Work on developing standards forthe next generation of DVD products, which will allow write and erase capability, is in theearly stages. Tw^o competing camps have already formed in this arena based on the use ofmagneto-optical (MO) and phase change (PD) optical disc technology. Once again,
Toshiba/Matsushita is leading one camp (PD) while Sony/Philips is leading the other camp(MO). Based on the apparent frustrations that have developed over DVD and the inability toreach negotiated agreements on critical patent and royalty issues, both camps may decide totry the old VHS/Beta route and let the market decide the future winners in this competition.
It is Dataquest's view that an underlying objective of Philips and Sony is an attempt to control
the destiny of the royalty revenue stream of DVD in the same way the two companies
controlled the royalty revenue stream of CD technology. As publicly traded corporate giants inthe multimedia market, based in a large part on the success of CD Audio and CD-ROM
technology, the two can ill afford to take less revenue for DVD than for CD technology in themarket. This is especially important in the long term as DVD replaces CD technology. Bothcompanies have experienced very costly and highly embarrassing efforts to develop otherstandards such as MiniDisc, CD-i, and Digital Compact Cassette (DCC). It thus becomesmandatory for these two companies to ensure that they are revenue winners in the next
generation of audio and video media technology. How^ever, the inability of Philips and Sony toreach negotiated agreements with the other members of the DVD Consortium may result increating impediments to long-term growth and leave a smaller pie to split between the
different competitors over the next five to ten years.
By Bruce Ryon, Mary Bourdon, Dale Ford

August 6, 1996

©1996 Dataquest

DataQuest
A Gartner Group Company

4251 River Oaks Parkway, San Jose, CA 951 34-191 3(408) 468-8000
Fax (408) 954-1780

February 1996

Dear Dataquest Client,
By now, you should have received the 1996 Dataquest research program binders
for filing the newsletters and reports that will be sent to you throughout the year.
To let you know what documents you can expect to receive as part of yoursubscription, enclosed please find the 1996 datasheet for the research program towhich you subscribe. The back side of the datasheet lists the Dataquest
Perspectives, Market Trends reports. Market Statistics books, reports, andelectronic newsletters that are included in this year's research portfolio.
If you have any questions about the research schedule, please contact yourDataquest research analyst or client services representative.
Sincerely,

Jeffrey A. Byrne
Vice President
Worldwide Marketing"t-; i - J'f'ii>

December 1995
Dear Dataquest Client:
In 1996, Dataquest will celebrate its 25th year as tlie leading global supplier of market intelligence tothe IT vendor and financial commimities. I wotdd like to thank you, on behalf of all Dataquest
associates worldwide, for your support. We are proud to be your information partner by providing
the IT market insight and analysis you need to metke crucial business and planning decisions.
The enclosed binder is for filing and storing the pirinted market research newsletters and reports thatyou will receive on an ongoing basis throughout 1996 as part of your subscription to Dataquest. You
may notice that we've streamlined the binder tab ;and document filing structure this year. We hopethat this 5-tab scheme increases your efficiency in fUing and locating documents.
You probably know that in addition to paper-baseid delivery, Dataquest is also committed todelivering our market statistics and analysis elecb-onically. We expect that our electronic products,
known collectively as Dataquest on the Desktop, will play an increasing role in our ability to deHver
information to you in a timely, efficient way, For your information, our electronic tools include:••••

Dataquest on Demand—Our monthly CD-ROM containing a roUing 13 months of Dataquest's
printed documents
MarketViezv — A data analysis tool containing many of Dataquest's market statistics databases
Electronic NezvsTakes and Dataquest Alerts — Weekly/event-driven summary and analysis of
top IT news, published via e-mail or fax by most Dataquest research groups
Dataquest Interactive — Our Internet-based electronic delivery system that you are invited topreview at this URL: http://www.dataquest.com

One last note: an optional binder called Electronic News is available on request for clients who wish
to file their electronic newsletters and Dataquest Alerts. To order your copy, please fiU out the
FaxBack form found in the binder pocket and fax it back to us.
We look forward to working •with you in our continuing process to improve the content, quality, andtimeliness of our products and services. I encourage you to share with us your comments about our
pubHcations and electronic dehvery tools.
Sincerely,tJeffrey A. Byrne
Vice President, Worldwide Marketing•H.-d1 7*7i-i-i^fii#

CONSUMER MULTIMEDIASEMICONDUCTORS ANDAPPLICATIONS WORLDWIDE
Datacjuest's newest applications market program focuses on semiconductor opportunities
the multimedia and consumer electronics markets, with emphasis on interactive, video,
audio, and home convenience technologies.

The New
Generation ofConsumerElectronics

Market Coverage

^-H
MMSI^

i

Want more
information
about
Dataquest?
Place your request
by calling our
Fax-on-Dematui
system at
1-800-328-2954

Semiconductors are not
only driving thedevelopment of a newgeneration of consumer
electronics, they are alsochanging the w a yconsumers will purchasea n d access information andentertainment hardware
a n d services. Products andstrategies developed byconsumer electronics
manufacturers andsemiconductor suppliers
are being shaped bycompeting standards andtechnologies. In this very
dynamic environment,
manufacturers will need tob e keenly aware of shiftingThis program provides acomprehensive view of the
products, applications, andsemiconductor suppliers
for the consumer
electronics and homemultimedia markets.
Statistics include:• Electronic equipment
production estimates• Semiconductor
consunnption by
application market• Market share andcompetitive analysis ofmultimedia/consumer
IC manufacturers

Dataquest

market trends and rapidly
advancing technologies.
Dataquest has developed aprogram that focuses
specifically o nsemiconductor directions
in consumer electronics
and home multimedia
products.
Who Can Benefit from
This Program?
Semiconductor companies
will value the in-depth
coverage of emerging
markets for their products
in consumer electronics,
such as next-generation
video games, interactive
set-top boxes,• Consumer electronicsspecific IC forecasts
Application and Device
CoverageMarket a n d production
information for systems
and semiconductors
includes:• Set-top boxes(Cable/DBS)• Video g a m e controllers,
cable adapters, andcartridges• Digital Video/Versatile
Disc (DVD)• Digital cameras

inHDTV, and digital cameras.
This service provides coverageof these markets from asemiconductor perspective
and presents analysis of neweirchitectures and technologies,
competitive productinformation, and forecasts ofgrowth for semiconductors
employed in consumer andhome multimedia products.
Consumer electronic OEMs,passive component companies,
and design tool and test
equipment companies will allneed this information to laymarket plans, characterize
emerging markets, prioritize
investments, and reduce
decision risk.
• Televisions (HDTV)• VCRs• Camcorders• Personal portable stereos(boomboxes, MD, DCC)
• CD players• Stereo components• Multimedia PC(top-level data only)• Appliances• Video and graphics ASICs• Compression chips(e.g., MPEG)• Media engines• 2-DCCDs

W H A T

YOU

WILL

RECEIVEAS

A

CLIENT

CONSUMER MULTIMEDIA SEMICONDUCTORS AND APPLICATIONSWORLDWIDE
Perspectives

Dataquest Perspectives present analysis and commentary on key technologies,
companies, market opportunities, trends, and issues in the semiconductor market. A
minimum of six Perspectives will be published on an event-driven basis throughout
the year. Scheduled Perspectives for 1996 include:
Market and Product Analysis: Comprehensive newsletters presenting analysis andcommentary on new products or applications that will impact the market for
semiconductors in consumer/multimedia electronics. Potential topics include: reports
on major industry shows, interactive set-top boxes, HDTV, video game controllers,
compression technology, audio technology, and video and graphics chips.
Two Issues per Year
Market Analysis: Concise summary of significant events or announcements in thesemiconductor industry or consumer electronics markets.
Two Issues per Year

Vendor Analysis: These reports will provide a series of brief analyses covering topics
such as product offerings, financial results, organizational structures, and strategic
direction of key players in the industry.
Four Issues per Year

Market Trends

Consumer Applications Markets: Market size and forecasts for principal consumer
interactive and multimedia, video, audio, and appliance markets. This report provides
basic information about the semiconductor opportunity offered by peirticularapplications. Information provided includes system market size (in production terms)
in revenue, units, and average selling price; system market and product feature trends;
hardware architecture trends; semiconductor content and market forecasts; and alisting of key OEMs.
Available in the Third Quarter 1996

Market Statistics

Competitive Trends: Consumer Electronics Semiconductor Supplier Analysis -Examines the competitive landscape of the consumer electronics and home multimedia
semiconductor metrkets. Market share for companies supplying consumer electronicsspecific chips and supplier matrices are provided for nnajor product areas.
Available in the Third Quarter 1996

Consumer Semiconductor Consumption Forecast: Five-year forecasts for
consumer electronics-specific semiconductor consumption in approximately 15
categories and major subcategories of consumer electronics equipment. Forecasts for
multimedia eind interactive products are closely tied to electronic equipment productforecasts produced by Dataquest's Multimedia research group.
Available in the Fourth Quarter 1996

Reports

Digital Video/Versatile Disc Technology and Semiconductors: In-depth analysisof the competing standards, critical technologies, and innovative semiconductor
products shaping the emerging DVD market. The report will dehver a forwardlooking assessment of the DVD market and predict the semiconductor opportunity it
will drive. Information and analysis of the market will support tacticsd and strategicplanning needs.
Available in the First Quarter 1996

Electronic News

Dataquest Alerts: News and analysis, delivered by fax, for fast-breaking events.
Dataquest Alert bulletins are published throughout the year on an event-driven basis.
Event-driven

DataQuest
A Gartner Group Company
Corporate Headquarters
251 River Oaks Partway
San Jose, CA 95134-1913
United States
Plione: 1-408-468-8000
Fax
1-40&S54-1780
Fax-Bacic 1-S00-328-29S4 and press 4®1996 Dataquest

Boston Area
Nine Technology Drive
P.O. Box 5093
Westborough, MA 01581-5093
United States
Plione; 1-50M71-5555
Fax
1-508-871-6262

United Kingdom
Holmers Farm Way
High Wycomt}e
Buckinghamshire
HP12 4XH
United Kingdom
Phone: +441494422722
Fax+441494422742

Asia/Pacific
7/F China Undetwriteis Centre
88 Gloucester Road
Wan ChaiHong Kong
Phone: 85228246168
Fax
85228246138

Japan
Shinkavwa Sanko Building
eth Floor
1-3-17, Shinkawa
Chuo-ku, Tokyo 104
Japan
Phone: 81-3-5566^11
Fax
81-35566-0425

Dataquest is a registered trademark of the A.C. Nielsen Company
Program Code: MSAM-WW
MKTG 1/96 (JCG)

%

#

I T t

' - I

\y»,

1996 RESEARCH PROGRAMS
From semiconductors to systems, software to services, telecommunications to document
management, Dataquest's scope of expertise provides clients with a clear view of the relationships
among information technology segments - relationships that can have a profound impact onmaking strategic business decisions.
Computer
Systems andPeripherals

Computer Systems
CKent/Server Computing Worldwide
Computer and Client/Server Systems Europe
Servers Europe
UNIX and Open Systems Europe
Workstations
Advanced Desktop and Workstation
Computing Worldwide
Workstations Europe
Computer Storage
Removable Storage Worldwide
Optical Disk Drives Worldwide
Optical Disk Drives Europe
Rigid Disk Drives Worldwide• RAID Storage Systems Worldwide
Rigid Disk Drives Europe
Tape Drives Worldwide
Tape Drives Europe
Graphics
Graphics and Displays Worldwide

Personal Computing
Personal Computers Worldwide
Personal Computers Strategic Service Europe
Personal Computers Asia/Pacific
Mobile Computing Worldwide
PC Distribution Channels Worldwide
PC Distribution Channels Europe
Desktop PC Technology Directions Worldwide
Mobile PC Technology Directions Worldwide
Personal Computers Central and Eastern Europe
Quarterly Statistics
Advanced Desktop and Workstation Quarterly Statistics
WorldwideWorkstation Quarterly Statistics Europe
Server Quarterly Statistics l^orth America
Server Quarterly Statistics Europe
PC Quarterly Statistics United States
PC Quarterly Statistics Europe
PC Quarterly Statistics JapanPC Quarterly Statistics Asia/Pacific
PC Quarterly Statistics Worldwide by Region

Online,Multimedia,
and Software

Emerging Teciinologies
Multimedia Worldwide
Mvdtimedia Europe (Module)
Online Strategies Worldwide
Online Strategies Europe (Module)
Productivity/Development Tools
Client/Server Software Worldwide
Workgroup Computing Worldwide
Workgroup Computing Europe (Module)

Personal Computing Software Worldwide
Personal Computing Software Europe (Module)
Technical Applications
AEC and CIS Applications Worldwide
Electronic Design Automation (EDA) Worldwide
Mechanical CAD/CAM/CAE Worldwide
CAD/CAM/CAE/GIS Europe (Module)
CAD/CAM/CAE Asia/Pacific (Module)

Services

Customer Services
Customer ServiceTrends North America
Customer Services and Management Trends
EuropeProfessional Services
Professional Service Trends North America• Systems Integration and Applications
Development• Consulting and Education• Systems Management
Vertical Market Opportunities North America
Professional Services Europe• Systems Integration• Consulting and Education• Systems Management
Professional Services Vertical Market Opportunities
EuropeProfessional Service Trends Asia/Pacific
Sector Programs
System Services North America• Desktop Services• Notebook Services• Server Services
User Computing Services Europe
Network Integration and Support Services North America
Network Integration and Support Services Europe
Software Services North America
Strategic Service Partnering North America

Dataquest

1996

RESEARCH

PROGRAMS

Copiers
Printers Europe
Copiers North America
Colour Products Europe (Modtde)
Printer Quarterly Statistics Europe
Copiers Europe
Printer Distribution Channels Europe
Facsimile
Printers Asia/Pacific
Facsimile North America
Printer Quarterly Statistics Asia/PacificPrinters
Printers North America
Application Markets
Semiconductors Regional Markets
Semiconductor Application Markets Worldwide
Semiconductors Worldwide
Semiconductor Application Markets Europe
Semiconductors Europe
Semiconductor Application Markets Asia/Pacific
Semiconductors Japan
Commvmications Semiconductors & Applications WW
Semiconductors Asia/Pacific
Consumer Multimedia Semiconductors & Applications• China/Hong Kong
Worldwide• Taiwan
Semiconductor Directions in PCs & PC Multimedia WW• Korea
PC Teardown Analysis• Singapore
PC Watch Europe
Devices
Electronic Equipment Production Monitor Europe
ASICs Worldwide
Electronic Application Markets Europe —Automotive
ASIC Applications Europe
Electronic Application Markets Europe —Communications
Memories Worldwide
Electronic Application Markets Europe — Constuner
Memory Applications Europe
Electronic Application Markets Europe — EDP
Memory IC Quarterly Statistics Worldwide
Manufacturing
Embedded Microcomponents Worldwide
Semiconductor Equipnient, Manufacturing, & Materials
Microcomponent Applications Europe
Worldwide
DRAM Quarterly Supply/Demand Report
LCD Industry Worldwide
User Issues
Semiconductor Contract Manufacturing Worldwide
Semiconductor Supply and Prions Worldwide
Document
Management

Telecommunlcations

Networking• Premise Switching Systems North America
Voice Communications Europe
Networking Nort/i America• Local Area Networks North America• Voice Processing Europe• Wide Area Networks North America• Call Centres Europe• Modems North America• Telephones Europe
Networking Europe• PHX/KTS Systems Europe• Asynchronous Transfer Mode Europe
Public• ISDN EMrope
PubUc Network Eqmpment & Services North America• Modems Europe• Public Network Equipment North America• Local Area Networks Europe• Public Network Services North America• WANs Europe
Public Network Equipment & Services Europe
Quarterly Market Watch North America• Public Network Equipment Europe• Intelligent Hubs & Switches• Public Network Services Europe• Network Interface Oirds
Personal
Network Distribution Channels Europe
Cellular Telephony Worldwide
Voice
Personal Communications North America
Voice Communications North America
Personal Communications Europe• Voice Processing North America• Infrastructure and Services Europe• Computer-Integrated Telephony &• Terminals Europe
Automatic Call Distributors North America
Personal Commurucations Distribution Europe

CrossTechnology
Programs

Technology Insights for:Financial Services
Government Agencies
Publishing, Media, and Consulting Finns

Emerging IT
Markets

Central and Eastern Europe
Personal Computers
Telecommunications
Latin America
Personal Computers
Printers

Dataquest

Corporate Headquarters
251 River Oaks Parkway
San Jose, CA 95134-1913
United States
Phone: 1-408-468-8(XI0Fax:
1-408-954-1780
Fax-on-Demand: Dial 1-80O-32S-2954
and press 4 (Limited to North America)

A Gartner Group Company@1996 Dataquest Incorporated

IT Business Development for Financial Organizations
IS and Purchasing Organizations
IT Supporting Industries
Asia/Pacific
IT Market Insight Asia/Pacific
Personal Computers Asia/Pacific & Quarterly Statistics
Printers Asia/Pacific & Quarterly Statistics
Professional Service Trends Asia/Pacific• Country-level reports on Asia/Pacific IT markets

Boston Area
Nine Technology Drive
P.O Box 5093
Weslborough, MA 01581-5093
United States
Phone: 1-508-871-5555
Fax:
1-508-871-6262

United Kingdom
Holmers Fann Way
High V\/ycoml», Buckinghanshire
HP124XH
United Kingdom
Phone: •M41494 422 722
Fax;+441494422 742

TolcyoShii^kawa Sanko Buildii^
6th Floor
1-3-17, Shinkawa
Chuo-ku, Tokyo 104
Japan
Phone: 81-3-S566-0411
Fax
81-3-SS66-042S

Dataquest is a registered trademark of the A C Nielsen Company
Program Code: NONE-WW
MKTG 1/96 (PSB); ,• i ^ ' H .
•DATAQUEST 1996 CONFERENCES
Dataquest sponsors an on-going series of conferences and invitational events focusing on
trends and issues in information technology and IT services. These conferences are thepreeminent source of insight and analysis of global IT market dynamics.
North America

January 24
January 30
February 20
March 7
AprU 1-2
April 1 *May 6-7
May 13-14
June 26-27
July 1 *September 25-26'
October 24-25
December 1 *Capitalizing on the Wireless Phenomenon
Dataquest Predicts
Dataquest Predicts
Channel Trends Conference
ServiceTrends Conference
Mining the Internet
Personal Computer Conference
Copier Conference
Storage Track Conference
SEMICON/West
Multimedia
Semiconductors '96
Mining the Internet

San Jose, California
Boston, Massachusetts
San Jose, California
San Jose, California
Orlando, Florida
Boston, Massachusetts
San Jose, California
Boston, MassachusettsMonterey, California
San Francisco, California
San Jose, CaUfomia
Palm Desert, California
San Jose, California

EuropeJanuary 24

Munich, Germany
Frankfurt, Germany

September 10

Computer Storage
Semiconductors '96
Computer Storage

May 13-14

Semiconductors '96

Tokyo, JapanMay 22-23

Japan

Dataquest
Invitational
Computer
Conferences

London, England

September 10-12

Computers and Peripherals

Tokyo, Japan

December 6

Telecommunications

Tokyo, Japan

December 1 *December 1 *December 1 *December 1 *December 1 *December 1 *Asia/Pacific Series
Asia/Pacific Series
Asia/Pacific Series
Asia/Pacific Series
Asia/Pacific Series
Asia/Pacific Series

Tokyo, Japan
Seoul, Korea
Beijing, PRC
Shanghai, PRC
Xi'an, PRC
Guangzhou, PRC

March 5
April 10
April 24
September 24

Dataquest Storage Solutions Series •USA
Dataquest Storage Solutions Series -USA
Dataquest Storage Solutions Series •USA
Dataquest Storage Solutions Series USA

San Jose, California
Irvine, California
Nashua, New Hampshire
Newton, Massachusetts

April 1

Mediterranean Series
Mediterranean Series
Mediterranean Series
Mediterranean Series

Dubai, UAE
Athens, Greece
Tel Aviv, Israel
Istanbul, Turkey

May 21
October 30
November 6* Date tentative/may change

Dataquest

D A T A Q U E S T
Dataquest
Invitational
Computer
Conferences(continued)

Want more
information
about
Dataquest?
Place your request
by calling our
Tax-on-Demandsystem at
1-800-328-2954

1 9 9 6C O N F E R E N C E SJanuary 17

Dataquest Storage Solutions Series-Europe

Paris, France

January 23

Dataquest Storage Solutions Series-Europe

Munich, Germemy

January 30

Dataquest Storage Solutions Series-Europe

Milan, Italy

February 1

Dataquest Storage Solutions Series-Europe

Rome, Italy

June 10

Dataquest Storage Solutions Series-Europe

Budapest, Hungary

June 12

Dataquest Storage Solutions Series-Europe

Prague, Czech Republic

June 21

Dataquest Storage Solutions Series-Europe

St. Petersburg, Russia

June 25

Dataquest Storage Solutions Series-Europe

Moscow, Russia

Julyl

Dataquest Storage Solutions Series-Europe

Warsaw, Poland

September 1

Dataquest Storage Solutions Series-Europe

Amsterdam, Holland

September 5

Dataquest Storage Solutions Series-Europe

Stockholm, Sweden

September 11 Dataquest Storage Solutions Series-Europe
September 19 Dataquest Storage Solutions Series-Europe

Frankfurt, Germany

October 1 *Latin America Series

Caracas, Venezuela

October 1 *Latin America Series

Mexico City, Mexico

October 1 *Latin America Series

Sao Paulo, Brazil

October 1 *Latin America Series

Buenos Aires, Argentina

October 1 *Latin America SeriesSantiago, Chile

London, England

October 1 *Latin America Series

Bogota, Columbia

October 1 *Latin America Series

Lima, Peru

February 19

South Africa Series

Capetown, South Africa

February 22

South Africa Series

Johaimesburg, South Africa

April 11LINK Series- North America

Orlando, Florida

April 30

LINK Series • North America

Austin, Texas

May 1

LINK Series - North America

Philadelphia, Peruisylvania

May 9

LINK Series • North America

Charlotte, North Carolina

May 14LINKSeries• North America

Denver, Colorado

May 21LINK Series • North America

Portland, Oregon

November 1 * LINK Series • North America

Montreal, Quebec

November 1 * LINK Series- North America

Ottawa, Ontario

November 1 * LINK Series • North America

Calgary, Alberta

November 1 * LINK Series- North America

Vancouver, BC

November 1 * LINK Series • North America

Toronto, Ontario''Date tentative/may change

Dataquest
A Gartner Group Company

Corporate Headquarters
251 River Oaks Paf1<way
San Jose, CA 95134-1913
United States
Ptiore: 1-408-468-8000
Faic
1-408-954-1780
Fax-on-Demand: Dial 1-800-328-2954
and press 4 (Limited to Nortti America)@1996 Dataquest Incorporated

United Kingdom
Holmers Farm Way
HighV\^comtie.
BuckingtiamstiirB
HP124XH
United Kingdom
Ptione: +441494422722
Fax:•t441494 422 742

FranceImmeuble Defense Bergeres
345, avenue GeorgesCi^menceau
TSA 40002
92882 - Naiterre CTC Cedex 9
FrancePhone: +33141351300
Fax:+33141351313

Asia/Pacific
7/F China Undervwiters
Centre88 Gloucester Road
WaiChaiHong Kong
Phone: 85228246168
Fax:
852 28246138

IsraelPhone: +97 2 9 926 111
Fax:+97 29 925 791

Boston Area
Nine Technology Drive
P.O. Box 5093
WfesttxTOugh, MA 01581-5093
United States
Phone: 1-S08-871-5555
Fax:
1-508^71-5262

Gennany
Kronstadter Strasse 981677 Munchen
Deutschland
Phone: +49899309090
Fax:+49899303277

Japan
Shinkawa Ssiko Building
6th Floor
1-3-17, Shinkawa
Chuo-ku, Tokyo 104
Japan
Phone: 81-3-5566<l411
Fax:
81-3-55660425

South Africa
Phone: +27 11 468 1084/7
Fax+27114681241

Italy
Phone: +39 2 24 40 539
Fax:+3922624400

Spain
Phone: +34 1 57 13 804
Fax:+3415714266

Dataquest is a registered trademark of the A.C. Nielsen Company
Program Code: DQGE-WW
MKTG 1/96 (PSB)•

Dataquest Fax Back

9
To:

City:.

Leticia Martinez

Dataquest Incorporated

Co.:

San Jose, California

1780

Country:.

U.S.A.

_Total Pages 1 of 1

Here's How to Order Your Electronic News Binder
Dataquest provides a separate binder called
Electronic News to help you organize yourprintouts of the electronic newsletters andDataquest Alerts that will be sent to you by yourDataquest North America research programs
throughout the year.
Although not all clients will print out electronicnews bulletins or file faxes, the Electronic Newsbinder is available by request for those who do.

To order your Electronic News binder, just fillout the form, below and fax it back to us. We
will mail your binder to you immediately
Note: If you subscribe to more than one
Dataquest North America research program,then indicate how many binders you need in thespace provided below {plan on one binder per
research program), and we'll send them toyou in one shipment.

Thank you for helping us serve you better.
Customer Name
Title
Company
Street Address

City

State/ProvinceCountry

Postal/Zip CodeTelephone

Fax

Total number of Electronic News binders needed:

Dataquest
251 River Oaks Parkway, San Jose, CA 95134-1913

1
i

?

DataQuest

Perspective

C o n s u m e r M u l t i m e d i a Semiconductors and Applications
Worldwide

Vendor Analysis
Nintendo Delivers tlie IVIachine of the Year
Abstract: This document provides information on Nintendo's introduction of its nextgeneration platform, the Nintendo 64 (N64). A cost analysis of the Nintendo 64, along withsemiconductor content information, is presented. Also, an updated forecast for 32/64-bit
video game console production is provided. Finally, a competitive cost comparison of theSony PlayStation and Sega Saturn systems is presented.
By Dale Ford

All I Want for Christmas is a Nintendo 64

>

LU
D
N
Z
LLI
_J

n ><
O

o <
LU DC
_l <

LL ^

As the Christmas holidays approach, children and teenagers are euphoric
over the new Nintendo 64 system and the unprecedented level of game playthat it delivers. With requests for Nintendo's new system at the top of
millions of letters to Santa Claus, parents are panic-stricken as they findbarren retail store shelves and long waiting lists for deliveries. Some parents
have turned to placing want ads in the newspaper promising amazing sums
for the chance to buy the box that Time magazine selected as Machine of theYear for 1996. The Nintendo 64 won this distinction over other exciting
products such as digital satellite set-top boxes, WebTV systems, the latest
cellular telephone products, digital cameras, and even 200-MHz Pentium
PCs. With a seeming chorus of praises already ringing from video gameindustry publications to daily newspapers, Nintendo continues to fueldemand using joint promotions with Blockbuster Video, Nickelodeon, andKellog's and a "Change the System" ad campaign. However, the company's
greatest challenge now is to deliver systems and software to meet thedemand it has already created.

DataQuest
Program: Consumer Multimedia Semiconductors and Applications Worldwide
Product Code: MSAM-WW-DP-9608
Publication Date: December 23,1996
Filing: Perspective(For Cross-Tectinology, file in ttie Semiconductor Application Markets, Volume 2, binder)Consumer Multimedia Semiconductors and Applications Worldwide

The Nintendo 64 was first released in Japan on June 23, and within 10 weeks,over 1 million units had been sold. Early reports in the Japanese press
claimed that Japanese retailers were holding high levels of inventory becauseof poor consumer demand and a failure of the systems to sell through to themarket. Nintendo disputed these claims and met with the press to provide
information showing that over 90 percent of the systems had already beensold to consumers. Nintendo continues to be aggressive in addressing
persistent news reports in the Japanese press that the Nintendo 64 is notmeeting sales projections for Japan. The company insists that it is continuing
to meet its sales targets.
Within three days of the September 29 launch in North America, the initial
shipment of 350,000 units was completely sold out. Consumers bought n\orethan 50 percent of the software and systems before they reached the shelves.
Responding to the wave of consumer demand, Nintendo has announced that
it will increase shipments of the Nintendo 64 to the North American market
from 500,000 to 1.2 million by Christmas. However, the demand forNintendo 64 is somewhere between 1.5 million to 2 million units. In an
attempt to respond to the short supply, Nintendo has now established a rain
check policy, with major retailers guaranteeing a system by the end ofJanuary 1997. By early December, 900,000 units had reached the market.
Originally, Nintendo had projected that it would sell 5 million Nintendo 64
systems by the end of its fiscal year on March 31,1997. The most recent
comments now indicate that it expects to sell 6 million units by then.
The Name of the Game Is Fun (and Profit)
Perhaps the most in\portant challenge that Nintendo faces is delivering
software titles for the Nintendo 64. Nintendo has set very high quality
standards for the titles that it approves for the Nintendo 64, which has
limited the early availability of software. As a result, there were only twotitles available when the system was launched. Super Mario 64 and
PilotWings 64. The quality of the games is evidenced from numerous
reviews calling Super Mario 64 the best video game ever produced. Industry
analysts and press representatives who viewed a demonstiation of theNintendo 64 at the E3 show gave it a standing ovation. There are a total ofeight titles available for the Nintendo 64 during the 1996 holiday season. At
the Shoshirikai trade show in Japan in November, there were nearly 40 new
titles demonstrated for the Japanese market, and there should be at least 20
titles available for the North American market by the end of March 1997. The
bottom line from Nintendo's perspective is that the system must be fun andcreate a new surge of excitement among its players. The company feels that
if it accomplishes this, the profit w^ill follow.
The availability of software is critical because this is where the profit isderived. Nintendo competitors point to the hundreds of titles available for
the Sony PlayStation and Sega Saturn as evidence of a key advantage they
have over Nintendo. However, a high percentage of these titles are so similarthat it is hard to distinguish among them. This has created a situation where
many companies struggle to differentiate their product and earn a profit. The
challenge of developing titles for the Nintendo 64 and the business
MSAM-WW-DP-9608©1996 Dataquest

December 23,1996

Consumer Multimedia Semiconductors and Applications Worldwide

development plan implemented by Nintendo will create a barrier too highfor smaller companies and limit the number of developers supporting theplatform. By pushing the technology envelope, Nintendo is creating anenvironment in which only the fittest will survive.
The record-setting sales of the Nintendo 64 system provide a solid
foundation for Nintendo to turn its financial picture aroimd from thedeclining revenue it has earned since 1993, as shown in Table 1. The successof the Nintendo 64 system will provide additional fuel to the growth of theoverall 32/64-bit video game market forecast, shown in Table 2. Again, it
must be remembered that video game manufacturers actually lose money on
the sales of hardware. However, the hardware sales enable profit from thesale of software, and video game manufacturers have to work to create an
installed base of users for their software.
Table 1
Nintendo Financial Data, Year Ending March 31 (Millions of Dollars)
Revenue
Gross Margin (%)
Net Income

1992

1993

1994

1995

1996

5,300

5,987

4,581

3,917

3,337

16

14

11

10

17

822

836

497

393

565

2000

CAGR (%)
1995-2000

19,510 20,536

32.0

Note: Revenue in dollars is based on a rate of ¥106 = $1.
Source: Nintendo

Table 2
Worldwide 32/64-Bit Video Game Controller Production Forecast
1998

1999

1993

1994

1995

1996

Unit Shipments (K)

100

1,570

5,123

10,928

Factory Value ($)

328

320

335

270

235

205

197

187

-11.0

Factory Revenue ($M)

33

502

1,716

2,950

2,911

3,371

3,843

3,840

Semiconductor Content ($)

205

200

225

175

142

130

125

118

17.5
-12.1

Semiconductor TAM ($M)

21

314

1,153

1,912

1,759

2,137

2,439

2,423

16.0

1997

12,387 16,442

Source: Dataquest (December 1996)

Looking under the Hood
After the introduction of the Nintendo 64 in Japan, Dataquest acquired asystem and performed a detailed cost and production analysis. A summaryof the system cost and semiconductor content is presented in Table 3 and an
illustration of the system board layout is shown in Figure 1. The complete
analysis of the Nintendo 64 has been published in a Focus Report titled A
Teardown Analysis of the Nintendo 64 (TRDN-WW-FR-9610).
The Nintendo 64 represents an impressive accomplishment in system design
and the use of advanced chip technology. The entire system centers aroundfour niain chips, two processor chips based on Silicon Graphics technology
MSAM-WW-DP-9608©1996 Dataquest

December 23,1996

Consumer Multimedia Semiconductors and Applications Worldwide

and the MIPS architecture and two Rambus DRAMS. All four of these chips
are manufactured by NEC. The design of this system enables it to deliver thehighest level of performance ever in a video game console while achieving a
low production cost that minimizes the losses from selling it at $199.
Table 3
Nintendo 64 System Cost Summary and Semiconductor Content(Dollars)
1996

1997 Change(%)

Total System Production Cost

170.14161.99-4.8

Total Semiconductor Cost

107.37

98.93

-7.9

106.58

ICs

98.16

-7.9

31.05

26.39

-15:0

31.05

26.39

-15.0

Audio

9.15

8.69

-5.0

Standard Logic, Linear

2.72

2.60

MPU, Graphics/Video

63.67

60.49

-4.^;
-5.0

Active Discrete Components

0.78

0.77

-1.9

Passive Components

8.02

7.94

-1.1

Systems, Modules, and Batteries

21.10

21.10

0.Q

Printed Circuit Boards

2.60

2.55

Mechanical Components

19.00

18.94

M
M

Labor and Freight

12.05

12.53

MemoryDRAM/VRAM/SDRAM/RDRAM

4.0

Source: Dataquest (December 1996)

The performance delivered by this system keeps it one step ahead of cinothermajor competitor, the multimedia PC. PCs will have to await the next
generation of processors before they can start to compete with the gaming
experience delivered by the Nintendo 64. Even then, these systems will costover $2,000, compared to the $199 Nintendo system. Some of the basic
technical specifications for the Nintendo 64 are listed below:

MSAM-WW-DP-9608•

CPU: 64-bit RISC MIPS R4300i; clock speed 93.75 MHz•

Memory: Rambus DRAM 36Mb; maximum transmission speed of 4,500
Mbps•

Coprocessor: SP (sound and graphics processor) and DP (pixel drawing
processor) incorporated; clock speed of 62.5 MHz•

Resolution: 256 x 224 to 640 x 480 dots; flicker-free interlaced mode
support•Color: 32-bit RGBA pixel color frame buffer support; 21-bit color video
output•Graphics processing functions:•

Z buffer•

Antialiasing©1996 Dataquest

December 23,1996

Consumer Multimedia Semiconductors and Applications Worldwide•

Realistic texture mapping:•

Trilinear mip-map interpolation•

Environmental mapping•

Perspective correction

Memory expansion slot and storage unit cormector for 64DD cartridge
drive
Figure 1
Nintendo 64 System Card

Power
Switch

R4300i64-Bit IVIIPS
Processor

CentralElectronics
Subsystem\ J\ Ji , U

U
Power
Input

storage Unit Connector "(On Bottom)°)

B6B7a5.

Source: Dataquest (December 1996)

MSAM-WW-DP-9608©1996 Dataquest

December 23,1996

Consumer Multimedia Semiconductors and Applications Worldwide

The next planned enhancement to the Nintendo 64 system will be a magnetic
storage accessory called the 64DD. A prototype of the 64DD was displayed
at the Shoshinkai Japanese trade show in November. The drive will increase
the storage capacity of N64 cartridges by a factor of eight and also deliver
data to the processor at two to three times the speed of CD-equipped gamemachines. The drive will also allow players to customize their characters,
envirorunents, and game play mechanics.

The Rest of the Nintendo Portfolio
Although the Nintendo 64 is capturing all the headlines, it is important toremember that Nintendo is also pursuing other video game markets basedon other platforms.
•

Super NES: Nintendo has remained committed to the development ofmarkets based on this platform, and this 16-bit system continues todeliver profits. Nintendo is continuing to invest in the development of
titles for the Super NES.

•

Virtual Boy: This 32-bit platform was introduced to the market during
1995. It provides a visually immersive, three-dimensional gaming
environment using a self-contained display that resembles a large pair ofgoggles. Even though Nintendo reduced the price from the original $180,
system shipments have been below Nintendo's expectations. New titles
were introduced for the Virtual Boy in 1996 in an effort to stimulate themarket.

•Game Boy: Since its introduction in 1989, over 48 million units have beensold worldwide. Currently, there are over 450 titles available for theGame Boy. Nintendo introduced a new product called the Game Boy
Pocket during 1996 that offers very attractive enhancements:•

The Game Boy Pocket is 30 percent smaller and about half the weightof the original Game Boy.

•

A new LCD display offers sharper images and improved contrast,
which allow game play in the glare of sur\light, and improved
viewing angles.

The Competition
The departure of Atari and 3DO has narrowed the video game console
industry to three principal players: Sega, Sony, and Nintendo. In addition tothis trio, the mtdtimedia PC has become a very popular gaming platformcompeting with the video game console segment. Based on the cost analysisof the Sega Saturn, Sony PlayStation, and Nintendo 64 shown in Table 4,
Nintendo holds a significant advantage in system production costs, with anestimated cost of $162 for 1997. The production costs for the SonyPlayStation are $50 higher, and the Sega Saturn costs almost $90 more thanthe Nintendo 64 to produce. This difference in production costs allowed
Nintendo to easily match the $199 retail prices of the PlayStation and Saturnand eliminate cost as a factor in a customer's purchase decision. It appears
MSAM-WW-DP-9608©1996 Dataquest

December 23,1996

Consumer Multimedia Semiconductors and Applications Worldwide

that Nintendo plans to compete in the market based on system performance
rather than continue the price war that Sony and Sega started at the E3 show.
Based on the cost advantage Nintendo holds in this area, it is hard to
imagine Sega or Sony engaging in another price war in the near future.
Table 4
Total Production Cost Summary for 32/64-Bit Video Came Consoles(Dollars)
1995

1996

1997

Total Semiconductor Cost

261.61199.92121.00

Passive Components

13.66

13.29

12.92

Systems, Modules, and Batteries

76.46

39.32

38.14

Printed Circuit Boards

23.00

22.54

22.09

Mechanical Components

16.46

16.48

16.51

Labor and Freight

36.81

38.04

39.32

Total Cost

428.01

329.60249.97

Total Semiconductor Cost

196.45166.19118.65

Passive Components

18.12

17.70

17.29

Sega Saturn

Sony PlayStation

Systems, Modules, and Batteries

27.04

26.52

26.00

Printed Circuit Boards

12.50

12.25

12.01

Mechanical Components

11.73

11.80

11.87

Labor and Freight

23.10

23.78

24.49

Total Cost

288.95258.24210.30-107.37

98.93

Passive Components

-

8.02

7.94

Systems, Modules, and Batteries

-

21.10

21.10

Printed Circuit Boards

-

2.60

2.55

Mechanical Components

-

19.00

18.94

Labor and Freight

-

12.05

12.53

Total Cost-

170.14161.99Nintendo 64
Total Semiconductor Cost

Source: Dataquest (December 1996)

Sega and Sony have both responded to the Nintendo 64 introduction withrenewed sales campaigns for their own machines. At the end of November,
Sega began a promotion in which it bundles three free titles and a coupon for$15 off any two additional titles with the purchase of a Sega Saturn. This
promotion will run through December 31,1996. Sega claims that by
September 1996, sales of the Sega Saturn had reached 5.75 million
cumulative units. The company is targeting 7.75 million cumulative unit
shipments worldwide by the end of March 1997. Sony claims that it had
shipped a total of 9 million PlayStations by October 31,1996. Sony has also
claimed that demand is exceeding supply for the PlayStation and announced
MSAM-WW-DP-9608©1996 Dataquest

December 23,1996

Consumer Multimedia Semiconductors and Applications Worldwide

plans to increase production to 1 million units per month in November andDecember.

Dataquest Perspective
Nintendo has hit a grand slam with the Nintendo 64 and delivered a newsurge of energy to the overall video game market. At one point, it appearedthat the multimedia PC might spell the demise of the video game console
industry. Not only has the Nintendo 64 leapfrogged its competitors, it has
demonstrated the awesome potential that still exists to deliver an incredible
gaming experience in a box that costs less than $200. Future possibilities forthe video game console are brighter than ever, but the multimedia PC willcontinue to place pressure on this industry to stay one step ahead. Of course,
at the heart of all of this lies advanced semiconductor technology from
Silicon Graphics and Rambus, and they will reap the rewards for theircontribution. If Nintendo can successfully ride the tidal wave it has created,sales of the Nintendo 64 could surpass both Sega and Sony by Christmas
1997.

For More Information...

Dale Ford, Senior Industry Analyst
Internet address
Via fax

Dataquest
A Gartner Group Company(408) 468-8311
dford@dataquest.com(408)954-1780

The content of this report represents our interpretation and analysis of information generally available to the
public or released by responsible individuals in the subject companies, but is not guaranteed as to accuracy orcompleteness. It does not contain material provided to us in confidence by our clients. Reproduction or
disclosure in whole or in part to other parties shall be made upon the written and express consent of Dataquest.
©1996 Dataquest—Reproduction Prohibited
Dataquest is a registered trademark of A.C. Nielsen Company

Perspective

Consumer M u l t i m e d i a Semiconductors and Applications
Worldwide

Vendor Analysis
Nintendo Delivers tlie IVIacliine of tlie Year
Abstract: This document provides information on Nintendo's introduction of its nextgeneration platform, the Nintendo 64 (N64). A cost analysis of the Nintendo 64, along withsemiconductor content information, is presented. Also, an updated forecast for 32/64-bit
video game console production is provided. Finally, a competitive cost comparison of theSony PlayStation and Sega Saturn systems is presented.
By Dale Ford

All I Want for Christmas Is a Nintendo 64

<

-J

LU
*—^
WBBJ

N
Z
UJ

>• -J

<

n
O ><

O
LU DC
^

<

As the Christmas holidays approach, children and teenagers are euphoric
over the new Nintendo 64 system and the unprecedented level of game playthat it delivers. With requests for Nintendo's new system at the top of
millions of letters to Santa Claus, parents are panic-stricken as they findbarren retail store shelves and long waiting lists for deliveries. Some parents
have turned to placing want ads in the newspaper promising amazing sums
for the chance to buy the box that Time magazine selected as Machine of theYear for 1996. The Nintendo 64 won this distinction over other exciting
products such as digital satellite set-top boxes, WebTV systems, the latest
cellular telephone products, digital cameras, and even 200-MHz Pentium
PCs. With a seeming chorus of praises already ringing from video gameindustry publications to daily newspapers, Nintendo continues to fueldemand using joint promotions with Blockbuster Video, Nickelodeon, andKellog's and a "Change the System" ad campaign. However, the company's
greatest challenge now is to deliver systems and software to meet thedemand it has already created.

DataQuest
Program: Consumer Multimedia Semiconductors and Applications Worldwide
Product Code: MSAM-WW-DP-9608
Publication Date: December 23,1996
Filing: Perspective(For Cross-Tectinology, file in the Semiconductor Application IVIarkets, Volume 2, binder)Consumer Multimedia Semiconductors and Applications Worldwide

The Nintendo 64 was first released in Japan on June 23, and within 10 weeks,over 1 million units had been sold. Early reports in the Japanese press
claimed that Japanese retailers were holding high levels of inventory becauseof poor consumer demand and a failure of the systems to sell through to themarket. Nintendo disputed these claims and met with the press to provide
information showing that over 90 percent of the systems had already beensold to consumers. Nintendo continues to be aggressive in addressing
persistent news reports in the Japanese press that the Nintendo 64 is notmeeting sales projections for Japan. The company insists that it is continuing
to meet its sales targets.
Within three days of the September 29 latmch in North America, the initial
shipment of 350,000 units was completely sold out. Consumers bought morethan 50 percent of the software and systems before they reached the shelves.
Responding to the wave of consumer demand, Nintendo has announced that
it will increase shipments of the Nintendo 64 to the North American market
from 500,000 to 1.2 million by Christmas. However, the demand forNintendo 64 is somewhere between 1.5 million to 2 million units. In an
attempt to respond to the short supply, Nintendo has now established a rain
check policy, with major retailers guaranteeing a system by the end ofJanuary 1997. By early December, 900,000 units had reached the market.
Originally, Nintendo had projected that it would sell 5 million Nintendo 64
systems by the end of its fiscal year on March 31,1997. The most recent
comments now indicate that it expects to sell 6 million units by then.
The Name of the Game Is Fun (and Profit)
Perhaps the most important challenge that Nintendo faces is delivering
software titles for the Nintendo 64. Nintendo has set very high quality
standards for the titles that it approves for the Nintendo 64, which has
limited the early availability of software. As a result, there were only twotitles available when the system was launched. Super Mario 64 and
PilotWings 64. The quality of the games is evidenced from numerous
reviews calling Super Mario 64 the best video game ever produced. Industry
analysts and press representatives who viewed a demonstration of theNintendo 64 at the E3 show gave it a standing ovation. There are a total ofeight titles available for the Nintendo 64 during the 1996 holiday season. At
the Shoshinkai trade show in Japan in November, there were nearly 40 new
titles demonstrated for the Japanese market, and there should be at least 20
titles available for the North American market by the end of March 1997. The
bottom line from Nintendo's perspective is that the system must be fun andcreate a new surge of excitement among its players. The company feels that
if it accomplishes this, the profit will follow.
The availability of software is critical because this is where the profit isderived. Nintendo competitors point to the hundreds of titles available for
the Sony PlayStation and Sega Saturn as evidence of a key advantage they
have over Nintendo. However, a high percentage of these titles are so similarthat it is hard to distinguish among them. This has created a situation where
many companies struggle to differentiate their product and earn a profit. The
challenge of developing titles for the Nintendo 64 and the business
MSAIVI-WW-DP-9608©1996 Dataquest

December 23,1996

Consumer Multimedia Semiconductors and Applications Worldwide

development plan implemented by Nintendo will create a barrier too highfor smaller companies and limit the number of developers supporting theplatform. By pushing the technology envelope, Nintendo is creating anenvironment in which only the fittest will survive.
The record-setting sales of the Nintendo 64 system provide a solid
foundation for Nintendo to turn its financial picture arotmd from thedeclining revenue it has earned since 1993, as shown in Table 1. The successof the Nintendo 64 system will provide additional fuel to the growth of theoverall 32/64-bit video game market forecast, shown in Table 2. Again, it
must be remembered that video game manufacturers actually lose money on
the sales of hardware. However, the hardware sales enable profit from thesale of software, and video game manufacturers have to work to create an
installed base of users for their software.
Table 1
Nintendo Financial Data, Year Ending March 31 (Millions of Dollars)
Revenue
Gross Margin (%)
Net Income

1992

1993

1994

199S

1996

5,300

5,987

4,581

3,917

3,337

16

14

11

10

17

822

836

497

393

565

2000

CAGR (%)
1995-2000

19,510 20,536

32,0

Note: Revenue in dollars Is based on a rate of ¥106 = $1.
Source: Nintendo

Table 2
Worldwide 32/64-Bit Video Game Controller Production Forecast
1993

1994

1995

1996

1997

1998

Unit Shipments (K)

100

1,570

5,123

10,92812,387

16,442

Factory Value ($)

328

320

335

270

235

205

197

187

-11.0

Factory Revenue ($M)

33

502

1,716

2,950

2,911

3,371

3,843

3,840

17.5

Semiconductor Content ($)

205

200

225

175

142

130

125

118

-12.1

Semiconductor TAM ($M)

21

314

1,153

1,912

1,759

2,137

2,439

2,423

16.0

1999

Source: Dataquest (December 1996)

Looking under the Hood
After the introduction of the Nintendo 64 in Japan, Dataquest acquired asystem and performed a detailed cost and production analysis. A summaryof the system cost and semiconductor content is presented in Table 3 and an
illustration of the system board layout is shown in Figure 1. The complete
analysis of the Nintendo 64 has been published in a Focus Report titled A
Teardown Analysis of the Nintendo 64 (TRDN-WW-FR-9610).
The Nintendo 64 represents an impressive accomplishment in system design
and the use of advanced chip technology. The entire system centers aroundfour main chips, two processor chips based on Silicon Graphics technology
MSAM-WW-DP-9608©1996 Dataquest

December 23,1996

Consumer Multimedia Semiconductors and Applications Worldwide

and the MIPS architecture and two Rambus DRAMS. All four of these chips
are manufactured by NEC. The design of this system enables it to deliver thehighest level of performance ever in a video game console while achieving a
low production cost that minimizes the losses from selling it at $199.
Table 3
Nintendo 64 System Cost Summary and Semiconductor Content(Dollars)
1996

1997 Change(%}

Total System Production Cost

170.14161.99^.8

Total Semiconductor Cost

107.37

98.93

-7.9

106.58

98.16

-7.9

31.05

26.39

-15.0

31.05

26.39

-15.0

Audio

9.15

8.69

-5.0

Standard Logic, Linear

2.72

2.60

-4.3

MPU, Graphics/Video

63.67

60.49

-5.0

Active Discrete Components

0.78

0.77

-1.9

ICs
MemoryDRAM/VRAM/SDRAM/RDRAM

Passive Components

8.02

7.94

-1.1

Systems, Modules, and Batteries

21.10

21.10

0.0

Printed Circuit Boards

2.60

2.55

Mechanical Components

19.00

18.94

-2.0
-0.3

Labor and Freight

12.05

12.53

4.0

Source: Dataquest (December 1996)

The performance delivered by this system keeps it one step ahead of anothermajor competitor, the multimedia PC. PCs will have to await the next
generation of processors before they can start to compete with the gaming
experience delivered by the Nintendo 64. Even then, these systems will costover $2,000, compared to the $199 Nintendo system. Some of the basic
technical specifications for the Nintendo 64 are listed below:

MSAM-WW-DP-9608•

CPU: 64-bit RISC MIPS R4300i; clock speed 93.75 MHz•

Memory: Rambus DRAM 36Mb; maximum transmission speed of 4,500
Mbps•

Coprocessor: SP (sound and graphics processor) and DP (pixel drawing
processor) incorporated; clock speed of 62.5 MHz•

Resolution: 256 x 224 to 640 x 480 dots; flicker-free interlaced mode
support•Color: 32-bit RGBA pixel color frame buffer support; 21-bit color video
output•Graphics processing functions:•

Z buffer•

Antialiasing©1996 Dataquest

December 23,1996

Consumer Multimedia Semiconductors and Applications Worldwide•

Realistic texture mapping:•

Trilinear mip-map interpolation•

Environmental mapping•

Perspective correction

Memory expansion slot and storage unit connector for 64DD cartridge
drive
Figure 1
Nintendo 64 System Card

sea7q5

Source: Dataquest (December 1996)

MSAM-WW-DP-9608©1996 Dataquest

December 23,1996

Consumer Multimedia Semiconductors and Applications Worldwide

The next planned enhancement to the Nintendo 64 system will be a magnetic
storage accessory called the 64DD. A prototype of the 64DD was displayed
at the Shoshinkai Japanese trade show in November. The drive will increase
the storage capacity of N64 cartridges by a factor of eight and also deliver
data to the processor at two to three times the speed of CD-equipped gamemachines. The drive will also allow players to customize their characters,
environments, and game play mechanics.

The Rest of the Nintendo Portfolio
Although the Nintendo 64 is capturing all the headlines, it is important toremember that Nintendo is also pursuing other video game markets basedon other platforms.
•

Super NES: Nintendo has remained committed to the development of
nrarkets based on this platform, and this 16-bit system continues todeliver profits. Nintendo is continuing to invest in the development of
titles for the Super NES.

•

Virtual Boy: This 32-bit platform was introduced to the market during
1995. It provides a visually immersive, three-dimensional gaming
environment using a self-contained display that resembles a large pair ofgoggles. Even though Nintendo reduced the price from the original $180,
system shipments have been below Nintendo's expectations. New titles
were introduced for the Virtual Boy in 1996 in an effort to stimulate themarket.

•Game Boy: Since its introduction in 1989, over 48 million units have beensold worldwide. Currently, there are over 450 tities available for theGame Boy. Nintendo introduced a new product called the Game Boy
Pocket during 1996 that offers very attractive er\hancements:•

The Game Boy Pocket is 30 percent smaller and about half the weightof the original Game Boy.

•

A new LCD display offers sharper images and improved contrast,
which allow game play in the glare of sunlight, and improved
viewing angles.

The Competition
The departure of Atari and 3DO has narrowed the video game console
industry to three principal players: Sega, Sony, and Nintendo. In addition tothis trio, the multimedia PC has become a very popular gaming platforni
competing with the video game console segnient. Based on the cost analysisof the Sega Saturn, Sony PlayStation, and Nintendo 64 shown in Table 4,
Nintendo holds a significant advantage in system production costs, with anestimated cost of $162 for 1997. The production costs for the SonyPlayStation are $50 higher, and the Sega Saturn costs almost $90 more thanthe Nintendo 64 to produce. This difference in production costs allowed
Nintendo to easily match the $199 retail prices of the PlayStation and Saturnand eliminate cost as a factor in a customer's purchase decision. It appears
MSAM-WW-DP-9608©1996 Dataquest

December 23,1996

Consumer Multimedia Semiconductors and Applications Worldwide

that Nintendo plans to compete in the market based on system performance
rather than continue the price war that Sony and Sega started at the E3 show.
Based on the cost advantage Nintendo holds in this area, it is hard to
imagine Sega or Sony engaging in another price war in the near future.
Table 4
Total Production Cost Summary for 32/64-Bit Video Game Consoles(Dollars)
1995

1996

1997

Total Semiconductor Cost

261.61199.92121.00

Passive Components

13.66

13.29

12.92

Systems, Modules, and Batteries

76.46

39.32

38.14

Printed Circuit Boards

23.00

22.54

22.09

Mechanical Components

16.46

16.48

16.51

Labor and Freight

36.81

38.04

39.32

Total Cost

428.01

329.60249.97

Total Semiconductor Cost

196.45166.19118.65

Passive Components

Sega Saturn

Sony PlayStation
18.12

17.70

17.29

Systems, Modules, and Batteries

27.04

26.52

26.00

Printed Circuit Boards

12.50

12.25

12.01

Mechanical Components

11.73

11.80

11.87

Labor and Freight

23.10

23.78

24.49

Total Cost

288.95258.24210.30Total Semiconductor Cost-

107.37

98.93

Passive Components

-.

8.02

7.94

Systems, Modules, and Batteries

-

21.10

21.10

Printed Circuit Boards

-

2.60

2.55

Mechanical Components

-

19.00

18.94

Labor and Freight

.-

12.05

12.53

Total Cost-.

170.14161.99Nintendo 64

Source: Dataquest (December 1996)

Sega and Sony have both responded to the Nintendo 64 introduction withrenewed sales campaigns for their own machines. At the end of November,
Sega began a promotion in which it bundles three free titles and a coupon for$15 off any two additional titles with the purchase of a Sega Saturn. This
promotion will run through December 31,1996. Sega claims that by
September 1996, sales of the Sega Saturn had reached 5.75 million
cumulative units. The company is targeting 7.75 million cumulative unit
shipments worldwide by the end of March 1997. Sony claims that it had
shipped a total of 9 million Pla5rStations by October 31,1996. Sony has also
claimed that demand is exceeding supply for the PlayStation and announced
MSAM-WW-DP-9608©1996 Dataquest

December 23,1996

Consumer Multimedia Semiconductors and Applications Worldwide

plans to increase production to 1 million units per month in November andDecember.

Dataquest Perspective
Nintendo has hit a grand slam with the Nintendo 64 and delivered a newsurge of energy to the overall video game market. At one point, it appearedthat the multimedia PC might spell the demise of the video game console
industry. Not orvly has the Nintendo 64 leapfrogged its competitors, it has
demonstrated the awesome potential that still exists to deliver an incredible
gaming experience in a box that costs less than $200. Future possibilities forthe video game console are brighter than ever, but the multimedia PC willcontinue to place pressure on this industry to stay one step ahead. Of course,
at the heart of all of this lies advanced semiconductor technology from
Silicon Graphics and Rambus, and they will reap the rewards for theircontribution. If Nintendo can successfully ride the tidal wave it has created,sales of the Nintendo 64 could surpass both Sega and Sony by Christmas
1997.

For More Information...

Dale Ford, Senior Indusb-y Analyst
Internet address
Via fax

OataQuest
A Gartner Group Company(408) 468-8311
dford@dataquest.com(408)954-1780

The content of this report represents our interpretation and einalysis of information generally available to the
public or released by responsible individuals in the subject companies, but is not guaranteed as to accuracy orcompleteness. It does not contain material provided to us in confidence by our clients. Reproduction or
disclosure in whole or in part to other parties shall be made upon the written and express consent of Dataquest.
©1996 Dataquest—Reproduction Prohibited
Dataquest is a registered trademark of A.C. Nielsen Company

Perspective

C o n s u m e r M u l t i m e d i a Semiconductors and Applications
Worldwide

Vendor Analysis
Nintendo Delivers the Macliine of tiie Year
Abstract: TTM'S document provides information on Nintendo's introduction of its nextgeneration platform, the Nintendo 64 (N64). A cost analysis of the Nintendo 64, along withsemiconductor content information, is presented. Also, an updated forecast for 32/64-bit
video game console production is provided. Finally, a competitive cost comparison of theSony PlayStation and Sega Saturn systems is presented.
By Dale Ford

All I Want for Christmas Is a Nintendo 64

3
Hi

D
N
Z
LU

>-

»J

n
O

<
>

<
o
LD cc

As the Christmas holidays approach, children and teenagers are euphoric
over the new Nintendo 64 system and the unprecedented level of game playthat it delivers. With requests for Nintendo's new system at the top of
millions of letters to Santa Claus, parents are panic-stricken as they findbarren retail store shelves and long waiting lists for deliveries. Some parents
have turned to placing want ads in the newspaper promising amazing sums
for the chance to buy the box that Time magazine selected as Machine of theYear for 1996. The Nintendo 64 won this distinction over other exciting
products such as digital satellite set-top boxes, WebTV systems, the latest
cellular telephone products, digital cameras, and even 200-MHz Pentium
PCs. With a seeming chorus of praises already ringing from video gameindustry publications to daily newspapers, Nintendo continues to fueldemand using joint promotions with Blockbuster Video, Nickelodeon, andKellog's and a "Change the System" ad campaign. However, the company's
greatest challenge now is to deliver systems and software to meet thedemand it has already created.

DataQuest
Program: Consumer Multimedia Semiconductors and Applications Worldwide
Product Code: MSAM-WW-DP-9608
Publication Date: December 23,1996
Filing: Perspective(For Cross-Tectinoiogy, file in tiie Semiconductor Application Marl<ets, Volume 2, binder)Consumer Multimedia Semiconductors and Applications Worldwide

The Nintendo 64 was first released in Japan on June 23, and within 10 weeks,over 1 million units had been sold. Early reports in the Japanese press
claimed that Japanese retailers were holding high levels of inventory becauseof poor consumer demand and a failure of the systems to sell through to themarket. Nintendo disputed these claims and met with the press to provide
information showing that over 90 percent of the systems had already beensold to consumers. Nintendo continues to be aggressive in addressing
persistent news reports in the Japanese press that the Nintendo 64 is notmeeting sales projections for Japan. The company insists that it is continuing
to meet its sales targets.
Within three days of the September 29 launch in North America, the initial
shipment of 350,000 units was completely sold out. Consumers bought morethan 50 percent of the software and systems before they reached the shelves.
Responding to the wave of consumer demand, Nintendo has aruiounced that
it will increase shipments of the Nintendo 64 to the North American market
from 500,000 to 1.2 million by Christmas. However, the demand forNintendo 64 is somewhere between 1.5 million to 2 million units. In an
attempt to respond to the short supply, Nintendo has now established a rain
check policy, with major retailers guaranteeing a system by the end ofJanuary 1997. By early December, 900,000 units had reached the market.
Originally, Nintendo had projected that it would sell 5 million Nintendo 64
systems by the end of its fiscal year on March 31,1997. The most recent
comments now indicate that it expects to sell 6 million units by then.

The Name of the Game Is Fun (and Profit)
Perhaps the most important challenge that Nintendo faces is delivering
software titles for the Nintendo 64. Nintendo has set very high quality
standards for the titles that it approves for the Nintendo 64, which has
limited the early availability of software. As a result, there were only twotitles available when the system was latmched. Super Mario 64 and
PilotWings 64. The quality of the games is evidenced from numerous
reviews calling Super Mario 64 the best video game ever produced. Industry
analysts and press representatives who viewed a demonstiation of theNintendo 64 at the E3 show gave it a standing ovation. There are a total ofeight titles available for the Nintendo 64 during the 1996 holiday season. At
the Shoshinkai trade show in Japan in November, there were nearly 40 new
titles demonstrated for the Japanese market, and there should be at least 20
tities available for the North American market by the end of March 1997. The
bottom line from Nintendo's perspective is that the system niust be fun andcreate a new surge of excitement among its players. The company feels that
if it accomplishes this, the profit will follow.
The availability of software is critical because this is where the profit isderived. Nintendo competitors point to the hundreds of titles available for
the Sony PlayStation and Sega Saturn as evidence of a key advantage they
have over Nintendo. However, a high percentage of these titles are so similarthat it is hard to distinguish among them. This has created a situation where
many companies struggle to differentiate their product and earn a profit. The
challenge of developing titles for the Nintendo 64 and the business
MSAIVl-WW-DP-geOS©iggeOataquest

December 23,1996

Consumer Multimedia Semiconductors and Applications Worldwide

development plan implemented by Nintendo will create a barrier too highfor smaller companies and limit the number of developers supporting theplatform. By pushing the technology envelope, Nintendo is creating anenvironment in which ordy the fittest will survive.
The record-setting sales of the Nintendo 64 system provide a solid
foundation for Nintendo to turn its financial picture around from thedeclining revenue it has earned since 1993, as shown in Table 1. The successof the Nintendo 64 system will provide additional fuel to the growth of theoverall 32/64-bit video game market forecast, shown in Table 2. Again, it
must be remembered that video game manufacturers actually lose money on
the sales of hardware. However, the hardware sales enable profit from thesale of software, and video game manufacturers have to work to create an
installed base of users for their software.
Table 1
Nintendo Financial Data, Year Ending March 31 (Millions of Dollars)
1992

1993

1994

1995

1996

5,300

5,987

4,581

3,917

3,337

Gross Margin (%)

16

14

11

10

17

Net Income
Note: Revenue in dollars is based on a rate of ¥106 = $1.
Source: Nintendo

822

836

497

393

565

2000

CAGR <%)
1995-2000

19,510 20,536

32.0

Revenue

Table 2
Worldwide 32/64-Bit Video Game Controller Production Forecast
1997

1993

1994

1995

1996

Unit Shipments (K)

100

1,570

5,123

10,928

Factory Value ($)

328

320

335

270

235

205

197

187

Factory Revenue ($M)

33

502

1,716

2,950

2,911

3,371

3,843

3,840

17.5

Semiconductor Content ($)

205

200

225

175

142

130

125

118

-12.1

Semiconductor TAM ($M)

21

314

1,153

1,912

1,759

2,137

2,439

2,423

16.0

1998

12,387 16,442

1999

-11.0

Source: Dataquest (December 1996)

Looking under the Hood
After the introduction of the Nintendo 64 in Japan, Dataquest acquired asystem and performed a detailed cost and production analysis. A summaryof the system cost and semiconductor content is presented in Table 3 and an
illustration of the system board layout is shown in Figvire 1. The complete
analysis of the Nintendo 64 has been published in a Focus Report titled A
Teardown Analysis of the Nintendo 64 (TRDN-WW-FR-9610).

The Nintendo 64 represents an impressive accomplishment in system design
and the use of advanced chip technology. The entire system centers aroundfour main chips, two processor chips based on Silicon Graphics technology
MSAM-WW-DP-9608©1996 Dataquest

December 23,1996

Consumer Multimedia Semiconductors and Applications Worldwide

and the MIPS architecture and two Rambus DRAMS. All four of these chips
are manufactured by NEC. The design of this system enables it to deliver thehighest level of performance ever in a video game console while achieving a
low production cost that minimizes the losses from selling it at $199.
Table 3
Nintendo 64 System Cost Summary and Semiconductor Content(Dollars)
1996

1997 Change(%)

Total System Production Cost

170.14161.99-4.8

Total Semiconductor Cost

107.37

98.93

-7.9

106.58

98.16

'7.9

31.05

26.39

-15.0

31.05

26.39

-15.0

Audio

9.15

8.69

-5.0

Standard Logic, Linear

2.72

2.60

-4.3

MPU, Graphics/Video

63.67

60.49

-5.0

Active Discrete Components

0.78

0.77

-1.9

Passive Components

8.02

7.94

-1.1

Systems, Modules, and Batteries

21.10

21.10

QLO

Printed Circuit Boards

2.60

2.55

^iS

Mechanical Components

19.00

18.94

-«a

Labor and Freight

12.05

12.53

4.0

ICs
MemoryDRAM/VRAM/SDRAM/RDRAM

Source: Dataquest (December 1996)

The performance delivered by this system keeps it one step ahead of anothermajor competitor, the multimedia PC. PCs will have to await the next
generation of processors before they can start to compete with the gaming
experience delivered by the Nintendo 64. Even then, these systems will costover $2,000, compared to the $199 Nintendo system. Some of the basic
technical specifications for the Nintendo 64 are listed below:l\/ISAM-WW-DP-9608•

CPU: 64-bit RISC MIPS R4300i; clock speed 93.75 MHz•

Memory: Rambus DRAM 36Mb; maximum transmission speed of 4,500
Mbps•

Coprocessor: SP (sound and graphics processor) and DP (pixel drawing
processor) incorporated; clock speed of 62.5 MHz•

Resolution: 256 x 224 to 640 x 480 dots; flicker-free interlaced mode
support•Color: 32-bit RGBA pixel color frame buffer support; 21-bit color video
output•Graphics processing functions:•

Z buffer•

Antialiasing©1996 Dataquest

December 23,1996

Consumer Multimedia Semiconductors and Applications Worldwide•

Realistic texture mapping:•

Trilinear mip-map interpolation•

Environmental mapping•

Perspective correction

Memory expansion slot and storage unit connector for 64DD cartridge
drive
Figure 1
Nintendo 64 System Card

Power
LED

a
I

D

0 ^
O

HandsetController

14.7 MHz
7 MHz

Frequency
Pre
Symthssizer
Symthssi

14.3 MHz

D

n

RDRAM

1

Voltage
Regulator
Power
SwitehRDRAM

I

Audio Subsystem
94B0F
DACI

D

Audio

^'3"^'
Processor

WTCr
"' ^^
EncoderGraphics I
I Subsystem i

L

1 I

j.

I

I. J
Audio/Graphics
Coprocessor

CentralElectronics
Subsystem

I Voltage Regulator
Cartridge Conriedof

O

\ J

\ i

n

\)

\)

a

Storage Unit Connector(On Bottom)

L

K

R4300i64-Bit MIPS
Processor

LUT-DAC¥TI AudioA/ideo
OutputuMemory Expansion|7'tLC125

Reset Button

-vr

<

o
Power
Inftuto)"9eB7BS

J

Source: Dataquest (December 1996)

MSAM-WW-DP-9608©1996 Dataquest

December 23,1996

Consumer Multimedia Semiconductors and Applications Worldwide

The next planned enhancement to the Nintendo 64 system will be a magnetic
storage accessory called the 64DD. A prototj^e of the 64DD was displayed
at the Shoshinkai Japanese trade show in November. The drive will increase
the storage capacity of N64 cartridges by a factor of eight and also deliver
data to the processor at two to three times the speed of CD-equipped gamemachines. The drive will also allow players to customize their characters,
environments, and game play mechanics.

The Rest of the Nintendo Portfolio
Although the Nintendo 64 is capturing all the headlines, it is important toremember that Nintendo is also pursuing other video game markets basedon other platforms.
•

Super NES: Nintendo has remained committed to the development ofmarkets based on this platform, and this 16-bit system continues todeliver profits. Nintendo is continuing to invest in the development of
titles for the Super NES.

•

Virtual Boy: This 32-bit platform was introduced to the market during
1995. It provides a visually immersive, three-dimensional gaming
environment using a self-contained display that resembles a large pair ofgoggles. Even though Nintendo reduced the price from the original $180,
system shipments have been below Nintendo's expectations. New titles
were introduced for the Virtual Boy in 1996 in an effort to stimulate themarket.

•Game Boy: Since its introduction in 1989, over 48 million units have beensold worldwide. Currently, there are over 450 titles available for theGame Boy. Nintendo introduced a new product called the Game Boy
Pocket during 1996 that offers very attractive enhancements:•

The Game Boy Pocket is 30 percent smaller and about half the weightof the original Game Boy.

•

A new LCD display offers sharper images and improved contrast,
which allow game play in the glare of sunlight, and improved
viewing angles .

The Competition
The departure of Atari and 3DO has narrowed the video game console
industry to three principal players: Sega, Sony, and Nintendo. In addition tothis trio, the multimedia PC has become a very popular gaming platformcompeting with the video game console segment. Based on the cost analysisof the Sega Saturn, Sony PlayStation, and Nintendo 64 shown in Table 4,
Nintendo holds a significant advantage in system production costs, with anestimated cost of $162 for 1997. The production costs for the SonyPlayStation are $50 higher, and the Sega Saturn costs almost $90 more thanthe Nintendo 64 to produce. This difference in production costs allowed
Nintendo to easily match the $199 retail prices of the PlayStation and Saturnand eliminate cost as a factor in a customer's purchase decision. It appears
MSAM-WW-DP-9608©1996 Dataquest

December 23,1996

Consumer Multimedia Semiconductors and Applications Worldwide

that Nintendo plans to compete in the market based on system performance
rather than continue the price war that Sony and Sega started at the E3 show.
Based on the cost advantage Nintendo holds in this area, it is hard to
imagine Sega or Sony engaging in another price war in the near future.
Table 4
Total Production Cost Summary for 32/64-Bit Video Game Consoles(Dollars)
1995

1996

1997

Total Semiconductor Cost

261.61199.92121.00

Passive Components

13.66

13.29

12.92

Systems, Modules, and Batteries

76.46

39.32

38.14

Printed Circuit Boards

23.00

22.54

22.09

Mechanical Components

16.46

16.48

Labor and Freight

36.81

38.04

16.51
39.32

Total Cost

428.01

329.60249.97

Total Semiconductor Cost

196.45166.19118.65

Passive Components

18.12

17.70

17.29

Systems, Modules, and Batteries

27.04

26.52

26.00

Printed Circuit Boards

12.50

12.25

12,01

Mechanical Components

11.73

11.80

11.87

Labor and Freight

23.10

23.78

24.49

Total Cost

288.95258.24210.30Total Semiconductor Cost-

107.37

98.93

Passive Components

-

8.02

7.94

Systems, Modules, and Batteries

-

21.10

21.10

Printed Circuit Boards

-

2.60

Mechanical Components

-

19.00

2.55
18.94

Labor and Freight

-

12.05

12.53

Total Cost-

170.14161.99Sega Saturn

Sony PlayStation

Nintendo 64

Source: Dataquest (December 1996)

Sega and Sony have both responded to the Nintendo 64 introduction withrenewed sales campaigns for their own machines. At the end of November,
Sega began a promotion in which it bundles three free titles and a coupon for$15 off any two additional titles with the purchase of a Sega Saturn. This
promotion will run through December 31,1996. Sega claims that by
September 1996, sales of the Sega Saturn had reached 5.75 million
cumulative units. The company is targeting 7.75 million cumvilative unit
shipments worldwide by the end of March 1997. Sony claims that it had
shipped a total of 9 million PlayStations by October 31,1996. Sony has also
claimed that demand is exceeding supply for the PlayStation and announced
l\/lSAM-WW-DP-9608©1996 Dataquest

December 23,1996

Consumer Multimedia Semiconductors and Applications Worldwide

plans to increase production to 1 million units per month in November andDecember.

Dataquest Perspective
Nintendo has hit a grand slam w^ith the Nintendo 64 and delivered a newsurge of energy to the overall video game market. At one point, it appearedthat the multimedia PC might spell the demise of the video game console
industry. Not orvly has the Nintendo 64 leapfrogged its competitors, it has
demonstrated the awesome potential that still exists to deliver an incredible
gaming experience in a box that costs less than $200. Future possibilities forthe video game console are brighter than ever, but the multimedia PC willcontinue to place pressure on this industry to stay one step ahead. Of course,
at the heart of all of this lies advanced semiconductor technology from
Silicon Graphics and Rambus, and they will reap the rewards for theircontribution. If Nintendo can successfully ride the tidal wave it has created,sales of the Nintendo 64 could surpass both Sega and Sony by Christmas
1997.

For More Information...

Dale Ford, Senior Industry Analyst
Internet address
Via fax

ClataQuest
A Gartner Group Company(408) 468-8311
dford@dataquest.com(408)954-1780

The content of this report represents our interpretation and analysis of information generally available to the
public or released by responsible individuals in the subject companies, but is not guaranteed as to accuracy orcompleteness. It does not contain material provided to us in confidence by our clients. Reproduction or
disclosure in whole or in part to other parties shall be made upon the written and express consent of Dataquest.
©1996 Dataquest—^Reproduction Prohibited
Dataquest is a registered trademcurk of A.C. Nielsen Company

Perspective

Consumer Multimedia Semiconductors and Applications
Worldwide

Vendor Analysis
SGS-Thomson: The Right Products, the Right Place, the RightTime
Abstract: This report covers SGS-Thomson's business in semiconductors used in consumer
electronics equipment. SGS-Thomson offers a broad line of semiconductors for audio equipment, video equipment, and appliances. The company has established a leadership positionin the lucrative market for MPEG-2 decoders used in digital set-top boxes and DVD
players. With its early participation in the development of the European DVB standard,
SGS-Thomson could be a key supplier as the worldwide consumer video market transitions
to digital technology.
By Jonathan Cassell

Opportunity Knocks

5
m
N
>

The proliferation of digital technology into the consumer electronics
marketplace offers tremendous opportunity to those semiconductor
companies prepared to seize it. Franco-Italian SGS-Thomson Microelectronics NV, Saint Genis, France, has been one of the biggest beneficiariesof the digitization of consumer video, attaining leadership in the market for
MPEG-2 video decoders used in satellite set-top boxes over the past two
years. A longtime player in the analog consumer electronics market,
SGS-Thomson has been at the right place at the right time to cash in on
digital video. SGS-Thomson at an early stage identified MPEG decoding asa lucrative technology and aligned itself with a key customer, Thomson
Consumer Electronics, which has propelled SGS-tThomson into its leading
position.

Z
LU

Q. - J

o<
o cc
<
UJ
ES

DataQuest
Program: Consumer Multimedia Semiconductors and Applications Worldwide
Product Code: MSAM-WW-DP-9607
Publication Date: October 28,1996
Filing: Perspective(For Cross-Technology, file in the Semiconductor Application Markets, Volume 2, binder.)Consumer Multimedia Semiconductors and Applications Worldwide

Now, as the consumer digital video phenomenon spreads, SGS-Thomson
faces increasing competition from otiier players that want a piece of the
expanding opportunity. Keeping a leadership position will be a major challenge for SGS-Thomson as competitors attempt to leapfrog it with lowercost, more highly integrated approaches to silicon in set-top boxes and inother consumer digital video platforms. However, SGS-Thomson is moving
forward to offer its own highly integrated solution, leveraging its comprehensive yet well-targeted line of consumer electronics devices. Meanwhile,
SGS-Thomson is taking a leading role in the development of silicon for digital video standards that are likely to become pervasive worldwide in the
future. Thus, circumstance and strategy continue to favor SGS-Thomson's
chances of being at the right place at tiie right time to seize new digital
video opportunities as they knock.

A Major Player
SGS-Thomson is one of the world's largest semiconductor companies,
ranking No. 15 with $3.55 billion in revenue in 1995. With more than 3,000
main types of products sold to 1,500 customers, SGS-Thomson is a broadline supplier. The product line includes extensive offerings in areas including standard ICs, discretes, memories, programmable devices, andapplication-specific products using bipolar, CMOS, BiCMOS, mixed-signal,and digital technologies. SGS-Thomson's sales are well distributed amongmajor semiconductor applications, including computer, industrial, telecommunications, and consumer, as shown in Figure 1. Consumer, which
consists of semiconductors for VCRs, stereos, TV and satellite receivers,
appliances, and home automation, accounted for 20 percent of the company's revenue in 1995, or about $710 million.
SGS-Thomson's consumer sales have been growing rapidly in recent years,
rising 28 percent in 1995 compared to 1994. The company's growth has
outstripped increases in the consumer semiconductor market as a whole.
SGS-Thomson is a worldwide supplier, with large percentages of its
revenue coming from every major region, excluding Japan, as shown in
Figure 2. Although the Americas represent only 24 percent of worldwide
revenue, much of SGS-Thomson's sales in the Asia/Pacific region are
into divisions of U.S.-based companies. When revenue from those Far
Eastern-based subsidiaries is combined with sales to those companies'
parent companies in the United States, the Americas account for one-thirdof SGS-Thomson's overall revenue, making it the second-largest sales
region for the company, after Europe.
SGS-Thomson is a worldwide manufacturing powerhouse, with l l fabs
and six back-end assembly facilities located in Europe, the United States,
Asia/Pacific, and Africa. Among its fabs are two operating 8-inch wafer
facilities that are located in Phoenix, Arizona, and in CroUes, France, andthree that are under construction or just beginning production inl^usset,
France, in Catania, Italy, and in Singapore. The company has a 0.4-inicron
process and is beginning production at 0.35-micron.
*:|: *'""'• ij> f .'ZD Uu)> t.
MSAM-WW-DP-9607©1996Dataquest

October 28,1996

Consumer Multimedia Semiconductors and Applications Worldwide

Figure 1
Market Share of SGS-Thomson's 1995 Revenue by Application

Automotive (9%)

Total = $3.55 Billion
S66927

Source: SGS-Thomson, Dataquest (October 1996)

Figure 2
Regional Share of SGS-Thomson's 1995 Revenue

Japan {4%)Total = $3.55 Billion

Source: SGS-Thomson, Dataquest (October 1996)

MSAM-WW-DP-9607©1996 Dataquest

October 28,1996

Consumer Multimedia Semiconductors and Applications Worldwide

Competitive Position
SGS-Thomson has an extensive line of dedicated digital and mixed-signal
products for consumer audio, video, appliances, and other devices. Despite
that, SGS-Thomson in 1995 was not a top-ranked vendor in many basic
categories of chips used in consumer applications, such as microcontrollers,
microperipherals, digital signal processors (DSPs), or analog video andaudio ICs.
The market position SGS-Thomson lacks in nuts and bolts consumer
products it more than makes up for with its dominant role in digital video
decompression, also called decoding. In the major types of digital video
decompression chips—MPEG-2 and MPEG-1—SGS-Thomson in 1995 held
the No. 1 and No. 2 positions, respectively, and was the No. 1 vendor of
MPEG digital decoding chips overall, as shown in Table 1. Overall,
SGS-Thomson in 1995 sold 4.2 million MPEG decoders, 1.4 million of whichwere MPEG-1 and 2.8 million of which were MPEG-2, both audio andvideo.
Table 1
SGS-Thomson's Competitive Position in Digital \^deoDecompression Chips in 1995
Market Ranking MPEG-1 Decode
No. 1
No. 2
X

MPEG-2 DecodeX

Total MPEG Decode
X

Source: Dataquest (October 1996)

SGS-Thomson was able to achieve its leading position and high sales
largely because of its early entry into this market and because it garnered a
key design-win for its MPEG-2 decoders with Thomson Consumer
Electronics. Thomson Consumer Electronics used the MPEG decoders in its
wildly popular digital set-top box, known as the Digital Satellite Service(DSS) system. The majority of the Thomson Consumer Electronics DSS
boxes also included other SGS-Thomson silicon, including a transport
demultiplexer ASIC that works with the MPEG-2 decoder and the 16-bit
ST90R51FB1 microprocessor that performs system control. Overwhelming
demand for the MPEG-2 decoder and for associated chips used in the DSS
boxes was responsible for much of SGS-Thomson's sales growth in the
United States in 1994 and 1995. The majority of SGS-Thomson's MPEG-1
decoders were used in Video CD and karaoke players used in Japan and the
Asia/Pacific region.

Tlie Competition
With its broad line of consumer products, SGS-Thomson competes with ahost of other semiconductor manufacturing powerhouses, including
Toshiba, Sanyo, Sony, Philips, Motorola, Texas Instruments, and NEC. In
MPEG video decompression, the company faces a smaller group of competitors, including C-Cube Microsystems Inc., LSI Logic Corporation, andTexas Instruments Inc.

MSAM-WW-DP-9607©1996 Dataquest

October 28,1996

Consumer Multimedia Semiconductors and Applications Worldwide

Market Outlook: A Tale of Two Markets
SGS-Thomson participates both in the traditional analog market and in theemerging digital market for audio, video, and appliances. Although bothare part of the consumer electronics business, the analog and digital portions of the market are as different as night and day when it comes to projected growth rates. Overall, the demand for semiconductors in consumer
electronic equipment is expected to grow at a compound annual growthrate (CAGR) of 14.9 percent from 1996 to 2000. Major product categories in
the consumer market consist of semiconductors that are mostly used inmature types of analog equipment, such as audio, video, and appliances.
Those categories should experience compound revenue growth rates
ranging from 11 percent to negative 1.3 percent from 1996 to 2000.
In contrast, semiconductor use in new digital corisumer electronics products, such as cable and satellite set-top boxes and DVD, is expected to growat rates ranging from 15.3 percent to 114.4 percent in the same period, as
shown in Figures 3,4, and 5. SGS-Thomson's strong product line and experience will allow it to exploit the high growth opportunities offered by thesenew digital platforms.

Products
SGS-Thomson is a long-term participant in the consumer electronics market
and has built u p an extensive portfolio of chips for that area. That portfolio
provides most of the basic building blocks required to buUd consumer televisions, set-top boxes, stereos, radios and associated devices. That productline has been enhanced in recent years with new digital video decoders,which have become some of the company's most popular products for the
consumer electronics market.

Video Products
SGS-Thomson's line of devices for video products includes power transistors, remote control transmitters, display drivers, teletext decoders, satellite
sound and video processors, PAL/NTSC encoders and decoders, analog-todigital converters, PAL/SECAM and PAL/NTSC TV processors, and video
and audio intermediate frequency (IF) amplifiers.

Audio Products
SGS-Thomson offers audio devices including hi-fi and stereo amplifiers,
A M / F M radios, stereo decoders, audio signal processors, surround soundmatrix digital audio processors, cassette playback systems, stereo audio
processors, graphic equalizers, frequency S5mthesizers, and audio
processors with Sound Retrieval System (SRS) surround sound and voicecancellation.

MPEG-2 Decoders
SGS-Thomson has been a pioneer in MPEG-2 decoders. Most of its sales
before 1996 were of decoders that performed either audio or video decompression, requiring two separate chips to c a n y out decompression in a digital video system. Although SGS-Thomson still offers standalone MPEG-2
audio and video decoders, its primary sales now are of devices that integrate audio and video functions onto a single die.

MSAI\/l-WW-DP-9607©1996Dataquest

October 28,1996

Consumer Multimedia Semiconductors and Applications Worldwide

Figvire 3
Worldwide Digital Satellite Set-Top Box Semiconductor Forecast
Millions of U.S. Dollars

1996

1997

T
1998
1999
1996-2000 CAGR = 15.3%

2000
S&S9Z9Source: Dataquest (October 1996)

Figure 4
Worldwide Digital Cable Set-Top Box Semiconductor Forecast
Millions of U.S. Dollars
1,2001,000800600400-r
200"Ji
1996

1
1997

1
I
1998
1999
1996-2000 CAGR = 98.4%

2000s)66930

Source: Dataquest (October 1996)

FigtireS
Worldwide DVD Video Player Set-Top Box Semiconductor Forecast
Millions of U.S. Dollars
,200

1996

T
1997

1
r
1998
1999
1996-2000 CAGR s 114.4%

2000
966931

Source: Dataquest (October 1996)
MSAM-WW-DP-9607©1996 Dataquest

October 28,1996

Consumer Multimedia Semiconductors and Applications Worldwide

The STiSSOO, introduced in 1993, is generally recognized as the industry's
first single-chip MPEG-2 video decoder in production. Because of its early
availability, it found its way into many first-generation digital platforms.
Thomson Consumer Electronics-manufactured DSS set-top boxes based on
the Sti3500 began shipping in 1994 and continued to use derivatives of thepart until early 1996. SGS-Thomson still manufactures the Sti3500, eventhough it now offers more integrated, more cost-effective parts.
The Sri4500/4510 MPEG-2 audio decoder is a companion chip to the
Sri3500A.
The Sti3520, introduced in April 1995, combines the features of the Sti3500
and Sti4500 into a single-chip MPEG-2 audio and video decoder. The device
is targeted at the markets for direct broadcast satellite (DBS) and digital
cable TV set-top boxes.
The Sti3520A is an enhancement to the Sti3520 that reduces memory
requirements for PAL-format video and that integrates a phase-locked loop
(PLL).
The Sti3550 is a combined MPEG-2 audio and video decoder designed for
DVD players and drives. The device supports output in NTSC and PAL
data bit rates and has a serial interface for linking to the AC-3 audio usedwith DVD applicatioiis.
The Sti4600 is an audio decoder that can decompress AC-3 format soundtypically used with MPEG-2 video in DVD applications. Applications for
the Sti4600 include consumer and PC DVD players, as well as highdefinition TV (HDTV) receivers and high-end audio equipment.
MPEG-1 Decoders
The Sti3430 is an MPEG-1 video and audio decoder targeted at Video CD
and karaoke applications.

The Future
Like every other major player in the digital set-top box silicon market,
SGS-Thomson is pursuing an integration path that eventually will reduce
the number of chips required for such platforms to just a few devices, dow^nfrom as many as 12 today. With a price war raging in the set-top box market,
a premium has been placed on integration in order to achieve cost reduction. Thomson is developing a highly integrated digital set-top box
device—the STi5500, code-named Omega—that combines on a single die
MPEG-2 audio and video decoding, transport demultiplexing, video encoding, system control, and peripheral interfaces. Reflecting the strength of
SGS-Thomson's product portfolio, the company already has all the coresand functions required to build Omega.
Omega will integrate an ST20 microprocessor, a 32-bit RISC microprocessor
core capable not only of system control, but also of running the operating
systems, applications, and drivers used in a set-top box. Beyond that, theST20 will be capable of running interactive applications such as programming guides or even Internet access. SGS-Thomson may offer a version of
the ST20 that is optimized to run Java code.
MSAM-WW-DP-9607©1996Dataquest

October 28,1996

Consumer Multimedia Semiconductors and Applications Worldwide

Expected to begin shipment to customers in the fourth quarter of 1997,
Omega will allow the creation of digital satellite set-top boxes based on justthree logic chips, a tuner, and a single 16Mb SDRAM, as illustrated in
Figure 6. In comparison, SGS-Thomson's current digital set-top box solution
requires five logic chips, a tuner, and two memories totaling 20Mb.
Reflecting Thomson's strong position in the satellite set-top box market, thecompany already has a chip tiiat supports the type of error correction anddemodulation used in satellite set-top boxes. However, the company atpresent lacks similar front-end chips for cable and multipoint, multichannel
distribution system-t5^e digital set-top boxes. Such chips are in the works,
however.
When Omega ships, SGS-Thomson will have a solution that will be close to,but somewhat behind, the integration level of that offered by competitors
such as LSI Logic.
In a separate effort, SGS-Thomson is part of a consortium that is developinga chipset for televisions that w^ork with the segment of the European DigitalVideo Broadcasting (DVB) standard that deals with terrestrial digital video
broadcasting. The project, called DVBRID, will produce a four-chip solution
for digital television that will be completed in late 1997. The chipset will be
used in a trial of the system in the United Kingdom later that year. The
DVBIRD chipset is likely to establish the required semiconductor technology for terrestrial digital video systems throughout Europe.
SGS-Thomson is responsible for the forward error correction (FEC) portionof the DVBRID chipset, using technology originally developed for its digitalsatellite set-top box chips. Leveraging the work it has done on DVBIRD,
SGS-Thomson plans to introduce in early 1998 a more integrated DVB
chipset using ite 0.35-micron process technology. The more highly integrated version of DVBIRD will consist of only two or three devices.
Thomson's work on the DVBIRD project and its own development work indigital video chipsets will allow it to be one of the leading vendors ofchipsets for both digital set-top boxes and for digital televisions in Europe,
as well as other regions of the world.
SGS-Thomson is plaiming to offer chips that address most of the major subsystems in a DVD player, including audio and video decoding and processing, servo electronics, channel encoding and decoding, and SCSI/EIDE
interface.

Customers and Partnerships
Despite sharing a name and—indirectly—sharing some ownership by acommon parent company, SGS-Thomson and Thomson Consumer
Electrorucs say there is no special arrangement between their two companies beyond a normal customer/vendor relationship. However, the twocompanies dearly have benefited from working together. Thomson
Consumer Electronics in 1995 was the No. 1 maker of digital DBS boxes,
with 1.26 million sold that year. The vast majority of those boxes were basedon SGS-Thomson MPEG-2 decoders, making SGS-Thomson the world's
largest vendor of those devices.

MSAM-WW-DP-9607©1996 Dataquest

October 28,1996

CO

>
i:

Figure 6
SGS-Thomson's Digital Set-Top Box Semiconductor Integration Road Map

I

4MB
DRAM

I

CD
<T)
O
•vl

1995

Dual A/D
STV0190

Tuner

QPSK/QAM
Viterbi
Reed-Solomon

MPEG-2 AA/
ST) 3520 or
STI 3520A

Transport(ASIC)T
System Micro(ST 9)

@

16MB
DRAM

CO
CO
CD

o
tu

.a
t=

CD
CO

1986

1997
O

S
o
C3CD

—^

ro
c»

C£>
CO
CD

Dual A/D
STV0190

Tuner

Tuner

H

Dual A/D

STV0190

Source; SGS-inomson, Dataquest (October1996)

QPSK/FEC
STV0196

QPSK/FEC
STV0196

H

Integrated|
MPEG-2 AA/
STi 3520A

Transport and I
System Micro I
ST2Q-TP1/2
I

STI 5500 OMEGAMPEG-2 AudtoA/ideo Decoding,Transport, System Micro, and
PAL/NTSC EncoderH10

Consumer Multimedia Semiconductors and Applications Worldwide

Beyond Thomson Consumer Electronics, SGS-Thomson also has garnered
other design-wins for its MPEG-2 decoders and transport chips, mostnotably with Sony.

Dataquest Analysis
On most fronts, SGS-Thomson is well-positioned to continue to exploit
opportunities offered by the digitization of consumer electronics. Just as
SGS-Thomson's experience in consumer electronics semiconductors helped
it identify MPEG as a key technology at an early stage, the company's leading position in digital video chips will allow it to enter new product areas
quickly and attain leadership.
SGS-Thomson's experience in digital set-top boxes, combined with its workon the DVBRID project, will allow it to establish a leading role in the emerging digital television market in Europe. The introduction of Thomson's
highly integrated version of the DVBIRD chipset will coincide with thecommencement of terrestrial digital video broadcasting in Europe.
However, the influence of DVB is spreading beyond Europe. The DVB
standard is moving ahead rapidly, with versions having been developed for
all common delivery systems, including satellite, cable, and terrestrial. DVB
is emerging as the standard of choice for digital video systems such as DBS
in all regions of the world, excluding the United States.
Meanwhile, other next-generation and digital television standards worldwide are floundering. U.S. HDTV is mired in the political process and isbeing held hostage by special interests. Calls are increasing to scuttle theidea of setting a digital television standard at all and to let the market
decide. Japanese MUSE analog HDTV is still bumping along, with sets costing a whopping $3,500 and only a few hours of broadcast available eachweek.
'With other standards failing, DVB could become the worldwide standard
for next-generation television, mirroring the success of the Global System
for Mobile Communications (GSM) in digital cellular applications.
On the DVD front, SGS-Thomson is leveraging its knowledge of digital
video systems to come to market quickly with a chipset. Given that thecompany has more experience than any other in the high-volume manufacturing of MPEG-2 decoders, SGS-Thomson's products will be extremely
cost-competitive in the DVD market.
One cloud does loom on the horizon for SGS-Thomson, though. While
Omega may put the company in the pack in the integration race that israging now, it is not as integrated as other solutions offered or soon to beoffered by companies such as LSI Logic, VLSI Technology, and Texas
Instruments. Companies in that race are leapfrogging each other at anaccelerating pace, increasing the penalty for straggling with each design
cycle in the market.

MSAM-WW-DP-9607©1996 Dataquest

October 28,1996

Consumer Multimedia Semiconductors and Applications Worldwide

11

Despite that, SGS-Thomson's early leadership in MPEG-2 decoding andtransport will help it to maintain a strong position in the digital set-top box
market. Designers in Thomson Consumer Electronics and in other companies have a great deal of familiarity with the SGS-Thomson parts, making
them easier to design in than parts from some other competitors.

l\/lSAM-WW-DP-9607©1996 Dataquest

October 28,1996

12

Consumer Multimedia Semiconductors and Applications Worldwide

For More Informatiim...

Jonathan Cassell, Industry Analyst
Internet address
Via fax

Dataquest
A Gartner Group Company(408) 437-8195
jcassell@dataquest.com(408) 437-0292

The content of this report represents our interpretation and analysis of information generally available to the public
or released by responsible individuals in the subject companies, but is not guaranteed as to accuracy or completeness.
It does not contain material provided to us in confidence by our diervis. Reproduction or disclosure in whole or inpart to other parties shall be made upon the written and express consent of Dataquest.
©1996 Dataquest—Reproduction Prohibited
Dataquest is a registered trademark of A.C Nidsen Company

Perspective

Consumer Multimedia Semiconductors and Applications
Worldwide

Market Analysis
iVIedia Processors Help Bridge the Gap between Computers andConsumer Electronics

LU
3
N
Z
Q.

<

o >
o <
LU GC
-I <

E S

Abstract: The markets for computers and consumer electronics equipment are charging
forward on convergent paths. The consumer electronics market is "going digital" at thesame time that multimedia computers are becoming more consumer oriented. One specificexample of a semiconductor product that bridges the gap between computers and consumer
electronics is a media processor. This document is a variation of a Perspective published by
the Semiconductor Directions in PCs and PC Multimedia Worldwide program at Dataquest.
It has been revised for delivery to clients of the Consumer Multimedia Semiconductors andApplications Worldwide program because of its relevance to consumer electronics
semiconductor markets.
New products called media processors and media engines could bring more multimedia
performance to PCs for a lower price than conventional chipsets. These devices are unprovenin the marketplace because they are new, but they offer some compelling benefits. Productpositioning is squarely between application-specific standard products (ASSPs) and general
microprocessors, leveraging the speed and programmability benefits of each of those
products. Media processors must compete with ASSPs as well as with multimedia
enhancement to general microprocessors, such as Intel's MMX, to be successful. The market
for these products expands beyond PCs into consumer and communications equipment, but
this document focuses on the PC market opportunity. This document defines what a media
processor is, identifies key issues for these products, and provides a five-year forecast for
the use of these devices in PCs.
By Geoff Ballew

New Cliips Provide IVIore Bang for the Buck in IVIultimedia PCs
Multimedia. This one word has a tremendous impact on PC architecture
because the simultaneous processing of graphics, audio, and video data
places large demands on the major components in a PC. The trend toward

Dataquest
Program: Consumer Multimedia Semiconductors and Applications Worldwide
Product Code: MSAM-WW-DP-9606
Publication Date: October 21,1996
Filing: Perspective(For Cross-Technology, file in the Semiconductor Application IVIarl<ets, Volume 2, binder.)Consumer Multimedia Semiconductors and Applications Worldwide

more multimedia features and higher multimedia performance is pushingPCs harder than ever before. Today's PCs are much faster and better
equipped for multimedia processing than they were just a few years ago, butthey are clearly not powerful enough to handle new multimedia features
such as 3-D audio, MPEG-2 decompression, and videoconferencing.
As PC OEMs strive to provide higher multimedia performance at low prices,
they need to find efficient ways (on a price versus performance basis) to add
additional multimedia muscle to a PC. So far there is no single answer; wehave a variety of new solutions and old solutions that will compete. These
include improving the application-specific standard products (ASSPs) or
fixed-logic chipsets, making the CPU faster with special instructions (such asIntel's MMX) and higher clock speeds, and using an embedded processor
that is optimized for multimedia data types. This last category includes chips
such as programmable DSPs and a new class of embedded processor called a
media processor or media engine. Media processors are the newest solution
for boosting PC multimedia performance. They offer compelling benefits,
but have some challenges to overcome if they are going to succeed in the PC
semiconductor market. For the purposes of this document, media processors
are not distinguished from media engines.
Each of these solutions has an impact on PC design, so a basic system
diagram showing an example of each one is provided here. A buUeted list of
the digital signal-processing tasks handled by each chip or chipset isprovided, with the bullet located below the chip or chipset that performs thattask. Figure 1 shows a typical multimedia PC with the multimedia features
implemented with standard chipsets or ASSPs. Note that each subsystem - (graphics, audio, and fax/modem) is implemented with a complete chipset.
Figure 2 shows the same features using a CPU enhanced with Intel's MMX ..
instruction set. This solution leverages the computing power of the CPU forsignal processing and control functions instead of putting dedicated;controllers in the peripheral chipsets. Figure 3 shows an implementation ;...
using a media processor called Mpact from Chromatic Research, a media
processor company. This solution is similar to the one shown in Figure 2 but
uses a dedicated processor rather than the CPU for signal processing andcontrol. Each of these three solutions has price and performance advantages
and disadvantages. Also, it is important to note that these solutions are not.
mutually exclusive. As Intel incorporates MMX into its entire x86 MPU '.r,;product line, MMX will coexist with ASSPs and media processors in thesame systems because the performance should be additive. This means thata system having MMX and a media processor will be more powerful than asystem with a media processor but without MMX.

Media Processors: What Are They?
Media processors are a new class of semiconductor device. They have fixedlogic elements just like ASSPs or standard chipsets, but they also have aprogrammable signal processing core like a programmable digital signal
processor (pDSP). These products are designed for processing digital signals
just like a pDSP but have additional features that make them more suitable
MSAM-WW-DP-9606©1996 Dataquest

October 21,1996

Consumer Multimedia Semiconductors and Applications Worldwide

for PC and consumer electronics applications. These features include
standard bus interfaces such as Peripheral Component Intercormect (PCI)
and f C, integrated ASSP functions such as a VGA controller, greater
processing power, and a high degree of concurrency for handling multiple
real-time processes. A general definition of a media processor is a device thatmeets the following criteria:
Figure 1
System Diagram of a Multimedia PC with 3-D Graphics, MPEG, Telephony, and Audio
Features Implemented with ASSPs
Graphics Memory
2MB or More
Pentium
without
MMX

}

Core
Logic

Graphics
Controller

CRTii' ^ L Graphics Processing and Control
1f
*

Main
MemoryMemory512KBMPEG Decoder
I-MPEG Decompression,1

1

Fax/Modem
ChipsetL Fax/Modem Processing and Control

Audio Chipset^

SpeafterMicrophone

L Audio Processing and Confrol
PCI Busseessi

Source: Dataquest (October 1996)•

Media processors are programmable. This separates them from highly
integrated, multiple-function logic chipsets, such as integrated audio andfax/modem chipsets.

•

Media processors must have a high degree of concurrency. The ability tohandle three or more real-time processes simultaneously is essential.

•

Media processors have a dedicated purpose. The addition of applicationspecific bus interfaces, such as PCI or I^C, targets these devices tocommunications and multimedia applications in PCs and consumer
electronics rather than other applications for digital signal processing.
This also distinguishes media processors from general-purpose
microprocessors with multimedia functions, such as Intel's MMX.

These requirements are very general, but so is the media processor productcategory. These devices straddle the abyss between fixed logic
implementations such as ASSPs (which are fast but not flexible) and generalMSAM-WW-DP-9606©1996 Dataquest

October 21,1996

Consumer Multimedia Semiconductors and Applications Worldwide

purpose microprocessors (which are flexible but not fast). Figure 4 shows
this graphically.
Figure 2
System Diagram of a Multimedia PC with 3-D Graphics, MPEG, Telephony, and Audio
Features Implemented with MMX

Graphics Memory
2MB
Pentium
with
MMX

Core
Logic

t

Graphics
ControSler

iL

-MPEG
Decompression- Fax/Modem
Processing andControl- Audio Processing
and Control

1r

Main
MemoryCRT

L Graphics Processing and Control*—^

ContrDllerless
Modem Chipset

Audio
DAC and ADC^»

Telephone^

Speaker
Microphone

PCI Bus9668S2

Source: Dataquest (October 1996)

Software Defines the Functionality
Media processors require software to define their functionality. The
hardware provides computational power for processing digital signals, but
software is required for compatibility with various data types, standards,
and protocols such as V.34 for modems, Sound Blaster compatibility foraudio processing, and even digital video decoding standards such as
MPEG-1. This is in sharp contrast to ASSPs because those products have therequired standards and protocols implemented in the chips rather thanrequiring software to provide compatibility. Of course both media
processors and ASSPs require software drivers to interface with the PC
operating system, such as Windows 95. Figure 5 highlights the division
between hardware and software for media processors compared with ASSPs.

l\/ISAI\/l-WW-DP-9606©1996 Dataquest

October 21,1996

Consumer Multimedia Semiconductors and Applications Worldwide

Figure 3
System Diagram of a Multimedia PC with 3-D Graphics, MPEG, Telephony, and Audio
Features Implemented with a Media Processor
CRT

RAMDACPentiumwith orwithout
MMX

Core
Logic
Controlierless—^
Modem
Chipset

jl

'if

Main
Memory- Graphics
Processing
Audio
and Control
DAC~ Fax/Modem
and ADC
Processing
and Control-MPEG Decompression- Audio Processing
and Control—^

Telephone

Speaker
Microphone

PCI Bus964383

Source: Dataquest (October 1996)

Figure 4
Relative Positioning of Media Processors
Programmable

General Microprocessor^^^ Media
Processor

tnoreasing
Multimedia
MuscleIpbSP

IMPU
without
MMX

Increasing Flexibility
9MSSJ

Source: Dataquest (October 1996)
MSAM-WW-DP-9606©1996 Dataquest

October 21,1996

Consumer Multimedia Semiconductors and Applications Worldwide

Figure 5Media Processors Rely on Software for Compatibility

Interface to Operating
System Such as
Windows 95

Software-Compatibility withStandards andData Types-^•••••'*i^- -i.-

Software

SoftwareHardware•"••:;:;•, p^ , .
- ^ • " . . . ^ ' ••= i ^ ^ ••V l ' J v ^ o f r ' . " • :?
:

o

•
•

.
•
•

•••i'f'••fm^;- .V:\/.":^gaifflli:':' i.

Processing Powerfe**^'••'•••^ i i ^ ^ i .

::,.;•;•.

HardwareHard^rt/are- . l ^ - : . : . - 5 . ' r ^ . T ^: :o^^^^"S^.'J:VS^^' L : . : sKfpjj ^^^^i.'^s^iy.^;'- ;ASSPs

Media Processors
964S83

Source: Dataquest (October 1996)

The Advantages of Media Processors
The major advantages of using media processors over alternative solutions
are discussed after this bulleted list:

l\/ISAM-WW-DP-9606•

Media processors centralize signal processing to reduce redundantfunctions (and therefore redundant cost) across multiple subsystems,
such as audio processing, fax/modem, networking, graphics, and video
processing.

•Media processors enable functional upgrades through software rather
than hardware changes. This benefits PC OEMs by reducing the risk ofinventory and design obsolescence, and it benefits PC users becausefeatures and performance can be enhanced without the challenges of
opening the PC and changing hardware.

•

Scalability allows functions to use as much processing power as possible
on a real-time basis.

•

Lower total system costs are possible. The potential for cost savings
increases dramatically when high-end functions such as MPEG-2
decompression, Dolby AC-3 decoding, and videoconferencing are
included.

•Media processors are more powerful than multimedia enhancements tomicroprocessors.

©1996 Dataquest

October 21,1996

Consumer Multimedia Semiconductors and Applications Worldwide

Media processors have the potential to provide many benefits for PC OEMsand PC users by making hardware designs more flexible without incurring alarge cost penalty. The traditional way to add features to PCs has been to
add a new chipset for each new subsystem—for example, adding a modem
chipset for modem functions or an audio chipset for sound processing. The
problem with this method is simply that adding another major function
requires another standalone chipset. All the functions for a given subsystem
are integrated into a compact chipset but there is little integration acrosssubsystems to minimize the total number of chips (and more specifically the
total number of gates) for the whole PC. Media processors are designed toleverage processing power across multiple functions by separating thecontrol elements of peripheral chipsets from the interface elements ofperipheral chipsets. Processing power is centralized and can be allocated tovarious functions (such as MPEG decode, audio processing, orcommunications processing) on a real-time basis. Media processors do
require support chips, such as analog-to-digital conversion (ADC) anddigital-to-analog conversion (DAC), to interface with external peripherals.
However, the cost of these interface chips is significantly lower than the costof complete chipsets.
A second benefit of using media processors instead of fixed-logic chipsets is
software upgradability. A PC user today who wants to upgrade a modem
must take the old modem out and put a new modem in. If a PC has a media
processor, its multimedia functions can be upgraded just by installing new
software, rather than by opening the box and changing the hardware. In thesame way, a PC OEM tKat designs around a media processor rather than
ASSPs will be able to reconfigure inventory and work in process more easily
by changing software rather than hardware. This helps protect the OEMagainst the risks of product obsolescence and having a large inventory ofimdesirable products in the midst of a technology shift.
A third benefit of media processors is scalability. All of a media processor's
processing power is divided among the functions in use on a real-time basis.
When only one or two functions are used simultaneously, those functions
receive more processing power and therefore show higher performance thanthey would have in an average ASSP. When the user requires multiple
functions in demanding applications such as Internet gaming (asimultaneous use of modem, audio, graphics, and probably motion video
decoding) each function receives only its share of the total processing power.
For this reason, media processors must be powerful enough to process
multiple data streams concurrently.
A fourth benefit of using a media processor is the opportunity for a lower
total bill of materials cost to implement a feature-rich, multimedia PC. A PC
with a media processor requires only a controUerless chipset, rather than astandard chipset, for a given subsystem such as a fax/modem. A
controUerless chipset is a subset of a standard chipset; it does not include themicrocontroller and DSP functions, which makes it less expensive than astandard chipset. The media processor provides the microcontroller and DSP
functions in place of having those functions in the peripheral chipset. If
MSAM-WW-DP-9606©1996 Dataquest

October 21,1996

Consumer Multimedia Semiconductors and Applications Worldwide

enough subsystems are added with these lower-cost controUerless chipsets,then the cost savings from buying less-expensive chipsets will exceed thecost of bupng the media processor. A rule of thumb is that four or moresubsystems must be added to make a media processor cost-effective. If an
OEM will use the media processor for only one or two functions, then ASSPs
will provide a lower total cost. Figure 6 shows some Dataquest estimates ofthe semiconductor costs for implementing a multimedia subsystem with thefollowing four functions: accelerated 3-D graphics, MPEG-1 decompression,
wave table audio, and V.34 modem functions. Media processors offer more
dramatic cost savings if high-end functions like MPEG-2 decoding, Dolby
AC-3 decoding, and videoconferencing are added to a PC design.
Figure 6
Cost Comparison between Media Processors and Other Solutions for Adding 3-D
Graphics, MPEG, Telephony, and Audio Functions to a Multimedia PC
Dollars per System
160-flEl Additional Software Costs•^

Media Processor
MPEG Audio and Video
Decoder

D Modem Chipset (V.34)
S Wave Table AudioB 3-D Graphics Controller^

ASSP

Philips' TriMedia TM-1

Chromatic
Reseach's
MPact

MemoryIntel's MMX
964BSeSource: Dataquest (October 1996)

The fifth advantage is simply that higher performance can be achieved byusing a media processor than by relying solely on MMX or other MPU
multimedia enhancements for signal-processing power. If a media processor
is added to a system with MMX, the available multimedia processing power
will be approximately additive. Although the two resources (MMX and amedia processor) will not work cooperatively on a single task, the list oftasks can be divided between them to maximize performance.

The Disadvantages of Media Processors
The potential disadvantages of tising media processors versus alternative
solutions are discussed after this bulleted list:

MSAM-WW-DP-9606©1996 Dataquest

October 21,1996

Consumer Multimedia Semiconductors and Appiications Worldwide•

Functional redundancy with MMX puts vendors in partial competition
with Intel for low-end PC desigiis.

•

There is risk in adopting new design strategies.

•

Higher total system costs are possible.

Functional redtmdancy with MMX and other multimedia enhancements tomicroprocessors is a potential barrier to getting design-wins in low-end PCs.
Media processor vendors are not the only advocates of centralizing
multimedia processing. Intel evangelizes the centralized model because it
creates greater demand for new microprocessors. The MMX instruction set isone step Intel is taking to make its microprocessors able to process
multimedia data more efficiently. Other MPU vendors are implementing
similar multimedia enhancements to their own designs. Two examples are
Sun Microsystems' Visual Instruction Set (VIS) and Cyrix's own
implementation of the MMX instruction set. Media processors andmultimedia enhancements to general-purpose MPUs are variations on thesame theme. Media processor vendors must position their products carefully
against MMX because MMX will be shipping for "free" as it becomes astandard feature in all Intel's Pentium and Pentium Pro microprocessors andas the non-MMX versions are discontinued.
As PC OEMs strive to differentiate their products, there is risk associatedwith adopting a new design strategy such as using a media processor
instead of ASSPs. OEMs that use ASSPs can choose each chipset from adifferent vendor, so their audio chipset vendor can be independent fromtheir fax/modem chipset vendor. Ilus will change slowly, because higher
levels of integration are necessary for minimizing costs, but media
processors make this transition much more immediate. Of course, there isalso potential gain by adopting a new strategy because it does differentiate
one OEM from another.
The issue of total system cost was mentioned as a possible advantage as well
as a possible disadvantage. Media processors are new products, so the actual
cost of implementation is not established. The total cost of implementationmust be competitive compared with ASSP implementations because PCs are
sold on the basis of price, performance, and features. Media processor
vendors must make the chip and software available at a volume price thatmakes it competitive even if an OEM does not include high-end functioi\ssuch as videoconferencing, MPEG-2 decompression, or Dolby AC-3
decoding.

Company Highlights
Two companies. Chromatic Research and Philips Semiconductors, areleading the race to bring media processors to the PC market. Below is a brief
description of each company's media processor strategy.

Chromatic Research
Chromatic is bringing a new business model—^the "chipless semiconductor
company"— to the market. The company's media processor is named Mpact,
MSAM-WW-DP-9606©1996 Dataquest

October 21,1996

_10

Consumer Multimedia Semiconductors and Applications Worldwide

but will not be manufactured or sold by Chromatic. Strategic partners will
make and sell the chip, while Chromatic will sell the software to use thechip. The company has annotmced two partners so far, LG Semicon andToshiba, and may add one additional partner.
As a chipless semiconductor company. Chromatic will design new versionsof the Mpact chip, as well as write and sell software for the chip. In fact,
Chromatic will be the sole source of software "modules" for the Mpact chip.
These modules are required for any implementation, but OEMs canpurchase only the functions they need. This strategy keeps Chromatic
focused on product technology and marketing rather than manufacturing
and allows it to leverage the manufacturing expertise and process
technology of its partners.
Chromatic aimounced version 1.0 of Media ware, the software for the Mpact
media processor, on September 23, so both parts of its media processor"solution" are now available. Toshiba and LG Semicon are ready to fabricate
volumes of Mpact chips, and Chromatic is ready to ship the software. The
next step for these companies is securing design-wins into leading OEMs.
Chromatic expects to aimounce several key design-wins soon, but thisinformation is not yet public.

Philips Semiconductors
This consumer electronics giant has been a market leader in digital video
chips but until recently did not actively participate in the PC semiconductor
market. Philips is now pursuing the PC market more aggressively with PCgraphics products as well as its TriMedia TM-1 media processor. The TriMedia name refers to a family of media processors that Philips plans to bringto market. TM-1 is the first actual product in the Tri-Media family. In the fallof 1995, the company plimged into the PC graphics market by acquiring themultimedia products group from Western Digital. That acqmsition gave
Philips inunediate access to PC graphics technology, as well as giving it the
Paradise brand name for board-level graphics products.
Philips is using its expertise in signal processing (most notably video
encoders, decoders, ADCs, and DACs) to gain a larger role in the PC
semiconductor market. TM-1 is focused on signal processing for the PC but
does not include a VGA controller. This makes it highly complementary to
the graphics products acquired from Western Digital. Future products in the
TriMedia family will be tailored for consumer applications other than PCs.
Those products are likely to include VGA or TV output as well as greater
capability to act as the system microprocessor rather than just as acoprocessor like the TM-1.

Otiiers
Several other companies have announced development efforts for media
processors, including Samsung, Mitsubishi, and others. Also, a number ofcompanies are developing products that are similar to media processors but
fall into other product categories. These include programmable DSPs like
IBM's MWave chip and products from Analog Devices, as well as
multifunction chipsets like NVidia's NVl and NV3 products. These products
MSAM-WW-DP-9606©1996 Dataquest

October 21,1996

11

Consumer Multimedia Semiconductors and Applications Worldwide

will compete with media processors for PC design-wins, but they offer
varying levels of performance and programmability.

Five-Year Forecast
Multimedia PCs
Multimedia PC shipments will continue to grow through the year 2000, withslower growth in 1999 and 2000. Figure 7 and Tables 1 and 2 show
Dataquest's forecast for multimedia PCs and media processors used in PCs
through the year 2000. The limiting factor for this forecast is the attach rate of
CD-ROM drives. Dataquest's definition of a multimedia PC requires anaudio subsystem as well as a CD-ROM drive. Two market factors that could
provide stronger growth for 1999 and 2000 are continued strong demand forhome PCs and continued emphasis on CD-ROM discs as media for software
distribution. Software distribution is a significant reason for adding a CDROM drive to any PC that is not networked, so this forecast should beviewed as conservative for 1998 to 2000.
Figure 7
Five-Year Forecast for Multimedia PCs and Media Processors Used in PCs
Thousands of Units
50,000-|-Multimedia PCs

45.000-Optimistic Media
Processor Forecast

40,00035,000-s

30,000-Conservative Media
Processor Forecast

25,000 20,000 15,00010,000-

5,000-1
0

m

1996

1997

1998

1999

2000
966637

Source: Dataquest (October 1996)

iViedia Processors
Media processors are a new product that will bring new levels of flexibility
to the PC market. These devices are becoming available at a critical time in
the PC market, as expectations for multimedia processing are increasing
faster than microprocessor performance. Multimedia functions can always be
implemented in ASSPs, but the cost of adding multiple chipsets can beprohibitive and this approach does not take advantage of redundancies
across chipsets. Media processors have the opportunity to balance thisMSAM-WW-DP-9606©1996 Dataquest

October 21,1996

Consumer Multimedia Semiconductors and Applications Worldwide

12equation by providing lots of processing power tailored for multimedia datatypes (audio, video, communications, and graphics) at a competitive priceversus performance level. However, the adoption of media processors into a
product does require a shift in product design and configuration. For media
processors, 1996 will be an interesting year, with some exdting
announcements of design-wins, but it will not be a strong indicator of longterm acceptance. Philips is not scheduled to reach volume production until
first quarter 1997, and other vendors will take even longer. Greater
competition between media processor vendors will develop as they bringnew products to market through 1997 and 1998.
Table 1Five-Year Unit Forecast for Media Processors Used in PCs (Thousands of Units)
1996
29,503200
100

Multimedia PCs
Optimistic Forecast
Conservative Forecast

1997
39,302
5,000
1,000

1998
43,905
10,0003,000

1999
44,59518,0006,000

2000
46,45527,000
4,000

CAGR
(%)
1996-2000
12.0
240^
151.5

2000
945,000
140,000
35

CAGR (%)
1996-2000
229.7
143.2
-3.3

Source: Dataquest (October 1996)

Table 2Five-Year Revenue Forecast for Media Processors Used in PCs(Thousands of Dollars)

Optimistic Forecast
Conservative Forecast
Dataquest Estimated ASP {$)

1996
8,000
4,000
40

1997
190,000
38,00038

1998
360,000
108,000
36

1999
630,000
210,000
35

Source: Dataquest (October 1996)

Media processors are a new product and have not started shipping as of thedate of this forecast. At this early stage in the market, Dataquest has forecast
media processor shipments based on the best of its knowledge andinformation and has provided two scenarios (optimistic and conservative).
Actual shipments are expected to fall somewhere between these two
scenarios. This forecast will be updated as more information becomes
available and as these products begin to ship into the PC marketplace.
Critical factors that will affect media processor shipments are:

MSAM-WW-DP-9606•

Willingness of ASSP vendors to compete in a price war•

Willingness of OEMs to embrace programmable solutions versus ASSPs•

Introduction of media processors from additional vendors to increase
competition•

Real demand for high-performance multimedia features such as MPEG-2
decompression, AC-3 decoding, and videoconferencing©1996 Dataquest

October 21,1996

Consumer Multimedia Semiconductors and Applications Worldwide

13_

Dataquest Perspective
Multimedia muscle, or the ability to process digital information for audio,
video, and communications applications, is increasingly important forcomputing applications as well as consumer electronics applications. Media
processors are new products that could help fill the need for multimedia
muscle in these two applications markets, but PCs will be the initial driverfor media processor shipments. Additional opportunity exists within
consumer electronics as consumer devices become increasingly based on
digital technologies and the gap between PCs and consximer electronics gets
narrower.
Media processors could bring advantages such as scalability andprogrammability to the consumer electronics market. Most consumer
electronics products are not upgradable; they are usually replaced if new
formats, standards, or other requirements develop. The technology treadmill
moves quickly, and flexible, programmable designs are important. The
ability to adopt new technologies quickly could be a key differentiator
among consumer electronics OEMs as their products increasingly competewith computers as soiirces of entertainment.

l\/ISAM-WW-DP-9606©1996 Dataquest

October 21,1996

14

Consumer Multimedia Semiconductors and Applications Worldwide

For More Information...

Geoff Ballew, Industry Analyst
Internet address
Via fax(408) 468-8676
gbaIlew@dataquest.coin(408)954-1780

The content of this report represents our interpretation and analysis of information generally available to the
public or released by responsible individuals in the subject companies, but is not guaranteed as to accuracy orcompleteness. It does not contain material provided to us in confidence by our clients. Reproduction or
I J i ^ y ^ f j l I C S T <^^sdosure in whole or in part to other parties shall be made upon the written and express consent of Dataquest.
Ao
AN ^ ^ ^©1996 Dataquest—Reproduction Prohibited
A Gartner Group Company dataquest is a registered trademark of A.C. Nielsen Company

Perspective

Consumer Multimedia Semiconductors and Applications Worldwide

Market Analysis
Set-Top Box Semiconductor Opportunity
Abstract: This document analyzes the competitive landscape and opportunities for makers
of semiconductors for digital set-top box boxes. A forecast of growth of set-top box production and their semiconductors is presented. This report also provides an analysis of changes
in set-top box architectures and ways in which semiconductor manufacturers can tailor
their products and strategies to address those trends.
By Jonathan Cassell

Set-Top Box Definitions"Set-top box" is a generic term that means different things to different
industries. The seven product categories presented in Table 1 all have beenreferred to as set-top boxes (STBs), based merely on their location in relation
to the TV set.

>-

Q

LU
3
N
2
LJJ
—1
<
>

o<
o
LU CC
-J

<

\L ^

This report will focus on the first category, pay TV receivers, specifically,
digital pay TV receivers. In this document, digital pay TV receivers arereferred to as digital set-top boxes. Digital STBs are pay TV receivers
capable of accepting digital audio and digital video input. This is in contrast to analog STBs—the most common type of pay TV receiver in use
today—which can accept analog audio and video signals. Digital STBs thatuse all kinds of delivery technologies v^U be covered in this report, including cable and satellite types. Table 2 presents a list of definitions of digital
STB terms.

Dataoyest
Program: Consumer Multimedia Semiconductors and Applications Worldwide
Product Code: MSAM-WW-DP-9605
Publication Date: September 2,1996
Filing: Perspective(For Cross-Technology, file in the Semiconductor Application Marl<ets, Volume 2, binder.)Consumer Multimedia Semiconductors and Applications Worldwide

Table 1
Descriptions of Various Products Referred to as Set-Top Boxes
Product
Pay TV Receivers

Description
Includes both aiialog and digital receivers. Includes cable. Direct Broadcast
Satellite (DBS), and Multipoint Multichannel Distribution System (MMDS)
pay TV receivers.

Dedicated Game Consoles

Examples are Sony PlayStation and Sega Saturn

Read-Only Multimedia
Computers

Examples are 3D0 and Philips CD-I. Formerly known at Dataquest as TV
CD-ROM players. This category is being replaced by dedicated game
consoles.

Back-Channel Trarismitters

Allow user to play along with networked sports and game shows—TV
Answer, for example.

Audio and Data Decoders

Used for nonvideo signals transmitted out of band in the vertical blanking
interval, in-band video, or rn-band audio. Include digital cable radio andclosed captioning.

Navigational Systems

A special type of data decoder for electronic progranuning guides. Dedicated hardware systems exist, but most are being integrated into pay
TV receivers. Examples are StarSight, Prevue Network, and Interactive
TV Guide.

Data Storage Devices

Examples are VCR-Plus and Sega Chaimel Game Adapter

Source: Dataquest (August 1996)

The Digital Transformation
The STB market is undergoirig a mass migration from analog to digital technology. This migration is fundamentally changing the shape of the STB
market. Digital technology allows STBs to receive many more channels
wiih m u c h higher quality audio and video than is possible with analog systems. It also increases the interactive capabilities of STBs, giving customers
a greater choice of what to watch and when. Even more significantly, digitaltechnology is bringing a new business model to the STB market, a modelthat adds real competition to the equation for the first time.
With the proliferation of new digital television systems, such as DirecTV,
PrimeStar, and EchoStar, consumers now have a choice of which service tosubscribe to, which provides an alternative to the monopolistic delivery
model of analog cable. The emergence of digital television standards, suchas digital video broadcasting (DVB), has allowed STB vendors for the firsttime to compete on price and technology, in contrast to the analog market,
where customers were forced to use proprietary boxes rented to tiiem by
their cable service provider. Some digital STBs now are sold in retail outlets,
allowing customers to compare products from numerous manufacturers
and make choices based on price, features, and brand name.

IVISAIVl-WW-DP-9605©1996 Dataquest

September 2,1996

•Consumer Multimedia Semiconductors and Applications Worldwide

17

Dataquest Perspective
If anything, the EchoStar price cut illustrates the benefits that highly integrated silicon can bring. EchoStar was considered an underdog in the DBS
market. The company was several months late in beginning its services, andit entered a market dominated by the rapidly growing DirecTV/USSB DSS
system. However, cutting its price to just $199 should do a great deal toboost its fortunes in the market.
EchoStar said it was able to achieve the price reduction in its second-generation system by using highly integrated silicon in its systems. The EchoStar
system uses a proprietary ASIC that integrates functions that formerly took
12 chips to perform, including MPEG-2 transport decoding, DVB descrambling, and general-purpose input/output.
Although the integration will allow EchoStar to cut costs, it will not reducethem enough to allow it to make any money off the sales of the boxes oreven to break even. At $199, EchoStar is losing money on each unit it sells.
EchoStar acknowledges that its strategy is to make a profit by selling services, rather than the boxes themselves. The fact that EchoStar is willing totake this step shows how tough the competition in the DBS market is—andhow great the rewards are for running a successful service. EchoStar's movealso underscores the importance that STB makers are placing on finding
low-cost silicon solutions that will allow them to minimize losses fromequipment sales.
Many semiconductor companies participating in the digital STB market
now possess strengths in specific technology areas. As long as integration
strategies are limited to certain portions of the STB, such as demodulationor MPEG decompression, those companies will do well. However, in thelong term, digital STB makers will be seeking chipsets that integrate mostfunctions into just one, two, or three chips. This will require semiconductor
vendors to have all STB functions in their portfolio. Semiconductor makers
wanting to be players in this market in the long term should ensure thatthey have all the pieces of the STB puzzle through internal development,
partnerships, licensing, and acquisition. The STB market likely will follow
the pattern of the PC market, where OEMs use high-volume ASSPs toreduce costs. Thus, in the long term, STB silicon solutions should be standard chipsets.
In the war between DSS and DVB, DVB appears to be the long-term winner.
By 2000, DVB should constitute the majority of digital video systems.
Although DSS now has more support, the openness of the DVB standard
eventually will cause it to be adopted by more MSOs and STB vendors
worldwide. It is expected to become dominant in the same fashion that
Europe's General Standard for Mobile Communications (GSM) has for cellular phones. Intrinsically, DSS is somewhat cheaper to implement compared with DVB, given that it is specifically designed for only one market
and has no requirements to support multiple languages and Chinese characters, such as DVB does. However, the widespread support that DVB will
garner will allow it to achieve lower costs in the long run. DVB's influence
may well extend beyond STBs. While efforts to develop a digital high-definition TV standard in the United States have been iiured in factional fighting, DVB—with its comprehensive support for digital broadcast—could
become the worldwide standard for next-generation television.
MSAM-WW-DP-9605©1996 Dataquest

September 2,1996

18

Consumer Multimedia Semiconductors and Applications Worldwide

For More Information.
••• •Jonathan Cassell, Industry Analyst
Internet address
Via fax

IjOT'l/^l I^Cf
* ^ ' * W I V ^ U V - J !>A Gartner Group Company(408) 468-8195
jcassell@dataquest.com(408) 954-1780

The content of this report represents our interpretation and analysis of irrfonnation generally available to the public
or released by responsible individuals in the subject companies, but is not guaranteed as to accuracy or completei\ess.
It does not contain material provided to us in confidence by our clients. Reproduction or disclosure in whole or inP^"^'° °^^^ parties shall be made upon the written and express consent of Dataquest©1996 Dataquest—Reproduction Prohibited
Dataquest is a registered trademark of A.C. Nielsen Company

'Consumer Multimedia Semiconductors and Applications Worldwide

Table 2
Digital Set-Top Box Tenninology
Term
Set-Top Box

Definition
In this document, STB refers specifically to pay TV receivers.

Digital Set-Top Box

An STB that receives digital audio and video signals

Analog Set-Top Box

An STB that receives analog audio, and video signals

Analog Television

A television system that broadcasts audio and video in an analog format
Analog is the most common form of broadcast today and is used by the
majority of cable and radio frequency systems.

Digital Television

Television systems that deliver digital audio and video to STBs using any
one of a variety of delivery technologies

Digital Cable

A digital television system that broadcasts digital audio and video signals to
STBs over cable lines

Direct Broadcast Satellite

DBS is generic term for a technology that broadcasts video and data fromsatellites directly to STBs attached to receiver dishes. Also known as Direct
to Home (DTH)

Digital Video Broadcasting

DVB is a European-based group of interrutional companies formed to set
standards for digital video broadcasting. DVB standards cover satellite,
cable, and other delivery technologies.

Digital Satellite Service

DSS is a DBS system designed by Hughes Electronics Corp. for use with its
satellite system. Works with DSS-tjqje DBS set-top boxes.

Asymmetrical Digital Subscriber LoopADSL is a digital television delivery technology that makes telephone
twisted-pair lines capable of supporting MPEG-2 transmissions.

Multipoint Multichannel
Distribution System

MMDS is a digital television delivery technology that broadcasts multiple
channels of video and data services from a central transmitter, also known
as wireless cable.

Hybrid Fiber Coax

HFC is a technology that can be used for digital and analog television delivery. Switched digital video aUows interactive digital TV to be broadcast as
well as two-way communications over cable Unes. HFC xises fiber links
from the central site to neighborhood hubs and then uses coaxial cable totransmit to homes.

Switched Digital VideoSDV is similar to HFC except that it requires a digital STB to receive the signals in the home.

MPEG-2A standard from the Motion Picture Experts Group for video compression
The most commonly used compression technology for digital video
systems

Multiple Service Operator

MSOs are providers of television services, such as cable TV or DBS
companies.

Source: Dataquest (August 1996)

MSAM-WW-DP-9605©1996 Dataquest

September 2,1996

Consumer Multimedia Semiconductors and Applications Worldwide

In 1996, the dynamics of this new, highly competitive market are beginning
to assert themselves. DBS MSOs are cutting subscriber rates to steal customers away from analog cable and from other digital satellite services. STB
makers, too, are slashing the price of their equipment. In the future, competition will become more intense as new MSC5s enter the market using any
one of the variety of delivery methods possible with digital STBs.
For chipmakers, the hot competition means hot opportunity as STB makers
and MSOs look to the semiconductor content of their equipment to cut
costs. STB makers are finding that better silicon trarislates directly into competitive advantage. With the emphasis on cost reduction, semiconductor
vendors that can offer their customers low-cost, highly integrated standard
products for digital STBs will be successful in the long run.

The Digital Set-Top Box Marlcet
The move from analog to digital technology in the set-top market unlocks
the potential for fast growth. Sales growth for analog STBs has ceased inrecent years because of the tight control that analog cable MSOs have overthe distribution of their equipment. Analog cable MSOs rent their STBs.
When customers no longer need the analog cable box, they return it to the
MSO, which then rents it to someone else, increasing the life span of that
equipment and depressing sales of new STBs. Analog STBs tend to be proprietary to the MSO, eliminating the possibility of consumers choosing
which box they want to use.
As consumers are attracted to the larger number of channels and higher
quality of video and audio brought by digital video systems, they will
begin to buy more digital STBs than analog ones. As shown in Figure 1, thebulk of production in 1997 will cross over from analog to digital STBs inorder to meet customer demand. Production of digital STBs will grow rapidly over the next few years, increasing to more than 42 million units in
2001, up from 2.9 million in 1995.
Because digital STBs have higher average selling prices (ASPs) than analog
STBs, factory revenue from sales of digital STBs surpassed that of analog
STBs in 1995, as shown in Figure 2. Factory revenue from sales of digital
STBs is expected to grow to nearly $9 billion in 2001, up from $1.4 billion in
1995.
Digital STB unit production and factory revenue will experience strong
increases through the year 2001. Growth will be boosted in intervals eachtime a new region ramps production of systems. Initial growth will comefrom production of digital DBS STBs, particularly in the Americas, which atpresent is the leading region for satellite set-top box manufacturing. However, rapid growth of digital DBS STB production in Europe will propelthat region past the Americas in 1998. Europe will continue to drive the digital STB market until the year 2000. However, late in the century, Asia/
Pacific will emerge as a digital DBS STB manufacturing powerhouse andwill outstrip European production by the year 2001.

MSAM-WW-DP-9605©1996 Dataquest

September 2,1996

Consumer Multimedia Semiconductors and Applications Worldwide

Figure 1
Worldwide Digital and Analog Set-Top Box Production Forecast
Thousands of Units

1993

1994

1995

1996

1997

1998

1999

2000

2001
3SSS94

Source: Dataquest (August 1996)

Figure 2
Worldwide Digital and Analog Set-Top Box Factory Revenue Forecast
Millions of Dollars
9,0008,000

Digital Set-Top Box
Factory Revenue

7,000

Analog Set-Top Box
Factory Revenue

6,000
5,000

i

i

4,000

P

3,000'
2,000'
1,000
0

liJBfcfcfct
1993

1994

1995

1996

1997

1998

2000

2001

1999

Source: Dataquest (August 1996)

MSAM-WW-DP-9605©1996 Dataquest

September 2,1996

Consumer Multimedia Semiconductors and Applications Worldwide

Asia/Pacific manufacturing will grow as ASPs for digital DBS STBs fall. As
shown in Table 3, factory ASPs for digital satellite set-top boxes will
decrease to $203 in 2001, down from $474: in 1995. Much of the decline in
ASPs can be attributed to manufacturers using lower-cost, more highly
integrated chipsets.
Meanwhile, production of digital cable STBs will move into high volume
starting in 1997. The Americas will be the center of digital cable STB production as the analog cable systems migrate to digital technology. Factory
ASPs for digital cable set-top boxes will fall to $225 in 2001, down from$682 in 1995.

Types of Digital Video Delivery Systems
In addition to encouraging competition between MSOs and equipment
manufacturers, the move to digital in the STB market is increasing the number of options for delivery of services. Numerous options exist for transmission of video and audio to digital STBs, as opposed to analog STBs, where
the only widely used delivery methods are cable and satellite. As shown in
Figure 3, the t5rpe of transmission system used often is determined by theservice provider's line of business. Telecommunications companies arebacking delivery methods that use the telephone infrastructure, such as
ADSL, HFC, and SDV. They also are pioneering development of MMDS
systems. Cable MSOs are concentrating most of their efforts on delivering
digital video over existing cable lines. DBS services are used by a mix ofcompanies including cable companies, telecommunications operators andmedia companies.
Table 3
Worldwide Cable and DBS Set-Top Box Production

Digital Cable Set-Top Boxes(K Units)
Factory ASP ($)
Factory Revenue ($M)
Semiconductor Content ($)

1993

1994

8

20

900

702

1997

1998

1999

2000

2001

C A G R (%)
1996-2001

63

437 1,500

3,199

6,447

10,405

15,711

151

682

492

383

326

294

257

225

-17

1995 1996

7

14

43

215

574

1,043

1,895

2,671

3,535

108

474

272

208

190

174

138

132

124

116

-9

4

5

13

83

260

441

852

1,287

1,822

127

100

72

64

77

64

48

46

39

32

-11

Americas Production ($M)

7

10

28

165

367

503

868

1,039

1,140

86

Digital DBS Set-Top Boxes(K Units)

0.50

874 2,841 6,579 9,655 12,903

15,295

20,25526,87245

Factory ASP ($)

900

465

474

348

296

267

233

203

-13

Semiconductor TAM ($M)
Percentage Americas

447

Factory Revenue ($M)

0.45

406

1347 2,943 3,358

3,824

4,086

4,727

5,455

26

Semiconductor Content ($)

400

262

198

176

151

122

114

105

97

-11

Semiconductor TAM ($M)

0.20

229

562 1,158

1,458

1,572

1,744

2,127

2,607

29

Percentage Americas

0

96

67

42

32

28

25

22

18

-20

Americas Production ($M)

0389

902 1,228

1,066

1,054

1,038

1,035

991

2

Source: Dataquest (August 1996)

MSAM-WW-DP-9605©1996 Dataquest

September 2,1996

'Consumer Multimedia Semiconductors and Applications Worldwide

Figure 3
Digital Set-Top Box Delivery Technologies

Source: Dataquest (August 1996)

At present, the vast majority of digital STBs produced use DBS delivery systems; nearly 98 percent of tiie STBs shipped in 1995 are of the DBS variety.
DBS will remain the No. 1 digital television delivery system at least through2001, despite strong growth of digital cable, as shown in Figure 4. The
deployment of digital cable has been delayed by infrastructure issues.
However, production of digital cable STBs is increasing at a rapid rate. SDV
and HFC are in the trial phase and are not likely to undergo any large-scale
deployments until 1997. Early deployment of ADSL and MMDS is notexpected to begin until 1998.
From a semiconductor point of view, STBs designed to work with the various delivery technologies can be largely alike. For example, a digital cable
STB can use most of the same components as a digital DBS STB. The only
major difference between those two types of systems is in the demodulation
functions, which currently account for about 23 percent of the semiconductor content of a digital STB. Some delivery systems require no changes in
STB design. For example, a digital cable STB and an HFC STB both interface
to coaxial cable and could use an identical demodulation and network
interface subsystem. Thus, in Figure 4, delivery systems such as HFC and
SDV are accounted for in the digital cable listing.

MSAM-WW-DP-9605©1996 Dataquest

September 2,1996

Consumer Multimedia Semiconductors and Applications Worldwide

Figure 4
Worldwide Cable and DBS Digital Set-Top Box Production Forecast
Thousands of Units

1993

1994

1995

1996

1997

1998

1999

2000

2001
9S5597

Source: Dataquest (August 1996)

1996: Satellite Wars
In 1996, the battle in the digital STB market is between competing DBS services and standards. Ventures such as DirecTV, PrimeStar, and EchoStar arefighting to gain market share by cutting the prices of services and equipment.
Rapid growth of sales of DBS services and equipment in 1995 resulted in
the highly competitive environment of 1996. As shown in Table 4, the leading DBS STB vendor in 1995 was Thomson Consumer Electronics, whichsells under brand names that include RCA and General Electric. Thomson
produces boxes that can accept broadcasts from the DirecTV and U.S.
Satellite Broadcasting (USSB) MSOs. Other STB makers enjoyed strong
sales in 1995 as well, including General Instrument, which produces boxes
for the PrimeStar system, and Sony, which also mantifactures DirecTV and
USSB-compliant DSS systems. The main market for DBS systems was in the
United States, with 92 percent sold in that region.
In 1996, new players EchoStar Communications Inc. and AlphaStar haveentered the digital DBS MSO market. A host of other vendors are preparing
to throw their hats into the digital STB ring before titie end of 1996, including Canal Plus in France and PerfecTV in Japan. Table 5 lists some of the
major MSOs and the status of their businesses in 1996.
With the ranks of competitors swelling, the battle for the digital STB market
has begun in earnest. EchoStar in July fired a broadside on the competition
when it slashed the price of its second-generation DISH network STB to$199, down from $599. While the deal lasts only through the end of 1996
and comes bundled with a $300, one-year service deal, EchoStar had decisively undercut the competition's pricing. In response, DirecTV and USSB

MSAM-WW-DP-9605©1996 Dataquest

September 2,1996'

Consumer Multimedia Semiconductors and Applications Worldwide

Table 4
DBS Set-Top Box Vendor Sales, ASPs, and Regions in 1995
Set-Top Box Vendor
Thomson Consumer Electronics
General Instrument
Sony
OthersTotal

Units1,260,000
1,000,000
100,000
210,000
2,570,000

Americas (%)
100
100
100
-

Europe (%)
100

Source: Dataquest (August 1996)

instituted their own low-cost STB deal, reducing the price of their set-top
boxes to $199, down from about $499. To achieve that price point, the two
MSOs used a combination of rebates to customers and subsidies to manufacturers of DSS systems. EchoStar's move has spurred a price war among
DBS MSOs.
The importance of the aggressive price reductions of DBS systems has notbeen lost on cable MSOs. With the popularity of DBS rising, cable companies have responded with advertising campaigns critical of the quality ofsatellite services. They have also accelerated their own digital video plans,with Tele-Cortununications Inc. announcing that it is maldng a purchase of
several million General Instrument digital STBs in August.

DSS versus DVB
Although the satellite war can be seen as a battle among MSOs and box
manufacturers, it also is a fight between standards. At present, the mostpopular format for DBS is the Digital Satellite Service, which was designed
by Hughes for use with its satellite system. DSS is supported by the
DirecTV and the USSB services, which have about 1.7 million subscribers,
the largest number of customers in the DBS business. In addition to having
the most subscribers, DSS has the largest number of STB manufacturers
building or committed to building systems for it. RCA and Sony are building DSS STBs, and Samsung, Sanyo, Daewoo, Sony, Toshiba, Uniden, andPanasonic are planning to introduce compatible systems. The standard
itself specifies use of MPEG-2 video decompression and AC-3 audio.
New services like EchoStar and AlphaStar use the Digital Video Broadcasting standard, which was specified by a Europe-based corisortium of companies. Like DSS, DVB uses tiie MPEG-2 video compression standard. As foraudio, DVB uses MPEG-2's own audio format. Although DVB now has
fewer subscribers and fewer box manufacturers in its camp, it is an open
standard, with most semiconductor manufacturers supporting or plarming
to support it. With widespread support anticipated, DVB backers believethat economy of scale eventually will allow it achieve lower costs than DSS.
As a specification, DVB is comprehensive, covering all major types of delivery systems. In late 1995, the DVB steering board approved the specification
for the terrestrial flavor of DVB, known as DVB-T, and for DVB-MS, a digital multipoint video distribution system (MVDS). DVB-T allows digital television signals to be transmitted to receivers that use roof-mounted aerials

MSAM-WW-DP-9605©1996 Dataquest

September 2,1996

CO>

Table 5
Status of Some Major MSO's Digital Video Systems in August 1996o-aSystem Name

Company

Delivery Mode

Standard

toDirecTV/USSB

Hughes and General
Motors/ Hubbard
Broadcasting

DBS

DSS

EchoStar

EchoStar GjftweSffiications Ini,

DBS

AlphaStar

Tee-Com

PrimeStarIo>oRegion Served

StatusThomson, Sony,
Hughes, Toshiba,
Uniden, Hughes,
Sanyo, Samsung,
Daewoo, andMatsushita

United States

Began bin 199

DVBGroupe Sagem and
SCI Systems Inc.

United States

Began b
in Ap

DBS

DVB

Tee-Com

United States

Began bin July

TCI and Cable Co.
Consortium

DBS

DigiCipher

General Insi^tiieht

United States

Began bin 199PerfecTV

Four major Japanesetrading houses

DBS

DVB

Toshiba Corp.,
Hitachi Ltd., NEC,Sony, Matsushita,
Sharp, Fujitsu

Japan

Will becasts i
Septe

GalaxyDirecTV (Hughes
Electronics)

DBS

DSS

Thomson, Sony,
HughesLatin America

Began bin midCanal Plus

Canal Plus

DBS

DVB

jPhilips and T V /ComFranceSet to bvice in

Tele-TV

Bell Atlantic,
NFYNEX, Pacific
Telests

MMDS

Thomson Consumer Electronics

United States

Set to bservic

tn

@
CO
CO

a>
o

Si
fi>

.£>

C
CD
CO

CO
CD

•a
f-fr
CD

3
oCD

CO
CO

en

Set-Top Box
Suppliers

NA = Not applicable
Source: Dataquest (August 1996)

Consumer Multimedia Semiconductors and Applications Worldwide

11

or even simple indoor antennas. DVB-MS is similar to MMDS wirelesscable, using microwaves to transmit signals to rooftop antennas that are in
the line of sight.
Built on top of the DVB is the Digital Audio-Visual Council 1.0 (DAVIC 1.0)
specification, which standardizes interactive elements of digital video systems, such as video on demand, and home shopping. DAVIC soon is
expected to give final approval to Version 1.1 of its specification, whichadds support for Internet access. The group is also working to define standards for digital cable modems. By offering a standard approach to digital
video interactivity, DAVIC intends to make these functions available aswidely as possible.

The Digital Set-Top Box Semiconductor Opportunity
The digital STB market represents an extremely attractive opportunity forchip manufacturers prepared to serve it. Semiconductor sales into the digital STB market are expected to rise to $4.4 billion in 2001, up from $575 million in 1995, as shown in Figure 5. Over the next few years, DBS set-top
boxes will command the lion's share of semiconductor sales into the digital
STB market. However, sales of digital cable STBs will grow rapidly and willaccount for 41 percent of semiconductor consumption in the digital STB
market by the year 2001.
Figure 5
Worldwide Digital Set-Top Box Semiconductor Revenue Forecast
Millions of Dollars
4,500 -d
4,000-

Total DBS
Semiconductor

3,500-

Total Cable
Semiconductor

3,0002,5002,000 1,5001,0005000
1993

1994

1995

1995

1997

1998

1999

2D00

2001
565596

Source: Dataquest (August 1996)

MSAM-WW-DP-9605©1996 Dataquest

September 2,1996

12

Consumer Multimedia Semiconductors and Applications Worldwide

Top suppliers into the STB market include Motorola, which sells CPUs andmicrocontrollers into those systems as well as some DigiCipher video
decompression chips and demodulation devices. SGS-Thomson alsoachieved a high rank in 1995 because of sales of MPEG-2 decompression
chips, a market the company leads. Symbios Logic in 1995 was a major supplier to the digital STB market based the strengtfi of sales of demodulator
ASICs and some decompression devices.
Today's digital STBs use a mix of off-the-shelf parts and ASICs. Devices
such as RCA's first-generation DSS system, wHch was manufactured byThomson, used readily available parts such as SGS-Thomson's MPEG-2
video and audio decoder and its 16-bit microcontroller. It also incorporated
three ASICs manufactured by Symbios Logic that perform demodulationand error correction. While such a design allowed RCA to enter the market
quickly and capture a large amount of market share, it was not the mostcost-efficient approach to building a system, with the large number of semiconductors, passives, and standard logic pushing the cost to build an entire
system to $283.82.
In the short term, STB vendors are turning to ASICs to reduce costs and todifferentiate themselves from the competition.
However, many vendors now believe that the future of the STB market lies
in highly integrated, application-specific standard products (ASSPs). LSI
Logic has been the early leader in this area with its Integra design, whichboils down most of the logic required into just three chips, which together
are priced at only $70 to $75 in high volume. VLSI Technology recently
announced its Vista STB architecture, which—like Integra—is a comprehensive digital STB chipset. Other companies including Motorola andC-Cube Microsystems are planning to offer similar standard chipsets.
Road maps from LSI Logic and VLSI Technology call for a an aggressive
integration of functions into fewer and fewer chips. Figure 6 shows VLSITechnology's road map for integration of digital STB functional blocks.
When VLSI Technology moves production of its STB silicon into a 0.35micron process, it believes it can integrate most functions into just one chip.
Dataquest believes STB semiconductor integration will be somewhat lesscomprehensive. By the year 2000, the STB still will use several chips, including a separate demodulator device, as shown in Figure 7. Having a separate
demodulator device allows different front ends to be used, depending on
the transmission format employed by the STB, whether it is cable, satellite
or a newer technology, such as ADSL.
As STB silicon becomes more integrated, its costs will decline precipitously.
As shown in Figure 8 and Table 6, the silicon content of a digital DBS STB in
1996 was $175.93. That cost will drop to $121.80 by 1998 and to $105.36 by
2000. Figure 8 shows the semiconductor content of a set-top box divided
into major subsystems. The cost listed for each subsystem accotmts for logic
ICs, memory, passives, discretes, and crystal oscillators. In Figtire 8, thevalue of the semiconductor content of a digital DBS STB is divided by major
subsystem rather than by component because, as time passes, the functionsof each subsystem will be integrated into a single chip. Of the major subsystems, MPEG-2 decompression will remain fiie most costly, in part
because of the complexity of the logic used and in part because of the large
amount of memory used compared with other subsystems of the STB.
l\/ISAM-WW-DP-9605©1996 Dataquest

September 2,1996

CO>

Figure 6
Digital Set-Top Box Road Map for VLSI Technology

o
-a
CD

o>

QPSK/QAM
Demodiilaiion

1995

O
tn

11196

R-S
ChannelEncodeSingle-Chip
ReceiverR-S/Viterbi
Channe!
Decoding

Desc ramble
DVB;DES

MPEG-2Demux

ARM RI
Cache
Periphera

Integrated
Set-Top
Controller

@
(O
CO
O)

o
0>
S3

c
CD
CO

1997

1997-98

CO
CD

•o^
CD"

3

cr
CD

CO
CO

O)

Source: VLSI Technology

VISTA STB
MPEG-2
Processor

Single-Chip
Transceiver

VISTA
Superintegrated
Single-Chip

'^':^

VIST
MP
Pro

14

Consumer Multimedia Semiconductors and Applications Worldwide

Figure 7
Digital Set-Top Box Functional Block Integration Path
Demodulation/ 1

.EC

1

^

Transport/
Demux

1
1

^

MPEG-2
Decode1

Television
Encode11Conditional
Access

1
1

A
/ / »

Demodulation/ 1
FEC
1

CentralProcessing

1
1

Audio/Video1

Demodulation/ 1

FEC

1

Processing
A/V

1
1

DRAM

1

/J^

Back-Channel
Communications
Microprocessor 1
Central1
Processing
|

DRAM

1

1995

,

"" 1
1998

2000
9656O0Source: Dataquest (August 1996)

MSAM-WW-DP-9605©1996 Dataquest

September 2,1996

Consumer Multimedia Semiconductors and Applications Worldwide

15

Figure 8
Semiconductor Content of Digital DBS Set-Top Boxes
Dollars180

m Interface Subsystem
Demodulatorm Subsystem
Decompressionn Subsystems Transport Subsystemn Communications
Subsystem

1601401201008060-^

40-

Central Electronics
Subsystem

200
1996

1998

2000

Source; Dataquest (August 1996)

Table 6
Semiconductor Content of Digital DBS Set-Top Boxes (Dollars)
Semiconductor Content

1996

1998

2000

Central Electronics Subsystem

6.99

6.10

Communications Subsystem

10.95
10.12

9.26

8.56

Transport Subsystem

21.47

18.05

Decompression Subsystem

75.88
40.02

52.65
27.17

15.80
44.77

17.49

7.68
121.80

Demodulator Subsystem
Interface Subsystem
Total

175.9323.22
6.91
105.36

Source: Dataquest (August 1996)

MSAM-WW-DP-9605©1996 Dataquest

September 2,1996

Consumer Multimedia Semiconductors and Applications Worldwide

16

In order to provide a complete STB chipset, companies must have all thepieces of the STB platform in their portfolio. In pursuit of this goal, semiconductor companies now are moving to add more and more functions totheir STB portfolios through internal development, partnerships, andacquisitions. Table 7 give a list of the STB functions offered by various players in the STB semiconductor market.
Table 7
Summary of Manufacturers' Digital Set-Top Box Chipsets

Analog Devices
AT&T
Broadcom
C-CubeComstream
CrystalFujitsu
GEC Plessey
Semiconductors
HitachiHyundai
LSI Logic
PhilipsSiemens
SGS-Thomson
Sony
VLSI Technology

Forward
DualA/D
Error Transport
Converter Demodulator Correction
Demux
X
X
X
X
X
X
X
X
X
X

X
X
X
X

X

X
X
X
X
X
X
X

X

X

X
X
X

X
X
X
X

X
X
X

X
X
X

MPEG
Audio

MPEG
Video

System
CPU

X

X

X
X

X

X
X
X
X
X
X
X
X

X
X
X
X
X
X
X
X

X
X
X
X
X

Source: Dataquest (August 1996)

MSAI\/l-WW-DP-9605©1996 Dataquest

September 2,1996

Perspective

Consumer Mtiltimedia Semiconductors and Applications Worldwide

Competitive Analysis
For Video Game Players, It's Time to "Go Big or Go Home"
Abstract: This report provides a cotnpetitive analysis of the recent price cuts and productannouncements by Sony, Sega,'Nintendo,and Bandai. The implications for chip
manufacturers are explored, and significant winners in the semiconductor industry are
higftlighted.
By Dale Ford

The Gloves Come Off with Price Cut Announcements by Sony and Sega, while
Nintendo Launches I\I64 at E3
The dramatic price announcements and product introductions in the video
game industry during 1996 have set the stage for a competition in which only
the fittest will survive.
How Low Can They Go?

Nintendo came into the 1996 E3 Show in Los Angeles with carefully
orchestrated plans to capture the limelight with the long-awaited public
unveiling of its Nintendo 64 platform. However, Sony and Sega managed tocapture the headlines with dramatic aimouncements of steep retail price cutsfor the Sony PlayStation and Sega Saturn. Coming into the show, Sony's
Plaj^tation was priced at $299, and Sega's Saturn was $249 after a $50 pricecut that was announced on April 1. E3 began on Thursday morning. May 16,
with a Chief Executive Roundtable that included participants from Sony
Computer Entertainment America, Nintendo of Ajnerica, Sega of America,
Acclaim Entertainment, Electronic Arts, Microsoft Interactive Media, DisneyInteractive, and The 3DO Company. Taking the first question directed tohim, Sony Executive Vice President Jim Whims delivered the sound-bitepunch: "At Sony, our philosophy regarding price changes is really very
DataQuest
Program: Consumer Multimedia Semiconductors and Applications Worldwide
Product Coda: MSAM-WW-DP-9604
Publication Date: August 12,1996
Filing: Perspective(For Cross-Technology, file in the Semiconductor Application Markets, Volume 2, binder.)Consumer Multimedia Semiconductors and Applications Worldwide

simple. Go big or go home." He then delivered the news that, effective
immediately, the Sony PlayStation price would be cut by $100 to $199, which
was met by extended cheers and applause in the audience. It appears that theannouncement caught Sega and Nintendo a bit flat-footed in the meeting,but Sega's Tom Kalinske responded on Friday morning with another $50
price cut announcement that brought the Saturn down to $199. These pricecuts generated such excitement because retailers and software companies
believe these cuts are necessary to add strength to the rebounding video
game market in the United States.
Make no mistake, the video game industry titans have moved thecompetition to a level that would cause even the most seasoned veterans ofMortal Kombat, Virtua Fighter, or Killer Instinct to catch their breath. These
price cuts are painful, high-stakes moves that will have major impacts on thebottom line. A cost analysis of the Saturn and PlayStation reveal theinvestments being made by Sony and Sega to promote their platforms andwho has the relative advantage. Dataquest performed a detailed cost analysis
of each platform, shown in Tables 1 and 2. This cinalysis indicates that thecost to manufacture each Sega Saturn is $330, while the Sony PlayStation has
a manufacturing cost of $260. These costs reflect only the cost of goods andlabor in manufacturing and exclude fixed overhead and channel costs.
Table 1
Sega Saturn System Cost Analysis (Dollars)
Category
Total System Production Cost
Total Semiconductor Cost
ICs
MemoryDRAM/VRAM/SDRAM/RDRAM
Nonvolatile
MPU, Graphics/Video
Audio
CD-ROM Control
System Support
Standard Logic, Linear
Active Discrete Components
Passive Components
Systems, Modules, Batteries
Printed Circuit Boards
Mechanical Components
Labor and Freight

1995

1996

428.0
261.6
261.4
166.6
161.6
5.0
57.9
9.5
15.0
9.8
2.6
0.2
13.7
76.5
23.0
16.5
36.8

329.6
199.9
199.7
116.0
111.7
4.4
51.8
8.4
12.6
8.6
2.3
0.2
13.3
39.3
22.5
16.5
38.0

Penentage
Change
-23.0
-23.6
-23.6
-30.4
-30.9
-12.5
-10.5
-11.2
-16.3
-12.5
-9.0
-2.0
-2.8
-48.6
-2.0
0.2
3.3

Source: Dataquest (July 1096)

Table 2
Sony PlayStation System Cost Analysis (Dollars)

MSAM-WW-DP-9604©1996 Dataquest

August 12,1996

Consumer Multimedia Semiconductors and Applications Worldwide

Category
Total S5retem Production Cost
Total Semiconductor Cost
ICs
MemoryDRAM/VRAM/SDRAM/RDRAM
Nonvolatile
MPU, Graphics/Video
Audio
CD-ROM Control
System Support
Standard Logic, Linear
Active Discrete Components
Passive Components
Systems, Modules, Batteries
Printed Circuit Boards
Mechanical Components
Labor and Freight

1995
289.4
196.9
195.6
105.2
99.6
5.6
34.0
16.8
35.5
2.5
1.7
1.3
18.1
27.0
12.5
11.7
23.1

1996
258.7
166.6
165.4
81.6
76.4
5.2
30.1
16.1
33.7
2.3
1.7
1.2
17.7
26.5
12.3
11.8
23.8

Percentage
Change
-10.6
-15.4
-15.5
-22.5
-23.3
-7.4
-11.5
-4.1
-5.0
-8.0
-2.0
-2.4
-2.3
-1.9
-2.0
0.6
3.0

Source: Dataquest (July 1996)

The cost to manufacture the Saturn has dropped by $100 since it was first
introduced at a retail price of $399. Half of the Saturn's cost decrease comesfrom recent drops in DRAM memory prices, while another 30 percent iscaused by reduced CD-ROM drive prices. At the same time, the PlayStation's
manufacturing costs have dropped by $30 since its original introduction at$299 retail. Again, most of this cost reduction is because of a decline inmemory prices. However, even these cost reductions do not completely
compensate for the price cuts that have been announced. If Sega were to ship
1.5 million Satums at $199 (it has stated that its goal for 1996 is to ship 1.5
million Satums in the United States), it would cost the company almost $200
million. To put this investment in perspective, this is twice as m.uch as the$90 million in marketing costs that Sega has planned for all of its U.S.
marketing and sales activities for all Sega products during the rest of 1996.
In the context of the classic four Ps of marketing (product, price, place, andpromotion), price has become the lethal weapon of choice for these industry
giants. The cost figures in Tables 1 and 2 reveal that the Sony PlayStation
enjoys a clear cost advantage over the Sega Saturn across the board. The
more elegant and highly integrated PlayStation design yields costadvantages in everything from memory and MPU/graphics costs to theprinted circuit boards (PCBs), mechanical components, and labor. The one
area in which Tables 1 and 2 seem to show Sega with a major advantage is in
the CD-ROM control chips. However, this is because of the fact that the SonyPlayStation uses a stripped-down CD-ROM mechanism and places thecontrol chips on the system board, where their cost is that shown in Table 2.
The Sega Saturn uses a complete CD-ROM drive, and the cost for this drive
and the chips it contains are included in the systems and modules category
MSAM-WW-DP-9604©1996 Dataquest

August 12,1996

Consumer Multimedia Semiconductors and Applications Worldwide

in Table 1. A straight comparison of the complete cost for the CD-ROM andchips in each system shows the two systems nearly equal in cost in this area.
On the bottom line, if Sony were to ship 1.5 million PlayStations, it would
cost it $90 million, less than half the cost that would be incurred by the Sega
Saturn. In a simple price war, Sony would appear to hold a significant
advantage over Sega.
But what about Nintendo and its $249 64-bit machine? Will it feel pressure todrop its price to come closer to Sega and Sony by the time of the September
introduction of the Nintendo 64 in the United States? Dataquest has acquireda Nintendo 64 and will be publishing a detailed cost analysis of this systemfrom the Teardown Analysis program. From a preliminary analysis, it would
appear that the high level of semiconductor integration Nintendo has
achieved with its system and the absence of added costs for a CD-ROM drive
would put it in a strong position to compete in this price war. Judging fromthe early market demand for the Nintendo 64 at the $249 price point,
Nintendo should be able to maintain its current pricing for the rest of 1996.
In fact, Nintendo has commented that it expects to generate a small profit
from the sales of its hardware in 1996.
The final and most important question is, "What has motivated thesecompanies to make such aggressive pricing moves?" The answer to thatquestion may come from remarks made by the CEO of Electronic Arts at the
Executive Roundtable. In his comments, he indicated that the presence of themultimedia PC as a gaming platform is shaping the investment decisions of
the content developers. It was his opinion that, given the requirement thatmost game developers feel to support the multimedia PC, there is not room
for all three of the dedicated console platforms to survive. The competition
among Sega, Sony, and Nintendo goes beyond capturing incremental market
share. Indeed, it may be a fight for survival. Figure 1 illustrates the uphillbattle that Sega faces after capturing only 36 percent of the worldwide 32/64bit video game controller market during 1995, compared with Sony's
50 percent.
The high-stakes warfare being played out in the video game industry has
already claimed its first casualties with the departure of the top executives
involved in the price cut announcements at E3. Tom Kalinske resigned from
Sega of America in July after six years as president and CEO in the wake ofreported losses of $170 million in Sega's U.S. operations for the fiscal year
ended in March 1996. Jim Whims was sent packing by Sony ComputerEntertainment of America in the face of denials that his forced resignation
was related to the recent price cuts. In both companies, executives were
installed who effectively shifted tighter control back to the parent companies
in Japan. It is obvious that these companies want the "generals" atheadquarters calling the shots as they move forward into perilous terrain.

MSAM-WW-DP-9604©1996 Dataquest

August 12,1996

Consumer Multimedia Semiconductors and Applications Worldwide

Figure 1
Worldwide 32/64-Bit Video Game Controller Market Share, 1995

Atari, NEC, and Others (6%)
Panasonic/3DO (8%)

Total Unit Shipments = 6.3 lUillion
3B49Z9Source: Dataquest (July 1996)

Nintendo 64 Explodes onto the Market
Nintendo began selling its long-awaited Nintendo 64 (formerly called the
Ultra 64) in Japan at the end of June. With the Nintendo 64, Nintendo not
only matches its competitors, it surpasses them. Playing some early game
titles on the Nintendo 64 reveals that the platform offers stunningly realistic
3-D graphics and smooth, highly responsive control. The anticipatedperformance of this system heis stimulated high levels of enthusiasm in thevideo gaming community. While Nintendo sat out the first round ofcompetition among RISC-based platforms in 1995, the excitement generated
by the Nintendo 64 has created an unprecedented level of pent-up market
demand.
Nintendo announced that, less thcin four weeks after the system's debut inJapan, it had shipped more than 800,000 units into the market. Nintendo
expects to sell a total of 3.6 million systems in the Japanese market in the firstnine months of availability and more than 1 million units in North America.
The company noted that it will begin selling the Nintendo 64 in the UnitedStates on September 30, and it has committed to deliver 500,000 tmits to the
U.S. between launch and Christmas 1996. However, cumulative orders from
U.S. retailers have already reached 1 million units.
The Nintendo 64, which originally was expected to ship in November 1995,
is based on a pair of chips designed by Silicon Graphics Inc. subsidiary MIPS

l\/ISAM-WW-DP-9604©1996 Dataquest

August 12,1996

Consumer Multimedia Semiconductors and Applications Worldwide

Computer Systems and on Rambus memory technology. The key systemcomponents are:•

The 64-bit MIPS R4300i RISC microprocessor; clock speed 93.75 MHz•

The Reality sound and graphics coprocessor; clock speed 62.5 MHz•

Two 18Mb Rambus DRAM (RDRAM) chips with a maximum transfer
speed of 4,500 Mbps

Nintendo wants the Nintendo 64 to have a five- to six-year lifetime. To makesure the platform has the legs to last, Nintendo has several upgrades planned
for the platform. In the area of storage, Nintendo will offer a SyQuest-type,
removable cartridge hard drive that will give users a range of new features,
including the ability to download game software. Nintendo said that thedrive, which will plug into the bottom of the console, will begin shipping inJapan by the end of 1996 and in the United States sometime in 1997. The
drive, called 64DD, will use high-density magnetic discs that front-load into
the unit cind hold 64MB of data. For reference, the Super NES version ofDonkey Kong Country requires only 4MB of storage. The drive specifications
are listed at 150ms average seek time (AST) and 1-MB/sec data transfer rate(DTR). Nintendo said it is already working on a DVD peripheral for theNintendo 64.
In the area of memory, the Nintendo 64 has a door on its top that allows
additional RDRAM to be added to the system. The memory expansion
module that goes in the door allows users to give the Nintendo 64 aperformance and memory boost. However, this memory expansion module
for the Nintendo 64 is not yet available.
The design of the Nintendo 64 certainly is forward-looking. Figure 2 shows
the system controller and joystick. The interior of the Nintendo 64 firstunveiled in 1995 reveals an extremely simple design, with a total of just four
major chips on a single, dual-layer board. The R4300i and the Reality
coprocessor share the Rambus DRAM, using it for everjrthing, including
system memory, frame buffer, and 3-D texture buffer. This is a major contrast
to designs like the Saturn, which has a total of seven processors and ASICs
on the system board and which has four different memory subsystems.

MIPS MPU Suppliers and Rambus Cash In Their Winning Chips
In May 1996, MIPS Technologies claimed that 10 million MIPS processors
had shipped since the architecture was introduced in 1985. Eighty percent of
those processors had shipped in the preceding 18 months, and 5.5 million
had shipped during 1995 alone. With more than 3.1 million of those
processors shipping in the Sony PlayStation in 1995, the video game industry
could claim credit for the success of the MIPS architecture. Or, viewed fromanother perspective, Sony could credit its success to the advanced systemarchitecture enabled by the MIPS processor. In any event, the video gameindustry wUl continue to be a major driver of MIPS processor sales. With the
MIPS chips that will ship in the Nintendo 64 amd Sony PlayStation combined,
the video gcime industry could easily accoimt for over two-thirds of the 10
MSAM-WW-DP-9604©1996 Dataquest

August 12,1996

Consumer Multimedia Semiconductors and Applications Worldwide

million MIPS processors that MIPS Technologies has predicted will ship in
1996.
Figure 2
The Nintendo 64^'^'':V'>^^^..'•#:.£BLi;s;i

Source: Nintendo (July 1996)

On the other hand, sales of the SH-2 processor could be in danger unless
Sega is able to rejuvenate the sales of its Saturn platform. The efforts topromote the PowerPC architecture and the M2 technology developed by
3DO in the video game industry appear to be putting pressure on Sega
executives and designers. Although there is no reason to expect Sony orNintendo to abandon the MIPS architecture, it would not be surprising to see
Sega take the risk of turning to the PowerPC to breathe new life into its
flagship platform.
Rambus announced that over $100 million in revenue had been generated byproducts incorporating its interface technology, memory, and processors,during the first half of 1996. Again, the video game industry can take credit
for helping this leading-edge technology get off the ground. A Creative Labsgraphics card and the Nintendo 64 were the only products shipping into themarket at the time of the Rambus announcement. In addition to leading in
generating revenue for Rambus during 1996, the success of the Rambus
technology in the Nintendo 64 platform will help open new doors for thesechips to be designed in other next-generation consumer electronics products.

MSAM-WW-DP-9604©igg6Dataquest

August 12,1996

Consumer Multimedia Semiconductors and Applications Worldwide

The Bandai Pippen ©World Arrives in the United States
Bandai Digital Entertainment captured a share of the spotlight at the E3
show with the unveiling of its Pippen ©World product. This hybrid product,
based on the PowerPC Macintosh architecture, provides access to theInternet and the ability to run various multimedia and gaming CD-ROMbased titles. Although this box enables access to the Internet, it would not be
accurate to call it a Network PC. From the system specifications outlined
below it can be seen that it does not conform to the architecture commonlydescribed as a Network PC. The key hardware specifications for the Pippen©World system are:•PowerPC 603 operating at 66 MHz•

5MB DRAM expandable to 13MB with an 8MB module•

4MB of ROM for operating system main kernel storage•

128K of flash memory for nonvolatile storage•

1MB of DRAM for video storage•

Front-loading 4x CD-ROM drive•

Two standard Apple Computer serial interfaces for printer and modem
support•

PCX-compatible expansion connector

The Pippen ©World will begin shipping in the United States in September
1996 at a price of $599. This price does not include the cost of a modem.
Consumers who purchase this product will be offered the opportunity tosign up for Internet access services with PSI Services. For a price of $24.95 amonth, service subscribers will be supplied with a modem (14.4 baud or
higher) and unlimited access to the Internet. After subscribing for one year,
the subscriber wiU own the modem. In discussions at E3, company
representatives were already talking about upgrading to a DVD drive in thenext product release.
In its primary role of accessing and displaying images from the Internet, thePippen ©World is a compelling product. One of the major challenges for thistype of product is creating a clear display of computer text and graphics on a
TV monitor. Compared with other products in this category, the Pippen©World does an admirable job. A number of softwcire products were being
demonstrated that used a combination of CD-ROM-delivered multimedia
content and Internet interactivity. Dataquest expects this type of product toattract broader interest and will begin to track its progress in the market.

Technology Trends: The Internet Shapes Near-Term Plans, while DVD Looms in
the Future
The Internet
The development of the Internet appears destined to shape video gaming
platforms of the future. Video game companies have already been
MSAI\/l-WW-DP-9604©1996 Dataquest

August 12,1996

Consumer Multimedia Semiconductors and Applications Worldwide

encouraged by the success of electronic delivery mechanisms such as the
Sega Channel and Nintendo Power Source. In its pursuit of expanding thevideo game market beyond young adolescent males, the video gameindxistry has discovered that cin interactive, social gaming experience appeals
to a female audience. A number of products and services were introduced at
E3 that are designed to create a virtual community for video game players
using the Internet as the backbone. This communications capability and thepotential it holds to more than double the video game market generated thegreatest enthusiasm in a number of panel discussior« at E3.
One of the first products that could enable this t5^e of capability for
dedicated video game consoles is the Sega Saturn Net Link. The Net Link is a28.8-Kbps modem that cam be plugged into a slot in the Saturn and that runsa custom-designed Internet browser delivered on a CD-ROM. Sega will alsooffer a keyboard and mouse to enable a complete Internet access solution.
Unfortunately, the Saturn does a poor job of converting computer graphics
and text for display on a TV monitor. Larger images and text can be read
without too much effort, but the use of a virtual magnifying glass is required
to read most standard-size text.
DVD
The introduction of a DVD drive in the video game environment will comein the PC first and will then migrate to the dedicated console as a peripheral.
The business model employed by Nintendo, Sony, and Sega will delay the
introduction of a video game console with an integrated DVD drive to theend of 1998 at the earliest. Video game companies need to derive software
revenue and profit from the installed base they are creating today of 32- and64-bit platforms before they can introduce a DVD upgrade. This delay will
also give DVD drives time to come down in price.

Summary
Although the major players in the video game industry have always been
fierce competitors, the marketing strategies employed by these players havebecome incresisingly aggressive as the potential consequence of failure could
be elimination from the game. The relative price/performance delivered by
the flagship platforms of Sega, Sony, and Nintendo will play a major role indetermining the winners and the losers. The players that have developed
systems based on highly integrated, powerful processors and advanced
memory chips would appear to possess the ultimate weapon in this game.

MSAM-WW-DP-9604©1996 Dataquest

August 12,1996

10Consumer Multimedia Semiconductors and Applications Worldwide

For More Information...

Dale Ford, Senior Industry Analyst
Internet address
Via faxf jdT?lf^l l^^^l« ^^*7;
A Gartner Group Company(408) 468-8311
dford@dataquest.com(408)954-1780

The content of this report represents our interpretation and analysis of information generally available to the
public or released by responsible individuals In the subject companies, but Is lurt guaranteed as to accuracy orcompleteness. It does not contain material provided to us In confidence by our dients. Reproduction or
disclosure in whole or In part to other parties shall be made upon the written and express consent of Dataquest.
©1996 Dataquest—Reproduction Prohibited
Dataquest is a registered trademark of A.C. Nielsen Company

Perspective

Consumer Multimedia Semiconductors and Applications
Worldwide

Vendor Analysis
C-Cube: The Digital Video Specialist
Abstract: C-Cube Microsystems Inc. has been one of the most notable success stories indigital video compression and decompression chips. In every major product segment of thedigital video market, C-Cube was the No. I player or held one of the top positions in 1995.
This leadership position has helped C-Cube rapidly increase revenue and earnings. C-Cubeplans to offer a low-cost MPEG-2 codec in 1997 that will be the company's most important
product in the future. Dataquest believes that C-Cube will continue to be a leader in current
and future digital video markets.
By Jonathan Cassell

A LeaderC-Cube Microsystems Inc. is one of the leading players in the market for
digital video compression and decompression (codec) chips. The company's
product portfolio extends to every major segment of the digital video
market, including encoding and decoding of MPEG-1 and MPEG-2, which
are the most widely adopted video compression formats in the consumer,
computing, and communications markets.
C-Cube differentiates itself from its major competition by focusing
exclusively on compression technology. Since its founding in 1988, C-Cube
has invested heavily in all aspects of digital video technology. The company
has developed considerable expertise in digital video technology, including
an understanding of algorithms and a knowledge of system-level issues.
C-Cube's high level of expertise in digital video technology has given it aunique understanding of its target markets and the requirements of its

iTirrrFi!^
Program: Consumer Multimedia Semiconductors and Applications Worldwide
Product Code: MSAM-WW-DP-9603
Publication Date: August 5,1996
Filing: Perspective(For Cross-Technology, file in the Semiconductor Application Markets Volume 2 binder.)Consumer Multimedia Semiconductors and Applications Worldwide

customers. It has also allowed C-Cube to exploit new opportunities for
digital video in any market in which they appear, whether it is computer,
consumer, or communications.
Because of this, C-Cube has been able to exploit new, high-volume market
opportunities as they appear, helping its sales to grow at an explosive rate
recently. Net revenue grew to $124.6 million in 1995, up nearly 300 percent
from the $45 million it reported in 1994 (see Table 1). C-Cube's hot
performance has extended into 1996, with the company reporting thatrevenue was up for the first six months of the year by 264 percent and thatnet income was up by 274 percent compared with the first half of 1995. In
addition to allowing C-Cube to exploit high-volume opportunities, thecompany's expertise in digital video has allowed it to take a leading positionin key, high-margin markets, helping to boost profitability. C-Cube's grossmargin was 51.9 percent in 1995.
Table 1
C-Cube Microsystems Financials (Millions of Dollars)
1991
5.5
20.6
8.40

Net Revenue ($M)
Gross Margin (%)
Net Income ($M)

1992
13.6
44.8
-5.30

1993
23.7
59.3
-0.50

1994
45.0
53.4
5.00

1995
124.6
51.9
24.90

Source: Dataquest (July 1996)

The Portfolio
All C-Cube's major product lines are in areas that are expected to experienceextremely strong sales growth. With applications in the consumer,
computer, and communications markets, digital video represents one of thehottest growth opportunities for semiconductor technology. Figure 1
presents the market growth potential for C-Cube's major product lines. All
the markets C-Cube sells into are expected to experience double-digit sales
increases through 1999, with MPEG-2 decoding enjoying a compound
annual growth rate (CAGR) well above 100 percent. C-Cube also gamers
revenue from development contracts. However, that business is declining,both on a dollar basis and when measured as a percentage of revenue.
Figure 2 shows C-Cube's 1995 revenue segmented by product type. The
majority of C-Cube's revenue is derived from sales of MPEG-1 decoder
chips, which are priced between $25 and $30 in large quantities. However, a
disproportionate amount of the company's earnings come from sales of highmargin MPEG-2 encoder chipsets, which are sold in small quantities and cancost as much as $6,000.

MSAM-WW-DP-9603©1996 Dataquest

Augusts, 1996

Consumer Multimedia Semiconductors and Applications Worldwide

Figure 1
Market Potential for C-Cube Microsystems•
MPEG
Decoders$100
Million•JPEG
Codecs•
MPEG
Encoders

25

50

100

1995-1999 Market CAGR (%)

Source: Dataquest (July 1996)

Figure 2
C-Cube Microsystems Revenue Sources (1995)
JPEG—1
f4%l
\

f

MPEG
Encoding
(20%)

\
\
\

MPEG-2—1

MPEG-1

1

Decoding(7%)

Decoding
(69%)

m
m

\
^

1995 Revenue = $124.6 Million
964863

Source: Dataquest (July 1996)

MSAM-WW-DP-9603©1996 Dataquest

Augusts, 1996

Consumer Multimedia Semiconductors and Applications Worldwide

C-Cube in May 1996 bought DiviCom, a vendor of semiconductors,
software, and systems for digital video networks that reported revenue of$34.1 million in 1995. DiviCom's product line includes video and audio
encoders and decoders, decoder components, and systems based on the
MPEG-2 and digital video broadcasting (DVB) international standards.
DiviCom's approach to digital video systems can accommodate all types ofdelivery systems, including satellite, cable, fiber, and twisted-pair wiring.
MPEG-1 Decoders
C-Cube sells a of line of MPEG-1 decoders primarily used in VideoCD
players and karaoke machines, products that are extremely popular in Japanand Asia/Pacific countries. C-Cube now serves the VideoCD and karaoke
markets with two devices: the CL450 and the CL480VCD, which are thecompany's most popular parts.
C-Cube's CL450 video decoder, which began shipping in 1992, was the firstcommercially available MPEG-1 decompression chip. The CL450 originally
was designed with computer multimedia tasks in mind. The CL480VCD,
which began shipping in 1994, was designed specifically to address themarket for VideoCD, with system decoding support, audio video
synchronization, CD-ROM decoding support, and error concealment.
C-Cube announced in March the CL484VCD, an enhanced version of the
CL480VCD, which supports the VideoCD 2.0 standard. VideoCD 2.0 added
to VideoCD players the ability to display an on-screen menu, among otherfeatures. C-Cube began shipping the CL482, the company's latest VideoCD
MPEG-1 decoder, in July. The CL482 includes an NTSC-to-PAL converterand logic designed to improve the image quality of CD-ROMs that are ofinferior quality or have been damaged.
C-Cube also offers the CL450SWA and the CL480PC for PC-based MPEG-1
decompression.
MPEG-2 Decoders and Related Devices
C-Cube sells an MPEG-2 decoder that is used mainly in direct broadcast
satellite (DBS) set-top box applications. The CL9100, introduced in 1994, is asingle-chip MPEG-2 video decoder. The device integrates system-levelfeatures such as on-screen display and error concealment. C-Cube also sells
the CL9110, a companion chip to the CL9100 that performs transport
demultiplexing, a set of functions that includes separation of MPEG-2 data
streams into their audio and video components.
JPEG Codecs
C-Cube sells the CL550 and CL560, a pair of processors that perform JPEG
compression. The CL550 is designed for still image compression. The CL560
is a higher-performance chip designed to perform JPEG compression for
professional, nonlinear digital video editing applications.
MPEG-2 Encoders
For encoding MPEG-2 digital video, C-Cube offers the CLM4740, CLM4720,
and CLM4450 chipsets. All these chipsets are based on C-Cube's VideoRISC,
MSAM-WW-DP-9603©1996 Dataquest

Augusts, 1996

Consumer Multimedia Semiconductors and Applications Worldwide

a processor designed specifically for digital video compression tasks. For
simple video encoding tasks, such as simple MPEG-1 encoding, a single
VideoRISC can be used. For more demanding applications—like professionalquality MPEG-2 encoding—multiple VideoRISCs can be ganged together. CCube has continually updated the VideoRISC and is using the third
generation of the processor for its newest MPEG-2 encoders.
The CLM47XX family, each member of which uses 14 VideoRISC processors,
is designed to perform real-time, high-quality video compression for digital
broadcast systems. The CLM47xx family includes versions for frame andadaptive field/frame encoding in both PAL and NTSC formats. For lowercost MPEG-2 video encoding applications, C-Cube offers the CLM4400, a
chipset based on four VideoRISC processors that performs compression in a
half D1 resolution.
In April, C-Cube introduced its latest MPEG-2 encoder chipsets: theCLM4740, the CLM4720, and the CLM4440. The new chipsets are designed
to be more cost-effective by using the third-generation version of theVideoRISC processor, which allows fewer chips to be used in each product.
The CLM4740, designed for broadcast encoding, consists of only seven
VideoRISC processors, half the number of chips used by previous membersof the CLM47XX family. The CLM4740 Video Storage Encoder uses only fiveVideoRISCs, and the CLM4440 Video Authoring Encoder consists of just two
devices.
For MPEG-1 encoding, C-Cube sells the CLM4100, the CLM4500, and the
CLM4550. The three devices provide different levels of MPEG-1 encoding
quality. The single-chip CLM4100 is used in low-cost authoring applications,the dual-chip CLM4500 for midlevel video encoding, and the four-chip
CLM4550 for advanced encoding.
Other Products
C-Cube also offers the CLM4100 encoder and the CLM4200 codecs forvideoconferencing applications that comply with the H.261 standard. For
each family of products, C-Cube sells related development boards. C-Cube's
product offerings extend all the way to complete systems—the company
offers an MPEG-2 encoder development station.

The Competition
As illustrated in Table 2, C-Cube holds high positions in all major digital
video compression markets. Although C-Cube faces stiff competition fromlarger companies in many areas, no other company challenges it in all thesegments of the digital video market.

MSAM-WW-DP-9603©1996 Dataqu est

Augusts, 1996

Consumer Multimedia Semiconductors and Applications Worldwide

Table 2Competitive Product Position for C-Cube Microsystems in 1995
Market Ranking
No. 1
No. 2
No. 3

MPEG-1 Decode
X

MPEG-2 Decode

MPEG Encode
X

X

Source: Dataquest (July 1996)

C-Cube was the world's No. 1 vendor of MPEG-1 decompression chips in
1995. Although companies generally encountered disappointing results in
the 1995 market for MPEG-1 decompression chips for PCs, C-Cube soldabout 1.8 million of those devices in 1995 to makers of VideoCD systems in
the Far East. The company's business in that area has allowed it to enter into
close relationships with major consumer electronics companies that supply
VideoCD systems, including Sony, Philips, JVC, and Matsushita. C-Cube's
primary competitors in the MPEG-1 decoder market are SGS-Thomson,
Texas Instruments, and Motorola.
C-Cube's stock was battered in early 1996 when LSI Logic and IBM
Microelectronics announced that they planned to offer MPEG-2 encoders.
The companies' moves were seen as a direct challenge to the virtual
monopoly C-Cube owns in the MPEG-2 encoding market. Both LSI Logic
and IBM promised to offer products that used fewer chips and were lessexpensive than C-Cube's VideoRISC-based products. However, IBM had justbegun ramping its MPEG-2 encoder in June, and LSI expects to begin
volume shipping its MPEG-2 encoder in the first quarter of 1997. As of now,
C-Cube still holds its monopoly in MPEG-2 encoding.
Because it is used both in DVD players and in digital set-top boxes, MPEG-2
decoding is a key technology for the present and future of digital video. It isalso the only major digital video market in which C-Cube does not have aleadership position. SGS-Thomson is the leader in that market, almost
completely because of sales of MPEG-2 decoding chips for DBS set-top
boxes. However, C-Cube also sells into the set-top box market and is
beginning to expand its presence there. The company has announced set-top
box design-wins with companies including Samsung; DiviCom (now owned
by C-Cube), which is supplying the EchoStar DBS system; and Tee-Com,
which is a supplier to the AlphaStar DBS system.

The Future
C-Cube now is developing a product that will take it far beyond thecapabilities of the VideoRISC family: a single-chip device capable of both
MPEG-2 compression and decompression. In contrast, the company's
current solution uses as many as 14 chips. By boiling down all functions to asingle chip, C-Cube will make MPEG-2 encoding inexpensive enough to be
used in high-volume consumer products. Set to be introduced in mid-1997,
the codec will be essential for future DVD players that will be able to record
video in the MPEG-2 format, as well to as play it back. C-Cube sees its
MSAM-WW-DP-9603©1996 Dataquest

Augusts, 1996

Consumer Multimedia Semiconductors and Applications Worldwide• ! *inexpensive MPEG-2 codec as being the company's signature product in the
future, equivalent to the way Intel sees the Pentium. Initially, C-Cube is
likely to enjoy an Intel-like monopoly in this area, as competitors LSI Logic
and IBM by mid-1997 will still be offering their first-generation, multichip
encoders.
Besides playing the main role in DVD players, the low-cost MPEG-2 encoder
will serve as the centerpiece in another platform that C-Cube sees as being
more important than the DVD player itself: the set-top box. Because DVD
players and digital set-top boxes—both the DBS and cable types—share somuch logic (particularly the MPEG-2 codec) combining them would benatural. The codec in a combined DVD player/set-top box could perform a
range of functions, including decompressing MPEG-2 video from both theDVD player and the DBS/cable system and compressing video for recording
on a DVD player or for videoconferencing.
C-Cube anticipates that the set-top box will be the main consumer
entertainment product in the future, integrating interactive television, DVD,and communications into a single platform. The company's acquisition of
DiviCom plays into this strategy, because DiviCom has expertise indesigning set-top boxes and set-top box semiconductors. By combining its
expertise with DiviCom's, C-Cube plans to integrate digital set-top box
functions into fewer and fewer chips. Set-top boxes now have 10 to 12 chips.
Within a year and a half, C-Cube wants to reduce the number of chips to six.
By mid-1999, C-Cube believes that digital set-top boxes will be composed ofonly two or three chips.

Dataquest Perspective
C-Cube seems to have found the right strategy to win in the market for
digital video. By focusing on technology and by consciously addressing
three major markets—consumer, computer, and communications--C-Cubestands to benefit no matter which direction digital video takes. This strategy
is especially appropriate for an unpredictable market like digital video,
whose many twists and turns have shaken out some competitors.
Many companies now anticipate rapid growth in the DVD market. With aline of MPEG-2 decoders and a planned single-chip MPEG-2 codec, C-Cubestands to profit if the DVD market booms. However, if initial growth in DVD
is somewhat restrained—which is the expectation both of C-Cube and of
Dataquest—C-Cube will not suffer. C-Cube will continue to experience
growth in profitability based on revenue from the VideoCD market it
dominates.
C-Cube's acquisition of DiviCom clearly was the right move for thecompany, giving it access to technology it needs to build its presence in thedigital set-top box market. However, it is less clear whether the set-top box
in the future will emerge as the main consumer entertainment platform, as
C-Cube anticipates. Whatever role the digital set-top box plays, it a market

MSAM-WW-DP-9603©1996 Dataquest

Augusts, 1996

Consumer Multimedia Semiconductors and Applications Worldwide

that will grow strongly in the coming years, and C-Cube is likely to be one ofits major semiconductor suppliers.
Although there are likely to be a few bumps ahead, digital video
applications will continue to enjoy strong growth. In both the short term andthe long term, C-Cube is destined to be one of the winners in the digital
video race.

For More Information...

Jonathan Cassell, Industry Analyst
Internet address
Via fax

ElataQuest
A Gartner Group Company(408)468-8195
jcassell@dataquest.com(408)954-1780

The content of this report represents our interpretation and analysis of information generally available to the
public or released by responsible individuals in the subject companies, but is not guaranteed as to accuracy orcompleteness. It does not contain material provided to us in confidence by our clients. Reproduction or
disclosure in whole or in part to other parties shall be made upon the written and express consent of Dataquest.
©1996 Dataquest—Reproduction Prohibited
Dataquest is a registered trademark of A.C. Nielsen Company

Perspective

Consumer Multimedia Semiconductors and Applications
Worldwide

Dataquest Predicts
Consumer iVIuitimedia Cliip Teciinoiogies: Ready for Prime Time
Abstract: This document is a summary of a speech given at the Dataquest Predicts
conferences and covers the topic of next-generation consumer electronics and theopportunity these markets present for semiconductor manufacturers.
By Dale Ford

Next-Generation Consumer Electronics and Semiconductor Opportunities
This document provides the results of the research Dataquest has been doing
in its new service. Consumer MultimediaSemiconductor Applicatioris
Markets. Consumer electronics is an exciting area that we believe is poised tomove forward in a very significant way, particularly as it relates tosemiconductor manufacturers.
This document covers the following four particular categories, withpredictions:•Set-top boxes•

Next-generation video games (32- and 64-bit video game controllers)•

DVD controllers•

A variety of technologies related to what future televisions might begin
to look like.

I>ataQyest
Program: Consumer Multimedia Semiconductors and Applications Worldwide
Product Code: MSAM-WW-DP-9602
Publication Date: May 27,1996
Filing: Perspective(For Cross-Technology, file in the Semiconductor Application Markets, Volume 2 binder)Consumer Multimedia Semiconductors and Applications Worldwide

A Wave of Interactive, Digital Technologies Is Rolling into the HomeIf we were to roughly position some of the consiimer electronics market
segments, plotting them on a market-size versus market-growth axis withmarket growth across the bottom, the relative positioning would looksomething like that outlined in Figure 1. The more mature products on themarket that are currently generating strong revenue flows for their
manufacturers are in the upper left-hand comer of the figure. We see, ofcourse, color televisions, personal portable stereos, video game cartridges,
and VCRs. These are some of the mature products that are out there andcurrently shipping in high volumes.
In the lower left-hand comer of Figure 1 we see the decline that's been taking
place in the 8- and the 16-bit video game controllers, as shipments of the
SegaGenesis and the other products in the 16-bit category have been
declining for a couple of years.
The lower right-hand corner of Figure 1 represents the high-growth area,
where we see a number of new products that offer promising opportunities
for manufacturers and semiconductor makers. Many of these productcategories begin with the word digital. Indeed, the era of digital consumer
electronics is bursting upon us. We see digital cable and direct broadcast
satellite converter boxes, the 32- and 64-bit video game generation, digital
VCRs, and digital camcorders. Other digital markets, as mentioned earlier,
are the digital cameras and digital video discs. All of these emerging
products present exciting opportunities.
The market that is represented by color TVs, VCRs, camcorders, video
games, stereos, audio systems, and various types of personal electronics isoutlined in Figure 2. Some of the categories that we typically count in the
consumer electronics category at Dataquest have actually been taken out of
this chart. This chart does not include the appliance and home convenience
products. Products such as washers, refrigerators, dishwashers, and so on
are all taken out of this figure. Taking this modification into account, we seethat the overall market is poised for a little more than 9 percent compound
annual growth between 1995 and the year 2000.
Dataquest is forecasting strong growth for what we call the next generationof consumer electronics. Beginning with a $3.5 billion market in 1995, we are
predicting that this market will grow at more than 50 percent CAGR during
the next five years, growing up to represent $13 billion in electronics
equipment manufacturing by the year 2000. However, even with this rate of
growth, next-generation consumer electronics will only push the overallmarket growth rate up about 1.5 percent and represent less than 10 percentof the consumer electronics market by 2000. While manufacturers of nextgeneration products are excited about the prospects for their products, ananalysis of the impact on overall market growth presents the question, "Why
all the excitement over the new digital consumer electronics technologies?"
The forecast shown in Figure 3 provides the best answer to this question.

IVISAI\/l-WW-DP-9602©1996 Dataquest

May 27,1996

Consumer Multimedia Semiconductors and Applications Worldwide

Figixre 1
The Consumer Electronics Market
Market Sizey^^f Video Game ^V^Cartridge^
f Personal/Portable^
x , ^ _ ^ Stereo ^ ^^^^''^^'*—• — "-""^r Color TelevisiorO^(VCRJ)<

Other Emerging Markets• Digital Video Disic (DVD)• Digital Camera• MiniDisc (MD)
• ???

F
" ^^
k

^

(^igital VCR^^

/ ^ 6 4 - B i t VideoN/8/16-Bit Video Game^^*'^^__Controller_^^,^^
VGatne Controller/
C Camcorder,^'" ^V—
X Digital Cable/ A\ D 8 S Converter/

Market Growth963734

Source: Dataquest (May 1996)

Figure 2
Consumer Electronics Equipment Forecast
Billions of Dollars

Source: Dataquest (May 1996)

MSAM-WW-DP-9602©1996 Dataquest

May 27,1996

Consumer Multimedia Semiconductors and Applications Worldwide

Figure 3
Consumer Electronics Semiconductor Market Forecast
Millions of Dollars
50,00045,000-

E

40,000-

Next-Gen^ation Consumer
Digitally Enhanced Consumer

35,00030,000-

Other Consumer

25,00020,00015,00010,000
5,000
0
1993

Source: Dataquest (May 1996)

Figure 3 is the type of chart that gets the adrenaline of semiconductor
manufacturers flowing. The strong growth opportunities that are being
created in the consumer electronics segment of the semiconductor industry
are being driven by new digital versions of existing corisumer electronics
and what Dataquest has defined as next-generation products.
For clarity, "next-generation" products are 32/64-bit and beyond video gamecontrollers, DVD controllers (these include only those controllers that areused for video playback and do not include those that would be sold into thePC market), digital set-top boxes, direct broadcast satellite converters, HDTV
receivers, and other digital products such as digital cameras and MiniDisc
players.
"Digitally enhanced" consumer products are products that we've had in ourhomes all along, but now we are seeing new versions released with digitalenhancements to them. Recently we've seen the introduction of digital
camcorders and digital VCRs. We are also seeing new digital content going
into our television sets and TV guide set-top boxes on top of our television
sets. We are seeing many new products roll out that we've had, but we now
have digital versions of those products.
With this added digital content, the semiconductor market growth forconsumer electronics is driven to almost 18 percent CAGR over the next five
years. Beginning in 1995, the total consumer electronics semiconductor
market is a little more than $22 billion. Of that, roughly $2 billion is in nextgeneration electronics, and another $2 billion in digitally enhanced consumer
electronics. By the time we reach the year 2000, if we put these twocategories together, they represent more than 50 percent of the consumer

MSAM-WW-DP-9602©1996 Dataquestl\/lay27,1996

Consumer Multimedia Semiconductors and Applications Worldwide

electronics semiconductor market, which by then has reached over $45
billion.
If we were to subtract the products in these two categories—if these products
would not have come into existence—the market would only grow at a little
under 6 percent from now until the year 2000. It's these digital products, thedigital enhancements and the next-generation products, that are generating
excitement among semiconductor manufacturers and drawing their attention
and their investment dollars.
Figure 4 breaks out the next-generation consumer market into a little moredetail. Overall, Dataquest is forecasting strong growth in this area with thissegment of the chip market expanding from about $2 billion in 1995 andgrowing at a 55 percent CAGR to %7.7 billion by the year 2000. From thischart you will begin to get an idea of the areas we are bullish on, and one of
the areas that we're not as optimistic about. HDTV receivers, shown in the
top segment, will only represent about 2 percent of the semiconductor
market for next-generation consumer electronics out of a total of %7.7 billion
by the year 2000. About 10 percent of the chip market for next generation
products will be going into DVD-Video (digital video disc) players. This
does not include the chips that will go into the DVD-ROM players targetedat the PC. The combined set-top box and direct broadcast satellite market
will account for 41 percent of the market, while 30 percent of the market will
be driven by the 32/64 bit and beyond video game controllers. The
remaining 17 percent of the market shown in the "other" category includes
chips for products such digital cameras and MiniDisc players.

The Home Consumer Battleground
Having addressed the cold hard numbers in the forecast, let's talk a little bit
about the battlegrounds that are shaping up in the consumer electronics
realm. The most talked about competition is between the television and thePC. However, there are many other battlefronts that are shaping up in the
consumer electronics markets. Some of these battles revolve around how
content and services are going to be delivered to the PC or the television (seeFigure 5).
One of the key areas of competition is between fixed-media and electronicdelivery. Examples of fixed-media are CDs, cartridges, and cassettes.
Electronic delivery comes in the form of twisted-pair to the home, coax andfiber, broadcast television, cable TV, DBS (direct broadcast satellite), and
MMDS (Multipoint Multichannel Distribution System). Both types ofdelivery will be competing for the home consumer dollar.
Within the television market, there are multiple consumer electronics
products that are competing for space on top of the TV, including DVDVideo players, video CDs (these are still very poptilar in the Asia/Pacificregion), set-top boxes, and video game players.

MSAI\/l-WW-DP-9602©1996 Dataquest

May 27,1996

Consumer Multimedia Semiconductors and Applications Worldwide

Figure 4
The Chip Market for Next-Generation Consumer Electronics
Millions of Dollars
8,000 •

7,000-m HDTV Receiver^

Digital Video Disc (DVD) Players

6,000-D Digital Satellite Set-Top Box

5,000-s Digital Cabie Set-Top Box

4,000-

M 32/64-Bit Video Game Controllers

m Other Nex-Gen Products

3,0002,000 1,000^

Source: Dataquest (May 1996)

Figure 5
The Battle for the Home Consumer Electronics Market Is Only Beginning

PC-Based

Twisted Pair
Coax/Fiber

Service
ProviderCompanies

DVD
Entertainment

Video CD

GD

Set-Top

TV-Based

Video GameBroadcast
CATV
DBS

Information
Commerce
Education

TV

96373S

Source: Dataquest (May 1996)

MSAM-WW-DP-9602©1996 Dataquest

May 27,1996

Consumer Multimedia Semiconductors and Applications Worldwide

While all of these products are competing against each other, they also havethe potential to complement one another. For example, look at DVD-Video
players and the DBS set-top box. As DVD players are developed that enablea recording capability, it will be possible to develop a hybrid DVD/DBS
product where the digital video signal is received through the DBS systemand then recorded in the same digital format on the DVD disc. By sharing
the core chip set that includes MPEG-2 decoding, the cost of the overallsystem can be reduced and potentially enable improved economies forpenetrating the home market.
In the midst of this pitched battle in the home consumer electronics market,
it is interesting to note the devotion and the central role that these products
play in people's lives, driving them to spend their money on these devices.
Some people have gone beyond the point where this is a convenience,
luxury, or an entertainment-type of product in their home. A recent survey
conducted by USSB, one of the service providers for direct broadcast
satellite, unveiled some interesting statistics. Nineteen percent of thosesurveyed said that they could not survive without television. Another 78
percent of adults considered watching TV with the kids to be a family
activity. The demographics can be quite intriguing. Some people havereached the level of addiction to these products. In the PC world there arerecent reports of internet addicts. For example, some students are findingthat their studies are beginning to suffer as they jump onto the internet anddo not know when to get off. Television can be equally as powerful. A recent
study of Star Trek devotees found that many exhibited the typical signs of
addiction and withdrawal when they are isolated from Star Trek
programming and products.

Set-Top Boxes
Many of the hopes and expectations that the marketplace had placed on settop boxes had a bit of a shadow cast on them because of the disappointing
results of the trials conducted in various locations across the United States.
However, the bright spot that jumped out in 1995 was the exceptional
success of direct broadcast satellite (DBS) products. The shipments of DBS
systems in their first 18 months qualify this product as a true home run.
At the 1996 Consumer Electronics Show, Thomson Consumer Electronics
announced that it had shipped 1.8 million DBS boxes over an 18-month
period, with 1.2 million of those shipped during 1995. Thomson Consumer
Electronics also announced that its inventories were down to less than one
week. It has now announced its second-generation receiver, and the firstgeneration receivers have dropped down below $500. PrimeStar also claimed
its one-millionth subscriber 17 months after the launch of its system.
PrimeStar has had the backing of TCI and cable operators, with General
Instruments supplying its set-top boxes.
In addition to the services offered by PrimeStar, USSB, and DirecTV, two
new services are joining the competition in 1996. EchoStar has rolled out its
DISH network and also won the FCC auction for the 148-degree satellite slot.
The other system is AlphaStar, a subsidiary of Canada's Tee-Comm
Electronics Inc. MCI Telecommxmications won the other FCC auction for the
MSAI\/l-WW-DP-9602©1996 Dataquest

May 27,1996

Consumer Multimedia Semiconductors and Applications Worldwide

110-degree satellite slot with a bid of $682.5 million and will team up with
Rupert Murdoch's News Corp. to offer Direct to the Home (DTH) services.
While the shining star for digital consumer electronics was the DBS/DTH
set-top, the cable set-top box market continues to be delayed bydisappointing trial results. The barriers discovered in the trials have driven
service providers and equipment manufacturers to investigate alternative
approaches for this market. They are now backing off from the promise ofvideo-on-demand (VOD) to near video-on-demand (^s^VOD). In the NVOD
system, a broadcaster would deliver many more channels and begin
transmitting the same movie every 15 minutes so that a subscriber could
tune in at one of those 15 minute intervals and watch a program. Service
providers are also looking at expanding the network bandwidth from thecurrent 400 MHz to 750 MHz to provide more of room to add these extra
channels.
Meanwhile, the search for the most cost-effective and timely
communications technologies continues. The competition in this arena
ranges from hybrid fiber coax (HFC) technology and fiber-to-the-curb (FTC),
to wireless cable services (MMDS) and asjrmmetric digital subscriber line
(ADSL). In fact, we now have so many people with so many schemes fordelivering content to the home over a wireless system that these airwaves
are really becoming quite valuable. The government will be milking that for
all it's worth as it works to get its budget down.
On the home front, there are concerns about the costs of these boxes andwhat consumers will be willing to spend. There are also questions about
what service providers are willing to invest up front in order to get themarket rolling. One potential solution to the dilemma over financing wasintroduced by Hewlett-Packard. At the Western Cable Show, HP armounced
its leasing plan for its Kayak set-top box, where for $7 to $10, service
providers will be able to lease their set-top box from HP. Under thisprogram, HP would step up to shoulder more of the risk and financial
bvirden in order to create a market for its product.
The set-top box draws on technologies from multiple disciplines (see Figure6). In fact, it's one of the few stories of a successful application of militarytechnology in a consumer application—the DBS set-top box. Perhaps the
only other system with a similar successful application of militarytechnology is the Global Positioning System (GPS). Other obvious
technologies that play a role in set-top boxes have been borrowed from thetelevision and modem arena. Even PC technologies play a critical role. In
addition to robust operating systems, video and graphics processing
capabilities developed for the PC have been incorporated into set-top boxes.
All of these technologies have to be merged into one product, and thismerging has to be done at a very cost-effective, consumer price point. This istruly challenging the industry. Fortunately, industry standards are being
developed that will help in the cost of developing these products. With theuse of technologies that cut across a number of different disciplines,
standards bodies have made progress in creating standards that engineers
can design to and move product development forward.
l\/ISAM-WW-DP-9602©1996 Dataquestl\/iay27,1996

Consumer Multimedia Semiconductors and Applications Worldwide

Figure 6
Distilling Diverse Technologies Into the Cost-Conscious Set-Top Box^&m-'^-

Set-Top Box
963739Source: Dataquest (May 1996)

Encryption has increased in its visibility and its importance to the set-top box
market. With hackers and counterfeiters working to crack the codes that
protect the value delivered through set-top boxes, the development of morerobust encryption schemes has become critical. Fortunately, it appears thatthose who developed the early set-top box products had enough vision tobuild in the capability to respond to these attacks. For example, in DBS boxes
that there is a convenient smart-card slot that has been designed into thebox. Plans have already been put into place to ship out smart cards with new
encryption codes and algorithms as another wave of defense against
counterfeiters.

Chip Solutions and Opportunities in the Set-Top Box iVlarlcet
One of the opportunities for semiconductor manufacturers in this area is todrive out the costs for the existing features in set-top boxes. The set-top box
world has been dominated by a handful of suppliers. They have managed tomaintain a fairly constant price point of $105 for the average set-top box overthe past decade. With the advanced set-top boxes that are being developed,
chip suppliers also have the chance to deliver new compelling features thatwill enhance these newer products. Dataquest segments this market into
four categories: nonaddressable analog set-top boxes, addressable analog settop boxes, advanced analog set-top boxes that have an addressable capability
and upstream communications capability, and the digital set-top boxes that
include the digital video decoder with MPEG-2 and DigiCipher compression
technology. As semiconductor manufacturers begin to compete in this area,
MSAM-WW-DP-9602©1996 Dataquest

May 27,1996

_10

Consumer Multimedia Semiconductors and Applications Worldwide

they will be called upon to bring their economies—the semiconductor
economies that have worked so well in providing more bang for the buck in
the PC world—^into consumer products.
Chip suppliers are also enabling new entrants to penetrate what has been aclosed equipment supplier system in the cable world. Recent entrants suchas Hewlett-Packard and Sony will create better competition in this market
and help drive down prices as they work to end the dominance of earlier
players. However, semiconductor manufacturers face this challenge: They
need to have the skills and the technologies, whether developed in-house or
licensed, so that they can integrate diverse functions into their chipsets. A
brief list of the functions they must be able to integrate spans from 32-bit
microcontrollers to communications technologies to decoders and memory.

32/64-Bit Video Game Products Move the Marl(et to the Next Level
During the past year we have seen video game hardware move to a newlevel of performance with the introductions of new 32- and 64-bit platforms.
In 1995, a third major player entered the market that had been dominated by
Sega and Nintendo. Sony burst onto the scene in a big way with its
Pla)7Station. Sony definitely made a big splash in the Nortih American
market and captured significant market share with its 32-bit player.
Sega also launched its next-generation product, the Sega Saturn, and a new
portable product, the Genesis Nomad. Sega has not been as pleased with theresults of its Sega players in the United States. Sega has pointed the finger ofblame at a lack of adequate advertising and promotion for the Saturn andexpressed its determination to double its efforts in 1996.
Both Sega and Sony are now anticipating the introduction of Nintendo's new
platform, the Nintendo 64. Nintendo did introduce a new product in 1995,
the Virtual Boy. This is a unique platform that uses a set of goggles thatallow a player to view a 3-D monochrome image. This is not intended to be aportable system. Early success of this system was limited by its high pricepoint, which Nintendo dropped as it works to stimulate the market dtuing
1996.
Again, hitting constuner price points is a key factor in stimulating sales forthese new products. Sony introduce its PlayStation at $299, while Sega rolled
out the Saturn at $399. Sega shortly dropped the price by $50 to $349 andthen dropped it another $50 to $299. Consumers are not willing to pay steep
prices for these video game controllers. As a result, it has put severe pricepressure on the manufacturers to bring these platforms down into theconsumer realm. At the recent E3 show in Los Angeles, both Sony and Sega
dropped their retail price for the Plaj^Station and Saturn to $199.
3DO continues to flounder even as many people comment on the excellent
technology it has developed with its Power PC-based platform. 3DO made anumber of moves at the end of 1995 and in early 1996 to continue to push its
technology. First, Matsushita bought the rights to control the development
and production of the next-generation M2 platform from 3DO. Originally,l\/ISAI\/l-WW-DP-9602©1996 Dataquest

May 27,1996

Consumer Multimedia Semiconductors and Applications Worldwide

11_both parties stated that the value of this agreement was in the $100 million
range. Subsequent information indicates that the value of this deal was much
lower. In 1996,3DO licensed its technology to Cirrus Logic for use in its
graphics controller chipset.
In all of these video game platforms there are new microprocessors bringing
increased firepower to game players. The MIPS RISC architectures have hadreally big wins in this area. LSI Logic is delivering its R3000A processor in
the Sony PlayStation ,and Silicon Graphics teamed up with NEC to capture
the slot in the Nintendo 64. The Power PC is rumored to have a possible
future in Sega's platform. This must be of concern to Hitachi, which has two
SH-2 processors and an SH-1 microcontroller in the Sega Saturn. For nonIntel architectures such as MIPS and Power PC, these consumer markets
represent a golden opportunity to move into segments where Intel isn't
plajdng and establish a solid presence.
There are also new memory architectures showing up in these platforms.
The Nintendo 64 uses a Rambus architecture, and the others are employing
various combinations of SDRAM and VRAM. Quite often these advanced
memory architectures show up first in consumer electronics products before
they move into PCs.
Both Sony and Sega have to be questioning the price they are paying formoving to the CD-ROM format for software distribution. This discussion isbest illustrated by Figure 7. Dataquest has had the opportunity to do adetailed analysis of both the Sony Pla5/Station and the Sega Saturn. We wereable to do a close examination of the components in each and assess the
major cost drivers in these platforms.
The diagram on the left side of Figure 7 shows the system board in the SonyPlayStation. There are multiple processors on this board including the LSI
Logic CPU chip, a graphics processor, a sound chip ASIC, and anothercouple of processors in the CD-ROM subsystem. All of these chips in theSony PlayStation are a significant factor in driving the price. Two-thirds ofthe cost of manufacturing the PlayStation is because of the chips alone.
On the other hand, the Nintendo 64, which Nintendo plans to introduce at$249 (and again, rumors are that it may even try to push the price down to$200), contains two major processor chips: the Silicon Graphics 64-bit MIPS
RISC processor and a Silicon Graphics Reality co-processor. The only otherchips are two Rambus chips for memory and three to four other smaller
chips. There is a slot for upgrading and adding additional memory if
desired. The integration that Nintendo has achieved in the Nintendo 64 is
definitely playing a factor in its ability to hit that $249 to $200 price.

IVISAM-WW-DP-9602©1996 Dataquest

May 27,1996

12

Consumer Multimedia Semiconductors and Applications Worldwide

Figure 7
Chip Opportunities in Video GamesThe Sony Playstation System ($199)

DRAM

Connector to Handset
Connector Module

ORAM

DRAM

NTSC/PAL Encoder

DRAM

J
VRAM

LSli Logic
CPll) Chip

Qr£^hiC£
Processor

Nintendo Ultra 64 ($249); Connector 1
to CD-ROM

I Triple^ RAMDAC• Silicon Graphics
64-Bit MIPS RISC

n

VRAM

i^f^PA'??.?.^^?^'^?!'!!

i• Silicon Graphics
Reality Coprocessor'-^Jp'_Amp|•

Stereo'fiAC"
ROM

L

Central Electronic
Subsystem• 2 Rambus Chips"Soufia"
Chip
ASIC

Audio
Subsystem

ASIC

Prct»ssor
ASIC

CD-ROM
Q
Subsystem LC46
Graphics Subsystem• 3-4 Other Chips

DRAM

IX
Expansionother'DC inS-Video AA/Feaure

Composite Video
963740Source: Dataquest (May 1996)

There is another important cost factor because of the use of a CD-ROM drivein the PlayStation and Saturn systems. In addition to the added cost from thedrive itself, these designs also require additional chips and memory to beplaced on the system board, which adds even more to the cost. In a
cartridge-based system such as Nintendo's, there is no need for the added
memory to support a CD-ROM drive. Instead of a combination of DRAM,
VRAM, and ROM, which is a significant cost driver for Sony's PlayStation,
the Nintendo 64 uses two Rambus chips. The Sega Saturn takes an evenbigger hit on memory costs than the Plaj^Station.
It is true that Nintendo is paying a different type of price for using a
cartridge-based platform. Sega and Sony are indeed able to save on the costto roll out the software itself and on the distribution and the production costsof the software. However, they are papng a price on the system side and thepenetration they are able to make in the home market with their higher
system prices. If online gaming and electronic delivery of titles takes off inthis market, then Sony and Sega will even lose the cost advantage on
software distribution.

IVISAI\/l-WW-DP-9602©1996 Dataquest

I\/Iay27.1996

13

Consumer Multimedia Semiconductors and Applications Worldwide

Advanced Chips Delivering Next-Generation Features
Video games have really moved up the performance curve through eachsucceeding generation of platforms (see Figure 8). We have gone from theeight-bit world, where we had some improved functions coming into play, tothe 16-bit world where systems were able to handle more objects on thescreen and deliver more realistic motion, richer color, faster graphics, andstereo sound. Now with 32-bit processing capabilities, video games are able
to perform 3-D processing, texture mapping, rotation and scaling, and fullmotion video. These systems are also delivering advanced, CD-quality audiowith 3-D sound. They are also improving the human control interface byoffering wireless controls, virtual reality goggles, and memory cards.
Memory cards have been used for upgrading the performance of the system,
but now these systems also have a slot in the front where you can save an
ongoing game on a card, take it down the street to your friend's house, plugthe card into another system, and keep playing the same game.
Putting all of this functionality in a video game while dealing with all of thecost issues has created a challenge for the Japanese mantifacturers of theseproducts. The increasing value of the Yen has not helped matters either. This
has lead the Japanese manufacturers to move production offshore into otherAsia/Pacific countries to reduce costs. For example, Hitachi has been a major
manufacturer of the Sega system. It is now offering to set up manufacturing
facilities in other Asia/Pacific countries. However, Sega is discussing options
with other manufacturers in addition to Hitachi as it evaluates its options fora next-generation system.
Figure 8
Advanced Chips Delivering Next-Generation Features
32/64-Bit• 3-D graphics• Photorealism• Advanced audio features• Motion video

16-Blt• iVIore objects on screen• iVIore realistic motion• Stereo sound
8-Bit• Richi color• improved graphics• Faster game response

963741

Source: Dataquest (May 1996)

IVISAM-WW-DP-9602©1996 Dataquestl\/lay27,1996

J4

Consumer Multimedia Semiconductors and Applications Worldwide

What Does DVD Offer the Consumer?
DVD was the big story at the January Consumer Electronics Show. There
was an intriguing battle played out throughout 1995 between competing
standards in this realm. With agreement on a common standard, the door
has been opened to the market for an exciting product that offers great
opportunities to consumers, retailers, and electronics manufacturers. In
discussing the improved features that DVD offers, we begin with the majoradvancements in audio and video quality. Using new digital technology, thissystem is able to deliver what is called "better-than-VHS" quality video. It
also eriables audio performance that is superior to CD-quality sound withdigital home theater surround-sound. These improvements are probably themost meaningful for the typical consumer.
On top of these improvements, DVD makes it possible to put an entire
movie on one CD-ROM-sized disk that stores 133 minutes of sound andvideo. The audio track can store three different languages. An additional
four languages can be displayed in subpictures. Multiple aspect ratios canalso be displayed using a DVD player including standard TV, wide screen,
3x4, or 16x9 aspect ratios.
Added to these features is the ability to provide copy protection that will bebuilt-in to protect the interests of content developers in Holl5m^ood, andparental lock-out control that is an improvement over the V-chip concept.
Instead of only having the option to completely block out a particular movie,
DVD allows the consumer to select what version of the movie to watch: R,
PG-13, PG, or G. DVD also allows content developers and distributors toinclude related products with the videos on the disks. Developers can now
include a video game based on the video that is recorded on the disk, andthey can expand their marketing opportunities into the video game segment.
With the recent highly successful movie Toy Story, viewers who went to thetheater could also play the Toy Story video game in the theater arcade. Now
this marketing concept can be brought right into the home.
As mentioned earlier, there was a pitched battle over standards that was
played out during 1995. There was one camp lined up behind the Super
Density (SD) format, led by Toshiba and Time Warner, and a separate groupsupporting the Multimedia CD (MMCD) standard, led by Sony and Philips.
Each group worked aggressively on the development of their technology
and in recruiting supporters of their standard in the manufacturing,semiconductor, and content-creation industries.

DVD Players Agree on Single Standard
The two camps were finally pushed together at the end of 1995 and agreed
on one common standard. The main force driving the two groups into anagreement came from the "Group of Five" in the PC world. These companies
saw the opportunity for applying DVD technology inside of PCs, and led byCompaq and Microsoft they pushed the players toward a single standard.
The agreement on the DVD standard is what made it possible to have an
upbeat Winter Consumer Electronics Show in January following a less-thanexciting holiday season for consumer electronics sales in the U.S. market.
MSAI\/l-WW-DP-9602©1996 Dataquest

May 27,1996

Consumer Multimedia Semiconductors and Applications Worldwide

15

Remember that Sony and Toshiba were both demoristrating DVD players
and DVD technology in the January 1995 Consumer Electronics Show. It was
the announcement of this finalized standard that allowed almost a dozen
additional manufacturers to announce or demonstrate DVD players in 1996.
The new players included Matsushita, Philips, Thomson, Pioneer, Samsung,
LG Electronics, Onkyo, Sanyo, Zenith, Hitachi, JVC, and Mitsubishi. All ofthem were either demonstrating players or announcing plans to build
players for the DVD market.
Toshiba is leading the pack in coming to market with the introduction of two
products, a $599 and a $699 DVD player that the company says will reachthe market by Labor Day. Thomson also said that it will introduce a DVD
player in 1996, and it vowed that it will still hit the original $499 price point.
However, it is difficult to understand how Thomson will do that in light ofanother annovmcement. It has entered into a joint agreement with
Matsushita in which Thomson will manufacture set-top boxes for
Matsushita's Panasonic brand, which will be introduced in the United Statesin 1996. In return, Matsushita will manufacture DVD players for Thomson.
This agreement will help each company enter the different markets until
they develop their own manufacturing capabilities in these areas. Since
Matsushita will actual produce the DVD players for Thomson initially, it will
limit Thomson's ability to hit a $499 price.
As an interesting side note to the development of a DVD standard, there is
no official agreement on what DVD stands for. The most common meaning
assigned to DVD was Digital Video Disc. However, with applications for thistechnology in the PC and audio markets, the standards committees
announced that they would just refer to the standard as DVD with no official
meaning for the acronym. The market really wasn't satisfied with thisdecision, so the market has come up with its own name for DVD—Digital
Versatile Disc. In the near term, DVD will be a read-only medium and its
earliest applications will be in the video playback arena. As the technologies
are developed, it will begin to move toward a writable capability, andeventually to an erasable/writable medium to make it a true RAM memory
product.
There have been concerns about adequate supplies of some of the criticalcomponents for this product, such as the laser diodes. However, Dataquest
believes that the market demand will not be great enough in the near term to
make this an issue. There are some highly optimistic forecasts that are
creating the concern over component supply that Dataquest does notsupport. While Dataquest does expect DVD to be a highly successful
product, we differ with some of the manufacturers in their predictions on
how quickly this market will ramp. In our preliminary forecast, we expect
60,000 unit shipments worldwide in 1996 of DVD-Video players. We expect
the market to reach 2.5 million shipments in 1998 and about 10 million by theyear 2000. While the DVD products for PCs will lag in their introduction to
the market, we expect siinilar success for these products, with market
shipments reaching 10 million by 2000 (see Figure 9).

MSAM-WW-DP-9602©1996 Dataquest

May 27,1996

16

Consumer Multimedia Semiconductors and Applications Worldwide

Figure 9Strong Support from Content Providers Should Push DVD SuccessMillions of Units•\ o n n ™

1,000800600400200-^ - ^ - ^ "*-— -^^rr:^^:'^^^^'^''

J g fT-^™

0- r
19 BO

1

[

1982

1

1"
1984

1

1
1986

1

1

1988

1 19901 1 1992
1

1994
• •'

1996

1998

rrerecorueu v o n i apes

963742

Source: Dataquest (May 1996)

There will be strong support from the content developers for DVD products,
and this will be important for its success. About 250 movie titles are expected
to be released on the DVD format when these are introduced in late 1996.
The success of prerecorded VCR tapes and their penetration into the homemarket, as shown in Figure 9, is an important indicator of the potential forDVD. Combined with the popularity of the optical disc format, the delivery
of movies and software content in a DVD format should be very popvdar.

What is the Future of Digital TV?
We are seeing regional variations with regard to the future of digital
television (see Figure 10). In the United States, efforts to develop an HDTV
standard product continue, and in Japan the MUSE standard has been
established. It had been announced that Japan would move to a digitalsystem similar to HDTV, however there has been strong resistance from the
manufacturers to this shift and we do not expect to see a major move to adigital HDTV product in Japan any time soon. There are claims that between
9 to 11 hours a day of HDTV satellite broadcasts have been provided inJapan over the past year. The reality is that the HDTV broadcast was more in
the range of two to three hours a day, but they are gearing up for a big
conunerdal rollout in 1997.

MSAM-WW-DP-9602©1996 Dataquest

May 27,1996

17

Consumer Multimedia Semiconductors and Applications Worldwide

Figure 10
MUSE, HDTV, and DVB: Regional Variations on a Theme

963743

Source: Dataquest (May 1996)

In Europe, broadcasters and equipment providers have chosen to skip efforts
to develop an HDTV product and they have moved to developing the DVB,
Digital Video Broadcast, standard. In this product, the same resolution isdelivered as in current televisions but the additional available bandwidth isused to send out more channels. With the momentum that has beenachieved in the development of DVB, this product could repeat the earlier
success of digital GSM cellular telephones in becoming a de facto worldwide
standard.

Significant Challenges Remain for Advanced Television and HDTV
In the United States, even the Grand Alliance has admitted that it willprobably not be able to roll out HDTV products until 1998. Again, thegovernment is looking at plans to auction off the spectrum for digital
television broadcasts, and this has become the focus of intense lobbying inWashington D.C. There will be a pitched battle between the different interest
groups and industries. On one side, the current TV broadcasters are arguingthat they should receive their spectrum free since they provide a public
service. However, other parties claim that this would be an unfair
govermnent giveaway and that broadcasters should compete with others inthis new market and pay for their spectrum allocation. There was an attempt
to include a specific provision for the TV spectrum auctions in thetelecommunications legislation that was passed in Congress earlier this year.
However, as part of a compromise to get the bill passed, it was decided thatthe issue of auctions would be dealt with in future negotiations. There arel\/ISAI\/l-WW-DP-9602©1996 Dataquest

iVlay27,1996

_18

Consumer Multimedia Semiconductors and Applications Worldwide

also different proposals that have been introduced for developing the digital
TV market, including plans from the FCC and the White House. In the WhiteHouse proposal, the introduction of digital video broadcasting would be set
for 2005 and include vouchers to help consumers buy digital decode
equipment or new digital TVs to receive the new digital broadcasts as the oldanalog signals are phased out.
There are various key technologies that are being leveraged from otherproducts into the development of digital television, such as the MPEG-2 andACS compression and modulation standards like quadrature amplitude
modulation (QAM) and vestigial side band (VSB). Once again, the questionthat must be answered in the development of advanced television products
is, ''Will the consumer be willing to pay the price for new products such as
HDTV?" In order for these products to be successful they must be able toreach the right price point. One area that offers some promise for helping on
the issue of cost is the development of new display technologies.

Display Technology Is the Focus of Intense R&D
There are a number of technologies that are being developed for flat panel
displays such as plasma display panels (PDF), LED displays, flat thincathode ray tubes, vacuum fluorescent displays (VFD), electroluminescent(EL) panels, and field emission displays (FED). One of the major hurdles indeveloping all of these products is moving from a successful prototype tofull-scale production. Perhaps the biggest wild card in all of thesetechnologies is the LED display. If a blue LED and a green LED with good
reliability and performance are successfully developed at the right price, this
could enable a major displacement of the LCD panels that currently
dominate the mobile PC market, paving the way for a new consumer display
market.
In addition to flat panel displays, there are other technologies out there, suchas the digital micromirror display (DMD) developed by Texas Instrumentswith its digital light processing (DLP) technology. TI has shown that it cancreate 400,000 micromirrors on a chip 17 microns square. TI has
demonstrated early prototype products with this technology, including apresentation at Dataquest's 1995 Semiconductor Conference. Sony andThomson appear to be poised to help TI bring this product to market. Thereis also a Laser CRT and Direct Laser product under development. The
United States continues to flirt with investments in the display arena to help
the development of a U.S. display industry. This industrial investment
debate revolves around whether the creation of a display industry in the
United States is critical to the competitive stature of the United States orwhether it would be better to leverage the R&D and production that istaking place in Japan and the Asia/Pacific region.

What's a Hot Chip Like You Doing in a Place Like This?
There are additional digital products that are beginning to emerge. A
number of digital camcorders were introduced at the 1996 Consumer
Electronics Show. While these are admittedly "prosumer" type products,
they show the leading edge of where the market could eventually move. For
MSAM-WW-DP-9602©1996 Dataquest

May 27,1996

Consumer Multimedia Semiconductors and Applications Worldwide

19_

example, JVC introduced a small digital camcorder based on the digital
video (DV) standard, and Canon is marketing an eye-tracking camcorder. It
is no small thing to track the eye, yet inside of a camcorder we now haveeye-tracking technology.
The digital camera was targeted originally at more of a vertical market, butmanufacturers have been pleasantly surprised by its acceptance andpenetration into some of the consumer markets. It is currently being soldmore as a PC peripheral that offers an effective way of capturing images andmoving them into the PC. While digital cameras do not compete with thepicture quality produced by film-based cameras, they offer better input
mechanism for PCs. Using a standard camera it is necessary to take thepicture, develop it, and then use a scarmer to input the image to a PC. A
digital camera greatly simplifies this process. Ricoh and Casio both haveproducts on the market. Chinon has been manufacturing products under anumber of U.S. brand labels for some time, and it rolled out its own brand at
the Consumer Electronics Show. All of these manufacturers were moving
aggressively to double and triple their manufacturing capacity during 1995
to meet market demand.
Networking is coming to your home entertainment system. The IEEE 1394
standard is being promoted as the networking solution for consumer
products and as an interface between the PC and consumer worlds. Evidenceof progress in the adoption of this standard is Sony's inclusion of a 1394 port
on its new digital camcorder. The CEBus and LonWorks standards arecompeting to become the local area network in the home.
The personal portable stereo market continues to evolve with new featuresand enhancements. Sony continues to market the MiniDisc (MD) player anddropped the price for its playback-only product to $199. While MiniDisc
products have been successful in Japan, they are still working for acceptancein the U.S. market.
Even watches have been impacted by digital technology. For more than ayear Timex has been marketing a watch that is its own mini day planner on awrist. This watch enables you to enter your schedule into your PC and thendownload that schedule into your watch by hitting a button and holding thewatch up in front of some flashing bars on a PC monitor. The watch thenserves as an intelligent reminder throughout the day of important
appointments and times.

Dataquest Perspective
Figures 11 through 13 summarize some of the important issues related to theconsumer electronics market and the impact of digital technology. Dataquest
expects that DRAM manufacturers will find exciting new opportunities in
consumer electronics products. Consumer electronics manufacturers are
introducing the leading-edge DRAM architectures into their products to milk
every ounce of performance out of them. Lower DRAM pricing will provide
some relief to the manufacturers of these digital electronics products overtime and will help them hit important consumer price targets.
l\/ISAM-WW-DP-9602©1996 Dataquest

May 27,1996

20

Consumer Multimedia Semiconductors and Applications Worldwide

Figure 11
New Consumer Electronics: Growing DRAM Opportunity
Average Price per Megabyte ($)
DU-

50\
40-

V

30-

\

2010-

*

1990

1
1991

1
1992

1
1993

1
1994

1
1995

1
1996

1
1997

—
1
1998

'

—

1999
963744

Source: Dataquest (May 1996)

Figure 12
Leveraging Technology and Chips across Multiple Platforms
r'-tr^t-vr.-A.

.liS^B^^^M
Set-Top Box

Video Game

963745

Source: Dataquest (May 1996)

MSAM-WW-DP-9602©1996 Dataquest

May 27,1996

Consumer Multimedia Semiconductors and Applications Worldwide

21

Figure 13
Semiconductors: Escalating Integration and Performance

Average
Gates per
Chip

Source: Dataquest (May 1996)

Semiconductor manufacturers have invested early in many of the coretechnologies that will be used in digital consumer electronics. Theirinvestment will be leveraged into multiple consumer platforms. Consumer
electronics manufacturers will be able to draw from a palette of technologies
in developing their products, ranging from compression technologies such
as MPEGl and 2 and ACS, to modulation and the encryption technologies.
The application of semiconductor industry economies to consumer
electronics will allow these products to derive some of the same benefits that
helped drive the PC market to the heights it has reached.
Finally, Dataquest believes that semiconductor manufacturers are moving
the scope of their vision beyond just the PC. Many companies that have been
devoting their development purely to the PC are now forming their own
consumer electronics divisions to go after this market and take all of theireggs out of one basket. There are significant growth opportunities here fordifferent MPU architectures, DSPs, memory, ASIC, and ASSP products.
We are going to see greater participation of North American and European
companies in the consumer market than we've ever had before. Traditionally
the Japanese companies have been recognized as the dominant players inthis market. Now these consumer giants are turning to companies in the
United States and Europe such as LSI Logic, VLSI Technology, Silicon
Graphics, SGS Thomson, Texas Instruments, and so on for criticalsemiconductor technologies and solutions. Companies such as these willplay a fundamental and important role in moving the consumer electronics
market into the next century.

MSAI\/l-WW-DP-9602©1996 Dataquest

May 27,1996

22

Consumer Multimedia Semiconductors and Applications Worldwidei

For More Information...

Dale Ford, Senior Industry Analyst
Internet address
Via fax

I J ^ T ^ f ^ l l^^ST
Ap tr ^^*nA Gartner Group Company(408) 468-8311
dford@dataquest.coin(408) 954-1780

The content of this report represents our interpretation and analysis of information generally available to the
public or released by responsible individuals in the subject companies, but is not guaranteed as to accuracy orcompleteness. It does not contain material provided to us in confidence by our clients. Reproduction or"disclosure in whole or in part to other parties shall be made upon the written and express consent of Dataquest.
©1996 Dataquest—Reproduction Prohibited
Dataquest is a registered trademark of A.C. Nielsen Company

Perspective

Consumer Multimedia Semiconductors and Applications Worldwide

Market Analysis
Digital Dominates tlie News at the 1996 Winter Consumer
Electronics Show
Abstract: Solid sales of multimedia PCs into the U.S. home market made the statistics on
consumer electronics sale reported by the Consumer Electronics Manufacturers
Association
look good for the 1995 holiday season, but, otherwise, consumer electronics sales were slow.
Retailers came to the 1996 Winter Consumer Electronics Show eager for new products that
hold the potential to draw customers back to their stores in 1996. Manufacturers rolled out
products and promotions that conveyed a clear message: The key for increasing sales isspelled D-I-G-I-T-A-L. This document provides information and analysis on the most significant product announcements and demonstrations at the 1996 Winter Consumer Electronics Show. Dataquest has launched a new program. Consumer Multimedia
Semiconductors
and Applications Worldwide, that will provide in-depth, detailed market research andanalysis on the consumer electronics market and the semiconductor markets driven by products and technologies such as those described in this document. This document is being sent
to all clients ofDataquest's semiconductor programs as an introduction to this exciting new
program.
By Dale Ford and Tom Stames

Consumer Electronics Manufacturers Present a Vision of a Digital Future
More than 97,000 attended the 1996 International Winter Consumer Electronics Show (CES), held in Las Vegas from January 5 through 8. The Winter
CES is the premier event for the consumer electronics industry's largest
annual consumer electronics trade show, bringing together the highest concentration of manufacturers of consumer electronics with buyers, retailers,and other decision makers. This year, more than 1,800 exhibitors showed
their products on over 1 million square feet of floor space.

Dataquest
Program: Consumer Multimedia Semiconductors and Applications Worldwide
Product Code: MSAM-WW-DP-9601
Publication Date: February 12, 1996
Filing: PerspectiveConsumer Multimedia Semiconductors and Applications Worldwide

Attendance at the 1996 Winter CES was significantly lower than in 1995
because of the withdrawal from the show of the major video game companies like Sega and Nintendo. The most visible video game company at tineshow was Fox Interactive, and it does not intend to return for the 1997
show. The video game companies latmched their own show in Los Angeles
during 1995. This new trade show, called Electronics Entertainment Expo
(E3), is dedicated to the video game industry and will be held again May 16
through 18 at the Los Angeles Convention Center.
The CES is sponsored by the Consumer Electronics Manufacturers Association (CEMA), a sector of the Electronic Industries Association (EIA).
According to CEMA, an estimated 750 facilities in the United States manufacture or assemble consumer electionics products, employing an estimated180,000 people. Another 3.4 million people, with total wages estimated at$56 billion, are employed in the more than 130,000 stores that sell theseproducts to the consumer However, CEMA casts a wide net in defining
consumer electionics. Its definition includes products such as PCs andcellular phones sold into the home, along with tiaditional consumer
products such as TVs, VCRs, boom boxes, and cameras.
Solid sales of multimedia PCs into the U.S. home market made the U.S.
statistics look good for the 1995 holiday season, but, otherwise, consumer
electronics sales were slow. Retailers came to the show eager for new products that hold the potential to draw customers back to their stores in 1996.
Consumer electionics manufacturers came to the show with products andpromotions that conveyed a clear message: The key for increasing future
sales is spelled d-i-g-i-t-a-1. Dataquest has launched a new program. Consumer Multimedia Semiconductors and Applications Worldwide, that will
provide in-depth, detailed market research and analysis on the consumer
electionics market and the semiconductor market driven by products andtechnologies such as those described in this document.

DVD Steals the Spotlight (Just Don't Ask What it Stands For)
So what was tiie hottest consumer electionics products at this year's CES?
Without a doubt, digital video disc (DVD) players stole the show as almosta dozen of the world's major consumer electionics companies intioduced,
with a lot of fanfare, energy, and expense, either prototypes or plans to produce DVD players. The activity at tiie show surrounding DVD players, byboth the manufacturers and the buyers, was truly astounding. After adisappointing Christmas season for retailers of tiaditional consumer electionics products, many hopes are being placed on this product. With thepromotional efforts that are planned, consumers wiU soon be adding "DVD"to their household vocabulary. The following companies have jumped on
the DVD bandwagon:• Toshiba• Sony••••MSAM-WW-DP-9601

Philips
Matsushita
Pioneer
Samsung©1996 Dataquest

February 12,1996

Consumer Multimedia Semiconductors and Applications Worldwide• LG Electronics• Thomson• Onkyo• Zenith• Mitsubishi
It should be remembered that both Sony and Toshiba were demonstrating
DVD technology at the 1995 Winter CES. (Toshiba's demonstrations werebehind closed doors.) Throughout 1995, the industry watched closely as
intense competition was played out between two formats. Super Density(SD) and Multimedia CD (MMCD). Nobody wanted to see a repeat of theformat wars that had hindered the early growth of other consumer electronics markets, and the two camps were finally pushed into negotiations on acommon standard. The announcement of a final DVD specification allowed
manufacturers to roll out their products with confidence at the 1996 WinterCES. If agreement had not been reached it could have been a gloomy show.
However, the groundwork has been laid, and now the race to the market
is on.
An interesting side note to the final DVD specification is that the term"DVD" was left imdefined in the final agreement. Because of the potential
application of DVD technology in products targeted at multiple markets,
including the video playback market and the PC market, the major companies decided they did not want to define DVD as "digital video disc." Left
with a term begging for a definition, the industry appears to be adopting
the name "digital versatile disc."
Toshiba led the pack with the earliest announcements of product plans. It
intends to bring its SD-1006 and SD-3006 to market by early September atprices of $599 and $699. (All prices given in this document are manufacturers' suggested retail prices.) Figure 1 shows the SD-3006 player. These players are targeted at the video playback market. A version of DVD has also
been developed for PC storage called DVD-ROM, but the focus of the Winter CES was on the video playback market. Sony, Thomson, and Philips
were other major players outlining product introductions for the fourth
quarter of 1996. Matsushita/Panasonic was holding only closed-door discussions with selected retailers about their plans. Pioneer, which has been
the standard bearer for Laser Disc (LD) technology, was showing a hybrid
product that could play both LD and DVD. The best prospect for the success of this t3^e of product is in the Asia/Pacific and Japanese markets,
where LD has experienced stronger acceptance. It is also notable that
Korean companies such as LG Electronics and Samsung were promoting
plans for product introductions in late 1996 or early 1997.
Although early promises were made of introducing DVD players at a $499
price point, it was also expected that this target would be difficult to reach,so Toshiba's prices were not a surprise. However, Thomson still vows toreach $499 with its introductory product. It is not clear how it will do this inlight of its manufacturing agreement with Matsushita. It was announced at
the show that Matsushita will supply DVD players to Thomson for salearound the world and, in return, "Thomson will provide Matsushita with
DSS home satellite systems for sale under the Panasonic brand in the
United States. Sometime after 1996, both companies will begin to manufacture their own products in each of these categories.
MSAM-WW-DP-9601©1996 Dataquest

February 12,1996

Consumer Multimedia Semiconductors and Applications Worldwide

Figure 1
DVD System
jffty

«i^'"

-=miK;ie :p-M:%:^J^rV.' .. -L-i^^^'t^'MU...

ifi^.,..

iMMMl? "^^^^^^^B"^WW^"'•'^•-^W^(jj;;:!.-,;.: -i•980705
Source: Toshiba

Some of the early predictions by manufacturers for the success of DVD
might be called optimistic. In fact, some of them might be called wildly
optimistic. Their projections of 2.5 million to 3 million shipments in the firstyear would make the early shipments of the highly successful Direct Broadcast Satellite (DBS) systems look small in comparison. Other manufacturers
were trying to be more cautious in their forecasts, not wanting to let thehype set unrealistic expectations that, if unmet, could lead to a major letdown and fallout among critical supporters. A coordinated launch of thisproduct is being orchestrated. Major Hollywood studios are preparing torelease between 250 and 400 movie titles in the DVD format this fall.
Dataquest does expect the DVD to be a highly successful product that will
benefit from the combined support of manufacturers, retailers, and software providers. Preliminary projections of DVD unit shipments into thevideo playback market call for 60,000 units to be shipped in 1996, with sales
accelerating rapidly to 2.5 million units in 1998. Dataquest's Consumer
Multimedia Semiconductors and Applications Worldwide program will be
publishing an in-depth analysis of DVD in the first quarter of 1996 that will
provide more detailed iivformation and a final forecast on this exciting
product.

DBS Systems Celebrate the Past and Look to the Future
In second place in the hot product race were direct broadcast satellite (DBS)
systems introduced by several manufacturers.

DSS
At the show, Thomson Consumer Electronics announced that it has shippeda total of 1.8 million Digital Satellite Systems (DSS) to dealers in its first
MSAM-WW-DP-9601©1996 Dataquest

February 12,1996

Consumer Multimedia Semiconductors and Applications Worldwide

18 months of production. There were 600,000 units shipped in 1994, and an
additional 1.2 million tmits shipped in 1995 under both the RCA and GE
brand names. In December 1995, sales of DSS averaged 5,000 units per day.
About 25 percent of DBS subscribers dropped their cable TV subscription infavor of DBS services. Thomson also annoimced that its factory inventory
stands at less than one week. Its total manufacturing capacity is now 2 million units annually.
Thomson unveiled its second-generation DSS receivers at the Winter CES.
Thomson now has three systems with the RCA brand: the DS7430RA topof-the-line system for multiroom operation, the DS4430RA deluxe singleroom system, and the entry-level DS3330RA system. These new models will
begin shipping to dealers on January 15,1996. At the end of January, Thomson will also have a DSS with its ProScan brand on it. Thomson plans todesign a DSS receiver as a PC add-in card sometime in 1996.
Pay TV services for DSS are split between two different program suppliers,
DirecTV and U.S. Satellite Broadcasting (USSB). DirecTV is owned by GM
Hughes Electronics. USSB is owned by Hubbard Broadcasting Inc. News
Datacom provides the conditional access service for both DirecTV and
USSB.
During the \^^nter CES keynote speeches, Joe Clayton, executive vice president of Thomson Consumer Electronics, said that there would be 11 different brands of DSS by the end of 1996 and two completely new DBS systems(AlphaStar by Tee-Comm and Digital Sky Highway—DISH—^Network by
EchoStar). At the Winter CES, Uniden imveiled its DSS receiver, the Uniden
UDS 200. Uniden has been a leader in integrated receiver-decoders (IRDs)
for the C-band satellite market. Table 1 shows manufacturers that have orplan to have DSS-compatible receivers. Figure 2 shows Sony's DSS system.
DSS is now available at over 20,000 retail points of sale. Best Western plans
to begin offering DirecTV in its hotel rooms in January 1996.
Table 1
Manufacturers of DSS-Compatible Receivers
ManufacturerThomson Corwumer Electronics (RCA)
Sony Electronics Inc.

Introduction Date
June 1994
Jime 1995

Thomson (GE Brand)
Hughes Network Systems
Uniden America Corporation
Toshiba America Consumer Products Inc.

September 1995
Early 1996

Samsving Electronics Co. Ltd.
Sanyo Electric Co. Ltd.
Daewoo Electronics Co.

Jime 1996
June 1996

Matsushita (Panasonic and Quasar Brands)

June 1996

Thomson (RCA ProScan Brand)

1996

Mid-1996
Mid-1996

Jime 1996

Source: Dataquest (January 1996)

MSAM-WW-DP-9601©1996 Dataquest

February 12,1996

Consumer Multimedia Semiconductors and Applications Worldwide

Figure 2
The Sony DSS System

sEoras
Source: Sony

Primestar at the Winter CES
On January 5,1996, Primestar Partners L.P. announced its 1 millionth
subscriber. This milestone occurred 17 months after its national launch.
Primestar claims to have a 45 percent share of the DBS market, which, by its
estimates, would put the total number of DBS subscribers at just over 2 million. Primestar is owned by a consortium of cable operators, led by TeleCommunications Inc. with a 22 percent share. General Instrument manufactures the hardware for Primestar. The Digicipher-I video decoder and theaudio chip for the Primestar receiver are made by Motorola.
Primestar plans to spend $150 million in advertising in 1996. The highlightof the campaign is two TV spots airing during the Super Bowl on January
28—one during the pregame show and the ottier during the game itself.
Primestar is also sponsoring the American Red Cross with a donation of$1 million and has announced its intention of serving hotels through analliance with LodgeNet Entertainment Corporation.
Comparing Primestar and DSS
The street price for DSS has dropped to $499. This is for the first-generation
RCA or GE brand with a $100 manufacturer's rebate from Thomson Consumer Electronics. The first-generation standalone receiver (without a dish)has dropped to a street price of $405 (including Thomson's $50 manufacturer's rebate). Primestar's customer-premises equipment remains the
MSAM-WW-DP-9601©1996Dataquest

February 12,1996

Consumer Multimedia Semiconductors and Applications Worldwide

property of Primestar. With DSS, customers can choose to install the equipment themselves with a kit costing $70 or choose professional installation
costing $150 to $200. Primestar offers no choice—professional installation isrequired at a rate of $150 to $200.
Pay TV services for DSS are split between two program suppliers, DirecTV
and USSB, whereas Primestar is the sole programming supplier for its
system. DirecTV has more channel capacity fiian Primestar. Primestar has
10 pay-per-view channels and DirecTV has 60. Also, DirecTV has 28 digitalmusic channels and Primestar has only 14.
EchoStar's New DISH Network
EchoStar Communications Corporation of Englewood, Colorado, successfully launched its first direct broadcast satellite, EchoStar-I, on December
28,1995. The satellite, a series 7000 satellite from Lockheed Martin Corporation, was launched from China Great Wall Industry Corporation's launchfacility in Xichang, China. The satellite's final location will be at 119 degrees
west longitude to provide 75 channels of programming for EchoStar's DISH
Television Network by mid-February. EchoStar plans to launch a second
satellite next year that wiU increase its capacity to 150 channels.
EchoStar's DBS system uses an 18-inch dish just like the RCA system. The
basic receiver and dish system has a price of $599. However, consumers also
have the option of renting the hardware for $10 per month, added to thecost of the programming package. EchoStar hopes to become the low-cost
DBS service provider, with 40 basic channels starting at $19.99 per month.
The EchoStar receiver uses MPEG-2 compression and is fully compatible
with the Digital Video Broadcast (DVB) standard. EchoStar has chosen Electronic Data Systems of Piano, Texas, to provide customer service and sales
support.
EchoStar began making C-band satellite dishes in 1980. In 1995, the company's financial results suffered from the decline of the bigger dishes.
AlphaStar
AlphaStar Digital Television is a new home satellite system scheduled to
begin late in the first quarter of 1996 for the U.S. and Canadian markets. The
programming services are provided by AlphaStar Television Network Inc.
in the United States and ExpressVu Inc. in Canada. The hardware is available now from Tee-Comm Electronics Inc. On August 21,1995, AlphaStar
announced that Samsung Electro-Mechanics Company would also be
manufacturing hardware systems.
The AlphaStar system uses a dish that is either 24 inches, 30 inches, or
39 inches in diameter. The Star Trak 1000 digital receiver uses TV/ComInternational's Compression NetWORKS system architecture, which is fully
DVB-compliant and uses MPEG-2 compression and Viterbi forward error
correction. Similar to DSS, the Star Trak receiver has a built-in 2400-baud
telephone modem for ordering programming and an ISO 7816 smart cardwith three levels of security, llie receiver can accept satellite signals ineither the C-band or the Ku-band. Unlike DSS, the Star Trak receiver does
not allow for S-video output. The DirectStar satellite dish is being made by
V\^negard Company of Burlington, Iowa. The system costs $1,099 ia
Canada. There will also be a lease-to-own option available.
MSAM-WW-DP-9601©1996 Dataquest

February 12,1996

Consumer Multimedia Semiconductors and Applications Worldwide

ExpressVu received a service license from the Canadian Radio-Television
and Telecommunications Commission on December 20,1995. To serve
Canada with almost 100 channels of video and audio programming,
Express Vu has reserved transponder space on Telesat's Anik El satellite.
Express Vu plans to provide an entry-level service for as little as $7.95 permonth. For the U.S. market, AlphaStar Television Network will use 14 transponders on AT&T's Telstar 402R sateUite, which was launched on September 24,1995. AlphaStar has chosen Turner Vision in Bluefield, West Virginia,
to provide call center services.

Camcorders
Common Digital Format Paves tiie Way for a New Generation
JVC introduced the world's smallest and lightest camcorder at the Winter
CES, perfect for James Bond. JVC's GR-DVl digital camcorder uses the new
digital video cassette (DVC) format, which is now apparently going by just"DV." RCA debuted an identical model that it is sourcing from JVC. The
RCA model number is CC900D. The JVC and RCA DVC camcorders will beavailable in the spring. Figure 3 shows the new JVC GR-DVl digital
camcorder.
It looks as if standards may still be in flux with these cameras, but the JVC/
RCA models used a mini-DV cassette containing 30 minutes or 60 minutesof 1/4-inch tape. The cassette is about half the size of an 8mm tape. With aweight of only a pound (0.45 kg) and a very rectangular form of 1-3/4 x
3-1/2 x 5 3/4 inches (43 x 148 x 88mm), the camcorder is significantly
smaller than its smallest analog cousins. A 3.6v lithium ion battery about
the size of an AA battery runs the camcorder.
Figure 3
The JVC GR-DVl Digital Camcorder

Source: JVC

MSAM-WW-DP-9601©1996Dataquest

February 12,1996

Consumer Multimedia Semiconductors and Applications Worldwide

The GR-DVl has one 570,000-pixel, 1/3-inch charge-coupled device (CCD)
that can pick out images in 1 lux of light. It has a digital image stabilizer
that works extremely well, even when the lOx optical zoom and the lOOx
digital zoom are enabled. The DV format allows for a 500-line image, which
betters S-VHS and Hi-8 by 20 percent and can produce a 16:9 or standard
ratio image. However, the camcorder does not have a digital output and cantransmit images only at S-video resolution.
So what's really digital? The image is digitized and compressed using discrete cosine transforms and variable length coding with an in-frame compression rate of 25 Mbps. The audio is pulse code modulated digital stereo,
sampled at 48 kHz in a two-channel, 16-bit mode, or at 32 kHz in a fourchannel, 12-bit mode. Each frame is incredibly sharp and can be edited,
spliced, dubbed, and cut many times without sound or picture degradation.
The camcorder can be used to take digital still photographs, too, even in a
timed sequence, and stores over 4,000 images on a tape, each digitally pure.
The camera can be connected directly to a TV for playback. It also comeswith a docking station for fancy editing. Besides the 12 digital special effects
and 18 scene transitions available in the camera, the docking station brings
editing capabilities up to professional standards. It adds time-code stamping, audio dubbing, and the ability to rearrange up to eight scenes at a time,along with a selection of effects and transitions. A Joint Level Interface
Protocol QLIP) in the docking station allows for sophisticated linking andcontrol of the camcorder with a variety of audiovisual equipment andcomputers.
Although these digital camcorders are not an everyday consumer item, forthe low-budget professional, serious amateur, or the gadget whiz with a little extra cash and some imagination, they are an impressive marvel. The
size and weight are small enough to make it easy to leave this camcorderbehind on a bus. But they are expensive. According to the EIA, the average
selling price (ASP) for consumer camcorders in 1995 was $610. In Japan, theMinistry of Finance pegs that ASP at $482. Of course, these ASPs are theselling prices from manufacturers to dealers. An additional 33 percent canbe added for the retailers' margin. Dataquest conducted a retail price survey
in February 1995 and found name brand camcorders as low as $450 street
price. The upper limit for the consumer market is $1,500. Prosumers will
typically choose a Hi-8, S-VHS, or S-VHS-C model with one CCD for anywhere between $1,200 and $2,500. The industrial and broadcast marketschoose cameras and camcorders in the $2,500-to-$l 00,000 range.
In addition to the JVC/RCA introduction, Sony, Panasonic, and Sharp digital camcorders were also presented at the show. Table 2 summarizes someof the information presented on these products. Hitachi also revealed its
plans to introduce a digital camcorder that would not use DV cassettes but
instead would use an entirely tapeless format. This pocket-size camcorder
will be able to store 3,000 still frames and interface with a PC for editing
and storage. Introduction is planned for the second half of 1996.

MSAM-WW-DP-9601©1996 Dataquest

February 12,1996

Id

Consumer Multimedia Semiconductors and Applications Worldwide

Table 2
Digital Camcorder Introductions
Model

Features

Price ($)

Availability

JVC GR-DVl

Single 570,000-pixel CCD, digital image
stabilizer, editing functions

2,995

April 1996

RCA CC-900B

Single-CCD, editing functions

2,999

March or April 1996

Sony DCR-VXIOOO

Three-CCD imaging with 410,000 pixels
per CCD, Super SteadyShot stabilization, and IEEE 1394 interface forediting/dubbing

4,199

Now

Sony DCR-VX700

Similar to DCR-VXIOOO, except for single
410,000-pixel CCD

2,999

Now

Panasonic PV-DVIOOO

Three-CCD imaging with 270,000 pixels
4,199
per CCD, Digital Electronic Image Stabilizer, Digital Photo-Shot for still frames,and 16:9 recording mode

Now

Sharp VL-DH-5000

Three-CCD imaging with 410,000 pixels
per CCD; 5-inch LCD color monitor

May 1996

4,595

Source: Dataquest (January 1996)

An Eye on Canon's Camcorder
Canon's feature products were its latest camcorders, with sophisticated eyetracking circuitry. In these, an infrared light shines at the retina of the eyepressed against the viewfinder. After two calibration tests, the circuitry canthen do an excellent job of following the eye's movements. This is most useful for identifying the object in the picture most critical to the focus, lighting, and color. This technique results in a very precise focusing in spite of
the fact that nearer, farther, or larger objects appear in the viewfinder or thata chain link fence, net, window, or cable appears in front of the desirable
image. The desired focal point does not have to be in the center of the picture, nor does it have to be motionless. The result is quite impressive. However, too long a glance at a less-desirable portion of the viewfinder image
will cause refocusing on the new object. Of course. Canon then went wild
and made it so that fiie eye movement could be used to select features
within the camera, such as zoom and fade. This resulted in significant distraction from the primary purpose of having the eye in the eyepiece: following the objects in motion. It also tends to cause unnecessary strain on eyes
being asked to do fairly uimatural things. A little more dexterity in the fingertips would provide the same functionality in a normal camcorder. The
eye-movement-tracking capability has possibilities in many other applications, such as computer input alternatives. Some lessons in human behavior
could be gained from such a device.

Say "Cheese" to Digital Cameras
Casio leads the developing digital camera field. The strength of the Casio
brand, access through Casio sales channels, handy camera size, and selection meant that Casio's QV-10 model stayed in high demand and limited
supply from its U.S. initial shipping date of September 1995. Casio started
producing 3,000 cameras per month in March 1995 and boosted its monthly
MSAM-WW-DP-9601©1996 Dataquest

February 12,1996

Consumer Multimedia Semiconductors and Applications Worldwide

11

output to 10,000 units per month in September as its camera became one of
the most popular models on the market. By the end of 1995, the company
had invested another ¥300 million to expand production capacity to 30,000
xinits per month.
The 96 images that can be stored, the 1.3-inch color LCD monitor, and theability to delete undesired shots in the camera add up to valuable in-thefield efficiencies offered by Casio's original QV-10 digital camera. Connected to a PC or Mac, the QV-IO allows photographs and computer-generated graphics to be downloaded into the camera for a small, portable
presentation system. Electronic images can be output to PCs or directly to a
TV. An ink jet color printer produces acceptable hard copies of the photos,
although these are not "suitable for framing." In fall 1996, a color printer, theQG-lOO, will produce higher-density, color, 2-inch-to-3-inch hard copies
that look a little more like a Polaroid. But, for $350, the QG-lOO has a far
more limited use than a similarly priced Hewlett-Packard ink jet printer.
Casio showed an improved model of the camera, dubbed the QV-30, at theWinter CES (see Figure 4). It expects to begin shipping this $1,000 camera in
April 1996. Slightly larger than the QV-10, the lens can be made 46mm
wide-angle or 105mm telephoto for more versatility. The resolution of theimage is 300 lines, compared with the 200 lines of tiie QV-10, and the newmodel has a larger, 2.5-inch TFT LCD. An agreement with Adobe will makeavailable a consumerized version of Photoshop called PhotoDeluxe, which
will allow images transferred to a PC to be enhanced, manipulated, andcropped. The images can then be integrated with greeting cards, calendars,
and other personal items.
Figure 4
Casio's New Model QV-30 Digital Camera

Source: Casio

MSAM-WW-DP-9601©1996 Dataqu est

February 12,1996

12

Consumer Multimedia Semiconductors and Applications Worldwide

Ricoh also showed its entry into the digital camera business. Although the
Ricoh camera offers impressive features, it appeared that its designers had
not seen the Casio model before putting this product together. The Ricoh
RDC-1 will hold up to 492 still images in the biggest flash EPROM, but
requires a PC to delete pictures. Some additional capabilities were available
in the camera, such as a protocol to upload images to a remote PC over an
add-on modem. The lens is equivalent to a 50mm-to-150mm lens, but the
LCD screen was a cumbersome add-on rather than being molded into theback of the unit, as is Casio's. It, too, will have a small printer accessory andPhotoshop-type PC software, perhaps included. Ricoh does have the ability
to capture 10 seconds of audio with each photo, or to record up to 20 seconds of motion with sound, with each frame a complete compressed image.
However, with U.S. availability in the spring and a big $1,800 price, Ricohseems to be going for a higher-end, some-assembly-required market, and it
is not likely to have Casio on the ropes soon.
The Casio cameras and the Ricoh have similar internal designs. Each uses a
Hitachi SH-1 microcontroller in the camera, running 14 MHz out of code in
the 64KB on-chip ROM, with 0.5MB DRAM for working space. The processor is aided by an individually developed ASIC that performs digital image
compression. Ricoh uses JPEG as its image compression definition andconsumes twice as much memory to store the data as Casio. However, theRicoh can perform its compression fast enough to store 30 images per second continuously. Little real image enhancement takes place in the camera,as the processors primarily take what comes in off the CCD, set up the compression, and organize the bits in the flash EPROM. A digital camera by
Sierra uses a MIPS microprocessor and actually performs digital signal processing (DSP) functions on the image to balance, correct, and enhance theimage in the camera. Casio uses 2MB flash memory to hold 96 images,
while Ricoh uses 2MB, 8MB, or 24MB of flash in a PCMCIA-type removablecartridge to store up to 492 stills.
Chinon has also been a major manufacturer of digital cameras, producing
digital still cameras for U.S. makers on an OEM basis since 1992. It manufactures cameras for Apple, Kodak, and Logitech. In December 1995, it
announced two new cameras under its own brand name, the ES-1000 and
ES-3000. The ES-1000 is priced at $499 and will begin U.S. shipments in
February 1996. The higher-end ES-3000 model is similar in size to a palmcorder and offers 3x zoom, with the highest-resolution image being 640 x
480 pixels. Storage capacity ranges from five images at 640 x 480 resolution
to 40 images at 320 x 240 resolution in the internal 1MB of memory. Capacity can be increased with an optional flash memory card of 2MB, 4MB, 8MB,
and 16MB. The 16MB card allows 689 images to be stored at 320 x 240 resolution. One of the main disadvantages oftibiisproduct is the absence of abuilt-in or add-on display module. Images must be ported to a PC for viewing. Chinon has announced that it will triple its monthly production capacity from the 20,000 uruts per month it is estimated to have reached in
December 1995.
Today, digital cameras are most popular with professionals such as insurance companies and real estate agents (who apparently are also besieged as
the target markets for personal digital assistants), who may prefer the
instant image and easy integration with a computer file or simply want aneasy way to show a house. However, to the pleasant surprise of

MSAM-WW-DP-9601.

©1996 Dataquest

February 12,1996

Consumer Multimedia Semiconductors and Applications Worldwide

13

manufacturers, consumers are also beginning to purchase digital cameras
and driving a stronger-than-expected market. The merger of the camera
and a computer represents the easiest way to get photographs into a PC.
Images can be transferred to the hard drive of a computer, where they canbe viewed, edited, or added to documents. While the images created bydigital cameras are inferior to the quality achieved by traditional film cameras, the image that can be captured in a PC through a digital camera issuperior to the method of using a scanner to transfer a photo into a computer. The picture quality of the latest digital cameras is comparable to
S-VHS or Hi-8 video images. Even with prices ranging from $500 to $1,800,
Casio expects overall market sales of digital cameras to be four times higher
in 1996 than in 1995.

What's on the Tube Tonight?
From the first day of television programming, viewers have been asking
what there is to watch. TV listings in local papers satisfied some people's
needs, and, in the United States, TV Guide, a separate magazine including
listings, satisfied others. But television has changed drastically in the last
decade, and the means of keeping up with programming is changing, as
well. The VCR changed the viewing habits of the public, but a recent U.S.
survey showed that one-third of VCR owners did not know how to record a
TV show when they were not home. Now the program listings can be foundon the TV itself, and recording a program on the VCR is finally easy.
There are many systems on the market in the United States that provide
television program information electionically and simplify the use of the
TV and VCR. VCR Plus started the process five years ago by giving users ameans of programming their VCRs with a single six-digit code found in theprinted TV listings, without having to program the channel, date, time, andduration separately. A VCR that supports VCR Plus will then record theright charmel at the right time. A normal VCR can also take advantage of
VCR Plus using a special remote control unit that will send the right signals
to the VCR to perform the recording designated by the six-digit code. Butthat is now old hat.

Video Guide
Radio Shack has been advertising the Video Guide, which is provided by acompany called Video Guide. The system is available at other major retailers. Video Guide is interested in the installed base of already-purchased
TVs and VCRs. As the latest entry into the market, it may want to provide
the best set of features. It uses a small $100 iinit near the TV/VCR in conjunction with an extremely simple remote control, which essentially canreplace the remote control for most TVs and VCRs. For $50 a year. Video
Guide distributes one week's worth of TV programming over a paging
network in each region. The receiver intercepts the TV signal (on channel
three) and can display upcoming programming on the screen.
Video Guide has the nicest-looking display of the three approaches (seeFigure 5), but its fancy graphics may become less readable on a 13-inch or
9-inch screen (Dataquest has not seen this). Browsing the on-screen programming guide is helped by alphabetical listings and some searchcapability. It is easy to find all of the showings of "The Outer Limits" for the
next week to be sure none are missed or to find all programs in the sports
MSAM-WW-DP-9601©1996 Dataquest

February 12,1996

14

Consumer Multimedia Semiconductors and Applications Worldwide

category. Video Guide even keeps up with a subscriber's most watched
charmels and prioritizes them in the listings. Once the wanted program ishighlighted, pushing a button will cause tiie TV to tune it in if it is being
shown at the time. If it is not being shown, pushing another button willschedule it to be recorded later by the VCR. A tiny wired "repeater" infraredlink placed on the VCR assures tihat a desired program will be recorded
properly.
Through Video Guide, not only is TV programming available over the airwaves, but for up to $50 a year more, a sports newswire and a news andweather listing can be obtained. These text-based services are quite handy,
allowing the subscriber to scan headlines and get more detail and even tojump to the ball game in progress if it is showing on one of the available
channels. The sports information keeps up with the score, quarter, andevents—an advantage of using a paging transmission rather than TV channel space. With the public's ever-increasing appetite for sports and news
(baseball strikes and politics notwithstanding, and with Olympic games
and the O.J. Simpson trial whetting appetites), these extra services could
offer a significant edge over other systems.
The Video Guide system uses a Motorola 68EC000 processor in the mainchassis and a Microchip Technology microcontroller in the remote control.
The services are provided by Video Guide over the paging network, andregional information is included in the TV, news, and sports data provided.
Since its release in early November, an average of 1,000 systems a day havebeen sold, with a nice boost from holiday sales. With a little more word-ofmouth advertising and promotion, this number should grow substantially.
Figure 5
Video Guide Unit

9S0709Source: Video Guide

MSAM-WW-DP-9601©1996Dataquest

February 12,1996

Consumer Multimedia Semiconductors and Applications Worldwide

15

StarSight
An earlier version of the TV program guide came from StarSight. StarSight
focused its attention on the new-TV and new-VCR markets, although Magnavox has a standalone StarSight receiver for aftermarket opportunities. A
StarSight receiver could add $35 to the cost of a TV or VCR and add $100 to
the unit's selling price, plus a $50 annual subscription. When included with
the TV or VCR, the only evidence of the circuit is a few extra buttons on the
remote control. StarSight taps into the listings of TV Guide magazine, bringing that extra edge to its service. However, only TV program listings areprovided, without the news and sports information available from Video
Guide. Also, the receiver gets its data in the backgroimd of the local PBS
affiliate broadcast, so for up-to-the-minute updates of news, sports, or
weather, the PBS channel must be tuned in. StarSight does provide sevendays of programming, expanded descriptions, category selection, and highlight-and-see/record capabilities.
StarSight's text on the TV screen has all the appeal of the Courier typewriter
typeface with a little color highlighting, but it should be legible on any TV
screen. The StarSight system does overlay the text on the TV program being
watched—a benefit for the viewer who just can't stand missing a second of
the program.
StarSight has been on the market for about a year. It has support from
14 major TV/VCR manufacturers, although relatively few TVs or VCRs
today are shipped with StarSight. Thomson, with its GE, RCA, and ProScan
brands in the United States, has invested $25 million in the company, so it isbacking StarSight at a different level. The StarSight system uses speciallydesigned chips from Zilog to receive the listings and place them on the TV
screen.

A Baby Brother?
Gemstar, maker of VCR Plus+, has now introduced TV Guide Plus+. TV
Guide Plus+ is offered as a free service after a properly equipped television
or VCR is purchased. American Broadcasting Company (ABC) affiliates
broadcast the electronic program guide to local broadcast areas, possibly
covering a greater range than PBS or paging systems. The service also taps
directly into listings of the "trusted" printed TV Guide. The simple dot
matrix text display on the screen shows only two days of complete programming, although some listings show a longer period. A video window
allows viewing of the current channel, some real-time information is possible, cind VCR Plus+ has been turned into a one-button recording feature,
but TV Guide Plus+ looks like the simplest form of electronic program listing. TV Guide Plus+ is primarily designed for inclusion in the TV or VCR.
Magnavox is promoting TV Guide Plus+ in some of its TVs and VCRs,
although other models sport StarSight.

Historical Reference
These systems for distributing TV programming, news, weather, sports,
and information are remiruscent of the Teletext service that has been available in Great Britain since the early 1980s. This system started as an accessory to the TV but soon was incorporated into the set. An extra £100 (about

MSAM-WW-DP-9601©1996 Dataquest

February 12,1996

16

Consumer Multimedia Semiconductors and Applications Worldwide$100 in the early 1980s, now about $75) would buy a TV fitted with Teletext
circuitry. The service was free in Great Britain, where advertising was foundon only two of the four available channels and was generally regarded withdisdain. Hundreds of "pages" of text were available to the user, providing
news stories, weather, sports, air traffic information, and listings for programs. Subtitles for the hearing-impaired viewer were also transmitted
over Teletext.
The British eagerly accepted this iriformation system when only four TV
channels were broadcast with almost no variation across the country and ahundred quid was a lot of money to most people. The textual information
came over the transmission during the vertical blanking interval (as is donein many current systems), but this means the subtitles for the hearingimpaired do not record on a VCR. The desired information was brought up
on the TV screen by entering the page number on the remote control. The
system is still in place, and approximately 70 percent of TVs in Great Britain
have Teletext. Some advances have been made in the service, simplifying
navigation through the pages, but it does not provide a simplified link to
the VCR.
It is not clear why a Teletext-type system never took hold earlier in the
United States. Perhaps one of tiiese new systems will have long-term
success. Whether more than one will survive may be a test of standards,
features, and marketing. Table 3 shows a comparison of TV program listing
systems.
Table 3Comparison of Electronic T V Program Listing S y s t e m s

SystemNumber ofDays of
Listings

Added
Price ($)

AnnualService
Charge ($)

BroadcastMediumIntegration
With TV or
VCRVideo Guide

7

100

50

PagingExternal

Modem display,real-time sports
and news available

StarSight

7

100

50

PBS

Internal/
external

Shows video

TV Guide
Plus+

2

50

Free

ABC

Internal

No charge forservice

VCRP1US+

7

40

Free

Newspaper Internal/
external

Requires print
media six-digit
code

Teletext

1

65

Free

BBC

Closed captioning

Internal

Notes

Source: Dataquest (January 1996)

MSAM-WW-DP-9601©1996 Dataquest

February 12,1996

Consumer Multimedia Semiconductors and Applications Worldwide

17

Voice Recording Systems
There were plenty of exhibitors showing voice recording systems, such as
digital answering machines, digital voice recorders, and novelty recorders.
For instance. Motorola was showing its new Tenor voice pager, which iscapable of receiving voice messages through a pager network. The device
can record up to four minutes of messages.
Parrot RCS S.A., a French company headquartered in Paris, was showing its
new Parrot Speech Recognition Organizer. The Parrot Organizer combines avoice recorder and a phone directory that can be accessed with speech
recognition. The product also features an automatic phone dialer and an
optional interface to either a Macintosh or PC-compatible computer. The
Organizer is assembled by IBM and retails for $279 in the United States.
The heart of the Parrot Organizer is a customized Texas Instruments TMS
320 C52 DSP at 40 MHz, capable of 20 mips. The DSP integrates Parrot's
proprietary speech recognition software. The Organizer has 256KB of RAM
and 256KB of ROM for voice prompts in five different languages. With compression, the Parrot Organizer is capable of 14 minutes of recording time at
2,400 bps. The Organizer also includes an ASIC for managing the energy
and real-time clock that was designed and developed by Parrot and manufactured by Fujitsu. The Parrot Organizer is completely designed in 3.3V
CMOS technology and runs on four AAA batteries.
Voice It Worldwide Inc. was showing its new Family Message Center, a digital note recorder with four separate channels for multiple users. The Message Center has a suggested retail price of $119. Voice It was also showing
its extended line of Personal Note Recorders, the VT-40, VT-90, VT-180, andVT-240. The numbers indicate the seconds of recording time at the slowest
recording speed. Voice It's Personal Note Recorders offer threedifferent recording speeds, which allows the user a trade-off between
recording time and audio quality. The recordings are always played back at
the speed of normal speech. Figure 6 shows Voice It's VT-240 Personal Note
Recorder.
The Flashback Digital Recorder from Norris Communications Corporation
won a Popular Science Award in November of 1994. The product was featured in Popular Science's Best of What's New issue in the Audio and Video
category. The Flashback features interchangeable memory cartridges called
SotindClips that contain flash memory chips from Intel. Cartridges areavailable with 18 minutes or 36 minutes of recording time (a 72-minuteversion is also plarmed). The Flashback runs on two AA batteries. The
product also features playback at three different speeds, with automatic
pitch adjustment. The Flashback with one 36-minute cartridge lists for $249.
On November 10,1995, Norris announced its intention to sell its Flashback
technology to other OEMs. Norris also introduced its new SoundLink
adapter. The SoundLink is a single-piece PCMCIA type II card that is essentially a PC docking port for Flashback SoundClips. Another product, introduced on November 13,1995, was the Norris Flashfile System (NFS). The
NFS is a development tool and file manager application program interface
designed for other companies using flash memory in botii primary and secondary storage applications. The NFS is a complete flash memory manager

MSAM-WW-DP-9601©1996 Dataquest

February 12,1996

Consumer Multimedia Semiconductors and Applications Worldwide

18

Figure 6
The Voice It VT-240 Personal Note Recorder^^mSW^ ^^^^^MJii^^^T^^^^^^^^^^^^^^HflBB^H^^Sn^^^F^^^^^^^H^^^^^^^^^P .i?

RS^^HKH.::^^^^^^^^IS^S^^V''^•••^^^^^^pk^^H^fl|H^^k^^^^^^^^^^^^^^^Hl^^^^^^Vsfe*'
as 0710Source: Voice Itwith an MS-DOS redirector that takes only 13KB of ROM and 300 bytes of
RAM to implement.
The 18-minute SoundClip contains 1MB of flash from Intel; the 36-minuteversion contains 2MB. The Flashback Digital Recorder also contains 512KB
of DRAM used as a temporary buffer for compression and pitch adjustment
during playback. The DRAM part used is a Micron 70ns lMx4. Other identifiable parts inside the Flashback included a 32Kx8 EPROM from Atmel, a
codec from Oki, and a shift register from Harris.

Voice Recording Chips
The following five chip companies exhibited at this year's Winter CES:••••

AT&T Microelectronics
DSP Group Inc.
Integrated Storage Devices
National Semiconductor• Zilog
All of these companies were showing chips designed for voice recording
applications. National Semiconductor was previewing a 4MB serial flash
part and voice processor chipset that it plans to introduce in the first quarterof 1996. The remaining four companies wiU be reviewed in detail in an
upcoming Dataquest document.

MSAM-WW-DP-9601©1996 Dataquest

February 12,1996

Consumer Multimedia Semiconductors and Applications Worldwide

19

Additional Sliow Higliliglits and Notes
An exhaustive report of all the new product introductions and developments at the Winter CES is not possible here. However, the following items
demand at least a brief description.
Compaq and Fislier Price Invent the $2,000 Toy
Although the PC may have been accused of being nothing more than an
expensive toy in the past, Compaq and Fisher Price have teamed up to create an innovative product that truly does turn a multimedia PC into a toy.
This new product has drawn on the strengths of both companies to produce
one of the more creative approaches to the home education/entertainment
market. The Wonder Tools product line was designed for children from ages
3 to 7 and includes three categories: interactive computer toys, preschoolappropriate peripherals, and standalone software titles for children andfamilies. The first products introduced at the Mnter CES were the Wonder
Tools Cruiser and Software, an innovative driving console and CD-ROM
software that create an interactive experience for children (see Figure 7),
and The Wonder Tools Keyboard, a keyboard with oversized keys, a mouse,
and activity software that makes the computer easier and more fun to use
for children. These products are designed to be used with any Windowsbased PC and are scheduled to be available in the United States during thesecond half of 1996.
Figure 7
The Compaq/Fisher Price Wonder Tools System

Source: Compaq/Fisher Price

MSAM-WW-DP-9601©1996Dataquest

February 12,1996

20

Consumer Multimedia Semiconductors and Applications Worldwide

Binaura Steps Up to Challenge Spatializer and Q-Sound
Spatializer Audio Laboratories and Q-Sound have been among the mostrecognized names in the world of 3-D or enhanced audio products for themultimedia PC. Although multimedia PCs have been the platform for early
applications of this technology, the market for this type of product is muchlarger than just PCs. In theory, any electronics product that reproducessound is a target for enhanced audio technology. At the Winter CES, Spatializer introduced its HTMS-2510 stereo surround sound system for the consumer market. By plugging an HTMS-2510 in line with TVs, stereos, andVCRs, consumers can bring 3-D surround sound capability into theirhomes. However, a more significant development in this area may havecome from a company called Binaura that demonstrated its technology in a
motor home outside the convention center.
Binaura has already announced major design-wins for its patented audio
enhancement technology with Creative Labs and Diamond Multimedia.
The Soundblaster and 3-D multimedia accelerator products introduced by
Creative Labs and Diamond Multimedia in 1995 incorporated its technology. Binaura claims that it already has five licensees of its technology andexpects the total to increase to 13 or 15 soon. Discussions with company
executives indicate that Binaura is positioned to capture over 70 percent of
the multimedia upgrade kit market in 1996.
At the Winter CES, the company was demonstrating a very simple, inexpensive box with a pair of speakers driven by a portable CD player. The
sound enhancement was impressive when applied to both stereophoruc
and monophonic signals. The Binaura system is implemented with discrete
components: one quadraphorvic operational amplifier, one quadraphonicmultiplexer, 20 resistors, and four capacitors. It plans to offer an ASIC version of the circuit in the first half of 1996. Its goal is to be a leader in audio
enhancement technologies for consumer electronics, video games, automotive sound, home entertainment, and multimedia computing markets. Look
for significant market developments from this small, aggressive company
during 1996.
Sony Hopes Price Cuts Will Stimulate U.S. MiniDisc Sales
Sony announced a reduction in the price of its play-only MiniDisc (MD)portable to $199 with the introduction of its MZ-E40. This model is scheduled to begin U.S. shipments in July and would replace an earlier modelwith a suggested retail price of $349 (an average street price of $299). Sonyclaims to have sold 1.5 million car, home, and portable MD players worldwide, but the steep price has created a major barrier to its success in the U.S.
market. The new model features a 10-second memory buffer and sevenhours of playback on two AA batteries, compared with a three-second
buffer and five hours of playing time on the previous model. Sharp has also
begun to manufacture MiniDisc products, which it was showing at CES.
IEEE 1394 Begins to Make Inroads into the Consumer WorldFor over a year, the proponents of the IEEE 1394 standard have been promoting it as the future consumer electronics network. Evidence of progressin penetrating the consumer electronics world was seen at the \A^nter CES.
The most notable products that included IEEE 1394 communications capability were Sony's digital camcorders. However, the marketing of IEEE 1394

MSAM-WW-DP-9601©1996 Dataquest

February 12,1996

Consumer Multimedia Semiconductors and Applications Worldwide

21

appears to be an uphill battle still. The most frequent response when various representatives were asked if their product included an IEEE 1394 port
was a blarik stare. When pressed on the issue, most representatives were
either uninformed or unconvinced of the merits of an IEEE 1394 port.
Although Sony's incorporation of this port in its camcorders is encouraging,the day when this capability is a standard feature would appear to be
distant.
Afraid of the Dark?
Although ITT's Night Quest product line has essentially no semiconductor
content, the company did have one of the more intriguing products in the
consumer's price range. ITT was showing its night vision monoculars andbinoculars for the consumer market at the Winter CES. With technology
developed (and paid for) for the military, these second- and third-generation viewers turn complete darkness into green daylight. Indoors, withimperceptible light, or outdoors, in starlight (not moonlight), these viewers
show detail of everything, with nothing hiding in the shadows.
Night vision glasses such as these have been seen in spy movies and military exercises, but now are available for as little as $800, not the $5,000-to$10,000 price range seen in military surplus catalogs. The company claims
that these are far more sensitive than those used by the Russian military.
Last year, ITT sold these monoculars/binoculars successfully to the marine
market, where they aid significantiy in night boating. ITT is now bringing
the glasses to a broader sporting goods market for use by hunters, campers,
hikers, and others to see prowlers, animals, trails, lost people, and things
that go bump in the night. These are slightly infrared-sensitive but do notdepend on infrared for imaging (an infrared flashlight is offered for supplemental lighting).
The image on all models is amazingly clear and detailed. There is basicallyno magnification, so the field of view is maximized (52 degrees), and 2x and3x lens attachments are available. Most models even float, so consumers
won't lose their investment overboard, although another Night Viewer
might be needed to see the first one bobbing along in the dark. The lowest
cost model, the Night Quest 100, is a monocular weighing only 10 oz.

Summary
With DBS, MD, DVC, and DVD, the home digital revolution is in full swing.
V\^th the transition to digital, Dataquest expects that the value of semiconductors going into consumer electronics will grow from $22 billion in 1995
to $46 biUion by 2000. (Note that this does not include the semiconductor
market opportunity in home appliance/convenience products.) As shownin Figure 8, new digital products and digital enhancements to current consumer products will drive the growth in the consumer semiconductor market in tiie future. The digital products introduced at the 1996 Winter CES
give added credence to this forecast.

MSAM-WW-DP-9601©1996 Dataquest

February 12,1996

22

Consumer Multimedia Semiconductors and Applications Worldwide

Figure 8
Consumer Semiconductor Market Forecast: Digital Will Drive the Growth in Chips
Millions of Dollars
50,000 •45,000-[\]

Next-Generation Consumer•

DJgitaHy Enhanced Consumerm

Other Consumer

40,00035,00030,00025,00020,000 15,00010,000-r;
5,000-S

1993

Source: Dataquest (January 1996)

NOIMSAMWW MSAMWWDP9501

Uti'.

1 W:

Ms. Maria V a l e n z u e l a
Dataquest Incorporated
1-1100K—INTERNAL D I S T . - -For More Information...

Dale Ford, Senior Industry Analyst
Internet address
Via fax

Dataquest
A Gartner Group Company(408) 468-8311
dford@dataquest.com(408) 954-1780

The content of this report represents our interpretation and analysis of information generally available to the public
or released by responsible individuals in the subject companies, but is not guaranteed as to accuracy or completeness.
It does not contain material provided to us in confidence by our clients. Reproduction or disclosure in whole or inpart to other parties shall be made upon the written and express consent of Dataquest.
©1996 Dataquest—Reproduction Prohibited
Dataquest is a registered trademark of A.C. Nielsen Company

m

DataQucst

FILE COPY:MARIA VALENZUELAI
DataQuest

Consumer Electronics Semiconductor
Forecast: Next-Generation Products
Promise Bloclcbuster Marlcet

Market Trends

Program: Consumer IVlultimedia Semiconductors and Applications Worldwide
Product Code: MSAM-WW-MT-9603
Publication Date: December 9,1996
Filing: Market Trends

I

Consumer Eiectronics Semiconductor
Forecast: Next-Generation Products
Promise Bioclcbuster Market

Market Trends

Program: Consumer Multimedia Semiconductors and Applications Worldwide
Product Code: MSAM-WW-MT-9603
Publication Date: December 9,1996
Filing: Market Trends

Consumer Electronics Semiconductor Forecast: Next-Generation Products Promise Blockbuster Market

I

Table of Contents
1. The Consumer Electronics Chip Market Starts to Get Respect
Introduction
The Stars of the Show
2. The Next-Generation Cor^sumer Electronics Semiconductor
MarketDigital Satellite and Cable Set-Top Boxes
DVD Video Players
Video CD Players
Next-Generation Video Game Consoles
HDTV/ATV/SDTV
Digital Still Cameras
Other Next-Generation Consumer Electronics Products
3. The Expanding Market for Compression Chips
Compression Standards
JPEG and Motion JPEG
MPEG-1.
MPEG-2 and AC-3
H.261
H.263
Indeo and Proprietary Algorithms
Content Creation and Distribution Encoding Systems
Compression Technologies in PC Applications
The Compression Semiconductor Opportunity
4. DRAM Drops into Digital Consumer Electronics

I

Page
1
1
1
11
15
16
17
19
20
20
21
23
23
23
23
23
24
24
24
24
25
26
37

^

MSAM-WW-MT-9603©1996 Dataquest, December 9,1996

Consumer Multimedia Semiconductors and Applications Worldwide

List of Figures
FigurePage
1-1 Worldwide Consumer Electronics and Semiconductor Market
2
1-2 Consumer Electronics Semiconductor Market by Region
4
1-3 Consumer Electronics Semiconductor Market by
Product Generation5
1-4 Semiconductor Market Forecast for Next-Generation
Consumer Electronics
7
1-5 Semiconductor Market Forecast for Next-Generation
Consumer Electronics by Technology Type8
1-6 Semiconductor Market Forecast for Next-Generation
Consumer Electronics by Integration Type8
2-1 Summary of Chip Market for Next-Generation
Consumer Electronics Products by Chip Type15
3-1 Compression Semiconductor Market by Standard
34
3-2 Compression Semiconductor Market by System
35
4-1 Worldwide DRAM Memory Market in Next-Generation
Consumer Electronics
37

i

i

i
IVISAM-WW-MT-geoS©1996 Dataquest

December 9,1996

Consumer Electronics Semiconductor Forecast: Next-Generation Products Promise Blocl<buster Market

List of Tables
Table
1-1
1-2
1-3
1-4
1-5
1-6
1-7

2-1
2-2
2-3
2-4
2-5
2-6
2-7
2-8
3-1
3-2
3-3
3-4
3-5
3-6
3-7
4-1

MSAM-WW-MT-9603

Page
Worldwide Consumer Electronics Semiconductor
Market Forecast by Device TypeWorldwide Consunier Electronics Semiconductor
Market Forecast b y Region
Worldwide Consunier Electronics Semiconductor
Market Forecast by Product Generation
Worldwide Semiconductor Market Opportunity for
Next-Generation Consumer Electronics Products
Semiconductor Market Forecast for Next-Generation
Consumer Electronics by Technology Type
Semiconductor Market Forecast for Next-Generation Consumer
Electronics by Integration TypeWorldwide Audio/Video/Graphics Processing Chip
Market for Next-Generation Consumer Electronics
Products
Worldwide Chip Market for Next-Generation Consumer
Electronics Products by Semiconductor TypeWorldwide Chip Market for Digital Cable Set-Top Boxes
by Semiconductor TypeWorldwide Chip Market for Digital Satellite Set-Top
Boxes by Semiconductor TypeWorldwide Chip Market for DVD Video Players by
Semiconductor TypeWorldwide Chip Market for Video CD Players by
Semiconductor TypeWorldwide Chip Market for Next-Generation Video Game
Consoles by Semiconductor TypeWorldwide Chip Market for HDTV/SDTV/ATV
Receivers by Semiconductor TypeWorldwide Chip Market for Digital Still Cameras by
Semiconductor TypeWorldwide Compression Semiconductor Function
Shipment Summary by Standard
Worldwide Video Compression Semiconductor
Function Shipments by Standard
Worldwide Audio Compression Semiconductor
Function Shipments by Standard
Worldwide Compression Semiconductor Market
Summary by Standard
Worldwide Compression Semiconductor Market
Summary by System
Worldwide Video Compression Semiconductor
Market by Standard
Worldwide Audio Compression Semiconductor
Market by Standard
Worldwide DRAM Memory Market in Next-Generation
Consumer Electronics©1996 Dataquest

1
3
5
6
7
7

9
11
16
17
18
18
19
20
21
27
27
29
30
31
31
33
38

December 9,1996

Chapter 1

The Consumer Electronics Chip Marl(et Starts to Get
Respect^ ^ ^ ^ « ^ _ ^ ^ ^ ^ ^ _ _ ^ ^ ^ ^ ^Introduction
This document presents the Dataquest forecast for semiconductor consumption in consumer electronics equipment, along w^ith the market forcompression semiconductors in all types of equipment. With the emergence of a new digital consumer electronics era, the emphasis of this document and its forecasts is on the opportunity created by next-generation
consumer electronics. These products, along with digitally enhanced consumer electronics, will drive the growth of semiconductors in this segmentin the future. The forecasts in this report rely on systems forecasts established for major consumer electronics categories, along with predicted
semiconductor trends and valuations in this equipment. Multiple analysts
contributed to the creation of the forecasts and analysis presented in thisdocument, as listed below.
Contributing Analysts: Dale Ford, Jonathan Cassell, Greg Sheppard, and Geoff
BallewThe Stars of the Show
The semiconductor market for consumer electronics is forecast to decline
by $1.9 billion in 1996 from $26.1 billion in 1995. Two major factors play arole in the decline of the market. First, the overall consumer electronics
equipment market was essentially flat from 1995 to 1996. The flat market
combined with plummeting memory prices to result in an overall semiconductor market decline. The shrinking memory market accounted for$1.7 billion of the total market contraction, as shown in Table 1-1 andFigure 1-1. Japan and Asia/Pacific continue to dominate the consumptionof semiconductors for consumer electronics. However, the European andAmericas chip markets are expected to experience strong growth over the
next five years, as shown in Table 1-2 and Figure 1-2.
Table 1-1
W o r l d w i d e Consumer Electronics Semiconductor Market Forecast b y D e v i c e Tj^pe( M i l l i o n s of Dollars)

Total Equipment
Factory Revenue
Total Semiconductor
Total IC
Bipolar Digital
MOS Digital
MOS Memory
MOS
Microcomponent

1993
1994
1995
1997
1998
2000
1996
1999
143,593 157,141 170,433 171,441 182,544 195,962 209,822 223,517
17,406
13,048
223
7,416
2,339
2,869

21,507
16,467
211
9,664
3,034
3,939

26,071
19,959161
12,615
4,830
4,631

24,185
18,542
98
11,478
3,166
5,417

27,015
20,64179
12,843
3,318
6,297

31,881
24,60463
15,762
4,400
7,632

38,18529,75250
19,4485,988
9,083

45,74635,77839
23,537738
10,861CAGR (%)
1995-2000
5.6
11.9
12.4
-24.6
13.3
8.9
18.6
(Continued)

MSAM-WW-MT-9603©1996 Dataquest

1

Consumer Multimedia Semiconductors and Applications Worldwide

Table 1-1 (Continued)
Worldwide Consumer Electronics Semiconductor Market Forecast by Device Type(Millions of Dollars)

MOS Logic
Analog(Monolithic+ Hybrid)
Total Discrete
Total Optoelectronic

I

1993
2,208
5,409

1994
2,691
6,593

1995
3,154
7,183

1996
2,895
6,966

1997
3,228
7,719

1998
3,730
8,779

1999
4,377
10,2542000
5,278
12,201CAGR (%)
1995-2000
10.8
11.2

3,160
1,198

3,610
1,431

4,390
1,722

4,067
1,576

4,581
1,792

5,263
2,014

6,118
2,315

7,234
2,734

10.5
9.7

Source: Dataquest (November 1996)

Figure 1-1
Worldwide Consumer Electronics and Semiconductor Market
Millions of Dollars

Millions of I

250,000
Total Equipment
Factory Revenue
Total
Semiconductor

i

50,000

L

1993

1994

1995

1996

•••'"

I

1997

" " "

1998

I

• ' " •

1999

I

2000
967984

Source: Dataquest (November 1996)

i
MSAM-WW-MT-9603©1996 Dataquest

December 9,1996

The Consumer Electronics Chip IVIarket Starts to Get Respect

Table 1-2
Worldwide Consumer Electronics Semiconductor Market Forecast by Region(Millions of Dollars)
1993
1,868
68
735
21
856
188
1,868
1,940
320
1,270
182
168
0
1,940

1994
2,395
89
1,020
31
1,008
248
2,395
2,300
370
1,535
209
186
0
2,300

1995
3,074
135
1,456
46
1,051
385
3,074
2,650
416
1,817
213
204
0
2,650

1996
3,003
134
1,512
45
946
366
3,003
2,900
402
2,109
191
198
0
2,900

1997
3,569
165
1,907
54
1,015
428
3,569
3,200
421
2,396
180
203
0
3,200

1998
4,580
227
2,574
66
1,175
538
4,580
3,550
472
2,683
176
219
0
3,550

1999
5,875
310
3,463
81
1,330
691
5,875
4,250
525
3,269
200
256
0
4,250

2000
7,209
409
4,392
97
1,437
874
7,209
5,250
647
4,064
225
314
0
5,250

CAGR (%)
1995-2000
18.6
24.9
24.7
16.0
6.5
17.8
18.6
14.7
9.3
17.5
1.0
9.1
NA
14.7

Audio
Video
Personal Electronics
Appliances
Other Consumer
Total

8,298
1,337
4,113
1,816
626
407
8,298

10,018
1,591
4,735
2,409
798
486
10,018

11,713
1,797
5,137
3,176
1,016
588
11,713

10,143
1,419
4,142
3,093
1,058
430
10,143

11,024
1,515
4,373
3,478
1,196
463
11,024

12,749
1,648
4,750
4,508
1,360
482
12,74914,935
1,801
5,422
5,673
1,539
500
14,935

17,612
1,991
6,114
7,256
1,717
536
17,612

8.5
2.1
3.5
18.0
11.1
-1.9
8.5

Asia/Pacific
Audio
Video
Personal Electronics
Appliances
Other Consumer
Total

5,299
1,241
1,813
837
938
470
5,299

6,794
1,859
2,231
1,008
1,141
555
6,794

8,634
2,443
2,746
1,332
1,480
633
8,634

8,139
2,314
2,518
1,310
1,394
602
8,139

9,222
2,609
2,947
1,396
1,567
704
9,222

11,003
3,203
3,489
1,734
1,718
858
11,003

13,125
3,784
3,975
2,101
2,300
965
13,125

15,674
4,629
4,828
2,518
2,523
1,175
15,674

12.7
13.6
11.9
13.6
11.3
13.2
12.7

Worldwide
Audio
Video
Personal Electronics
Appliances
Other Consumer

17,406
2,966
7,932
2,855
2,588
1,065

21,507
3,909
9,521
3,656
3,132
1,289

26,071
4,790
11,156
4,768
3,750
1,607

24,185
4,269
10,281
4,640
3,597
1,399

27,015
4,710
11,623
5,107
3,980
1,595

31,881
5,551
13,496
6,484
4,472
1,879

38,185
6,420
16,129
8,055
5,424
2,157

45,746
7,676
19,398
10,096
5,991
2,584

11.9
9.9
11.7
16.2
9.8
10.0

Americas
Audio
Video
Personal Electronics
Appliances
Other Consumer
Total
EuropeAudio
Video
Personal Electronics
Appliances
Other Consumer
Total

Japan

Source: Dataquest (November 1996)

MSAM-WW-l\/IT-9603©1996 Dataquest

Decembers, 1996

Consumer Multimedia Semiconductors and Applications Worldwide

Figure 1-2
Consumer Electronics Semiconductor Market by Region
Millions of Dollars
50,000D Asia/Pacific
S Japan

•
^

1993

1994

1995

1996

1997

1998

1999

EuropeAmericas

2000967985

Source: Dataquest (November 1996)

The real stars of the consumer electronics semiconductor show are nextgeneration consumer electronics and digitally enhanced consumer electronics. As shown in Table 1-3 and Figure 1-3, these products will drive thetotal chip market in this segment over $45 billion while chip shipments inlegacy products remain relatively flat. The follow^ing points present definitions for each of the categories in these tables and figures:• Next-generation consumer electronics: Products that are includedin this category are digital set-top boxes, digital satellite set-top boxes,
32/64-bit video game consoles, DVD video players, DVD audio players,
digital still cameras, video CD players, HDTV-SDTV-ATV receivers,
digital camcorders, and other products employing advanced semiconductor technologies. These products represent a new generation of consumer electronics.
• Digitally enhanced consumer electronics: These are consumer electronics products that have been enhanced by the addition of new digitaltechnology. For example, camcorders that now employ motion compensation and digital zoom, TVs with V-chips (to block violent programming) and closed captioning, VCRs with Video Guide incorporated, andCD Audio players with additional memory and circuits to provide
shock protection, among others. These are all products that have been in
the home for many years but now have new, enhanced features delivered by digital technology.

MSAM-WW-MT-9603©1996 Dataquest

Decembers, 1996

The Consumer Electronics Chip Market Starts to Get Respect

Table 1-3
Worldwide Consumer Electronics Semiconductor Market Forecast by Product
Generation (Millions of Dollars)

Legacy Consumer
Electronics
Digitally Enhanced
Corisumer Electronics
Next-Generation
Consumer Electronics
Total Consumer
Electronics

1993
17,118

1994
20,121

1995
21,622

1996
16,537

1997
16,717

1998
17,006

1999
17,396

2000
17,467

CAGR(%)
1995-2000
-4.2

250

750

2,400

3,400

5,500

9,000

13,60020,000

52.8

37

637

2,049

4,248

4,798

5,876

7,188

8,279

32.2

17,406

21,507

26,071

24,18527,01531,881

38,18545,746

11.9

Source: Dataquest (November 1996)

Figure 1-3
Consumer Electronics Semiconductor Market by Product Generation
Millions of Dollars
50,000 •Next-Generation
ConsumerElectronics
Digitally-Enhanced
ConsumerElectronics
Legacy Consumer
Electronics

1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
9679S6

Source: Dataquest (November 1996)

MSAM-WW-MT-9603©1996 Dataquest

December 9,1996

Consumer Multimedia Semiconductors and Applications Worldwide• Legacy consumer electronics: These are products that have been on themarket for many years, such as standard color TVs, portable stereos,and VCRs, among others. They represent the current high-volume portion of the consumer electronics market and will continue to find markets at the niid-to-low-end segments. However, the chip market
opportunities in these products are flat to declining.
Tables 1-4 through 1-6 and Figures 1-4 through 1-6 present summaries ofthe semiconductor forecasts for chips consumed in next-generation consumer electronics. More detailed forecasts for these products are presented
in Chapter 2. The digital set-top box market is forecast to account for over
40 percent of the $8.3 billion semiconductor market in the year 2000. These
products are followed by video CD and DVD video players, which willconsume almost 25 percent of the chips in next-generation consumer electronics. Application-specific standard product (ASSP) and mixed-signal
chips will lead the growth of this segment of the market, with forecast
106.8 percent and 63.3 percent compound annual growth rates (CAGR),
respectively. Over half of the value created for semiconductors in the next
generation comes from chips directly involved in processing audio, video,
and graphics, as shown in Table 1-7. The chips counted in this category
include products such as audio and video decoding chipsets, NTSC andPAL converters, and analog-to-digital (A/D) and digital-to-analog ( D / A )converters.

Table 1-4
Worldwide Semiconductor Market Opportunity for Next-Generation Consumer
Electronics Products ( M i l l i o n s of Dollars)

Digital Cable
Set-Top Box
Digital Satellite
Set-Top Box
DVD Video Player
Video CD Player
Next-Generation Video
Game Console
HDTV-ADTV-SDTV
Receiver
Digital Still Camera
Other Next-Generation
Products*
Total

1993
4

1994
5

1995
13

1996
83

1997
260

1998
441

1999
852

2000
1,287

CAGR (%)
1995-2000
150.1

0

229

562

1,204

1,458

1,572

1,744

2,127

30.5

0
5
21

0
69
314

0
219
1,142

44
606
1,812

169
859
1,353

413
1,005
1,513

774
1,085
1,717

950
1,079
1,705

NA
37.5
8.3

8

12

40

84

110

146

167

210

39.6

0
0

7
0

52
21

202
213

299
291

451
336

458
393

463
459

54.8
85.0

37

637

2,049

4,248

4,798

5,876

7,188

8,279

32.2

NA = Not applicable•Other next-generation products includes digital VCRs, digital camcorders, DVD audio, and others.
Source: Dataquest (November 1996)

MSAM-WW-MT-9603©1996 Dataquest

Decembers, 1996

The Consumer Electronics Chip l\/larl(et Starts to Get Respect

Table 1-5
Semiconductor Market Forecast for Next-Generation Consumer Electronics byTechnology Type (Millions of Dollars)
1993

1994

1995

1996

1997

1998

1999

2000

C A G R (%)
1995-2000

Digital

12

245

692

1,7%

2,374

2,882

3,190

3,351

37.1

Analog, Discrete, a n d O p t o

8

75

200

690

872

1,091

1,418

1,781

54.9

Mixed-Signal

2

37

163

446

705

1,021

1,525

1,889

63.3

Memory

15

281

995

1,315

847

883

1,056

1,259

4.8

2,049

4,247

4,799

5,876

7,189

8,279

32.2

37

Total

637

Source: Dataquest (Novemt)er 1996)

Table 1-6
Semiconductor Market Forecast for Next-Generation Consumer Electronics byIntegration Type (Millions of Dollars)

ASIC/ASSP

1993

1994

1995

1996

1997

1998

1999

2000

C A G R (%)
1995-2000

12

187

569

1,767

2,632

3,537

4,727

5,611

58.1

1,377

1,576

1,685

1,545

27.3

ASIC

12

169

461

1,139

ASSP

1

17

107

629

1,255

1,960

3,042

4,066

106.8

Standard IC or Discrete a n d Opto

11

169

485

1,165

1,320

1,457

1,406

1,409

23.8

Memory-

15

281

995

1,315

847

883

1,056

1,259

4.8

Total

37

637

2,049

4,247

4,799

5,876

7,189

8,279

32.2

Source: Dataquest (Novemtjer 1996)

Figure 1-4
Semiconductor Market Forecast for Next-Generation Consumer Electronics
Millions of Dollars
9,000
Otiier Next-Generation
Products*

1993

1994

1995

1996

1997

1998

1999

I

Digital Still Camera[Q]

HDTV-ADTV-SDTV Receiver

•r^
tSsi

Next-Generation Video Game
ConsoleQ

Video CD Player^

DVD Video Playerg|Digital Satellite Set-Top Box^

Digital Cable Set-Top Box

2000
9€7987*Other next-generation products includes digital VCRs, digital camcorders, DVD audio, and otiiers.
Source: Dataquest (November 1996)

MSAM-WW-l\yiT-9603©1996 Dataquest

December 9,1996

Consumer Multimedia Semiconductors and Applications Worldwide

Figure 1-5
Semiconductor Market Forecast for Next-Generation Consumer Electronics byTechnology Type
Millions of Dollars
9,000-D Memory
S Mixed-Signal

1993

1994

1995

1996

1997

1998

1999

•

Analog,Discrete,and Opto^

Digital2000
967SB3

Source: Dataquest (November 1996)

Figure 1-6
Semiconductor Market Forecast for Next-Generation Consumer Electronics byIntegration Type
Millions of Dollars
9,000-n Memory
Standard ICs orandDiscrete
Opto
IHi

ASSP

^

ASIC

967389Source: Dataquest (November 1996)

MSAM-WW-MT-9603©1996 Dataquest

December 9,1996

The Consumer Electronics Chip l\/larl<et Starts to Get Respect

Table 1-7
Worldwide AudioA'ideo/Graphics Processing Chip Market for Next-Generation
Consumer Electronics Products (Millions of Dollars)

Digital Cable Set-Top Box
Digital Satellite Set-Top Box
DVD Video Player
Video CD Player
Next-Generation Video Game Console
HDTV-ADTV-SDTV Receiver
Digital Still Camera
Other Next-Generation Products
Total

1993 1994 1995
83
2
114 332
0
0
0
0
3
119
41
90 302
6
30
9
6
42
5
0
0
5
0
17 262
838

1996 1997
132
48
774
655
71
18
329
510
728
621
83
63
239
161
76
52
1,947 2,613

1998
214
785
175
612
987
109
336
96
3,315

1999 2000
613
406
875 1,084
412
336
660
664
1,132 1,129
158
125
337
341
141
118
3,992 4,539

CAGR(%)
1995-2000
137.4
26.7
NA
40.8
30.2
39.6
52.3
94.3
40.2

Source: Dataquest (November 1996)

MSAM-WW-MT-9603©1996 Dataquest

December 9,1996

Chapter 2

Tlie Next-Generation Consumer Electronics Semiconductor
Market—^—^^-^-^^-^-^-.^—^—^—^^—
This chapter explores the high growth opportunity presented by next-generation consumer electronics equipment. Because of the establishment ofindustry standards for most of these products, analog, digital, and mixedsignal ASSP products are expected to find extremely high growth opportunities. On ihe other hand, the continued price erosion in memory chips
and lack of elasticity for memory demand in these systems will combine tokeep memory growth in these products below 5 percent. Table 2-1 andFigure 2-1 present a summary of the detailed semiconductor forecast foreach of the defined next-generation products in the following tables. It is
important to note that these tables present the combined value of semiconductors on end-equipment shipping from the factory. In a high-growthmarket such as this, the actual units and value of chip shipments fromsemiconductor manufacturers to equipment manufacturers in a given year
will typically be higher than the forecasts in these tables because of inventory and work-in-process.
Table 2-1
Worldwide Chip Market for Next-Generation Consumer Electronics Products by
Semiconductor Type (Millions of Dollars)

Digital ASIC
Digital Cable Set-Top Box
Digital Satellite Set-Top Box
DVD Video Player
Video CD Player
Next-Generation Video Game
ConsoleHDTV-ADTV-SDTV Receiver
Digital Still Camera
Other Next-Generation Products
Digital ASSP
Digital Cable Set-Top Box
Digital Satellite Set-Top Box
DVD Video Player
Video CD Player
Next-Generation Video Game
ConsoleHDTV-ADTV-SDTV Receiver
Digital Still Camera
Other Next-Generation Products

1993 1994
127
8
1
1
37
0
0
0
21
2
4
64

1995
282
3
49
0
9
188

1996
709
18
108
4
7
425

1997
960
57
153
12
0
548

1
0
0

1
3
0

4
27
3

8
106
32

11
149
29

14
100
27

0
0
0
0
0
0

10
0
0
0
10
0

80
0
0
0
80
0

406
5
150
11
240
0

696
26
233
43
379
0

1,028
60
330
101
462
0

0
0
0

0
0
0

0
0
0

0
0
0

0
0
15

3
45
27

1998 1999 2000
1,129 1,212 1,073
94
56
26
87
36
110
34
63
56
0
0
0
884
869
750

CAGR (%)
1995-2000
30.6
56.2
-5.8
NA
-100.0
35.9

16
42
28

31.8
9.2
56.8

1,375 1,721
170
311
401
510
190
260
502
500
0
0

84.5
NA
NA
NA
44.1
NA

15
82
24

8
61
43

15
68
55

NA
NA
NA
(Continued)

MSAM-WW-MT-9603©1996Dataquest

11

T2

Consumer IWultimedia Semiconductors and Applications Worldwide

Table 2-1 (Continued)
Worldwide Chip Market for Next-Generation Consumer Electronics Products by
Semiconductor Type (Millions of Dollars)
1993 1994
4
108
0
0
60
0
0
0
3
0
42
3

1995
330
1
138
0
10
170

1996
681
27
325
2
27
257

1997
718
62
408
7
37
139

1998
726
55
377
16
40
145

1999
603
102
174
27
41
163

2000
558
154
91
28
42
155

CAGR (%)
1995-2000
11.1
171.9
-7.8
NA
33.6
-1.8

1
0
0

1
1
0

4
6
2

8
19
17

11
32
23

17
52
23

17
54
24

17
46
23

34.5
52.9
68.6

4
0
0
0
0
0

42
0
37
0
0
0

93
1
73
0
0
1

222
9
157
0
0
1

211
26
117
0
0
1

169
26
63
0
0
2

144
26
35
0
0
2

140
26
21
0
0
2

8.5
77.8
-21.9
NA
NA
16.0

3
0
0

5
0
0

16
0
2

34
0
21

44
0
23

53
0
25

54
0
28

59
0
32

30.3
NA
72.4

Analog ASSP
Digital Cable Set-Top Box
Digital Satellite Set-Top Box
DVD Video Player
Video CD Player
Next-Generation Video Game
ConsoleHDTV-ADTV-SDTV Receiver
Digital Still Camera
Other Next-Generation Products

0
0
0
0
0
0

2
0
0
0
2
0

7
0
0
0
6
0

147
0
118
2
21
0

256
27
175
7
30
0

405
66
258
18
36
0

698 1,011
296
183
574
401
42
34
40
40
0
0

173.9
NA
NA
NA
46.5
NA

0
0
0

0
0
0

0
0
1

0
0
6

0
0
17

2
0
25

8
0
31

17
0
41

NA
NA
130.6

Analog Standard IC or Discrete
Digital Cable Set-Top Box
Digital Satellite Set-Top Box
DVD Video Player
Video CD Player
Next-Generation Video Game
Console

4
0
0
0
0
0

23
0
11
0
4
2

73
1
28
0
14
8

197
5
64
1
47
20

221
21
29
2

237
13
16
5
75
36

234
9
12
9
82
41

237
9
13
11
82
39

26.7
60.6
-14.6
NA
41.9
35.8

Digital Standard IC or Discrete
Digital Cable Set-Top Box
Digital Satellite Set-Top Box
DVD Video Player
Video CD Player
Next-Generation Video Game
ConsoleHDTV-ADTV-SDTV Receiver
Digital Still Camera
Other Next-Generation Products
Analog ASIC
Digital Cable Set-Top Box
Digital Satellite Set-Top Box
DVD Video Player
Video CD Player
Next-Generation Video Game
ConsoleHDTV-ADTV-SDTV Receiver
Digital Still Camera
Other Next-Generation Products

66
25(Continued)

iviSAivi-ww-iviT-geos©1996Dataquest

December 9,1996

13

Tiie Next-Generation Consumer Electronics Semiconductor Market

Table 2-1 (Continued)
Worldwide Chip Market for Next-Generation Consumer Electronics Products by
Semiconductor Tjrpe (Millions of Dollars)

HDTV-ADTV-SDTV Receiver
Digital Still Camera
Other Next-Generation Products

1993 1994
3
5
1
0
0
0

1995
16
4
1

1996
34
13
15

1997
44
18
16

1998
53
22
17

1999
54
11
16

2000
59
10
14

CAGR(%)
1995-2000
30.2
NA
56.2

Mixed-Signal ASIC
Digital Cable Set-Top Box
Digital Satellite Set-Top Box
DVD Video Player
Video CD Player
Next-Generation Video Game
ConsoleHDTV-ADTV-SDTV Receiver
Digital Still Camera
Other Next-Generation Products

0
0
0
0
0
0

0
0
0
0
0
0

86
0
0
0
0
82

207
0
0
8
0
157

206
0
0
14
0
149

278
0
0
34
0
204

329
0
0
59
0
235

332
0
0
61
0
239

31.0
NA
NA
NA'
NA
23.8

0
0
0

0
0
0

0
0
4

0
0
43

0
0
44

0
0
40

0
0
35

0
0
32

NA
NA
51.7

Mixed-Signal ASSP
Digital Cable Set-Top Box
Digital Satellite Set-Top Box
DVD Video Player
Video CD Player
Next-Generation Video Game
ConsoleHDTV-ADTV-SDTV Receiver
Digital Still Camera
Other Next-Generation Products

0
0
0
0
0
0

6
0
0
0
6
0

20
0
0
0
20
0

76
0
0
9
67
0

304
0
146
48
95
0

527
39
189
115
113
0

969 1,334
206
132
384
574
272
217
120
120
0
0

130.8
NA
NA
NA
42.5
NA

0
0
0

0
0
0

0
0
0

0
0
0

0
0
15

2
36
34

7
46
63

17
58
87

NA
NA
NA

2
0
0
0
0
1

31
0
0
0
8
23

56
0
0
0
28
26

162
0
0
0
97
44

195
0
0
0
134
32

215
0
0
0
152
36

226
0
0
0
162
41

222
0
0
0
162
37

31.8
NA
NA
NA
42.4
7.4

0
0
0

0
0
0

0
0
2

0
0
21

0
0
29

0
0
17

0
0
24

0
0
23

NA
NA
61.1

Mixed-Signal Standard IC
Digital Cable Set-Top Box
Digital Satellite Set-Top Box
DVD Video Player
Video CD Player
Next-Generation Video Game
ConsoleHDTV-ADTV-SDTV Receiver
Digital Still Camera
Other Next-Generation Products(Continued)

MSAM-WW-MT-9603©1996Dataquest

December 9,1996

Consumer Multimedia Semiconductors and Applications Worldwide

14

Table 2-1 (Continued)
Worldwide Chip Market for Next-Generation Consumer Electronics Products by
Semiconductor Type (Millions of Dollars)
1993 1994
8
1
0
0
0
0
0
0
5
0
2
0

1995
17
0
0
0
14
0

1996
124
0
0
4
"44
2

1997
185
0
0
15
57
5

1998
279
0
0
37
64
6

1999
342
0
0
70
70
7

2000
393
0
0
89
70
5

CAGR(%)
1995-2000
70.3
NA
NA
NA
38.8
NA

0
0
0

0
1
0

0
10
4

0
32
43

0
48
61

0
99
73

0
105
89

0
120
108

NA
NA
93.8

MemoryDigital Cable Set-Top Box
Digital Satellite Set-Top Box
DVD Video Player
Video CD Player
Next-Generation Video Game
ConsoleHDTV-ADTV-SDTV Receiver
Digital Still Camera
Other Next-Generation Products

15
2
0
0
0
12

281
3
85
0
10
181

995 1,315
7
19
281
274
5
0
38
56
907
667

847
42
197
21
61
455

883
88
230
54
62
333

1,056 1,259
174
259
307
249
131
105
63
66
358
343

4.8
105.5
2.3
NA
10.3
-11.7

0
0
0

0
1
0

0
32
15

0
52
19

2
97
17

5
98
16

9
119
14

NA
80.3
45.7

Total Market
Digital ASIC
Digital ASSP
Digital Standard IC or Discrete
Analog ASIC
Analog ASSP
Analog Standard IC or Discrete
Mbced-Signal ASIC
Mixed-Signal ASSP
Mixed-Signal Standard IC
Opto
Memory

37
8
0
4
4
0
4
0
0
2
1
15

637
127
10
108
42
2
23
0
6
31
8
281

5,876 7,189
1,129 1,212
1,028 1,375
726
603
144
169
698
405
237
234
329
278
527
969
226
215
342
279
883 1,056

8,279
1,073
1,721
558
140
1,011
237

32.2
30.6
84.5
11.1
8.5
173.9
26.7
31.0
130.8
31.8
70.3
4.8

Opto
Digital Cable Set-Top Box
Digital Satellite Set-Top Box
DVD Video Player
Video CD Player
Next-Generation Video Game
ConsoleHDTV-ADTV-SDTV Receiver
Digital Still Camera
Other Next-Generation Products

06
2

2,049 4,247 4,799
709
282
960
696
406
80
681
330
718
211
222
93
147
7
256
197
221
73
207
86
206
20
304
76
162
56
195
27
124
185
847
995 1,315

332
1,334
222
393
1,259

NA = Not applicable
Source: Dataquest (November 1996)

MSAM-WW-MT-9603©1996 Dataquest

December 9,1996

15

The Next-Generation Consumer Electronics Semiconductor l\yiarl<etFigure 2-1
Summary of Chip Market for Next-Generation C o n s u m e r Electronics Products b y Chip
Type
Millions of Dollars

H Memory
S OptoH Mixed-Signal Standard IC

9,000-<f••Mixed-Signal ASSP^^

Digital ASSP^

Digital ASIC

Mixed-Signal ASIC

m Analog Standard IC or Discretem Analog ASSPn Analog ASICs Digital Standard IC or Discrete

1996

2000

9e/990Source: Dataquest (NovemlDer 1996)

Digital Satellite and Cable Set-Top Boxes
Digital set-top boxes represent a fast-growing market for video and audio
compression and processing devices. They also are significant consumersof memory, mainly DRAM, although SRAM and flash also are used insuch systems. The primary type of video compression used in both cableand satellite systems is MPEG-2. For audio, both the MPEG-1 and MPEG-2
standards are used, although some systems are beginning to adopt
Dolby's AC-3 compression technology. In addition to decompression, digital set-top boxes perform a variety of different types of video and audio
processing, including demultiplexing, graphics control and acceleration,
and NTSC/PAL encoding.
In a quest for cost reduction, the market as a whole is transitioning awayfrom a mix of ASICs and standard parts and toward highly integrated
ASSPs. Analog, digital, and mixed-signal ASSPs all are playing an increasingly important role in new and future set-top boxes and will account foran ever-larger percentage of value in those systems. The cost of memory
used in digital set-top boxes significantly decreased in 1996 as DRAM
prices plunged. DRAM costs will continue to decline as more use is madeof integrated video processing ASSPs that employ unified memory architectures (UMAs).
Because of a price war in the digital satellite set-top box market, makers of
those systems are aggressively cutting costs through integration. Because
so far they have not been a large-volume product, digital cable set-top
boxes are lagging behind their satellite counterparts on the integration

I
MSAM-WW-MT-9603©1996 Dataquest

December 9,1996

Consumer Multimedia Semiconductors and Applications Worldwide

16

front. Digital cable boxes also tend to possess a larger amount of differentiation, more microprocessing horsepower, and a higher level of audio/
visual processing than satellite systems. Near the end of the century, somenew cable boxes will include audio and video compression capabilities tosupport two-way communication and data storage applications. Tables 2-2
and 2-3 present detailed semiconductor market forecasts for digital cableand digital satellite set-top boxes, respectively.
Table 2-2
Worldwide Chip Market for Digital Cable Set-Top Boxes by Semiconductor Type(Millions of Dollars)

Digital ASIC
Digital ASSP
Digital Standard IC
or Discrete
Analog ASIC
Analog ASSP
Analog Standard IC
or Discrete
Mixed-Signal ASIC
Mixed-Signal ASSP
Mixed-Signal Standard
IC
Opto
Memory
Total

1993
1
0
0

1994
1
0
0

1995
3
0
1

1996
18
5
27

1997
57
26
62

1998
94
60
55

1999
56
170
102

2000
26
311
154

CAGR (%)
1995-2000
56.2
NA
171.9

0
0
0

0
0
0

1
0
1

9
0
5

26
27
21

26
66
13

26
183
9

26
296
9

77.8
NA
60.6

0

Q

0
0

0
0

0
0
0

0
0
0

0
0
0

0
39
0

0
132
0

0
206
0

NA
NA
NA

0
3
5

0
7
13

0
19
83

0
42
260

0
88
441

0
174
853

0
259
1,287

NA
105.5
150.1

0
2
4

'

NA = Not applicable
Source: Dataquest (November 1996)

DVD Video Players
After a long delay that has created high anticipation among consumer
electronics retailers, manufacturers, and consumers, DVD video players
began shipping to the market in Japan and Korea on November 1,1996.
Shipments are expected in the United States and other countries by early
1997 at the latest. These video players are based on MPEG-2 and AC-3
compression technolog)' and use shorter-wavelength diodes toallow playback of full-length movies from one CD-ROM-size disc.
Although early video players will employ a variety of ASICs and ASSPs ina low-integration solution, there will be a shift to second-generation products quickly that employ highly integrated ASSP and ASIC solutions.
Many chip companies are targeting this opportunity with competitive digital and mixed-signal ASSP solutions. The advanced optical storage technology employed in these products drives higher costs for the opticalelectronics and motor drivers. The channel and video processing requirements in these systems are 2.5MB of DRAM. These initial video players areplayback devices only and use decoder technology that combines MPEG-2
and AC-3 as mandatory standards with other optional compression
standards.
MSAM-WW-MT-9603©1996 Dataquest

December 9,1996

17

The Next-Generation Consumer Electronics Semiconductor l\/larl<etTable 2-3
Worldwide C h i p Market for Digital Satellite Set-Top Boxes b y Semiconductor Type(Millions of D o l l a r s )Digital ASIC
Digital ASSP
Digital Standard IC or Discrete
Analog ASIC
Analog ASSP
Analog Standard IC or Discrete
Mixed-Signal ASIC
Mixed-Signal ASSP
Mixed-Signal Standard IC
Op toMemory
Total

1993
0
0
0
0
0
0
0
0
0
0
0
0

1994
37
0
60
37
0
11
0
0
0
0
85
229

1995
49
0
138
73
0
28
0
0
0
0
274
562

1996
108
150
325
157
118
64
0
0
0
0
281
1,203

1997
153
233
408
117
175
29
0
146
0
0
197
1,458

1998
110
330
377
63
258
16
0
189
0
0
230
1,572

1999
87
401
174
35
401
12
0
384
0
0
249
1,743

2000
36
510
91
21
574
13
0
574
0
0
307
2,127

CAGR (%)
1995-2000
-5.8
NA
-78
-21.9
NA
-14.6
NA
NA
NA
NA
2.3
30.5

NA = Not applicable
Source: Dataquest (Novemtjer 1996)

Although the cost for MPEG-2 compression chipsets ranges in the thousands of dollars currently, Dataquest's forecast for this market anticipates
the development of low-cost MPEG-2 encoding chipsets that would
enable a mass market for recordable DVD video players. Full read/writecapable players that employ codecs are expected to reach the market bylate 1998 or early 1999. There are also opportunities to create hybrid settop box and DVD products because of the common compression technologies employed in these products. This forecast does not attempt to project
ttie market for these hybrid products. Table 2-4 presents a detailed semiconductor market forecast for DVD video players.

Video CD Players
Although relatively unknown in the Americas and Europe, video CD
players have achieved high-volume shipments in Japan and Asia/Pacific,
approaching a production rate of 10 million units in 1996. With their application in karaoke products and the support of a large number of low-cost
movie titles, these players are expected to continue on a strong growth
path over the next three to four years even in the face of the DVD video
player introduction. These players are based on MPEG-1 compression
technology. C-Cube Microsystems Inc. has been a leader in enabling thismarket with its MPEG-1 chipsets. The combined drop in price of CD-ROM
drives and MPEG-1 chips during the latter part of 1995 and 1996 led to asignificant d r o p in the price for video CD players, which helped push market demand u p significantly. The chips in these players are highly integrated, and even with the introduction of a new video CD standard, thetechnology is maturing and has the p'otential for further cost reductions.
The channel/video processing in these players only requires 4Mb of memory, which could eventually be integrated with the other logic in the nextlevel of integration. Table 2-5 presents a detailed semiconductor market
forecast for video CD players.
i\/ISAM-WW-MT-9603©1996 Dataquest

December 9,1996

18

Consumer Multimedia Semiconductors and Applications Worldwide

Table 2-4
Worldwide Chip Market for DVD \^deo Players by Semiconductor Type(Millions of Dollars)
1993

1994 1995
0
0

1996
4

1997 1998 1999
12
34
63
43 101 190
7
27
16

Digital ASIC

0Digital ASSP
Digital Standard IC or Discrete

0
0
0
0

0
0

0
0

11
2

0
0

0
0

0
2

0
7

0
18

0
34

0
0

0
0

0
0

1
8

2
14

5
34

Mixed-Signal ASSP
Mixed-Signal Standard IC

0
0

0
0

0

9

0

48
0

Opto
MemoryTotal

0
0

0
0

15
21

115
0
37
54

0

0

0
0
0

0
4

169

413

Analog ASIC
Analog ASSP
Analog Standard IC or Discrete
Mixed-Signal ASIC

5
44

2000
56

CAGR (%)
1995-2000
NA
NA
NA
NA
NA

9
59

260
28
0
42
11
61

217

272

NA

0

0

70
105
774

89
131

NA
NA

NA
NA

NA

950

NA

2000

CAGR (%)
1995-2000

NA = Not applicable
Source: Dataquest (November 1996)

Table 2-5
Worldwide Chip Market for Video CD Players by Semiconductor Type(Millions of Dollars)
1994

Digital ASIC

1993
2

21

9

7

0

0

0

0

-100.0Digital ASSP

0

10

80

240

379

462

502

500

44.1

Digital Standard IC or Discrete
Analog ASIC
Analog ASSP

0

3

10

27

37

40

41

42

33.6

0
0

0
2

0
6

0
21

0
30

0
36

0
40

0
40

NA
46.5

Analog Standard IC or Discrete

0

4

14

47

66

75

82

82

41.9

Mixed-Signal ASIC

0

0

0

0

0

0

0

0

NA

Mixed-Signal ASSP
Mixed-Signal Standard IC

0

20

0

6
8

28

67
97

95
134

113
152

120
162

120
162

42.5
42.4

Opto

0

5

14

44

57

64

70

70

38.8

Memory-

0

10

66

63

10.3

69

606

61
859

62

5

38
219

56

Total

1,005

1,085

1,079

37.5

1995

1996

1997

1998

1999

NA = Not applicable
Source: Dataquest (November 1996)

MSAM-WW-MT-9603©1996 Dataquest

December 9,1996

19

The Next-Generation Consumer Electronics Semiconductor Marl<etNext-Generation Video Game Consoies
With the introduction of the Nintendo 64, the industry has completed its
shift from 16-bit hardware to an emphasis on shipments of next-generation 32- and 64-bit video game consoles by all three major players, Sega,
Sony, and Nintendo. All of these systems employ ASICs extensively. However, the Nintendo 64 has achieved the highest level of integration in its
design and the most efficient use of DRAM. The Nintendo 64 uses two
Rambus RDRAM chips, while the Sega Saturn and Sony PlayStation use avariety of DRAM and VRAM. The high cost of memory in these systems
was a major cost driver until the major DRAM price erosion in 1996. Thisdrop in memory costs helped offset losses experienced by the manufacturers in selling these systems for $199. One of liie main differentiators
between the Sony and Sega systems and the Nintendo system is their useof a CD-ROM instead of cartridges for software delivery. There is no compression technology employed in any of these systems today. There has
been some discussion of eventual migration to DVD drives, but Dataquest
does not expect this to happen until late 1998 at the earliest. Table 2-6 presents a detailed semiconductor market forecast for next-generation video
game consoles.
Table 2-6
Worldwide Chip Market for Next-Generation Video Game Consoles by Semiconductor
Type (Millions of Dollars)

Digital ASIC
Digital ASSP
Digital Standard IC or Discrete
Analog ASIC
Analog ASSP
Analog Standard IC or Discrete
Mixed-Signal ASIC
Mixed-Signal ASSP
Mixed-Signal Standard IC
Opto
Memory
Total

1993
4
0
3
0
0
0
0
0
1
0
12
21

1994
64
0
42
0
0
2
0
0
23
2
181
314

1999
884
0
163
2
0
41
235
0
41
7

2000
869
0
155
2

5

1998
750
0
145
2
0
36
204
0
36
6

455

333

1,353

1,513

343
1,717

358
1,705

1995
188
0
170
1
0
8
82
0
26
0

1996
425
0
257
1
0
20
157
0
44
2

1997
548
0
139
1
0
25
149
0
32

667

907
1,812

1,142

0
39
239
0
37
5

CAGR (%)
1995-2000
35.9
NA
-1.8
16.0
NA
35.8
23.8
NA
7.4
NA
-11.7
8.3

NA = Not applicable
Source: Dataquest (November 1996)

IViSAM-WW-MT-9603©1996 Dataquest

December 9,1996

20

Consumer Multimedia Semiconductors and Applications Worldwide

HDTV/ATV/SDTV
The market for next-generation television currently consists of analog
high-definition TV (HDTV) receivers in Japan. However, by 1998,
advanced television digital broadcast standards should be finalized in the
United States and in Europe, paving the way for the sale of digital HDTV
systems. In the intervening years, advanced television systems will use
predominately analog components. After that, both digital HDTV anddigital standard definition television (SDTV) platforms should begin totrickle into the market. Such systems will have a semiconductor content
resembling some digital set-top boxes to a degree, with MPEG-2 video
decompression, AC-3 or MPEG-2 audio decompression, and some DRAM
for decompression buffering. Table 2-7 presents a detailed semiconductor
market forecast for HDTV/SDTV/ATV receivers.
Table 2-7
Worldwide Chip Market for HDTV/SDTV/ATV Receivers by Semiconductor Type(Millions of Dollars)

Digital ASIC
Digital ASSP
Digital Standard IC or Discrete
Analog ASIC
Analog ASSP
Analog Standard IC or Discrete
Mixed-Signal ASIC
Mixed-Signal ASSP
Mixed-Signal Standard IC
Opto
Memory
Total

1993
1
0
1
3
0
3
0
0
0
0
0
8

1994
1
0
1
5
0
5
0
0
0
0
0
12

1995
4
0
4
16
0
16
0
0
0
0
0
40

1996
8
0
8
34
0
34
0
0
0
0
0
84

1997
11
0
11
44
0
44
0
0
0
0
0

no

1998
14
3
17
53
2
53
0
2
0
0
2
146

1999
15
8
17
54
8
54
0
7

2000
16
15
17
59
17
59
0
17

0
0
5
167

0
0
9
210

CAGR (%)
1995-2000
31.8
NA
34.5
30.3
NA
30.2
NA
NA
NA
NA
NA
39.6

NA = Not applicable
Source: Dataquest (November 1996)

Digital Still Cameras
Sales of digital cameras are expected to grow rapidly as prices decline. The
year 1998 is expected to show the strongest unit growth through the end of
the century as mainstream camera prices drop into the range of $200 or
less. Although digital cameras can replace conventional film cameras,
most consumers through the end of the century will use them exclusively
to import images into PCs. Because of this, the available market for digital
cameras is expected to be limited to PC owners and PC buyers through theend of the century. Graphics processing accounts for the majority of thevalue of the semiconductor content in a digital camera. The chargecoupled device (CCD) is the single most expensive component in mostdigital cameras, although learning curve reductions in CCD prices should
help reduce digital camera average selling prices (ASPs) significantly inthe future. To maximize memory efficiency, digital cameras also include

MSAM-WW-MT-9603©1996 Dataquest

December 9,1996

21

The Next-Generation Consumer Electronics Semiconductor Mari<etcompression engines that use JPEG or a proprietary algorithm. The compressed images are stored in flash memory. Flash memory cost reductions
also should help to further drive down the price of digital cameras.
Current digital cameras, which are in their first or second generation,
make heavy use of standard digital products. However, as cameras evolve,
they are expected to make increasing use of more cost-effective ASSPs.
Table 2-8 presents a detailed semiconductor market forecast for digital stillcameras.

Other Next-Generation Consumer Electronics Products
Products included in the other category of this forecast include digital
camcorders based on the digital videocassette (DVC) standard, DVDaudio players, and other advanced consumer devices that may be introduced over the next five years. This forecast does not attempt to measure
the size of the DVC compression chip market in digital camcorders.
Because the specification for DVD audio is still under discussion, it is notpossible to present a detailed forecast for this product.
Table 2-8
Worldwide Chip Market for Digital Still Cameras by Semiconductor Type(Millions of Dollars)

Digital ASIC
Digital ASSP
Digital Standard IC or Discrete
Analog ASIC
Analog ASSP
Analog Standard IC or Discrete
Mixed-Signal ASIC
Mixed-Signal ASSP
Mixed-Signal Standard IC
Opto
Memory
Total

1993
0
0
0
0
0
0
0
0
0
0
0
0

1994
3
0
1
0
0
1
0
0
0
1
1
7

1995
27
0
6
0
0
4
0
0
0
10
6
52

1996
106
0
19
0
0
13
0
0
0
32
32
202

1997
149
0
32
0
0
18
0
0
0
48
52
299

1998
100
45
52
0
0
22
0
36
0
99
97
451

1999
82
61
54
0
0
11
0
46
0
105
98
458

2000
42
68
46
0
0
10
0
58
0
120
119
463

CAGR (%)
1995-2000
9.2
NA
52.9
NA
NA
NA
NA
NA
NA
NA
80.3
54.8

NA = Not applicable
Source: Dataquest (November 1996)

MSAIVI-WW-MT-9603©1996 Dataquest

December 9,1996

Chapter 3

The Expanding Market for Compression Cliips,
Compression technology sits at the heart of most advanced consumer
electronics products, and these products are driving a strong market
demand for compression. However, compression products are finding
important markets in other areas beyond the consumer electronics category, such as PCs, PC add-in cards, videoconferencing equipment, andbroadcast/head-end/postproduction equipment. In order to present a
more complete forecast of the compression market opportunity, thisreport presents a forecast for the use of compression in these products inaddition to the consumer electronics products.

Compression Standards
Forecasts for the major compression standards of JPEG, Motion JPEG,
MPEG-1, MPEG-2, AC-3, Indeo, DigiCipher, and H.261/H.263 are presented in this chapter. A brief discussion of these standards and theirapplications is presented in the following sections.
JPEG and Motion JPEG
JPEG stands for Joint Picture Experts Group and is the nickname for thecommittee that defined this standard. This standard was defined as a stillimage compression standard, but it is also used extensively for video compression and is referred to as Motion JPEG in these applications. In Motion
JPEG, each video frame is compressed independently of all others, which
is different from the MPEG and H.261 standards that employ interframe
and intraframe compression. Because each frame is entirely independentof the others. Motion JPEG performs well in applications where random
access or the ability to recover easily from lost frames is required, such asvideo editing or high-quality videoconferencing on normal packet LANs.
MPEG-1The MPEG acronym stands for Motion Picture Experts Group, the committee that established the standard. The MPEG-1 standard was developed for delivery of movies at encoded data rates of about 1.5 Mbps. Thisrate fits well witik applications such as single-speed CD-ROMs and Tl connections. In a single-speed CD-ROM application, the compressed video
stream occupies about 1.1 Mbps of the overall data rate, with audio andoverhead processing consuming the remaining bandwidth. The compression artifacts of MPEG-1 appear as "blockiness" at the edges of 8 x 8-pixel
blocks and other image degradation is inherent in this algorithm. Because
the encoding process is so processor intensive, dedicated hardware encoding systems range in price from a few thousand dollars to more than
$50,000. The video CD standard uses MPEG-1 for video and audio
encoding.
MPEG-2 and AC-3
The MPEG-2 standard is a superset of the MPEG-1 standard and offers agreater variety of options and higher-quality reproduction of video andaudio. The primary MPEG-2 applications are digital cable and satellite settop boxes, DVD video players and PC add-in cards, and HDTV. The DVD
standard specifies a combination of MPEG-2 video compression and AC-3i
MSAM-WW-MT-9603©1996 Dataquest

23

24

Consumer Multimedia Semiconductors and Applications Worldwide

audio compression with an optional, undefined third compression standard. The AC-3 audio compression standard was developed by Dolby
Laboratories, working closely with Zoran Corporation. The use of AC-3
compression in DVD and set-top boxes applications and the related
MPEG-2/AC-3 market is included in this forecast. The AC-3 chips areused in home theater surround sound stereo systems also. However, thesestereo implementations do not employ the compression element of thealgorithm and are not counted in tikis forecast.

H.261
This Integrated Telecommunications Union standard has become themainstream method of compressing video information in room, roUabout,and PC-based videoconferencing systems. The mainstreaming of this technology has supplanted or complemented a variety of proprietary algorithms employed by companies like PictureTel, Compression Labs, andIntel (Proshare/Indeo). H.261 is part of an overall H.320 standard thatspecifies all of the aspects of protocol and control involved in establishingand maintaining a videoconferencing session. H.261 is oriented toward
operating with ISDN bearer channels (at 64 Kbps) and fractional Tl andEl rates up to 2 Mbps. H.261 is similar to MPEG in that it uses digital cordless telephony (DCT) algorithms to eliminate redundant visual
information.

H.263
This DCT-based algorithm is designed to work with the H.324 plain old
telephone service (POTS) standard. Designed to operate over a 28.8-Kbps
dial-up modem, the standard can work with 88 x 72-pixel images up to
four times standard NTSC TV resolution. It was tailored to be visuallyeffective at low bit rates, but many believe it is better than H.261 at higher
bit rates and therefore could possibly supplant that standard eventually.

Indeo and Proprietary Algorithms
Before the broad international suppoit of H.261 and H.263 appeared, avariety of proprietary compression algorithms existed in videoconferencing. As noted above, each major videoconferencing vendor had its own
approach. These algorithms were used as one of the points of product differentiation, as the vendors claimed theirs had the better quality. The
problem was that the algorithms were not interoperable with each other—
one had to have PictureTel and Compression Labs systems in all conferencing locations in order to communicate. Intel's support for Indeo waslargely motivated by its desire to ensure that a MlPS-consuming application would be enabled on the desktop PC. For the most part, these proprietary approaches have been phased out or remain as backwardly
compatible options on videoconferencing systems.

Content Creation and Distribution Encoding Systems
In the creation of video-based content there are a variety of systems
employed. These systems prepare the content for publication or storage
and help in the editing and mastering process. In the process, these systems encode or compress the video (and audio) content using one of avariety of compression standards. Key content examples include CD-ROM
titles (games, reference, and so on), video CD (primarily video karaoke),and the emerging market of DVD movie titles. The systems span the range
from PC-based add-in cards and software (including soft codecs), to
rack-mounted editing and production systems costing $100,000 or more
MSAM-WW-MT-9603©1996 Dataquest

December 9,1996

The Expanding Market for Compression Chips

25

for Hollywood film editing and mastering. The bulk of desktop PC (orworkstation) systems today deal with MPEG-1 and other PC-oriented
algorithms such as CinePak. The emerging opportunity is for systems that
employ MPEG-2 algorithms to create DVD movie titles.
There are also systems that are oriented toward real-time (or near-realtime) encoding of broadcast television and private satellite links. The primary purpose of these systems in to conserve bandwidth and push more
content through the same bandwidth. Key standards employed in thesesystems are MPEG-2, DigiCipher (1 and 2), and other proprietary versions
from companies like Compression Labs. These are mostly expensive rackmounted systems costing tens of thousands of dollars each. These systems
can be employed by:• Direct broadcast satellite services (like DirectTV or PerfecTV)• Remote live news gathering (like the Cable News Network)• Terrestrial broadcast and cable TV back-haul and distribution• Local ad insertion by CATV and multipoint, multicharmel distribution
systems (MMDS) systems• Private satellite links

Compression Technologies in PC Applications
Video compression technologies will see much greater use in PC applications in the future. This is driven by a combination of faster PCs, higherquality software codecs, improved video acceleration features in graphics
dnips, and new types of high-density, removable mass storage. The
CD-ROM made digital video content economical to deliver to end users,
but performance limitations of the drives as well as the PCs limited playback quality and therefore limited acceptance.
Digital video playback has been hindered by perceptions of low quality(lower than broadcast TV), which was caused by PC performance andcodec compatibility issues. This is changing as Pentium and Pentium Pro
microprocessors get higher clock rates and with use of Intel's MMX multimedia instruction set. Faster PCs, together with higher-quality software
codecs and faster CD-ROM drives, will drive greater use of digital videoon PCs. Hardware codecs will benefit from this trend as greater use ofdigital video creates awareness and causes more PC users to purchasehardware accelerators. Many of the compatibility issues with MPEG-1
hardware in the past appear to have been solved, and this w^ill increase theperception of utility and value for those products.
MPEG-2 usage will be driven by the availability of DVD drives and software content. MPEG-2 codecs require much greater processing power
than MPEG-1 codecs and will realistically require some degree of hardware acceleration outside the host CPU for the next 18 to 24 months.
Audio compression technologies will rise in use as audio chip vendors
continue to add value to the digital controllers for audio subsystems. One
application that will drive a need for audio compression in the corporate
computing environment is videoconferencing. Other applications of audio
compression are tied to consumer and entertainment applications. MPEG
audio and AC-3 will be tied to use of MPEG digital video and are expected
to grow as use of those video compression technologies grows.

i
MSAI\/l-WW-IVIT-9603©1996Dataquest

December 9,1996

26

Consumer Multimedia Semiconductors and Applications Worldwide

Audio and video compression technologies will see greater use in PCs
because all of the pieces of the puzzle are in place. Fast CPUs, quality software codecs, inexpensive hardware codecs, and high-speed, high-density,
inexpensive mass storage all create an environment where the PC users'
expectation of quality can be reasonably achieved. TV-quality (or better)
digital video is becoming affordable because of these compression technologies, and that will drive greater usage for business and consumer
applications.
It is important to note that a significant portion of the compression opportunity in PCs will be created by the use of media engines in PCs rather
than discrete decoders and codecs. In this case, compression processing
will be performed by a media processor besides the main CPU. However,the compression function will be a subset of a larger video processing chipand accomplished through a combination of hardware and software processing. In these applications, the value of the compression silicon is discounted from the forecast cost of discrete decoder and codec solutions.

The Compression Semiconductor Opportunity
Tables 3-1, 3-2, and 3-3 present the forecast of systems shipping that
include some form of hardware compression content. Because the possible
chip implementations of compression can range from multichip solutions
through single-chip products to embedded functions in larger processors
and ASSPs, the unit shipments in these tables are not intended to represent actual chip shipment numbers. It is important to understand thatthese tables present system shipments and not chip shipments. Also,
Tables 3-4 and 3-5 present separate shipment numbers for systems withvideo and audio compression, respectively. Because most systems include
both audio and video compression, the total compression shipments are
not additive, as can be seen in the summary shown in Table 3-1. It should
be noted that increased use of MPEG-2 and AC-3 decoding software in
PCs could result in decreased sales of systems with hardware video andaudio compression content. This phenomenon could result in shipments
falling somewhat below the forecasts for systems with MPEG-2 and AC-3
decoders and codecs presented in the following tables.
The forecast of market value for compression semiconductor products ispresented in Tables 3-4, 3-5, 3-6, and 3-7, as well as Figures 3-1 and 3-2. As
explained in the previous paragraph, the silicon implementation of thecompression function can take many forms. In valuing the compression
market, these forecasts assign a value to the chips or portion of the chip
actually implementing the decoding or codec function. If the compressionfunction is part of a larger ASIC or ASSP, only the estimated value of thecompression silicon is included in the market value, instead of the price ofthe complete chip. Tables 3-6 and 3-7 present separate market value numbers for video and audio compression, respectively. In this case, the total
value of the separate audio and video compression markets is additive, as
shown in the summary in Table 3-2. The value of silicon employed in compression applications is forecast to grow from $327 million in 1995 to over
$1.9 billion by the year 2000. The combined market for compression in
DVD video players and DVD encode/decode boards for the PC will growto represent over one-third of the silicon compression market, followed bydigital set-top boxes, with slightly less than one-third of the market.

MSAI\/I-WW-MT-9603©1996 Dataquest

December 9,1996

27

The Expanding Market for Compression Chips

Table 3-1
Worldwide Compression Semiconductor Function Shipment Summary by Standard(Thousands of Units)

Decoders
MPEG-1 Decoder
MPEG-2/AC-3/Other Decoder
DigiCipher

1997
1998
1999
1996
1993 1994 1995
85 2,518 9,075 21,758 34,507 51,831 69,388
77 1,625 6,170 14,342 20,234 27,452 32,759
9
524 1,825
6,416 13,273 23,879 36,630
500
0
1,080
1,000
0
370
1,000

2000
86,42638,081
48,3450

CAGR (%)
1995-2000
57.0
43.9
92.6
-100.0Codecs
JPEG, Motion JPEG Codec
MPEG-1 Codec
MPEG-2/AC-3/Other Codec
Indeo Codec
H.261/H.263 Codec
Other Codecs

181
31
31
0
8
6
105

9,459 17,654
1,989 2,842
2,958 6,441
1,094 4,103
0
0
1,240
688
2,729 3,028

29,7603,599
10,794
9,454
0
2,269
3,644

112.3
82.1
120.7
798.4
-100.086.9
82.9

Total Decoders and Codecs

266 2,835 9,764 23,439 37,869 61,290 87,042 116,186

64.1

317
69
126
0
18
58
47

690
180
206
0
26
100
178

1,681
484
252
1
18
206
722

3,362
973
740
3
0
382
1,264

NA = Not applicable
Source: Dataquest (November 1996)

Table 3-2
Worldwide Video Compression Semiconductor Function Shipments by Standard(Thousands of Units)

JPEG (Codec)
Digital Still Camera
Motion JPEG (Codec)
PC/Workstation
PC/Workstation Add-In
Card Aftermarket

1993
-

1994
6
6

1995
51
51

1996
297
297

1997
663
663

1998
1,454
1,454

1999
1,994
1,994

2000
2,392
2,392

CAGR (%)
1995-2000
116.1
116.1

31
-

63
63

129
8
121

187
11
176

310
15
295

536
19
516

848
24
825

1,207
27
1,179

56.4
29.2
57.6

m

MPEG-1 (Decoder)PC
PC Add-In Card Aftermarket
Video CD Player

69
31
38

748 3,601 10,594 15,749 22,467 27,596
350 1,700 5,567 8,556
250
844
550
700 1,040
63 77016,20018,0002,580
9,400
13,500685

33,452
13,6691,284
18,500

56.2
122.5
10.8
48.3

MPEG-1 (Codec)
PC
PC Add-In Card Aftermarket
MPEG-2 (Decoder)
Digital Cable Set-Top Box
Digital Satellite Set-Top Box
DVD Decode/Encode for PC
DVD Video Player
HDTV-ADTV-SDTV

31
31
9
8
1
-

206
126
126 206
524 1,825
63
20
504 1,761-

10,773
9,568
1,205
48,345
8,324
20,255
12,787
6,769
210

120.6
NA
42.4
92.6
165.3
63.0
NA
NA
NA

252
740 2,958 6,409
410 2,505 5,704
252
452
705
330
6,416 13,273 23,879 36,630
437 1,500 3,199 5,803
5,579 8,655 12,403 15,295
40 1,623 4,603 9,629
360 1,495 3,631 5,797
43
106
-

(Continued)

MSAM-WW-l\/IT-9603©1996 Dataquest

December 9,1996

28

Consumer Multimedia Semiconductors and Applications Worldwide

Table 3-2 (Continued)
Worldwide Video Compression Semiconductor Function Shipments by Standard(Thousands of Units)

MPEG-2 (Decoder)
Digital Cable Set-Top Box
Digital Satellite Set-Top Box
DVD Decode/Encode for PC
DVD Video Player
HDTV-ADTV-SDTV

1993
9
8
1
-

1994 1995
524 1,825
63
20
504 1,761
-

•

1996
1997
1999
1998
6,416 13,273 23,879 36,630
437 1,500 3,199 5,803
5,579 8,655 12,403 15,295
40 1,623 4,603 9,629
360 1,495 3,631 5,797
43
106

2000
48,345
8,324
20,255
12,787
6,769
210

CAGR (%)
1995-2000
92.6
165.3
63.0
NA
NA
NA

MPEG-2 (Codec)
Digital Cable Set-Top Box
DVD Decode/Encode for PC
DVD Video Player
Broadcasting/Head-End

-

-

0
0

1
1

3
3

1,094
758
325
11

4,103
645
1,480
1,957
21

9,454
2,081
3,824
3,514
36

798.4
NA
NA
NA
194.2

Indeo (Codec)
Videoconferencing (PC-Based)

8
8

18
18

26
26

18
18

-

-

-

-

-100.0-100.0H.261/H.263 (Codec)
Videoconferencing (PC-Based)
Videoconferencing (RoUabout)Videoconferencing (Telephone)

6
6
-

58
7
1
50

100
14
15
70

206
47
26
133

382
113
30
239

688
238
31
419

1,240
477
30
733

2,269
957
29
1,283

86.9
131.5
13.8
78.9

DigiCipher (Decoder)
Digital Satellite Set-Top Box-

370 1,080
370 1,080

1,000
1,000

1,000
1,000

500
500

-

-

-100.0-100.0

722
693
7
16
6

1,264
1,232
13
12
8

2,729
2,700
13
6
11

47
18
11
13
6
-

178
152
7
15
3

• • - •

Others (Codec)
Digital Still Camera
Videoconferencing (PC-Based)
Videoconferencing (Rollabout)Videoconferencing (Telephone)
Broadcasting/Head-End

105
14
8
83
-

3,028
2,991
25
3
9

3,644
3,589
50
1
4

82.9
88.1
47.5
-37.5
NA
5.2

Total
PC
PC Add-In Card Aftermarket
Digital Cable Set-Top Box
Digital Satellite Set-Top Box
DVD Decode/Encode for PC
DVD Video Player
Video CD Player
HDTV-ADTV-SDTV
Digital Still Camera
Videoconferencing (PC-Based)
Videoconferencing (Rollabout)Videoconferencing (Telephone)
Broadcasting/Head-End

258 1,958 7,195 19,692 33,385 56,305 81,846
258
361 2,124 8,092 14,283
93 251 1,098
1,272
1,175 1,669
2,570
8
20
63
437 1,500 3,199 6,447
1 874 2,841 6,579 9,655 12,903 15,295
40 1,623 5,361 11,108
360 1,495 3,956 7,755
38 685 2,580
9,400 13,500 16,200 18,000
106
43
24
203
990 1,895 4,154 4,984
35
28
48
71
125
502
251
8
14
30
42
42
37
33
83
55
70
239
133
419
733
3
12
6
21
30

111,536
23,264
3,668
10,405
20,255
16,611
10,282
18,500
210
5,981
1,007
30
1,283
40

73.0
146.0
27.3
177.5
48.1
NA
NA
48.3
NA
96.7
83.8
0
78.9
65.0

NA = Not applicable
Source: Dataquest (November 1996)

MSAM-WW-MT-9603©1996 Dataquest

December 9,1996

29

The Expanding Market for Compression Chips

Table 3-3
Worldwide Audio Compression Semiconductor Function Shipments by Standard(Thousands of Units)

MPEG-l (Decoder)PC
PC Add-In Card Aftermarket
Digital Cable Set-Top Box
Digital Satellite Set-Top Box
Video CD Player

1999
1998
1997
1996
1993 1994 1995
77 1,625 6,170 14,342 20,234 27,452 32,759
5,567 8,556
350 1,700
250
700 1,040
550
844
63 770
31
808
437
257
135
63
20
8
857 2,507 3,613 4,228 4,548 4,355
685 2,580 9,400 13,500 16,200 18,000
38

2000
38,081
13,669
1,284
780
3,848
18,500CAGR(%)
1995-2000
43.9
122.5
10.8
65.3
9.0
48.3

MPEG-l (Codec)
PC
PC Add-In Card Aftermarket
Digital Cable Set-Top Box

31
31
-

126
'
126
-

206
206
-

252
252
-

740
410
330
-

2,958
2,505
452
-

6,441
5,704
705
32

10,794
9,568
1,205
21

120.7
NA
42.4
NA

MPEG-2 (Decoder)
Digital Satellite Set-Top Box
HDTV-ADTV-SDTV

1
1
-

17
17
-

334
334
-

2,966
2,966
-

5,399
5,399
-

7,551
7,529
21

9,132
9,079
53

12,197
12,092
105

105.3
105.0
NA

AC-3 (Decoder)
Digital Satellite Set-Top Box
HDTV-ADTV-SDTV

-

-

.

-

28
28
-

847
826
21

1,915
1,862
53

4,413
4,308
105

NA
NA
NA

4,361 10,996 20,420
1,243 2,762 4,994
1,623 4,603 9,629
1,495 3,631 5,797

27,0997,544
12,787
6,769

NA
NA
NA
NA

•

-

•

.

-

^

•

-

-

-

AC-3/MPEG-2/Others (Decoder)
Digital Cable Set-Top Box
DVD Decode/Encode for PC
DVD Video Player

._

.

-

-

-

-

AC-3/MPEG-2/Others (Codec)
Digital Cable
Set-Top Box
DVD Decode/Encode for PC
DVD Video Player
Others (Codec)
Digital Still Camera

.

Total
PC
PC Add-In Card Aftermarket
Digital Cable Set-Top Box
Digital Satellite Set-Top Box

i.

-

•

-

^

702
303
40
360
^

-

r

20
20

-

1,083
-

4,049
612

9,397
2,060

NA
NA

38
38

758
325
83
83

1,480
1,957
100
100

3,824
3,514
120
120

NA
NA
NA
NA

108 1,767 6,711 18,282 30,800 50,970 74,816 102,102
250
2,110 8,073 14,260 23,237
350
2,489
880 1,152 1,745
189 976 1,096
62
437 1,500
3,199 6,447 10,405
63
20
8
1
874 2,841 6,579 9,655 12,903 15,295 20,249

72.4
147.5
20.6
177.5
48.1

-

• • - :

^
-

•

-

.

-

(Continued)

iViSAM-WW-MT-9603©1996Dataquest

December 9,1996

30

Consumer Multimedia Semiconductors and Applications Worldwide

Table 3-3 (Continued)
Worldwide Audio Compression Semiconductor Function Shipments by Standard(Thousands of Units)

DVD Decode/Encode for PC
DVD Video Player
Video CD Player
HDTV-ADTV-SDTV
Digital Still Camera

1993
38
-

1994 1995
685 2,580
-

1997
1999
1998
1996
40 1,623 5,361 11,108
360 1,495 3,956 7,755
9,400 13,500 16,200 18,000
43
106
100
83
20
38

2000
16,611
10,282
18,500210120

CAGR (%)
1995-2000
NA
NA
48.3
NA
NA

NA = Not applicable
Source; Dataquest (November 1996)

Table 3-4
Worldwide Compression Semiconductor Market Summary by Standard(Millions of Dollars)

Decoders
MPEG-1 Decoder
MPEG-2/AC-3/Other Decoder
DigiCipher Decoder

1993
4
3
0
0

1994
69
39
18
12

1995
218
127
55
36

1996
482
249
204
30

1997
681
262
395
24

1998
898
296
594
9

1999
1,069
287
782
0

2000
1,126
276
850
0

CAGR(%)
1995-2000
38.9
16.8
72.9
-100.0CodecsJPEG and Motion JPEG Codec
MPEG-1 Codec
MPEG-2/AC-3/Other Codecs
Indeo Codec
H.261/H.263 Codec
Other Codecs
Total Decoders and Codecs

56
3
39
0
1
1
12
59

65
5
44
0
2
5
9
133

109
9
59
1
3
13
26
327

145
14
64
2
2
24
39
627

191
20
85
6
0
33
46
872

315
31
89
79
0
48
67
1,213

515
37
100
244
0
71
63
1,584

806
39
113
474
0
111
69
1,932

49.1
35.4
14.1
267.0
-100.0
53.9
21.9
42.6

Source: Dataquest (November 1996)

l\^SAM-WW-MT-9603©1996 Dataquest

December 9,1996

31

The Expanding Market for Compression Chips

Table 3-5
Worldwide Compression Semiconductor Market Summary by System(Millions of Dollars)

Total

1993

1994

1995

1996

1997

1998

1999

2000

CAGR (%)
1995-2000

59

133

327

627

872

1,213

1,584

1,932

42.6

PC

0

0

8

8

69

123

139

168

84.6

PC A d d - I n Card Aftermarket

43

51

88

91

57

36

38

43

-13.4

Digital Cable Set-Top Box

0

1

2

17

52

88

165

248

155.3

Digital Satellite Set-Top Box

0

38

109

228

282

306

310

354

26.5

D V D D e c o d e / E n c o d e for P C

0

0

0

2

58

177

307

418

NA

D V D Video Player

0

0

0

14

53

122

245

293

NA

Video CD Player

2

27

76

197

208

220

211

189

19.9

HDTV-ADTV-SDTV

0

0

0

0

0

1

3

4

NA

Digital Still Camera

0

1

5

21

34

66

67

73

72.8

Videoconferencing (PC-Based)

4

4

6

7

10

18

33

63

61.8

Videoconferencing (Rollabout)

6

8

14

18

16

13

11

9

-9.1

Videoconferencing (Telephone)

4

3

4

8

13

21

32

47

61.2

Broadcasting/Head-End

0

0

14

17

19

22

23

25

11.9

NA = Not applicable
Source: Dataquest (November 1996)

Table 3-6
Worldwide Mdeo Compression Semiconductor Market by Standard(Millions of Dollars)
1996 1997

1998

1999

2000

CAGR (%)
1995-2000

4

8

14

15

15

74.0

1

4

8

14

15

15

74.0

5

8

9

12

17

22

25

26.2

-

-

0

1

1

1

1

1

4.3

3

5

7

9

12

17

21

24

27.1

1993

1994

1995

-

0

1

-

0

Motion JPEG (codec)

3

PC/Workstation
PC/Workstation A d d - I n C a r d
Aftermarket

JPEG (Codec)
Digital Still Camera

2

22

77

148

148

182

182

186

19.3

PC

-

-

5

5

14

33

34

48

55.1

PC Add-In Card Aftermarket

1

2

16

12

4

4

4

4

-22.8

Video CD Player

1

20

55

132

130

144

144

133

19.4

37

38

52

57

74

74

77

86

10.8

MPEG-1 (Decoder)

MPEG-1 (Codec)
PC
PC A d d - I n Card Aftermarket

-

-

-

-

41

63

68

77

NA

37

38

52

57

33

11

8

10

-28.5
(Continued)

MSAIVI-WW-MT-9603©1996 Dataquest

December 9,1996

32

Consumer Multimedia Semiconductors and Applications Worldwide

Table 3-6 (Continued)
Worldwide Video Compression Semiconductor Market by Standard(Millions of Dollars)

MPEG-2 (Decoder)
Digital Cable Set-Top Box
Digital Satellite Set-Top Box
DVD Decode/Encode for PC
DVD Video Player
HDTV-ADTV-SDTV

1993 1994 1995 1996 1997 1998
49 147 251 359
0
18
49
29
10
2
0
1
47 128 166 190
17
0
67
29
1
53
27
7
1
:-

MPEG-2 (Codec)
Digital Cable Set-Top Box
DVD Decode/Encode for PC
DVD Video Player
Broadcasting/Head-End

-

_

-

1999
451
71
188
118
71
1

2000
474
82
198
125
66
2

CAGR (%)
1995-2000
57.5
115.2
33.3
NA
NA
NA

T-

--

1
1

2
2

6
6

56
31
13
11

170
24
56
74
16

327
67
124
113
22

240.6
NA
NA
NA
99.4

Indeo (Codec)
Videoconferencing (PC-Based)

1
1

2
2

3
3

2
2

-

-

r:

-

-

-

-

-

-100.0-100.0H.261/H.263 (Codec)
Videoconferencing (PC-Based)
Videoconferencing (Rollabout)Videoconferencing (Telephone)

1
1
-

5
1
1
3

13
1
7
4

24
4
11
8

33
8
12
13

48
16
11
21

71
30
10
32

Ill
55
8
47

53.9
107.6
3.3
61.2

DigiCipher (Decoder)
Digital Satellite Set-Top Box
OthersOthers (Codec)
Digital Still Camera
Videoconferencing (PC-Based)
Videoconferencing (Rollabout)Videoconferencing (Telephone)
Broadcasting/Head-End

-

36
36
26
4
1
7
14

30
30
39
16
1
7
15

24
24
46
26
2
5
13

9
9
67
51
2
2
11

-

-

12
2
6
4
-

12
12
9
1
2
7
0
-

63
51
4
1
7

68
57
8
0
2

-100.0-100.0
NA
21.6
72.0
47.5
-43.2
NA
-28.7

Total
PC
PC Add-In Card Aftermarket
Digital Cable Set-Top Box
Digital Satellite Set-Top Box
DVD Decode/Encode for PC
DVD Video Player
Video CD Player

56
41
0
0
1

110
44
1
29
20

264
6
75
2
83
55

462
5
77
10
158
1
7
132

601
55
49
29
190
29
27
130

825 1,051 1,290
97
125
103
32
38
34
49
149
96
199
198
188
98
249
174
180
66
145
144
133
144

37.4
84.9
-12.6
142.7
19.1
NA
NA
19.4

f

(Continued)

MSAM-WW-MT-9603©1996Dataquest

December 9,1996

33

The Expanding Market for Compression Chips

Table 3-6 (Continued)
Worldwide Video Compression Semiconductor Market by Standard(Millions of Dollars)
1996 1997 1998

1999

2000

CAGR (%)
1995-2000

-

1

1

2

NA

20

34

65

66

72

72.4

6

7

10

18

33

63

61.8

14

18

16

13

11

9

-9.1

4

8

13

21

32

47

61.2

14

17

19

22

23

25

11.9

1993

1994

1995

HDTV-ADTV-SDTV

-

-

-

-

Digital Still Camera

-

1

5

Videoconferencing (PC-Based)

4

4Videoconferencing (RoUabout)

6

8

Videoconferencing (Telephone)

4

3

Broadcasting/Head-End--

NA = Not applicable
Source: Dataquest (November 1996)

Table 3-7
Worldwide Audio Compression Semiconductor Market by Standard(Millions of Dollars)
1993
M P E G - l (Decoder)

1

PC

•

PC A d d - I n Card Aftermarket

^

•

0

1994

1995

1996

1997

1998

1999

2000

17

CAGR (%)
1995-2000

50

100

115

114

105

90

12.4

-

2

2

7

13

16

19

56.4

1

6

6

2

2

2

2

-22.2
35.3

Digital Cable Set-Top Box

0

0

1

1

1

2

3

2

Digital Satellite Set-Top Box

-

9

20

25

25

21

16

12

-10.8

Video C D Player

0

7

21

66

79

76

67

56

21.4

6

7

8

11

15

23

27

31.0

-

-

-

6

13

20

24

NA

6

7

8

5

2

2

3

-15.5

-

-

0

0

NA

M P E G - l (Codec)
PC
PC A d d - I n Card Aftermarket
Digital Cable Set-Top Box

'^•

-

•

2
-

-

-

-

0

0

6

44

67

76

87

110

78.7

Digital Satellite Set-Top Box

0

0

6

44

67

75

86

109

78.4

HDTV-ADTV-SDTV

-

-

-

-

-

0

1

1

NA

-

'-

-

-

0

11

20

36

NA

-

0

11

19

35

NA

-

-

0

1

1

NA

-

13

76

148

225

230

NA

MPEG-2 (Decoder)AC-3 (Decoder)
Digital Satellite Set-Top Box

• ' •

^

• ' -

>.*

'

A C - 3 / M P E G - 2 / O t h e r s (Decoder)--

Digital Cable Set-Top Box

-

-

5

22

37

55

64

NA

D V D D e c o d e / E n c o d e for P C

-

-

-

1

28

62

106

109

NA

D V D Video Player

-

-

-

6

26

49

64

58

HDTV-ADT\^-SDTV. - • • •

•

-

•

NA
(Continued)

l\/lSAM-WW-l\/lT-9603©1996 Dataquest

December 9,1996

34

Consumer Multimedia Semiconductors and Applications Worldwide

Table 3-7 (Continued)
Worldwide Audio Compression Semiconductor Market by Standard(Millions of Dollars)

AC-3/MPEG-2/Others (Codec)
Digital Cable Set-Top Box
DVD Decode/Encode for PC
DVD Video Player
Others (Codec)
Digital Still Camera
Total
PC
PC Add-In Card Afterrriarket
Digital Cable Set-Top Box
Digital Satellite Set-Top Box
DVD Decode/ Encode for PC
DVD Video Player
Video CD Player
HDTV-ADTV-SDTV
Digital Still Camera

1993
^
-

1994
-

3
2
0
0
0

23
7
0
9
7

r

-t

-

-

^

•

-

(

1995
:-

1996
0
0

1997
0
0

1998
24
16
7
1
1

1999
74
11
27
36
1
1

2000
148
32
60
55
1
1

CAGR (%)
1995-2000
NA
NA
NA
NA
NA
NA

63
2
13
1
26
21
-

165
2
13
6
70
1
6
66
0

271
14
7
23
93
28
26
79
0

388
26
4
39
107
79
56
76
1
1

533
36
4
69
121
133
100
67
1
1

642
43
5
99
156
169
113
56
2
1

58.9
83.9
-18.4
186.0
42.5
NA
NA
21.4
NA
NA

i

NA = Not applicable
Source: Dataquest (November 1996)

Figiu-e 3-1
Compression Semiconductor Market by Standard
Millions of Dollars£.,\J\J\J —A

Hother Codecs

0

H.261/H.263 Codec

1

Indeo Codec

1,800-

i*

1,6001,400 1,200-^

Q]] MPEG-2/AC-3/Other Codecs

1,000-H^

MPEG-1 Codec

800 r-H

Q

JPEG and Motion JPEG Codec

600-.

^ 1

^

DIgiCipher Decoder

400-

B

Q

MPEG-2/AC-3/Other Decoder^^

MPEG-1 Decoder

2000 - i!f3^^^^^^^^<^%^^^///^^i^^^.^Z^,\1 ^^'^'Y^^^^rY^^f^f^rr^^rr/j^fff^^fi-^^r^ 1

1993

1994

1995

1996

1997

1998

1999

1
2000
967991

Source: Dataquest (November 1996)

MSAM-WW-MT-9603©1996 Dataquest

December 9,1996

35

The Expanding Mari<et for Compression Chips

Figure 3-2
Compression Semiconductor Market by System
Millions of Dollars
2,000-

Broadcasting/Head-End
Videoconferencing (Telephone)
Videconferenclng (Rollabout)Videoconferencing (PC-Based)

H Digital Still Camera
HDTV-ADTV-SDTV
Video CD Player

II

DVD Video Player
DVD Decode/Encode for PC

D Digital Satellite Set-Top Box
Digital Cable Set-Top Box
PC Add-In Card Aftermarket
PC
1993

1994

1996

1995

1997

1998

1999

2000
367998Source: Dataquest (November 1996)

MSAM-WW-MT-9603©1996 Dataquest

December 9,1996

Chapter 4

DRAM Drops into Digital Consumer Electronics.
The new generation of digital consumer electronics presents a significant
demand for DRAM over fiie next five years. However, the forecast decline
in DRAM prices and the inelasticity of DRAM demand in these products
will combine to keep DRAM revenue declining over the forecast period, as
shown in Figure 4-1 and Table 4-1.
Figure 4-1
Worldwide DRAM Memory Market in Next-Generation Consumer Electronics
Market Revenue (Millions of Dollars)

Total Megabytes (Thousands of MB)-250,000

1,200 -J•]]
1,000-- 200,000

HDTV-ADTV-SDTV

rrxp, Next-Generation
Video Game
Q

Video CD Player^

DVD Video Player

100,000^^

Digital Satellite
Set-Top Box-50,000r^<^

Digital Cable
Set-Top Box

800150,000
600-

400-

200-

Total Megabytes
1993

1994

1995

1996

1997

1998

1999

2000
957993

Source: Dataquest (November 1996)

MSAM-WW-MT-9603©1996 Dataquest

37

38

Consumer Multimedia Semiconductors and Applications Worldwide

Table 4-1
Worldwide DRAM Memory Market in Next-Generation Consumer Electronics
1993

1994

1995

1996

1997

1998

1999

2000

CAGR (%)
1995-2000

12.0
3.0
0.5
3.0

6.0
3.0
0.5
3.0

4.0
3.0
0.5
3.7

4.0
3.0
2.5
0.5
3.4

3.5
2.4
2.5
0.5
2.8

3.5
2.3
2.7
0.5
3.2

4.0
2.3
2.9
0.5
3.5

4.0
2.3
3.0
0.5
3.7

0
-5.6
NA
0
0

^

-

-

-

--

2.3

2.3

2.3

NA

Total Megabytes (K)Digital Cable Set-Top Box
Digital Satellite Set-Top Box
DVD Video Player
Video CD Player
Next-Generation VideoGame
HDTV-ADTV-SDTV

417 7,794 29,038 63,967 74,089 112,430 160,935 204,850
253 1,749 5,250 11,197 25,789 41,620
121
96
2 2,621 8,522 19,737 23,172 29,032 34,414 45,574
900 3,738 10,524 22,256 30,847
9,250
343 1,290
19
9,000
8,100
4,700 6,750
300 4,710 18,972 36,880 35,179 52,615 68,284 75,984

47.8
177.5
39.8
NA
48.3
32.0

-

-

-

-

-

963

1,193

1,575

NA

Total Market Revenue ($M)
Digital Cable Set-Top Box
Digital Satellite Set-Top Box
DVD Video Player
Video CD Player
Next-Generation VideoGame
HDTV-ADTV-SDTV

13
2
0
0
11

241
3
62
9
168

885
6
205
34
639

1,097
15
168
8
42
864

646
28
125
21
43
429

583
50
130
47
45
305

690
102
136
87
47
314

796
151
165
111
44
319

-2.1
90.0
-4.2
NA
5.3
-13.0

-

-

-

-

-

4

5

6

NA

Average Megabytes per System
Digital Cable Set-Top Box
Digital Satellite Set-Top Box
DVD Video Player
Video CD Player
Next-Generation VideoGame
HDTV-ADTV-SDTV

NA = Not applicable
Source: Dataquest (November 1996)

l\/lSAM-WW-MT-9603©1996 Dataquest

December 9,1996

ii

For More Information...

Dale Ford, Senior Industry Analyst
Internet address
Via fax^_^[jJlTJl/^l l^Cf^"^^^^^%S^
A Gartner Group Company(408) 468-8311
dford@dataquest.com(408) 954-1780

The content of this report represents our interpretation and analysis of irrformation generally available to the public
or released by responsible individuals in the subject companies, but is not guaranteed as to accuracy or completeness.
It does not contain material provided to us in confidence by our clients. Reproduction or disclosure in whole or inpar' 'o other parties shall be made upon the written and express consent of Dataquest.
©1996 Dataquest—Reproduction Prohibited
Dataquest is a registered trademark of A.C. Nielsen Company

DATAQUEST WORLDWIDE OFFICES

251 River Oaks ParfWay' | * ;San Jose, California 95134-1913
UniteH States' •Phone: 1-408-468-8000 ' 'Facsimile: 1-408-954-1780

ASIA/PACIFIC
Asia/Pacific Headquarters

EUROPE
European Headquarters

NORTH AMERICAWorldwide Headquartersi^' ..

^J

Tarnesis, The Glahty . < *Egham, Surrey TW20 9AW
United Kingdom
Phone:+44 1784431 611
Facsimile: +441784 488 980'

Suite 5904-7^ Central Plaza' IS.Harbour Road, WanchaiHong Kong.
Phone: 852-2824-6168
FacsimUe: 852-2824-6138

East Coast Headquarters

Dataquest France

Dataquest Korea

Nine Technology Drive
RO. Box 5093
Westborough, Massachusetts 01581-5093
United States
Phone: 1-508-871-5555
Facsimile: 1-508-871-6262

Immeuble Defense Bergeres
345, avenue Georges Cl^menceau
TSA 40002
92882 - Nanterre CTC Cedex 9
FrancePhone: +33 1 41 35 13 00
Facsimile: +33 1 4135 13 13

Suite 2407, Trade Tower
159 Samsung-dong, Kangnam-gu
Seoul 135-729
Korea
Phone: 822-551-1331
Facsimile: 822-551-1330

Dataquest Global Events

3990 Westerly Place, Suite 100
Newport Beach, California 92660
United States
Phone: 1-714-476-9117
Facsimile: 1-714-476-9969
Sales Offices:
Washington, DC (Federal)
New York, NY (Financial)
Dallas, TX
LATIN AMERICA

Research Affiliates and Sales Offices:
Buenos Aires, Argentina
Sao Paulo, Brazil
Santiago, Chile
Mexico City, Mexico

Dataquest Taiwan
Dataquest Gemiany

Kronstadter Strasse 981677 Munchen
Germany
Phone: +49 89 93 09 09 0
Facsimile: +49 89 93 03 27 7
Sales Offices:
Brussels, Belgium
Kfar Saba, Israel
Milan, Italy
Randburg, South Africa
Madrid, Spain
JAPANJapan Headquarters

Aobadai Hills 4-7-7
Aobadai
Meguro-ku, Tokyo 153
Japan
Phone: 81-3-3481-3670
Facsimile: 81-3-3481-3644

llF-2, No. 188, Section 5
Nan King East Road
TaipeiTaiwan, R.O.C.
Phone: 8862-756-0389
Facsimile: 8862-756-2663
Dataquest Singapore

105 Cecil Street#06-01/02 The Octagon
Singapore 069534
Phone: 65-227-1213
FacsimUe: 65-227-4607
Dataquest Thailand

12/F, Vanissa Building
29 Soi Chidlom
Ploenchit Road
Patumwan, Bangkok 10330
ThailandPhone: 662-655-0577
Facsimile: 662-655-0576
Research Affiliates and Sales Offices:
Melbourne, Australia
Beijing, China

Dataquest
A Gartner Group Company\©1996 Dataquest

FILE COPY:
MARlM vAi-ENZUELA

DataQuest
Consumer Electronics Semiconductor
Application Markets

Market Trends

Program: Consumer Multimedia Semiconductor and Applications Worldwide
Product Code: MSAM-WW-MT-9602
Publication Date: October 14,1996
Filing: Market Trends

Consumer Electronics Semiconductor
Application Markets

Market Trends

Program: Consumer Multimedia Semiconductor and Applications Worldwide
Product Code: MSAM-WW-MT-9602
Publication Date: October 14,1996
Filing: Market Trends

Consumer Electronics Semiconductor Application Markets

Table of Contents
1. Introduction
2. Executive Summary
3. Audio Equipment
Personal/Portable Stereos (Boom Boxes and Headsets)
CD Players
Personal CD Players
MiniDisc Players
Cassette Tape Decks..,.
Persorml Tape Players
Stereo Rack Systems
Stereo Receivers
Stereo Speakers
4. Video Equipment
Market Trends
Color Television
VCRs
Camcorders
Digital Camcorders
HDTV
The Challenges of U.S. HDTV
Problems with Wide-Screen TVs and HDTV Receivers
DisplaysStandards and Organizations
Current Specifications
Receiver Production and Market
DVD Video Players
Video-CD Players
5. Interactive Products and Personal Electronics
Interactive Television and Set-Top Box Definitions
Markets for Subscriber Terminals
Production and Market Forecast
Technology Requirements
Manufacturers and ProductsInteractive Video Games
Cameras, Watches, and Clocks
Digital Cameras
Advanced Photo System (APS) Cameras
6. Appliances and Other Consumer Equipment
Microwave Ovens and Refrigerators
Dishwashers, Washers, and Dryers
Air Conditioners
RangesOther Consumer Equipment
7. Emerging Opportunities
Home LANs
USB and IEEE 1394
Home Theater Technologies
Smart Appliances
New Influential Regions in the World
MSAM-WW-MT-9602©1996 Dataquest

Page
1
3
9
9
11
11
17
18
19
,
20
21
23
25
30
30
38
44
48
50
50
53
53
54
55
55
59
63
67
67
69
69
76
76
81
88
88
89
91
91
91
99
99
100
101
101
102
104
105
106

October 14,1996

Consumer Multimedia Semiconductor and Applications Worldwide

List of Figures
FigurePage
2-1 Worldwide Consumer Electronic Equipment Production
Revenue Forecast
3
2-2 Worldwide Semiconductor Consumption for Consumer
Electronics Equipment Production, by Device
4
2-3 Americas Consumer Electronics Equipment Production
Revenue Forecast
5
2-4 Americas Semiconductor Consumption for Consumer
Equipment Production, by Device
6
2-5 Regional Share of Consumer Electronics Equipment
Production Revenue
6
2-6 Semiconductor and Consumer Electronics Milestones
7
2-7 U.S. Household Penetration of Consumer Electronics Products
8
3-1 Worldwide Audio Equipment Production Revenue Forecast
10
3-2 Regional Share of Audio Equipment Production Revenue
10
3-3 Worldwide Personal/Portable Stereo Production Revenue
and Unit Shipment Forecast
12
3-4 Regional Share of Personal/Portable Stereo Production
Forecast
13
4-1 Worldwide Video Equipment Production Revenue Forecast
26
4-2 Regional Share of Video Equipment Production Revenue
27
4-3 Americas Video Equipment Production Revenue Forecast
27
4-4 Worldwide Color Television Production Revenue andUnit Shipment Forecast
31
4-5 Regional Share of Color Television Production Revenue
32
4-6 U.S. Color Television Sales by Screen Size for 12-Month Period
33
4-7 U.S. Color Television Sales by Type for 12-Month Period
33
4-8 Block Diagram of Multifunction, High-Performance
Color TV37
4-9 Worldwide VCR Production Revenue and Unit Shipment
Forecast
39
4-10 Regional Share of VCR Production Revenue
40
4-11 Block Diagram of a Typical VCR
43
4-12 Worldwide Camcorder Production Revenue and Unit Shipment
Forecast
44
4-13 Regional Share of Camcorder Production Revenue
46
4-14 Block Diagram of a Typical Camcorder49
4-15 Worldwide HDTV Receiver Production Forecast
57
4-16 Worldwide DVD Video Player Production Forecast
61
4-17 Representative DVD Video Player Block Diagram
62
4-18 Worldwide Video-CD Player Production Forecast
63
4-19 Block Diagram of a Representative Video-CD System64
5-1 Interactive Television Systems
68
5-2 Regional Share of Analog Set-Top Box Production Revenue
71
5-3 Worldwide Digital Set-Top Box Production Forecast
72
5-4 Worldwide Digital Set-Top Box Average Selling Price Forecast
72

MSAM-WW-MT-9602©1996 Dataquest

October 14,1996

Consumer Electronics Semiconductor Application l\/larl<etsiii

List of Figures (Continued)
FigurePage
5-5 Worldwide Digital Set-Top Box Revenue Forecast
75
5-6 Regional Share of Digital Set-Top Box Production Revenue
75
5-7 Block Diagram of a Typical CATV/DBS Set-Top Box
77
5-8 Block Diagram of Thomson's DirecTV Box
79
5-9 Worldwide Video Game Controller Production Revenue
and Unit Shipment Forecast
81
5-10 Worldwide Video Game Controller Unit Shipment
Forecast, by Type82
5-11 Regional Share of Video Game Controller Production Revenue 84
5-12 Worldwide Video Game Market Share, 1995
85
5-13 Generic Block Diagram of RISC Video Game Controller
87
5-14 Block Diagram of Casio's QV-10 Digital Camera
90
6-1 Worldwide Electronic Appliance Production Revenue Forecast.... 92
6-2 Regional Share of Electronic Appliance Production Revenue
92
6-3 U.S. Major Appliance Unit Shipments, 1954 to 1994
93

l\/ISAI\/l-WW-l\/IT-9602©1996 Dataquest

October 14,1996

Consumer Multimedia Semiconductor and Applications Worldwide

List of Tables
Table
Page
2-1 Worldwide Consumer Electronics Equipment Production
Revenue Forecast
4
2-2 Americas Consumer Electronics Equipment Production
Revenue Forecast
5
3-1 Americas Audio Equipment Production Revenue Forecast
11
3-2 Worldwide Personal/PorStereo Production Forecast
12
3-3 Americas Personal/PorStereo Production Forecast
13
3-4 U.S. Boom Box Brand Share Leaders, First Quarter 1995 throughFourth Quarter 1995
14
3-5 U.S. Boom Box Brand Share Leaders, Second Quarter 1995
through First Quarter 1996
14
3-6 U.S. CD Player Brand Share Leaders, First Quarter 1995 throughFourth Quarter 1995
15
3-7 U.S. CD Player Brand Share Leaders, Second Quarter 1995
through First Quarter 199615
3-8 U.S. Personal CD Player Brand Share Leaders, First Quarter 1995
through Fourth Quarter 1995
16
3-9 U.S. Personal CD Player Brand Share Leaders, Second Quarter 1995
through First Quarter 199616
3-10 U.S. Cassette Tape Deck Brand Share Leaders, First Quarter 1995
through Fourth Quarter 1995
18
3-11 U.S. Cassette Tape Deck Brand Share Leaders, Second Quarter 1995
through First Quarter 199618
3-12 U.S. Personal Tape Player Brand Share Leaders, First Quarter 1995
through Fourth Quarter 1995
19
3-13 U.S. Personal Tape Player Brand Share Leaders, Second Quarter
1995 through First Quarter 199619
3-14 U.S. Stereo Rack System Brand Share Leaders, First Quarter 1995
through Fourth Quarter 1995
20
3-15 U.S. Stereo Rack System Brand Share Leaders, Second Quarter 1995
through First Quarter 199620
3-16 U.S. Stereo Receiver Brand Share Leaders, First Quarter 1995
through Fourth Quarter 1995
21
3-17 U.S. Stereo Receiver Brand Share Leaders, Second Quarter 1995
through First Quarter 199621
3-18 U.S. Compact Stereo System Brand Share Leaders, First Quarter
1995 through Fourth Quarter 1995
22
3-19 U.S. Compact Stereo System Brand Share Leaders, Second Quarter
1995 through First Quarter 1996
22
4-1 Worldwide Video Equipment Production Revenue Forecast
26
4-2 Americas Video Equipment Production Revenue Forecast
28
4-3 North American Video R&D and Manufacturing
28
4-4 Worldwide Color Television Production Forecast
31
4-5 Americas Color Television Market Forecast
32
4-6 Americas Color Television Production Forecast
32
4-7 U.S. Color Television Brand Share Leaders, First Quarter 1995
through Fourth Quarter 1995
34
MSAM-WW-MT-9602©1996 Dataquest

October 14,1996

Consumer Electronics Semiconductor Application l\/larl<ets

List of Tables (Continued)
Table
Page
4-8 U.S. Color Television Brand Share Leaders, Second Quarter 1995
through First Quarter 1996
34
4-9 Worldwide VCR Production Forecast
39
4-10 Americas VCR Market Forecast
40
4-11 Americas VCR Production Forecast
41
4-12 U.S. VCR Brand Share Leaders, First Quarter 1995 throughFourth Quarter 1995
41
4-13 U.S. VCR Brand Share Leaders, Second Quarter 1995 throughFirst Quarter 199642
4-14 Worldwide Camcorder Production Forecast45
4-15 Americas Camcorder Market Forecast
45
4-16 Americas Camcorder Production Forecast
45
4-17 U.S. Camcorder Brand Share Leaders, First Quarter 1995
through Fourth Quarter 1995
46
4-18 U.S. Camcorder Brand Share Leaders, Second Quarter 1995
through First Quarter 1996
47
4-19 Grand Alliance Specification
55
4-20 SDTV Specification
56
4-21 DAVIC 1.1 Specification
56
4-22 Worldwide HDTV Receiver Production Forecast
56
4-23 Americas HDTV Receiver Market Forecast
57
4-24 Americas HDTV Receiver Production Forecast
57
4-25 Sizes and Prices of HDTV Sets
58
4-26 Worldwide DVD Video Player Production Forecast
60
4-27 Worldwide Video-CD Player Production Forecast
63
5-1 Descriptions of Various Products Referred to as "Set-Top Boxes"... 67
5-2 Worldwide Analog Cable/Satellite Set-Top Box Production
Forecast
70
5-3 Americas Analog Cable/Satellite Set-Top Box Market Forecast
70
5-4 Americas Analog Cable/Satellite Set-Top Box Production
Forecast
71
5-5 Worldwide Digital Set-Top Box Production Forecast
73
5-6 Americas Digital Cable and Satellite Decoder Market Forecast
74
5-7 Americas Digital Cable and Satellite Decoder Production
Forecast
74
5-8 Semiconductor Opportunities in Interactive TV
78
5-9 Interactive Television Technology Evolution
78
5-10 Worldwide Digital Cable and Satellite Decoder Revenue Market
Share, 1995
79
5-11 Advanced Subscriber Terminal Manufacturers andTheir Products
805-12 Worldwide Video Game Controller Production Forecast
82
5-13 Worldwide Video Game Controller Unit Shipment
Forecast, by Type83
5-14 Americas Video Game Controller Production Forecast
83
5-15 Americas Revenue from Production of Cameras, Watches,
and Clocks
88
MSAM-WW-MT-9602©1996 Dataquest

October 14,1996

vi

Consumer Multimedia Semiconductor and Applications Worldwide

List of Tables (Continued)
Table
Page
6-1 Americas Appliance Production Revenue Forecast
93
6-2 Americas Appliance Market Forecast
94
6-3 U.S. Microwave Oven Brand Share Leaders, First Quarter 1995
through Fourth Quarter 1995
94
6-4 U.S. Microwave Oven Brand Share Leaders, Second Quarter 1995
through First Quarter 1996
95
6-5 U.S. Refrigerator Brand Share Leaders, First Quarter 1995 throughFourth Quarter 1995
95
6-6 U.S. Refrigerator Brand Share Leaders, Second Quarter 1995
through First Quarter 1996
96
6-7 U.S. Dishwasher Brand Share Leaders, First Quarter 1995 throughFourth Quarter 1995
96
6-8 U.S. Dishwasher Brand Share Leaders, Second Quarter 1995
through First Quarter 1996
97
6-9 U.S. Clothes Washer Brand Share Leaders, First Quarter 1995
through First Quarter 1995
97
6-10 U.S. Clothes Washer Brand Share Leaders, Second Quarter 1995
through First Quarter 199698
6-11 U.S. Clothes Dryer Brand Share Leaders, First Quarter 1995 throughFourth Quarter 1995
98
6-12 U.S. Clothes Dryer Brand Share Leaders, Second Quarter 1995
through First Quarter 1996
99
6-13 Worldwide Revenue from Production of Other Consumer
Equipment
100
6-14 Americas Revenue from Production of Other
Consumer Equipment
100

MSAM-WW-MT-9602©1996 Dataquest

October14,1996

Chapter 1

Introduction
This document is the fifth in a series of six that provide reference information and analysis about the principal system application markets for semiconductors. The six areas are data processing, wireline communications,
wireless communications, consumer electronics, automotive electronics,
and a combined document on industrial and military and civil aerospaceelectronics. Each document brings forth basic information about theopportunity offered by particular systems:• System market size (in production terms) in revenue, units, and average
selling price• System market and product feature trends• Hardware architecture trends and semiconductor device opportunities• Semiconductor content and market forecast• A listing of key OEMs
The information in this report is gathered from both primary andsecondary sources. Primary sources include surveys and interviews ofindustry vendors and customers, as well as analyst knowledge andopinion. Some of the primary sources include Dataquest's own services.
Secondary sources include various governmental and trade sources onsales, production, trade, and public spending. Semiconductor content
assumptions are based on both surveys of producing OEMs and physicalteardown evaluations by Dataquest analysts of representative systems.
The forecast methodology is based on various methods and assumptions,depending on the area. To form a solid basis for projecting system
demand, capital, government, and consumer spending assumptions are
made for various regions of the world. For specific markets, saturationand displacement dynamics are considered as well. Key exogenous factors
such as new software introductions, exchange rate changes, and government policies also are considered. Semiconductor content forecasts are
based on interviews of system marketers and designers (including makers
of enabling semiconductor technology), along with an analysis of historical trends.
Project Analysts: Dale Ford, Jonathan Cassell, and Xavier Pucel

MSAM-WW-MT-9602©1996 Dataquest

Chapter 2

Executive Summary
The consumer electronic equipment market represents a significant opportunity for semiconductor applications (see Figure 2-1 and Table 2-1 forDataquest's forecast for consumer electronic equipment production).
Although the worldwide market for consumer electronic equipment is
projected to have a compound annual growth rate (CAGR) of 6.1 percent
for the next five years, the semiconductor market for consumer electronic
products will have a CAGR of more than 13 percent in this same timeframe (see Figure 2-2). This difference is driven by the digitization of consumer products, from VCRs to dishwashers. New products being introduced—high-definition television (HDTV), digital VCRs, Video-CD and
DVD Video players, MiniDisc (MD) players, digital cable/satellite set-top
boxes, and interactive video games—are boosting the opportunities forsemiconductor products.
Figure 2-1
Worldwide Consumer Electronic Equipment Production Revenue Forecast
Millions of Dollars
250,000-fl

200,000-^

Other Consumer

Q

Appliances
Personals Electronics

150,000-

Video
Audio

1 oo,poo -50,000-

1
1993

1
1994

1
1995

1
1996

1
1997

r
1998

1999

2000
96S110Source: Dataquest (September 1996)

MSAM-WW-MT-9602©1996 Dataquest

Consumer Multimedia Semiconductor and Applications Worldwide

Table 2-1
Worldwide Consumer Electronics Equipment Production Revenue Forecast(Millions of Dollars)
Segment
Audio

1993

1994
22,616

1995
24,71142,01517,75543,87245,894

19,56948,21853,443

21,793
58,104

11,86913,09814,931

20,588

Video

1997

1998

1999

2000

25,461

28,29054,872

31,47035,02558,991
23,92363,16825,811

38,66866,912

67,26913,77270,82914,10951,055
21,349

CAGR(%)
1995-2000
9.4

27,5167.8
4.8

74,578
14,7915.1-0.2

140,445 152,599 165,433 171,140 182,113 195,425 208,942 222,465

6.1

Personal Electronics
Appliance
Other Consumer
Total

1996

21,95560,62863,661

12,64813,335

Source: Dataquest (September 1996)

Figure 2-2
Worldwide Semiconductor Consumption for Consumer Electronics Equipment
Production, by Device; of Dollars^S

Optoelectronics

mi Discretem Analog ICs
D MOS Logic
S MOS
Microcomponents

1993

1994

1995

1996

1997

1998

1999

•

MOS Memory^

Bipolar Digital ICs

2000
966111

Source: Dataquest (September 1996)

This worldwide trend is accentuated in the Americas production arena.
Table 2-2 and Figure 2-3 show that consumer electronic equipment production in the Americas will grow at a 4.6 percent CAGR through the year
2000. However, semiconductor consumption for consumer equipment
production will grow at a 20.1 percent CAGR at the same time (see Figure2-4). The importance of the consumer electronics market is even greater inJapan and the Asia/Pacific region than in North America. Figure 2-5
shows that almost 70 percent of consumer electronics production takes
place in these regions.
l\/ISAM-WW-MT-9602©1996 Dataquest

October 14,1996

Executive Summary

Table 2-2
Americas Consumer Electronics Equipment Production Revenue Forecast(Millions of Dollars)
Segment
Audio

1993

Video
Personal Electromcs
Appliance

14,548Other Consumer
Total

1994

1995

1,498

1,575

1,575

8,919
270

10,054306

10,923325

12,054

1,429

16,2091,527

26,66429,671

1997

1996
1,622

1,677

1998
1,737

1999
1,792

340

12,653358

13,175375

14,015390

16,38816,895

17,48918,086

1,583

1,640

1,705

1,775

18,8181,847

30,79432,55133,88235,14836,8612000

CAGR(%)
1995-2000

1,855

3.3

14,788403
19,664

6.2
4.4

1,923

4.0

38,6334.6

3.7

Source: Dataquest (September 1996)

Figure 2-3
Americas Consumer Electronics Equipment Production Revenue Forecast
Millions of Dollars
40,000-^m

35,000-1^^

I I Appliances

30,000 25,000 -other Consumer

mm

20,000 -I

1^'^

Personal
Electronics

H

Video

^

Audio

15,00010,0005,000
0
1993

1994

1995

1996

1997

1998

1999

2000
966112

Source: Dataquest (September 1996)

MSAM-WW-IMT-9602©1996 Dataquest

October 14,1996

Consumer Multimedia Semiconductor and Applications Worldwide

Figure 2-4
Americas Semiconductor Consumption for Consumer Equipment Production,
by Device
Millions of Dollars
8,000 -|1m Optoelectronics
m Discretem Analog ICs
D MOS Logic
S MOS
Microcomponents

1993

1994

1995

1996

1997

1998

1999

•

MOS Memory^

Bipolar Digital ICs

2000
9SG-I13

Source: Dataquest (September 1996)

Figure 2-5
Regional Share of Consumer Electronics Equipment Production Revenue
1995

2000

Total = $222 Billion

Total = $165 Billion

966114

Source: Dataquest (September 1996)

MSAM-WW-MT-9602©1996 Dataquest

October 14,1996

Executive Summary

Figure 2-6 shows the relationship between the development of semiconductor technologies and products and the evolution of consumer electronics products. Semiconductors play a fundamental enabling role in thedevelopment of next-generation consumer electronics markets. Figure 2-7
provides an overview of the penetration of major consumer electronics
products into U.S. homes. Although some products, such as televisions,have reached near-saturation, other products still have room for significant expansion. The market for high-penetration products such as TVs ismainly found in replacements and upgrades. New technology developments targeted at existing products will drive an increase in upgrades ofthese products.
Several new, exciting products will take the stage in consumer electronics
markets during the next five years. This report provides information on
many of these new products.
Figure 2-6
Semiconductor and Consumer Electronics Milestones
1960

1950
1955
Tmnsistor Rkdio
I.

1966
IC Radio

W

il

1960
Transistor TV

c o
O 0)
O u]

s >, Ge
at•S .2

Transistor

1975
VCR

Di& •rele:.D$i\ icetc
Fundfiortal
Parti--LSI Sysrer. i
Componer teSi
Tts nsistor

2S&BitSfl/W
4-t itMCV

P t=0)(0

MOSIC
Monoiil (jc iC for
POdkgtB^dio

1987
OAT

'4994
CD*ROM;Basfed.. GameMachin^^ • t ^•'•^'.:•';;Mmi-Disc ••.
Reconaw/Player;

196).
Trim Ton
Trarslstor
Cole r TV

MOS
Transistor

=
1
E a>

19S2
CD Player

2000

TS90::

19^9
Hepdphone Stereo

196(1Miniii4as$ette
ICAidio Tape Recorder

a> u

o

1980

1970

^1^2-";;;-1996 .
..;HDTV^- . OVD- •;;1986
6mm VCR
1986
DSB• 1993yM995":: Video-CD QigitallVCR

Sui 'Systems

VLIt';;••::ULSI^jystBmp/i-a-( 'hip

Ch OS IC

30JKI0GaisASiC

100,1X0
Gate/-SIC

Id lorC£ Player

4M,i
DR. W

DHAhl

16Mb

Se viconducior
User
QCD
Imager

GaAs Di vicefor SHF
966115

Source: SonyMSAM-WW-MT-9602©1996Dataquest

October 14,1996

Consumer Multimedia Semiconductor and Applications Worldwide

Figure 2-7
U.S. Household Penetration of Consumer Electronics Products
Refrigerators
All Televisions
Home Radios
Color TVsVCR Decks
Microwave Ovens^s^ggs^iggU;:^^^

i^iiUgei^^
jgjMfajiiijijg^^

M^igttggiiyWsgiU^^s^^SiSgis^g^isi;;^^^

Clothes Washers

mm^^s^^mmmm^^^^!imMm^^^^^
Separate Component Audio Systems"m^msmmssm&immmA
Rack or Compact Audio Systems
imi^^^^^^sm^ssssL,
Ranges, Electricmm^ss^ms^mmmmmmm^
Dishwashers

iiSEgi!i!:!gse!m^Dryers, Electric^A^^^jmm^Amss5^^^^mms5^mm\
Color TVs with Sterei^^s^i^^^^mMmi^s^^ssmmma^
Monochrome TVs
ism^^ssmmmms^m^
Ranges, Gas^^msmimmmm^^^^^
imm^ms/^m^mmmmm^
Camcorders
wsmmsm^.

Home CD Players

CD Boomboxes

wxi^s&smsmism,m^^m^i^.
Home Security Systems
mmm^m^.
Dryers, Gas '^^ssiz^sms^.
Portable CD Players

Autosound CD Players
Projection TVs
All LCD TVs
TVA/CR Combinations

Jan. 1995

Home Satellite Earth Stations

Jan. 1996

Laser Disc Players
1^10—r "T"
30
20

T"
40

~r"
50

—T"
60

"T"
70

Percentage of Households

—r —r
80

90

100
966116

Source: EIA, Appliance Magazine, Dataquest (December 1995)

MSAM-WW-MT-9602©1996 Dataquest

October 14,1996

Chapter 3

Audio Equipment
Worldwide audio equipment production is expected to grow at a healthy
9.4 percent CAGR through 2000. Audio system sales in the United States,in particular, will help drive this growth. Portable products and digital
tetimology continue to have the most significant impact on the audio electronics market. Decreases in memory prices and an explosion of innovative features are resulting in growing replacement sales and growing
demand for step-up products. Examples of this are the multiple discchanger-equipped compact disc (CD) systems that are replacing single-CDsystems, reintroduction of the MiniDisc (MD), and the future entry of
DVD-Audio players. Coupled with new or improved digital products,
adoption of new technologies (such as Dolby Surround AC-3 and Home
THX) is opening new avenues for semiconductor applications (see further
discussion of emerging opportunities in Chapter 7). Although Dolby Pro
Logic technology is becoming prevalent in deluxe audio/video (A/V)
receivers and rack systems, orJy 5 percent of the minisystems feature thistechnology. While some manufacturers (such as Aiwa) are taking advantage of this untapped market, all audio system vendors are offering AC-3
compatible systems in view of exploding demand.
As digital formats become more widely available, performance differences
between products will fade. Manufacturers will strive to differentiate theirproducts in terms of added features and ease of use. Adoption of universal
bus interfaces such as Universal Serial Bus and IEEE 1394 will ensureplug-and-play capability between consumer electronics equipment(including audio) and multimedia computer applications (see further
discussion in Chapter 7).
Figures 3-1 and 3-2 illustrate the commanding role that the Asia/Pacificregion will play in audio products, with more than 76 percent of production taking place there by 2000. Table 3-1 shows Americas production ofaudio products. Major audio electronics manufacturers with U.S. facilities
include Emerson Radio Corporation, Pioneer Electronic Corporation,
Sanyo, Tandy Corporation, and Toshiba Corporation. As the various brandshare tables in this chapter show, Sony Corporation plays a commandingrole in every segment of the audio electronics equipment market.
This chapter will present a worldwide production forecast for personalportable stereos and a discussion on various major products. Brand share
information is also presented for other major audio products.

Personal/Portable Stereos (Boom Boxes and Headsets)
Digitization is also affecting the personal portable audio market. Three
hundred radio stations have joined the Radio Data System (RDS) campaign sponsored by the Consumer Electronics Manufacturers Association(CEMA). Onkyo Corporation, Bang & Olufsen, and Denon are making
RDS home radios, and Grundig AG is making RDS portable radios. RDS
works by sending an inaudible data stream. This data appears as text andenables a variety of listener-convenience and community-service features.

MSAM-WW-l\/lT-9602©1996 Dataquest

10

Consumer Multimedia Semiconductor and Applications Worldwide

Figure 3-1
Worldwide Audio Equipment Production Revenue Forecast
Millions of Dollars
oU.UUU-

25,000-20,000-^Americas

B

Japan

H

EuropenAsia/Pacific

15,000-10,0005,000-

II
•

1

oJ
1993

jms!

•
S B
.^mR
jmR _™s ^ r ;
1995

1994

1996

1997

Wttff^—

1999

2000

1998
3•66117

Source: Dataquest (September 1996)

Figure 3-2
Regional Share of Audio Equipment Production Revenue
1995

2000
i— Americas (6.4°/o)j—Americas (4.6%)

Total = $25 Billion

Total = $39 Billion
96S1teSource: Dataquest (September 1996)

MSAM-WW-MT-9602©1996 Dataquest

October 14,1996

11

Audio Equipment

Table 3-1
Americas Audio Equipment Production Revenue Forecast (Millions of Dollars)
Segment

1996

1998

1999

2000

64

67

74

71

850

865

889

70
916

971

248

95
255

102
263

110
272

119
281

942
127
291

301

226

230

236

241

255

261

56

71

84

92

99

248
102

103

109

2.5
5.4

1,498

1,575

1,575

1,622

1,677

1,737

1,792

1,855

3.3

1994

1995

Compact Disc Players

55

59

61

Radios
Personal/Portable Stereos

880
92

Stereo Components

840
87
237

Musical Instruments

223

Tape Recorders
Total

CAGR (%)
1995-2000

1997

1993

4.8
2.7

137

7.5
3.3

Source: Dataquest (September 1996)

For example, listeners can select the desired station by its call letters or
program format, which appear in text form on the face of the RDS radio.
Another example is the announcement by SGS-Thomson in June 1996 of
the signing of a contract with WorldSpace Inc. for the development andproduction of chipsets that will bring CD-quality sound to personalradios. The set will comprise one advanced bipolar chip and two CMOS
chips. It will use Motion Picture Experte Group (MPEG) compression/
decompression technology and produce a signal length up to 128 Kbps
(CD stereo quality). The charmel decoder and source decoder chips will be
integrated in the future.
Figure 3-3 and Table 3-2 show the worldwide production forecast for
personal/portable stereos. Although these systems represent a highvolume opportunity, the growth in revenue will remain very low. Figure
3-4 provides a regional breakout of personal/portable stereo production.
The domiriance of the Asia/Pacific region in tiie production of personal/
portable stereos will increase through 2000, reaching 78.4 percent ofworldwide production. Table 3-3 lists the Americas production forecast for
personal/portable stereos. Sony commanded more than 30 percent of the
U.S. market in 1995 for boom boxes (see Tables 3-4 and 3-5).

CD Players
Beyond personal CD players, much of the growth in the CD player market
is driven by upgrades to CD changer players that accommodate multiple
CDs. Tables 3-6 and 3-7 show brand share leaders for CD players in the
United States.

Personal CD Players
Tables 3-8 and 3-9 list U.S. brand share leaders in personal CD players.

MSAM-WW-MT-9602©1996 Dataquest

October 14,1996

12

Consumer Multimedia Semiconductor and Applications Worldwide

Figure 3-3
Worldwide Personal/Portable Stereo Production Revenue and Unit Shipment Forecast
Millions of Dollars

Thousands of Units

7,000

160,000

6,000

140,000i

5,000' 120,000
100,000

4,000

I

3,000 H

80,000m

60,0002,000

40,0001,000

20,000

0

ai

1993

1994

1995

1996

1 i

1997

1998

1999

m

0

2000

966119Source: Dataquest (September 1996)

Table 3-2
Worldwide Personal/Portable Stereo Production Forecast

Units (K)Factory ASP ($)
Factory Revenue ($M)
Semiconductor
Content ($)
Semiconductor
TAM ($M)

1993
1994
1997
1998
1999
2000
1995
1996
129,044 129,237 132,861 135,945 140,594 145,801 151,042 156,911
34
47
42
40
37
35
33
36
5,249
6,077
5,434
5,067
5,145
5,251
5,053
5,138
7
10
8
8
9
9
8
8
1,251

1,185

1,161

1,133

1,149

1,168

1,151

1,171

CAGR (%)
1995-2000
3.4
-3.8
0
-4.9
0.2

Regional Production Trends (Percentage of World by Unit Production)
Americas

1

1

1

1

1

1

1

1

Europe

12

12

12

11

11

11

11

Japan

13

9

8

6

5

5

4

10
4

Asia/Pacific

74

78

79

81

82

83

84

84

Source: Dataquest (September 1996)

MSAM-WW-MT-9602©1996 Dataquest

October 14,1996

i'3'

Audio Equipment

Figure 3-4
Regional Share of Personal/Portable Stereo Production Forecast
1995
Americas (1.8%)—i
I

2000
Americas (2,6%)—|1

r- Europe (6.2%)^ ^ Europe(6.4%)

/ /
/ /
/
(^
1
\

Japan
(27.7%)

Japan(12.6%)\\

1
1

A3ia/Pacific(64.3%)Y\

Asia/Pacific(78.4%)

Total = $5 BillionmaTotal = S5 Billion
9S6120Source: Dataquest (September 1996)

Table 3-3
Americas Personal/Portable Stereo Production Forecast

Units (K)Factory ASP ($)

1993

1994

1995

1996

1997

1998

1999

2000

CAGR (%)
1995-2000

1,479

1,552

1,638

1,754

1,900

2,059

2,183

2,314

7.2

59

59

58

58

58

58

58

59

0.3

137

7.5

Factory Revenue
($M)

87

92

95

102

110

119

127

Semiconductor
Content ($)

12

12

12

12

12

12

12

12

0.9

Semiconductor
TAM ($M)

17

18

19

20

22

24

26

28

8.1

Source: Dataquest (September 1996)

MSAM-WW-MT-9602©1996 Dataquest

October 14,1996

14

Consumer Multimedia Semiconductor and Applications Worldwide

Table 3-4
U.S. Boom Box Brand Share Leaders, First Quarter 1995 throughFourth Quarter 1995 (Percent)
Brand
Sony
RCA
Magnavox
Sanyo
Panasonic
Emerson
Sharp
Craig
GPX
GE
Others
Total

Unit Market Share (%)
31.8
8.8
8.4
5.6
4.6
3.6
3.6
3.4
3.3
2.9
24.0
100.0

Revenue Market Share (%)
33.0
8.7
8.1
5.1
5.3
2.8
3.8
2.4
2.6
2.4
25.8
100.0

Source: The Scout Repor1®/The Polk Company

Table 3-5
U.S. Boom Box Brand Share Leaders, Second Quarter 1995
through First Quarter 1996 (Percent)
Brand
Sony
Magnavox
RCA
Sanyo
Panasonic
GPX
GE
Sharp
EmersonJVC
Others
Total

Unit Market Share (%)
31.6
9.3
8.2
5.4
4.7
3.7
3.5
3.1
3.0
2.8
24.7
100.00

Revenue Market Share (%)
32.9
9.4
8.0
5.0
5.2
2.8
3.7
2.2
2.3
2.1
26.4
100.00Source: The Scout Report®/The Polk Company

MSAM-WW-MT-9602©1996Dataquest

October 14,1996

15

Audio Equipment

Table 3-6
U.S. CD Player Brand Share Leaders, First Quarter 1995 throughFourth Quarter 1995 (Percent)
Brand

Unit Market Share (%)
28.4

Revenue Market Share (%)
28.4

13.9
6.8

15.3
6.0

in
5.2

6.8
4.0

5.3
5.3

4.5
4.6

3.5
2.9

2.3
1.7

Others

1.9
19.1

2.2
24.2

Total

100.0

100.0

Sony
Pioneer

JVC
Technics
Panasonic
Kenwood
RCA
Magnavox
TEAC
Fisher

Source: The Scout Repor1®/The Polk Company

Table 3-7
U.S. CD Player Brand Share Leaders, Second Quarter 1995
through First Quarter 1996 (Percent)
Brand

Unit Market Share (%)

Revenue Market Share (%)

Sony
Pioneer

27.8
11.9

27.7

JVC
Technics

8.4

8.3

7.9

7.0

Panasonic
Kenwood

5.8
5.7

4.8
5.0

RCA

4.4

4.0

Magnavox

4.1

2.7

TEAC
Fisher

2.7

1.6

2.4

2.9

Others

18.9

22.4

Total

100.0

100.0

13.6

Source: The Scout Report®/The Polk Company

MSAiVI-WW-i\/IT-9602©1996Dataquest

October 14,1996

16

Consumer IVIultimedia Semiconductor and Applications Worldwide

Table 3-8
U.S. Personal CD Player Brand Share Leaders, First Quarter 1995
through Fourth Quarter 1995 (Percent)
Brand
Sony
Panasonic
RCA
Magnavox
Koss
Aiwa
FisherSanyo
Kenwood
Radio Shack Brands
Others
Total

Unit Market Share (%)
42.8
13.9
12.1
5.4
3.5
2.7
3.0
2.8
1.9
1.4
10.5
100.0

Revenue Market Share (%)
41.6
14.0
11.3
5.1
3.1
3.3
5.0
2.6
2.1
1.4
10.5
100.0

Source: The Scout Report®/The Polk Company

Table 3-9
U.S. Personal CD Player Brand Share Leaders, Second Quarter
1995 through First Quarter 1996 (Percent)
Brand
Sony
Panasonic
RCA
Magnavox
Koss
Aiwa
FisherSanyo
Kenwood
Radio Shack Brands
Others
Total

Unit Market Share (%)
42.3
14.1
12.3
5.8
3.9
3.1
2.5
2.4
2.2
1.4
10.0
100.0

Revenue Market Share (%)
42.1
14.3
11.7
5.5
3.4
3.6
3.8
2.3
2.4
1.4
9.5
100.0

Source: The Scout Reporl®/The Polk Companyl\/ISAM-WW-MT-9602©1996Dataquest

October 14,1996

Audio Equipment

17

MiniDisc Players
MiniDisc (MD) is similar to a standard CD player in looks and features but
offers much improved portability and the ability to record at slightly lessthan CD quality. Sony concedes that the product is not intended to replace
today's CD but to be its portable counterpart. MD is v p n g to replace theanalog cassette. MD uses a compression technique known as Adaptive
Transform Acoustic Coding (ATRAC) to fit 74 minutes of near CD-quality
music on a 2.5-inch optical disc. ATRAC is designed to remove the frequencies the human ear is less sensitive to and therefore the least likely to
notice missing. Shockproofing is achieved by incorporating a RAM buffer.
If the laser does mistrack during play, the music will continue to flow foru p to 10 seconds, which is good for mobile applications.
While MDs represent a growing market in Japan, they are still unpopularin Europe and the United States. MD players demand in Japan should
more than double in 1996 to reach 3 million units, while overseas markets
may consume over 500,000 units. Sony still believes the global market has
the potential to reach 30 million units by the year 2000. However, lowdemand has limited the entry of new companies to the market and theintroduction of new models by existing players. But vendors are not giving up. Anticipating accelerating growth, Sony has recently reintroduced
the MD in the United States for the third time. Sharp and Aiwa are also
introducing new products. To date, all audio makers have acquired MD
manufacturing licenses from Sony, including Sharp, Kenwood, Sansui,
Clarion, Aiwa, RCA, and Sanyo. In September 1995, Matsushita beganselling a MiniDisc portable audio player. Matsushita's entry is significant
because it was one of the original developers of the rival audio format
called digital compact cassettes (DCC) or digital audio tape (DAT). At its
first introduction in 1992, the MD was targeted at people in their early 30s.
This time, companies will focus on high-school and college students who
have become the main users in Japan. Growing sales in Japan helped
lower cost for all products. By developing low-cost models, MD player
makers will attempt to offer prices and features acceptable to the market.
However, today, MD players are still expensive items for mainstream consumers. In Japan, prices revolve around the equivalent of $500, and in the
United States they are closer to $600.
Today, the removable storage industry is scrambling for a replacement for
the floppy disk, and there is some talk about using MDs to that end. Technically speaking, MDs are suitable for multimedia use because they canrecord data and images as well as music. At 140MB, MDs offer a recording
capacity equivalent to about 100 floppy disks. However, two factors are
essential to the adoption of MDs as data storage devices:• Price: MD players need to break the $200 barrier. Consumers have indicated that they are willing to pay no more than $200 for a storage drive.
Dataquest believes that this price barrier will be very difficult to breakfor MDs.
• IEEE 1394: Adoption of IEEE 1394 as a universal bus interface. IEEE
1394 will enable easy setup of MD players to stereo systems as well as
computers.

l\/ISAI\/i-WW-IVlT-9602©1996 Dataquest

October 14,1996

18

Consumer Multimedia Semiconductor and Applications Worldwide

Cassette Tape Decks
Tables 3-10 and 3-11 list the brand share leaders for cassette tape decks in
the United States.
Table 3-10
U.S. Cassette Tape Deck Brand Share Leaders, First Quarter 1995
through Fourth Quarter 1995 (Percent)
Brand
SonyPioneer
JVC
Kenwood
Radio Shack Brands
Technics
FisherGE
TEAC
GPX
Others
Total

Unit Market Share (%)
22.3
14.1
9.0
6.0
5.0
5.4
3.3
4.9
4.5
2.4
23.1
100.0

Revenue Market Share (%)
27.2
13.7
9.3
6.6
3.8
5.8
2.1
NA
2.8
1.8
26.9
100.0

Source: The Scout Report®/The Polk Company

Table 3-11
U.S. Cassette Tape Deck Brand Share Leaders, Second Quarter
1995 through First Quarter 1996 (Percent)
Brand
SonyPioneer
Kenwood
JVC
TEAC
GETechnics
Radio Shack Brands
Panasonic
Onkyo
Others
Total

Unit Market Share (%)
20.2
13.8
13.4
6.5
4.8
4.4
3.6
3.5
3.3
2.6
23.9
100.0

Revenue Market Share (%)
23.7
12.8
13.7
6.7
3.6
4.6
2.6
NA
2.0
1.2
29.1
100.0

Source: The Scout ReporKD/The Polk Company

MSAM-WW-MT-9602©1996Dataquest

October 14,1996

Audio Equipment

19

Personal Tape Players
Tables 3-12 and 3-13 list the brand share leaders in the United States.
Table 3-12
U.S. Personal Tape Player Brand Share Leaders, First Quarter 1995
through Fourth Quarter 1995 (Percent)
Brand
Sony
GE
Panasonic
Aiwa
GPX
RCA
Radio Shack Brands
Lenoxx Sound
PhiicoEmerson
Others
Total

Unit Market Share (%)
41.4
9.4
6.5
5.6
4.9
3.6
4.0
2.5
2.0
2.0
18.1
100.0

Revenue Market Share (%)
46.0
6.9
8.4
7.5
4.5
3.4
4.5
1.4
1.1
1.3
15.0
100.0

Source: The Scout RepoitS/The Polk Company

Table 3-13
U.S. Personal Tape Player Brand Share Leaders, Second Quarter
1995 through First Quarter 1996 (Percent)
Brand
Sony
GE
Panasonic
Aiwa
GPX
RCA
Radio Shack Brands
Lenoxx Sound
PhiicoEmerson
Others
Total

Unit Market Share (%)
41.2
9.0
6.9
5.1
4.9
4.0
3.8
2.4
2.2
2.0
18.5
100.0

Revenue Market Share (%)
46.0
7.0
9.0
6.5
3.9
3.9
4.0
1.3
1.2
1.2
16.0
100.0

Source: The Scout Repor1®/The Polk Company

IViSAIVI-WW-MT-9602©1996Dataquest

October 14,1996

20

Consumer Multimedia Semiconductor and Applications Worldwide

Stereo Rack Systems
Tables 3-14 and 3-15 list the brand share leaders for stereo rack systems in
the United States.
Table 3-14
U.S. Stereo Rack System Brand Share Leaders, First Quarter 1995
through Fourth Quarter 1995 (Percent)
Brand
Sony
Pioneer
Aiwa
Sharp
FisherKenwood
Soundesign
Technics
JVC
Panasonic
Others
Total

Unit Market Share (%)
18.0
9.5
9.4
6.8
6.8
6.7
5.4
5.0
3.8
3.2
25.4
100.0

Revenue Market Share (%)
19.9
13.4
8.1
5.1
9.2
9.6
3.8
8.3
5.5
3.2
13.9
100.0

Source: The Scout Repor1®/The Polk Company

Table 3-15
U.S. Stereo Rack System Brand Share Leaders, Second Quarter
1995 through First Quarter 1996 (Percent)
Brand
Sony
Pioneer
Aiwa
Sharp
FisherKenwood
Soundesign
Technics
JVC
Panasonic
Others
Total

Unit Market Share (%)
17.8
11.3
8.7
8.3
7.5
6.0
4.7
4.4
3.7
2.6
25.0
100.0

Revenue Market Share (%)
17.8
16.0
7.4
7.0
11.1
8.7
2.7
7.1
5.5
2.8
13.9
100.0

Source: The Scout Report®/The Polk Company

MSAM-WW-MT-9602©1996Dataquest

October 14,1996

21

Audio Equipment

Stereo Receivers
Tables 3-16 and 3-17 list the brand share leaders for stereo receivers in the
Uiuted States. Tables 3-18 and 3-19 list the brand share leaders for compact
stereo systems in the United States.
Table 3-16
U.S. Stereo Receiver Brand Share Leaders, First Quarter 1995
through Fourth Quarter 1995 (Percent)
Brand
Sony
Pioneer
Kenwood
Technics
JVC
Onkyo
YamahaRadio Shack Brands
Denon
TEAC
Others
Total

Unit Market Share (%)
27.2
17.0
8.5
9.7
8.7
4.4
3.0
2.4
2.5
1.6
15.0
100.0

Revenue Market Share (%)
27.3
17.6
7.6
9.1
7.2
6.9
4.4
1.4
4.1
1.2
13.2
100.0

Source: The Scout Report®/The Polk Company

Table 3-17
U.S. Stereo Receiver Brand Share Leaders, Second Quarter 1995
through First Quarter 1996 (Percent)
Brand
Sony
Pioneer
Kenwood
Technics
JVC
Onkyo
YamahaRadio Shack Brands
Denon
TEAC
Others
Total

Unit Market Share (%)
23.2
16.1
10.8
9.5
9.4
5.1
4.0
3.2
2.1
1.5
15.1
100.0

Revenue Market Share (%)
22.1
16.0
11.3
8.3
8.0
7.1
5.7
2.1
2.7
1.2
15.5
100.0

Source: The Scout Repor1®/The Polk Company

MSAM-WW-MT-9602©1996Dataquest

October 14,1996

22

Consumer Multimedia Semiconductor and Applications Worldwide

Table 3-18
U.S. Compact Stereo System Brand Share Leaders, First Quarter
1995 through Fourth Quarter 1995 (Percent)
Brand

Unit Market Share (%)

Revenue Market Share (%)

Aiwa

13.7

22.0

Sony
RCA

16.4
9.2

18.6
6.3

Sharp

7.5
8.3

6.3
7.1
3.6
1.7

GE

6.1
3.9
4.2

2.1

JVC

3.1

4.3

Emerson
Others

2.5
25.1

1.3
26.7

Total

100.0

100.0

Magnavox
Soundesign
GPX

Source: The Scout Repor1®/The Polk Company

Table 3-19
U.S. Compact Stereo System Brand Share Leaders, Second
Quarter 1995 through First Quarter 1996 (Percent)
Unit Market Share (%)

Revenue Market Share (%)

15.5
15.4
9.2

24.9

Sharp
Magnavox

7.4

5.9

7.0

5.9

Soundesign

5.9

3.3

GPX
GE

3.8
3.7

2.0
1.7

JVC

3.5

4.8

Emerson

2.9

1.5

Others

25.7

26.8

Total

100.0

100.0

Brand
Aiwa
Sony
RCA

17.0
6.1

Source: The Scout Repon®/The Polk Company

MSAM-WW-MT-9602©1996Dataquest

October 14,1996

Audio Equipment

23

Stereo Speakers
The main driving forces behind the growth of the stereo speaker industry
are audio-for-video and new designs for speaker-specific applications. The
home theater concept, where consumers want speakers to faithfully reproduce movie sound tracks, is mutating from being a high-end feature to amore mainstream technology. The Dolby Surround AC-3 specification,
which enables home theater acoustics, requires the use of additional surround speakers and, optionally, the use of subwoofers. Speaker designs
are taking into account the differing demands for movie sound track
reproduction and music reproduction. Some systems incorporate a switchthat allows the user to select the desired music or sound track mode.

MSAM-WW-MT-9602©1996 Dataquest

October 14,1996

Chapter 4

Video Equipment
Video equipment is positioned in the consumer market as entertainment
equipment and, together with audio equipment, has been serving as amarket and technology driver for the electronics equipment and semiconductor industries. In particular, it has spurred the development and commercialization of numerous production technologies and systems, whichhave also promoted the growth of industries that supply necessary components and materials.
Home use of entertainment equipment assures wide market penetration
because it is less affected or impeded by social and cultural barriers. Videoequipment demand potentially covers the entire world and grows withthe economic development in each country. At the same time, establishment of video equipment production bases in the areas offering low-costlabor has helped expand regional economies, which in turn has created theeconomic base that stimulates video equipment demand.
Figure 4-1 and Table 4-1 show the anticipated worldwide growth forecastof video equipment production. The CAGR for the next five years in video
equipment is expected to be 7.8 percent. Particularly strong growth isanticipated in digital set-top boxes, with almost a 40 percent CAGR forecast. Japan will continue to shift video equipment production locations to
the Asia/Pacific region: 42.7 percent of video equipment production willtake place in the Asia/Pacific region by 2000 (see Figure 4-2). The forecast
for Americas video equipment production is given in Figure 4-3 and Table
4-2. Although color televisions represent the dominant slice of revenue
production in the Americas, new technology developments are pushingproduction rates of VCRs and set-top boxes to much higher levels. The"other video" equipment category includes items such as LCD TV, blackand-white TV, video accessories, and various emerging products. Table 4-3
lists major North American video research and design and manufacturinglocations.
Major announcements related to video R&D and manufacturing investments in the Americas include the following:• JVC completed production of its new Americas color TV manufacturing
facility in Tijuana, Mexico, and closed its older facility in New Jersey.
The new factory plans to produce 600,000 color sets in 1996 and thenboost production to 1 million sets in 1997. JVC will also start to assemble
4:3 aspect ratio projection TVs in 1997 at the facility.
• Mitsubishi Corporation established a new television R&D center inOrange County, California.
• Philips Consumer Electrorucs added complete new production lines
at its facility in Ottawa, Ohio, to give it the capacity to turn out 500,000
32-inch tubes and 300,000 35-inch tubes annually. The 32-inch production began in summer 1996. Production of 35-inch sets will start in 1997.
Philips also armounced that it would raise its prices by 6 percent to 8
percent for the picture tubes it sells to other TV and monitor manufacturers. It noted that the increase was necessary because of a number offactors, including increasing glass prices and the need to develop
higher-quality displays suited to digital television.
MSAM-WW-MT-9602©1996 Dataquest

25

26

Consumer Multimedia Semiconductor and Applications Worldwide

Figure 4-1
Worldwide Video Equipment Production Revenue Forecast
Millions of Dollars•

other VideoEl

Digital Cable/
Satellite Set-Top
Interactive Boxes

Set-Topm Analog
Decoders
m HDTVm Camcorders

D Video-CD Players
S DVD-Video Players
T
1993

I
1994

I

T

1995

1996

I
1997

I
1998

r
1999

2000

^a

VCRs

^

Color TVs

Source: Dataquest (September 1996)

Table 4-1
Worldwide Video Equipment Production Revenue Forecast (Millions of Dollars)
Segment

1993

Color TVs

24,372

VCRs
DVD-Video Players
Video-CD Players

1995

1996

1997

1998

1999

2000

24,687 25,252 26,493 27,871 29,212 30,714 32,251
10,521 11,035 10,569 10,395 10,294 9,838 9,374 9,049
2,772
0
154
589
3,406
0
0
1,443
17
242
735 2,115 2,768 3,078 3,240 3,238

Camcorders
HDTVs
Analog Set-Top Decoders
Digital Cable/
Satellite Set-Top
Interactive Boxes
Other Video
Total

1994

4,984

4,942

5,037

96
1,107

138
1,388

8

910

420

NM
34.5

5,590

2.1

1,890

40.0

846

1,378
564

485

4,867

5,981

7,398

-18.0
39.7

2,062
3,023 3,544 3,606
1,523
51,055 54,872 58,991 63,168 66,912

23.6
7.8

352

5,444
942

5,485
1,198

1,309

1,131

970

1,020
1,250
42,015 43,872 45,894

5.0
-3.1

5,601

5,350
735

1,390

CAGR (%)
1995-2000

3,159

3,932

NM = Not meaningful
Source: Dataquest (September 1996)

MSAM-WW-MT-9602©1996 Dataquest

October 14,1996

27

Video Equipment

Figure 4-2
Regional Share of Video Equipment Production Revenue
19 95

/
/

Asia/Pacific
(33%)

\

j - ^
\

2000

Americas
(24%)

\
/

>v

Japan
C29%)

\

Americas(22%)\

Europe
\ ^

m
\ ^ ^

1

\
\

Asia/Pacific
(43%)

I

/ \

V

/
\

/
Nw

/

Europe\1(16%) m

Japan
(19%)

\^

^
J ^

Total = $67 Billion

Total = $46 Billion

96612E

Source: Dataquest (September 1996)

Figure 4-3
Americas Video Equipment Production Revenue Forecast
Millions of Dollars
16,000DQ] others

1
1993

^

Digital Cable/
Satellite Set-Top
Decoders

Q

Analog Cable/
Satellite Set-Top
Decoders^

Camcorders

H

VCRs

^

Color TVs

"i
I
1
I
T
I
1994 1995 1996 1997 1998 1999 2000
9661 S3

Source: Dataquest (September 1996)

i\/lSAI\/l-WW-l\/IT-9602©1996 Dataquest

October 14,1996

28

Consumer Multimedia Semiconductor and Applications Worldwide

Table 4-2
Americas Video Equipment Production Revenue Forecast (Millions of Dollars)
CAGR (%)
1995-2000

Segment

1993

1994

1995

1996

1997

1998

1999

2000

Color TVs

7,894
292

8,507

8,963

10,619

5.7

385

476

11,192552

11,818

313

9,734
307

10,271

305

561

12.4

Camcorders

31

8

0

0

0

0

0

NM

Analog Cable/
Satellite Set-Top
Decoders

556

689

570

465

401

353

0
189

150

-23.4

Digital Cable/
Satellite Set-Top
Decoders

6

400

930

1,392

1,433

1,557

1,906

2,074

17.4

Others

140

145

148

155

164

170

176

185

4.6

Total

8,919

10,054

10,923

12,054

12,653

13,17514,015

14,788

6.2

VCRs

i

NM = Not meaningful
Source: Dataquest (Septenfiber 1996)

Table 4-3
North American Video R&D and Manufacturing
Company

R&D Centeri

Manufacturing Sites

Daewoo (Orion Electric)

San Luis Rio Colorado, Mexico;

MexicaU, Mexico
EmersonNorth Bergen, New Jersey

North Bergen, New Jersey

HitachiTijuana, Mexico

JVC (Matsushita)

Tijuana, Mexico

LG Electronics

MexicoMatsushita
Vancouver, Washington

Franklin Park, Illinois;

Mitsubishi

Brazelton, Georgia
Santa Ana, California

Brazelton, Georgia
Santa Ana, California

Orange Coimty, California
PhilipsThomson Consimier

Knoxville, Teimessee

Greenville, Termessee; Ottawa, Ohio; Mexico

Indianapolis, Indiana

Bloomington, Indiana; Marion, Indiana; Mexico

SamsungTijuana, Mexico

Sanyo

Tijuana, Mexico

Sony

San Jose, California

ZenithGlenview, Illinois

San Diego, California; Tijuana, Mexico
Mount Pleasant, Permsylvania
Melrose Park, Illinois; Mexico

Source: Dataquest (September 1996)

i
MSAM-WW-MT-9602©1996 Dataquest

October 14,1996

Video Equipment

29

Sanyo Video Components completed a $25 million expansion with the
opening of its second plant in Tijuana, Mexico. The expansion tripled
Sanyo's local production capacity for audio and video parts. The newfacility can produce 3 million flyback transformers and 2.5 million
tuners annually. The first plant, which opened in 1993, produces about
6 million deflection yokes a year. Following the kidnapping of a Sanyo
executive in Mexico during 1996, concerns were raised that Sanyo andother Japanese manufacturers could pull back investment in Mexico if
security became a significant concern.
Thomson Consumer Electronics has begun expansion of its color TV
and picture tube operations in North America. It plans to spend $52 million to expand capacity at its picture tube plant in Marion, Indiana. The
company recently boosted production of 25-inch color tubes. The new
expansion will increase production of 31-inch and 35-inch tubes by
20 percent and allow for start-up of production of 32-inch tubes. The
plant currently produces 4 million of Thomson's total U.S. output of
6.5 million tubes. Thomson will also invest $2 million to double the production capacity of projection TVs at its main color TV manufacturingsite in Bloomington, Indiana.
LG Electronics, formerly known as Goldstar, acquired a 57.5 percent
interest in Zenith in 1995. Part of the LG Electronics investment will
enable Zeiuth to make improvements such as upgrading its Melrose
Park, Illinois, and Mexico picture tube plants. Zenith broke ground forthe first phase of a $150 million expansion of its Melrose Park facility inspring 1996. The first investment of $80 million will allow the plant toincrease production capacity by 10 percent. The second phase of investment is expected to give the plant the capability to produce larger-size
picture tubes. It is equipped to manufacture 19-inch, 20-inch, 25-inch,
and 27-inch tubes. Zenith uses tubes produced at this plant in its own
TV sets and also sells them to other TV manufacturers.
Daewoo subsidiary Orion Electric is investing $180 million in a color
tube plant in Mexicali, Mexico. The investment will boost production
capacity at the site to 4 million tubes annually. Daewoo also expanded
its San Luis Rio Colorado plant to produce 1.5 million VCRs each year.
; Sony plans to become the second Americas region manufacturer of
VCRs and will invest $9.3 million in a plant to be located in Tijuana,
where it already manufactures color TVs. The new plant should be
operational by spring 1997 and will ramp to produce 1 million units
annually to supply markets in the United States, Canada, and Latin
America. Output from this plant will replace VCRs now imported bySony from Malaysia. The switch will result in cost savings by lowering
inventory requirements. Sony has also indicated that the plant could be
expanded to produce other products, such as the Sony PlayStation
video game console.
JVC has entered into a joint venture with Gradiente of Sao Paulo, Brazil,
for marketing Brazilian-made VCRs, camcorders, and TVs. The venture
will use parts and components that JVC supplies to its partner for manufacturing. Brazil is the largest audio/video market in Central andSouth America.

l\/lSAM-WW-!VIT-9602©1996 Dataquest

October 14,1996

30

Consumer Multimedia Semiconductor and Applications Worldwide

Between 1996 and 2005, LG Electronics plans to invest $1 billion in alarge electronics complex near Taubate, Brazil. The complex will produce color TV monitors, CRTs, electronic home appliances, and otherparts. The first step will be to build an $86 million plant that can make3 million color TV monitors annually. Within four years, LG Electronics
plans to be the leading producer of color TV monitors in Brazil.

Market Trends
Today, worldwide video equipment demand is stratified by the following
distinguishable levels:• Replacement and additional purchase demand in industrialized countries where the first-time buyer market is nearing a saturation point• First-time purchase for low end and low cost
• Demand for hybrid products such as TV/VCR combinations• Demand for next-generation video equipment, including wide-screen
TV, HDTV, DVD, and Video-CD players
As shown in Figure 2-7, color TVs and VCRs are now found in almost all
U.S. homes. The majority of homes in the United States and Canada havemore than one TV, and many families have more than one VCR. Most purchases in these categories are for replacement or upgrade of existing products. Lower interest rates and strong new home sales stimulated consumer
durable spending beginning in the early part of 1994, which led to robust
sales of video equipment in the United States. However, in spite of higher
consumer confidence in 1995, video electronics sales growth slowed.
Newer video technologies such as direct broadcast satellite (DBS) receivers and DVD Video players present major growth opportunities. The following sections provide more detailed discussion of the high-volume
video equipment—color TVs, VCRs, and camcorders. Emerging opportunities in HDTV, Video-CD, and DVD also are discussed at the end of thischapter. Detailed information on analog and digital set-top boxes is presented in Chapter 5, where interactive products are discussed.

Color Television
Figure 4-4 and Table 4-4 present the worldwide color television production
forecast. The actions of most major color television producers indicate that
production of color TVs will take place closer to the region where they are
consumed. By virtue of the high growth of the Asia/Pacific markets, production of color TVs in that region will grow to 36 percent of the worldwide total in the year 2000. Production plans in China are so aggressivethat government leaders fear they will not be able to find export markets
for all their TV sets. Chinese officials now have instructions to enter only
into new production ventures that are considered strategically importantin the development of next-generation products. Tables 4-5 and 4-6 show
the Americas color TV market and production forecast, respectively.
Figure 4-5 shows the regional distribution of color TV production. Figures
4-6 and 4-7 show the sales mix of color TVs sold in the United States. RCA
was the leading brand in the Uruted States during 1994 and 1995. Tables
4-7 and 4-8 list leading color television brands.

MSAM-WW-MT-9602©1996Dataquest

October14,1996

Video Equipment

31

Figure 4-4Worldwide Color Television Production Revenue and Unit Shipment Forecast
Millions of Dollars

Thousands of Units
140,000

35,000

Factory Revenue
30,000

Units

1993

1994

1995

1996

1997

1998

1999

2000
966124

Source: Dataquest (September 1996)

Table 4-4
Worldwide Color Television Production Forecast
1993
Units (K)

1994

1995

1996

1997

1998

Japan
Asia/Pacific2000

CAGR (%)
1995-2000

102,861 105,748 110,527 115,171 120,085 125,443 131,172 137,408
232
234
235
237
233
233
228
230
24,372 24,687 25,252 26,493 27,871 29,212 30,714 32,251
35
32
32
33
34
33
31
31

4.5

4,482

4,757

6.8

24

24
16

Factory ASP ($)
Factory Revenue ($M)
Semiconductor
Content ($)
4,197
Semiconductor
3,346
3,379
3,424
3,824
3,592
Market ($M)
Regional Production Trends (Percentage of World by Unit Production)
Americas
Europe

1999

23

24

24

19

19

18
7

10
48

9
49

51

25
17

25
17

24
17

7

7

7

16
7

51

51

52

53

0.5
5.0
2.2

6
54

Source: Dataquest (September 1996)

l\/iSAM-WW-MT-9602©1996 Dataquest

October 14,1996

32

Consumer Multimedia Semiconductor and Applications Worldwide

Table 4-5
Americas Color Television Market Forecast
2000

CAGR(%)
1995-2000

39,017 40,567 42,450
294
294
294
11,471
11,927
11,02812,480

3.9
0
3.9

1994

1995

1996

1997

33,817 36,331
292
318
10,754 10,609

35,086294

37,512294

10,31536,082294
10,608

1,884
368

2,532
344

2,804
337

871

945

3,043
333
1,013

1993

1998

1999

Color TV Only
Units (K)Factory ASP $Factory Revenue ($M)
TV/VCR Combination
Units (K)Factory ASP $Factory Revenue ($M)

693

2,333
350
817

3,298
331
1,092

3,569
330
1,178

3,872
330
1,278

8.9
-0.8
8.0

Note: Includes direct view stereo and nonstereo TV, does not Include monochrome TV, color LCD TV, or projection TV.
Source: Dataquest (September 1996)

Table 4-6
Americas Color Television Production Forecast
1993

1994

1995

1996

1997

1998

Units (K)23,408 24,976 26,850 28,461 29,600 30,340
347
337
341
334
342
350
Factory Revenue ($M)
7,894 8,507 8,963 9,734 10,271 10,619
Semiconductor Content ($)
29
29
29
30
31
29
677
772
900
Semiconductor Market ($M)
731
823
931
Factory ASP ($)

CAGR(%)
1995-2000
4.4
31,705 33,290
1.2
353
355
5.7
11,192 11,818
1.5
31
31
6
978 1,032
1999

2000

Source: Dataquest (September 1996)

Figure 4-5
Regional Share of Color Television Production Revenue
1995

2000

Total = $25 Billion

Total = $32 Billion

Source: The Scout Report®/The Polk Company

MSAM-WW-MT-9602©1996 Dataquest

October 14,1996

Video Equipment

33

Figure 4-6
U.S. Color Television Sales by Screen Size for 12-Month Period (Unit Basis)

Under 18 Inches

19 to 20 Inches

25 to 27 Inches

December 1994

30 to 35 Inches

December 1995
Over 39 InchesE1
25
Percentage of Unit Shipments

March 1996
1^

30

35

40
966126

Source: The Scout Repor1®/The Polk Company

Figure 4-7
U.S. Color Television Sales by Type for 12-Month Period (Unit Basis)

Direct View Color TVs

TVA/CR Combinations

Projection TVs

LCD TVs

December 1994
December 1995

Monochrome TVs
"T"
40

H

December 1996 (Estimated)

T"
50

^ ^
70

^ ^
60
Percentage of Unit Shipments

80

90

Source: The Scout Repor1®/The Polk Companyl\/ISAI\/l-WW-i\/IT-9602©1996Dataquest

October14,1996

34

Consumer Multimedia Semiconductor and Applications Worldwide

Table 4-7
U.S. Color Television Brand Share Leaders, First Quarter 1995
through Fourth Quarter 1995 (Percent)
Brand
RCA
Magnavox
Zenith
Sony
GE
Sharp
Sanyo
Panasonic
EmersonToshiba
Others
Total

Unit Market Share (%)
16.4
15.8
12.6
7.9
6.3
5.4
5.3
3.9
3.7
3.2
19.5
100.0

Revenue Market Share (%)
17.5
13.9
11.9
10.6
4.3
3.3
3.2
4.2
1.9
5.8
23.4
100.0

Source: The Scout Report®/The Polk Company

Table 4-8
U.S. Color Television Brand Share Leaders, Second Quarter 1995
through First Quarter 1996 (Percent)
Brand
Magnavox
RCA
Zenith
Sony
GE
Sanyo
Sharp
Panasonic
EmersonToshiba
Others
Total

Unit Market Share (%)
16.3
16.2
12.4
7.5
6.5
5.3
5.2
4.0
3.5
3.2
19.9
100.0

Revenue Market Share (%)
14.4
17.3
11.8
9.7
4.4
3.2
3.3
4.2
1.8
6.0
23.9
100.0

Source: The Scout Repon®/The Polk Company

MSAM-WW-MT-9602©1996Dataquest

October 14,1996

Video Equipment

35

Key market trends and product developments affecting the color television market include the following:• TV/VCR combinations will continue to grow significantly as several
manufacturers introduce new models. These are preferred by families
as a unit for children because they save room and are easy to operate.
• Direct view screens of 20 inches and less are losing favor to screen sizesof 25 inches and more. A continued shift of the sales mix to larger screen
sizes is expected. Screen sizes over 30 inches already 14 percent of themarket in the United States for the 12 months ended March 1996.
• Stereo color TVs continue to expand their U.S. market presence. In
June 1996, sales of stereo TVs set a new market share record with a50.3 market share, 1.06 million TVs, during that month.
• Plasma displays made a big splash at the fall 1995 COMDEX show.
These displays are about 4 inches thick and are expected to find theirearliest application in "hang-on-the-wall" TVs. It appears that a market
that was always "just 10 years away" is finally close to becoming a reality. Fujitsu and Panasonic were exhibiting the most impressive large flat
panel designs based on their color plasma technology. Sony also demonstrated its Plasmatron display, which employs plasma-addressed liquid crystal (Pale) technology. Mitsubishi has also announced plans to
introduce a flat panel TV display using plasma technology. Fujitsu looks
like it is probably about a year ahead of other plasma panel competitors.
Its 42-inch color plasma display featuring 300-candela-per-square-meterbrightness, a wide aspect ratio of 16:9, 24-bit color, 852 x 480 resolution,a 160-degree viewing cone, and a 70:1 contrast ratio outclassed virtually
everything else in sight and captured constant media attention at theshow. Major investments in research and production capacity havebeen announced by leading Japanese television manufacturers. Market
introductions of plasma displays are scheduled to begin in the second
quarter of 1996. However, pricing on these displays will create a barrier
to early market acceptance. Fujitsu is targeting a price of $5,000 duringmass production in 1996. This means that complete consumer systems
should be available for less than $10,000.
• New technology developments are paving the way for introduction of
three-dimensional televisions (3-D TVs) that allow viewers to see 3-D
images without wearing special glasses. Sanyo has already exhibited a
3-D video projection system and announced that it intends to begin
shipping systems outside Japan in late 1996. Shipments for use in commercial applications, arcade games, and medical equipment began in
1994. Sanyo's 40-inch 3-D LCD system employs twin LCD projectorsthat cast the images onto a double lenticular lens screen. This screenthen separates the signals into right side and left side images, resulting
in the illusion of 3-D images without the use of special glasses. Also, acompany called HinesLab Inc. announced in September 1995 that it had
patented a display system that achieves true stereo 3-D images. The
company claims that its system uses conventional optics and is built
into a single display panel that affords users a greater degree of freedom, allowing anyone to sit in front of a monitor and experience

MSAI\/l-WW-l\/IT-9602©1996 Dataquest

October 14,1996

36

Consumer Multimedia Semiconductor and Applications Worldwide

realistic moving images. Finally, engineers from the University of
Alabama have demonstrated a prototype that pumps moving holographic stereogram images through an active matrix LCD. The prototype, called ICVision, is constructed using a 1-inch diagonal active
matrix LCD from Kopin Corporation and a diffractive optical elementfor directing light through a series of slits, Mrhich form the left and righthalves of the stereo image.
• Digital micromirror display (DMD) technology continues to beadvanced by Texas Instruments. Texas Instruments has been working
on DMD technology for decades. It has now developed a DMD device
that measures 2 centimeters squared and holds between 300,000 and
480,000 movable aluminum mirrors, each about 16 square microns. By
controlling the mirrors' movement, the device projects a brighter image
than today's LCD-based video projectors. Employing processing techniques the company calls Digital Light Processing (DLP), TI now supplying evaluation kits for purchase by selected applicants. Thesesubsystems, called DLP Digital Video, support a 640 x 480 display andare being shipped in the thousands of units at prices between $6,850
and $5,200. TI has also opened a center to showcase its digital imaging
technology. The DMD device is now poised to make a direct assault on
TFT LCDs in at least one application area, projection systems. If the
micromirror begins to capture market share, it will be one of the few
technologies developed since the commercial introduction of TFT LCDs
to establish itself—by matching performance at about an equivalent
price—in a specific application now dominated by the TFT LCD.
• The "V-Chip" (the V stands for violence) that identifies programs bycontent and allows consumers to block out objectionable shows wasintroduced in 1994. Although the major TV networks have voiced opposition to this scheme, legislation has been passed in the U.S. that mandates the use of V-chip technology in new TV sets. The V-chip will findits way into set-top boxes, VCRs, and TVs. Zilog Inc. has alreadyannounced that its Z89300 TV control and on-screen display chip family
have the recommended TV program rating decoding and control
capability. In volume production, this chip will be priced in the $4-to-$6
range. Europe has now launched its own debate over V-Chip technology. Adoption of the technology in Europe faces high hurdles becauseof opposition to a single standard for rating content. With 15 different
countries and even more cultures, a common standard for moral
decency will be hard to establish.
Functionally, color TVs have reached near-maturity, and the focus is being
placed on improvement of productivity in the manufacturing process
through digitization. Integration of peripherals devices into semiconductor chips allows reduction of components, and thus reduction of inspection/adjustment points. Also, an increasing use of microcomputersenables signal processing control by computer bus, leading to standardization of chassis design. Figure 4^8 shows a block diagram of a currently
available multifunction, high-performance color TV.

MSAM-WW-lVlT-9602©1996 Dataquest

October 14,1996

CO>

Figure 4-8
Block Diagram of Multifunction, High-Perf ormance Color TV

\7
CO

<J>

o

lo

Aritenna
Tuner

VIF

V/C

SIF

Synchro/Separator/
HVOSC

@

y]

CD
CO

cr>
o

\J

CD

v>

Power
Supply

o
o

o
cr
CD

Source: Dataquest (September 1996)
CD
CD
CT>

speaker

Audio Output

lU

Voltage
Regulator

CRT Drive

Vertical Output
Horizontal Drive

Horizontai
Output38

Consumer Multimedia Semiconductor and Applications Worldwide

Major technological trends in electronic circuits for video equipment areclassified as follows:• Digital processing of image, voice, and mechanical control signals.
Digital processing of video and voice signals for low-end products has
been incorporated into ICs, except for CRT video and horizontal output
circuits, which are configured by discrete devices.
• Ghost cancellation technology. Since the adoption of the Ghost Cancellation Reference (GCR) by the U.S. Federal Communications Commission (FCC) in May 1993, awareness of its technology has increased.
Many more statioris are including the reference in tiieir transmission.
Ghost cancellation technology is also being introduced to the publicthrough a consumer standalone unit. With time, ghost cancellation will
become more widely accepted, and the technology will become a commonly integrated feature of the television receiver or VCR.
• Interframe signal processing using TBC technology and semiconductor
memory. Improved-definition TV (IDTV) and enhanced definition TV(EDTV) use digital memories to scan 525 lines at a frequency twice thatused in the National Television Standards Committee (NTSC) standard.
The use of digital memory also allows currently available color TVs toadopt technologies to improve picture quality by eliminating or
reducing cross-color and jitter.
• Closed-captioning decoders. Closed-captioning decoders for the
hearing impaired are now mandatory on U.S. market TVs.
• Use of the bus system for interactive control of ICs. In particular, the12 bus technology patented by Philips is beginning to be adopted bycolor TVs.
• Incorporation of new features. Digitization of signal processing has promoted incorporation of new features, such as picture in picture, digitalstill, and on-screen display.

VCRs
Figure 4-9 and Table 4-9 show the forecast for worldwide VCR production.
With high household penetration rates in the United States and popular
alternative products such as Video-CD players in Japan and Asia/Pacificcountries, Dataquest expects unit shipments and revenue for the next five
years to remain essentially flat through 1997. Sales are now sustained byreplacement, upgrades, and households adding a VCR. As new DVD
Video players assert themselves in the market, they will cause the market
for VCRs to start to decline, beginning in 1998. With the introduction ofrewritable DVD players, the decline of the VCR market will accelerate,
starting in the year 2000. Asia/Pacific is now the dominant region for VCR
production. Figure 4-10 shows the distribution of VCR production by

MSAM-WW-MT-9602©1996 Dataquest

October 14,1996

Video Equipment

39

Figure 4-9Worldwide VCR Production Revenue and Unit Shipment Forecast
Millions of Dollars

Thousands of Units

12,00070,000

1993

1994

1995

1996

1997

1998

1999

2000
866129Source: Dataquest (September 1996)

Table 4-9
Worldwide VCR Production Forecast

Factory Revenue ($M)
Semiconductor Content ($)

1993
1994
1995
1996
1997
1998
1999
2000
53,133 57,930 58,821 60,456 62,276 61,613 59,583 58,465
172
157
198
190
165
160
155
180
10,521 11,035 10,569 10,395 10,294 9,838 9,374 9,049
42
41
41
41
43
44
43
42

Semiconductor Market ($M)

2,297

Units (K)Factory ASP ($)

2,569

2,516

2,512

2,620

2,501

2,426

2,383

4
21

4

17

3
18

18
62

15
64

13
62

Regional Production Trends (Percentage of World by Unit Production)
Americas22223Europe

12

13

Japan

30
55

27
58

Asia/Pacific

15
22
62

16
20
62

CAGR (%)
1995-2000
-0.1
-2.9
-3.1
-1.0
-1.1

23
12
61

Source: Dataquest (September 1996)

MSAM-WW-IVIT-9602©1996 Dataquest

October 14,1996

40

Consumer Multimedia Semiconductor and Applications Worldwide

Figure 4-10
Regional Share of VCR Production Revenue
1995

2000

Americas (3.0%) •Americas (6.2%)

Totals $10.6 BiltTon

Total = $9.0 Billion
3S6130Source: Dataquest (September 1996)

region. Tables 4-10 and 4-11 show the Americas VCR market and production forecast, respectively. Tables 4-12 and 4-13 list the leading VCR
brands. Key trends to note among VCRs are as follows:• The most popular upgrade feature is stereo audio. The 1996 market forhome VCR will be heavily stereo-oriented. There will probably be a
decline in the sale of mono models in the United States. Other advanced
features include special effects with four heads and the S format, which
offers more effective scan lines.
• The VCR Plus programming standard for simplified program recordingis nearly a standard feature on step-up VCRs, and advanced features
such as the Video Guide System are penetrating the VCR.
Table 4-10
Americas VCR Market Forecast
1993
Units (K)Factory ASP ($)
Factory Revenue ($M)

15,249
229
3,492

1994
16,751

1995
17,816

1996

1997

18,427

218
3,652

206
3,670

195
3,593

19,038
192
3,655

1998
19,303
195
3,764

1999

2000

CAGR (%)
1995-2000

19369
197
3,816

18,843

1.1

200
3,769

-0.6
0.5

Note: Does not include TVA/CR combinations or camcorders
Source: Dataquest (September 1996)

MSAI\/l-WW-MT-9602©1996 Dataquest

October 14,1996

Video Equipment

41

Table 4-11
Americas VCR Production Forecast

Units (K)Factory ASP ($)
Factory Revenue ($M)
Semiconductor Content ($)
Semiconductor Market ($M)

1993

1994

1995

1996

1997

1,238
236
292

1,313
232

1,365
229

305
31
41

313
31
43

1,378
223
307

1,756
219
385
34

31
39

33
45

59

1998
2,127
224
476
34
72

1999
2,442
226
552
34
84

2000
2,450
229
561
34
84

CAGR(%)
1995-2000
12.4
0
12.4
1.8
14.4

Source: Dataquest (September 1996)

Table 4-12
U.S. VCR Brand Share Leaders, First Quarter 1995 through Fourth Quarter 1995 (Percent)
Unit Market Share (%)
13.5

Revenue Market Share (%)
14.5

Magnavox

12.6

Panasoruc

8.0

12.2
8.7

Emerson

7.5
5.9

5.4
7.5

JVC

5.5
5.1

Sharp
GE

5.0
4.8

Sanyo
Others

3.4
28.7

28.0

Total

100.0

100.0

Brand
RCA

Zenith
Sony

6.2
6.1
4.5
4.2
2.7

Source: The Scout Repon®/The Polk Company

IWSAI\/l-WW-MT-9602©1996 Dataquest

October14,1996

42

Consumer Multimedia Semiconductor and Applications Worldwide

Table 4-13
U.S. VCR Brand Share Leaders, Second Quarter 1995 through First
Quarter 1996 (Percent)
Brand
Magnavox
RCA
Panasonic
EmersonSony
Zenith
JVC
Sharp
GE
Sanyo
Others
Total

Unit Market Share (%)
13.7
13.1
7.9
7.0
5.8
5.8
5.5
5.1
4.7
3.4
28.0
100.0

Revenue Market Share (%)
12.9
14.0
8.6
5.0

in
5.8
6.6
4.6
4.1
2.7
28.0
100.0

Source: The Scout Report®/The Polk Company

In terms of basic features and functioris, VCRs have reached a stage ofnear perfection. Basic signal processing circuits are increasingly digitizedby using analog-to-digital converters (ADCs) and digital-to-analog converters (DACs) and are eventually integrated into semiconductor chips
incorporating digital signal processors (DSPs). New developments are
expected in restoration of original signals, in addition to accurate replay,
as well as the ability to provide output according to diverse consumer
demand. Digitization has boosted the number of ICs capable of handling
NTSC, PAL (European), and SECAM (French) formats. Also, the use of
on-screen display ICs and filter-equipped ICs is reducing the number ofcomponents and adjustment points at the factory. Copy-protection circuitry from Macrovision is becoming more popular as both Philips andTexas Instruments are producing copy-protection chips. Figure 4-11
shows a block diagram of a typical VCR.
A new standard called Data-VHS (D-VHS) is being developed by VCR
manufacturers, led by JVC. The new D-VHS system will be backwardcompatible with the VHS format and would also add a bitstream recording capability to allow recording of compressed digital data. The standard
would use existing Super VHS media and would be capable of offering
49 hours of recording per cassette. D-VHS will also record analog broadcasts such as NTSC and PAL. This feature would open new applications
for VCRs in uses such as data storage and multimedia systems. JVC has
consulted with Hitachi, Matsushita, and Philips Electronics in developing
this new standard. Also, the following companies have expressed support
for the D-VHS format: LG Electronics, Mitsubishi Electric, Samsung
Electronics, Sanyo Electric, Sharp, Sony, Thomson Consumer Electronics,
and Toshiba. Thomson is looking at D-VHS as an extension of its RCA
Digital Satellite System (DSS) equipment line. D-VHS could record theactual digital direct-to-home satellite feeds of DirecTV and U.S. Satellite
Broadcasting (USSB) programming.

MSAM-WW-l\/IT-9602©1996Dataquest

0ctober14,1996

Crt

>

Figure 4-11
Block Diagram of a Typical VCR

Y
CD

a>

Antenna

CD

ro

Tuner

VIF/SIF

SystemMicrocontroller

On-Screen
Display

Additional
FunctionVideo Switch

@

Audio

k
CD
CO
CTJ
O
CD

SJ"

JO

CD
C/J

Motor Driver

FLD
Microcontrotler

AudioA/ideo
Head

Motor

^
O
o
I-+

o
aCD
CD
C35

Source: Dataquest (September 1996))

44

Consumer Multimedia Semiconductor and Applications Worldwide

The inclusion of digital recording capability will add $300 to $400 to theretail price of a VHS VCR. The first D-VHS VCRs hit the market in mid1996. The higher price will present a significant barrier to market acceptance. A survey conducted by the Electronic Industries Association
explored U.S. consumer interest in a digital VCR. When digital VCR was
described to them, 29 percent of the VCR owners said they would be interested in purchasing it and 22 percent were unsure. However, when asked
about the price they would be willing to pay, 25 percent of respondents
said they would pay $400,11 percent would pay $600, 3 percent would
pay $800, and 5 percent would pay $1,000.

Camcorders
Figure 4-12 and Table 4-14 present Dataquest's forecast for worldwide
camcorder production. Growth in revenue and shipments will be healthyduring the next five years. Tables 4-15 and 4-16 present the Americas
market and production forecast, respectively. Figure 4-13 shows the production distribution by region. Japan is the primary location for production of camcorders. In spite of some shifting of production to Europe,
Japan will still produce the large majority of camcorders through 2000,
Tables 4-17 through 4-18 show the leading camcorder brands in the
United States.

Figure 4-12

Worldwide Camcorder Production Revenue and Unit Shipment Forecast
Millions of Dollars

Thousands of Units

14,000

6,000

]

1993

1994

1995

1996

1997

• " "

1998

I

" • • "

I

1999

2000
S6€132

Source: Dataquest (September 1996)

MSAM-WW-MT-9602©1996 Dataquest

October 14,1996i

45Video Equipment

Table 4-14
Worldwide Camcorder Production Forecast
1996
1997
1998
1999
2000
1995
8,833 9,659 10,457 11,410 12,071 12,683 13,474 13,994
482
432
399
564
512
469
451
416
4,984 4,942 5,037 5,350 5,444 5,485 5,601
5,590
112
117
114
111
108
144
133
125
1993

Units (K)Factory ASP ($)
Factory Revenue ($M)
Semiconductor Content ($)

1994

Semiconductor Market ($M)

1,372 1,418
1,276 1,288 1,306 1,330
Regional Production Trends (Percentage of World by Unit Production)
Americas
Europe

1
10

0
14

Japan

88
1

81
4

Asia/Pacific

0

1,489

1,512

15

0
17

0
18

0
19

0
20

0
20

81
4

79
4

78
4

77

77

4

4

76
4

CAGR(%)
1995-2000
6.0
-3.7
2.1
-2.9
3.0

Source: Dataquest (September 1996)

Table 4-15
Americas Camcorder Market Forecast

Units (K)

1994

1995

1996

1997

1998

1999

2000

3,428

3,594

3,836

4,012

4,201

4,400

4,612

630

621
2,232

596

586

578

577

-0.6

2,286

2,351

581
2,441

4,834
577

2,543

2,661

2,789

4.1

Factory ASP ($)
Factory Revenue ($M)

CAGR (%)
1995-2000

1993

2,159

4.7

Source: Dataquest (September 1996)

Table 4-16
Americas Camcorder Production Forecast
1993

1994

1995

1996

1997

1998

1999

2000

CAGR (%)
1995-2000

Units (K)

50

15

0

0

0

0

0

0

NM

Factory ASP ($)

611
31

0
0

0

0

0

0
0

0

0
0

0
0

NM
NM

92

555
8
87

0

0

0

0

0

0

NM

5

1

0

0

0

0

0

0

NM

Factory Revenue ($M)
Semiconductor Content ($)
Semiconductor Market ($M)
NM = Not meaningful
Source: Dataquest (September 1996)

MSAIVI-WW-IVIT-9602©1996 Dataquest

October 14,1996

46

Consumer Multimedia Semiconductor and Applications Worldwide

Figure 4-13
Regional Share of Camcorder Production Revenue
1996

2000

Asia/Pacific (3.1%)—\ i— Americas (0%)

Asia/Pacific (3.0%) —Total = $5.03 Billion,— Americas (0%)

Total = $5.6 Billion
S66133

Source: Dataquest (September 1996)

Table 4-17
U.S. Camcorder Brand Share Leaders, First Quarter 1995 through Fourth Quarter 1995
(Percent)
Brand
Sony
RCA
Panasonic
JVC
Sharp
GE
Hitachi
Magnavox
Samsung
Canon
Others
Total

Unit Market Share (%)
22.8
18.7
15.6
12.6
8.6
4.3
4.2
3.5
1.9
1.8
6.0
100.0

Revenue Market Share (%)
26.1
18.3
15.7
11.9
9.4
3.2
4.8
2.6
1.2
1.9
4.9
100.0

Source: The Scout ReporUg/The Polk Company

MSAM-WW-MT-9602©1996 Dataquest

October 14,1996

47

Video Equipment

Table 4-18
U.S. Camcorder Brand Share Leaders, Second Quarter 1995
through First Quarter 1996
Brand
Sony
RCA
Panasonic
JVC
Sharp
GE
Hitachi
Magnavox
Canon
Samsung
Others
Total

Unit Market Share (%)
22.5
19.1
16.3
12.3
8.5
4.5
3.3
3.0
2.3
2.2
6.0
100.0

Revenue Market Share (%)
25.6
18.6
16.5
11.7
9.3
3.3
3.9
2.4
2.5
1.5
4.7
100.0

Source: The Scout Repor1®/The Polk Company

Key trends to note among camcorders are as follows:• More than 23 percent of U.S. homes have camcorders, although it is primarily homes with children that are buying camcorders. Aggressive
pricing by some companies has pushed entry-level pricing well below$400. The hottest price points remain in the $700 to $800 range.
• The strong movement to compact versions is helping fuel new sales.
S versions are beginning to win over resolution-conscious movie
makers.
• Viewfinders that rely on LCDs rather than on traditional optical techniques are contributing to the impressive market surge for camcorders.
The percentage of camcorders equipped with LCD monitors is morethan doubling annually in Japan and abroad, according to statistics
from Sharp, a leader in LCD technology implementation in camcorders.
Sharp predicts that camcorders with built-in LCD monitors will represent 25 percent of all U.S. camcorder sales in 1996. Matsushita claims thenumber will be closer to 16 percent. Hitachi, JVC, Matsushita, Minolta,
Sharp, and Sony all introduced new LCD-based products in 1996.
• The VHS-C format appears to be capturing a greater share of the
U.S. market at the expense of the full-size VHS camcorders. According
to the Photo Marketing Association, in 1991, the full-size VHS
standard represented 42 percent of the U.S. camcorder market, with
8mm accounting for 37 percent and VHS-C for 22 percent. By 1994, themix had shifted to: VHS, 26 percent; VHS-C, 38 percent; and 8mm,
36 percent. In 1995, it appeared that VHS-C and 8mm were neck andneck at 41 percent, and VHS was declining to 18 percent of the market.
(JVC claims that VHS-C captured 44 percent of the market, comparedwith 37 percent for 8mm in 1995.) JVC is now forecasting that, by theend of 1996, VHS-C will grow to 46 percent of the market while VHS
sinks to 15 percent and 8mm holds steady at 37 percent.

MSAM-WW-IMT-9602©1996Dataquest

October 14,1996

48

Consumer Multimedia Semiconductor and Applications Worldwide

Figure 4-14 shows a block diagram of a typical camcorder. Some technology features and trends with implications for semiconductor opportunities are:• Charge-coupled device (CCD) makers are increasing their share in the
camcorder market. CCDs are becoming smaller and are accommodating
more picture elements.
• CCD output signals, which have been conventionally analog processed,
are converted to digital signals through a 10-bit DAC and, after luminance and chrominance (Y/C) signal processing by the DSP, are sent to
the processing stage for functions such as blur correction and electronic
zooming. Auto focus/auto iris/auto white balance (AF/AE/AWB)
detection has been integrated into digital circuits on a single chip.
Peripherals circuits related to blur correction consist of fuzzy logic circuits for motion detectors, blur-correction control, and memory control,
which are incorporated into standard cells (DSPs).
• Mechanism control is handled by an 8-bit microcomputer (servo microcomputer). With the increasing emphasis on portability, development
efforts are being shifted from low power consumption to lower operation voltage to 3.3V (3V). Further demand for high-performance camcorders will encourage digital processing, incorporation of a battery
charge circuit into a single chip, and development of a single/hybrid
chip.
• In the video equipment market, advanced technology developed forindustrial use (broadcast equipment) is finding its way to consumer
applications that demand much lower levels of picture quality. Various
technologies unique to consunier products, such as blur correction,
have been commercialized. At the same time, because color TVs, VCRs,
and camcorders share common features, new technology developed forany of them is diffused to others.
• Vibration or shake compensation has become a key feature in camcorders, equal in importance to compact, lightweight design andstrong-magnification zooms. There are two approaches to shake compensation, one electronic and the other optical. Recently, almost all but
the low-end camcorders have adopted some version of electronic shakecompensation.
• With the adoption of digital camera circuits, many camcorders feature
digital zooms allowing greater magnification. For example, combining a
12X optical zoom lens with a 2X digital zoom function makes it possible
to record images at 24X magnification.

Digital Camcorders
The first digital camcorders were introduced in 1995. These camcorders
are based on the Digital Video (DV) format specification for home-use
digital camcorders tiiat was agreed to by 55 manufacturers as part of the
HD Digital VCR Conference. Matsushita and Sony were the first manufacturers to offer digital camcorders, followed by JVC and Sharp. Hitachi is
expected to introduce its digital camcorder. The Hitachi camcorder willrecord on a floppy disk that can be inserted into a PC instead of on a tape.
As with most of the new digital video products, the steep pricing of these
new camcorders will limittihepotential market to semiprofessionals andthe top 1 percent to 2 percent of the consumer camcorder market. Pricing
on these early models ranges from $2,200 to $4,700.
MSAM-WW-MT-9602©1996 Dataquest

October 14,1996

CO>

Figure 4-14
Block Diagram of a Typical Camcorder

VflAM

CD

a>
CD

1

rsD

CCD

Focus
Driver-ADC

CDS, AGC

Zoom/Iris
DriverCamera Y/C
IVIicrocontroller-

Y/C DSP

MotionDetection
Compensation

1

1

AF/AE/AWB-

Microcontroller __Amplifier

@
CD
CD
O)

DAC

MotionMicrocontroller

Audio Signal
Processor

V/C Sig
ProcesO(UofLCD Panel
View Finder

SystemMicrocontroller

-O

c:

LCD
Controller

1
Sensor
Amplifier_Servo
Microconlroiler

-

1
DRAM
DriverLoading
Driver„Capstan
Driver
(

O
o

r-t-

Power
Supply_ Charge Control _lor Battery

O

cr
CO

CD
CD
CT>

Source: Dataquest (September 1996)

DC-DC
Converter^^V ^ ^ ; ^HeadAmplifie50

Consumer Multimedia Semiconductor and Applications Worldwide

To record image signals, camcorders using the DV format adopt the digitalcomponent system, recording luminance and chrominance signals separately. This format provides a resolution of 500 horizontal lines. Instead of
the standard 0.3-MHz color signal bandwidth, the DV format works witha 1.4-MHz bandwidth. The format also calls for a built-in time base correction (TBC) function to diminish jitter. Audio recording involves the use of
pulse code modulation (PCM) stereo. There are two possible audio modes.
For audio quality equal to that of compact discs and digital audio tapes(DAT), a 16-bit sound system using two channels and 48-KHz sampling
frequencies can be used. The specification also defines a 12-bit audio system with four channels and 32-KHz sampling frequencies. The interface
format for cormecting to personal computers is still being finalized, but it
appears that it will be based on the IEEE-1394 standard.
As mentioned previously, Matsushita was one of the first manufacturers tobring a digital camcorder to market. This first model integrated 2.5 million
transistors into five main video chips on a 0.5-micron process. Two of thechips, error correction and digital modulation devices, are produced by
LSI Logic. A PCM device is made by Mitsubishi Electric. Mitsubishi canuse the PCM chip for its camcorder with Matsushita's agreement.

HDTV
HDTV is high-definition television, a technology that provides a quantum
leap in video quality over conventional NTSC sets. Higher-quality television is everyone's desire, from the consumers who would like a better picture, to the broadcasters who would like to deliver nicer-looking content,
to the equipment vendors, who would love to sell new, high-priced products. However, other technologies have emerged—both analog and digital—that can deliver higher-quality television at a much lower price. That,
combined with the seemingly endless political hurdles HDTV must jump
before it becomes a reality, makes it questionable if it is really worth all thetrouble.

The Challenges Of U.S. HDTV
• Political: The FCC must approve the system and then allocate space inthe frequency spectrum to transmit the signals.
• Broadcasters: Head-end gear for HDTV currently is very expensive
compared with NTSC gear.
• Receivers: HDTV sets intended for consumers require very expensive
components and may never achieve enough volume to reduce costs
sigruficantly.
Political

For nine years, HDTV has been on an arduous journey through the
U.S. political process. The end to that journey appeared to be in sight inMay, when the U.S. Federal Commurucations Commission (FCC)
endorsed a standard for HDTV that had been proposed by a Grand Alliance of seven industry and research organizations. In July, the four FCC
commissioners advanced for public comment two separate proposals
based on the Grand Alliance system.

MSAM-WW-MT-9602©1996 Dataquest

October 14J996

Video Equipment

51

Both proposals license to current TV broadcasters two channels, one totransmit their signals in an analog format and another for digital television. Under the terms of the proposals, the FCC would take back thelicenses for the analog stations after about 15 years, forcing broadcasters togo fully digital. This transition period is intended to give consumers the
chance either to upgrade to new digital TVs or to purchase digital converter boxes. The only difference between the two proposals comes in the
total number of channels allocated for digital TV broadcasts. One of the
proposals would reserve all television channels for digital broadcasting.
The other proposal would allocate channels 60 to 69 to other services, suchas mobile communications.
The House of Representatives in June solidly defeated a proposal requiring broadcasters to pay for their new digital spectrum. Thus, neither of the
proposals forwarded for public comment by the FCC calls for frequency
allocation auctions. The elimination of the possibility of frequency auctions is a major victory for broadcasters, as it removes a potentially major
disincentive for them to offer HDTV programming.
However, although the actions of the FCC and the House of Representatives remove one hurdle in the way of HDTV, two major roadblocks
remain.
The first problem facing the new proposals is a coalition of entertainmentand computing leaders who oppose the Grand Alliance system. The coalition, called Americans for Better TV, contends the Grand Alliance proposal
represents inferior technology that will favor foreign suppliers at theexpense of American-based computer makers. At Sie heart of their objection to the Grand Alliance system is its inclusion of interlaced video, as
opposed to progressive scanning. Interlaced video, the traditional scanning format for broadcast television, offers lower-quality pictures and is
not suited for computer display, they contend. Led by high-profile spokespersons, including Microsoft's Bill Gates and film director Steven
Spielberg, Americans for Better TV is asking the FCC to dump theGrand Alliance proposals and adopt a less stringent approach to HDTV
standardization.
A second obstacle in the path of the FCC approval process is that the
government and industry disagree over which proposals should beapproved by the FCC. There is strong support in Congress and the WhiteHouse for the proposal that would hold out charmels 60 to 69 to auction
off for other services. The goverrunent believes these channels can be auctioned off to generate cash, in light of the fact that more than $15 billion
was garnered from wireless spectrum auctions. However, broadcasters
claim that holding out these channels would crowd digital transmissions
and cause serious sigrtal interference in some situations. Broadcasters aresupporting the proposal that would allocate all the channels for digital TV
transmissions. After giving broadcasters and other industries a chance tocomment, the FCC is scheduled to adopt final rules on the allocation ofdigital spectrum by the end of 1996.
There are even five lobbying organizations that promote HDTV in
Washington, D.C. HDTV eventually will be approved by the FCC, but the
FCC is now also supporting standard-definition (digital) television(SDTV).
MSAM-WW-MT-9602©1996 Dataquest

October14,1996

^2Consumer Multimedia Semiconductor and Applications Worldwide

Following are descriptions of the two key U.S. government bodies
involved with HDTV:• Federal Communications Commission: New spectrum is being
allocated for digital broadcast TV. If digital broadcasting succeeds,
under the two proposals for HDTV that have been forwarded, the FCC
in 15 years will regain possession of the spectrum now used for analog
TV channels and auction it off for up to $23 billion. Currently, 400 MHz
of spectrum is allocated for broadcast TV; however, only about 120 MHz
is used even in the biggest cities. The FCC chairman is Reed Hundt.
Mark Corbitt is director of technical policy at the Office of Planning andPolicy.
• Advisory Committee on Advanced Television Services (ACATS): A
50-member committee was established by the FCC in September 1987 toevaluate and recommend an HDTV standard for the United States.
Former FCC Chairman Richard E. Wiley has been the chairman of
ACATS since its inception. David Kettler is executive director of scienceand technology for BellSouth Corporation and cochairman of ACATS'
Systems Analysis Working Party. CBS executive Joseph Flaherty iscochairman of the ACATS Technical Subgroup. Robert Hopkins is chairman of the ACATS Expert Group on Scanning Formats and Compression. Jules Cohen is chairman of the ACATS Field-Testing Task Force.
Broadcasters

Although the discouraging prospect of digital frequency auctions has been
removed, broadcasters are unlikely to invest heavily in HDTV, because of
the high cost of equipment. Instead, terrestrial broadcasters can always
invest in more translators and more power for their transmitters. In
October 1995, Television Broadcast magazine conducted a survey of TV
station general managers. Of those surveyed, 88 percent of broadcasters
expect to switch from tape to digital storage by the year 2000. Substantial
costs will be incurred in the next five years to accomplish this. Also,
28 percent of broadcast general managers wish advanced television would
just go away.
Receivers

The biggest challenge facing the acceptance of HDTV is the price of thereceivers. If that price is too high, consumers will not buy them. If consumers do not buy the receivers, there will be no audience. If there is noaudience, broadcasters will not be able to sell air time to advertisers. If
advertisers do not buy air time, broadcasters will be unwilling to invest in
expensive HDTV gear. Members of the Grand Alliance, the U.S. consortium of HDTV hopefuls, admitted in November 1995 that HDTV will not
be available in the United States until 1998 at the earliest. Grand Alliancemembers remain confident that consumers will pay $3,500 for an HDTV
receiver. Dataquest is much less optimistic that consumers will accept
equipment at tihat price.

l\/!SAI\/l-WW-MT-9602©1996 Dataquest

October 14,1996

Video Equipment

53

Problems with Wide-Screen TVs and HDTV Receivers
Beyond price, there are a number of other problems facing HDTV receivers. The following are problems presented by wide-screen TVs and HDTV
receivers:• Will not fit on standard TV production and assembly lines, therefore
more labor and cost is required to transport the work-in-progress fromone station to the next
• Too wide to fit through a standard-size doorway• Too wide to fit in standard wall unit furniture• Electron gun must be quite far from the screen so it can scan its full
width at a reasonable speed• As screen gets wider, glass must be thicker (and heavier) for structural
strength. Difficult to mold a flat screen• Proposed viewing distance for HDTV is half that for standard NTSC
TVs. Therefore, the number of viewers within the optimal distance will
be more than halved.
• Very heavy—about 200kg

Displays
There are a number of technologies that are being developed for HDTV
displays, including plasma display panels (PDP), LED displays, flat thincathode ray tubes, vacuum fluorescent displays (VFD), electroluminescent(EL) panels, and field emission displays (FED). One of the major hurdles
in developing all these products is moving from a successful prototype tofull-scale production.
PDP is a new flat panel display technology that has the potential to reducethe cost of HDTV receivers. Several Japanese suppliers are planning toenter the PDP market. Fujitsu in October is expected to begin production
at a rate of 10,000 units per month of a 42-inch model that will be priced at¥500,000 each (about $5,000 for the display alone). Hitachi Ltd. expects toenter the market for plasma displays in 1997. NEC in April 1998 is scheduled to begin full operation of a ¥25 billion ($226.6 million) PDP plant thatwill produce 40- and 33-inch displays.
The LED display is perhaps the biggest wild card of all the technologies
being advanced for HDTV. If a blue LED and a green LED with good reliability and performance are successfully developed at the right price, this
could enable a major displacement of the LCD panels that currently dominate the mobile PC market, paving the way for a new consumer display
market.
Another technology slated for HDTV applications is the digital micromirror display (DMD) developed by Texas Instruments with its digital lightprocessing (DLP) technology. TI has shown that it can create 400,000
micromirrors on a chip that is 17 microns square.

i\/lSAIVi-WW-l\/IT-9602©1996 Dataquest

October 14,1996

54

Consumer Multimedia Semiconductor and Applications Worldwide

There also are Laser CRT and Direct Laser products under development.
The United States continues to flirt with investment in the display arena tohelp the development of a U.S. display industry. This industrial investment debate revolves around whetiker the creation of a display industry in
the United States is critical to its competitive stature or whether it would
be better to leverage the R&D and production that is taking place in Japanand the Asia/Pacific region.

Standards and Organizations
Standards and organizations include:• Grand Alliance: Digital HDTV Grand Alliance (United States). The alliance of the seven organizations that proposed four all-digital HDTV
systems to ACATS in 1993. Formed on May 24,1993, the seven member
organizations are AT&T Microelectronics (now part of Lucent Technologies), Zenith Electronics Corporation, General Instrument Corporation,
Massachusetts Institute of Technology, Philips Consumer Electronics,
Thomson Consumer Electronics, and the David Samoff ResearchCenter. AT&T and GI jointly built the video encoder. Philips constructed
the decoder, Samoff and Thomson cooperated in building the transport
subsystem, and Zenith built the modulation subsystem.
• SDTV: Standard-definition (digital) TV. FCC-approved standard for
digital TV using standard-resolution NTSC displays within an HDTV
broadcast system. Hitachi is the leading developer of down-conversion
systems for turning HDTV signals into SDTV for display on standard
TV sets.
• MUSE HDTV: Multiple Sub-Nyquist Sampling Encoding (also known
as Hi-Vision). Japanese standard for analog HDTV developed in 1968 by
NHK. MUSE uses a display with interlaced scanning with 1,125
horizontal scanning lines at 60 fields per second. Since 1990, between
nine and 11 hours of Hi-Vision has been transmitted every day by satellite in Japan. Around the time of the Olympics, Japan Public Broadcasting Corp. (NHK) increased daily broadcast time to 14 hours. The
commercial service launch for Hi-Vision is scheduled for late 1997. As of
July 31,1995, Hi-Vision TV sets were priced at about $5,618. Narrow
MUSE is a slimmed-down version occupying only 6 MHz of bandwidth. The system uses digital signal processing, but the frequency
modulation is analog. Developed primarily by Sony.
• MPT: Japan's Ministry of Posts and Telecommunications. In July of
1995, the MPT announced that Japan, too, would have a digital TV specification. The specification is similar to Europe's DVB. However, there
has been strong resistance from manufacturers of Hi-Vision HDTV sets
to a shift from analog to digital HDTV technology. Dataquest does notexpect to see a major move to a digital HDTV product in Japan any timesoon. Full-scale broadcasting of Hi-Vision HDTV is still planned to startin 1997. MPT's Digital Broadcasting Systems Division director is
Tomofumi Yasunari.
• DVB: Digital Video Broadcasting Group, formed in September 1983.
HDTV is no longer a priority in Europe, and HDTV efforts have been
replaced by the pan-European DVB standard for digital TV. DVB is
headquartered in Geneva, operating under the auspices of the European
Broadcast Union and the German Ministry of Telecommunications.
Four standards exist: DVB-S for satellite using quadrature phase shift
MSAM-WW-l\/IT-9602©1996 Dataquest

October 14,1996

55

Video Equipment

key (QPSK), DVB-C for cable using 64-quadrature amplitude modulation C64~QAM), DVB-T, for terrestrial broadcasting using coded orthogonal frequency division multiplexing (COFDM), and DVB-MS, adigital multipoint video distribution system (MVDS). The compression
technology is MPEG-2 main level, main profile.
• DAVIC: Digital Audio Visual Interoperability Cotincil. Standard-settingorgaruzation for digital TV, formed in January 1994, headquartered inEurope, following the DVB project. The chairman is Dr. Leonardo
Chiariglione. The original DAVIC 1.0 specification was completed inJune 1995. DAVIC 1.1, which was introduced at a June meeting in
New York, adds specifications for Internet access and cable modems,
among other enhancements. DAVIC 1.2, planned for December, adds
items such as a communications application program interface (API) forInternet access and Asymmetrical Digital Subscriber Loop (ADSL)
Asynchronous Transfer Mode (ATM) mapping.

Current Specifications
Tables 4-19 through 4-21 present major HDTV technical specifications.

Receiver Production and Market• Dataquest's forecast for worldwide production of HDTV receivers isshown in Table 4-22 and Figure 4-15. The North American market and production forecasts are presented in Tables 4-23 and 4-24, respectively.
Table 4-25 shows sizes and prices for current HDTV models on the market.

Table 4-19
Grand Alliance Specification
Resolutions and Frame Rates

Video Compression
Audio Compression
Modulation
Data Rate
Bandwidth
OthersSpecification
1280 X 720; progressive 24-, 30-, 60 frames per second
1920 X 1080; progressive 24-, 30 frames per second
1920 X 1080; interlaced 60-frames per second
MPEG-2 main level, high profile
Dolby AC-3 digital audio (ACATS standard A/52)
8-VSB
20 Mbps
6-MHz bandwidth per charmel (cable version can fit
two HDTV signals within 6 MHz)188-byte MPEG-2 transport packets, packetized datatransport structure with headers and descriptors;
4-byte header, 184-byte payload
HDTV signal will be compressed by a factor of morethan 60 to 1, from 1.2 billion bits per second to lessthan 20 million bits per second.

Source: Dataquest (September 1996)

l\/lSAiVi-WW-MT-9602©1996 Dataquest

October 14,1996

56

Consumer Multimedia Semiconductor and Applications Worldwide

Table 4-20
SDTV Specification
Specification
Resolutions

640 X 480 (4:3 aspect ratio, VGA)

704 X 480 (16:9 aspect ratio, CCIR Rec. 601)
Frame Rates
Video Compression

60 interlaced fields per second, 24-, 30-,
and 60 frames per second (progressive)
MPEG-2 main level, main profile

Audio Compression

Dolby AC-3 digital audio

Modulation

8-VSB

Source: Dataquest (September 1996)

Table 4-21
DAVIC 1.1 Specification
Specification
Resolution
Video Compression

640 X 480
MPEG-2 main level, main profile

Audio Compression

MusicamModulation

64-QAM for hard-wired networks (cable and telco)

Upstream Data Rates

1.544 Mbps and 256 Kbps

Source: Dataquest (September 1996)

Table 4-22
Worldwide HDTV Receiver Production Forecast

Units (K)Factory ASP ($)

CAGR (%)
1995-2000

1993

1994

1995

1996

1997

1998

1999

2000

12

23
6,000

88
4,000

210

304
3,100

530
2,600

700
2,700

51.4

3,500

428
2,800

40.0

8,000

-7.6

Factory Revenue ($M)

96

138

352

735

942

1,198

1,378

1,890

Semiconductor Content ($)

700
8.4

540

450

400

363

340

300

-7.8

12.4

39.6

84

110.4

145.5

315
167

210

39.6

Semiconductor TAM ($M)
Source: Dataquest (September 1996)

i
MSAM-WW-MT-9602©1996 Dataquest

October 14,1996

Video Equipment

57

Figiwe 4-15
Worldwide HDTV Receiver Production Forecast
Millions of Dollars

1993

Thousands of Units

1994

1995

1996

1998

1997

1999

2000
965135

Source: Dataquest (September 1996)

Table 4-23
Americas HDTV Receiver Market Forecast
1998

1999

2000

0

1997
1

9

37

0

0

3,100

2,800

16
2,600

0

0

3

25

42

2,700
100

1993

1994

1995

1996

Units (K)000Factory ASP ($)

00

Factory Revenue ($M)

00

CAGR (%)
1995-2000
NM
NM
NM

NA = Not meaningful
Source: Dataquest (September 1996)

Table 4-24
Americas HDTV Receiver Production Forecast

Units (K)

1993

1994

1995

1996

1997

1998

1999

2000

CAGR (%)
1995-2000

0

0

0

0

1

9

16

37

NM

Factory ASF ($)

0

0

0

0

3,100

2,800

NM

0

0

0

0

3

25

2,600
42

2,700

Factory Revenue ($M)

100

NM

Seniiconductor Content ($)
Semiconductor TAM ($M)

0
0

0
0

0

0
0

340
3.1

315
5

300
11.1

NM

0

363
0.4

NM

NA = Not meaningful
Source: Dataquest (September 1996)

i\/ISAM-WW-l\/IT-9602©1996 Dataquest

October 14,1996

58

Consumer Multimedia Semiconductor and Applications Worldwide

Table 4-25
Sizes and Prices of HDTV Sets (Fourth Quarter of 1995)
Size
20 Inches
24 Inches
28 Inches
32 Inches
28 Inches
32 Inches
36 Inches
36 Inches
43 Inches
50 Inches
60 Inches
70 Inches
Up to 200 Inches(Mitsubishi and Sony are the leaders.)

Type
MUSE-to-NTSC only
MUSE-to-NTSC only
MUSE-to-NTSC only
MUSE-to-NTSC only
Hi-Vision HDTV
Hi-Vision HDTV
Hi-Vision HDTV
Rear projection
Rear projection
Rear projection
Rear projection
Rear projection
Front-screen projection

Price (Yen)
200,000
290,000
440,000
500,000
700,000
360,000
420,000
500,000-

Source: Dataquest (September 1996)

Manufacturers of HDTV Sets

Manufacturers of HDTV receivers are as follows:• Sony (also front- and rear-projection models)• Toshiba• Matsushita (Panasonic, JVC brands, also rear-projection models)• Mitsubishi (also front- and rear-projection models)• Sanyo• Sharp (also front-projection models)• Hitachi (also rear-projection models)• Ikegami (also front-projection models)
Semiconductor Opportunities

HDTVs have a great deal of semiconductor content. Increasingly, intellectual property in DSP-based digital transmission, video manipulation,
compression, and audio, to name a few areas, will be crucial for market
participation. Key chip function opportunities include the following:• Digital tuning (microcontroller, or MCU, controlled)• Demodulation circuits for VSB• MPEG-2 video decoder• Digital video processing• Forward error correction• Transport depacketizer• AC-2 (Dolby) six-channel CD audio decode

MSAM-WW-MT-9602©1996 Dataquest

October 14,1996

Video Equipment

59• Audio DAC and amplification• 1MB to 2MB DRAM for decompression buffer• Video RAMDAC (10 bits, 135 MHz)• Infrared on-screen control display controls• Closed captioning/ghost cancellation circuits• Optionally: modem interfaces (for interactivity) and decryption
However, because of limited volumes, HDTV will not emerge as amajor driver of semiconductor sales in this century. As was illustrated inTable 4-22, the worldwide semiconductor opportunity for HDTV sets willreach only $210 million in the year 2000.

DVD Video Players
In September 1995, Philips, Sony, and Toshiba announced an agreement todevelop a single standard for the high-density digital video disc. DVD isthe next generation of compact disc technology that is predicted to impact
significantly consumer VCRs, as well as computer delivery of digital content, because of its several-gigabyte storage capabilities. The standard puts
an end to a format war between two camps that was similar to the one that
occurred in the early 1980s between the opposing consumer videotape
camps, beta and VHS.
The agreement ended almost 10 months of format competition between
the two primary camps: Multimedia CD (MMCD), led by Sony and Philips, and the Superdensity (SD) alliance, led by Toshiba, Matsushita, andTime Warner. Tlie agreement between the two camps began lengthy negotiations to develop tiie final specification for DVD. From the perspective ofthe different manufacturers, perhaps the most important issue to beresolved is intellectual property rights. An immediate difficulty is the
sheer number of companies involved in the DVD-format unification. At
least nine companies have staked claims to become license holders: Sony,
Philips Electronics, Thomson Multimedia, Hitachi, Matsushita, Toshiba,
Mitsubishi, Pioneer, and JVC. Unable to reach an agreement in the DVD
Consortium, Sony and Philips broke from the group negotiation as the endof 1996 was approaching and announced that they would license their patents independentiy. They invited other companies to join them in an
attempt to bring DVD products to the market before the end of 1996.
In the announcement of the initial agreement, the parties stated theirintent to release a final specification in December 1995. This was followedby promises to release the final specification almost every month during
1996. As of this writing, no final specification has been released. In themeantime, additional difficulties have been encountered because of disputes between Hollywood and the PC community over copy protection.
Although the DVD manufacturers and the Hollywood community havereached agreement on an encryption scheme to protect content, the PC
companies have not yet signed on to this agreement.
The end of 1996 is approaching, and DVD manufacturers are eager to ship
products to the market before the end of the year. With major hurdles in
the U.S. market still remaining, leading companies like Matsushita,Toshiba, Hitachi, and Pioneer have announced plans to ship DVD Video
players in Japan beginning in October and November 1996.
MSAI\/l-WW-i\/lT-9602©1996 Dataquest

October 14,1996

60

Consumer Multimedia Semiconductor and Applications Worldwide.

Even though the near-term difficulties will not be solved easily, Dataquest
is optimistic about the long-term prospects of the DVD market. A forecast
for worldwide DVD production is presented in Table 4-26 and Figure 4-16.
Figure 4-17 shows a representative block diagram of a DVD Video player.
Some of the important elements of the DVD format that have been agreed
to are as follows:• 4.7GB storage in a single layer• Dual-layer and double-sided discs• Backward-compatibility with all current CDs• MPEG-2 video compression• AC-3, MPEG-2, and Linear PCM audio compression• Compatibility between computer-based and consumer-based(television) products• 0.6mm X 2 substrate thickness, bonded disc
• EFM Plus modulation/demodulation• Reed-Solomon error-correction code

Table 4-26
Worldwide DVD Video Player Production Forecast
CAGR (%)
1995-2000

1993

1994

1995

1996

1997

1998

1999

2000

Units (K)Factory ASP ($)

0
0

0

360
428

1,495
394

3,956
365

7,755
357

10,282

0

0
0

331

NM
NM

Factory Revenue ($M)
Semiconductor Content ($)

0
0

0
0

0

154

589

146

133

1,443
122

2,772

0

116

3,406
108

NM
NM

Semiconductor Market ($M)

0

0

481

903

1,112

NM

0

0

0

0
53
199
Regional Production Trends (Percentage of World by Unit Production)
Americas00Europe

1

0

0

Japan

50

0
37

0

31

25

Asia/Pacific

49

63

69

75

23
77

NA = Not meaningful
Source: Dataquest (September 1996)

K
MSAM-WW-MT-9602©1996 Dataquest

October 14,1996

Video Equipment

61

Figure 4-16
Worldwide DVD Video Player Production Forecast
Millions o f Dollars

T h o u s a n d s of Units

2,000
m

1993

1994

1995

r

I

1996

1997

1998

1999

2000
966136

Source: Dataquest (September 1996)

Some of the important issues related to the rollout and development of
DVD players are as follows:• Initial pricing for DVD players was targeted at $500. It appears that theinitial players will not hit that price. Instead, pricing in the United States
will range between $600 and $700. Early prices for DVD Video players
in Japan range between $750 and $900. Critical components such as the
red laser diodes wiU drive higher initial costs; as they come down theprice curve, it will be possible to lower system prices.
• There are concerns about the availability, supply, and pricing of
635/650rtm red-laser diodes, which are a key element in DVD's highdensity storage capacity. Although this is a concern for manufacturers
eager to ramp production of DVD players quickly, it is not certain thatmarket demand will materialize to meet the production plans of DVD
manufacturers during 1996 and 1997. Pricing will be a hurdle in earlymarket growth.
• Initially, players will be ROM only and eventually RAM and erasable.
The draft format of a rewritable disc called the DVD-RAM was determined in late 1995. The rewritable DVD-RAM could use phase change(PD) technology (applying heat from the laser to change the recording
layer from a polycrystalline structure to an amorphous state) or magneto-optic (MO) technology to store information. The draft specification
calls for a capacity between 2.6GB and 3GB, with the wavelength of thelaser diode in the range of 650nm to 680nm.

iVlSAIVI-WW-IVIT-9602© 1 9 9 6 Dataquest

October 1 4 , 1 9 9 6

CO>Figure 4-17
Representative DVD Video Player Block Diagram

CO

a>
o
ro

A Optica! Pickup
Pin
Diode

i/V
Converter

RF Amp(F^
Detection)

CD Data
Processor

Audio(AC-3,
Linea

Actuator
^
*

@
CD
CO
CD
O

w

Motor
DriverI" -^ "
Focus
Tracking^edge

Data Processor-

Read Ctiannel
Demodulator
ECC

Servo
Processor

Servo
Driver

I

I

SRAM

ROM

I
o
o

•—I-

o
C3-

CO
CD
CT>

Source: Dataquest (Septemt)er 1996)

DRAM

MCU

I

CPU Bus

SystemStreamDecoderVideo
Decoder
MPEG-2

I

DRAM/
SDRAM

1

Subpicture
Decoder

^

T
Mix

4

63

Video Equipment

Video-CD Players
The market for early-generation video disc players, Video-CD, has grownmuch more quickly than called for by early predictions. Most industry
observers expect market shipments to pass 8 miUion players in 1996, making this one of the most successful product introductions in the consumer
electronics industry. Altliough Video-CD is virtually unknown in theAmericas, it enjoys enormous popularity in Japan and the Asia/Pacificregion. The most popular use of Video-CD is in karaoke applications.
\^deo-CDs are also finding their way into PC applications. Manufacturers
from Japan, Korea, Taiwan, and China are all competing in this market. As
shown in Table 4-27 and Figure 4-18, Dataquest expects this market to continue its rapid expansion in the near term with growth tapering off
approaching the year 2000.
Table 4-27
Worldwide Video-CD Player Production Forecast (Preliminary)
1993

1994

1995

1996

1997

1998

1999

2000

CAGR(%)
1995-2000

Units (K)

38

685

2,580

9,400

13,50016,20018,00018,50048.3

Factory ASP ($)

460

354

285

225

205

190

180

175

-9.3

Factory Revenue ($M)

17

242

735

2,115

2,768

3,078

3,240

3,238

34.5

Semiconductor Content ($)

120

101

85

68

65

63

61

59

-7.2

Semiconductor Market ($M)

5

69

219

639

878

1,013

1,089

1,082

37.6

Source: Dataquest (September 1996)

Figure 4-18
Worldwide Video-CD Player Production Forecast (Preliminary)Thousands of Units

Millions of Dollars

20,0003,500

18,000

Factory Revenue

3,000-16,000

Units

2,500-

14,00012,0002,000

10,000
1,500

8,000

1,000

6,000
- 4,000500' 2,000
0

0
1993

1994

1995

1996

1997

1998

1999

2000
966138Source: Dataquest (September 1996)

MSAM-WW-MT-9602©1996 Dataquest

October 14,1996

64

Consumer Multimedia Semiconductor and Applications Worldwide

These players use MPEG-1 technology and allow 74 minutes of storage forfull-motion video. Figure 4-19 shows a block diagram for a Video-CD system. At 352 X 240/288 pixels, Video-CD's resolution is limited but has stillfound many applications in portable players and minicomponent systems,
many of which use LCD displays.
Figure 4-19
Block Diagram of a Representative Video-CD System

Pulse-Code Modulation (PCM) Clock
Audio Bypass'^CIIN-?—•CD-ROMs^JPrwe";!;IBesntralJii
1i'CD-ROM
Decbder:«!.....--_..._.,— ..,video C0 0«codeM

MPEG-1
Audio
Control^Compresaea; MPEG-i•^mta.J^•Aiiiaiq:!
MPEG-1 •Interface' :Interfecsil
SystemDigite!
Stream^Video Video
Host ;;' output:
Irtterface

MPEG-1
Audio
Decoder

HTSC• EncoderIIm'AvSifM<oa.

^

IliJMIcf ocontro^lef
T T T T T

NTSC TV

4Mb DRAM;'User Interface"Components already included in CD player

Source: Dataquest (Septenfiber 1996)

There are numerous Video-CD models, and it is estimated that there
were over 7,000 Video-CD software titles available in 1996. Of thisnumber, 3,000 were karaoke titles and 60 percent were targeted at nonJapanese markets. This number should expand dramatically as Video-CD
players are introduced in India, with its prolific movie industry. One of the
major issues surrounding Video-CD has been the large pirate movie
industry associated with it. This has probably added to its success. Tradenegotiations between China and the United States in 1996 focused on thisissue, and a new agreement has been reached on intellectual property protection. Following this agreement, Warner Home Video and MGM/UAannounced licerising agreements with one of China's largest manufacturers and distributors of Video-CD and laser disc (LD) hardware andsoftware.

i
MSAM-WW-MT-9602©1996 Dataquest

October 14,1996

Video Equipment

65

C-Cube Microsystems Inc. has been one of the major semiconductor winners in the Video-CD market, with design-wins for its MPEG-1 decompression chips in market leaders such as Sony and Sharp and a large
majority of other Video-CD manufacturers. C-Cube has set an aggressiveschedule to narrow the ultimate cost differential between audio CD andVideo-CD systems to $30. Its initial MPEG-1 devices should allow manufacturers to produce Video-CD players for about $100 over the cost ofaudio CD products. The company hopes to halve that to $50 by 1997.
Oak Technology Inc. is another chip company competing for the merchantmarket MPEG-1 chip business in Video-CD players.

i\/lSAM-WW-l\/lT-9602©1996 Dataquest

October 14,1996

Chapter 5Interactive Products and Personal Electronics,
Interactive consumer products include those that allow users real-time
control of information presented on the TV screen. The primary examples
covered here include interactive television and associated set-top decoder
boxes and video games. Some visionaries are projecting that these technologies may merge, at least in part, in the coming decade with each other orwith the standard TV set.

Interactive Television and Set-Top Box Definitions"Set-top box" is a generic term that means different things to different
industries. The seven product categories presented in Table 5-1 have all
been referred to as "set-top boxes," based merely on their location in relation to the TV set.
This section will focus on the first category, pay-TV receivers. Within the
combined pay-TV industries, the terminology used is "subscriber terminal." Figure 5-1 presents a diagram of an interactive system that shows
how a subscriber terminal would be used in a cable, satellite, or telephonesystem. The following terms are also synonymous with pay-TV receivers:• Integrated receiver/decoder (IRD): satellite industry• Customer-premises equipment (CPE): telco industry• Subscriber terminal, cable converter: cable industry• Compuverter, pay-TV receivers

Table 5-1
Descriptions of Various Products Referred to as "Set-Top Boxes"
Product
Pay-TV Receivers
Dedicated Game Corisoles
Read-Only Multimedia Computers

Backchannel Transmitters
Audio and Data Decoders

Navigational Systems

Data Storage Devices

Description
Includes cable, DBS, C-band satellite, MMDS, LMDS, and now telco
Examples: Sony Plaj^tation and Sega Saturn
Examples: 3DO and Philips CD-I. Formerly known at Dataquest as TV
CD-ROM players. This category is being replaced by dedicatedgame consoles.
Allow user to play along with networked sports and game shows—TV Answer, for example
Used for nonvideo signals transmitted out-of-band in the verticalblanking interval, in-band video, or in-band audio. Include digital
cable radio and closed captioning.
A special type of data decoder for electronic programming guides.
Dedicated hardware systems exist, but most are being integrated
into pay-TV receivers. Examples include StarSight, Prevue Network,and Interactive TV Guide
Examples are VCR-Plus and Sega Charmel Game Adapter

Source: Dataquest (September 1996)

MSAM-WW-l\/IT-9602©1996 Dataquest

67

>

Figure 5-1
Interactive Television Systems

CD
CD
O

IZL

ro

Satellite or
Cable Network
Set-T

@
L

CO
CD
CO

a
cu

Digitally
Compressed
Programs

AnalogDigital

-

I-*-

(U
J:3

Servers

Analog
Programs

Data

2-Way
Amplifier^Mufti ploxer
Network
Interface Unit-J

• Sutjscriber Management- Info Processor

Joystick

Servers
G
Uplink Facility

O
o

fto
a-

CD

CD
CD

cr>

Source: Dataquesl (September 1996)

Cable Headend orTele|>hQne DnriH^ySubscriber Home

Interactive Products and Personal Electronics

69

Subscriber terminals are further divided into the following four subcategories by technology:• Nonaddressable analog• Addressable analog• Advanced analog (includes addressability and upstream
communications)• Digital
A digital set-top box includes a digital video decoder for receiving digitally encoded TV signals. The compression schemes are typically MPEG-2^
but also include General Instrument's DigiCipher I and DigiCipher II. The
difference between addressable analog boxes and advanced analog boxesis that advanced boxes also include an embedded modem for upstream
communications. Embedded modems are the basic semiconductor components for receiving interactive services. Cable modems fall into a separate
category, more closely related to PC modems than to set-top boxes. As
subscriber terminals move from nonaddressable to addressable toadvanced analog and finally to digital, almost every major component
maker is eyeing this market as a major application area.

Markets for Subscriber Terminals
The following six network systems represent potential markets for subscriber terminals:• Cable TV• C-band satellite (also known as full-view satellite)• Ku-band satellite (also known as DBS and DTH)
• Wireless cable (also known as MMDS)• Cellular cable (also known as LMDS)• TelcoProduction and Market Forecast
Analog terminals will be buoyed temporarily by new sales in the wirelesscable market. However, shipments of new digital terminals will overtake
their analog predecessors by 1997, Now the cable industry is plarming to
introduce hybrid boxes capable of receiving both analog and digital signals. Because these boxes wiU include the expensive digital decoders anddemodulators, we have included their projected sales in the digital terminals category.
Because of the controlled nature of the cable equipment business, competition in the set-top box market has been limited. With consumers given no
choice of boxes to buy, analog set-top box pricing has been iirozen, remaining at a selling price of about $105 for the last 10 years. As digital boxes
become more prevalent, the average selling prices (ASPs) for analog boxes
will finally begin to erode. There is a significant opportunity for system
makers to reduce both the costs and the margins for DBS receivers over

MSAM-WW-I\/IT-9602©1996 Dataquest

October 14,1996

70

Consumer Multimedia Semiconductor and Applications Worldwide

time. In fact, with the breakout of a DBS set-top box price war in the summer of 1996, system makers are being forced to cut the cost of their equipment just to stay competitive. The chief means of cost cutting is the use ofcheaper, more highly integrated silicon.
Tables 5-2 through 5-4 show Dataquest's forecast for worldwide analog
set-top box production, the Americas analog set-top box market, and theAmericas analog set-top box production, respectively. Figures 5-2, 5-3,
and 5-4 and Table 5-5 present the forecast for worldwide and regional
digital set-top box production and average selling price forecast. Tables 5-6
and 5-7 show the Americas market and production forecast for digital settop boxes. Figures 5-5 and 5-6 show worldwide and regional share of
production by revenue for digital set-top boxes.
Table 5-2
Worldwide Analog Cable/Satellite Set-Top Box Production Forecast
1993
Units (K)10,719

Factory ASP ($)
Factory Revenue ($M)

103
1,107

Semiconductor Content ($)

41

Semiconductor TAM ($M)

441

1994

1995

1997

1996

12,233 11,505 11,388
113
114
99
1,388 1,309
1,131
44
44
41
535

501

1998

11,115 10,890
87
78
970
846
37
34

462

413

1999

2000

7,583 6,790
7174

CAGR(%)
1995-2000
-10.0

564

485

-8.9
-18.0

32

30

-7.0

372

239

206

-16.3

Regional Production Trends (Percentage of World by Unit Production)
Americas

50

50

43

41

40

39

30

Europe

40

41

44

43

26

20

28
14

Japan

3

3

3

3

38
2

2

3

2

Asia/Pacific

6

6

9

13

19

32

47

55

Source: Dataquest (September 1996)

Table 5-3
Americas Analog Cable/Satellite Set-Top Box Market Forecast

Units (K)Factory ASP ($)
Factory Revenue ($M)

1993
4,860
103
501

1994

1995

1996

1997

1998

1999

2000

CAGR (%)
1995-2000

5,490

4,500

4,230

4,050

3,870

2,070

1,710

-17.6

113

114

89

79

-7.1

513

82
317

82

620

99
419

170

135

-23.4

360

Source: Dataquest (September 1996)

MSAM-WW-MT-9602©1996 Dataquest

October 14,1996

71Interactive Products and Personal Electronics

Table 5-4
Americas Analog Cable/Satellite Set-Top Box Production Forecast

Units (K)

1993

1994

1995

1996

1997

1998

1999

2000

CAGR (%)
1995-2000

5,000
114

4,700
99

4,500

4,300
82

2,300
82

1,900
79

-17.6
-7.1

465
43

353

150

-23.4

35

189
32

31

-8.0

200

401
38
171

151

74

59

-24.2

5,400

6,100

Factory ASP ($)

103

113

Factory Revenue ($M)
Semiconductor Content ($)

556
42

689
46

570
47

Semiconductor TAM ($M)

228

281

235

89

Source: Dataquest (September 1996)

Figiure 5-2
Regional Share of Analog Set-Top Box Production Revenue
1995
r—Asiaypacific(7%)

2000Japan ( 3 % ) — v ^ " " ' ^ "1.

Americas

1

(44%)

1

'

Europe(17%)

A
M

Asia/Pacific(49%)

EuropeyAmericas
(31%)

{46%}
V
\

1\
\

Japan (3%)
Total = $485 Million

Total = $1.3 Billion

966141

Source: Dataquest (September 1996)

MSAM-WW-MT-9602©1996 Dataquest

October 14,1996

72

Consumer IVIultimedia Semiconductor and Applications Worldwide

Figure 5-3
Worldwide Digital Set-Top Box Production Forecast
Thousands of Units
25,000-11
Cable Converters

20,000Satellite Converters

15,00010,0005,000-1

1993
9661«

Source: Dataquest (September 1996)

Figure 5-4
Worldwide Digital Set-Top Box Average Selling Price Forecast

Cable Converters
Satellite Converters

1993

1994

1995

1996

1997

1998

1999

2000
966143

Source: Dataquest (September 1996)

MSAM-WW-MT-9602©1996 Dataquest

October 14,1996

73

Interactive Products and Personal Electronics

Table 5-5
Worldwide Digital Set-Top Box Production Forecast
1993 1994

1995

1996

1997

1998

1999

2000

CAGR (%)
1995-2000

Cable Converters
8

20

63

437

1,500

3,199

6,447

10,405

177.5

702

682

492

383

326

294

257

Factory Revenue ($M)

900
7

14

43

215

574

1,043

1,895

2,671

-17.8
128.2

Semiconductor Content ($)

474

272

208

190

174

138

132

124

-9.9

Semiconductor TAM ($M)

4

5

13

83

260

441

852

1,287

150.1

1

874

2,841

6,579

9,655

12,903

48.1

465

474

447

348

2%

15,295267

20,255

900

-13.2

0

406

1,347

2,943

3,358

3,824

4,086

233
4,727

Semiconductor Content ($)

400

262

122

114

229

1,458

1,572

1,744

105
2,127

-11.9

0

183
1,204

151

Semiconductor TAM ($M)

198
562

9

894

2,904

7,016

11,155

16,102

21,742

30,660

60.2

900

470

479

450

352

302

275

241

8

420

1,390

3,159

3,932

4,867

5,981

7,398

-12.8
39.7

Semiconductor Content ($)

470

262

198

183

154

125

119

111

-10.9

Semiconductor TAM ($M)

4

234

575

1,287

1,718

2,013

2,596

3,414

42.8

Units (K)Factory ASP ($)

Satellite Converters
Units (K)Factory ASP ($)
Factory Revenue ($M)

28.5
30.5

Total Digital Converters
Units (K)Factory ASP ($)
Factory Revenue ($M)

Regional Production Trends (Percentage of World by Unit Production)
93
7

98
2

73

49

40

33

33

28

Europe

12

28

44

44

35

Japan

0

0

5

6

39
4

3

3

4

Asia/Pacific

0

0

11

17

18

20

20

33

Americas

Source: Dataquest (September 1996)

MSAM-WW-MT-9602©1996 Dataquest

October 14,1996

74

Consumer Multimedia Semiconductor and Applications Worldwide

Table 5-6
Americas Digital Cable and Satellite Decoder Market Forecast
1993

1994

1995

1996

1997

1998

1999

2000

CAGR (%)
1995-2000

8

18

51

335

945

1,440

3,664

134.9

900
7

509

443
148

350
331

315

9

483
25

2,775
282

453

781

255
935

-12.0
106.7

Units (K)

0

758

1,849

2,742

3,016

3,317

3,649

4,014

16.8

Factory ASP ($)

0

462

403

318

286

256

232

-12.0

Factory Revenue ($M)

0

350

439
812

1,105

959

949

934

931

2.8

Cable Converters
Units (K)Factory ASP ($)
Factory Revenue ($M)
Satellite Converters

Source: Dataquest (September 1996)

Table 5-7
Americas Digital Cable and Satellite Decoder Production Forecast
1993

1994

1995

1996

1997

1998

1999

2000

CAGR (%)
1995-2000

7

20

57

372

1,050

1,600

3,083

4,072

134.9

315

282

255

503

868

1,039

-12.0
106.7

133
542

-8.2
115.7

Cable Converters
Units (K)Factory ASP ($)
Factory Revenue ($M)

900

Semiconductor Content ($)
Semiconductor TAM ($M)

483

443

6

509
10

28

165

350
367

479
3

287
6

204
12

197

172

141

73

180

226

138
424

Units (K)

0

842

2,054

3,046

3,351

3,686

4,054

4,460

16.8

Factory ASP ($)
Factory Revenue ($M)

0
0

462
389

439
902

403
1,228

318
1,066

286
1,054

256
1,038

232
1,035

-12.0
2.8

Semiconductor Content ($)

0

261

185

156

128

-8.2

0

219

381

523

473

125
507

121

Semiconductor TAM ($M)

179
544

540

7.2

7

862

2,111

4,401

5,285

8,531

32.2

Factory ASP ($)
Factory Revenue ($M)

900

440

326

6

463
400

3,418
407

930

1,392

1,433

295
1,557

1,906

243
2,074

-11.2
17.4

Semiconductor Content ($)
Semiconductor TAM ($M)

479
3

261
225

186
392

181
617

160
704

698

130
931

127
1,082

22.5

Satellite Converters

Total Digital Converters
Units (K)

132

7,138
267

-7.4

Source: Dataquest (September 1996)

MSAM-WW-MT-9602©1996 Dataquest

October 14,1996

75

Interactive Products and Personal Electronics

Figure 5-5Worldwide Digital Set-Top Box Revenue Forecast
Thousands ot Units
5,000

1993

1995

1994

1996

1997

1998

1999

2000
9^6144

Source: Dataquest (September 1996)

Figure 5-6
Regional Share of Digital Set-Top Box Production Revenue
1995

2000

Japan (5%)-

Japan (4%)

Total = $7.4 Billion

Total = $1.3 Billion

9€eidS

Source: Dataquest (September 1996)

MSAM-WW-MT-9602©1996 Dataquest

October 14,1996

76

Consumer Multimedia Semiconductor and Applications Worldwide

Technology Requirements
Figure 5-7 presents a generic block diagram of the type of technology
required in interactive terminals. A generic set-top box will require avariety of technologies ranging from RF to CMOS (see Table 5-8). Likewise, the opportunities will range from standard products to ASICs as thebox OEMs differentiate through design and cost structure. There are manylayers of software involved, and companies like Microsoft are heavily
involved in creating standard APIs to handle the various application programs managing the interactive services. The communication features are
initially designed as modules that upgrade the basic terminal.
As shown in Table 5-9, the interactive terminal will require more featuresin the coming years, including embedded two-way capability, greater processing power, and support for higher bandwidth transmission links. The
digital set-top box of 1996 is capable of digital reception, decompression,and audio/video processing. The video decompression standard primarily is MPEG-2, and audio decompression is Dolby AC-3 or MPEG. Linetransmission opportunities include 8-level vestigial side band (8 VSB) or
higher or 64-level QAM or higher. Error correction is needed to clean up
the fast-moving bit stream, decryption for privacy, and a transport layer
function for network overhead.
About 2MB of DRAM or tailored field memory is required for buffering.
Many of the functions initially are ASIC-based, with the overall design
controlled by the decoder box companies. Eventually, standard functions
will dominate as cost reduction becomes paramount.

Manufacturers and Products
Thomson has emerged as the leading supplier of digital set-top boxes.
Figure 5-8 presents a block diagram of Thomson's DirecTV Satellite
decoder terminal. In 1995, Thomson Consumer Electronics (also known asThomson Multimedia) shipped nearly 1.3 million DSS systems capable ofreceiving authorized programming from DirecTV or USSB. Table 5-10
shows the worldwide market share for leading manufacturers of digital
cable and satellite decoder terminals in 1995.
General Instrument traditionally has been the leader in subscriber terminals, producing 3.9 million analog boxes for the cable industry in 1994. Scientific-Atlanta held the No. 2 spot with 1.7 million analog boxes in 1994. In
Europe, Pace Micro Technology of West Yorkshire, England, claims to be
the leading supplier of analog set-top boxes. Pace supplies boxes for thecable, satellite, and wireless cable markets.
We should note that changes occur in the cable equipment market very
slowly. For instance, in 1982, GI shipped 2 million analog converter boxes.
Eleven years later, in 1993, GI's shipments were up to 3 million units. The
cable industry in the United States is slow to change because the nation is
wired with a patchwork of 11,460 cable operators, each with a slightly different system.

MSAM-WW-MT-9602©1996 Dataquest

October 14,1996

CO>

Figure 5-7
Block Diagram of a Typical CATV/DBS Set-Top Box

<£>

a>
CD

ro

Tuner/IF/
Demod(VSB/QAM)

Cable orSatellite Dish

il

-Or-

©
CD
to
CD
O
lU
•—ICU
i3
C
CD

Error Correcfion

a

Modem

n

Phor)e
Line
orRF
Unk

"

"

-

KeypadControls

Tran^ort IC

MPU/MCU

- •

r^
,

iL

L

'f

IR TFVRCVR

Encryption/
Smart Card
Interface

O

O
—
•^
O
O"
CO

CD
CD
CD

Source: Dataquest (September 1996)•4

DRAM2M8w

MPEG-2 Video
Decoder

MPEG or•4Dolby AC-3
Audio Decoder

Video DACs-

Encodar/

Dual Au
DAC

_

7B

Consumer Multimedia Semiconductor and Applications Worldwide

Table 5-8
Semiconductor Opportunities in Interactive TV
Semiconductor Function

Technology
Bipolar/GaAs
Bipolar
CMOS, bipolar
Opto, bipolar, and BiCMOS
CMOS
CMOS
Bipolar/CMOS
Bipolar
CMOS
CMOS
Bipolar/CMOS
CMOS
CMOS
CMOS
CMOS
CMOS
CMOS
CMOS
CMOS
CMOS/bipolar

Broadband Up/Down Conversion
IF Processing
Modulation/Demodulation (VSB, QAM)
ATM/SONET Physical
ATM/Network Protocol
Transport Layer and Error Correction
Video Standard Decode/Encode
Video DACVideo Conversion, Scaling
Video Compression (MPEG-2, DigiCipher)
Audio Conversion
Audio Compression (AC-3, MPEG)
DRAM
VRAM/Field Memory
Fast DRAM (SDRAM, FRAM)SRAM
MPU (32/64-Bit RISC)
Encryption (Decryption) Functions
Modem (Up to V Fast)
ASICs (for above Functions)
Source: Dataquest (September 1996)i

Table 5-9
Interactive Television Technology Evolution
Category
Transmission

Processing

MemoryOthers

1994
Cable: analog; cable:
digital test, 80 channels,
FM subcarrier; fiber-optic/
ADSL tests
Addressing, pay-per-view;
DBS down conversion;
bipolar/CMOS ASIC
2MB

1996
Cable: analog/digital,
500 channels, IVDS,
FM, VBI; Fiber-optic,
ATM tests; QAM
Digital video, audio;
MPEG decompression,
eiTor correction;
bipolar/CMOS ASIC
2MB
Modular design;
security/decryption;
digital radio

1998
Cable/DBS; digital/
two-way, IVDS, FM,
VBI; fiber-optic,
ATM; QAM
Digital video, audio;
MPEG decompression,
error correction;
bipolar/CMOS ASIC
2MB
Modular design;
security/decryption

Source: Dataquest (September 1996)

i
MSAM-WW-MT-9602©1996 Dataquest

October 14,1996

79Interactive Products and Personal Electronics

Figure 5-8
Block Diagram of Thomson's DirecTV Box
Ku Band Satellite Signal In
15-Pln 19.2-Kbps
Serial Port

1

Stereo Jacks
S-Video
-^
Video
video

21-Mbps
HDTV\l PortI .. in n n n,

RJ-11

m

^K:^i:;;i;PM^
Satellite Module

Comm Stream
Satellite
Demodulator

Sony
Video
OverlaySi

TMS8320
Audio

^1
i:^
!•'•'

s

SGS 3300
MPEG
Transport•-••'!:• •SGS 3100
MPEG

:s,1

3^^\f':M^^

i^

''S

I

ll

n
RF Modulator

2400Baud
Data
Modem

Power
Supply

To TV
A

8-Bit
Microcontroller^'i::-.--yM

News
Datacard

966147

Source: Dataquest (September 1996)

Table 5-10
Worldwide Digital Cable and Satellite Decoder Revenue Market Share, 1995 (Percent)VendorThomsonGeneral Instrument
Sony
Others
Total

Unit Market Share (%)
49.0
38.9
3.9
8,2
100.0

Revenue Market Share (%)
47.3
40.2
3.8
8.9
100.0

Source: Dataquest (September 1996)

MSAM-WW-MT-9602©1996 Dataquest

October 14,1996

80

Consumer Multimedia Semiconductor and Applications Worldwide

However, with new network systems for delivering pay-TV signals(DBS, wireless, and telco), the market has opened up for suppliers
from the computer, communications, and consumer electronics industries.
Sony was the most significant new player to enter the market in 1995.
Sony's RCA-DSS-compatible receivers succeeded in displacing HewlettPackard from the No. 3 spot it held in 1994. Besides Thomson Consumer
Electronics and Sony, Toshiba America Consumer Products Inc.,
Uniden America Corp., Hughes Network Systems, Sanyo Electric Co. Ltd.,
Samsung Electronics Co. Ltd., Daewoo Electronics Co. Ltd., andMatsushita Consumer Electronics Co. have been licensed to manufacture
DSS boxes and are expected to begin shipping in 1996. DirecTV Inc., a unitof Hughes Electronics Corporation, is the trademark holder of DSS.
Table 5-11 lists advanced subscriber terminals and their manufacturers.
Table 5-11
Advanced Subscriber Terminal Manufacturers and Their Products(Digital Boxes Unless Otherwise Noted)
Manufacturer
Adaptive Micro-Ware Inc.
Apple Computer Inc.
AT&T Network Systems
Compression Labs Inc.
Daewoo Electronics Co. Ltd.
Divicom
EchoStar Communications
General Instrument Corporation
Hewlett-Packard Co.
Hughes Network Systems Inc.
IBM
LG Electronics (Goldstar)Matsushita Consumer Electronics Co.
Mitsubishi Electronics America
Pace Micro Technology
Philips Consumer Electronics
Pioneer North America
Samsung Electronics America
Sanyo Electric Co. Ltd.
Scientific-Atlanta Inc.
Sony Electronics Inc.
Stellar One Corporation
Tee-Comm Electronics Inc.
Thomson Consumer Electronics

Product
DAVID (with Mitsubishi and Stellar One)
M4120 (first generation) intend to OEM
Digital Home Terminal
Media Access and Magnitude
DSS-compatible receiver
Navigator 1000
DISH DBS
CFT-2000 (analog), CFr-2200 DigiDock, CFr-2900 TCI, Primestar,
DigiCipher I and II receivers
Kayak
DirectPC, DSS-compatible receiverVideoway Terminal (analog)
GIV-101
DSS-compatible receiver
STB-1000 (with Adaptive Micro-Ware and Stellar One)DGT 400
Media Access, Consumer IRDs, and Magnavox for EchoStar
BA-9000, BAV-1000 Command Station, BA-6700 for Quantum(these are all analog, digital is Canal Plus DBS in France)
DSS-compatible receiver, AlphaStar receiver, and the PowerPC
Digital Interactive Set-Top Box (ISTB)DSS-compatible receiver
8600xD and 8600xDI (hybrid analog/digital boxes)
DSS SAS-BSl, SAS-BAl, and SAS-ADl
Stellar 1000 (with Adaptive Micro-Ware and Mitsubishi)
StarTrak Digital IRD
RCA DSS-1 and DSS-2(Continued)

MSAI\/l-WW-MT-9602©1996Dataquest

October 14,1996

i

81Interactive Products and Personal Electronics

Table 5-11 (Continued)
Advanced Subscriber Terminal Manufacturers and Their Products(Digital Boxes Unless Otherwise Noted)
Manufacturer
Toshiba America Corporation
TV/COM International
UnidenZenith Electronics Corporation

Product
DSS-compatible receiver
AlphaStar DVB receiverUDS 200 DSS-compatible receiverMedia Access

Source: Dataquest (September 1996)

Interactive Video Games
Figures 5-9 and 5-10 and Tables 5-12 through 5-14 present the production
forecast for handheld and console video games. With the hardv^rare costs
being subsidized to an increasing level by software sales and royalties ofthe manufacturers, the market price and factory price charged to dealers
for video game hardware is becoming disconnected from the true value ofthe hardware. The figures in Figure 5-9 and Table 5-12 represent estimated"factory value" rather than the actual price charged by the factory or factory ASP. This factory value would be analogous to internal transfer pricing. Figure 5-11 shows the regional share of production revenue for video
game consoles. Figure 5-12 presents the market share for video gamecontrollers.

Figxu-e 5-9Worldwide Video Game Controller Production Revenue and Unit Shipment Forecast
Millions of Dollars

Thousands of Units
25,000

,000

1993

1994

1995

1996

1997

1998

1999

2000
36614aSource: Dataquest (September 1996)

MSAI\^-WW-MT-9602©1996 Dataquest

October 14,1996

82

Consumer Multimedia Semiconductor and Applications Worldwide

Figure 5-10
Worldwide Video Game Controller Unit Shipment Forecast, by Type(Thousands of Units)
Thousands of Units
25,000-fl

CD-ROM Peripherals
TV Set-Top

D CD-ROM Players

20,000 -32-Bit/64-Bit/Future
RISC Players

15,000-16-Bit Players
8-Bit Players

10,000-5,000-

1993

1994

1995

1996

1997

1998

1999

2000
966143

Source: Dataquest (September 1996)

Table 5-12
Worldwide Video Game Controller Production Forecast
1993

1994

1995

1996

1997

CAGR (%)
1995-2000

Factory Value ($)

1998
1999
2000
22,045 12,590 14,411 13,328 13,343 16,797 19,583 20,536
202
197
187
94
123
168
235
224

Factory Revenue ($M)

2,077

1,542

2,414

3,136

2,984

3,396

3,849

3,840

9.7

36
788

54
682

100
1,444

149
1,987

134
1,786

128
2,147

125
2,441

118
2,423

3.3
10.9

Units (K)

Semiconductor Content ($)
Semiconductor Market ($M)

7.3
2.2

Regional Production Trends (Percentage of World by Unit Production)
Americas

Q

0:

0

0

0

0

0

0

Europe

0

0
51

0
16

0

64

0
23

0

Japan

0
31

16

16

0
17

Asia/Pacific

36

48

68

77

84

84

84

83

Note: Includes handheld
Source: Dataquest (September 1996)

i
MSAM-WW-MT-9602©1996 Dataquest

October 14,1996

83

Interactive Products and Personal Electronics

Table 5-13
Worldwide ^^deo Game Controller Unit Shipment Forecast, by Type(Thousands of Units)
1996

1997

1998

1999

2000

CAGR(%)
1995-2000

55

38

30

0

0

-100.01,874

235
16,442620-100.010,928649
12,387

19,51020,536

32.0

385

435

268

90

12

M

-100.0281
14,4113700-100.013,3280
16,7970

13,343

19,583

20,536

7.3

1993

1994

1995

8-Bit Players

1,110

400

1,272

16-Bit Players

18,710

8,860

100

1,570

7,349
5,123

TV Set-Top CD-ROM
Players

1,525

860

CD-ROM Peripherals

600

900

32/64-Bit/Future
RISC Players

Total

22,045

12,590Source: Dataquest (September 1996)

Table 5-14
Americas Video Game Controller Production Forecast
CAGR(%)
1995-2000

1993

1994

1995

1996

1997

1998

1999

Units (K)

65

71

77

0

0

0

0

0

NM

Factory ASP ($)

135

121

102

0

0

0

0

0

NM

Factory Revenue ($M)

9

8

8

0

0

0

0

0

NM

Semiconductor Content ($)

42

40

38

0

0

0

0

0

NM

Semiconductor Market ($M)

3

3

3

0

0

0

0

0

NM

2000

Note: Includes handheld
Source: Dataquest (September 1996)

There were two major events in the video game market during 1996.
The first event was the breakout of a majoT price war between Sony andSega over their PlayStation and Saturn platforms. At the E3 show in
Los Angeles, both companies dropped the price of their video game consoles to $199. The second important event was the introduction of theNintendo 64 to the market. Shipments began in Japan first at the end ofJune and in the United States at the end of September. Although orders
from retailers for the Nintendo 64 have been very strong, ultimately, theconsumer will determine the success of the system. Nintendo maintained
its price at $249 for introduction of the player in Japan but has dropped theprice to $199 for the United States launch to reach price parity with Segaand Sony.
Dataquest predicts that worldwide shipments of these new video gamecontrollers will climb to over 20 million by the year 2000. With the semiconductor content in this new generation of controllers leaping to over66 percent of manufacturing cost, the semiconductor market driven bythese new video game controllers will reach $2.4 billion by the year 2000.

MSAM-WW-MT-9602©1996 Dataquest

October 14,1996

84

Consumer Multimedia Semiconductor and Applications Worldwide

Figure 5-11
Regional Share of Video Game Controller Production Revenue (Percent)
1995

2000
Americas (0%)

Americas (0%)
Europe (0%)

Europe (0%)

Total = $2.4 Billion

Total = $3.8 Billion
966150Source: Dataquest (September 1996)

Some of the important market, technology, and production trends are as
follows:• The development of the Internet appears destined to shape video gaming platforms of the future. Video game companies have already beenencouraged by the success of electronic delivery mechanisms such as
the Sega Channel and Nintendo Power Source. The next frontier for
development is the interactive, social gaming experience that can be
enabled by the Internet. A number of games and services have been
introduced that are designed to create a virtual community for video
game players using the Internet as a backbone.
• The year 1996 saw the introduction of products designed to offer
Internet access through a video game console. Sega introduced the Sega
Saturn Net Link, a 28.8-Kbps modem that can be plugged into a slot in
the Saturn. Combined with a custom-designed Internet browser, theSaturn can be used as an inexpensive Internet access terminal. The
Bandai Pippen ©World was introduced at E3 in 1996. This hybrid product is primarily an Internet access terminal but also has the ability to run
various multimedia and gaming CD-ROM-based titles.
• The introduction of a DVD drive in the video game environment will
come in the PC first and will then migrate to the dedicated console as aperipheral. It will probably be late 1998 before a new platform with an
integrated DVD drive is introduced to the market.

MSAM-WW-IVlT-9602©1996 Dataquest

October 14,1996

85

Interactive Products and Personal Electronics

Figure 5-12
Worldwide Video Game Market Share, 1995 (Based on Unit Shipments)
16-Bit Players
Others (1,0%)—[32/64-Blt Players
Others (2.1%)
Panasonic/3DO (4,4%)—^ ' '—:—Atari (0.2%)

TV CD-ROM Players

8-Bit Players

Atari (2.1%:

9S6151

Source: Dataquest (September 1996)!\/ISAM-WW-MT-9602©1996 Dataquest

October 14,1996

86

Consumer Multimedia Semiconductor and Applications Worldwide• The Nintendo 64 departs from the model followed by Sega and Sony ofdelivering software in a CD-ROM format opting for cartridge-based
media instead. The key issues here are a trade-off of system hardware
cost versus software production and distribution costs. With Nintendo
the only remaining game manufacturer supplying software in cartridge
format, the production of video game cartridges should drop sharply.
• Nintendo did bring a 32-bit platform to the market during 1995, theVirtual Boy. The Virtual Boy game unit breaks the mold of the consoleattached-to-TV standard. It is difficult to classify this product as either ahandheld device or a console device because it delivers a very different
gaming experience. The Virtual Boy provides visually immersive, threedimensional gaming using a self-contained display that resembles alarge pair of goggles. A 32-bit RISC processor running at 20 MHz and adual-LED display create a smooth, three-dimensional display. The gameplatform was introduced in the United States in August 1995 at $180.
The price was dropped to $160 three months later in reaction to consumer resistance to higher-priced games.
• In addition to the Sega Saturn, Sega is also promoting the Nomad. Thissystem is Sega's first portable 16-bit video game system. It is compatible
with the library of more than 600 Sega Genesis game cartridges.
• Atari, the video game pioneer, exited from the market at the end of 1995.
• Following the loss of support from AT&T, Toshiba, Creative Labs, andSanyo for the 3DO platform, 3DO sold exclusive rights to control theuse of its M2 64-bit platform to Matsushita Electric. 3DO effectively
relinquished control over the technology's application in most markets
in exchange for $100 million in licensing fees plus royalties from
Matsushita. The 3DO M2 system employs the PowerPC in its design.
• The dramatic rise in the value of the yen has created a major challenge
for Japanese manufacturers of video games. The strong yen has forced
these companies to move production of video game players offshore tomeet critical price targets for increasing consumer demand. Althoughmost production is taking place in Asia/Pacific, Sony has mentioned
the possibility of producing the PlayStation in Mexico.
Figure 5-13 presents a generic block diagram of a RISC video gamecontroller. Key chip opportunities include:• 32/64-bit RISC or CISC MPU• 2MB to 4MB DRAM (VRAM for some designs)• 1MB to 2MB VRAM, SDRAM, or RDRAM• 32KB SRAM
• CMOS ASIC (100,000 to 200,000 gates) graphics/sound processing• NTSC/PAL encode• Sound DAC/amplification• MPEG/JPEG decompression (optional)• CD-ROM drive controller

MSAIVI-WW-l\/lT-9602©1996 Dataquest

October14,1996

O)>

Figure 5-13
Generic Block Diagram of RISC Video Game Controller

CO
CT>
O
l>0

Video Buffer

Grapfiics/
Video
Controller

VRAM/SDRAM/
1-2MB RDRAM

SystemCPU
32/64-Bit@<o
CU

NTSC/PA
EncodeHost
CD-ROM
Controller

Sound
Controller

CD-ROM
Drive
Controller

Audio
RAM
0,5MB

Main Bus

System
SupportCD
CT>

RAMDACVideo
Compression
Decoder(M/JPEG
Optional)l^ain
Memory
2-4MB
DRAM

OS
Memory4Mb
Nonvolatile

I/O
Controller

O
o
ft-

o
cr
CD

CO
CO
<y>

n

Handheld Controller, Etc.

Source: Dataquest (September 1996)

Consumer Multimedia Semiconductor and Applications Worldwide

Cameras, Watches, and Clocks
Table 5-15 presents the Americas region production in these areas.
Production for the most part has moved to Asia for all but the very highend products.
Table 5-15
Americas Revenue from Production of Cameras, Watches, and Clocks(Millions of Dollars)

CamerasWatches
Clocks
Total

1993

1994

1995

1996

1997

1998

1999

2000

24
110
60
194

25
115
62
202

27
120
66
213

28
127
69
224

29
131
72
232

29
136
75
240

30
142
78
250

30
148
81
259

CAGR(%)
1995-2000
2.1
4.3
4.2
4.0

Source: Dataquest (September 1996)

Digital Cameras
The term "digital camera" is used to refer both to video cameras that are
mounted on a PC for use in videoconferencing applications and to stillcameras that record images on memory chips, magnetic film, or a disk
instead of conventional film. The digital cameras discussed in this section
use the latter definition. Digital cameras were originally targeted at vertical markets such as real estate, fashion, and law enforcement. However, tothe pleasant surprise of manufacturers, consumers are purchasing digital
cameras and driving a stronger-than-expected market. A number of newcompanies are jumping into this market. The merger of the camera and acomputer represents the easiest way to get photographs into a PC. Images
can be transferred to the hard drive of a computer, where they can beviewed, edited, or added to documents. Although the images created bydigital cameras are inferior to the quality achieved by traditional film
cameras, the image that can be captured in a PC through a digital camera
is superior to the method of using a scarmer to transfer a photo into a
computer. The picture quality of the latest digital cameras is comparable to
S-VHS or hi-8 video images.
Some of the digital camera models available in the market are: Kodak's
DC 20, DC 40, and DC 50, Apple's QuickTake 100 and 150, Casio's QV-10,
Logitech's FotoMan Pixtura, Ricoh's DC-1 and RDC-1, Toshiba's
PROSHOT, Minolta's RD-175, Epson's Photo PC, Chinon's ES-1000 and
ES-3000, Polaroid's PDC-2000, Canon's PowerShot 600, Casio's QV-10,
QV-lOA, and QV-30, Fuji's DS-220, Ricoh's RCD-1, Dycam's 10-C andSony's DKC-IDl. New product announcements are expected from companies including Kyocera and NEC in the coming months.
Prices for digital cameras range from $500 for cameras such as the Epson
Photo PC and the Chinon ES-1000 to $1,800 for the advanced Ricoh
RDC-1. Even with these high prices, industry observers expect market
sales to be four times higher in 1996 than in the previous two years combined. Recent armouncements from major manufacturers would support
this prediction.
l\/ISAM-WW-MT-9602©1996 Dataquest

October 14,1996

Interactive Products and Personal Electronics

89

Digital cameras incorporate a variety of semiconductor types, including
microcontrollers, DRAM, flash memory, ASICs, and charge-coupleddevices (CCDs). The most experisive semiconductor in a digital camera
tends to be the CCD. Figure 5-14 is a block diagram of Casio's QV-10
digital camera.

Advanced Photo System (APS) Cameras
Another type of new camera uses film coated with a magnetic layer that is
capable of storing digital data. Data can be stored on lighting, composition, and print formats, as well as other parameters that can be used to
improve the quality of prints. This type of film, called the Advanced Photo
System, was introduced in March 1996 by erstwhile rivals Fuji and Kodak.
Despite much hype surrounding its introduction. Advanced Photo Systemcameras have yet to be sold in any large quantity. A botched productlaunch attempt has kept cameras out of many stores and stalled sales.

MSAM-WW-MT-9602©1996 Dataquest

October 14,1996

CO>

Figure 5-14
Block Diagram of Casio's QV-10 Digital Camera
LSI-2
LSI-1

CD
CT>
O

CCD

no

A/D

a
A

V

SG

D/A
Driver• { >TG
DCT - Huffman
Coprocessor

Lens

@

RISC CPU

CD
CD

16M
Flash Memoi7

a>
o
(U
f-H-

RAM

ROM

pu
J=)

c:

DMAC

CD

4M
DRAM

CPU
BSC

I/O Port

Key

O
o
I—*-

o
CT
CO

CD
CD
<J>

Source: Casio

SCIChapter 6

Appliances and Other Consumer Equipment
Figures 6-1 through 6-3 and Tables 6-1 and 6-2 present production andmarket forecasts for appliances and other consumer electronics.
Highlights in the markets for appliances and other consumer equipment
are as follows:• Generally, appliances are following replacement market economics inthe developed countries. Because of prohibitive transportation costs,
most appliances are produced in the end-use market.
• Major appliances are growing ever more sophisticated. Following thepatii laid down by consumer electronics, they are acquiring MCU (4-bit,
mostly) control, digital signal processor (DSPs), microprocessors, sensors, and a variety of electronic features.
• Motor-driven appliances such as refrigerators, washers, and dryers aregradually moving to solid-state controls for direct-drive motors. Use of
fuzzy logic is promising new opportunities for semiconductors. For
more information, see Chapter 7, "Emerging Opportunities."• There is an increasing trend away from electromechanical sensors
toward silicon-based sensors, but they must become more cost-justifiable based on their performance. For more information, see Chapter 7,"Emerging Opportunities."• Recent consumer surveys have indicated that home automation is on
top of the wish list. LAN technology will enable all computerized appliances to be linked together, but lack of standardization in this area may
temper consumer acceptance. For more information, see Chapter 7,"Emerging Opportunities."• The "green" movement is forcing more appliance power conservation,with solid-state controls as a way of accomplishing design objectives.
The upcoming U.S. Department of Energy standards for energy efficiency, potentially slated for 1999, may spur the use of electronic sensors
in many appliance applications.

Microwave Ovens and Refrigerators
Tables 6-3 and 6-4 detail the market for microwave ovens. Tables 6-5 and6-6 detail the market for refrigerators.

Disliwasliers, Washers, and Dryers
Tables 6-7 and 6-8 detail the market for dishwashers. Tables 6-9 and 6-10
detail the market for washers. Tables 6-11 and 6-12 detail the market fordryers.

MSAM-WW-MT-9602©1996 Dataquest

91

92

Consumer Multimedia Semiconductor and Applications Worldwide

figure 6-1
Worldwide Electronic Appliance Production Revenue Forecast (Millions of Dollars)Millions of Dollars
25,000-(I^Americasl^sEuropes Japann Asia/Pacific

1993

1994

1995

1996

1997

1998

1999

2000
966154

Source: Dataquest (September 1996)

Figure 6-2
Regional Share of Electronic Appliance Production Revenue (Percent)
1995

2000

Total = $58 Billion

Total = $75 Billion
366155

Source: Dataquest (September 1996)

MSAM-WW-MT-9602©1996 Dataquest

October 14,1996

93

Appliances and Other Consumer Equipment

Figiure 6-3
U.S. Major Appliance Unit Shipments, 1954 to 1994
(Includes Dishwashers, Dryers, Ranges, Refrigerators, and Washers)
Millions of Units

10-rf

m 1954m 1964s 1974n 1984n 1994

Dishwashers

DryersRangesWashers

Refrigerators

966156

Source: Dataquest (September 1996)

Table 6-1
Americas Appliance Production Revenue Forecast (Millions of Dollars)
Segment

1993

1994

1995

1996

1997

1998

1999

2000

CAGR (%)
1995-2000

Ranges and Over\s(Gas and Electric)

1,382

1,518

1,544

1,586

1,653

1,702

1,769

1,842

3.6

558

635

638

660

695

724

756

786

4.3

4,004
1,404

3,998
1,411

4,144
1,467

4,355
1,529

4,437

Dishwashers

3,791
1,230

4,603
1,652

4,761
1,729

3.6
4.1

Refrigerators

5,354

5,729

5,669

5,912

6,171

6,652

6,927

4.1

Room Air Conditioners

2,233

2,919

3,128

3,127

3,087

6,400
3,241

3,385

3,619

3.0

14,548 16,209 16,388 16,895 17,489 18,086 18,818 19,664

3.7

Microwave Ovens
Clothes Washers and Dryers

Total

1,582

Source: Dataquest (September 1996)

MSAM-WW-IVIT-9602©1996 Dataquest

October 14,1996

94

Consumer Multimedia Semiconductor and Applications Worldwide

Table 6-2
Americas Appliance Market Forecast (Thousands of Units)
1993

1994

1995

1996

1997

1998

1999

2000

CAGR (%)
1995-2000

Ranges and Ovens(Gas and Electric)
Microwave Ovens

10,982

12,277

12,072

12,324

12,53912,89813,224

13,515

2.3

10,973

12,583

12,214

12,486

10,050
7,484

10,006
7,438

10,274

11,162

13,683
11,467

2.3

9,676
7,116

12,976
10,827

13,324

Clothes Washers
Clothes Dryers

12,63910,487

7,435

7,580

7,856

8,130

8,384

2.8
2.4

Dishwashers
Refrigerators
Freezers

5,746

6,374

6,432

7,093

7,355

2.9

13,86615,031

15,465

15,913

2.8

2,370

2,395

14,2082,437

6,553
14,562

6,830

12,8602,252

6,340
13,662
5,608

5,855

5,982

2,570
6,222

2,639
6,336

2.5

4,401

2,493
6,112

2,712

Room Air Conditioners

6,454

2.0

64,00770,37570,222

71,57772,96575,21077,373

79,4822.5

Segment

Total

Source: Dataquest (September 1996)

Table 6-3
U.S. Microwave Oven Brand Share Leaders, First Quarter 1995 through Fourth Quarter
1995 (Percent)
Brand

Unit Market Share (%)

Revenue Market Share (%)

Sharp

24.7

GE

24.8
13.1

Sears/Kenmore
Panasonic

11.3
10.7

12.1

Tappan

5.9
5.4

5.1
4.1

Magic Chef

16.8
9.0

Emerson

5.1

2.8

Samsung

4.5

3.1

WhirlpoolGoldstar

5.0
3.7

7.3
2.9

Others
Total

10.5

12.1

100.0

100.0

©1996 Dataquest

October 14,1996

Source: The Scout Report®/The Polk Company

MSAM-WW-MT-9602

95Appliances and Other Consumer Equipment

Table 6-4
U.S. Microwave Oven Brand Share Leaders, Second Quarter 1995
through First Quarter 1996 (Percent
Brand

Unit Market Share (%)

Revenue Market Share (%)

Sharp

24.3

23.7

GE

12.9
11.6

16.9
12.4

Panasonic
Tappan

10.6

8.9
4.7

Magic Chef

4.1

Emerson

5.5
5.4

Samsung
Whirlpool

5.0
4.8

Goldstar
Others

4.0
10.3

3.5
7.8
3.1
11.9

Total

100.0

100.0

Sears/Kemnore

5.6

3.0

Source: The Scout Repor1®/The Polk Company

Table 6-5
U.S. Refrigerator Brand Share Leaders, First Quarter 1995 throughFourth Quarter 1995 (Percent)
Unit Market Share (%)

Revenue Market Share (%)

Sears/Kenmore

20.8

21.5

GE

19.3

Whirlpool

18.1
11.4

Amana

10.2

Frigidaire
Maytag

6.4

6.2

4.3
4.3

4.8

4.7

3.8

3.6
3.2

3.0

Brand

KitchenAid
Hotpoint
Admiral
Magic Chef

11.8
11.7

5.0

2.9

Others

13.0

10.0

Total

100.0

100.0

Source: The Scout Report®/The Polk Companyl\/ISAM-WW-l\/lT-9602©1996Dataquest

October 14,1996

96

Consumer Multimedia Semiconductor and Applications Worldwide

Table 6-6
U.S. Refrigerator Brand Share Leaders, Second Quarter 1995
through First Quarter 1996 (Percent)
Brand
Sears/Keninore

Unit Market Share (%)

GE
Whirlpool
Amana
Frigidaire

Maytag21.9

Revenue Market Share (%)
22.4

17.2
11.7

18.2
12.2

9.9
6.4

11.1
6.5
5.4

KitchenAid

4.8
4.4

Hotpoint
Admiral

4.3
3.5

3.5
2.9

Magic Chef

3.3

3.2

Others

12.6

9.3

Total

100.0

100.0

5.3

Source: The Scout Report®/The Polk Company

Table 6-7
U.S. Dishwasher Brand Share Leaders, First Quarter 1995 throughFourth Quarter 1995 (Percent)
Unit Market Share (%)

Revenue Market Share (%)

Sears/Kerunore

23.4

Maytag

17.5

23.1
19.4

GE
Whirlpool

17.9
15.0

17.9
14.1

KitchenAid

9.3

11.6

Hotpoint

4.2

3.0

Frigidaire
Tappan

2.9
1.4

2.6
1.2

Magic Chef
White/Westinghouse

1.4

1.3

1.5

1.0

Brand

Others
Total

5.5

4.8

100.0

100.0

Source: The Scout Report®/The Polk Company

MSAM-WW-MT-9602©1996Dataquest

October 14,1996

Appliances and Other Consumer Equipment

97

Table 6-8
U.S. Dishwasher Brand Share Leaders, Second Quarter 1995
through First Quarter 1996 (Percent)
Unit Market Share (%)

Revenue Market Share (%)

25.6

25.3
18.9

GE

17.3
17.0

Whirlpool
KitcheiL\id

15.1
8.0

14.5
10.2

Hotpoint
Frigidaire

3.8
3.3

Tappan

1.5
1.4

2.6
3.0
1.2

Brand
Sears/Kenmore
MaytagMagic Chef
White/Westinghouse
Others
Total

17.0

1.2

1.1

0.8

5.9

5.3

100.0

100.0

Source: The Scout Report®/The Polk Company

Table 6-9
U.S. Clothes Washer Brand Share Leaders, First Quarter 1995
through First Quarter 1995 (Percent)
30.9

Revenue Market Share (%)
30.4

Maytag

18.8
14.7

18.4
17.7

GE

9.3

9.0

Amana

4.6

4.8

Roper
Frigidaire

2.7

2.0

2.7

2.5
2.5
2.2

Unit Market Share (%)

Brand
Sears/Kenmore
Whirlpool

Hotpoint

3.2

White/Westinghouse

2.6

KitcheriAid

2.2

Others

1.9
8.6

Total

100.0

100.0

8.3

Source: The Scout Report®/The Polk Company

l\/iSAI\/i-WW-l\/lT-9602©1996Dataquest

0ctober14,1996

98

Consumer Multimedia Semiconductor and Applications Worldwide

Table 6-10
U.S. Clothes Washer Brand Share Leaders, Second Quarter 1995
through First Quarter 1996 (Percent)
Brand
Sears/Keninore
Whirlpool
Maytag
GE
Amana
Roper
Frigidaire
Hotpoint
White/Westinghouse
KitchenAid
Others
Total

Unit Market Share (%)
29.6
19.6
14.5
10.3
4.7
2.9
2.8
2.8
2.5
1.7
8.6
100.0

Revenue Market Share (%)
29.2
19.1
17.3
9.9
4.9
2.2
2.7
2.2
2.2
1.9
8.5
100.0

Source: The Scout Repor1®/The Polk Company

Table 6-11
U.S. Clothes Dryer Brand Share Leaders, First Quarter 1995
through Fourth Quarter 1995 (Percent)
Brand
Sears/Kenmore
Whirlpool
MaytagGE
Amana
White/Westinghouse
Frigidaire
Roper
Hotpoint
Speed Queen
Others
Total

Unit Market Share (%)
30.0
19.1
12.6
12.1
4.5
2.8
2.7
2.2
2.5
1.7
9.8
100.0

Revenue Market Share (%)
30.5
19.1
14.9
11.5
4.5
2.3
2.3
1.7
2.2
1.6
9.4
100.0

Source: The Scout Repor1®/The Polk Company

MSAM-WW-MT-9602©1996Dataquest

October 14,1996

99

Appliances and Other Consumer Equipment

Table 6-12
U.S. Clothes Dryer Brand Share Leaders, Second Quarter 1995
through First Quarter 1996 (Percent)
Brand
Sears/Kenmore
Whirlpool
MaytagGE
Amana
White/Westinghouse
Frigidaire
Roper
Hotpoint
Speed Queen
Others
Total

Unit Market Share (%)
29.4
19.4
13.3
12.2
4.4
3.0
2.8
2.4
2.2
1.3
9.6
100.0

30.1
19.4
15.2
11.8
4.5
2.4
2.5
1.8
2.0
1.3
9.0
100.0

Source: The Scout ReportD/The Polk Company

Air Conditioners
Top OEMs in air conditioners are as follows:• Sears/Kenmore• Fedders• Whirlpool• GE• Carrier• Amana• Frigidaire• White/Westinghouse• Emerson• FriedrichRangesTop OEMs in ranges are as follows:• GE• Electrolux (Frigidaire)• Whirlpool• Electrolux• Maytag (Magic Chef, Hardwick, Jenn Air)
• Raytheon (Caloric)• Brown• Peerless Premierl\/ISAM-WW-MT-9602©1996Dataquest

October 14,1996

100

Consumer Multimedia Semiconductor and Applications Worldwide

Other Consumer Equipment
Tables 6-13 and 6-14 detail the market for other consumer equipment.
Top OEMs in home security systems are as follows:• Honeywell• Black & Decker• Sony• Audiovox• YaleTable 6-13
Worldwide Revenue from Production of Other Consumer Equipment(Millions of Dollars)
Revenue

1993

Other Consumer Equipment

11,869 13,098 14,945 14,243 15,138 15,898 16,496 17,433
11,869 13,098 14,945 14,243 15,138 15,898 16,496 17,433

Total

1994

1995

1996

1997

1998

1999

2000

CAGR (%)
1995-2000
3.1
3.1

Source: Dataquest (September 1996)

Table 6-14
Americas Revenue from Production of Other Consumer Equipment(Millions of Dollars)
Segment
Automatic Garage Door Openers
Others
Total

1993

1994

1995

1996

1997

1998

1999

2000

CAGR (%)
1995-2000

351

409

426

443

462

483

504

527

4.3

1,078
1,429

1,118
1,527

1,157

1,197

1,243

1,292

1,397

1,583

1,640

1,705

1,775

1,343
1,847

3.8
4.0

1,923

Source: Dataquest (September 1996)

IVISAM-WW-MT-9602©1996 Dataquest

October 14,1996

Chapter 7

Emerging Opportunities
Consumer electronics of all types, in particular, white appliances, aredestined for increased use of semiconductor devices. From home entertainment, communications, and ambient climate control to kitchen appliances and even plant watering operations, home appliances are expanding
the field of semiconductor applications. Semiconductors are offering
appliance manufacturers unlimited possibilities to add features and value(that is, differentiation) to their products. While TV, video, or audio systemmanufacturers have embraced semiconductor technologies, white good
OEMs are not as knowledgeable about chip technologies and what to lookfor in an electronic component supplier. To enable market expansion,
semiconductor manufacturers will need to educate appliance OEMs about
the role and potential of semiconductors, how to use them appropriately,and how to specify components. For planning purposes, appliance OEMs
have to be awaretibiatmanufacturing semiconductors is a longer and more
involved process than producing a sheet of metal.

Home LANs
Recent consumer surveys have indicated that home automation was on
top of the wish list in terms of energy conservation, entertainment, andcost savings. In the future, there will be a multitude of computers at home.
Some will perform traditional computing tasks, while others will be usedmainly for games, communications, controlling other devices in the home,and other purposes. It is quite likely that all these computers will be tied
together somehow, perhaps using wireless technology. The era of thehome hub may be coming, but to be really successful and accepted by consumers, the technology has to be simple, maintenance free, and nearlyinvisible to typical users.
Home builders are now offering built-in office space in all house priceranges with cable or fiber-optics prewiring, LAN, and high-speed transmission lines. Plastic fiber optics promises data transmission speeds nearing those of glass fiber for aft-actionof the cost. In the United States,
Boston Optical has started selling this plastic fiber, which was developed
jointly with General Motors Corporation, Honeywell Inc., and Boeing
Company. In Japan, Sony, NEC, Toray Industries, and Toshiba have started
a similar consortium.
Anticipating increased use of LANs, bus technology suppliers are developing protocols with the hope of capturing early market leadership. Thesehouse LANs create a communications pathway among the home's appliances, heating, ventilation, and air conditioning (HVAC) systems, computing and cable equipment, and outside agencies such as the powercompany so that energy use can be optimized and outside communications can be automatic. They are also being driven by the increasing number of consumers looking for comfortable ways to work efficientiy at
home.

MSAM-WW-MT-9602©1996 Dataquest

101

102

Consumer Multimedia Semiconductor and Applications Worldwide

The consumer's ultimate wish is to have easy-to-use devices and compatible products. Confronted by too many systems, consumers are reluctant toinvest in any one system in an industry cluttered with incompatible
systems and therefore ripe for fallout.
Leading bus contenders in the United States include:• CEBus—An EIA-supported protocol that is enjoying widespread acceptance. One of its advantage is its versatility: it can be used with cable
television, air conditioning, phone wiring, or even radio frequency.
Intellon Corporation has a power line RF modem IC using spread spectrum technology capable of 10-Kbps data rates. Intellon recently tested
its technology on the Tele-Communications Inc. (TCI) and Microsoft settop box platform. AMP Inc.'s OnQ-mand system enables home automation operation via television sets, and Diablo Research Corporation proposes an energy monitoring system. Maytag's upcoming Jenn-Air dryer
will be one of the first appliances to be equipped with CEBus technology, which will add $50 to $75 to manufacturing costs. Costs are being
reduced for implementing this technology in consumer products suchas refrigerators, hot water heaters, and air conditioners.
• LonWorks—A proprietary approach advocated by Echelon Corporation. Echelon network controllers are made by Motorola and Toshiba.
Motorola and Toshiba are now quoting prices between $2 and $3 for
Neuron controller chips, compared to $15 a few years ago. In 1995,
50,000 homes were scheduled to have LonWorks devices installed.
• Totally Automated Building System (TABS) from NetMedia—This
approach merges PC control, customizable software, and complete
systems integration. TABS began shipping early this year.
• SmartHouse protocol—Molex Inc. offers packages of components using
this protocol. The wiring package for example, provides high-speed
Internet access and enables modem, fax, and phone lines as well as
video distribution throughout the home.
• XIO Protocol—Several companies offer products incorporating this protocol. For example, IBM's new Home Director Software, which will shipin fall 1996, will allow users to control lights, consumer electronics,
appliances, and sprinklers, among other functions, with no need forspecial wiring.
• Serv-Touch—Offered by P-Serv Technologies Pte., this system allows
users to activate remotely up to 48 devices by using the phone. The
system is awaiting FCC approval and could be on the market soon.

USB and IEEE 1394
With the advent of multimedia and digital telephony, end users wantcomputers that are easier to set up and use and that enable them to easily
plug in any kind of peripheral. Facing the large sampling of additional
devices that can be hooked up to the computer, connectivity becomes a
critical factor. Universal Serial Bus (USB) and IEEE 1394 are emerging as
new industry standards for external bus. Both technologies are driven by
the same philosophy: true plug-and-play computers. Both are standard
architectures that are open to all and are inexpensive to implement. They
have the pluses of automatic self-configuration coupled with simple
connectors and wiring.
MSAM-WW-MT-9602©1996 Dataquest

October 14,1996

Emerging Opportunities

103

There is no doubt that the personal computer landscape will be changed
by USB and IEEE 1394, but there is a question of the degree and pace ofthat change. It is possible that these two new bus technologies will be limited to a higher-performance/lower-cost interface role in the near future,
thereby merely broadening the application set of the personal computer.
However, Dataquest believes that these buses have the potential to transform the personal computer to a modular set of components in the same
fashion that stereo systems were transformed a few decades ago.
IEEE 1394 is designed as a high-speed local interface allowing plug-andplay with devices that rely on high-rate data transfer, including various
types of video and multimedia equipment. USB is viewed as complementary to IEEE 1394, to be used for applications and peripherals for which
speed is less of an issue (keyboards, mice, joysticks, and so on). Key players such as Microsoft, IBM, Sony, Philips, HP and Compaq Computer
Corporation are supporting both buses in their newest products or
prototypes.
In considering the existing market, one has to ask whether the current PC
market leaders will lead the charge or will be dragged kicking and screaming into the new paradigm. On the other hand, the corisumer electronics
giants clearly have an opportunity with the emergence of the modular PC
to gain access to significant new revenue streams.
USB-based products have started to appear on the market with a strong
push from Intel. Given current indicators based on Dataquest's discussions with PC and consumer electronics manufacturers, it is Dataquest's
belief that the industry will see IEEE 1394-based PC peripherals in 1997. It
is unlikely that existing PC companies will lead the charge, however. Early
leaders of this effort are more likely to be consumer electronics giants withline extensions for imaging products that sneak u p on the PC peripheralsmarket. Initial efforts may focus on DVD players and digital cameras, asthese are opportunities to capitalize on technology transitions in themarket.
The convergence of consumer entertainment electronics with the personal
computer, coupled with ease of setup and upgrading will not only appeal
to computer/electronics addicts but will also attract new buyers. Also, thesame bus chipset (USB or IEEE 1394) will be needed in both the peripherals and the host computer. The word "peripheral" is just taking a muchbroader meaning, including virtually any household electronic device. For
semiconductor makers, this can only mean larger volumes of chips to produce coupled with the opportunity to bring the integrated chip onto the
CPU motherboard.
For more discussion of this topic, see the Dataquest Perspective titled"The Right Connections to Stay in Business, or. Do Not Miss the Bus!"SAMM-WW-DP-9603.

IVISAIVI-WW-IViT-9602©1996 Dataquest

October 14,1996

104

Consumer Multimedia Semiconductor and Applications Worldwide

Home Theater Technologies
Social trends and technological advancements are supporting the phenomenal growth potential of the home theater system market. Home theater combines high-quality video and audio equipment to reproduce amovie theater surround sound environment. Home theater audio systems
include surround sound processors, amplifiers, receivers, subwoofers,
center-channel speakers, and satellite surround speakers. Key to the development of these systems are technologies like Dolby AC-3 and Home THX
5.1. AC-3 will first appeal mainly to hard-core audiophiles in 1996 and1997, but manufacturers are betting that AC-3 equipment will be among
their leading profit-generating products, and therefore are developing andproducing equipment rapidly to establish a leadership role for themselves.
Dolby Surround AC-3 reproduces powerful audio with dynamism, presence, and realism by delivering six separate channels of sound. The fivemain channels (three sound and two surround channels) operate across afull frequency range from 3Hz to 20,000Hz, assuring low-distortion audio
reproduction. Optionally, users can add a subwoofer to each channel. The
sixth channel is a low-frequency channel that can contain additional bass
information for maximum effect from explosions, crashes, or similarsounds. All six charmels are digital and use less space than a single channel on a CD because they use an advanced encoding system. The appeal ofthis method is that it is possible to add AC-3 sound tracks to conventionallaser discs and other sources.
Home THX is a set of performance parameters that Lucasfilm Ltd. developed. Home THX makes it possible to bring out the maximum potential
and quality of AC-3 sources by avoiding or correcting tonal and spatial
errors introduced by the home acoustic environment, which is smaller andmore intimate than cinema environment. Home THX controllers containseveral units of circuitry, including:• Re-equalization to correct overly bright front channel sound• Electronic crossover to improve bass dynamic range• Timbre matching to smooth the front-to-surround panning• Decorrelation to enhance the surround spatiality and envelopment
Audio system vendors believe that home theater technology will expand
the audio market and, thus, are promoting new products in this arena.
Pioneer is featuring audio/video (A/V) receivers, Yamaha is proposing aseven-channel digital sound field processor and amplifier. Kenwood offers
an AC-3 power amplifier with a touch pad preamplifier controller. Denon
is also entering the home theater market with A/V receivers, preamplifiers, and sound processors.
Digital sound still relies on analog components and offers opportunities tosemiconductor makers that want to exploit the fact that most audio semiconductors are not entirely digital. General-purpose DSPs are quite expensive for audio applications, opening opportunities for digital soundprocessor chips for under $10. Availability of AC-3 chipsets that cost lessthan current models should coincide with availability of DVD.

MSAM-WW-MT-9602©1996 Dataquest

0ctober14,1996

Emerging Opportunities

105

Smart Appliances
Evolving appliance technologies make it easier to use appliances such as
dishwashers and clothes washers, refrigerators, and microwaves, among
others, as well as to control the home environment (air-conditioning andsprinkler systems, for example). Driven by stricter environmental regulations and by consumer demand for convenience, electronic controls are
becoming increasingly popular in home appliances. However, appliance
OEMs are still uncertain about their return on investment in this arena.
Major home appliance OEMs that are aggressively exploring use of electronic controls include Maytag, KitchenAid, Hoover, Sharp, and Emerson.
What future appliances will deliver, and what role sensors and activators
will play, depends on the cost and globalization of the market.
• Sensors: Sensors are used to measure water level, pressure, air humidity, voltage, current, and many other parameters. Because of tighter governmental regulations around the world, electronic sensors are vying to
replace their electromechanical counterparts. However, the demand forthe latter will not die for some time because of cost. Use of electronic
controls provide appliance OEMs with two major advantages:• More accurate measurements and faster corrective action is enableda A wider range of parameters can be measured. Some parameters justcannot be electromechanically measured. This provides OEMs withthe possibility of adding features and value and the opportunity todifferentiate their products.
• Fuzzy logic: This software tool mathematically computes the subjectivity of human perception into the strict binary language of computers.
Fuzzy logic enables real-time and automatic monitoring of the appliance's function. Fuzzy logic is being integrated in vacuum cleaners,
clothes washers and dryers, microwaves, and dishwashers, among others. In ovens, for example, fuzzy logic sensors can determine if food iscompletely cooked, as well as what is to be cooked, and can check thefood consistency and texture, allowing the oven to adjust cooking conditions accordingly. In a washing machine, sensors measure level of soil
in water, level of water, temperature, level of foam, detergent levels,
arm rotation, and other parameters. The unit collects all tihe input,
examines the data against a mathematical model, and decides what to
do next. Achieving higher performance in variable speed motors is aprime application for fuzzy logic. Semiconductors represent about
60 percent of the total material cost in a typical variable-speed motor
command circuitry. Of that 60 percent, power switching and fast diodes
account for 70 percent. Other components are ICs used in control andinterfacing (15 percent each). By controlling instantaneously the amountof electrical power transferred to the motor, one can limit the current
span and use a cheaper power stage. This is possible by using a fastembedded fuzzy logic coprocessor that optimizes in real time the motor
flux and ultimately saves about one-third of the power stage.
• Voice activation: After appliances are trained to recognize particular
voices, they can execute commands made verbally. Microwaves andovens should be among the first appliances to display such features, but
this technology is still in the prototype stage. Products could emerge atthe end of 1997.
IVISAM-WW-MT-9602©1996Dataquest

October14,1996

106

Consumer Multimedia Semiconductor and Applications Worldwide

New Influential Regions in the World
It is important to keep an eye on several developing regions around theworld as household disposable income rises, creating a new generation of
consumers. About two-thirds of the world's population uses relatively few
consumer electronic items, and a huge market awaits patient consumer
electronics and appliance companies (and their suppliers).
Expect basic goods such as refrigerators, cookware (rice cookers, for example), persorial and portable stereos, and color TVs to be in demand first.
Markets such as China, India, Indonesia, Malaysia, Brazil, and Mexico areindicating huge potential. In most cases, these markets are best served byjoint ventures with local comparues.
For example. Central and South American countries absorbed over
15 million home appliances in 1994. Expected to grow at 5 percent per year
over the next several years, this market could reach over 20 million units
by 2000. Brazil alone represent 50 percent of the total South America
market.
The Chinese consumer electronics market also represents impending
growth. Sales of televisioris in 1996 will be about 12 percent higher tibian
1995 sales, to reach 27 million units. Twenty-one-inch color TVs represent
80 percent of the market, but they are being replaced by 25-inch or larger
sets. Demand for other audio/video equipment will grow similarly. Home
appliances such as ovens, microwaves, washing machines, refrigerators
and air conditioners are highly sought. For instance, 15 million washingmachines could be sold by the end of 1996, compared to 12.5 million units
sold in 1995. Fully automatic machines account for over a third of the market. They are very popular with urban populations, while rural families
prefer semiautomatic units. This market is expected to grow at a rate of
13 to 18 percent over the rest of the decade.

MSAM-WW-MT-9602©1996 Dataquest

October 14,1996

For More Information...

Dale Ford, Senior Industry Analyst
Internet address
Via faxrjOT Jlf^l If^CF^^'^^'^^^ir*"•
A Gartner Group Company(408) 468-8311
dford@dataquest.com(408) 954-1780

The content of this report represents our interpretation and analysis of information generally available to the public
or released by responsible individuals in the subject companies, but is not guaranteed as to accuracy or completenessIt does not contain material provided to us in confidence by our clients. Reproduction or disclosure in whole or inP^''''° other parties shall be made upon the written and express consent of Dataquest©1996 Dataquest—Reproduction Prohibited
Dataquest is a registered trademark of A.C. Nielsen Company

DATAQUEST WORLDWIDE OFFICESNORTH AMERICAWorldwide Headquarters

EUROPE
European Headquarters

ASIA/PACIFIC
Asia/Pacific Headquarters

251 River Oaks Parkway
Sail Jose, California 95134-1913
United States
Phone: 1-408-468-8000
Facsimile: 1-408-954-1780

Tamesis, The Glanty
Egham, Surrey TW20 9AW
United Kingdom
Phone:+44 1784 431 611
Facsimile: +441784 488 980

7/F China Underwriters Centre
88 Gloucester Road
Wan ChaiHong Kong
Phone: 852-2824-6168
Facsimile: 852-2824-6138

East Coast Headquarters

Dataquest France

Nine Technology Drive
P.O. Box 5093
Westborough, Massachusetts 01581-5093
United States
Phone: 1-508-871-5555
Facsimile: 1-508-871-6262

Immeuble Defense Bergeres
345, avenue Georges Cl&nenceau
TSA 40002
92882 - Nanterre CTC Cedex 9
FrancePhone: +33 1 41 35 13 00
Facsimile: +33 1 41 35 13 13

Suite 2407, Trade Tower
159 Samsung-dong, Kangnam-gu
Seoul 135-729
Korea
Phone: 822-551-1331
FacsimUe: 822-551-1330

Dataquest Germany

Dataquest Taiwan

Kronstadter Strasse 981677 Miinchen
Germany
Phone: +49 89 93 09 09 0
Facsimile: +49 89 93 03 27 7

llF-2, No. 188, Section 5
Nan King East Road
TaipeiTaiwan, R.O.C.
Phone: 8862-756-0389
FacsimUe: 8862-756-2663

Dataquest Korea

Dataquest Global Events

3990 Westerly Place, Suite 100
Newport Beach, Calif orrua 92660
United States
Phone: l-714^476-9117
Facsimile: 1-714-476-9969
Sales Offices:
Washington, DC (Federal)
New York, NY (Financial)
Dallas, TX
LATIN AMERICA

Research Affiliates and Sales Offices:
Buenos Aires, Argentiiia
Sao Paulo, Brazil
Santiago, Chile
Mexico City, Mexico

Sales Offices:
Brussels, Belgium
Kfar Saba, Israel
Milan, Italy
Randburg, South Africa
Madrid, Spain
JAPANJapan Headquarters

Aobadai Hills 4-7-7
Aobadai
Meguro-ku, Tokyo 153
Japan
Phone: 81-3-3481-3670
Facsimile: 81-3-3481-3644

Dataquest Singapore

105 Cecil Street#06-01/02 The Octagon
Singapore 069534
Phone: 65-227-1213
Facsimile: 65-227-4607
Dataquest Thailand

12/F, Vanissa Building
29 Soi Chidlom
Ploenchit Road
Patumwan, Bangkok 10330
ThailandPhone: 662-655-0577
Facsimile: 662-655-0576
Research Affiliates and Sales Offices:
Melbourne, Australia
Beijing, China

Dataquest
A Gartner Group Company©1996 Dataquest

DataQuest

Consumer Electronics Semiconductor
Application Marketsi^Market Trends

Program: Consumer Multimedia Semiconductor and Applications Worldwide
Product Code: MSAM-WW-MT-9601
Publication Date: January 29,1996
Filing: Market Trends

Consumer Electronics
Application Marlcets

Market Trends>

Program: Consumer Multimedia Semiconductor and Applications Worldwide
Product Code: MSAM-WW-MT-9601
Publication Date: January 29,1996
Filing: Market Trends

Consumer Electronics Semiconductor Application Markets

Table of Contents
1. Introduction
2. Executive Siimmary
3. Audio Equipment
Personal/Portable Stereos (Boom Boxes and Headsets)
CD Players
Personal CD Players
MiniDisc (MD) Players
Cassette Tape Decks
Personal Tape Players
Digital Compact Cassette (DCC) Players
Stereo Rack Systems
Stereo Receivers
Stereo Speakers
4. Video Equipment
Market Trends
Color Television
VCRs
Camcorders
HDTV
The Challenges of U.S. HDTV
Problems with Wide-Screen TVs and HDTV Receivers
Standards and Organizations
Current Specifications
Receiver Production and Market
DVD (Digital Video Disc) and Video-CD
5. Interactive Products and Personal Electronics
Interactive Television and Set-Top Box Definitions
Markets for Subscriber Terminals
Production and Market Forecast
Technology Requirements
Manufacturers and ProductsInteractive Video Games
Cameras, Watches, and Clocks
Digital Cameras
6. Appliances and Other Consumer Equipment
Microwave Ovens
Refrigerators
Dishwashers
Washers
DryersAir Conditioners
RangesOther Consumer Equipment
7. Emerging Opportunities"Smart Home" Electronics
New Influential Regions in the World>

l\/iSAI\yi-WW-i\/IT-9601©1996Dataquest

Page
1
3
11
12
13
13
13
16
16
21
21
21
23
25
27
29
35
40
47
47
48
49
50
51
54
59
59
61
61
65
68
70
78
78
81
81
81
83
83
83
83
90
90
93
93
94

January 29,1996

Consumer Multimedia Semiconductor and Applications Worldwide

List of Figures
FigurePage
2-1 Worldwide Consumer Electronic Equipment Production
Revenue Forecast
4
2-2 Worldwide Semiconductor Consumption for Consumer
Equipment Production, by Device
4
2-3 North American Consumer Electronic Equipment Production
Revenue Forecast
6
2-4 North American Semiconductor Consumption for Consumer
Equipment Production, by Device
6
2-5 Regional Share of Consumer Electrorucs Equipment Production
Revenue7
2-6 Microcontroller Penetration of the Home and Consumer
Markets8
2.-7 U.S. Household Penetration of Consumer Electronics Products,
January 1994
9
3-1 Worldwide Audio Equipment Production Revenue Forecast
11
3-2 Regional Share of Audio Equipment Production Revenue
12
3-3 Worldwide Personal/Portable Stereo Production Revenue
and Unit Shipment Forecast
13
3-4 Regional Share of Personal/Portable Stereo Production
Forecast
15
4-1 Worldwide Video Equipment Production Revenue Forecast
26
4-2 Regional Share of Video Equipment Production Revenue
27
4-3 North American Video Equipment Production Revenue
Forecast
28
4-4 Worldwide Color Television Production Revenue and Unit
Shipment Forecast
30
4-5 Regional Share of Color Television Production Revenue
32
4-6 North American Color Television Sales Mix
33
4-7 Block Diagram of Currently Available Multifunction,
High-Performance Color TV
36
4-8 Worldwide VCR Production Revenue and Unit Shipment
Forecast
37
4-9 Regional Share of VCR Production Revenue
38
4-10 Block Diagram of a Typical VCR
41
4-11 Worldwide Camcorder Production Revenue and Unit
Shipment Forecast
42
4-12 Regional Share of Camcorder Production Revenue
43
4-13 Block Diagram of a Typical Camcorder46
4-14 Worldwide HDTV Receiver Production Forecast
52
4-15 Worldwide Digital Video Disc (DVD) Preliminary Production
Forecast
55
4-16 Block Diagram of a Representative Video-CD System56
5-1 Interactive Television Systems
60
5-2 Worldwide Digital Set-Top Box Production Forecast
63
5-3 Worldwide Digital Set-Top Box Average Selling Price Forecast
63
5-4 Worldwide Digital Set-Top Box Revenue Forecast
64
5-5 Block Diagram of a Typical CATV/DBS Set-Top Box
66
MSAM-WW-MT-9601©1996 Dataquest

January 29,1996

Consumer Electronics Semiconductor Application Markets

List of Figures (Continued)
FigurePage
5-6 Block Diagram of Thomson's DirecTV Box
69
5-7 Worldwide Video Game Controller Production Revenue andUnit Shipment Forecast
71
5-8 Worldwide Video Game Controller Unit Shipment Forecast, byType
71
5-9 Worldwide Video Game Cartridge Production Revenue andUnit Shipment Forecast
73
5-10 Regional Share of Video Game Controller Production Revenue 74
5-11 Regional Share of Video Game Cartridge Production Revenue
74
5-12 Worldwide Video Game Market Share, 199475
5-13 Generic Block Diagram of RISC Video Game Controller
11
6-1 Worldwide Electronic Appliance Production Revenue Forecast.... 81
6-2 Regional Share of Electronic Appliance Production Revenue
82
6-3 U.S. Major Appliance Unit Shipments, 1954 to 1994
82

MSAM-WW-I\/IT-9601©1996 Dataquest.

January 29,1996

iv

Consumer Multimedia Semiconductor and Applications Worldwide

List of Tables
Table
2-1
2-2
3-1
3-2
3-3
3-4
3-5
3-6
3-7
3-8
3-9
3-10
3-11
3-12
3-13
3-14
3-15
3-16
3-17
3-18
3-19
4-1
4-2
4-3
4-4
4-5
4-6
MSAM-WW-MT-9601

Page
Worldwide Consumer Electronic Equipment Production
Revenue Forecast
5
North American Consumer Electronic Equipment Production
Revenue Forecast
7
North American Audio Equipment Production Revenue
Forecast
12
Worldwide Personal/Portable Stereo Production Forecast
14
North American Personal / Portable Stereo Production Forecast.... 15
U.S. Boom Box Brand Share Leaders, First Quarter 1994
through Fourth Quarter 1994'.
16
U.S. Boom Box Brand Share Leaders, Third Quarter 1994
through Second Quarter 1995
16
U.S. CD Player Brand Share Leaders, First Quarter 1994
through Fourth Quarter 1994
17
U.S. CD Player Brand Share Leaders, Third Quarter 1994
through Second Quarter 1995
17
U.S. Personal CD Player Brand Share Leaders,First Quarter 1994 through Fourth Quarter 1994
18
U.S. Personal CD Player Brand Share Leaders,Third Quarter 1994 through Second Quarter 1995
18
U.S. Cassette Tape Deck Brand Share Leaders,First Quarter 1994 through Fourth Quarter 1994
19
U.S. Cassette Tape Deck Brand Share Leaders,Third Quarter 1994 through Second Quarter 1995
19
U.S. Personal Tape Player Brand Share Leaders,First Quarter 1994 through Fourth Quarter 1994
20
U.S. Personal Tape Player Brand Share Leaders,Third Quarter 1994 through Second Quarter 1995
20
U.S. Stereo Rack System Brand Share Leaders,First Quarter 1994 through Fourth Quarter 1994
21
U.S. Stereo Rack System Brand Share Leaders,Third Quarter 1994 through Second Quarter 1995
22
U.S. Stereo Receiver Brand Share Leaders,First Quarter 1994 through Fourth Quarter 1994
22
U.S. Stereo Receiver Brand Share Leaders,Third Quarter 1994 through Second Quarter 1995
23
U.S. Stereo Speaker Brand Share Leaders,First Quarter 1994 through Fourth Quarter 1994
24
U.S. Stereo Speaker Brand Share Leaders,Third Quarter 1994 through Second Quarter 1995
24
Worldwide Video Equipment Production Revenue Forecast
27
North American Video Equipment Production Revenue
Forecast
28
North American Video R&D and Manufacturing
29
Worldwide Color Television Production Forecast
31
North American Color Television Market Forecast
31
North American Color Television Production Forecast
32'©1996 Dataquest

January 29,1996

Consumer Electronics Semiconductor Application Markets

List of Tables (Continued)
Table
Page
4-7 U.S. Color Television Brand Share Leaders, First Quarter 1994
through Fourth Quarter 1994
34
4-8 U.S. Color Television Brand Share Leaders, Third Quarter 1994
t h r o u ^ Second Quarter 1995
34
4-9 Worldwide VCR Production Forecast
37
4-10 North American VCR Market Forecast
38
4-11 North American VCR Production Forecast
38
4-12 U.S. VCR Brand Share Leaders, First Quarter 1994 throughFourth Quarter 1994
39
4-13 U.S. VCR Brand Share Leaders, Third Quarter 1994 throughSecond Quarter 1995,
39
4-14 Worldwide Camcorder Production Forecast
42
4-15 North American Camcorder Market Forecast
42
4-16 North American Camcorder Production Forecast
43
4-17 U.S. Camcorder Brand Share Leaders, First Quarter 1994
through Fourth Quarter 199444
4-18 U.S. Camcorder Brand Share Leaders, Third Quarter 1994
through Second Quarter 1995
44
4-19 Grand Alliance Specification50
4-20 SDTV Specification50
4-21 DAVIC 1.0 Specification
51
4-22 Worldwide HDTV Receiver Production Forecast
52
4-23 North American HDTV Receiver Market Forecast
52
4-24 North American HDTV Receiver Production Forecast
53
4-25 Sizes and Prices of HDTV Sets (Fourth Quarter of 1995)
53
4-26 Worldwide Digital Video Disc Preliminary Production Forecast... 55
5-1 Descriptions of Various Products Referred to as"Set-Top Boxes"
59
5-2 Worldwide Analog Cable/Satellite Set-Top Box Production
Forecast
62
5-3 North American Analog Cable/Satellite Set-Top Box Market
Forecast
62
5-4 North American Analog Cable/Satellite Set-Top Box
Production Forecast
62
5-5 Worldwide Digital Cable and Satellite Decoder Production
Forecast
64
5-6 North American Digital Cable and Satellite Decoder Market
Forecast
65
5-7 North American Digital Cable and Satellite Decoder Production
Forecast
65
5-8 Semiconductor Opportunities in Interactive TV
67
5-9 Interactive Television Technology Evolution
67
5-10 Worldwide Digital Cable and Satellite Decoder Revenue
Market Share, 1995
69
5-11 Advanced Subscriber Terminal Manufacturers and Their
Products
705-12 Worldwide \^deo Game Controller Production Forecast
72
MSAi\/l-WW-!\yiT-9601©1996 Dataqu est

January 29,1996

vT

Consumer Multimedia Semiconductor and Applications Worldwide

List of Tables (Continued)
Table
Page
5-13 Worldwide Video Game Controller Unit Shipment Forecast,by Type (Thousands of Units)72
5-14 North American Video Game Controller Production Forecast
72
5-15 Worldwide Video Game Cartridge Production Forecast
73
5-16 North American Revenue from Production of Cameras,
Watches, and Clocks
78
6-1 North American Appliance Production Revenue Forecast
83
6-2 North American Appliance Market Revenue Forecast
83
6-3 U.S. Microwave Oven Brand Share Leaders, First Quarter 1994
through Fourth Quarter 1994
84
6-4 U.S. Microwave Oven Brand Share Leaders,Third Quarter 1994 through Second Quarter 1995
84
6-5 U.S. Refrigerator Brand Share Leaders, First Quarter 1994
through Fourth Quarter 1994
85
6-6 U.S. Refrigerator Brand Share Leaders, Third Quarter 1994
through Second Quarter 1995
85
6-7 U.S. Dishwasher Brand Share Leaders, First Quarter 1994
through Fourth Quarter 1994
86
6-8 U.S. Dishwasher Brand Share Leaders, Third Quarter 1994
through Second Quarter 1995
86
6-9 U.S. Clothes Washer Brand Share Leaders, First Quarter 1994
through First Quarter 199487
6-10 U.S. Clothes Washer Brand Share Leaders, Third Quarter 1994
through Second Quarter 1995
87
6-11 U.S. Clothes Dryer Brand Share Leaders, First Quarter 1994
through Fourth Quarter 1994
88
6-12 U.S. Clothes Dryer Brand Share Leaders, Third Quarter 1994
through Second Quarter 1995
88
6-13 U.S. Room Air Conditioner Brand Share Leaders,First Quarter 1994 through Fourth Quarter 199489
6-14 U.S. Room Air Conditioner Brand Share Leaders,Third Quarter 1994 through Second Quarter 1995
89
6-15 U.S. Electric Range Market Share Leaders, First Quarter 1994
through Fourth Quarter 199490
6-16 U.S. Gas Range Brand Share Leaders, First Quarter 1994
through Fourth Quarter 199490
6-17 Worldwide Revenue from Production of Other Consumer
Equipment
91
6-18 North American Revenue from Production of Other
Consumer Equipment
91

MSAM-WW-MT-9601©1996 Dataquest

January 29,1996

Chapter 1

Introduction
This document is the sixth in a series of six that provide reference information and analysis about the principal system application markets for semiconductors. The six areas are data processing, wireline communications,
wireless communications, consumer electronics, automotive electronics,
and a combined document on industrial and military and civil aerospaceelectronics. Each document brings forth basic information about theopportvmity offered by particular systems:• System market size (in production term.s) in revenue, units, and average
selling price• System market and product feature trends• Hardware architecture trends and semiconductor device opportunities• Semiconductor content and market forecast• A listing of key OEMs
The information in this report is gathered from both primary and secondary sources. Primary sources include surveys and interviews of industry
vendors and customers, as well as analyst knowledge and opinion. Someof the primary sources include Dataquest's own services. Secondary
sources include various governmental and trade sources on sales, production, trade, and public spending. Semiconductor content assumptions are
based on both surveys of producing OEMs and physical teardown evaluations by Dataquest analysts of representative systems.
The forecast methodology is based on various methods and assumptions,depending upon the area. To form a solid basis for projecting system
demand, capital, government, and consumer spending assumptions are
made for various regions of the world. For specific markets, saturationand displacement dynamics are considered as well. Key exogenous factors
such as new software introductions, exchange rates changes, and government policies also are considered. Semiconductor content forecasts are
based upon interviews of system marketers and designers (including
makers of enabling semiconductor technology) along with an analysis ofhistorical trends.
Project Analysts: Dale Ford and Mark Gaare

MSAM-WW-MT-9601©1996 Dataquest

Chapter 2

Executive Summary
The consumer electronic equipment market represents a significant opportunity for semiconductor applications (see Figure 2-1 and Table 2-1 for our
forecast for consumer electronic equipment production). While the worldwide market for consumer electronic equipment is projected to have acompound annual growth rate (CAGR) of 7J percent for the next five
years, the semiconductor market for consumer electronic products will
have a CAGR of more than 15 percent in this same time frame (seeFigure 2-2). This difference is driven by the digitization of consumer
products from VCRs to dishwashers. New products being introduced—
high-definition television (HDTV), digital VCRs, video-CD and digital
video disc (DVD) products, MiniDisc (MD) and digital compact cassette(DCC) players, digital cable/satellite set-top boxes, and interactive video
games—are boosting the opportunities for semiconductor products.
This worldwide trend is accentuated in the North American production
arena. Table 2-2 and Figure 2-3 show that consumer electronic equipment
production in North America will grow by 3.9 percent CAGR through1998. However, semiconductor consumption for the consumer equipment
production wiU grow by 19.2 percent CAGR at the same time (seeFigure 2-4). The importance of the consumer electronics market is evengreater in Japan and the Asia/Pacific region than in North America.
Figure 2-5 shows that over 70 percent of consumer electronics production
takes place in these regions.
Figure 2-6 shows one measure of the increasing opportunities in the consumer market and provides a forecast of the number of microcontroller
ICs used in the home, automobile, and office. The commanding share
forecast for the home by the year 2000 is driven by consumer products
found in almost every room in the house, as shown in the list in the same
figure. Figure 2-7 provides an overview of the penetration of major consumer electronics products into U.S. homes. Although some products,
such as televisions, have reached near saturation, other products, suchas camcorders, still have room for significant expansion. The market for
high-penetration products such as TVs is mainly found in replacements
and upgrades. New technology developments targeted at existing products will drive an increase in upgrades of these products.
Several new exciting products will take the stage in consumer electroiucs
markets during the next five years. This report will provide information
on many of these new products.

MSAM-WW-MT-9601©1996 Dataquest

Consumer Multimedia Semiconductor and Applications Worldwide

Figure 2-1
Worldwide Consumer Electronic Equipment Production Revenue Forecast(Millions of Dollars)Millions of Dollars
250,000 H^

Other Consumer

I I Appliances

200,000 -I

150,000

S

Personal Electronics

H

Video

V^

Audio

100,000 H

50,000 -

"i

1993

1994

i

1995

1996

\

1997

I

1998

-•'•'•-r

1999

2000

Source: Dataquest (December 1995)

Figure 2-2
Worldwide Semiconductor Consumption for Consumer Equipment Production,
by Device (Millions of Dollars)Millions of Dollars
60,000-(I•Optoelectronics^

Analog IC

m Discrete

50,000-n MOS Logics MOS Microcomponent

• Bu

•

•

10,000-^MOS Memory
Bipolar Digital IC

^
1993

1994

1995

1996

1997

1998

1999

2000

Source: Dataquest (December 1995)

MSAM-WW-MT-9601©1996 Dataquest

January 29,1996

Executive Summary
OS rH
C5 00

CO c s
00 sC

in
so

OS
00

Os
CO

1-t

ON
CO

CO
^

cx
t<

u '^
o o
o
OS l-(o00 •<*o«NJ rsj
-<*•

•

0\
OS
OS

*

•

^

1-1

tx CO

t>s
1-1

ro ON
fO •*
(N cjhC
CN CM m
CN
l-<

• > *

-.

O
tx

co^
00
CO

Lfj^ sq^cNj" cTo00O CN|o d C v CNj C O
N
CNl

00
OS
9\

Cx
CO
in
CO

NO 0 0CO ON
1-H^ inCO" i n t C ON"
NO CN) s o rH

O
CN|
O
^
CO

ID
ts.
NO
bs"
ID

CO SO
O
00
CNJ^ •>**CO" CO
CNJ s o0 0 ONt-i ONID^ 00^od' ID"
1-1 ON

tjt
tv
ON
IN
CNl

Os OS 0 0s o s£> _otvj^ s q NO_^C O ' 1 - ? Os"I D CNj I D

IDCOCNJ^ CS^CC CNj"
1-H 00

NO
m
ID^

O
O
1-1 1-1
ID^ 1-^

CM

ID

'*

CO

rt
u
u
O

ts
OS
OS

1^ 00
00 OS
CNj^ s q

1-1
ID

csi

<N
1-1
CNl

a*
S
0)

>
P!j
Ci

o

•X!
u

O

>-(

so
OS
OS

O
C S CNl
ID N O 0 0
CS^ fNj^ NO
CNT
CNJ i n1-1 trxs; ID O " '-I tN*" so

Pi

4->

01

a

TjH ONOOOS O
CNJ s oCM •<*<

NO
00
CNJ
OS
1-1

1*
NO
ID
ID

CO OS
CN| t vs o COCOID
1-1 ID

ir

c
o

iri
iW

U

CO
•*
ID
O
rsl

SO CO NO O CNJ
CO CO 1-1 T-l CO
CNJ^ 1 * ^ sq
CO^ 1 - ^CO" t>r so" CsT C S« a < r l •<*< 1 - 1 Tjt

W
<H

U ^-s

fi 2
2 =
S o

0)

0 n
JJ

U
Csl

X)

sc u

0)

0) O

^ •1= s2

E
CO

.y

11

MSAM-WW-MT-9601

o

o
!/]
l-i

<L>

Cu

en

c
O

!

u

a, s;
<

O

©1996Dataquest

January 29,1996

Consumer Multimedia Semiconductor and Applications Worldwide

Figure 2-3
North American Consumer Electronic Equipment Production Revenue Forecast(Millions of Dollars)Millions of Dollars
35,000-fl^other Consumer

I i Appliances

30,000^^25,00020,000-[N]

Personal Electronics

U

Video

^

Audio

15,000-<(}-ooo^^^9^H^m • • H I ^ H ^ B^^^9BBBH ^ ^ ^ H ^ ^ ^ H ^ ^ ^ H ^ ^ ^ B ^ ^ ^ H

5.000- ^m n a I B H j am | B | H B H H
0 ^^Mjm^^jmimj^mi^M^^-^^M-ff^^^^j^jJA^
1993 1994 1995 1996 1997 1998 1999 2000
95O7O03

Source: Dataquest (December 1995)

Figure 2-4
North American Semiconductor Consumption for Consumer Equipment Production,
by Device (Millions of Dollars)Millions of Dollars
10,000-<|•

Optoelectronics^

Analog 10

m Discreten MOS Logics MOS Microcomponent

•
^

1993

1994

1995

1996

1997

1998

1999

MOS Memory
Bipolar Digital 10

2000
3507003

Source: Dataquest (December 1995)

MSAM-WW-MT-9601©1996 Dataquest

January 29,1996

Executive Summary

Table 2-2
North American Consumer Electronic Equipment Production Revenue Forecast(Millions of Dollars)

Audio
Video
Personal Electronics
Appliances
Other Consumer
Total

1993
716
7,622
203
13,6691,296
23,507

1994
766
8,869
210
14,942
1,395
26,182

1995
811
9,588
223

1996
864

1997
908

9,973
233

10,405241

15,4701,461
27,552

15,351
1,539
27,96015,917
1,593
29,063

1998
960
11,134250
16,186
1,655
30,185

1999
1,019
11,692
264
17,047
1,724
31,745

2000
1,078
12,847276
17,502
1,798
33,502

CAGR (%)
1995-2000
5.9
6.0
4.4
2.5
4.2
4.0

Source: Dataquest (December 1995)

Figtire 2-5

Regional Share of Consumer Electronics Equipment Production Revenue (Percentage)
1995

2000

Total = $172.7 Billion

Total = $250.5 Billion
950700*Source: Dataquest (December 1995)

MSAM-WW-MT-9601©1996 Dataquest

January 29,1996

CO>

Figure 2-6
Microcontroller Penetration of the Home and Consumer Markets
Number of Microcontroller ICs

CD

a>

200-

©

150-

CO
CD
CJ>

O
CU

CD

100-

50-

w

Home (1 Billion)• Appliances• Intercom• Telephones• Security System• Garage Door Opener• Answering Machine• Fax Machine• Home Computer• Copier• Stereo•TVs• Cable TV Tuner• VCR• Camcorder• Remote Controls• Video Games• Musical Instmments• Sewing Machine• Lighting Control• Camera• Exercise Equipment• Smoke Alarms• CO Detectors

OH
19 70

CD
CD
CD

a>

Source: Motorola (December 1995)

Automobile (40 Mitiion/Year)• Trip Computer• Engine Control• Airbag•ABS• Instrumentation• Security System• Transmission Contrbl• Entertainment• Climate Control•Cellular Phone* Keyless Entry* Collision Avoidance* Navigation

Oflice (50 Million)• Telephones• Computers• Security Systems• Fax Machine• Microwave* Copier• Laser Printer• Cotor Printer•TV•VCR• Remote Control

X
/
/
/
/
/
y

Personal (4 Billion)• IC Cards• Pager•Cellular Phone• Entertainment• Notebook Compute• Organizer/PDA^^.-r^""'^

1980

f
1990

Executive Summary

Figure 2-7
U.S. Household Penetration of Consumer Electronics Products, January 1994
(Percentage)
Refrigerators
All Televisions
Home Radios

Color TVsVCR Decks
Microwave Ovens
Clothes Washers
Separate-Component Audio Systems
Rack or Compact Audio Systems
Electric Ranges
Dishwashers

Electric Dryers
Color TVs with Stereos
Monochrome TVs
Gas Ranges
Color TVs with Stereo
Home CD Players
Video Game Software
Camcorders
Portable CD Players
Home Security Systems
Gas Dryers
Autosound CD Players
Projection TVs
All LCD TVs
TV/VCR Combinations
Home Satellite Earth Stations
Laserdisk Players
T
10

20

r

r
X
40
50
60
70
40
60
50
Percentage of Households

30

100
950T006

Source: EIA, Appliance Magazine, Dataquest (December 1995)

MSAM-WW-MT-9601©1996 Dataquest

Januai7 29,1996

Chapter 3

Audio Equipment.
Worldwide audio equipment production is expected to grow at a healthy
10.9 percent CAGR through 2000 (see Figure 3-1). Audio systems sales in
the United States will help drive this growth, thanks to growing replacement sales and growing demand for step-up products. An example of thisis the changer-equipped CD systems that are replacing single-CD systems.
Figure 3-2 illustrates the commanding role the Asia/Pacific region willplay in audio products, with more than 60 percent of production taking
place there by 2000. Table 3-1 shows North American production of audio
products. Major audio electrorucs manufacturers with U.S. facilities
include Emerson Radio, Pioneer Electronics, Sanyo, Tandy, and Toshiba.
Portable products and digital technology are having the most significant
impact on the audio electronics market. The Sony Walkman concept first
applied to cassette players has continued into products such as personal
CD players eind personal portable stereos, or boom boxes. New products
such as the MD and the DCC represent a combination of digital and portabilit)'^ features. Astitievarious brand share tables in this chapter show,
Sony plays a commanding role in every segment of the audio electronicequipment market. The only segment where it does not command a leading share is stereo speakers. Bose is the leader in this category, but evenhere Sony captured fhe No. 3 slot in 1994.
This chapter will present a worldwide production forecast for personalportable stereos and a discussion of the MD and DCC players. Brand share
information is also presented for other major audio products.
Figure 3-1
Worldwide Audio Equipment Production Revenue Forecast (Millions of Dollars)Millions of Dollars

1993

1994

1995

1996

1997

1998

1999

2000
9507007

Source: Dataquest (December 1995)

MSAM-WW-MT-9601©1996 Dataquest

11

12

Consumer Multimedia Semiconductor and Applications Worldwide

Figure 3-2
Regional Share of Audio Equipment Production Revenue (Percentage)

2000

1995

North America (2.5%)
Europe (5.6%)

North America (3.2%)• Europe (6.5%)

Total = $42.9 Billion

Total = $25.6 Biriion

Source: Dataquest (December 1995)

Table 3-1
North American Audio Equipment Production Revenue Forecast (Millions of Dollars)
Segment
Compact Disc Player
Radio
Personal/Portable Stereo

1993
33
165
33
226
242

Stereo Component
Musical Instrument
Tape Recorder
Total

17
716

1994
41

1995
50

1996
62

1997
76

184
35
239
250
17
766

194
36
252
261

204
39
266
274
. 19
864

212
42
276
282

18
811

20
908

1998
94
221

1999
115

2000

45
288
292

231
47
302
302

136
241
49
317
313

20
960

21
1,019

22
1,078

CAGR (%)
1995-2000
22.1
4.5
6.4
4.7
3.7
3.9
5.9

Source: Dataquest (December 1995)

Personal/Portable Stereos (Boom Boxes and Headsets)
Figure 3-3 and Table 3-2 show the worldwide production forecast for personal/portable stereos. Although these systems represent a high-volume
opportunity, the growth in revenue will remain very low. Figure 3-4 provides a regional breakout of personal/portable stereo production. The
dominance of the Asia/Pacific region in production of personal/portablestereos will increase through 2000, reaching 87 percent of worldwide production. Table 3-3 lists the North American production forecast for personal/portable stereos. Sony commanded more than 30 percent of the U.S.
market in 1994 for boom boxes (see Tables 3-4 and 3-5).
MSAM-WW-MT-geOI©1996 Dataquest

January 29,1996

Audio Equipment

13

Figure 3-3
Worldwide Personal/Portable Stereo Production Revenue and Unit Shipment Forecast(Millions of Dollars)Millions of Dollars

Thousands of Units

1—"

1993

1994

1995

"

"—I—'''"—r

1996

1997

1998

1999

2000
S507009

Source: Dataquest (December 1995)

CD Players
Beyond personal CD players, much of the growth in the CD player market
is driven by upgrades to the new CD-changer players that accommodate
multiple CDs. Tables 3-6 and 3-7 show brand share leaders for CD players
in the United States.
Personal CD Players
Tables 3-8 and 3-9 list U.S. brand share leaders in personal CD players.
MiniDisc (MD) Players
Sony's latest plunge into the consumer market is the MD, Sony's replacement for the analog cassette, in terms of recordability, portability, andsonic fidelity. MD is similar to a standard compact disc (CD) player inlooks and features but offers much improved portability and the ability torecord at slightly less than CD quality. Sony concedes the product is notintended to replace today's CD but to be its portable counterpart. MD uses
a compression technique known as Adaptive Transform Acoustic Coding(ATRAC) to fit 74 minutes of near CD-quality music on a 2.5-inch optical
disc. ATRAC is designed to remove frequencies the human ear is lesssensitive to and therefore least likely to notice missing. Shockproofing isachieved by incorporating a RAM buffer If the laser does mistrack during
play, the music will continue to flow for up to 10 seconds, which is goodfor mobile applications.
Although the early shipments were swept off shelves quickly, demand forthe first-generation devices has quickly dropped. Low demand has limited
the entrance of new companies to the market and the introduction of newmodels by existing players. To date, at least 14 electronics companies haveacquired MD manufacturing licenses from Sony, including Sharp,
MSAM-WW-MT-9601©1996 Dataquest

January 29,1996

03

>

CO
CT>
CD

Table 3-2
Worldwide Personal/Portable Stereo Production Forecast
1993

1994

114,525
34

119,062
34

Factory Revenue ($M)
Semiconductor Content ($)

3,909

4,007

8

Semiconductor TAM ($M}874

Units (K)Factory ASP ($)

Source: Dataquest (December 1995)

@
CD
CO
CT>

K.
tu

j=>

(U

^3
IS3
CD

CO
CD

a>

1995
123,792

1996

1997

1998

33

128,78732

134,09932

139,763
32

4,059

4,185

4,333

4,513

8

8

7

7

7

917

933

963

998

1,035

1

Audio Equipment

15

Figure 3-4
Regional Share of Personal/Portable Stereo Production Forecast

2000

1995
1— North America (0.9%),— Nortii America (1.1%)
1^ . ^ Japan (4.7%)
1 Europe / N ^(7.5%) /N^

Europe 7 ^ \(7.8%)/>^/ Japan\/(8.2%)^^// r?^\/\\\

Asia/PacilicROW(83.1%)

/

m
#
M

\
\
^\ .

Asia/PacificROW(86.7%)V\m#
M

Total = $4.66 Billion

Total = $4.05 Billion

9E07010Source: Dataquest (December 1995)

Table 3-3
North American Personal/Portable Stereo Production Forecast
1995
565

1996
605

1997

64

64

36

39
12
7

64
42
12
8

1993
510

1994

Factory ASP ($)
Factory Revenue ($M)

65
33

65
35

Semiconductor Content ($)
Semiconductor TAM ($M)

12
6

12
6

12
7

Units (K)

535

655

1998
710

1999
738

2000
768

64
45

64
47

64:
49

12
8

12
9

13
10

CAGR (%)
1995-2000
6.3
0
6.3
1.6
8.1

Source: Dataquest (December 1995)

Kenwood, Sansui, Clarion, Aiwa, RCA, and Sanyo, In September 1995,
Matsushita began selling a MiniDisc portable audio player. Matsushita's
entry is significant because it was one of the original developers of therival audio format called digital compact cassettes (DCC). Sony currently
dominates the market for MD products with more than 50 percent of themarket. However, in September, Sharp estimated that shipments of its MD
products to Japan would reach 1.2 million units in 1995, quadrupling its
shipments for 1994. Retailers report tliat play/record portables are outselling their play-only covmterparts by at least 3:1.

MSAi\/l-WW-i\/lT-9601©1996 Dataquest

January 29,1996

16

Consumer Multimedia Semiconductor and Applications Worldwide

Table 3-4
U.S. Boom Box Brand Share Leaders, First Quarter 1994 throughFourth Quarter 1994 (Percentage)

Sony
RCA
Magnavox
Sanyo
Panasonic

Unit
Market Share
32.8
7.5
7.2

Revenue
Market Share

5.8
4.8
4.8
4.7

6.1
4.8
3.8
3.0
2.7

General Electric
GPX
Emerson
Sharp
JVC

34.4
7.1
7.0

4.0
3.9

Others
Total

3.0
21.5

5.1
5.3
20.7

100.0

100.0

Table 3-5
U.S. Boom Box Brand Share Leaders, Third Quarter 1994 throughSecond Quarter 1995 (Percentage)
Unit
Market Share

Revenue
Market Share
35.1

Magnavox
RCA

33.6
7.9
7.8

Sanyo

5.8

7.3
5.7

Panasonic
GPX

4.8
4.4

5.2
2.8

General Electric
Sharp

4.0
3.7

3.6
4.4

Emerson
JVC

3.3
2.9

2.5

Others
Total

21.8
100.0

20.2
100.0

Sony

in

5.5

Source: The Scout Report®/Th6 Polk Company

Cassette Tape Decks
Tables 3-10 and 3-11 list the brand share leaders for cassette tape decks in
the United States.
Personal Tape Players
Tables 3-12 and 3-13 list the brand share leaders in the United States.

MSAM-WW-MT-9601©1996Dataquest

January 29,1996

Audio Equipment

17

Table 3-6
U.S. CD Player Brand Share Leaders, First Quarter 1994 throughFourth Quarter 1994 (Percentage)

Sony
Pioneer
Kenwood

Unit
Market Share
27.3
10.5
7.9

Revenue
Market Share
26.5
10.9
8.7

Technics
RCA

7.4
6.5

JVC
Magnavox

6.1
4.7

6.9
4.1
5.8
4.1

FisherPanasonic

3.4
3.0

Radio Shack Brands
Others

2.9
20.3
100.0

Total

5.1
2.2
2.9
22.8
100.0

Source: The Scout Heport'^hfl Polk Company

Table 3-7
U.S. CD Player Brand Share Leaders, Third Quarter 1994 throughSecond Quarter 1995 (Percentage)
Unit
Market Share

Revenue
Market Share

Technics

25.8
11.6
8.2

26.1
11.2
7.5

Kenwood

7.0

6.9

JVC

6.4
6.2

4.4

Sony
Pioneer

RCA
Magnavox
Panasonic
FisherRadio Shack Brands
Others
Total

6.1
3.3

4.0
3.7

2.9

3.4
2.7

5.4
3.5

21.0
100.0

22.7
100.0

Source: The Scout R6port*%ne Polk Company

MSAM-WW-MT-9601©1996Dataquest

January 29,1996

18

Consumer Multimedia Semiconductor and Applications Worldwide

Table 3-8
U.S. Personal CD Player Brand Share Leaders, First Quarter 1994
through Fourth Quarter 1994 (Percentage)
Unit
Market Share
44.7

Sony
RCA
Panasonic
Koss
Radio Shack Brands
Magnavox
Kenwood
JVC
FisherSanyo
OthersTotal

Revenue
Market Share

10.3
8.6

43.1
8.6
9.3

4.6
3.8
3.7
3.5
2.8
2.6
2.2
13.2

4.0
3.4
3.6
4.8
3.6
3.7
1.7
14.2

100.0

100.0

Source: The Scout Report'%he Polk Company

Table 3-9
U.S. Personal CD Player Brand Share Leaders, Third Quarter 1994
through Second Quarter 1995 (Percentage)

Sony
RCA
Panasonic
Magnavox

45.1
11.0

Revenue
Market Share
43.3
9.4

10.0
4.2

10.9
4.0

Koss
Fisher

4.0
2.9

3.4
4.7

Sanyo
Radio Shack Brands

2.8
2.7

2.3
2.4

JVC
Kenwood,

2.5
2.1

3.1
2.9

Others
Total

12.7

13.6
100.0

Unit
Market Share

»

100.0

Source: The Scout Reports/The Polk Company

MSAM-WW-MT-9601©1996Dataquest

January 29,1996

Audio Equipment

19

Table 3-10
U.S. Cassette Tape Deck Brand Share Leaders, First Quarter 1994
through Fourth Quarter 1994 (Percentage)
Unit
Market Share
24.8
10.2
7.3

Revenue
Market Share
27.7
10.1
7.2

6.8
6.3
6.0
5.0

2.3
9.8
5.2
5.2

Panasonic
Ovkyo
Others

3.4
3.3
2.8
24.1

2.3
1.9
3.6
24.7

Total

100.0

100.0

Sony
Pioneer
JVC
General Electric
Kenwood
Radio Shack Brands
Technics
Teac

Source: The Scout Ftaport'^Tie Polk Company

Table 3-11
U.S. Cassette Tape Deck Brand Share Leaders, Third Quarter 1994
through Second Quarter 1995 (Percentage)
Unit
Market Share

Revenue
Market Share

Sony
Pioneer

23.4
11.3

30.6
10.7

Kenwood
JVC

6.3
5.5

7.6
4.9

Teac
General Electric

5.3
5.3

Technics
Radio Shack Brands
Panasonic
Onkyo

5.2
4.7

3.5
1.8
5.2
3.9

3.0
2.2
27.8
100.0

Others
Total

2.0
2.1
27.7
100.0

Source: The Scout Heport^he Polk Company

I\/1SAM-WW-MT-9601©1996Dataquest

January 29,1996

20

Consumer Multimedia Semiconductor and Applications Worldwide

Table 3-12
U.S. Personal Tape Player Brand Share Leaders, First Quarter 1994
through Fourth Quarter 1994 (Percentage)
Unit
Market Share
40.1

Sony

Revenue
Market Share
46.5
9.0
9.0

General Electric
Panasonic
GPX
Aiwa

12.7
7.2
6.4
4.2

Radio Shack Brands
EmersonSanyo
PhilcoLenoxx Sound
Others

3.8
2.9
2.7
2.5
2.1
15.4

4.5
5.4
4.1
1.9
2.3
1.8
1.0
14.5

Total

100.0

100.0

?S!
Source: The Scout Reports/The Polk Company

Table 3-13
U.S. Personal Tape Player Brand Share Leaders, Third Quarter
1994 through Second Quarter 1995 (Percentage)

Sony
General Electric

41.2
12.0

Revenue
Market Share
47.8
8.7

Panasonic
GPX

6.5
5.4

7.5
4.2

Radio Shack Brands
Aiwa

4.6
4.5
2.9

4.9
6.2

Unit
Market Share

2.5

1.4
1.7

Philco
Sanyo

2.3
2.0

1.4
1.7

Others
Total

16.1

14.5
100.0

Lenoxx Soimd
Emerson

100.0

Qniirro- Tho Srnirt Ronnrt®/Tho Pnik

MSAM-WW-MT-9601©1996Dataquest

January 29,1996

Audio Equipment

21
Digital Compact Cassette (DCC) Piayers
DCCs were developed by Philips and Matsushita and are designed toreplace the analog cassette as a home recording device. DCC provides
backward compatibility, which allows the large installed base of analog
cassettes to be played on the new machines. DCC achieves its sound quality by using Precision Adaptive Subband Coding (PASC), a compression
scheme that enables near-CD-quality audio to be encoded on tape traveling at the same speed as required by an analog tape transport system. A
thin-film head is used for digital recording and playback for both digital
and analog. DCC is an innovative product, but it suffers from perceptionsin the market that consider tape or "contact-based" mediums to be inferior
to "noncontact-based" mediums such as discs. Even though DCC edgesout MD in terms of sonic integrity (it sounds better), MD has been more
successful. Philips has lowered the price on its DCC products in an
attempt to boost sales, which have not met expectations. OrUy 150,000
units were sold in 1993. In addition to those from Philips, DCC decks areavailable under the Panasonic, Tandy, and Magnavox brand names.

Stereo Rack Systems
Tables 3-14 and 3-15 list the brand share leaders for stereo rack systems in
the United States.

Stereo Receivers
Tables 3-16 and 3-17 list the brand share leaders for stereo receivers in the
United States.
\

Table 3-14
U.S. Stereo Rack System Brand Share Leaders, First Quarter 1994
through Fourth Quarter 1994 (Percentage)
Unit
Market Share
22.3
8.3
8.1
6.9
6.9
5.1
4.4

Sony
FisherPioneer
Sharp
Soundesign
Technics
Aiwa
Magnavox
Panasonic
JVC
Others
Total

40
3iS
3.4

Revenue
Market Share
24,0
13.0
13.0
4.9
^8
9.3
3*6
1.7
2.8
4.1

27.1

20.8

100.0

100.0

Source: The Scout Report'%he Polk Company

I
MSAM-WW-MT-9601©1996Dataquest

January 29,1996

22

Consumer Multimedia Semiconductor and Applications Worldwide

Table 3-15
U.S. Stereo Rack System Brand Share Leaders, Third Quarter 1994
through Second Quarter 1995 (Percentage)
Unit
Market Share
20.7

Sony
Pioneer
Sovindesign
Fisher

8.6
7.2

Revenue
Market Share
23.6
12.8
4.2
9.5
5.3
4.5
10.2

JVC
Panasonic
Magnavox
Others

7.0
6.9
6.3
6.0
4.2
3.8
3.4
25.9

Total

100.0

100.0

Aiwa
Sharp
Technics

5.3
3.8
1.7
19.1

Source: The Scout Report's/The Polk Company

Table 3-16
U.S. Stereo Receiver Brand Share Leaders, First Quarter 1994
through Fourth Quarter 1994 (Percentage)

Sony
Pioneer

22.3
17.4

Revenue
Market Share
21.2
16.0

Kenwood
JVC

10.5
8.9

9.9
6.4

Technics
Oitkyo

6.0
5.9
4.9
3.7

4.9

YamahaFisher

3.3

4.4
4.1

Others

14.0

Unit
Market ShareRadio Shack Brands
Denon

3.1

Total

100.0

7.8
5.1
5.4

14.8
100.0

Source: The Scout Report®/The Polk Company

MSAM-WW-MT-9601©1996Dataquest

January 29,1996

Audio Equipment

23

Table 3-17
U.S. Stereo Receiver Brand Share Leaders, Third Quarter 1994
through Second Quarter 1995 (Percentage)
Unit
Market Share
24.2

Revenue
Market Share
24.9

17.0
10.6

14.8
8.8

Kenwood
Technics
Or\kyoYamahaRadio Shack Brands
Fisher

9.4
7.3
5.6
3.5
3.0
2.5

8.1
6.3

Denon

2.2
14.7

7.9
5.3
3.0
2.6
3.9
14.4

100.0

100.0

Sony
Pioneer
JVC

Others
Total
Source: The Scout Report%1ie Polk Company

Stereo Speakers
Main driving forces behind the growth of the stereo speaker industry areaudio-for-video and new designs for speakers-specific applications. The
home theater concept, where consumers want speakers to faithfully
reproduce movie soundtracks, is a high-end example of this. Speakerdesigns are taking into accoimt the different demands for movie
soundtrack reproduction and music reproduction. Some systems incorporate a switch that allows the user to select the desired music or soundtrack
mode. Tables 3-18 and 3-19 list the U.S. brand share leaders in this market.

>»

MSAM-WW-MT-9601©1996Dataquest

January 29,1996

24

Consumer Multimedia Semiconductor and Applications Worldwide

Table 3-18
U.S. Stereo Speaker Brand Share Leaders, First Quarter 1994
through Fourth Quarter 1994 (Percentage)
Unit
Market Share
Bose

17.9

Revenue
Market Share
28.4

Radio Shack Brands
Sony

10.0
9.1

4.5
7.4

Pioneer
KLH

8.6
5.9
5.8
3.9

5.9
1.9

Infinity
JBL
YamahaAdvent

3.0
2.9
2.8
30.1
100.0

Technics
Others
Total

8.1
5.0
1.6
2.3
1.1
33.8
100.0

Source: The Scout Reports/The Polk Company

Table 3-19
U.S. Stereo Speaker Brand Share Leaders, Third Quarter 1994
through Second Quarter 1995 (Percentage)
Unit
Market Share

Revenue
Market Share

Bose
Sony

17.6
9.2

Radio Shack Brands
KLH
PioneerInfinity
JBL
Yamaha

8.3
7.4

27.8
7.1
3.5
2.5

6.5
6.4

4.2
8.6

4.8
3.6

5.7
2.1

Technics
Advent

3.0
2.7

1.3
2.6

Others
Total

30.5
100.0

34.6
100.0

Source: The Scout Report*%he Polk Company

MSAM-WW-MT-9601©1996Dataquest

January 29,1996

Chapter 4

Video Equipment\'ldeo equipment is positioned in the consumer market as entertainment
equipment, and together with audio equipment has been serving as amarket and technology driver for the electronics equipment and semiconductor industries. In particular, it has spurred the development and commercialization of numerous production technologies and systems, whichhave also promoted the growth of industries that supply necessary components and materials.
Home use of entertainment equipment assures wide market penetration
because it is less affected or impeded by social and cultural barriers. \^deoequipment demand potentially covers the entire world and grows withthe economic development in each country. At the same time, establishment of video equipment production bases in the areas offering low-costlabor has helped expand regional economies, which in turn has created theeconomic base that stimulates video equipment demand.
Figure 4-1 and Table 4-1 show ttie anticipated worldwide growth forecastof video equipment production. The CAGR for the next five years in video
equipment is expected to be 8.0 percent. Particularly strong growth isanticipated in digital set-top boxes, with 25 percent CAGR forecast
growth. Japan will be displaced as the leading producer of video equipment as production locations shift to the Asia/Pacific region: 40.4 percent
of video equipment production will take place in the Asia/Pacific region
by 2000 (see Figure 4-2). The forecast for North American video equipment production is given in Figure 4-3 and Table 4-2. Although color televisions represent the dominant slice of revenue production in North
America, new technology developments are pushing production rates of
VCRs, camcorders, and set-top boxes at much higher levels. The "Other
Video" equipment category includes items such as video-CD players, LCD
TV, black-and-white TV, and emerging products. Table 4-3 lists major
North American video research and design and manufacturing locations.
Major announcements related to video R&D and manufacturing investments in North America include the following:• JVC selected Tijuana, Mexico, as the location for a new North Americancolor TV manufacturing facility. The new factory will have the capacity
to turn out 10,000 20-inch and 27-inch color TVs monthly and will also
feed chassis to the color TV assembly facility in Elmwood Park, New
Jersey. Output is scheduled to begin in spring 1996.
• Mitsubishi announced plans to build a television R&D center in Orange
County, California.
• Philips Consumer Electronics will add complete new production lines
at its facility in Ottawa, Ohio, to give it the capacity to turn out 500,000
32-inch tubes and 300,000 35-inch tubes annually. The 32-inch production is expected to begin in summer 1996 and 35-inch production in
1997.

MSAM-WW-MT-9601©1996 Dataqu est

25

26

Consumer Multimedia Semiconductor and Applications Worldwide• Sanyo Video Components completed a $25 million expansion with the
opening of its second plant in Tijuana, Mexico. The expansion tripled
Sanyo's local production capacity for audio-video parts. The new facility can produce 3 million flyback transformers and 2.5 million tuners
annually. The first plant, which opened in 1993, produces about 6 million deflection yokes a year.
• Thomson Consumer Electronics has begun expansion of its color TV
and picture tube operations in North America. It plans to spend $52 million to expand capacity at its picture tube plant in Marion, Indiana. The
company recently boosted production of 25-inch color tubes. The new
expansion will increase production of 31-inch and 35-inch tubes by
20 percent and allow for start-up of production of 32-inch tubes. TTie
plant currently produces 4 million of Thomson's total U.S. output of
6.5 million tubes. Thomson will also invest $2 million to double the production capacity of projection TVs at its main color TV manufacturingsite in Bloomington, Indiana.
• LG Electronics, formerly known as Goldstar, acquired a 57.5 percent
interest in Zenith in 1995. Part of the LG Electronics investment will
enable Zenith to make improvements such as upgrading its Melrose,
Illinois, and Mexico picture tube plants.
Figure 4-1
Worldwide Video Equipment Production Revenue Forecast (Millions of Dollars)Millions of Dollars
80,000-ri•

other Video
Digital Cable/Satellite

Interactive
m Set-Top
Boxes^

Analog Set-Top
Decodern Camcorders Digital Video Disk (DVD)
H VCR
^

1993

1994

1995

1996

1997

1998

1999

Color TV

2000

Source: Dataquest (December 1995)

MSAM-WW-MT-9601©1996 Dataquest

January 29,1996

Video Equipment

27

Table 4-1
Worldwide Video Equipment Production Revenue Forecast (Millions of Dollars)

Color TV
VCR
Digital Video Disc (DVD)
Camcorder
Analog Set-Top Decoder
Digital Cable/Satellite
Set-Top Interactive Boxes
Other Video
Total

1993
1994
1995
1996
1997
1998
1999
2000
23,810 25,271 26,724 28,694 31,299 34,516 37,335 40,000
11,241 11,184 11,567 11,375 11,467 11,891 12,303 12,885
0
0
0
35
345
963
1,700
2,790
4,876 4,935 5,602 6,183 6,813 7,533 8,274 9,087
1,104
1,382
1,312
1,127
887
527
594
486
1
534
1,572
2,433 2,858 3,690 4,296 4,963
2,204 2,702 3,734 3,921 4,005 4,099
43,236 46,009 50,510 53,769 57,675 63,284

4,136 4,200
68,570 74,410

CAGR (%)
1995-2000
8.4
2.2
10.2
-18.0
25.9
2.4
8.1

Source: Dataquest (December 1995)

Figure 4-2
Regional Share of Video Equipment Production Revenue (Percentage)
1995

2000

Total s $50.5 Billion

Total = $74.4 Billion
9507012Source: Dataquest (Decemtjer 1995)

Market Trends
Today, worldwide video equipment demand is stratified by the following
distinguishable levels:• Replacement and additional purchase demand in industrialized countries where the first-time buyer market is nearing a saturation point• First-time purchase for low end and low cost
• Demand for hybrid products such as TV/VCR combinations• Demand for next-generation video equipment, including wide-screen
TV, HDTV, DVD, and video-CD
IVISAM-WW-MT-9601©1996 Dataquest

January 29,1996

28

Consumer Multimedia Semiconductor and Applications Worldwide

Figure 4-3
North American Video Equipment Production Revenue Forecast (Millions of Dollars)Millions of Dollars

14,000|c^•^

Digital Cable/Satellite
Set-Top Decoder

I—I—

Analog Cable/Satellite
Set-Top Decoder

F^

Camcorder

•

VCR

^

Color TV

2,000 -

1993

1994

1995

1996

1997

1998

1999

2000

Source: Dataquest (December 1995)

Table 4-2
North American Video Equipment Production Revenue Forecast (Millions of Dollars)
Segment
Color TV

1993
6,966

1994
7,508

1995
7,630

1996

1997

7,681

8,242

1998
8,845

1999
9,131
306

2000
9,770

CAGR (%)
1995-2000
5.1

VCR
Camcorder

70
31

107

155

44

74
62

88

203
126

265
180

193

311
207

33.1
27.2

Analog Cable/Satellite
Set-Top Decoder

556

689

570

465

348

235

188

135

-25.0

Digital Cable/Satellite
Set-Top Decoder

0

521

1,252

1,583

1,486

1,610

1,875

2,424

14.1

7,622

8,869

9,588

9,973

10,405

11,134

11,692

12,847

6.0

Total

Source: Dataquest (December 1995)

As shown in Figure 2-7, color TVs and VCRs are now found in almost all
U.S. homes, whereas newer video technologies such as camcorders havemore room for growth. The majority of homes in the United States andCanada have more than one TV, and many families have more than one
VCR. Most purchases in these categories are for replacement or upgrade ofexisting products. Lower interest rates and strong new home sales stimulated consumer durable spending beginning in the early part of 1994,
which led to robust sales of video equipment in the United States. However, in spite of higher consumer confidence in 1995, video electronics
sales growth slowed. The following sections provide more detailed discussion of the high-volume video equipment—color TVs, VCRs, and camcorders. Emerging opporturuties in HDTV, video-CD, and DVD also are
MSAM-WW-MT-9601©1996 Dataquest

January 29,1996

Video Equipment

29

Table 4-3
North American \^deo R&D and Manufacturing
Company
EmersonJVC
Matsushita
Mitsubishi

Manufacturing Sites
North Bergen, NJ
Elmwood Park, NJFranklin Park, IL; Mexico
Brazelton, GA
Santa Ana, CA

R&D CenterNorth Bergen, NJ

Philips

Brazelton, GA
Santa Ana, CA
Orange County, CA
Knoxville,TN

Thomson Consumer

Indianapolis, IN
.

Sanyo
Sony

San Jose, CA

ZenithGlenview, IL

Greenville, TN; Ottawa, Ohio;
MexicoBloomington, IN; Marion, IN;
MexicoTijuana, Mexico
San Diego, CA; Mexico
Moimt Pleasant, PA
Melrose Park, IL; Mexico

Source: Dataquest (September 1994)

discussed at the end of this chapter. Detailed information on analog anddigital set-top boxes is presented in Chapter 5, where interactive products
are discussed.

Color Television
Figure 4-4 and Table 4-4 present the worldwide color television production
forecast. There will be a significant shift in production from North
America and Japan to the Asia/Pacific region during the next five years:
43.4 percent of worldwide production is expected to take place there by
2000. Tables 4-5 and 4-6 show the North American color TV market andproduction forecast, respectively. Figure 4-5 shows the regional distribution of color TV production. Figure 4-6 shows the sales mix of color TVs
sold in the United States. RCA was the leading brand in the United States
during 1994 and 1995. Tables 4-7 and 4-8 list leading color television
brands. Key market trends and product developments affecting the color
television market include the following:• TV/VCR combinations will continue to grow significantly as several
manufacturers introduce new models. These are preferred by families
as a imit for children, because they save room and are easy to operate.
• EHrect view screens of 20 inches and less are losing favor to screen sizesof 25 inches and more. A continued shift of the sales mix to larger screen
sizes is expected. Screen sizes over 30 inches already represented almost
12 percent of the market in 1994.
• Stereo TVs grew to represent 42.5 percent of color TV sales in 1993.
Their market share slipped slightly in 1994 to 42.2 percent of the market.
• Plasma displays made a big splash at the fall 1995 COMDEX show.
These displays are about 4 inches thick and are expected to find theirearliest application in "hang-on-the-wall" TVs. It appears that a market>

MSAM-WW-MT-9601©1996 Dataquest

January 29,1996

30

Consumer Multimedia Semiconductor and Applications Worldwide

Figure 4-4Worldwide Color Television Production Revenue and Unit Shipment Forecast(Millions of Dollars)Millions of Dollars

Thousands of Units
180,000

45,00040,000

Factory Revenue- 160,000

35,000Units

140,000

30,000- 120,000

25,000100,000

20,00080,00015,00060,00010,00040,0005,000

h 20,000

0

0
1993

1994

1995

1996

1997

1998

1999

2000
9507014

Source: Dataquest (December 1995)

that was always "just 10 years away" is finally close to becoming a reality. Fujitsu and Panasonic were exhibiting the most impressive large flat
panel designs based on their color plasma technology. Sony also demonstrated its Plasmatron display, which employs plasma-addressed liquid crystal (Pale) technology. Mitsubishi has also announced plans to
introduce a flat panel TV-display using plasma technology. Fujitsu looks
like it is probably about a year ahead of other plasma panel competitors.
Its 42-inch color plasma display featuring 300-candela-per-square-meterbrightness, a wide aspect ratio of 16:9, 24-bit color, 852 x 480 resolution,a 160-degree viewing cone, and a 70:1 contrast ratio outclassed virtually
everj^ing else in sight and captured constant media attention at theshow. Major investments in research and production capacity have beenarmounced by leading Japanese television manufacturers. Market introductions of plasma displays are scheduled to begin in the second quarter of 1996. However, pricing on these displays will create a barrier forearly market acceptance. Fujitsu is targeting a price of $5,000 duringmass production in 1996. This means fiiat complete consumer systems
should be available for less than $10,000.
New technology developments are paving the way for introduction of
three-dimensional televisions (3-D TVs) that allow viewers to see 3-D
images without wearing special glasses. Sanyo has already exhibited a
3-D video projection system and announced that it intends to begin
shipping systems outside Japan in late 1996. Shipments for use in commercial applications, arcade games, and medical equipment began in
1994. Its 40-inch 3-D LCD system employs twin LCD projectors that cast
the images onto a double lenticular lens screen. This screen then separates the signals into right-side and left-side images, resulting in theillusion of 3-D images without the use of special glasses. Also, a company called HinesLab Inc. announced in September 1995 that it had
patented a display system that achieves true stereo 3-D images. The
MSAM-WW-I\/IT-9601©1996 Dataquest

January 29,1996

CO

Table 4-4>

Worldwide Color Television Production Forecast

5
5
CO

or>
o

1993

1994

1995

1996

1997

1998

102,610

109,901

117,385

125,775

134,855

145,168

232

230

228

228

232

238

Factory Revenue ($M)

23,81025,271

26,724

28,694

31,29934,516

Semiconductor Content ($)
Semiconductor TAM ($M)

29

30

3,003

3,312

30
3,502

30
3,813

30
4,091

4,468

Units (K)Factory ASP ($)

15
3

31

Source: Dataquest (December 1995)

Table 4-5
North American Color Television Market Forecast
@
CO
CO
CT)

Si

1993

1994

1995

1996

1997

1998
30,618

Color TV Only(U

Units (K)25,30627,31027,59428,490CO
CO

Factory ASP {$)

318
8,047

292

294

287

29,535
294

7,975

8,113

8,177

8,683

9,002

Units (K)Factory ASP ($)

1,792

2,229

2,864

3,107

350

2,382
344

2,640

368

337

333

331

Factory Revenue ($M)

659

780

819

890

954

1,029

Factory Revenue ($M)

294

TV/VCR Combinarion

Note: Includes direcl view slereo epd nonstereo TV. Does not Include monochrome TV, color LCD TV, or projection TV.
Source: Dataquest (December 1995)

(U
Z3
C=

tu
•2
ro
CO
CO
CO
(T>

3

32

Consumer Multimedia Semiconductor and Applications Worlcfwide

Table 4-6
North American Color Television Production Forecast
1993
1994
1996
1997
1999
1995
1998
2000
20,656 22,043 22,857 23,009 23,857 24,735 26,467 28,319
Units (K)Factory ASP ($)
337
341
334
334
345
345
345
345
Factory Revenue ($M)
6,966 7,508 7,630 7,681
8,242 8,845 9,131 9,770
Semiconductor Content ($)
29
29
29
30
29
30
30
30
Semiconductor TAM ($M)
597
663
713
794
645
657
742
850

CAGR (%)
1995-2000
4.4
0.7
5.1
0.1
5.3

Source: Dataquest (December 1995)

Figure 4-5
Regional Share of Color Television Production Revenue
1995

2000

Total = $26.7 Billion

Total = $40.0 Billion
950701S

Source: Dataquest (December 1995)

company claims that its system uses conventional optics and is built
into a single display panel that affords users a greater degree of freedom, allowing anyone to sit in front of a monitor and experience realistic moving images. Finally, engineers from the University of Alabama
have demonstrated a prototype that pumps moving holographic stereogram images through an active matrix LCD. The prototype, called
ICVision, is constructed using a 1-inch diagonal active matrix LCD from
Kopin Corporation and a diffiractive optical element for directing lightthrough a series of slits, which form the left and right halves of thestereo image.
Digital micromirror display (DMD) technology continues to beadvanced by Texas Instruments. Texas Instruments has been working
on DMD technology for decades. It has now developed a prototype
DMD device that measures 2 centimeters squared and holds 400,000
MSAM-WW-MT-9601©1996 Dataquest

January 29,1996

33

Video Equipment

Figure 4-6
North American Color Television Sales Mix (Unit Basis)

Q1/94 through Q4/94
30 to 35 Inches (7.7%) -Q3/94 through Q2/95

r Over 39 Inches (2.9%)30 to 35 Inches (8.5%)

r Over 39 Inches (3.2%)

01/94 through Q4/94
Projection TV (2.2%)

Other TV (LCD and Monochrome) (4.8%)

TVA/CR Combination (7.0%)

9S07016

Source: Dataquest (December 1995)

movable aluminum mirrors, each cibout 16 square microns. By controlling the mirror's movement, the device projects a brighter image than
today's LCD-based video projectors. Employing processing techniques
the company calls Digital Light Processing (DLP), TI has developed aprototype projection display that was demonstrated at Dataquest's 1995
Semiconductor Conference. Potential partners that could help TI bringthis technology to the market include Sony and Thomson Consumer
Electronics.
The "V-Chip" (the V stands for violence) that identifies programs bycontent and allows consumers to block out objectionable shows wasintroduced in 1994. Although the major TV networks have voiced opposition to this scheme. President Clinton and both houses of Congressfavor legislation that mandates the use of V-chip technology in all new
TV sets. The fate of this law hangs on a budget resolution in Washington. Meanwhile, hundreds of Canadian households will participate in atrial implementation of the V-chip. The V-chip could find its way into•l\yiSA!\yi-WW-l\/lT-9601©1996 Dataquest

January 29,1996

34

Consumer Multimedia Semiconductor and Applications Worldwide

Table 4-7
U.S. Color Television Brand Share Leaders, First Quarter 1994
through Fourth Quarter 1994 (Percentage)
Unit
Market Share
16.1

RCA
Magnavox
ZenithSony
General Electric
Sharp
Sanyo
EmersonToshiba
Panasonic

15.0
12.0

Revenue
Market Share
17.6
12.7
13.0

6.6
6.6

Others
Total

6.0
5.3
5.0
3.1

9.0
5.0
3.7
3.3
2.7
5.5

2.9
21.4

3.6
23.9

100.0

100.0

Source: The Scout Report'%iie Polk Company

Table 4-8
U.S. Color Television Brand Share Leaders, Third Quarter 1994
through Second Quarter 1995 (Percentage)

RCA
Magnavox

Unit
Market Share
16.2
16.1

Revenue
Market Share
17.2
14.3

12.3
7.1

12.8
9.4

6.3
6.0
4.9

4.4
3.8

ZenithSony
General Electric
Sharp
Sanyo
EmersonPanasonic
Toshiba
Others
Total

4.4

3.0
2.4

3.5
3.3

3.9
5.9

19.9

22.9

100.0

100.0

Source: The Scout Report^he Polk Company

MSAM-WW-MT-9601©1996Dataquest

January 29,1996

Vicieo Equipment35

set-top boxes, VCRs, and TVs. Zilog has already announced that its
Z89300 TV control and on-screen display chip family have the recommended TV program rating decoding and control capability. In volume
production, this chip will be priced in the $4-to-$6 range.
Functionally, color TVs have reached near maturity, and the focus is beragplaced on improvement of productivity in the manufacturing process
through digitization. Integration of peripherals devices into semiconductor chips allows reduction of components, thus reduction of inspection/
adjustment points. Also, an increasing use of microcomputers enables
signal processing control by computer bus, leading to standardization ofchassis design. Figure 4-7 shows a block diagram of a currently available
multifunction, hi^-performemce color TV.
Major technological trends in electronic circuits for video equipment areclassified as follows:• Digital processing of image, voice, and mechanical control signals.
Digital processing of video and voice signals for low-end products has
been incorporated into ICs except for CRT video and horizontal output
circuits, which are configured by discrete devices.
• Since the adoption of the Ghost Cancellation Reference (GCR) by theFederal Communications Commission (FCC) in May 1993, awareness of
its technology has increased. Many more stations are including the reference in their transmission. Ghost cancellation technology is also being
introduced to the public through a consumer standalone unit. With
time, ghost cancellation will become more widely accepted, and thetechnology will become a commonly integrated feature of the television
receiver or VCR.
• Interframe signal processing by using TBC technology and semiconductor memory. Improved-definition TV (IDTV) and EDTV use digitalmemories to scan 525 lines at a frequency twice that used in the
National Television Standards Committee (NTSC) standard. The use ofdigital memory also allows currently available color TVs to adopt technologies to improve picture quality by eliminating or reducing crosscolor and jitter.
• Closed-captioning decoders. Closed-captioning decoders for the hearing impaired are now mandatory on U.S. market TVs.
• Use of the bus system for interactive control of ICs. In particular the
12 bus technology patented by Philips is beginning to be adopted bycolor TVs.
• Incorporation of new features. Digitization of signal processing has promoted incorporation of new features, such as picture in picture, digitalstill, and on-screen display.

VCRs
Figure 4-8 and Table 4-9 show the forecast for worldwide VCR production.
Because household penetration rates are more than 90 percent, Dataquest
expects tmit shipnients and revenue for the next five years to remain
essentially flat. Sales are now sustained by replacement, upgrades, andhouseholds adding a VCR. Following the trends for other video equipment, production increasingly will shift to the Asia/Pacific region.
MSAM-WW-MT-9601©1996 Dataquest

January 29,1996

V)>

Figure 4-7
Block Diagram of Currently Available Multifunction, High-Performance Color TV

V

CO
O)

cz>

/Vf^IGirina
Tuner

^

VIF

V/C

SIF

Synctiro/
Separator/
HVOSC

@
CD
CO

cr>
a
cu

Audio Output

CU
J3
t=

SI

CO
C/J

Power
Supply

O)

^3
hO
CD
CD
CD
CJ>

A Speaker^^tmm'&Sl^^iM(Dieibeiinb«r t ^Voltage
Regulator

CRT Drive

Vertical Output
Horizontal Drive

H

Horizonta
OutputVideo Equipment

37

Figure 4-8
Worldwide VCR Production Revenue and Unit Shipment Forecast (Millions of Dollars)
Thousands of Units
70,000Millions of Dollars

13,000

1993

1994

1995

1996

1997

1998

1999

2000
9507016

Source: Dataquest (December 1995)

Table 4-9
Worldwide VCR Production Forecast
2000
1996
1997
1999
1995
1998
1994
1993
Units (K)55,296 57,209 61,844 63,638 65,313 65,891 66,919 68,662
188
187
179
176
180
184
196
203
Factory ASP ($)
12,885
11,567
11,375
11,467
11,891
12,303
Factory Revenue ($M)
11,241 11,184
39
42
41
39
39
43
42
43
Semiconductor Content ($)
Semiconductor TAM ($M)
2,333 2,470 2,656 2,657 2,667 2,585 2,579 2,654

CAGR (%)
1995-2000
2.1
0.1
2.2
-2.1
0

Source: Dataquest (December 1995)

Figure 4-9 shows the distribution of VCR production by region.
Tables 4-10 and 4-11 show the North American VCR market and production forecast, respectively. Tables 4-12 and 4-13 list the leading VCR
brands. Key trends to note among VCRs are as follows:• The most popular upgrade feature is stereo audio. The 1996 market forhome VCR desks will be heavily stereo-oriented. There will probably bea decline in the sale of mono models in the United States. Other
advanced features include special effects with four heads and the
S format, which offers more effective scan liaes.
• The VCR Plus programming standard for simplified program recordingis nearly a standard feature on step-up VCRs.

MSAI\/1-WW-MT-9601©1996 Dataquest

January 29,1996

38

Consumer Multimedia Semiconductor and Applications Worldwide

Figure 4-9
Regional Share of VCR Production Revenue
1995

2000
— North America (2.4%)

North America (0.6%)

Total = $11.6 Billion

Total = $12.9 Billion
9KJ7019

Source: Dataquest (December 1995)

Table 4-10
North American VCR Market Forecast
1993

1994

1995

1996

1997

1998

1999

2000

CAGR (%)
1995-2000

Units (K)Factory ASP ($)

14,004229

14,788218

15,232
206

16,146
197

16,365
200

1.4
-0.6

3,207

3,224

3,138

15,713192
3,017

15,930195

Factory Revenue ($M)

15,413
195
3,005

3,106

3,181

3,273

0.8

1998

1999

2000

CAGR (%)
1995-2000

1,183
245

1,243
250

306
33

311
34

39

42

Note: Does not include TV/VCR combinations or camcorders
Source: Dataquest (December 1995)

Table 4-11
North American VCR Production Forecast
1993

1994

1995

1996

1997

Units (K)Factory ASP ($)

302
231

469

325
228

673
231

871

1,127

233

235

Factory Revenue ($M)
Semiconductor Content ($)

70
31

155
32

203

265

31

74
31

Semiconductor TAM ($M)

9

15

10

22

228
107

33
28

33
37

30.7
1.8
•

33.1
1.5
32.8

Source: Dataquest (December 1995)

MSAM-WW-MT-9601©1996 Dataquest

January 29,1996

Video Equipment

39
Table 4-12
U.S. VCR Brand Share Leaders, First Quarter 1994 through Fourth
Quarter 1994 (Percentage)
Unit
Market Share
13.9
12.1
8.0
7.1

RCA
Magnavox
EmersonPanasonic
General Electric

Revenue
Market Share
14.6
11.4
5.5

4.5
3.1
29.9

8.0
5.0
6.0
6.0
7.0
4.1
2.4
30.0

100.0

100.0

5.8

Zenith
JVC
Sony
Sharp

5.3
5.0
4.7

Goldstar
Others
Total
Source: The Scout Repor^he Polk Company

Table 4-13
U.S. VCR Brand Share Leaders, Third Quarter 1994 throughSecond Quarter 1995 (Percentage)
Unit
Market Share

Revenue
Market Share

14.2
12.5
8.2

14.9
11.8
8.6

8.0

5.6

General Electric
Zeruth

5.3
5.0

4.6
5.7

Sharp
JVC

5.0
5.0

Sony
Goldstar
Others
Total

4.6
2.7

4.5
6.1
6.7
2.2
29.3
100.0

RCA
Magnavox
Panasoruc
Emerson

29.5
100.0

Source: The Scout Report'^he Polk Company

MSAM-WW-MT-9601©1996Dataquest

January 29,1996

40

Consumer Multimedia Semiconductor and Applications Worldwide

In terms of basic features and functions, VCRs have reached a stage ofnear perfection. Basic signal processing circuits are increasingly digitizedby using analog-to-digital converters (ADCs) and digital-to-analog converters (DACs) and are eventually integrated into semiconductor chips
incorporating digital signal processors (DSPs). New developments are
expected in restoration of original signals, in addition to accurate replay,
as well as the ability to provide output according to diverse consumer
demand. Digitization has boosted tiie number of ICs capable of handling
NTSC, PAL, and SECAM formats. Also, the use of on-screen display ICs
and filter-equipped ICs is reducing the number of components andadjustment points at the factory. Copy-protection circuitry from Macrovision is becoming more popular as both Philips and Texas Instruments
are producing copy-protection chips. Figure 4-10 shows a block diagramof a typical VCR.
A new standard called Data-VHS (D-VHS) is being developed by VCR
manufacturers, led by JVC. The new D-VHS system will be backwardcompatible with the VHS format and would also add a bitstieam recording capability to allow recording of compressed digital data. The standard
would use existing Super VHS media and would be capable of offering
49 hours of recording per cassette. D-VHS will also record analog broadcasts such as NTSC and PAL. This feature would open new applications
for VCRs in uses such as data storage and multimedia systems. JVC has
consulted with Hitachi, Matsushita, and Philips Electronics in developing
this new standard. Also, the following companies have expressed support
for the D-VHS format: LG Electronics, Mitsubishi Electric, Samsung Electronics, Sanyo Electric, Sharp, Sony, Thomson Consumer Electronics, andToshiba. Thomson is looking at D-VHS as an extension of its RCA Digital
Satellite System (DSS) equipment line. D-VHS could record the actual
digital direct-to-home satellite feeds of DirecTV and U.S. Satellite Broadcasting (USSB) programming.
The inclusion of digital recording capability will add $300 to $400 to theretail price of a VHS VCR. The first D-VHS VCRs are expected to hit tiie
market in mid-1996. The higher price will present a significant barrier tomarket acceptance. A survey conducted by the EIA explored U.S. consumer interest in a digital VCR. When digital VCR was described to them,
29 percent of the VCR owners said they would be interested in purchasing
it and 22 percent were unsure. However, when asked about the price theywould be willing to pay, 25 percent of respondents said they would pay$400,11 percent would pay $600, three percent would pay $800, and five
percent would pay $1,000.

Camcorders
Figure 4-11 and Table 4-14 present Dataquest's forecast for worldwide
camcorder production. Growth in revenue and shipments will be healthyduring the next five years. Tables 4-15 and 4-16 present the North American market and production forecast, respectively. Figure 4-12 shows the
production distribution by region. Japan is the primary location for production of camcorders. In spite of some shifting of production to the Asia/
Pacific region, Japan will still produce the large majority of camcorders
through 2000. Tables 4-17 through 4-18 show the leading camcorder

MSAM-WW-MT-9601©1996 Dataquest

January 29,1996

CO>

Figure 4-10
Block Diagram of a Typical VCR

Y
CO
CD

Antenna<=>
Tuner

VIF/SIF

SystemMicrocor^troller

OnScreen
Display

Video Switch@

Additional
Function

Audio

CO
CO

cr>

o

tu
r-t'
lU

Motor Driver

FLD
Microcontroller

AudioA/ideo
Head

Motor

^
JU

13
r\3
CO
CO
CO
CJ>

Source: Oataquest (Decembcir 1995)

42

Consumer Multimedia Semiconductor and AppNpations Worldwide

Figure 4-11
Worldwide Camcorder Production Revenue and Unit Shipment Forecast(Millions of Dollars); of Dollars

Thousands of Units
25,00020,00015,00010,000
5,000

1

1993

' "

1994

• • • • •

I

1995

• "

"

I

1996

• • • • ' •

I

1997

' "

" • "

1998

1999

I

2000
9B070E1

Source: Dataquest (December 1995)

Table 4-14
Worldwide Camcorder Production Forecast
1994

1995

1996

1997

1998

1999

2000

CAGR (%)
1995-2000

8,566 9,433
569
523
4,876 4,935
145
134
1,246 1,260

11,396492

13,300
465
6,183
115

15,147
450
6,813
112

17,224
437
7,533
110

19,465
425
8,274
109

21,997
413
9,087
107

14.1
-3.4
10.2
-2.8

1,533

1,698

1,890

2,113

2,363

10.9

2000

CAGR (%)
1995-2000

4,626

4.3

515
2,383

-2.5
1.6

1993
Units (K)Factory ASP ($)
Factory Revenue ($M)
Semiconductor Content ($)
Semiconductor TAM ($M)

5,602
124
1,409

Source: Dataquest (December 1995)

Table 4-15
North American Camcorder Market Forecast

Units (K)Factory ASP ($)
Factory Revenue ($M)

1993
3,381
611
2,066

1994

1995

3,530

3,750

600
2,118

586
2,198

1996
3,905

1997

1998

4,072

4,247

1999
4,433

570
2,226

550
2,240

535
2,272

520
2,305

Source: Dataquest (December 1995)

MSAM-WW-MT-9601©1996 Dataquest

January 29,1996

43

Video Equipment

Table 4-16
North American Camcorder Production Forecast

Units (K)Factory ASP ($)
Factory Revenue ($M)
Semiconductor Content ($)

1993
50
611
31
92

1994
75
581
44
87

1995
113
552
62
85

1996
169
524

1997

88
84

253
498
126
84

Semiconductor TAM ($M)

5

7

10

14

21

1998
380
473
180
85
32

1999

2000

429
449
193
85
36

485
427
207
86
41

CAGR {%)
1995-2000
33.9
-5.0
27.2
0.0
34.0

Source: Dataquest (December 1995)

Figure 4-12
Regional Share of Camcorder Production Revenue

1995
Asia/Pacific-ROW (3.9%)

2000

I— North America (1.1%)

Asia/Pacific-ROW (9.1%),—North America (2.3%)

Total = $9.1 Billion

Total = $5.6 Billion

9S07(E2

Source: Dataquest (December 1995)

brands in the United States. Key trends to note among camcorders are as
follows:• More than 20 percent of U.S. homes have camcorders, although it isprimarily homes with children that are buying camcorders.
• The strong movement to compact versions is helping fuel newsales. S versions are begirming to win over resolution-conscious
moviemakers.
• Viewfinders that rely on LCDs rather than on traditional optical techrtiques are contributing to the impressive market surge for camcorders.
The percentage of camcorders equipped with LCD monitors is morethan doubling annually in Japan and abroad, according to statistics
from Sharp, a leader in LCD technology implementation in camcorders.
MSAM-WW-MT-9601©1996 Dataquest

January 29,1996

44

Consumer Multimedia Semiconductor and Applications Worldwide

Table 4-17
U.S. Camcorder Brand Share Leaders^ First Quarter 1994 throughFourth Quarter 1994 (Percentage)
Unit
Market Share
26.4
16.1
14.7

Sony
RCA
Panasonic
JVC
Sharp

Revenue
Market Share
28.8
15.7
16.0
8.4
10.5

Magnavox
Hitachi

8.8
10.4
5.4
3.5

General Electric
Canon

4.6
2.7

4.3
4.1
3.2
3.0

LXI
Others

2.0
5.4

1.4
4.6

100.0

100.0

Total
Source: The Scout Report®/The Polk Company

Table 4-18
U.S. Camcorder Brand Share Leaders^ Third Quarter 1994 throughSecond Quarter 1995
Brand
Sony
RCA

Unit
Market Share
24.5
16.6

Revenue
Market Share

12.8
11.7

13.4
11.5

11.1
4.8

11.7
3.6

4.5
4.1

5.2
2.8

2.4
1.7

2.6
1.2

5.8
100.0

5.0

Panasonic
JVC
Sharp
Magnavox
Hitachi
General Electric
Canon
LXI
Others
Total
Source: The Scout Report®/The Polk Company

26.8
16.2

100.0

The VHS-C format appears to be capturing a greater share of the U.S.
market at the expense of the full-size VHS camcorders. According to the
Photo Marketing Association, in 1991, the full-size VHS standard represented 42 percent of the U.S. camcorder market, with 8mm accounting
for 37 percent and VHS-C for 22 percent. By 1994, the mix had shifted
to: VHS, 26 percent; VHS-C, 38 percent; and 8mm, 36 percent. By theend of 1995, it appeared that VHS-C and 8mm were neck and neck at
41 percent, and VHS was declining to 18 percent of the market.
MSAM-WW-MT-9601©1996Dataquest

January 29,1996

Video Equipment

45

Figure 4-13 shows a block diagram of a tj^pical camcorder. Some technology features and trends with implications for semiconductor opportunities are:
• CCD makers are increasing their share in the camcorder market. CCDs
are becoming smaller and are accommodating more picture elements.
• CCD output signals, which have been conventionally analog processed,
are converted to digital signals through a 10-bit DAC, and after Y/Csignal processing by the DSP are sent to the processing stage such as
blur correction and electronic zooming. Auto focus/auto iris/auto
white balance (AF/AE/AWB) detection has been integrated into digital
circuits on a single chip. Peripherals circuits related to blur correction
consist of fuzzy logic circuits for motion detectors, blur-correction control, and memory control, which are incorporated into standard cells(DSP).
• Mechanism control is handled by an 8-bit microcomputer (servo microcomputer). Wiih the increasing emphasis on portability, development
efforts are being shifted from low power consumption to lower operation voltage to 3.3V (3V). Further demand for high-performance
camcorders will encourage digital processing, incorporation of a battery
charge circuit into a single chip, and development of a single/hybrid
chip.
• In the video equipment market, advanced technology developed forindustrial use (broadcast equipment) is finding its way to consumer
applications that demand much lower levels of picture quality. Various
technologies unique to consumer products, such as blur correction,
have been commercialized. At the same time, because color TVs, VCRs,
and camcorders share common features, new technology developed forany of them is diffused to others.
• Vibration or shake compensation has become a key feature in camcorders, equal in importance to compact, lightweight design and strongmagnification zooms. There are two approaches to shake compensation,
one electronic and the other optical. Recently, almost all but the lowend camcorders have adopted some version of electronic shakecompensation.
• WiUn. the adoption of digital camera circuits, many camcorders feature
digital zooms allowing greater magnification. For example, combining a
12X optical zoom lens with a 2X digital zoom function makes it possible
to record images at 24X magnification.
The first digital camcorders were introduced in 1995. These camcorders
are based on the Digital Video (DV) format specification for home-use digital camcorders that was agreed to by 55 manufacturers as part of the HD
Digital VCR Conference. Matsushita and Sony were the first manufacturers to offer digital camcorders, followed by JVC and Sharp. Hitachi is
expected to introduce its digital camcorder at the winter Consumer Electronics Show. The Hitachi camcorder will record on a floppy disk that canbe inserted into a PC instead a tape. As with most of the new digital video
products, the steep pricing of these new camcorders will limit the potential market to semiprofessionals and the top 1 percent to 2 percent of theconsumer camcorder market. Pricing on these early models ranges from
$2,200 to $4,700.

MSAl\/f-WW-MT-9601©1996 Dataquest

January 29,1996

03>

Figure 4-13
Block Diagram of a Typical Camcorder

COVideo Buffer

Grapfiics/
Video
Controllera>oVRAM/SDRAM/
1-2MB RDRAM

System
Support

CO
CO

a>
o
t"
CD
CO

NTSC/PA
EncodeHost
CD-ROM
Controller

Sound
Controller

CD-ROM
Drive
Controller

Audio
RAM
0.5MB

Main Bus

SystemCPU
32/64-Bit@

RAMDACVideo
Compression
Decoder(M/JPEG
Optional)

Main
Memory
2-4MB
DRAM

OS
Memory4Mb
Nonvolatile

I/O
Controller

^D
CO
CD
CO
C35

n

Handheld Controller etc.

w

>5Source: Dataquest (December 1995)

Video Equipment

47

To record image signals, camcorders using the DV format adopt the digitalcomponent system, recording luminance and chrominance (Y and C) signals separately. This format provides a resolution of 500 horizontal lines.
Instead of the standard 0.3-MHz color signal bandwidth, the DV format
works with a 1.4-MHz bandwidth. The format also calls for a built-in timebase correction (TBC) fimction to diminish jitter. Audio recording involves
the use of pulse code modulation (PCM) stereo. There are two possible
audio modes. For audio quality equal to that of compact discs and digitalaudio tapes (DAT), a 16-bit sound system using two channels and 48-KHz
sampling frequencies can be used. The specification also defines a 12-bit
audio system with four charmels and 32-KHz sampling frequencies. Theinterface format for connecting to personal computers is still being finalized, but it appears that it will be based on the IEEE-1394 standard.
As mentioned previously, Matsushita was one of the first manufacturers tobring a digital camcorder to market. This first model integrated 2.5 million
transistors into five main video chips on a 0.5-micron process. Two of thechips, error correction and digital modulation devices, are produced by
LSI Logic. A pulse code modulation (PCM) device is made by Mitsubishi
Electric. Mitsubishi can use the PCM chip for its camcorder with Matsushita's agreement.

HDTV
HDTV is high-definition television, or advanced television—a quantum
leap in video quality. Everyone wants better TV. Consumers want clearer
pictures with higher resolution, and broadcasters would love to give it tothem. But is HDTV worth the price, especially in light of new technologies, both analog and digital, designed to squeeze more performance outof existing television systems?
The Challenges Of U.S. HDTV
• Political: The FCC must approve the system and then allocate space inthe frequency spectrum to transmit the signals.
• Broadcasters: Head-end gear for HDTV is currently very expensive
compared with NTSC gear.
• Receivers: HDTV sets intended for consumers require very expensive
components and may never achieve enough volume to reduce costs
significantly.
Political

A lot is known about the arduous journey of HDTV through the U.S. political process. There are even five lobbying organizations that promote
HDTV in Washington, D.C. HDTV will eventually be approved by the
FCC, but the FCC is now also supporting standard-definition (digital)
television (SDTV). Congress is putting pressure on the FCC to raise funds
through spectrum auctions to reduce the national debt. If the FCC decides
to auction HDTV spectrum, it would be a disincentive to broadcasters.
Following are descriptions of the two key U.S. government bodies
involved with HDTV:• Federal Communications Commission: New spectrum is being allocated for digital broadcast TV. If these digital TV spectrum licenses
are auctioned, they could be worth as much as $70 billion. If digital
MSAM-WW-MT-9601©1996 Dataquest

January 29,1996

48

Consumer Multimedia Semiconductor and Applications Worldwide

broadcast TV succeeds, the FCC would like to regain the spectrum currently used for analog TV channels and auction it for up to $23 billion.
Congress recently voted to raise $14 billion by 2002 from spectrum
auctions. Currently, 400 MHz of spectrum is allocated for broadcast TV;
however, only about 120 MHz is used even in the biggest cities. The
FCC chairman is Reed Hundt. Mark Corbitt is director of technicalpolicy at the Office of Plans and Policy.
• Advisory Committee on Advanced Television Services (ACATS): A
50-member committee was established by the FCC in September 1987 toevaluate and recommend an HDTV standard for the United States.
Former FCC Chairman Richard E. Wiley has been the chairman of
AC ATS since its inception. David Kettler is executive director of scienceand technology for BellSouth and cochairman of ACATS Systems Analysis Working Party. CBS executive Joseph Flaherty is cochairman of the
ACATS Technical Subgroup. Robert Hopkins is chairman of the ACATS
Expert Croup on Scanning Formats and Compression. Jules Cohen ischairman of the ACATS Field-Testing Task Force.
Broadcasters

Faced with the high cost of HDTV equipment and the possibility of spectrum auctions, broadcasters are likely to place their investments elsewhere. Terrestrial broadcasters can always invest in more translators andmore power for their transmitters. In October 1995, TV Broadcast magazine
conducted a survey of TV station general managers. Of those surveyed,
88 percent of broadcasters expect to switch from tape to digital storage by
2000. Substantial costs will be incurred in the next five years to accomplish
this. Also, 28 percent of broadcast general managers wish advanced television would just go away.
Receivers

The challenge that nobody wants to talk about is the cost of an HDTV
receiver. The equation is really very simple. If consumers can't afford a
special receiver, then broadcasters can't sell air time to advertisers because
there will be no audience. Therefore, there is no return on the broadcasters'
investment in expensive HDTV gear. Members of the Grand Alliance, theU.S. consortium of HDTV hopefuls, admitted in November 1995 thatHDTV will not be available in the United States until 1998 at the earliest.
Grand Alliance members remain confident that consumers will pay $3,500
for an HDTV receiver. Dataquest is much less optimistic about consumers'
acceptance at these prices.
Plasma is a new flat panel display technology that could potentiallyreduce the cost of HDTV receivers. Fujitsu is about a year ahead of otherplasma panel competitors. It previewed a 42-inch model at the COMDEX
show in November 1995. Production is expected to begin in October 1996
at 10,000 units per month for ¥500,000 each (about $5,000 for the display
alone).

Problems with Wide-Screen TVs and HDTV Receivers
The following are problems presented by wide-screen TVs and HDTV
receivers:• VN^U not fit on standard TV production and assembly lines, therefore
more labor and cost is required to transport the work-in-progress fromone station to the next
MSAM-WW-MT-9601©1996 Dataquest

January 29,1996

Video Equipment

49• Too wide to fit through a standard-size doorway• Too wide to fit in standard wall urut furniture• Electron gun must be quite far from the screen so it can scan its full
width at a reasonable speed• As screen gets wider, glass must be thicker (and heavier) for structural
strength. Difficult to mold a flat screen• Proposed viewing distance for HDTV is half that for standard NTSC
TVs. Therefore, the number of viewers within the optimal distance will
be more than halved.
• Very heavy—about 200kg• Very expensive

Standards and Organizations
Grand Alliance: Digital HDTV Grand Alliance (United States). The alliance of the seven companies that proposed four all-digital HDTV systems
to ACATS in 1993. Formed on May 24,1993, the seven member companies
are AT&T Microelectronics, Zenith Electronics Corporation, General
Instrument Corporation (GI), Massachusetts Institute of Technology,
Philips Consumer Electronics, Thomson Consumer Electronics, and DavidSamoff Research Center. AT&T and GI jointly built the video encoder,
Philips constructed the decoder, Samoff and Thomson cooperated inbuilding the transport subsystem, and Zenith built the modulation
subsystem.
SDTV: Standard-Definition (digital) TV. FCC-approved standard for digital TV using standard-resolution NTSC displays within an HDTV broadcast system. Hitachi is the leading developer of down-conversion systems
for turning HDTV signals into SDTV for display on standard TV sets.
MUSE HDTV: Multiple Sub-Nyquist Sampling Encoding (also known as
Hi-Vision). Japanese standard for analog HDTV developed in 1968 by
NHK. MUSE uses a display with interlaced scanning with 1,125 horizontal
scanning lines at 60 fields per second. Since 1990, between nine and11 hours of Hi-Vision has been transmitted every day by satellite in Japan.
The commercial service launch for Hi-Vision is scheduled for late 1997. Asof July 31,1995, Hi-Vision TV sets cost about $5,618. A MUSE signal occupies 8 MHz of bandwidth. Narrow MUSE is a slimmed-down version
occupying only 6 MHz of bandwidth. The system uses digital signal processing, but the frequency modulation is analog. Developed primarily by
Sony.
MPT: Japan's Ministry of Posts and Telecommunications. In July of 1995,
the MPT annoimced tiiat Japan, too, would have a digital TV specification.
The specification is similar to Europe's DVB. Digital satellite services are
expected to begin in April 1996. Manufacturers of Hi-Vision HDTV setsstrongly object being preempted. Full-scale broadcasting of Hi-Vision
HDTV is still planned to start in 1997. MPT's Digital Broadcasting Systems
Division director is Tomofumi Yasunari.
DVB: Digital Video Broadcasting Group, formed in September 1983.
HDTV is no longer a priority in Europe, and HDTV efforts have been

MSAM-WW-MT-9601©1996 Dataquest

January 29,1996

50

Consumer Multimedia Semiconductor and Applications Worldwide

replaced by the pan-European DVB standard for digital TV. DVB is headquartered in Geneva, operating vmder the auspices of the European Broadcast Union and the German Ntoiistry of Telecommimications. Twostandards exist: DVB-S for satellite using QPSK, and DVB-C for cableusing 64-QAM. COFDM is still being considered for the terrestrial standard. MPEG-2 main level, main profile. PCMCIA II will be used for thephysical interface to accommodate different conditional access systems(instead of smart cards).
DAVIC: Digital Audio Visual Interoperability Coimcil. Standard-settingorganization for digital TV, formed in January 1994, headquartered inEurope, following tiie DVB project. The chairman is Dr. Leonardo
Chiariglione. DAVIC Spec 1.0 was completed at a meeting in Melbourne,
Australia, and presented at the International Television Symposium inMontreux, Switzerland, in June 1995. The chairman of the Set-Top Unit
Techrucal Committee is K. Shimamura of NTT. The U.S. contact is Robert
Luff, chief technical officer of Broadband Commurdcations Group at
Scientific-Atlanta. DAVIC spec 1.1 is planned for June 1996, and DAVIC
spec 1.2 is planned for December 1996.

Current Specifications
Tables 4-19 through 4-21 present major HDTV technical specifications.
Table 4-19
Grand Alliance Specification
Resolutions and Frame Rates

Video Compression
Audio Compression
Modulation
Data Rate
Bandwidth
OthersSpecification
1280 X 720; progressive 24-, 30-, 60 frames per second
1920 X 1080; progressive 24-, 30 frames per second
1920 X 1080; interlaced 60-frames per second
MPEG-2 main level, high profile
Dolby AC-3 digital audio (ACATS standard A/52)
8-VSB
20 Mbps
6-MHz bandwidth per channel (cable version can fit two HDTV signals
within 6 MHz)188-byte MPEG-2 transport packets, packetized data transport structurewith headers and descriptors; 4-byte header, 184-byte payload
HDTV signal will be compressed by a factor of more than 60 to 1, from
1.2 billion bits per second to less than 20 million bits per second.

Source: Dataquest (December 1995)

Table 4-20
SDTV Specification
Resolutions
Frame Rates
Video Compression
Audio Compression
Modulation

Specification
640 X 480 (4:3 aspect ratio, VGA)
704 X 480 (16:9 aspect ratio, CCIR Rec. 601)
60 interlaced fields per second, 24-, 30-, and 60 frames per second (progressive)
MPEG-2 main level, main profile
Dolby AC-3 digital audio
8-VSB

Source: Dataquest (Decemberl995)

MSAM-WW-MT-9601©1996 Dataquest

January 29,1996

Video Equipment

51_

Table 4-21
DAVIC 1.0 Specification
Specification
Resolution
Video Compression
Audio Compression
Modulation
Upstream Data Rates

640 X 480
MPEG-2 main level, main profile
Musicam
64-QAM for hardwired networks (cable and telco)
1.544 Mbps and 256 Kbps

Source: Dataquest (December 1995)

Receiver Production and IVIaricet
Dataquest's forecast for worldwide production of HDTV receivers isshown in Table 4-22 and Figure 4-14. The North American market andproduction forecasts are presented in Tables 4-23 and 4-24, respectively.
Table 4-25 shows sizes and prices for current HDTV models on the market.
The following are some notes about market and production trends:• Full-scale broadcasting of Hi-Vision HDTV is planned to start in 1997.
• Matsushita announced in August 1995 that it will be raising productionof HDTV receivers from 4,000 per month to 10,000 per month. This will
mean full capacity for its Ibaraki factory in Osaka Prefecture.
• 1995 sales of color TVs in Japan equaled 8.4 million uiuts (EIAJ); widescreen TVs (HDTV and NTSC) represented 3 million to 4 million of
those uruts. In 1993,1.4 million wide-screen units were sold. Somewide-screen TVs from Hitachi and Matsushita will now include a
MUSE-to-NTSC converter.
• By April 1995, 30,000 MUSE receivers had been sold, as well as 100,000
MUSE-to-NTSC converters.
Manufacturers of HDTV Sets

Manufacturers of HDTV receivers are as follows:• Sony (also front- and rear-projection models)• Toshiba• Matsushita (Panasonic, JVC brands, also rear-projection models)• Mitsubishi (also front- and rear-projection models)• Sanyo• Sharp (also front-projection models)• Hitachi (also rear-projection models)• Ikegami (also front-projection models)l\/ISAIVI-WW-MT-9601©1996 Dataquest

January 29,1996

52

Consumer Multimedia Semiconductor and Applications Worldwide

Table 4-22
Worldwide HDTV Receiver Production Forecast
1993
12

1994

1995

1996

1997

1998

1999

2000

8,000

23
6,000

55
4,000

120
3,500

251
3,100

358
2,800

96
700

138
540

220
450

420
400

778
363

595
2,700
1,607
300

8.4

12.4

24.8

48.0

91.1

1,002
340
121.7

445
2,600
1,157
315
140.2

Units (K)Factory ASP ($)
Factory Revenue ($M)
Semiconductor Content ($)
Semiconductor TAM ($M)

178.5

CAGR (%)
1995-2000
61.0
-7.6
48.8
-7.8
48.5

Source: Dataquest (December 1995)

Figure 4-14
Worldwide HDTV Receiver Production Forecast
Millions of Dollars

Thousands of Units
600
-500
-400
300
200
100

5507024

Source: Dataquest (DGcember 1995)

Table 4-23
North American HDTV Receiver Market Forecast
1993

1994

1995

1996

1997

1998

1999

2000

Units (K)Factory ASP ($)

0
0

0
0

0

0
0

1
3,100

8
2,800

15
2,600

35
2,700

CAGR (%)
1997-2000
227.1
-4.5

Factory Revenue ($M)

0

0

0

3

22

39

95

212.4

0
0

Source: Dataquest (December 1995)

MSAM-WW-MT-9601©1996 Dataquest

January 29,1996

Video Equipment

53

Table 4-24
North American H D T V Receiver Production Forecast
1993

1994

1995

1996

1997

1998

1999

2000

Units (K)Factory ASP ($)

0
0

0
0

35
2,700

0
0
0

8
2,800
22
340

15
2,600

0
0
0

0
0
0
0

1
3,100

Factory Revenue ($M)
Semiconductor Content ($)

0
0
0
0
0

CAGR (%)
1997-2000
227.1
-4.5

39
315
4.7

95
300
10.5

212.4
-6.2
207.0

Semiconductor TAM ($M)

0

3
363
0.4

2.7

Source: Dataquest (December 1995)

Table 4-25
Sizes and Prices of H D T V Sets (Fourth Quarter of 1995)
Size

Type

20 Inches
24 Inches

MUSE-to-NTSC only
MUSE-to-NTSC only

28 Inches
32 Inches

Hi-Vision HDTV
Hi-Vision HDTV

400,000
500,000

36 Inches
52 Inches

Hi-Vision HDTV
Rear Projection

700,000
750,000

60 Inches
70 Inches
Up to 200 Inches

Rear Projection
Rear Projection

Price (Yen)
-

.-

•

Front-Screen Projection(Mitsubishi and Sony are the leaders)

Source: Dataquest (December 1995)

Semiconductor Opportunities

Clearly, HDTVs will be a semiconductor-rich opportunity. Increasingly,
intellectual property in DSP-based digital transmission, video manipulation, compression, and audio, to name a few areas, will be crucial for market participation. Key chip fimction opportunities include the following:• Digital tuning (MCU controlled)• Demodulation circuits for VSB• Moving Picture Expert Group (MPEG)-2 video decoder• Digital video processing• Forward error correction• Transport depacketizer• AC-2 (Dolby) six-channel CD audio decode• Audio DAC and amplification• 1MB to 2MB DRAM for decompression buffer• Video RAMDAC (10 bit, 135 MHz)• Infrared on-screen control display controlsl\/ISA!\/l-WW-MT-9601©1996 Dataquest

January 29,1996

54

Consumer Multimedia Semiconductor and Applications Worldwide• Closed captioning/ghost cancellation circuits• Optionally: modem interfaces (for interactivity) and decryption

DVD (Digital Video Disc) and Video-CD
In September 1995, Philips, Sony, and Toshiba announced an agreement todevelop a single standard for the high-density digital video disc. DVD isthe next generation of compact disc technology that is predicted to impact
significantly the world of consumer VCRs, as well as computer delivery ofdigital content, because of its several-gigabyte storage capabilities. The
standard puts an end to a format war between two camps that was similar
to the one that occurred in the early 1980s between the opposing consumer
videotape camps, beta and VHS.
The agreement ended almost 10 months of format competition between
the two primary camps: Multimedia CD (MMCD), led by Sony andPhilips, and the Superdensity (SD) alliance, led by Toshiba, Matsushita,
and Time Warner. The agreement between the two camps began lengthy
negotiations to develop the final specification for DVD. From the perspective of the different manufacturers, perhaps the most important issue to beresolved is intellectual property rights. An immediate difficulty is the
sheer number of companies involved in the DVD-format unification. At
least nine have staked claims to become license holders: Sony, Philips Electronics, Thomson Multimedia, Hitachi, Matsushita, Toshiba, Mitsubishi,
Pioneer, and JVC. In the announcement of the initial agreement, the parties
stated their intent to release a final specification in December 1995. Delays
in a final specification could affect the goal of bringing DVD players to themarket in 1996. A preliminary forecast for the worldwide DVD market
based on currently available information is presented in Table 4-26 andFigure 4-15. Some of the important elements of the DVD format that havebeen agreed to are as follows:• 4.7GB per layer, single- and/or double-layer and side
• Backward-compatibility with all current CDs• MPEG-2 the compression specification choice• Compatibility between computer-based and consumer-based (television) products• Technical specifications• 0.6mm X 2 substrate thickness, bonded disc
• EFM Plus modulation/demodulation• Reed-Solomon error-correction code

MSAM-WW-MT-9601©1996 Dataquest

January 29,1996

Video Equipment

55

Table 4-26
Worldwide Digital Video Disc Preliminary Production Forecast

Units (K)Factory ASP ($)
Factory Revenue ($M)
Semiconductor Content ($)
Semiconductor TAM ($M)

1993
0
0
0
0
0

1994
0
0
0
0

1995
0
0
0
0

0

0

1996
60
575
35
145
8.7

1997
750
460

1998
2,500
385

1999
5,000
340

2000
9,000
310

345
115
86.3

963
97

1,700
88
440.0

2,790
85

242.5

CAGR (%)
1995-2000
NM
MM
NM
NM
NM

765.0

NM = Not meaningful
Source: Dataquest (December 1995)

Figure 4-15
Worldwide Digital Video Disc (DVD) Preliminary Production Forecast
Thousands of Units

Millions of Dollars
3,000

9,000

1,000

1993

1995

1994

1996

1997

1998

1999

2000
9507025

Source: Dataquest (December 1995)

Some of the important issues related to the rollout and development of
DVD players are as follows:• Initial pricing for DVD players was targeted at $500. It appears that theinitial players will have a hard time hitting that price, and it will probably be closer to $600. Critical components such as the red-laser diodes
will drive higher initial costs; as they come down the price curve, it will
be possible to lower system prices.
• There are concerns about the availability and supply of 635/650nm redlaser diodes, which are a key element in DVD's high-density storage
capacity. Prototjrpe and sample diodes were produced in 1995; however,
manufacturers are still wavering about when volume production will
be possible. Although this is a concern for manufacturers anxious toramp production of DVD players quickly, it is not certain that market
MSAM-WW-MT-9601©1996 Dataquest

January 29,1996

56

Consumer Multimedia Semiconductor and Applications Worldwide

demand will materialize to meet the production plans of DVD manufacturers during 1996 and 1997. Pricing will be a hurdle in early market
growth.
• Initially, players will be ROM only and eventually RAM and erasable.
The draft format of a rewritable disc called the DVD-RAM was determined in late 1995. The rewritable DVD-RAM uses phase change technology to store information, applying heat from the laser to change therecording layer from a polycrystalline structure to an amorphous state.
The draft specification calls for a capacity between 2.6GB and 3GB, withthe wavelength of the laser diode in the range of 650nm to 680nm.
The early-generation video disc player, Video-CD, continues to showpromising growth, particularly in the Japan and Asia/Pacific karaoke
market. These players use MPEG-1 technology and allow 74 minutes ofstorage for full-motion video. Figure 4-16 shows a block diagram for a
Video-CD system. A DVD system wiU be similar to this diagram, with key
differences being the use of 16Mb of DRAM and MPEG-2 technology. At
352 X 240/288 pixels, Video-CD's resolution is limited but could still findapplications in portable players and minicomponent systems, many ofwhich will use LCD displays. There are currently about 30 Video-CD models and 900 software titles available in Japan. One of the major manufacturers, Sharp, expects the market for MPEG-1-based Video-CD players to
Figure 4-16
Block Diagram of a Representative Video-CD System
Pulse-Code Modulation (PCM) Clock1

Audio Bypass —>-ftL;•CO-ROM•' IDme^'-"..
;;|GontrDi ;;iI

VldeoCD Decoder'CD-ROM
Decoder

Compressed
MPEG
SystemStream:,Data
Interface
Hcst
Interface

MPEG
Audio
Initerface
Video
OutputMPEG
AudioContro)MPEG
Audio
Decoder"AudioUiO/A.

o••6

DigitalVideo

NTSC:;Encoder

<
IE
O
Q.

•Microcdifittroilef:
NTSCTV

4Mb DRAM•User Interface•Components already included in CD player

9507DZB

Source: Dataquest (December 1995)

MSAM-WW-MT-9601©1996 Dataquest

January 29,1996

Video Equipment

57

reach 400,000 units in 1995 and 900,000 units in 1996. C-Cube Microelectrorucs announced major design-wins for its MPEG decompression chips
in Sony and Sharp Video-CD players. C-Cube has set an aggressive schedule to narrow the ultimate cost differential between audio CD and VideoCD systems to $30. Its initial MPEG-1 devices should allow manufacturers
to produce Video-CD players for about $100 over the cost of audio CD
products. The company hopes to halve that to $50 by 1997.

I\/1SAIVI-WW-MT-9601©1996 Dataquest

January 29,1996

Chapter 5>Interactive Products and Personal Electronics
Interactive consumer products include those that allow users real-time
control of information presented on the TV screen. The primary examples
covered here include interactive television and associated set-top decoder
boxes and video games. Some visionaries are projecting that these technologies may merge at least partially in the coming decade with each other orwith the standard TV set.

Interactive Television and Set-Top Box Definitions"Set-top box" is a generic term that means different things to different
industries. The seven product categories presented in Table 5-1 have all
been referred to as "set-top boxes," based merely on their location in relation to the TV set.
This section will focus on the first category, pay TV receivers. Within the
combined pay TV industries, the terminology used is "subscriber terminal." Figtire 5-1 presents a diagram of an interactive system that shows
how a subscriber terminal would be used in a cable, satellite, or telephonesystem. The following terms are also synonymous with pay TV receivers:• Integrated receiver/decoder (IRD): satellite industry• Customer-premises equipment (CPE): telco industry• Subscriber terminal, cable converter: cable industry• Compuverter, pay TV receivers
Table 5-1
Descriptions of Various Products Referred to as "Set-Top Boxes"
Product
Pay TV Receivers
Dedicated Game Consoles
Read-Only Multimedia Computers

Backchannel Transmitters
Audio and Data Decoders
Navigational Systems

Data Storage Devices

Description
Includes cable, DBS, C-band satellite, MMDS, LMDS, and now telco
Examples: Sony PlayStation and Sega Saturn
Examples: 3DO and Philips CD-I. Formerly known at Dataquest as
TV CD-ROM players. This category is being replaced by dedicatedgame consoles.
Allow user to play along with networked sports and game shows—TV Answer, for example
Used for nonvideo signals transmitted out-of-band in the verticalblanking interval, in-band video, or in-band audio. Include digital
cable radio and closed captioning.
A special type of data decoder for electronic programming guides.
Dedicated hardware systems exist, but most are being integrated
into pay TV receivers. Examples include StarSight, Prevue
Network, and Interactive TV Guide
Examples are VCR-Plus and Sega Channel Game Adapter

Source: Dataquest (December 1995)

MSAM-WW-MT-9601©1996 Dataquest

59

03

>

Figure 5-1
Interactive Television Systems

CD
C7>
O

Satellite or
Cable Network

@
CD
CD

a>
a
£4
(U

Digitally
Compressed
Programs

AnalogServers

Analog
Programs

2-Way
Amplifier

DigitalMultiplexer
Network
Interface Unit
Subscriber Management

Data

J

Info Processor

Joystick

Servers

Uplink Facility
(U

-a
to
CD
CD
CD

a>

Source: Dataquest (December 1995)

Cable Headend or Telephone Company

Subscriber l^ome

Interactive Products and Personal Electronics

61

Subscriber terminals are further divided into the following four subcategories by technology:

I• Nonaddressable analog• Addressable analog• Advanced analog (includes addressability and upstream
communications)• Digital
A digital set-top box includes a digital video decoder for receiving digitally-encoded TV signals. The compression schemes are typically MPEG-2,
but also include General Instrument's DigiCipher I and DigiCipher II. The
difference between addressable analog boxes and advanced analog boxesis that advanced boxes also include an embedded modem for upstream
commimications. Embedded modems are the basic semiconductor components for receiving interactive services. Cable modems fall into a separate
category, more closely related to PC modems than to set-top boxes. As
subscriber terminals move from nonaddressable to addressable toadvanced analog and finally to digital, almost every major component
maker is eyeing this market as a major application area.
Markets for Subscriber Terminals
The following six network systems represent potential markets for subscriber terminals:

I• Cable TV• C-band satellite (also known as full-view satellite)• Ku-band satellite (also known as DBS and DTH)
• Wireless cable (also known as MMDS)• Cellular cable (also known as LMDS)• TelcoProduction and Market Forecast
Analog terminals will be buoyed temporarily by new sales in the wirelesscable market. However, shipments of new digital terminals will overtake
their analog predecessors by 1997. Now the cable industry is planning to
introduce hybrid boxes capable of receiving both analog and digital signals. Because these boxes will include the expensive digital decoders anddemodulators, we have included their projected sales in the digital terminals category.
Because of the controlled nature of the cable equipment business, analog
converter boxes have maintained their selling price of about $105 for thelast 10 years! As digital boxes become more prevalent, the average selling
prices (ASPs) for analog boxes will finally begin to erode. There is a significant opportunity for system makers to reduce both the costs and the margins for DBS receivers over time. In fact, manufacturers wiU need to dojust that in order to increase the size of their market from innovators toearly adopters, and possibly to the mass market.

MSAM-WW-MT-9601©1996 Dataqu est

January 29,1996

62

Consumer Multimedia Semiconductor and Applications Worldwide

Tables 5-2 through 5-4 show Dataquest's forecast for worldwide analog
set-top box production, the North American analog set-top box market,
and North American analog set-top box production, respectively.
Figures 5-2,5-3, and 5-4 and Table 5-5 present the forecast for worldwide
digital cable and satellite set-top box production, average selling price,
and revenue. Tables 5-6 and 5-7 show the North American market andproduction forecast for digital set-top boxes.
Table 5-2
Worldwide Analog Cable/Satellite Set-Top Box Production Forecast
1994
12,233
113

1995

1996

1997

Units (K)Factory ASP ($)

1993
10,719103

11,505
114

11,38899

10,200
87

1998
7,591
78

Factory Revenue ($M)
Semiconductor Content ($)
Semiconductor JAM ($M)

1,104
42
450.2

1,382
46
562.7

1,312
47
540.7

1,127
41
466.9

887
38
387.6

594
35
265.7

1999
7,030
75
527
32
225.0

2000
6,839
71

CAGR (%)
1995-2000
-9.9
-9.0

486
30
205.2

-18.0
-8.6
-17.6

Source: Dataquest (December 1995)

Table 5-3
North American Analog Cable/Satellite Set-Top Box Market Forecast

Units (K)Factory ASP ($)
Factory Revenue ($M)

1993
4,860
103
501

1994
5,490

1995
4,500

113
620

114
513

1996
4,230
99
419

1997
3,600
87
313

1998
2,700
78
211

1999
2,250
75
169

2000
1,710
71
121

CAGR (%)
1995-2000
-17.6
-9.0
-25.0

Source: Dataquest (December 1995)

Table 5-4
North American Analog Cable/Satellite Set-Top Box Production Forecast

5,400

1994
6,100

1995
5,000

1996
4,700

1997
4,000

1998
3,000

1999
2,500

2000
1,900

CAGR (%)
1995-2000
-17.6

103
556

113
689

99
465

75
188
32
80.0

71
135

-9.0
-25.0

46
280.6

87
348
38
152.0

78
235

42
226.8

114
570
47

30
57.0

-8.6
-24.7

1993
Units (K)Factory ASP ($)
Factory Revenue ($M)
Semiconductor Content ($)
Semiconductor TAM ($M)

235.0

41
192.7

35
105.0

Source: Dataquest (December 1995)

MSAM-WW-MT-9601©1996 Dataquest

January 29,1996

63Interactive Products and Personal Electronics

Figvire 5-2
Worldwide Digital Set-Top Box Production Forecast
Thousands of Units
12,00011

10,000 •

8,000

6,000

4,000

2,000

1993

1994

1995

1996

1997

1998

1999

2000

Source: Dataquest (December 1995)

Figure 5-3
Worldwide Digital Set-Top Box Average Selling Price Forecast

Cable Converters
Satellite Converters

1993

1994

1995

1996

1997

1998

1999

2000
9507029

Source: Dataquest (Decemtjer 1995)

MSAM-WW-MT-9601©1996 Dataquest

January 29,1996

64

Consumer Multimedia Semiconductor and Appjicatjons Worldwide

Figure 5-4
Worldwide Digital Set-Top Box Revenue Forecast
Millions of Dollars
3,000
Cable Converters
2,500

Satellite Converters

2,000

1,500^1
1,000
500

1993

1994

1996

1995

1997

1998

1999

2000
9507030

Source: Dataquest (December 1995)

Table 5-5
Worldwide Digital Cable and Satellite Decoder Production Forecast
CAGR (%)
1995-2000

1993

1994

1995

1996

1997

1998

1999

2000

Units (K)Factory ASP ($)

0
0

7
528

77
499

260
442

907
386

5,300
280

8,000

Factory Revenue ($M)
Semiconductor Content ($)

0
0

4
236

38
204

351
177

Semiconductor TAM ($M)
Satellite Converters

0

2

16

115
183
48

2,580
323
834
172
444

889

259
2,069
160
1,282

5,656
410

6,901
363

9,510
300

10,490268

11,400
254

27.8
-11.1

2,318
196

2,508
187

2,855
179

2,811
172

2,894
165

13.6
-4.7

1,107

1,291

1,702

1,803

1,880

21.8

Cable Converters

Units (K)Factory ASP ($)
Factory Revenue ($M)
Semiconductor Content ($)
Semiconductor TAM ($M)

1 1,205 3,350
900
440
458
530 1,533
1
400
210
223
0
269
703

160

1,485
168

153.1
-12.3
121.9
-4.7
141.1

Source: Dataquest (December 1995)

MSAM-WW-MT-9601©1996 Dataquest

January 29,1996

65

Interactive Products and Personal Electronics

Table 5-6
North American Digital Cable and Satellite Decoder Market Forecast
1993

1994

1995

1996

1997

1998

1999

2000

CAGR (%)
1995-2000

0
0
0

5

42

54

225

1,350

3,150

136.8

436
2

432
18

390
21

96
345
33

280
63

250
338

240
756

-11.1
110.5

0

1,071
436
467

3,600
390
1,404

3,780
345
1,304

4,950
280
1,386

5,400
250
1,350

5,940
240
1,426

18.3

0
0

2,565
432
1,108

Cable Converters
Units (K)Factory ASP ($)
Factory Revenue ($M)
Satellite Converters
Units (K)Factory ASP ($)
Factory Revenue ($M)

-11.1
5.2

Source: Dataquest (December 1995)

Table 5-7
North American Digital Cable and Satellite Decoder Production Forecast
1993

1994

1995

1996

1997

1998

1999

2000

CAGR (%)
1995-2000

0
0
0
0

5
436
2
222

47
432

107

250
280

20
207

60
390
23
194

182

70
171

1,500
250
375
162

3,500
240
840
154

136.8
-11.1
110.5
-5.7

0

1.1

9.7

11.6

19.5

42.8

243.0

539.0

123.2

Units (K)Factory ASP ($)

0
0

1,190
436

2,850
432

4,000
390

4,200
345

5,500
280

6,000
250

6,600
240

18.3
-11.1

Factory Revenue ($M)
Semiconductor Content ($)
Semiconductor TAM ($M)

0
0

519
222

1,231
207

1,560
194

1,449
182

1,500
162

1,584
154

5.2
-5.7

0

264.2

590.0

776.0

764.4

1,540
171
940.5

972.0

1,016.4

11.5

Cable Converters
Units (K)Factory ASP ($)
Factory Revenue ($M)
Semiconductor Content ($)
Semiconductor TAM ($M)
Satellite Converters

345
37

Source: Dataquest (December 1995)

Technology Requirements
Figure 5-5 presents a generic block diagram of the type of technology
required in interactive terminals. A generic set-top box will require a variety of technologies ranging from RF to CMOS (see Table 5-8). Likewise,
the opportunities wiU range from standard products to ASICs as the box
OEMs differentiate through design and cost structure. There are manylayers of software involved and companies like Microsoft are heavily
involved in creating standard application program interfaces (API) tohandle the various application programs managing the interactive services. The communication features are initially designed as modules that
upgrade the basic terminal.
As shown in Table 5-9, the interactive terminal will require more featuresin the coming years including embedded two-way capability, greater

MSAM-WW-MT-9601©1996 Dataquest

January 29,1996

CO>

Figure 5-5
Block Diagram of a Typical CATV/DBS Set-Top Box
Tuner/IF/

Cable orSatellite Dish

CD
O)
O

(VSB/QAM)
ii

-Or-

r
Phone
Line
Link
orRF
@

i L

Modem

V

''
KeypadControis

CO
CD

Transport IC

MPU/MCU

—•
a

a>

A

1'

(U

1'

f-«-

w

X3

N

IR TR/RCVR

Encryption/
Smart Card
Interface

c
{U

v2
IS3
CD
CD
CD
CD

Source: Dataquest (December 1995)

DRAM 2MB

< •

^

•

MPEG-2 Video
Decoder

MPEG or
Dolby AC-3
Audio Decoder

Video DACs—^

E

Interactive Products and Personal Electronics

67

Table 5-8
Semiconductor Opportunities in Interactive TV
Semiconductor Function
Broadband U p / D o w n Conversion
IF Processing
Modulation/Demodulation (VSB, QAM)
ATM/Sonet PhysicalTechnology

ATM/Network Protocol
Transport Layer and Error Correction

Bipolar/GaAs
Bipolar
CMOS, Bipolar
Opto, Bipolar, and BiCMOS
CMOS
CMOS

Video Standard Decode/Encode
Video DAC

Bipolar/CMOS
BipolarVideo Conversion, Scaling
Video Compression (MPEG-2, DigiCipher)

CMOS
CMOS
Bipolar/CMOS
CMOS
CMOS
CMOS
CMOS
CMOS

Audio Conversion
Audio Compression (AC-3, MPEG)
DRAM
VRAM/Field memory
Fast DRAM (SDRAM, FRAM)
SRAM

CMOS
CMOS
CMOS
CMOS/Bipolar

MPU (32/64-Bit RISC)
Encrj^tion (Decryption) Fimctions
Modem (up to V Fast)
ASICs (for Above Fxonctions)
Source: Dataquest (December 1995)

Table 5-9
Interactive Television Technology Evolution
Category
Transmission

Processing

MemoryOthers

1995
1993
Cable: analog/digital,
Cable: analog; cable:
500 channels, IVDS, FM,digital test, 80 channels,
VBI; Fiber-optic, ATM
FM subcarrier;tests; QAM
fiber-optic/ADSL tests
Addressing, pay-per-view; Digital video, audio;
DBS down conversion;
MPEG decompression,
bipolar/CMOS ASIC
error correction; bipolar/
CMOS ASIC
Minimal" •2MBModular design; security/
decryption; digital radio

1997
Cable/DBS: digital/
two-way, IVDS, FM, VBI;
fiber-optic, ATM; QAM
Digital video, audio;
MPEG decompression,
error correction; bipolar/
CMOS ASIC
2MB
Modular design; security/
decryption

Source: Dataquest (December 1995)

MSAM-WW-MT-9601©1996 Dataquest

January 29,1996

68

Consumer Multimedia Semiconductor and Applications Worldwide

processing power, and supporting higher bandwidth transmission links.
We expect the set-top box of 1995 to be capable of digital reception, decompression, and audio/video processing. The video decompression standard will be a version of MPEG-2, and audio decompression will be Dolby
AC-3 or MPEG. Line transmission opportimities include 8-level vestigial
side band (8 VSB) or higher or 64-level QAM or higher. Error correction
will be needed to clean up the fast-moving bit stream, decryption for
privacy, and a transport layer function for network overhead.
Approximately 2MB of DRAM or tailored field memory will be requiredfor buffering. Many of the functions will be ASIC-based initially with theoverall design controlled by the decoder box companies. Eventually, standard functions will dominate as cost reduction becomes paramount.

Manufacturers and Products
Thomson has emerged as the leading supplier of digital set-top boxes.
Figure 5-6 presents a block diagram of Thomson's DirecTV Satellite
decoder terminal. In 1994, Thomson Consumer Electronics (also known asThomson Multimedia) shipped 591,000 DSS systems, of which 498,880
were receiving authorized programming from DirecTV or USSB by March
8,1995. Table 5-10 displays the worldwide market share for leading manufacturers of digital cable and satellite decoder terminals in 1995.
General Instrument has traditionally been the leader in subscriber terminals, producing 3.9 miUion analog boxes for the cable industry in 1994.
Scientific-Atlanta held the No. 2 spot with 1.7 million analog boxes in
1994. In Europe, Pace Micro Technology of West Yorkshire, England,claims to be the leading supplier of analog set-top boxes. Pace supplies
boxes for the cable, satellite, and wireless cable markets. The company has
recentiy opened a U.S. office in Denver, Colorado.
We should note that changes occur in the cable equipment market very
slowly. For instance, in 1982, GI shipped 2 million analog converter boxes.
Eleven years later, in 1993, GI's shipments were up to 3 million units. The
cable industry in the Uruted States is slow to change because the nation is
wired with a patchwork of 11,460 cable operators, each with a slightiy different system.
However, with new network systems for delivering pay TV signals (DBS,
wireless, telco), the market has opened up for suppliers from the computer, communications, and consumer electronics industries. For instance,
Hewlett-Packard (HP) arrived on the cable scene in a big way in 1994, but
soon found out that GI still controlled the head-end equipment and, ultimately, the way data could be transmitted and received.
Sony was the most significant new player to enter the market in 1995.
Sony's RCA-DSS-compatible receivers succeeded in displacing HP fromthe No. 3 spot it held in 1994. Besides Thomson Consumer Electronics andSony, six more manufacturers have been licensed to manufacture DSS
boxes and are expected to begin shipping in 1996. DirecTV Inc., a imit ofHughes Electronics Corporation, is the trademark holder of DSS.
Table 5-11 lists advanced subscriber terminals and their manufacturers.

MSAM-WW-MT-9601©1996 Dataquest

January 29,1996

69

Interactive Products and Personal Electronicsi

Figure 5-6
Block Diagram of Thomson's DirecTV Box
Ku Band Satellite Signal In
15-Pin 19.2-Kbps
Serial Port

Stereo Jacks
S-VideoVideo

Mbps
HDTV Port
HD'

I

i

i-n L

IX

Ai h A A — o

RF ModulatormRF
ModuleTo TV
A•i^'^ff;i^^^:.fZ^ :.xi^--;-<}TMS8320
Audio

Satellite Module
Sony
Video
Overlay

25

Comm Stream
Satellite
Demodulator

SGS 3300
MPEG
Transport

Philips NTSC
Video

•^m

••

8-Bit
Microcontroller

SGS 3100
MPEG

M.

News
Datacard.|^^;^A^i«^a,ts^

^

fe-

a
9507M2

Source: Dataquest (December 1995)

Table 5-10
^ ^x^r , .•
Worldwide Digital Cable and Satellite Decoder Revenue Market
Share, 1995 (Percentage)
Revenue Market Share

Vendor

50.2

ThomsonGeneral Instmment
Sony

35.9
12.0
1.2

Pioneer

0.3

Apple

0.2

AT&T

0.2

Others

100
^

Total
Source: Dataquest (Decemt>er 1995)

MSAM-WW-MT-9601©1996 Dataquest

January 29,1996

70

Consumer Multimedia Semiconductor and Applications Worldwide

Table 5-11
Advanced Subscriber Terminal Manufacturers and Their Products(Digital Boxes Unless Otherwise Noted)
Manufacturer
Adaptive Micro-Ware Inc.
Apple Computer Inc.
AT&T Network Systems
Compression Labs Inc.
Divicom
EchoStar Communications
General Instrument Corporation
Hewlett-Packard Co.
Hughes Network Systems Inc.
IBM
LG Electronics (Goldstar)
Mitsubishi Electronics America
Pace Micro Technology
Philips Consumer Electronics
Pioneer North America
Samsung Electronics America
Scientific-Atlanta Inc.
Sony Electronics Inc.
Stellar One Corporation
Tee-Comm Electronics Inc.
Thomson Consumer Electronics
Toshiba America Corporation
TV/COM International
UnidenZenith Electronics Corporation

Product
DAVID (with Mitsubishi and Stellar One)
M4120 (first generation) intend to OEM
Digital Home Terminal
Media Access and Magnitude
Navigator 1000
DISH DBS (1996)
CFr-2000 (analog), CFr-2200 DigiDock, CFr-2900 TCI, Primestar,
DigiCipher I, and DigiCable
Kayak
DirectPC, RCA-DSS compatible (1996)
Videoway Terminal (analog)
GIV-101
STB-1000 (with Adaptive Micro-Ware and Stellar One)
DGT400Media Access, Consumer IRDs, and Magnavox for EchoStar
BA-9000, BAV-1000 Command Station, BA-6700 for Quantum (these
are all analog, digital is Canal Plus DBS in France)(No details at press time)
8600xD and 8600xDI (hybrid analog/digital boxes)
DSS SAS-BSl, SAS-BAl, and SAS-ADl
Stellar 1000 (with Adaptive Micro-Ware and Mitsubishi)
StarTrak Digital IRD
RCA DSS-1 and now DSS-2(Components for FSN, RCA-DSS-compatible in 1996)(no details at press time)
RCA-DSS-compatible (1996)
Media Access

Source: Dataquest (December 1995)

Interactive Video Games
Figures 5-7 and 5-8 and Tables 5-12 through 5-14 present the production
forecast for handheld and console video games. Figure 5-9 and Table 5-15
show^ the production forecast for game cartridges.
Figures 5-10 and 5-11 show the distribution of regional production forvideo game controllers and game cartridges. Figure 5-12 presents the market share for video game controllers.
The major news in the video game market during 1995 was the introduction of 32/64-bit next-generation video game controllers by major players
in the industry and the entry of Sony into the video game hardware market. Exciting new video game platforms such as Saturn, Playstation, Ultra64, Virtual Boy, M2, and Jaguar captured the attention of the video game
MSAM-WW-MT-9601©1996 Dataquest

January 29,1996

71Interactive Products and Personal Electronics

Figure 5-7
Worldwide Video Game Controller Production Revenue and Unit Shipment Forecast(Millions of Dollar)
Thousands of Units
30,000Millions of Dollars
3,500

Source: Dataquest (December 1995)

Figure 5-8
Worldwide Video Game Controller Unit Shipment Forecast, by Type(Thousands of Units)
Thousands of Units
30,000-^Handheld Players•

TV CD-ROM Players

r-1 32/64-BiVFuture" ^ RISC Players

993

1994

1995

1996

1997

1998

1999

2000

B

16-Bit Players^

8-Bit Players

95[3703*

Source: Dataquest (December 1995)

MSAM-WW-MT-9601©1996 Dataquest

January 29,1996

72

Consumer Multimedia Semiconductor and Applications Woridwide

Table 5-12
Worldwide \^deo Game Controller Production Forecast

Units (K)Factory ASP ($)
Factory Revenue ($M)
Semiconductor
Content ($)
Semiconductor
TAM ($M)

1999

2000

CAGR (%)
1995-2000

11,500
211
2,422
136

1998
13,572
227
3,075
150

16,266
197
3,196
131

18,197
187
3,405
124

2.8
4.3
7.2
7.3

1,560

2,030

2,128

2,253

10.2

1993
27,641
94
2,605
34

1994
15,472
102
1,584
45

1995

1996

1997

15,859
152
2,404
87

13,532
172
2,323
105

945

698

1,384

1,420

Note: Includes handhelds
Source: Dataquest (December 1995)

Table 5-13
Worldwide Video Game Controller Unit Shipment Forecast, by Type(Thousands of Units)

8-Bit Players
16-Bit Players
32/64-Bit/Futiare RISC
Players
TV CD-ROM Players
Handheld Players
Total

1993
1,110
18,710
100

1994
400
8,860
1,237

1,525
6,196
27,641860
4,115
15,472

280
6,202
4,802

1996
182
4,341
6,809

1997
0
1,954
8,886

1998
0
781
12,7911999
0469
15,7972000
0
328
17,869CAGR (%)
1995-2000-100.0
-44.5
30.1

120
4,455
15,85902,200
13,5320660
11,5000
013,57200
16,26600
18,197-100.0-100.02.8

1995

Source: Dataquest (December 1995)

Table 5-14
North American \^deo Game Controller Production Forecast

Units (K)Factory ASP ($)
Factory Revenue ($M)
Semiconductor Content ($)
Semiconductor TAM ($M)

1993

1994

65
135
9
42
2.7

65
129
8
40
2.6

1995
80
123
10
38
3.0

1996

1997

1998

1999

2000

CAGR (%)
1995-2000

80
118
9
37
3.0

80
114
9
35
2.8

85
109
9
34
2.9

92
105
13
33
4.1

101
101
10
33
3.3

4.8
-3.8
0.8
-2.8
1.9

Note: Includes handhelds
Source: Dataquest (December 1995)

IVISAM-WW-MT-9601©1996 Dataquest

January 29,1996

Interactive Products and Personal Electronics

73

Figure 5-9Worldwide \^deo Game Cartridge Production Revenue and Unit Shipment Forecast

Millions of Dollars

Thousands(

7,000

1993

1994

1995

1996

1998

1997

1999

2000
9507035

Source: Dataquest (December 1995)

Table 5-15
Worldwide Video Game Cartridge Production Forecast
1993
Units (K)Factory ASP ($)

1994

1995

135,884 114,077 104,896
26
23
25
2,591
Factory Revenue ($M)
3,536
2,676
Semiconductor
999Content ($)
Semiconductor
926.4
1,222.5 1,003.0
TAM ($M)

1997

1996

2000
190,107
100,879 95,210 106,998 141,713
27
32
34
28
33
2,729 2,704
3,382
6,480
4,651
10
11
11
11
10
979.2

979.6

1998

1,131.7

1999

1,543.7 2,133.7

CAGR (%)
1995-2000
12.6
6.7
20.1
4.9
18.2

Source: Dataquest (December 1995)

industry. FoUow^ing the 8- and 16-bit market cycles, these 32/64-bit controllers are expected to drive the next vv^ave of video game sales andtechnology.
Dataquest predicts that worldw^ide shipments of these new video gamecontrollers wrill climb to almost 18 million by the year 2000. With the semiconductor content in this nev^ generation of controllers leaping to over66 percent of manufacturing cost, the semiconductor market driven bythese nev^ video game controllers will reach $2.3 billion by the year 2000.
This forecast is based on the average factory price of new^ video game controllers dropping below $200 by the year 2()00. If prices decline more
rapidly, the unit shipments and semiconductor market could grow even

MSAM-WW-MT-9601©1996 Dataquest

January 29,1996

74

Consumer Multimedia Semiconductor and Applications Worldwide

Figure 5-10
Regional Share of Video Game Controller Production Revenue
1995
North America (0.4%)

i
2000

North America (0.3%) —Total = $2.4 Billion

Total = $3.4 Billion
9507036

Source: Dataquest (December 1995)

Figure 5-11
Regional Share of Video Game Cartridge Production Revenue
2000

1995
Japan (0.8%)

Total = $6.48 Billion

Total = $2.59 Billion

9607037

Source: Dataquest (December 1995)

MSAM-WW-MT-9601©1996 Dataquest

January 29,1996

75

Interactive Products and Personal Electronics)

Figure 5-12
Worldwide "V^deo Game Market Share, 1994

16-Bit Players

32/64-Blt Players
Others (5.3%)
Atari (3.8%) •Others (1,0%)

TV CD-ROM Players

Handheld Players
Others (2.4%)

Atari (0.4%)

Tandy VIS (1.5%>

9S07D38

Source: Dataquest (December 1995)

larger. Some of the important market, technology, and production trends
are as follows:• The higher prices of the new 32-bit video game controllers reduced sales
during 1995 and resulted in enhanced 16-bit games capturing the largest market share for software during the 1995 Christmas season.
• Sony entered the video game market with the introduction of its 32-bit
Sony PlayStation for $299. This platform uses a CD-ROM drive insteadof cartridges for the software. At the heart of the Pla56tation is LSI
Logic's custom 32-bit R3000 RISC processor.
^

MSAM-WW-MT-9601©1996 Dataquest

January 29,1996

76

Consumer Multimedia Semiconductor and Applications Worldwide• Sega launched two new platforms, the Sega Saturn and the Genesis
Nomad. The Saturn was introduced in the United States at a price of$399 and also incorporates a CD-ROM drive instead of cartridges. The
Saturn employs two 32-bit Hitachi SH2 processors in its design. It has
been widely rumored that Sega is considering the PowerPC for future
designs. After experiencing lackluster sales, Sega reduced the price to$299 to compete more effectively with the Sony PlayStation. The
Genesis Nomad is Sega's first portable 16-bit video game system. It is
compatible with the library of more than 600 Sega Genesis game
cartridges.
• Nintendo delayed the introduction of its Ultra-64 platform imtil spring1996 and focused its energy on the 16-bit market for another year.
Initially, this delay was viewed as a serious setback for Nintendo thatwould make it difficult to recapture market share. However, with thelower-than-expected sales for 32-bit controllers during 1995, Nintendo
could capture a significant advantage if its platform can demonstratesolid performance at the $249 price point. There have been some rumorsthat Nintendo would launch its Ultra-64 for $200. Part of the cost savings that would allow it to bring these controllers to the market at alower price comes from its decision to stay with cartridges instead of
CD-ROMs, which require the inclusion of a costly CD-ROM player inthe controller. The Ultra-64 achieves a high level of integration in its
design through use of a custom RISC processor developed by Silicon
Graphics and Rambus DRAM. Nintendo is working on a new storage
device for the Ultra 64 to overcome the limit on the amount of information that can be delivered in a cartridge. The device is expected to besome kind of magnetic recording disk, but it probably will not be
revealed until late 1996.
• Nintendo did bring a new platform to the market during 1995, theVirtual Boy. The Virtual Boy game unit breaks the mold of the consoleattached-to-TV standard. It is difficult to classify this product as either ahandheld device or a console device because it delivers a very different
gaming experience. The Virtual Boy provides visually immersive, threedimensional gaming using a self-contained display that resembles alarge pair of goggles. A 32-bit RISC processor nmning at 20 MHz and adual-LED display create a smooth, three-dimensional display. The gameplatform was introduced in the United States in August 1995 at $180.
The price was dropped to $160 three months later in reaction to consumer resistance to higher-priced games.
• Following the loss of support from AT&T, Toshiba, Creative Labs, andSanyo for the 3DO platform, 3DO sold exclusive rights to control theuse of its M2 64-bit platform to Matsushita Electric. 3DO effectively
relinquished control over the technology's application in most markets
in exchange for $100 million in licensing fees plus royalties from
Matsushita. The 3DO M2 system employs the PowerPC in its design.
• The dramatic rise in the value of the yen has created a major challenge
for Japanese manufacturers of video games. The strong yen has forced
these companies to begin moving production of video game players offshore to meet critical price targets for increasing consumer demand.
Figure 5-13 presents a generic block diagram of a RISC video game controller. Key chip opportunities include:• 32/64-bit RISC or CISC MPU
MSAM-WW-MT-9601©1996 Dataquest

January 29,1996

V)>

Figure 5-13
Generic Block Diagram of RISC ^^deo Game Controller
1

CO
OJ

Video Buffer

Graphics/
Video
Controllero1LSystemCPU
32/64-Bit

@
.^
C£>
CO

a>
o
Si
o>
r3

1

Main BusI

System
SupportVideo
Compression
Decoder(M/JPEG
Optional)

Main
Memory
2-4MB
DRAM

OS
Memory4Mb
Nonvolatile

Host
CD-ROM
Controller

Sound
Controlle

CD-ROM
Drive
Controller

Audio
RAM
0.5MB

/O
Controller

c:

•5
tv>
CD
CO
CO
CJ>

n

Handtield Controller etc.

(U

Source: Dataquest (December 1995)

NTSC/P
EncodeRAMDAC

VRAM/SDRAM/
1-2tw1B RDRAM

78

Consumer Multimedia Semiconductor and Applications Worldwide• 2MB to 4MB DRAM (VRAM for some designs)• 1MB to 2MB VRAM, SDRAM, or RDRAM• 32KB SRAM
•
•
•
•
•

CMOS ASIC (100,000 to 200,000 gates) graphics/sound processing
NTSC/PAL encode
Sound DAC/amplification
M/JPEG decompression (optional)
CD-ROM drive controller

Cameras, Watches, and Clocks
Table 5-16 presents the North American production in these areas. Production for the most part has moved to Asia for all but the very high-end
products.

Digital Cameras
The term "digital camera" is used to refer both to video cameras that are
mounted on a PC for use in videoconferencing applications and to stillcameras that record images on memory chips or a disk instead of film. The
digital cameras discussed in this section use the latter definition. Digital
cameras were originally targeted at vertical markets such as real estate,fashion, and law enforcement. However, to the pleasant surprise of manufacturers, consumers are purchasing digital cameras and driving a stronger-than-expected market. A number of new companies are jumping into
this market. The merger of the camera and a computer represents the easiest way to get photographs into a PC. Images can be transferred to thehard drive of a computer, where they can be viewed, edited, or added to
documents. Although the images created by digital cameras are inferior to
the quality achieved by traditional film cameras, the image that can be
captured in a PC through a digital camera is superior to the method ofusing a scanner to transfer a photo into a computer. The picture quality of
the latest digital cameras is comparable to S-VHS or hi-8 video images.
Some of the digital camera models available in the market are Kodak's DC
40, Apple's QuickTake 100 and 150, Casio's QV-10, Logitech's FotoMan
Pixtura, Ricoh's DC-1 and RDC-1, Toshiba's PROSHOT, Minolta's RD-175,
Epson's Photo PC, and Chinon's ES-1000 and ES-3000. New product
Table 5-16
North American Revenue from Production of Cameras, Watches, and Clocks(Millions of Dollars)

CamerasWatches
Clocks
Total

1993

1994

1995

1996

1997

1998

1999

2000

C A G R (%)
1995-2000

24
110
60
194

25
115
62
202

17

28
127
69
224

29
131
72
232

29
136
75
241

30
142
78
251

30
148
81
259

2.4
4.2
4.3
4.0

120
66
213

Source: Dataquest (December 1995)

MSAM-WW-MT-9601©1996 Dataquest

January 29,1996

Interactive Products and Personal Electronics

79

announcements are expected from Panasonic, Polaroid, and Canon in the
coming months. Prices for digital cameras range from $500 for cameras
such as the Epson Photo PC and the Chinon ES-1000 to $1,800 for theadvanced Ricoh RDC-1. Even with these high prices, industry observers
expect market sales to be four times higher in 1996 than in the previous
two years combined. Recent announcements from major manufacturers
would support this prediction.
• Chinon has been a major manufacturer of digital cameras, producing
digital still cameras for U.S. makers on an OEM basis since 1992. The
company manufactures cameras for Apple, Kodak, and Logitech. In
December it announced two new cameras under its own name. It alsoannounced that it would triple its monthly production capacity from anestimated 20,000 units per month in December 1995.
• Casio started producing 3,000 cameras per month in March 1995 andboosted its monthly output to 10,000 units per month in September as
its camera became one of the most popular models on the market. It alsoannounced their plan to invest ¥300 million to expand production
capacity to 30,000 units per month by the end of 1995.
One of the most impressive digital cameras to come to the market in 1995
was the Ricoh RDC-1, which received Byte Magazine's Best of COMDEX/
Fall '95 Award. The RDC-1 was designed for multimedia applications inbusiness and government. It can record a maximum of 492 still images,
four motion scenes with sovmd (five seconds each) or about 100 minutes ofsound on a 24MB PC card. Images can be transferred directly to a PC ortransmitted via a modem. The camera can also be connected directly to a
television or an optional 2.5-inch LCD monitor. The camera will begin selling in the United States in April 1996.

MSAM-WW-MT-9601©1996 Dataquest

January 29,1996

Chapter 6

Appliances and Other Consumer Equipment
Figures 6-1 through 6-3 and Tables 6-1 through 6-2 present production andmarket forecast for appliance and other consumer electronics.
Highlights in the markets for appliances and other consumer equipment
are as follows:• Generally appliances are following replacement market economics inthe developed countries. Because of prohibitive transportation costs,
most appliances are produced in the end-use market.
• New models are incorporating an increasing amount of user features
based on MCU (4-bit, mostly) control.
• Motor-driven appliances such as refrigerators, washers, and dryers aregradually moving to solid-state controls for direct-drive motors.
• The "green" movement is forcing more appliance power conservation
with solid-state controls as a way of accomplishing design objectives.

Microwave Ovens
Tables 6-3 and 6-4 detail the market for microwave ovens.

Refrigerators
Tables 6-5 and 6-6 detail the market for refrigerators.
Figure 6-1
Worldwide Electronic Appliance Production Revenue Forecast (Millions of Dollars)Millions of Dollars

1993

1994

1995

1996

1997

1998

1999

2000
9507040

Source: Dataquest (December 1995)

MSAM-WW-MT-9601©1996 Dataquest

81

82

Consumer Multimedia Semiconductor and Applications Worldwide

Figure 6-2
Regional Share of Electronic Appliance Production Revenue (Percentage)
1995

2000

Total = $57.25 Billion

Total = $77.39 Billion
BSOJWtl

Source: Dataquest (December 1995)

Figure 6-3
U.S. Major Appliance Unit Shipments, 1954 to 1994 (Includes Dishwashers, Dryers,
Ranges, Refrigerators, and Washers)
Millions of Units
10-t1

m 19548-

6-

B 1964
H 1974• 1984m 1994
4-

Dishwashers
9507042

Source: Dataquest (December 1995)

MSAM-WW-MT-9601©1996 Dataquest

January 29,1996

83

Appliances and Other Consumer Equipment

Table 6-1
North American Appliance Production Revenue Forecast (Millions of Dollars)

Range and Oven
(Gas and Electric)
Microwave Oven
Clothes Washer and Dryer
Dishwasher

1993
1,154

1994
1,239

1995
1,286

1996
1,324

1997
1,372

1998
1,400

574
3,518
1,168

627
3,724
1,284

657
3,879
1,341

688
3,842
1,376

713
3,997
1,434
5,872

734
4,036
1,439

1999
1,466

2000
1,515

764
795
4,233 4,343
1,595
1,538
5,228 5,606 5,792 5,693
6,018 6,357 6,519
2,027 2,463 2,515 2,428 2,528 2,559 2,689 2,735
13,669 14,942 15,470 15,351 15,917 16,186 17,047 15,987

Refrigerator
Room Air Conditioner
Total

CAGR (%)
1995-2000
3.3
3.9
2.3
3.5
2.4
1.7
0.7

Source: Dataquest (December 1995)

Table 6-2
North American Appliance Market Revenue Forecast (Millions of Dollars)

Range and Oven
(Gas and Electric)
Microwave Oven
Clothes Washer
Clothes Dryer
Dishwasher
Refrigerator
Freezer
Room Air Conditioner
Total

1993

1994

1995

1996

1997

7,390

7,843

7,636

7,700

7,816

8,945
7,472
5,581
4,509
8,920

9,844
7,739
5,873

9,697

10,059

5,038
9,517

7,484
5,623
4,847
9,384

9,862
7,613
5,768
4,956
9,486

1,767
3,384

1,860
4,532

1,843
4,697

1,867

7,803
5,941
5,129
9,676
1,904

4,389

4,301

47,96852,246

51,21151,641

52,629

1999

2000

CAGR (%)
1995-2000

8,091

8,172

1.4

10,465
8,214
6,316
5,521
10,116

10,674
8,379
6,473
5,703
10,319

1.9
2.3
2.9

4,344

1,991
4,388

2,030
4,432

2.0
-1.2

53,925

55,10256,183

1.9

1998
7,972
10,260
8,014
6,132
5,334
9,918
1,952

3.3
1.9

Source: Dataquest (December 1995)

Dishwashers
Tables 6-7 and 6-8 detail the market for dishwashers.

Washers
Tables 6-9 and 6-10 detail the market for washers.

DryersTables 6-11 and 6-12 detail the market for dryers.

Air Conditioners
Tables 6-13 and 6-14 details the market for air conditioners.

MSAIVI-WW-I\/IT-9601©1996 Dataquest

January 29,1996

84

Consumer Multimedia Semiconductor and Applications Worldwide

Table 6-3
U.S. Microwave Oven Brand Share Leaders, First Quarter 1994
through Fourth Quarter 1994 (Percentage)

General Electric
Panasonic

Unit
Market Share
22.9
15.5
10.4

Sears/Kerunore
Tappan9.9
6.3

WhirlpoolGoldstar

4.8
4.8

Magic Chef
Emerson

4.6
4.1
3.7
13.0

5.8
6.7
3.6
2.9
2.5
2.4
14.7

100.0

100.0

Sharp

Samsung
OthersTotal

Revenue
Market Share
22.2
20.6
8.9
9.7

Source: The Scout Report'%he Polk Company

Table 6-4
U.S. Microwave Oven Brand Share Leaders, Third Quarter 1994
through Second Quarter 1995 (Percentage)
Unit
Market Share

Revenue
Market Share

Sharp
General Electric

23.8
14.0

23.8
17.9

Sears/Kenmore

9.8
9.5

9.5

Panasonic
Tappan
Whirlpool

6.0
5.4

8.5
5.6
7.4

Magic Chef
Emerson

5.3
4.7

3.6
2.6

Goldstar
Samsimg

4.5
3.9
13.1

3.5
2.8
14.8
100.0

Others
Total

100.0

Source: The Scout Report^he Polk Company

MSAM-WW-MT-9601©1996Dataquest

January 29,1996

Appliances and Other Consumer Equipment

85

Table 6-5
U.S. Refrigerator Brand Share Leaders, First Quarter 1994 throughFourth Quarter 1994 (Percentage)
Unit
Market Share
Sears/Kenmore

Revenue
Market Share
20.2

Gaieral Electric
Whirlpool

19.4
18.0
13.5

Amana
Hotpoint
Frigidaire
AdmiralKitchenAid
MaytagMagic Chef
Others

13.3
6.0
5.6
3.1
3.0
2.8
2.7
12.6

14.5
4.8
4.9
2.6
3.8
3.4
2.1
9.6

Total

100.0

100.0

20.1
14.0

Source: The Scout Report'^he Polk Company

Table 6-6
U.S. Refrigerator Brand Share Leaders, Third Quarter 1994
through Second Quarter 1995 (Percentage)
Brand
Sears/Kenmore
General Electric

Unit
Market Share

Revenue
Market Share

19.2
18.9

20.2
20.6
13.1
13.6

Whirlpool
Amana

12.8
12.1

Frigidaire
Hotpoint

6.3
5.6
3.9

MaytagKitchenAid
Admiral

3.1
2.9
2.5
12.7

Magic Chef
Others
Total

100.0

5.4
4.6
4.5
3.7
2.7
2.0
9.6
100.0

Source: The Scout Report^he Polk Company

l\yiSAl\/l-WW-l\/IT-9601©1996Dataquest

January 29,1996

86

Consumer Multimedia Semiconductor and Applications Worldwide

Table 6-7
U.S. Dishwasher Brand Share Leaders, First Quarter 1994 throughFourth Quarter 1994 (Percentage)

Sears/Kerunore

Unit
Market Share
20.6

Revenue
Market Share
19.9

19.5
18.8
17.1
8.6

21.4
18.3
16.2
11.3

3.4
2.9
1.4
1.3
1.1
5.3

2.5
2.5
1.1
0.9
0.8
5.1

100.0

100.0

MaytagGaieral Electric
Whirlpool
KitchenAid
Hotpoint
Frigidaire
Magic Chef
TappanWhite/Westinghouse
Others
Total
Source: The Scout Report'%he Polk Company

Table 6-8
U.S. Dishwasher Brand Share Leaders, Third Quarter 1994
through Second Quarter 1995 (Percentage)

Sears/Kerunore
MaytagGeneral Electric
Whirlpool

Unit
Market Share

Revenue
Market Share

21.8
19.4
18.0

21.3
21.2

15.1
9.8
3.4

KitchervAid
Hotpoint

18.1
14.3
12.3
2.4

2.9
1.7

2.6
1.3

Magic Chef
White / Westinghouse

1.5
1.4

1.3
1.0

Others
Total

5.0

4.2

100.0

100.0

Frigidaire
TappanRniirpo- T h e Rrnirt Ronnrt®/Tho Pnik

MSAM-WW-MT-9601©1996Dataquest

January 29,1996

Appliances and Other Consumer Equipment

87

Table 6-9
U.S. Clothes Washer Brand Share Leaders, First Quarter 1994
through First Quarter 1994 (Percentage)
Unit
Market Share
26.6
20.4
15.7

Revenue
Market Share
26.8
20.2
18.4
10.7
3.4

Amana
Frigidaire

11.6
4.1
3.9
2.8

White/Westtnghouse
Roper
KitchenAid
Others

2.7
2.3
1.8
8.1

2.7
1.8
1.9
7.5

100.0

100.0

Sears/Kenmore
Whirlpool
MaytagGeneral Electric
Hotpoint

Total

3.9
2.7

Rniirro- T h o Rrniit Ronnrt®/Tho Pnllf

Table 6-10
U.S. Clothes Washer Brand Share Leaders, Third Quarter 1994
through Second Quarter 1995 (Percentage)
Unit
Market Share

Revenue
Market Share

28.7
20.1
15.7

28.7
20.0

Sears/Kenmore
Whirlpool
MaytagGeneral Electric

9.3

18.3
8.6
4.4
2.9

Amana
Hotpoint

4.3
3.5

Roper
White/Westinghouse

2.4
2.7

Frigidaire
KitchenAid

3.1
2.9
2.4
1.9

Others
Total

8.1
100.0

7.6
100.0

2.3
2.1

Source: The Scout Report^'he Polk Company

MSAI\/l-WW-IViT-9601©1996Dataquest

January 29,1996

88

Consumer Multimedia Semiconductor and Applications Worldwide

Table 6-11
U.S. Clothes Dryer Brand Share Leaders, First Quarter 1994
through Fourth Quarter 1994 (Percentage)
Unit
Market Share
27.7
19.0
14.5
14.4
4.0

Revenue
Market Share
27.6
19.4
17.5

Amana
White/Westiiighouse
Roper
Frigidaire

3.0
3.1
2.5
2.3

2.9
2.8

Speed Queen
Others

1.8
7.5

Total

99.8

Sears/Keninore
Whirlpool
MaytagGeneral Electric
Hotpoint

13.2
3.5

2.1
2.1
1.9
7.0
100.0

Source: The Scout Report^Tia Polk Company

Table 6-12
U.S. Clothes Dryer Brand Share Leaders, Third Quarter 1994
through Second Quarter 1995 (Percentage)
Unit
Market Share

Revenue
Market Share

Sears/Kerunore

29.0

28.9

Whirlpool

19.6

20.3

MaytagGeneral Electric

13.9
13.2

16.7

Hotpoint

3.5

2.9

Amana
Roper

3.0

2.9

2.6
2.6

2.2
2.2

2.6

2.1
1.5

Frigidaire
White/Westinghouse
Speed Queen
Others
Total
Source: The Scout Report%he Polk Company

MSAM-WW-MT-9601©1996Dataquest

1.4
8.6
100.0

12.0

8.3
100.0

January 29,1996

Appliances and Other Consumer Equipment

89

Table 6-13
U.S. Room Air Conditioner Brand Share Leaders, First Quarter
1994 through Fourth Quarter 1994 (Percentage)
Unit
Market Share
16.4
14.1
11.4

Sears/Kenmore
Fedders
Whirlpool
General Electric
Amana
Carrier

Revenue
Market Share
17.2
12.0
11.5
9.8
6.2
6.0
4.9

Friedrich

10.3
5.9
5.8
5.5
4.5
4.1

Frigidaire
Others

4.0
18.0

4.6
17.3

Total

100.0

100.0

White/Westinghouse
Emerson

4.8
5.7

Source: The Scout Report'TThe Polk Company

Table 6-14
U.S. Room Air Conditioner Brand Share Leaders, Third Quarter
1994 through Second Quarter 1995 (Percentage)

Sears/Kenmore
Fedders

18.9
16.6

Revenue
Market Share
19.1
14.9

Whirlpool
General Electric

10.7

10.8

9.4

9.1

Carrier

6.4

7.5

Amana

6.1

6.1

Frigidaire

5.4

White/Westinghouse
EmersonFriedrich
Others

4.7

5.9
3.7

Unit
Market Share

Total

4.6
4.3
12.9
100.0

4.8
5.9
12.2
100.0

Source: The Scout Report®/The Polk Company

l\yiSAI\/l-WW-[\yiT-9601©1996Dataquest

January 29,1996

90

Consumer Multimedia Semiconductor and Applications Worldwide

RangesTables 6-15 and 6-16 detail the market for ranges.
Table 6-15
U.S. Electric Range Market Share Leaders, First Quarter 1994
through Fourth Quarter 1994 (Percentage)
Unit Market Share
General ElectricElectrolux (Frigidaire)

Raytheon (Caloric)
Brown

39.0
19.0
19.0
13.0
6.0
2.0

Peerless Premier
Others
Total

1.0
1.0
100.0

Whirlpool
Maytag (Magic Chef, Hardwick, Jenn Air)

Source: Appliance Magazine

Table 6-16
U.S. Gas Range Brand Share Leaders, First Quarter 1994 throughFourth Quarter 1994 (Percentage)
General Electric (Roper)
Electrolux (Frigidaire)

Unit Market Share
25.0
24.0

Maytag (Magic Chef, Hardwick, Jerm Air)
Raytheon (Caloric)

24.0
20.0

Brown
Peerless Premier

3.0
3.0
1.0
100.0

Others
Total
Source: Appliance IVIagazine

Other Consumer Equipment
Tables 6-17 and 6-18 detail the market for other consumer equipment.
Top OEMs in home security systems are as follows:••••

HoneywellBlack & Decker
Sony
Audiovox• YaleMSAM-WW-MT-9601©1996Dataquest

Januai7 29,1996

Appliances and Other Consumer Equipment

91

Table 6-17
Worldwide Revenue from Production of Other Consumer
Equipment (Millions of Dollars)

>

Year
1993
1994
1995

Revenue
12,31013,623
16,262
17,215
18,51819,59820,543

1996
1997
1998
1999
2000
1995-2000 CAGR (%)

22,313
6.5

Source: Dataquest (December 1995)

Table 6-18
North American Revenue from Production of Other Constmier Equipment(Millions of Dollars)

Automatic Garage Door Opener
Others
Total

1993
352
944
1,296

1994
411
983
1,394

1995
435
1,026
1,461

19%
464
1,075
1,539

1997
485
1,107
1,592

1998
510
1,145
1,655

1999
537
1,186
1,723

2000
562
1,226
1,788

CAGR (%)
1995-2000
5.3
3.6
4.1

Source: Dataquest (December 1995)

MSAM-WW-MT-9601©1996 Dataquest

January 29.1996

i

Chapter 7

Emerging Opportunities"Smart Home" Electronics
Although home bus technology to date has been an elusive market, it isworth keeping tabs on. These house LANs create a communications
pathway among the home's appliances, HVAC systems, computing andcable equipment, and outside agencies such as the power company sothat energy use can be optimized and outside communications can be
automatic.
Leading bus contenders in the United States include:• CEBus—An EIA-supported protocol that has been designated asinterim standard IS-60 and is in the progress of balloting.
• LonWorks—A proprietary approach advocated by Echelon Corporation
One CEBus oflfering is from Intellon Corporation, which has a power line
radio-frequency modem IC using spread spectrum technology capable of
10-Kbps data rates. Intellon recently tested its technology on the TCI andMicrosoft set-top box platform. Echelon network controllers are made byMotorola and Toshiba.
In May 1995 a major feud erupted between CEBus proponents and
LonWorks supporters. The fight resulted from the EIA's proposal to the
FCC that it adopt AVBus as a standard for the control channel between settop boxes and cable-ready TVs and VCRs. AVBus is a subset of the CEBus
protocol. Echelon protested that this would grant CEBus an imfair advantage in competition for the home automation market. It believes that adoption of this standard in set-top boxes would limit access to the home byother standards because of the higher cost incurred by the need to implement a protocol converter. The CEO of Echelon claimed adoption of
CEBus by the FCC for set-top boxes would be "almost like the FCC picking
a winning PC operating system in 1980" before DOS, Macintosh, andWindows were invented. Claims and counterclaims are also being madeabout patent rights and whether one protocol or another is an "openstandard."
Both standards are developing expanded trials of their systems while theyseek to enlist the support of more manufacturers. For example, 50,000
homes were scheduled to have LonWorks devices installed in 1995. Intellon announced plans to participate in joint trials with Tele-Communications Inc. (TCI) and Microsoft using CEBus technology. Costs are also
being reduced for implementing this technology in consumer products
such as refrigerators, hot water heaters, and air conditioners. Motorola
and Toshiba are now quoting prices between $2 and $3 for "Neuron" controller chips, compared to $15 a few years ago.

MSAM-WW-MT-9601©1996 Dataquest

93

94

Consumer Multimedia Semiconductor and Applications Worldwide

New Influential Regions in the World
It is important to keep an eye on several developing regions around theworld as household disposable income rises, creating a new generation of
consumers. About two-thirds of the world's population uses relatively few
consumer electronic items, and a huge market awaits patient consumer
electronics and appliance companies (and their suppliers).

I

Expect basic goods such as refrigerators, cookware (rice cookers, among
others), personal/portable stereos, and color TVs to be in demand first.
Markets such as China, India, Indonesia, Malaysia, Brazil, and Mexico areindicating huge potential. In most cases, these markets are best served byjoint venture witii local companies.

iil\/iSAM-WW-i\/IT-9601©1996 Dataquest

January 29,1996

I

For More Information...
Dale Ford, Senior Industry Analyst
Internet address
Via fax^^
IjOl" O/^ll^Cf^'^^^^^^Sr
A Gartner Group Company(408) 468-8311
dford@dataquest.com(408) 954-1780

The content of this report represents our interpretation and analysis of information generally available to the public
or released by responsible individuals in the subject companies, but is not guaranteed as to accuracy or completeness.
It does not contain material provided to us in confidence by our clients. Reproduction or disclosure in whole or inpart to other parties shall be made upon the written and express consent of Dataquest.
©1996 Dataquest—Reproduction Prohibited
Dataquest is a registered trademark of A.C. Nielsen Companyi

i
DATAQUEST WORLDWIDE OFFICESNORTH AMERICAWorldwide Headquarters

EUROPE
European Headquarters

ASIA/PACIFIC
Asia/Pacific Headquarters

251 River Oaks Parkway
San Jose, California 95134-1913
United States
Phone; 1-408-468-8000
Facsimile: 1-408-954-1780

Holmers Farm Way
High Wycombe, Bucks HP12 4XH
United Kingdom
Phone:+44 1494 422 722
Facsimile: +44 1494 422 742

7/F China Underwriters Centre
88 Gloucester Road
Wan ChaiHong Kong
Phone: 852-2824-6168
FacsimUe: 852-2824-6138

East Coast Headquarters

Dataquest France

Nine Technology Drive
PO. Box 5093
Westborough, Massachusetts 01581-5093
United States
Phone: 1-508-871-5555
Facsimile: 1-508-871-6262

Immeuble Defense Berg^res
345, avenue Georges C16menceau
TSA 40002
92882 - Nanterre CTC Cedex 9
FrancePhone: +33 1 41 35 13 00
Facsimile: +33 1 41 35 13 13

Dataquest Korea

Suite 2407, Trade Tower
159 Samsung-dong, Kangnam-gu
Seoul 135-729
Korea
Phone: 822-551-1331
Facsimile: 822-551-1330

Dataquest Global Events

3990 Westerly Place, Suite 100
Newport Beach, California 92660
United States
Phone: 1-714-476-9117
Facsimile: 1-714-476-9969
Sales Offices:
Washington, IXI (Federal)
New York, NY (Financial)
Dallas, TX
LATIN AMERICA

Research Affiliates and Sales Offices:
Buenos Aires, Argentina
Sao Paulo, Brazil
Santiago, Chile
Mexico City, Mexico

Dataquest Geimany

Dataquest Taiwan

Kronstadter Strasse 981677 Miinchen
Germany
Phone: +49 89 93 09 09 0
Facsimile: +49 89 93 03 27 7

llF-2, No. 188, Section 5
Nan King East Road
TaipeiTaiwan, R.O.C.
Phone: 8862-756-0389
FacsimUe: 8862-756-2663

Sales Offices:
Brussels, Belgium
Kfar Saba, Israel
Milan, Italy
Randburg, South Africa
Madrid, Spaini

Dataquest Singapore

105 Cecil Street#06-01/02 The Octagon
Singapore 069534
Phone: 65-227-1213
FacsimUe: 65-227-4607

JAPAN
Japan Headquarters

Dataquest Thailand

Shinkawa Saivko Building
6th Floor
1-3-17, Shinkawa
Chuo-ku, Tokyo 104
Japan
Phone: 81-3-5566-0411
Facsimile: 81-3-5566-0425

12/F, Vanissa Building
29 Soi Chidlom
Ploenchit Road
Patumwan, Bangkok 10330
ThailandPhone: 662-655-0577
FacsimUe: 662-655-0576
Research Affiliates and Sales Offices:
Melbourne, Australia
Beijing, China

DataQuest
A Gt^ner Group Company©1996 DataquestiDataQuest

DataQuest

e

DataQuest

DataQuest
Competitive Trends: 1995 Consumer
Eiectronics Semiconductor IVIarlcet

Competitive Trends

Program: Consumer Multimedia Semiconductors and Applications Worldwide
Product Code: MSAM-WW-CT-9601
Publication Date: August 5,1996
Filing: ReportsCompetitive IVends: 1995 Consumer
Eiectronics Semiconductor iViaricet

Competitive Trends

Program: Consumer Multimedia Semiconductors and Applications Worldwide
Product Code: MSAM-WW-CT-9601
Publication Date: August 5,1996
Filing: ReportsCompetitive Trends: 1995 Consumer Electronics Semiconductor Marl<etTable of Contents
1. Introduction and Definitions
Introduction
Methodology
Segmentation
Definitions
Product Definitions
2. 1995 Consumer Semiconductor Market Share
3. MPEG ICs
4. Market Participationl\/ISAM-WW-CT-9601©1996 Dataquest

Page
1
1
1
1
2
2
7
19
23

Augusts, 1996

Consumer Multimedia Semiconductors and Applications Worldwide

List of Figures ^ ^ ^ ^ ^ . ^ ^ ^ ^ . ^ ^ ^ ^ ^ ^ ^ ^ ^FigurePage
2-1 Top 10 Vendors of Semiconductors for Use in Consumer
Electronics
8
3-1 Top Six Vendors of MPEG ICs for Use in Consumer Electronics,
Worldwide Revenue
20

MSAM-WW-CT-9601©1996 Dataquest

August 5,1996.

Competitive Trends: 1995 Consumer Electronics Semiconductor Market

List of Tables
Table
Page
2-1 Top 10 Vendors of Semiconductors for Use in Consumer
Electronics, Worldwide Revenue
7
2-2 Top 10 Vendors of Consumer ICs for Use in Consumer
Electronics, Worldwide Revenue
10
2-3 Top Five Vendors of Bipolar Digital ICs for Use in Consumer
Electronics, Worldwide Revenue
10
2-4 Top 10 Vendors of MOS Digital ICs for Use in Consumer
Electronics, Worldwide Revenue
11
2-5 Top 10 Vendors of MOS Memory for Use in Consumer
Electronics, Worldwide Revenue
11
2-6 Top 10 Vendors of MOS Microcomponents for Use inConsumer Electronics, Worldwide Revenue
12
2-7 Top Five Vendors of Microprocessors for Use in Consumer
Electronics, Worldwide Revenue
12
2-8 Top 10 Vendors of Microcontrollers for Use in Consumer
Electronics, Worldwide Revenue
13
2-9 Top Six Vendors of Microperipherals for Use in Consumer
Electronics, Worldwide Revenue
13
2-10 Top 10 Vendors of Digital Signal Processors for Use inConsumer Electronics, Worldwide Revenue
14
2-11 Top 10 Vendors of MOS Logic for Use in Consumer Electronics,
Worldwide Revenue
14
2-12 Top 10 Vendors of MOS ASICs/ASSPs for Use in Consumer
Electronics, Worldwide Revenue
15
2-13 Top 10 Vendors of Analog ICs for Use in Consumer Electronics,
Worldwide Revenue
15
2-14 Top 10 Vendors of Analog Audio ICs for Use in Consumer
Electronics, Worldwide Revenue
16
2-15 Top 10 Vendors of Analog Video ICs for Use in Consumer
Electronics, Worldwide Revenue
16
2-16 Top 10 Vendors of Other Analog ICs for Use in Consumer
Electronics, Worldwide Revenue
17
2-17 Top 10 Vendors of Discrete Components for Use in Consumer
Electronics, Worldwide Revenue
17
2-18 Top 10 Vendors of Optoelectronics for Use in Consumer
Electronics, Worldwide Revenue
18
3-1 Top Six Vendors of MPEG Decoder ICs for Use in Consumer
Electronics, Worldwide Revenue and Shipments
19
3-2 Top Five Vendors of MPEG-1 Decoder ICs for Use in Consumer
Electronics, Worldwide Revenue and Shipments
20
3-3 Top Five Vendors of MPEG-2 Decoder ICs for Use in Consumer
Electronics, Worldvdde Revenue and Shipments
21l\/ISAI\/i-WW-CT-9601©1996Dataquest

Augusts, 1996

jv

Consumer Multimedia Semiconductors and Applications Worldwide

List of Tables (Continued) i ^ . . ^ . . ^ ^ ^ ^ ^ ^ ^ . ^ _
Table
Page
3-4 Top Five Vendors of Standalone MPEG Decoder ICs for Use inConsumer Electronics, Worldwide Revenue and Shipments
21
3-5 Top Four Vendors of ICs with Embedded MPEG Decoder
Functions for Use in Consumer Electronics, Worldwide
Revenue and Shipments
21
4-1 Matrix of Company Participation in Various Consumer
Electronics Semiconductor Product Segments
24
4-2 Matrix of Company Participation in Various MPEG ProductSegments
26

l\/ISAM-WW-CT-9601©1996 Dataqu est

Augusts, 1996.

Chapter 1

Introduction and Definitions
Introduction
This report summarizes Dataquest's first comprehensive study of thesemiconductor companies supplying the market for consumer electronics
products. Rankings, market share, and revenue data for semiconductor
suppliers will be presented in tables covering key areas in tiie market for
consumer electronics semiconductors. Qiapter 2 provides revenue data on
areas including:• Total shipments of semiconductors for consumer applications• Shipments of MOS digital integrated circuits for consumer applications• Shipments of analog audio and video ICs• Shipments of discrete components and optoelectronics for consumer
applications
Chapter 3 presents company rankings in semiconductors for the emerging
video compression market and provides revenue and unit shipment
figures for:• Shipments of all MPEG-1 semiconductors for consumer applications• Shipments of all MPEG-2 semiconductors for consumer applications• Shipments of aU standalone MPEG semiconductors for consumer
applications• Shipments of all embedded MPEG semiconductors for consumer
applications
Project Analysts: Dale Ford, Kun Soo Lee, Jonathan Cassell, Ron Bohn, andJoan Brown

Methodology
The information in this report was derived using two methods. The first
method used a written company survey conducted in April and May 1996.
The second method used estimates made by Dataquest's semiconductor
product and regional analysts. A team of worldwide Dataquest analysts
reviewed the preliminary results and made some modifications of theinformation based on their professional judgment and insight. Dataquest
believes that the companies and products surveyed and analyzed in thisreport account for about 90 percent or more of worldwide shipments ofsemiconductors used in consumer electronics applications.

Segmentation
This section outlines the market segments that are specific to this document. It also provides a list of definitions of the markets and products covered in this document.

MSAM-WW-CT-9601©1996 Dataquest

Consumer Multimedia Semiconductors and Applications Worldwide

Dataquest's objective is to provide data along lines of segmentation thatare logical, appropriate to the industry in question, and immediately useful to clients. For market share purposes, Dataquest defines the semiconductor market according to the following functional segmentation scheme:• Total semiconductors: hybrids, total monolithic ICs, total discretes, andtotal optical semiconductors
Q Digital bipolar ICs: bipolar digital memory ICs and bipolar digital
logic ICsQ MOS digital ICs: MOS digital memory ICs, MOS digital microcomponent ICs, and MOS digital logic ICs• MOS digital MPUs: 8-bit and 16-bit CISC MPUs, 32-bit and greater
CISC MPUs, and 32-bit and greater RISC MPUs
• MOS digital microcontrollers (MCUs): 4-bit MCUs, 8-bit MCUs,
and 16-bit and greater MCUs
• MOS digital microperipherals (MPRs): system core logic chipsets,graphics and imaging controllers, communications controllers,
mass storage controllers, and audio/other controllers• Programmable digital signal processors (DSPs)• MOS digital logic ASICs/ASSPs: traditional digital gate arrays,
embedded gate arrays, MOS digital programmable logic devices,
MOS digital cell-based ICs, and MOS digital full-custom ICs• Other MOS digital logic ICs: standard logic, LCD drivers, andother MOS digital logic ICs
Q Analog ICs: video analog ICs, audio analog ICs, and other analog ICs• Video analog ICs• Audio analog ICs• Other analog ICs
Q Total discrete semiconductors: transistors, diodes, thjrristors, andother discretes
a Total optical semiconductors: total LED lamps/displays, optocouplers, diarge-coupled devices (CCDs), laser diodes, photosensors,and other optical semiconductors

Definitions
This report begins with a table describing total semiconductor shipments
into consumer products and then continues through the subcategories thatcompose the whole. The following list provides definitions used for thedata presented in this report.

Product Definitions
Total Semiconductor Consximer End Use (Hybrid IC + Total Monolithic
Integrated Circuit + Total Discrete + Total Optical Semiconductor): Total
semiconductor is defined as any active semiconductor product that contains semiconducting material (such as silicon, germanium, or galliuml\/ISAM-WW-CT-9601©1996 Dataquest

Augusts, 1996

Introduction and Definitions

arsenide, but excluding ceramics) and reacts dynamically to an input signal, either by modifying its shape or adding energy to it. This definition
excludes standalone passive components, such as capacitors, resistors,
inductors, oscillators, crystals, transformers, and relays.
Consumer electronics end use is defined as all semiconductors used inconsumer electronics applications. Consumer electronics applications consist of audio, video, personal electronics, appliances, and other coiwumer
equipment Audio equipment includes stereos and compact disc players.
Video equipment encompasses devices such as VCRs, TVs, and camcorders. The personal electronics category is composed of set-top boxes, electronic games and toys (with cartridges), cameras, and watches and clocks.
Appliances include air conditioners, microwave ovens, and refrigerators.
Other consumer electronics equipment consists of devices not classified
elsewhere, such as garage door openers. Products not counted as consumer electronics equipment include home PCs, printers and fax equipment, corded and cordless telephones, answering machines, and cellular
telephones. Dataquest categorizes this equipment in the data processing
and commtmications segments.
Total IC Consumer End Use (Bipolar Digital IC + MOS Digital IC + Analog
IC): An IC is defined as a large number of passive and/or active discrete
semiconductor circuits integrated into a single package.
Bipolar Digital IC (Bipolar Digital Memory IC + Bipolar Digital Logic IC):A bipolar digital IC is a monolithic semiconductor product in which
100 percent of the die area performs digital functions, and, concurrently,
100 percent of the die area is manufactured using bipolar semiconductor
technology. A digital function is one in which data is carried as numericalvalues, usually in a binary code.
MOS Digital IC (MOS Digital Memory IC + MOS Digital Microcomponent
IC + MOS Digital Logic IC): Defined as a monolithic semiconductor product in which 100 percent of the die area performs digital functions and,concurrentiy, any portion of the die area that is manufactured using metaloxide semiconductor (MOS) technology. A digital function is one in whichdata is carried as numerical values, usually in a binary code. This category
includes mixed-technology manufacturing, such as BiMOS and BiCMOS,
where there is some MOS technology employed.
MOS Memory IC (DRAM + SRAM + EPROM + EEPROM + Flash Memory+ Mask ROM + Otiier MOS Digital Memory): Defined as a MOS IC in
which data is stored and electronically retrieved.
MOS Microcomponent IC (MOS Digital Microprocessor + MOS Digital
Microcontroller + MOS Digital Microperipheral + Programmable Digital
Signal Processor): Defined as a MOS IC that contains a data processing
unit or serves as an interface to such a unit.
Microprocessor (8-bit and 16-bit CISC MPU + 32-bit and greater CISC
MPU + 32-bit and greater RISC MPU): A microprocessor is an IC that
includes an instruction decoder, an arithmetic logic unit (ALU), registers,
and additional logic. It may contain an instruction cache and/or data
cache. An MPU's functioiis are determined by fetching and executing

IVISA!\/I-WW-CT-9601©1996 Dataquest

Augusts, 1996

Consumer Multimedia Semiconductors and Applications Worldwide

instructions and manipulating data held in external memory or an internalcache. The MPU category includes MPUs incorporating or originatingfrom an ASIC design.
Microcontroller (4-bit MCU + 8-bit MCU + 16-bit and greater MCU):
Defined as an IC that is similar to an MPU, with the primary exception
being that it is designed to operate from on-chip program and data memory (not including cache memories). MCU devices must be available withon-chip program and/or data store. As an option, some MCU devices canbe purchased without on-chip memory. The MCU category includes
MCUs incorporating, or originating from, an ASIC design.
Digital Signal Processor: A DSP is an IC that includes a high-speed arithmetic unit (typically a multiply-accumulate unit) used for performing
complex mathematical operations, such as Fourier transforms. Like an
MPU or an MCU, a pDSP is programmable in that it fetches and executes
preprogrammed instructions. These instructions are oriented toward
signal-processing algorithms. Integrating a pDSP on the same chip as an
MPU or MCU does not alter the MPU or MCU categorization of tiiat
device.
Microperipheral: Defined as an IC that serves as a logical support function
to an MPU in a system. This definition includes MPRs comprising morethan one device, such as PC or core logic chipsets. The MPR category
includes MPRs incorporating or originating from an ASIC design.
MOS Logic IC (MOS Logic + MOS ASIC/ASSP + Otiier MOS Logic):
Defined as a MOS IC in which more than 50 percent of the die area
performs logic functions and excludes MOS microcomponent ICs.
MOS ASIC/ASSP (Traditional Digital Gate Array + Embedded Gate Array+ MOS Digital Programmable Logic Device + MOS Digital Cell-Based IC +MOS Digital Full-Custom IC): A MOS ASIC/ASSP is defined as a singleuser logic IC (ASIC) or multiple-user logic IC (ASSP) that is manufactured
using vendor-supplied tools and/or libraries. This does not include ASICs
of ASSPs incorporating microprocessor cells or microcontroller cells, asthese should be reported in the microprocessor IC or microcontroller IC
category, respectively.
Other MOS Logic IC: Defined as all otiier MOS logic ICs not accounted forin the preceding categories. This includes MOS commodity family logic
with 150 or more gates and MOS general-purpose logic not belonging to
any families.
Analog IC (Analog Video IC + Aiwlog Audio IC + Other Analog IC):
Defined as a semiconductor product tiiat deals with electrical signal
processing, power control, or electrical drive capability. It is one in whichsome of the inputs or outputs can be defined in terms of continuously or
linearly variable voltages, currents, or frequencies. This includes only
monolithic analog ICs manufactured using bipolar, MOS, or BiCMOS technologies. A monolithic IC is a single die contained in a single package.
Analog Audio IC: An analog audio IC is an analog IC implemented foraudio applicatioi\s, including radio and speech synthesis and recognition.

MSAI\/I-WW-CT-9601©1996 Dataqu est

Augusts, 1996

Introduction and Definitions

Analog Video IC: This is defined as an analog IC implemented for video
applications including video encoding and decoding.
Other Analog IC: This is defined as an analog IC used in consumer applications other than processing video or audio.
Total Discrete (Transistor + Diode + Thyristor + Other Discrete): A discrete
semiconductor is defined as a single semiconductor component such as atransistor, diode, or thyristor. Although multiple devices may be present
in a package, they are still considered discretes if they have no internalfunctional intercormection and are applied in the same manner as otherdiscrete devices.
Total Optoelectronics (Total LED Lamp/Display + Optocoupler + ChargeCoupled Device + Laser Diode + Photosensor + Other Optical Semiconductor): Defined as a semiconductor product in which photons induce theflow of electrons or vice versa. Other functions may also be integrated
onto the product. This category does not include LCD, incandescent displays, fluorescent displays, cathode ray tubes (CRTs), or plasma displays.
MPEG IC: This is an IC implemented for the purpose of encoding and/or
decoding data conforming with the MPEG-1 or MPEG-2 specifications for
digital video and audio compression.
MPEG-1 IC: This is an IC implemented for the purpose of encoding and/or decoding data conforming with the MPEG-1 specification for digital
video and audio compression.
MPEG-2 IC: This is an IC implemented for the purpose of encoding and/or decoding data conforming with the MPEG-2 specification for digital
video and audio compression.
Standalone MPEG IC: This is an IC exclusively dedicated to performing
MPEG encoding or decoding.
Embedded MPEG IC: This is an ASIC or ASSP that implements MPEG
encoding or decoding as part of a larger audio or video processing
function.

I\/ISAIVI-WW-CT-9601©1996 Dataqu est

Augusts, 1996

Chapter 2

1995 Consumer Semiconductor IVIarlcet Share
The consumer market represents a vast opportunity for manufacturers ofmany different t5^es of semiconductors. As shown in Table 2-1, revenue
from sales of semiconductors into the consumer market totaled more than
$24 billion in 1995.
Reflecting the fact that the Asian market is the world's biggest region
for consumer electronics equipment production, Japan-based and Asia/
Pacific-based companies dominate the top ranks of semiconductor
suppliers into that area. Four of the top five suppliers and eight of the top
10 suppliers of semiconductors for consumer electronics applications are
Japanese companies. Table 2-1 and Figure 2-1 present the top 10 vendors ofsemiconductors for use in consumer electronics.
Table 2-1
Top 10 Vendors of Semiconductors for Use in Consumer
Electronics, Worldwide Revenue (Millions of U.S. Dollars)
1995 Rank
1
2
3
4
5
6
7
8
9
10

Company
ToshibaNEC
Matsushita
Philips
Sanyo
Hitachi
Sharp
Mitsubishi
Sony
Motorola
All Others
Total Market

1995 Revenue
3,286
2,710
1,905
1,724
1,613
1,587
1,529
1,479
1,309
1,019
6,452
24,613

1995 Market
Share (%)
13.4
11.0

7n
7.0
6.6
6.4
6.2
6.0
5.3
4.1
26.2
100.0

Source: Dataquest (July 1996)

The following describes the top 10 companies in the consumer electronics
semiconductor market. The companies listed are leaders in the segments
constituting the consumer semiconductor market. It is noteworthy thatthese companies account for almost 75 percent of all semiconductor revenue in the area of consumer electronics. Although it is not one of the top 10
consumer semiconductor suppliers, Texas Instruments is the leading sellerof DSPs for consumer applications. Tables 2-2 through 2-18 present the top
semiconductor vendors for various categories of semiconductors used inconsumer electronics.
• Toshiba was the leading vendor of semiconductors for consumer equipment in 1995. It offers a substantial line of ICs targeted at the constuner
market and has a long history of marketing efforts directed at consumer
electronics. Toshiba continues to pursue aggressive sales promotion
activities in this area.
MSAM-WW-CT-9601©1996 Dataquest

7

Consumer Multimedia Semiconductors and Applications Worldwide

Figure 2-1
Top 10 Vendors of Semiconductors for Use in Consumer Electronicsi

Motorola (4.1%)
Sony (5.3%)
Philips (7.0%)
Mitsubishi (6.0%)
Sanyo (6.6%)
Sharp (6.2%)
Hitachi (6.4%)
Total = $24.6 Billion
9G1S07

Source: Dataquest (July 1996)

Although NEC garnered more revenue from its overall semiconductorbusiness than Toshiba in 1995, it takes second place to Toshiba in the
consumer electronics market. NEC possesses major strengths in designing and manufacturing digital ICs and memory. A particular strengthfor NEC is in digital logic ICs for consumer electronics equipment.
Although Matsushita was not ranked as one of the top 10 overall semiconductor manufacturers in 1995, the company held tihe No. 3 positionin the consumer chip market, reflecting its strength in this area. Matsushita's consumer product groups, which include Panasonic, National,
and Technics, offer a range of cortsumer electronics products, including
audio and video equipment. Matsushita operates as both a captive manufacturer, supplying parts to its own consumer line, and as a merchantmarket seller. Strong product areas for Matsushita include MCUs,
analog ICs, and optoelectronics, such as charge-coupled devices for
consumer equipment.
Netherlands-based Philips is the world's fourth-largest vendor ofsemiconductors for consumer electronics products and is the only nonJapanese company among the top five players in that market. In addition to competing in the merchant market. Philips supplies semiconductors to its parent company, which is one of the world's top sellers ofconsumer equipment. Philips is strongest in consumer analog semiconductors, where it leads in video and holds a strong position in audio
analog ICs. It is also one of the top suppliers of MOS logic ICs anddiscrete components.

MSAM-WW-CT-9601©1996 Dataquest

Augusts,1996

1995 Consumer Semiconductor Market Share

The world's fifth-largest vendor of consumer semiconductors is Sanyo,
a company that is very strong in the Asia/Pacific and Japanese semiconductor markets. The company focused its consumer semiconductor
efforts on Asia before the other Japanese manufacturers did. Sanyo isparticularly good at selling semiconductors to niche markets. The company shines in the market for consumer MOS logic and in analog audio
and video ICs.
Hitachi achieved the sixth position in consumer semiconductor sales in1995 primarily because of strong sales of its SH-2 microprocessor andSH-1 microcontroller. Although the SH-2 can be used in a variety of consumer products, the microprocessor owes its success largely to ihe Sega
Saturn home video game console, which was extremely popular in
1995. Each Saturn includes two Hitachi SH-2 microprocessors and one
SH-1 microcontroller.
Sharp, the seventh-largest manufacturer of semiconductors for the consumer market, is strong in the MOS memory market. The company is
the leading supplier of mask ROM, which is used extensively in cartridges for home video game consoles. Another area where Sharp leads
in is optoelectronics, where it holds the No. 1 position in the consumer
electronics market. Sharp also maintains a large business selling MOS
ASICs and other types of MOS logic.
Mitsubishi, which is the No. 8 supplier of consumer semiconductors, ispart of one of the world's largest manufacturing companies and a major
supplier of consumer products ranging from big-screen televisions to
air conditioners. The company is particularly strong in sales of microcontrollers for consumer products.
Sony is the ninth-largest producer of semiconductors in the consumer
electronics market. In addition to selling semiconductors, Sony is one of
the world's leading manufacturers of consumer electronics equipment.
Sony is a leader in nearly every segment of the consumer audio market,
as well as being a major player in video and other products. In semiconductors, Sony is strong in optoelectronics and analog audio, reflecting
its leadership in compact disc players and stereo equipment. Sony also
is a major supplier of analog video ICs.
Ranked at No. 10, Motorola is the only North American supplier among
the top 10 consumer semiconductor sellers. Motorola is the leading supplier of microprocessors for consumer applications and maintains astrong position in sales of microcontrollers, particularly 8-bit devices tothat market.
Texas Instruments is the top seller of DSPs for consiuner applications.
The world's No. 1 producer of DSPs, TI has a broad line of devices forapplications ranging from wireless communications to hard disk drives.
In the consumer market, TI produces DSPs for products such as sophisticated stereos, compact disc players, and set-top boxes.

MSAI\/I-WW-CT-9601©1996Dataquest

Augusts, 1996

10

Consumer Multimedia Semiconductors and Applications Worldwide

Table 2-2
Top 10 Vendors of All ICs for Use in Consumer Electronics,
Worldwide Revenue (Millions of U.S. Dollars)
1995 Rank
1
2

Company
Toshiba

1995 Revenue

1995 Market
Share (%)

2,618

13.5
11.6
7.2

NEC
Hitachi
Sharp

2,246
1,395
1,267

Philips
Matsushita
Sanyo

1,250
1,202
1,196

•6.5
6.5
6.2
6.2

9

Mitsubishi
Sony

1,130
984

5.8
5.1

10

Motorola
All Others

825
5,262

4.3
27.2

Total Market

19,375

100.0

3
4
5
6
7
8

Source: Dataquest (July 1996)

Table 2-3
Top Five Vendors of Bipolar Digital ICs for Use in Consumer
Electronics, Worldwide Revenue (Millions of U.S. Dollars)
1995 Rank

Company

1995 Revenue

1
2

Hitachi
Motorola

68
37

3
4

Toshiba

32
24

5

NEC
Texas Instruments
All Others
Total Market

13
53
227

1995 Market
Share (%)
30.0
16.3
14.1
10.6
5.7
23.3
100.0

Source: Dataquest (July 1996)

MSAM-WW-CT-9601©1996 Dataquest

Augusta,1996

1995 Consumer Semiconductor Market Share

11

Table 2-4
Top 10 Vendors of MOS Digital ICs for Use in Consumer
Electronics, Worldwide Revenue (Millions of U.S. Dollars)
1995 Rank
1
2
3
4
5
6
7
8
9
10

Company
Toshiba
NEC
Sharp
Hitachi
Mitsubishi
Matsushita
Motorola
Samsung
Sanyo
Hyundai
AU Others
Total Market

1995 Revenue
2,017
1,875
1,011
961
819
742
653
645
451
414
4,054
13,642

1995 Market
Share (%)
14.8
13.7
7.4
7.0
6.0
5.4
4.8
4.7
3.3
3.0
29.7
100.0

Source: Dataquest (July 1996)

Table 2-5
Top 10 Vendors of MOS Memory for Use in Consumer Electronics,
Worldwide Revenue (Millions of U.S. Dollars)
1995 Rank
1
2
..3
4
§
6
7

g
9
10

Company
Toshiba
Samsxmg
Sharp
NECHyundai
Hitachi
LG Semicon
Siemens
Texas Instruments
United Microelectronics
All Others
Total Market

1995 Revenue
611
601
468
431
412
268
264
164
153
148
767
4,287

1995 Market
Share (%)
14.3
14.0
10.9
10.1
9.6
6.3
6.2
3.8
3.6
3.5
17.9
100.0

Source: Dataquest (July 1996]

MSAM-WW-CT-9601©1996 Dataquest

Augusts, 1996

12

Consumer Multimedia Semiconductors and Applications Worldwide

Table 2-6
Top 10 Vendors of MOS Microcomponents for Use in Consumer
Electronics, Worldwide Revenue (Millions of U.S. Dollars)
1995 Rank
1
2
3
4
5
6
7
8
9
10

CompanyNEC
Toshiba
Mitsubishi
Hitachi
Motorola
MatsTishita
Sharp
Sanyo
Sony
Texas Instruments
All Others
Total Market

1995 Revenue
921
808
564
482
360
293
172
151
139
126
716
4,732

1995 Market
Share (%)
19.5
17.1
11.9
10.2
7.6
6.2
3.6
3.2
2.9
2.7
15.1
100.0

Source: Dataquest (July 1996)

Table 2-7
Top Five Vendors of Microprocessors for Use in Consumer
Electronics, Worldwide Revenue (Millions of U.S. Dollars)
1995 Rank
1
2
3
4
5

Company
Motorola
NEC
ToshibaIntel
HitachiAll Others
Total Market

1995 Revenue
54
38
32
29
20
86
259

1995 Market
Share (%)
20.8
14.7
12.4
11.2
7.7
33.2
100.0

Source: Dataquest (July 1996)

MSAM-WW-CT-9601©1996 Dataquest

Augusts, 1996

1995 Consumer Semiconductor Market Share

13

Table 2-8
Top 10 Vendors of Microcontrollers for Use in Consumer
Electronics, Worldwide Revenue (Millions of U.S. Dollars)
1995 Rank
1
2
3
4
5
6
7
8
9
10

CompanyNEC
Toshiba
Mitsubishi
HitachiMatsushita
Motorola
Sharp
Sanyo
Sony
Oki
All Others
Total Market

1995 Revenue
799
655
548
409
285
232
157
142
128
85
432
3,872

1995 Market
Share (%)
20.6
16.9
14.2
10.6
7.4
6.0
4.1
3.7
3.3
2.2
11.2
100.0

Source: Dataquest (July 1996)

Table 2-9
Top Six Vendors of Microperipherals for Use in Constuner
Electronics, Worldwide Revenue (Millions of U.S. Dollars)
1995 Rank
1
2
3
4
5
6

Company
Toshiba
NEC
Motorola
United Microelectronics
Hitachi
Texas Instruments
All Others
Total Market

1995 Revenue
114
74
55
40
39
32
110
464

1995 Market
Share (%)
24.6
15.9
11.9
8.6
8.4
6.9
23.7
100.0

Source: Dataquest (July 1996)

MSAM-WW-CT-9601©1996 Dataquest

August 5,1996

14

Consumer Multimedia Semiconductors and Applications Worldwide

Table 2-10
Top Six Vendors of Digital Signal Processors for Use inConsumer Electronics, Worldwide Revenue(Millions of U.S. Dollars)
1995 Rank
1
2
3
4
5
6

Company
Texas Instniments
Motorola
Hitachi
Zilog
NEC
Sanyo
All Others
Total Market

1995 Revenue
52
19
14
12
10
9
21
137

1995 Market
Share (%)
38.0
13.9
10.2
8.8
7.3
6.6
15.2
100.0

Source: Dataquest (July 1996)

Table 2-11
Top 10 Vendors of MOS Logic for Use in Consumer Electronics,
Worldwide Revenue (Millions of U.S. Dollars)
1995 Rank
1
2
3
4
5
6
7
8
9
10

Company
ToshibaNEC
Matsushita
Sharp
Sanyo
LSI Logic
Philips
YamahaSony
HitachiAll Others
Total Market

1995 Revenue
598
523
384
371
288
279
275
249
217
211
1,228
4,623

1995 Market
Share (%)
12.9
11.3
8.3
8.0
6.2
6.0
5.9
5.4
4.7
4.6
26.6
100.0

i

Source: Dataquest (July 1996)

i
MSAM-WW-CT-9601©1996 Dataquest

Augusta, 1996

1995 Consumer Semiconductor Market Share15

Table 2-12
Top 10 Vendors of MOS ASICs/ASSPs for Use in Consumer
Electronics, Worldwide Revenue (Millions of U.S. Dollars)
1995 Rank
1
2
3
4
5
6
7
8
9
10

Company
ToshibaNEC
Matsushita
LSI Logic
Sharp
YamahaMotorola
SGS-Thomson
HitachiFujitsu
All Others
Total Market

1995 Revenue
409
399
369
279
200
180
154
124
98
95
803
3,110

1995 Market
Share (%)
13.2
12.8
11.9
9.0
6.4
5.8
5.0
4.0
3.2
3.1
25.8
100.0

Source: Dataquest (July 1996)

Table 2-13
Top 10 Vendors of Analog ICs for Use in Consumer Electronics,
Worldwide Revenue (Millions of U.S. Dollars)
1995 Rank
1
2
3
4
5
6
7
8
9
10

Company
PhilipsSanyo
SonyToshibaMatsushita
HitachiNEC
Mitsubishi
Sharp
Texas Instruments
AH Others
Total Market

1995 Revenue
900
745
577
569
449
366
347
302
256
165
830
5,506

1995 Market
Share (%)
16.3
13.5
10.5
10.3
8.2
6.6
6.3
5.5
4.6
3.0
15.1
100.0

Source: Dataquest (July 1996)

1\/ISAM-WW-CT-9601©1996 Dataquest

August 5,1996

16

Consumer Multimedia Semiconductors and Applicatjons Worldwide

Table 2-14
Top 10 Vendors of Analog Audio ICs for Use in Consumer
Electronics, Worldwide Revenue (Millions of U.S. Dollars)
1995 Rank
1
2
3
4
5
6
7
8
9
10

Company
SanyoSonyToshibaMatsushita
Hitachi
Mitsubishi
Philips
Sharp
NEC
Texas Instruments
All Others
Total Market

1995 Revenue
324
231
199
191
155
115
101
100
74
62
236
1,788

1995 Market
Share (%)
18.1
12.9
11.1
10.7
8.7
6.4
5.6
5.6
4.1
3.5
13.2
100.0

Source: Dataquest (July 1996)

Table 2-15
Top 10 Vendors of Analog Video ICs for Use in Consumer
Electronics, Worldwide Revenue (Millions of U.S. Dollars)
1995 Rank
1
2
3
4
5
6
7
8
9
10

Company
Sanyo
PhilipsSony
ToshibaMatsushita
NEC
HitachiSamsung
Mitsubishi
Sharp
All Others
Total Market

1995 Revenue
309
300
244
228
170
99
98
76
72
71
259
1,926

1995 Market
Share (%)
16.0
15.6
12.7
11.8
8.8
5.1
5.1
3.9
3.7
3.7
13.4
100.0

Source: Dataquest (July 1996)

MSAM-WW-CT-9601©1996 Dataquest

Augusts, 1996

1995 Consumer Semiconductor Market Share17

Table 2-16
Top 10 Vendors of Other Analog ICs for Use in Consumer
Electronics, Worldwide Revenue (Millions of U.S. Dollars)
1995 Rank
1
2
3
4
5
6
7
8
9
10

Company
PhilipsNEC
Toshiba
Mitsubishi
HitachiSanyoSonyMatsushita
Sharp
Siemens
All Others
Total Market

1995 Revenue
499
174
142
115
113
112
102
88
85
77
285
1,792

1995 Market
Share (%)
27.8
9.7
7.9
6.4
6.3
6.3
5.7
4.9
4.7
4.3
15.9
100.0

Source: Dataquest (July 1996)

Table 2-17
Top 10 Vendors of Discrete Components for Use in Consumer
Electronics, Worldwide Revenue (Millions of U.S. Dollars)
1995 Rank
1
2
3
4
5
6
7
8
9
10

Company
Matsushita
Toshiba
PhilipsNEC
Sanyo
Mitsubishi
Motorola
HitachiSamsungSony
All Others
Total Market

1995 Revenue
485
479
474
384
315
272
188
162
111
75
778
3,723

1995 Market
Share (%)
13.0
12.9
12.7
10.3
8.5
7.3
5.0
4.4
3.0
2.0
20.9
100.0

Source: Dataquest (July 1996)

MSAM-WW-CT-SeOI©1996 Dataquest

Augusts, 1996

18

Consumer Multimedia Semiconductors and Applications Worldwide

Table 2-18
Top 10 Vendors of Optoelectronics for Use in Consumer
Electronics, Worldwide Revenue (Millions of U.S. Dollars)
1995 Rank
1
2
3
4
5
6
7
8
9
10

Company
Sharp
Sony
Matsushita
ToshibaSanyo
NECMitsubishi
Hewlett-Packard
TEMIC
Siemens
All Others
Total Market

1995 Revenue
262
250
218
189
102
80
17
61
39
37
200
1^15

1995 Market
Share (%)
17.3
16.5
14.4
12.5
6.7
5.3
5.1
4.0
2.6
2.4
13.2
100.0

Source: Dataquest (July 1996)

MSAM-WW-CT-9601©1996 Dataquest

Augusts,1996

Chapter 3

MPEG ICsThis chapter presents rankings for companies selling chips that can perform decompression of MPEG digital video and audio. During 1995, video
and audio MPEG functions typically were performed by separate chips.
During 1996, both audio and video decompression were being integrated
into a single chip. The market shares in this report do not separate fileaudio and video functions. Table 3-1 and Figure 3-1 present the top sellersof both audio and video MPEG decoding chips.
SGS-Thomson is the world's leading vendor of MPEG decompression
chips, a position it achieved based on its strong business selling decoders
for digital Direct Broadcast Satellite (DBS) systems. It scored an early
design-win for its MPEG-2 decoding chips when Thomson Multimedia
began producing set-top boxes for Hughes Electronics' v^aldly successful
DirecTV DBS television system.
C-Cube, a company that is dedicated to digital video compression technology, dominates the market for MPEG-1 decoders. The company has foundstrong demand for its MPEG-1 decoders in Japan and Asia/Pacific, where
they are used in \^deoCD video playback systems. Although revenue for
its MPEG-2 encoder chips is not counted in this ranking, C-Cube is leveraging its strengths in this area into future MPEG-2 decoder products.
Tables 3-2 and 3-3 list the market shares for vendors of MPEG-1 and
MPEG-2 chips. Tables 3-4 and 3-5 present the market shares for MPEG
chip vendors segmented by standalone MPEG decoders and embedded
MPEG decoders.
Table 3-1
Top Six Vendors of MPEG Decoder ICs for Use in Consumer Electronics, Worldwide
Revenue and Shipments
1995 Rank
1
2
3
4
5
6

Company
SGS-Thomson
C-CubeTexas Instruments
Motorola
S3
LSI Logic
AU Others
Total Market

1995 Revenue
($M)
120
80
23
19
7
4
18
271

1995 Shipments(K Units)
4,200
2,600
955
600
350
182
730
9,617

1995 Market
Share (%)
44.3
29.5
8.5
7.0
2.6
1-5:
6.6
100.0

Source: Dataquest (July 1996)^

MSAM-WW-CT-9601©1996 Dataquest

19

20

Consumer Multimedia Semiconductors and Applications Worldwide

Figure 3-1
Top Six Vendors of MPEG ICs for Use in Consumer Electronics, Worldwide Revenue^ (Dthers (6.6%)
LSI Logic (1.5%)S3 ( 2 . 6 % ) - - ^Motorola (7.0%)-vX
Texas Instruments (8.5%) — J^
SGS-Thomson(44.3%)yC-Cut>e(29.5%)

\

1
1

#
W

\

Total = $271 Million
954608Source: Oataquest (July 1996)

Table 3-2
Top Five Vendors of MPEG-1 Decoder ICs for Use in Consumer Electronics, Worldwide
Revenue and Shipments
1995 Rank

Company

1
2

C-CubeSGS-Thomson

34Motorola
Texas Instruments

5

S3
All Others
Total Market

1995 Revenue
($M)
74
35
19
10
7
7
152

1995 Shipments(K Units)
2,400

1995 Market
Share (%)
48.7

1,400
600
500

23.0

350
280

4.6
4.6

5,530

100.0

12.5
6.6

Source: Dataquest (July 1996)

MSAM-WW-CT-9601©1996 Dataquest

Augusts, 1996i

MPEG ICs

21

Table 3-3
Top Five Vendors of MPEG-2 Decoder ICs for Use in Consumer Electronics, Worldwide
Revenue and Shipments
1995 Rank
1

2:

t
i
f

Company
SGS-Thomson
Texas Instruments
C-CubeLSI Logic
Oak Technology
All Others
Total Market

1995 Revenue
($M)
85
13
6
4
2
9
119

1995 Shipments(K Units)
2,800
455
200
182
100
350
4,087

1995 Market
Share (%)
71.4
10.9
5.0
3.4
1.7
7.6
100.0

Source: Dataquest (July 1996)

Table 3-4
Top Five Vendors of Standalone MPEG Decoder ICs for Use in Consumer Electronics,
Worldwide Revenue and Shipments
1995 Rank
1
2
3
4
5

Company
SGS-Thomson
Motorola
Texas Instruments
S3
Oak Technology
All Others
Total Market

1995 Revenue
($M)
103
19
13
7
2
11
155

1995 Shipments(K Units)
3360
600
669
350
100
385
5,464

1995 Market
Share (%)
66.5
12.3
8.4
4.5
1.3
7.1
100.0

Source: Dataquest (July 1996)

Table 3-5
Top Four Vendors of ICs with Embedded MPEG Decoder Functions for Use inConsumer Electronics, Worldwide Revenue and Shipments
1995 Rank
1
2
3
4

Company
C-CubeSGS-Thomson
Texas Instruments
LSI Logic
All Others
Total Market

1995 Revenue
($M)
80
17
10
4
5
116

1995 Shipments(K Units)
2,600
840
286
182
245
4,153

1995 Market
Share (%)
69.0
14.7
8.6
3.4
4.3
100.0

Source: Dataquest (July 1996)

MSAM-WW-CT-9601©1996 Dataquest

August 5,1996

Chapter 4

Market Participation
Table 4-1 is a matrix illustrating which companies are involved in the various product segments constituting the consumer electronics semiconductor market. Eadi x signifies that a company garnered revenue from aparticular product t3^e in 1995.
Table 4-2 is a matrix illustrating which companies offer various types of
MPEG semiconductors. Each x signifies that a company garnered revenue
from a particular product type in 1995.

t
MSAM-WW-CT-9601©1996 Dataquest

23

CO

>

CO

a>
o

Table 4-1
Matrix of Company Participation in Various Consumer Electronics Semiconductor Product Se
Bipolar
Digital

MOS
MemoryMicroprocessors

Microcontrollers

Microperipherals

DigitalSignal
Processors

MOS
ASiCs/
ASSFs

X

X

X

X

X

X

X

AnalogAudio
ICs

AnalogVideo
ICs

Americas Companies
Advanced Micro Devices

X

Analog Devices

X

A'r&T
Brookhee

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

C-CubeX

X

Dallas Semiconductor
General Iristnimenl:

@
to
CO
C35

O

(U
ft(U
X3

Hewlett-Packard

X

X

X

X

X

X

X

IBM

X

X

X

X

X

X

X

[ntel

X

X

X

X

X

X

Linear Tedinology
X

LSI Logic
Microchip Technology

X

Motorola

X

X

X

X

X

X

X

X

X
X

SymbiosX

National Semiconduciter

X

X

X

X

X

X

Oak Technology

X

.

S3
Texas Instruments

X

X

X

X

X

X

X

X

X

VLSI Tedinology

X

X

X

X

X

X

X

X

X

X

X

X

X

Zilog
Japanese Companies
Fujiteu

X

X

X

X

X

X

X

X

X

Hitachi

X

X

X

X

X

X

X

X

X

Matsusliita

X

X

X

X

X

X

X

X

X

>

Mitsubishi

X

X

X

X

X

X

X

X

X

CO

NEC

X

X

X

X

X

X

X

X

X

Oki

X

X

X

X

X

X

X

X

X

CO
CO
C3)

>

Table 4-1 (Continued)
Matrix of Company Participation in Various Consumer Electronics Semiconductor Product Se
Analog
Video
ICs

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

•

X

MOS
MemoryMicroprocessors

Microcontrollers

Microperipherals

DigitalSignal
Processors

Sanyo

X

X

X

X

X

X

Seiko Epson

X

X

X

X

X

X

Sharp

X

X

X

X

X

Sony

X

X

X

X

Toshiba

X

X

X

X

Yamaha

X

X

X

X

CD

a>
o

Analog
Audio
ICs

Bipolar
DigitalRicoh

MOS
ASICs/ASSPs
XEuropean Compatd^
GEC Plessey

@
CO

to

X

%

X

PhilipsX

X

SGS-Thomson

X

X

X

X

X

X

X

X

X

Siemens

X

X

X

X

X

X

X

X

X

CD

a

X

X

X

X

X

TEMIC

(U
CD
V)

A s i a/Pacific C(liila|iiilil^;
DaewooX

X

Hyundai

X

X

X

>

c:
CO
f-*-

tn
CD
CD

<y>

X

X

X

X

X

X

X

X

X

X

X

X

LG Semicon

X

X

X

X

X

X

X

X

X

Samsung

X

X

X

X

X

X

X

X

X

United Microelectronics

X

X

X

X

X

Source: Dataquest (July 1996)

cz
(O

X

26

Consumer Multimedia Semiconductors and Applications Worldwide

Table 4-2
Matrix of Company Participation in Various MPEG Product Segments

C-CubeIBM
LSI Logic
Motorola
Oak Technology
S3
Texas Instruments
VLSI TechnologyFujitsu
HitachiSony
Philips
SGS-Thomson
Hyundai

MPEG-1 ICs
X
X

MPEG-2 ICs
X
X
X

X
X
X
X
X
X
X
X
X

X
X
X
X
X
X
X

Standalone
MPEG ICs

ICs with
Embedded
MPEG Functions
X

i

X
X
X
X
X
X
X
X
X
X
X
X
X

X
X

X
X
X

Source: Dataquest (July 1996)

i

MSAM-WW-CT-9601©1996 Dataquest

Augusts, 1996

i

i

For More Information...

Dale Ford, Senior Industry Analyst
Internet address
Via fax

IjOT'lf^l I^Cf^ ^ ^ ^ ^ ^ S r ^ ' ^ *AGartnerGroupCompany(408) 468-8311
dford@dataquest.com(408) 954-1780

The content of this report represerxts our irderpretation and analysis of information generally available to the public
or released by responsible individuals in the subject companies, but is not guaranteed as to accuracy or completeness.
It does rrat contain material provided to us in confidence by our clients. Reproduction or disclosure in whole or inP^'t t ° other parties shall be made upon the written and express conseiU of Dataquest.
©1996 Dataquest—Reproduction Prohibited
Dataquest is a registered trademark of A.C. Nielsen CompanyiDATAQUEST WORLDWIDE OFFICESNORTH AMERICA
Woridwide Headquarters

EUROPE
European Headquarters

ASIA/PACIFIC
Asia/Pacific Headquarters

251 River Oaks Parkway
San Jose, California 95134-1913
United States
Phone: 1-408-468-8000
FacsimUe: 1-408-954-1780

Tamesis, The Glanty
Egham, Surrey TW20 9AW
United Kingdom
Phone:+44 1784 431 611
Facsimile: +441784 488 980

7/F China Underwriters Centre
88 Gloucester Road
WanChaiHong Kong
Phone: 852-2824r6168
Facsimile: 852-2824-6138

East Coast Headquarters

Dataquest France

Nine Technology Drive
P.O. Box 5093
Westborough, Massachusetts 01581-5093
United States
Phone: 1-508-871-5555
Facsimile: 1-508-871-6262

Immeuble Defense Bergdres
345, avenue Georges C16nenceau
TSA 40002
92882 - Nanterre CTC Cedex 9
FrancePhone: +33 141 35 13 00
Facsimile: +33 1 41 35 13 13

Suite 2407, Trade Tower
159 Samsung-dong, Kangnam-gu
Seoul 135-729
Korea
Phone: 822-551-1331
Facsimile: 822-551-1330

Dataquest Gemiany

Dataquest Taiwan

Kronstadter Strasse 981677 Munchen
Germany
Phone: +49 89 93 09 09 0
Facsimile: +49 89 93 03 27 7

llF-2, No. 188, Section 5
Nan King East Road
TaipeiTaiwan, R.O.C.
Phone: 8862-756-0389
Facsimile: 8862-756-2663

Dataquest Korea

Dataquest Global Events

3990 Westerly Place, Suite 100
Newport Beach, California 92660
United States
Phone: l-714r476-9117
Facsimile: 1-714-476-9969
Sales Offices:
Washington, DC (Federal)
New York, NY (Financial)
Dallas, TX
LATIN AMERICA

Research Affiliates and Sales Offices:
Buenos Aires, Argentina
Sao Paulo, Brazil
Santiago, Chile
Mexico City, Mexico

Sales Offices:
Brussels, Belgium
Kfar Saba, Israel
Milan, Italy
Randburg, South Africa
Madrid, Spain
JAPANJapan Headquarters

Aobadai Hills 4-7-7
Aobadai
Meguro-ku, Tokyo 153
Japan
Phone: 81-3-3481-3670
Facsimile: 81-3-3481-3644

Dataquest Singapore

105 Cedl Street#06-01/02 The Octagon
Singapore 069534
Phone: 65-227-1213
Facsimile: 65-227-4607
Dataquest Thailand

12/F, Vanissa Building
29 Soi Chidlom
Ploenchit Road
Patumwan, Bangkok 10330
ThailandPhone: 662-655-0577
Facsimile: 662-655-0576
Research Affiliates and Sales Offices:
Melbourne, Australia
Beijing, China

DataQuest
A Gartner Group Company(©1996 Dataquest

fWLF r^'^""''

iMARlr.

V I»MB ts*i B y

ZUELADataQuest
DVD: The Hot New Digitai Video
Destination for Semiconductors

Focus Report

Program: Consumer Multimedia Semiconductors and Applications Worldwide
Product Code: MSAM-WW-FR-9602
Publication Date: July 8,1996
Filing: Reports

DVD: Tlie Hot New Digital Video
Destination for Semiconductors

Focus Report

Program: Consumer Multimedia Semiconductors and Applications Worldwide
Product Code: MSAM-WW-FR-9602
Publication Date: July 8,1996
Filing: Reports

DVD: The Hot New Digital Video Destination tor Semiconductors

Table of Contents
1.

2.

3.
4.

MSAM-WW-FR-9602

Page
The DVD Opportunity
1
Introduction1
Forecast Summary: High Growth2
DVD: What Is It? Where Is It Going? Who Will Take It There?
2
DVD Challenges: Past and Future
11
Technology Development
11Standards Unification
13
Intellectual Property Struggles
13
Software and Content Creation
17
Irifrastructure Development
17
Hardware Costs and Consumer Price Points
18
Writing and Encoding Technology
18
Market and Production Forecast
21
The DVD Semiconductor Opportunity
27
Semiconductor Market Forecast
27
Semiconductor Suppliers
40
Motorola
40
Hyundai40
Zoran
44
Other Announced Plans from Chip Suppliers
44
Summary and Conclusions
46©1996Dataquest

July 8,1996

Consumer Multimedia Semiconductors and Applications Worldwide

List of Figures
FigurePage
1-1 The Chip Market for Next-Generation Consumer Electronics
1
1-2 The Five DVD Standards
3
1-3 DVD Disc Types and Structures
5
1-4 Digital Video Direction: Convergence7
1-5 A DVD Time Line8
1-6 Support of Multiple, Key Industries Required for DVD Market
Success
9
2-1 Hurdles on the DVD Path
12
2-2 The Key to Movie Storage on a Single Disc: Variable Bit Rate
Encoding
14
2-3 The Seamless, Interactive Playback Concept
15
2-4 Alternative DVD/CD-ROM Optical Pickup Solutions
16
3-1 DVD Market Revenue Forecast
23
3-2 DVD Production Forecast
24
4-1 DVD-Video Player Block Diagram
28
4-2 Semiconductor Integration Trends in DVD
30
4-3 DVD Semiconductor Market Forecast by Platform
31
4-4 DVD Semiconductor Market Forecast by Device Type31
4-5 Motorola DVD Player Chipset
42
4-6 Hyundai PrAVO DVD Chip Solution
43
4-7 Zoran's DVD4PC Reference Design
45

MSAM-WW-FR-9602©1996 Dataquest

July 8,1996

DVD: The Hot New Digital Video Destination for Semiconductors

lii

List of Tables
Table
1-1 A Comparison of DVD and CD Disc Specifications
1-2 A Comparison of DVD-Video and Video CD Specifications
3-1 DVD-Video Player and DVD-ROM Drive Manufacturers
3-2 DVD Market Forecast
3-3 DVD-Video Player Production Forecast
3-4 DVD Optical Drive Production Forecast
3-5 DVD-Video Decode/Encode Board/Chipset Production
Forecast
4-1 Functional Description of Major DVD Elements
4-2 DVD-Video Player Semiconductor Market Forecast
4-3 DVD Optical Drive Semiconductor Market Forecast
4-4 DVD Video Decode/Encode Board/Chipset Semiconductor
Market Forecast
4-5 Announced and Potential DVD Chip Supplier Matrix

MSAM-WW-FR-9602©1996 Dataqu est

Page
6
6
22
23
24
25
26
29
32
35
38
41

July 8,1996

Chapter 1

The DVD Opportunity
Introduction
Digital technologies and advanced semiconductors are reshaping the consumer electronics world. The introduction of exciting new products suchas DVD-Video players and direct broadcast satellite (DBS) set-top boxes
creates new destinations for chips such as microprocessors (MPUs), digital
signal processors (DSPs), application-specific ICs (ASICs), applicationspecific standard products (ASSPs), and memory. Although these markets
are still in their infancy, they are forecast to experience rapid growth, asshown in Figure 1-1. This report will explore tixe key issues that semiconductor manufacturers should be aware of as they prepare to compete in
the dynamic DVD arena.
This report is one in a series of reports that will be published in the Consumer Multimedia Semiconductor Application Markets (MSAM) progam
providing detailed analysis and forecasts of the emerging digital consumer electronics markets. The next leport in this series will cover digital
set-top boxes. Dataquest is also engaged in active research on leadingedge electronic equipment through its Teardown Analysis program.
Dataquest plans to publish a detailed teardown arialysis of a selected DVD
player after the players reach the market.
Figure 1-1
The Chip Market for Next-Generation Consumer Electronics
Millions of Dollars
Q nnn

mi HDTV Receiver
8,000-u

DVD Players

7,0006,000 -Digital Satellite
D Set-Top
Box

5,000-s Digital Cable Set-Top Box

4,000-

Video
B 32/64-Bit
Game Controllers

3,000^

Other NextGeneration Products

2,0001,000-

^m

n

0—j
1993

(1994

j
1995

1
1996

1
1997

'W/^

1 — 1—
1998
199£

Source: Dataquest (July 1996)

MSAM-WW-FR-9602©1996 Dataquest

2000
964074.1

Consumer Multimedia Semiconductors and Applications Worldwide

Forecast Summary: High GrowthStanding on the shoulders of major technological advances in areas suchas video and audio compression, laser diode physics, and optical storage
technology, DVD is poised to boost both the consumer electronics andpersonal computer markets to new heights. The exciting capabilities
promised by DVD have captured the imagination and investment budgetsof companies from at least seven major industries. The major players in
the development of DVD continue to struggle with balancing thecooperative and competitive forces that have swirled around this promising product for over two years. While all of the players recognize that acoordinated, cooperative effort is essential for the creation of a successful
market, their zeal to capitalize on one of the most exciting products of the
1990s has brought DVD to the brink of digital video disaster on a numberof occasions.
Dataquest is optimistic that the remaining hurdles on the path to thesuccessful launch and growth of the DVD market will be overcome.
Although it does not match the h5rped expectations of some DVD proponents, Dataquest's forecast for the growth of the DVD market would makethis one of the most successful products ever introduced in the consumer
electrorucs and PC markets. After assessing the many factors that will
influence the success of the DVD market, Dataquest projects that market
shipments of DVD-Video players and DVD optical drives will top 33 million by the year 2000. More than 2.3 million DVD systems are expected toship between the first product introductions in August and September
1996 and the end of 1997. The semiconductor opportunity generated by
the DVD market is forecast to exceed $3.6 billion by the year 2000. This
report will outiine the market opportunity presented by DVD and review
some of the major hurdles that remain on the path to market. Detailed
information and forecasts on DVD production, the DVD semiconductor
market, and chip companies expected to enter the market will be provided. Information on some of the early semiconductor productannouncements will also be presented.

DVD: What Is It? Where Is It Going? Who Will Take It There?
Perhaps the easiest way to think of DVD is as a CD drive on steroids. V\^thhigher storage capacity, faster data transfer rates, interactive capabilities,
and applications across computer, video, and audio markets, DVD has
moved the capabilities of optical storage forward by an order of magnitude, and DVD supporters are already beginning to "feel the bum." In its
incarnation as a video player, it offers the ability to view full-length movies in multiple aspect ratios, languages, and Motion Picture Association ofAmerica(MPAA) ratings (R, PG-13, PG, G), all stored on a single CDROM-size disc. As a PC peripheral, DVD offers new levels of interactivity
for next-generation software titles and the storage capacity to handle more
content tihan developers currentiy know what to do with. In reality, DVD
is actually five separate standards, as shown in Figure 1-2. The physicalspecifications and file system for the first three standards are the same sothat a common platform can be created for multiple applications in thevideo, audio, computer, and next-generation consumer electrorucs
markets.

MSAM-WW-FR-9602©1996 Dataquest

July 8,1996

CO

>
^
^

Figure 1-2
The Five DVD Standards

CO

o>
CZ)
IV5

Part 3: Application

Part 2: File System

@
CO
CO
C3>

.o
c:

Parti: Physical

CD

Book

Finalized Specifications

c»
CO
CO
CJ>

Source: ToshibaConsumer Multimedia Semiconductors and Applications Worldwide

Books A, B, and C in the standard are "read-only memory standards"(ROM), while Book D will specify a "write once, read many" (WORM)
standard, and Book E will offer the ability to read, write, and erase.
Because of its ability to read and write, it is often called DVD-RAM, referring to a random access memory capability. Book A, also known as DVDROM, and Book B, called, DVD-Video or DVD-Movie, are close to final
and should enable the launch of products based on these standards at theend of 1996. Manufacturers would say that the standards are final. They
are close, but there are some details that remain to be decided that will be
described later in this report. The DVD-Audio standard, or Book C, is in
the early stages of discussion, and some preliminary proposals have beenpresented for this standard. Although hardware manufacturers are eager
to move to market as quickly as possible, the music industry is intent onprotecting its interests and has signaled its intention to set a slower pace ofdevelopment. The DVD-WORM and DVD-RAM standards will be established over the coming one to two years. In the meantime, the promotersof DVD have their hands full trying to bring the first DVD products tomarket.
Figure 1-3 presents a basic structure of the four different types of DVD
discs that can be produced. The single-sided disc offers 4.7GB of storage
capacity and will allow the storage of a 130-minute movie. The initial DVD
discs will be 12cm in diameter, the same size as a CD-ROM disc. An 8cm
disc has also been defined but delivery of content in this format has takena back seat to the 12cm disc. The dual-layer, double-sided, and dual-layer/
double-sided discs offer increased levels of storage, as shown in Table 1-1.
This table shows the major differences between CD and DVD technology.
Table 1-2 presents a comparison between DVD and Video CD technology,
which has been very popular in Japan and Asia/Pacific. Almost 2 million
Video CD players were shipped in 1995, and Sony plans to ship 4 million
portable players in 1996.
The title of "convergence product" has been bestowed upon DVD becauseof the common platform it will create for multiple applications acrosscomputer and consumer devices. Some of the major products in which
DVD will find application are illustrated in Figure 1-4. While obvious uses
are found in TV, PC, and high-end audio systems, the set-top box, network
computer, and video game console will also be impacted by DVD. Manufacturers of set-top boxes already have plans to leverage the common
MPEG-2 chipset into a hybrid device that may provide the ability to record
content sent over satellite or cable in the future. When the Bandai Pippen
was introduced at the E3 1996 show, the manufacturer was already talking
about the eventual replacement of the CD-ROM drive with a DVD drive in
the next version. Even video game consoles will upgrade to DVD eventually. The incorporation of DVD in this platform will be delayed for a few
years because of the unique business model employed by video gamecompanies. They are just beginning to create an installed base of new
32-bit and 64-bit game consoles, and they will need to derive software
profits from this base before they move to upgrade it again. Figure 1-5 presents a time line of when Dataquest expects hardware and software DVD
products to reach the market.

l\/ISAM-WW-FR-9602©1996 Dataquest

July 8,1996

en
>

a>
o
IV3

Figure 1-3
DVD Disc Types and Structures

Single-Sided Disc

Dual Layer (Single-Sided) Disc
0,6mm
0.6mm

c:

^
Layer 0

@
<o
CO
O)
ft!
»-*
cu

Dual Layer (Double-Sided) Disc

Double-Sided Disc£3

Layer 0

CD

BSide

cn

Layer

0.6mm
0.6mm

A Side

c_
c_
oo
CO
CO

o>

Source: Toshibann V|—I n ^Consumer Multimedia Semiconductors and Applications Worldwide

Table 1-1
A Comparison of DVD and CD Disc Specifications
Disc Diameter
Disc Thickness
Laser Wavelength
Numerical Aperture
Track Pitch
Shortest Pit/Land Length
Reference Scarming Velocity
Data Layers

Data Capacity

Reference User Data Rate

CD
120mm
1.2mm
780nm (infrared)
0.45
1.6um

DVD
120mm
1.2mm
650 and 635nm (red)0.60
0.74um0.83im:iSingle layer: 0.40um• Dual layer: 0.44um
1.2m/secCLV
4.0 m/sec CLV
1
1,2, or 4; single layer,
dual layer, doublesided, dual layer/
double-sided
Approximately 680MB
Single layer: 4.7GB
Dual layer: 8.5GB
Double-sided: 9.4GB
Dual layer/
double-sided: 17GB
1.108 MB/sec nominal
Mode 1: 153.6 KB/sec
Mode 2:176.4 KB/sec

CLV = Constant linear velocity
Source: Dataquest (June 1996)

Table 1-2
A Comparison of DVD-Video and Video CD Specifications
Video Data Rate
Video Compression
Sound Tracks

Subtitles

DVD-VideoVideo CD
1.44 Mbps (video, audio) 1 to 10 Mbps variable(video, audio, subtitles)
MPEG-2MPEG-12-charmel linear PCM;
2-channel MPEG
2/5.1-channel AC-3 or
MPEG; optional: up to
eight streams of data
available
Up to 32 languages
Open caption only

CLV = Constant linear velocity
Source: Dataquest (June 1996)

MSAM-WW-FR-9602©1996 Dataquest

Julys, 1996

The DVD Opportunity

Figure 1-4
Digital Video Direction: Convergence

Set-Top
Box\
Video Game
Console1m^^

Network
Access Terminal
High-End
Audio System

Source: Dataquest (June 1996)

The success of DVD in the market is highly dependent on the ability ofseven major industries to cooperate in translating this product concept
into a market reality. If the major companies in any one of the industries
shown in Figure 1-6 decide that they are not benefiting sufficiently from
DVD and decide to withdraw support, or if they fail to develop the necessary support infrastructure in a timely fashion, the near-term success of
DVD would be seriously harmed. The next section describes some of thecontention that currently exists among these industries. If disputes involving issues such as royalties and cop5rrights are not resolved soon, thelaunch of this market could be delayed. However, Dataquest is optimisticthat present difficulties can be overcome and that the long-term prospects
for DVD are very bright.

MSAM-WW-FR-9602©1996 Dataquest

Julys, 1996

CO>

Figure 1-5
A DVD Time Line33
I

Linear Play
Hollywood
Movies

(O
CD
O

rva

Software Products

LimitedInteractive
Movie Titles

Muitiple COTHIes on
One Disc

DVD-Video|
Player@..^

DVD-ROM
Drive
T"
DVD-Decode|
Board

Hardware Products

(£>
CO

cn

Non-Hollywood
Video Titles suchas Music Video,
Training,
Documentaries

ProsumerContent
Creation Tools

True interactive
PC-MuWmedia
Title

DVD Set-Top
Box Hybrid
DVD-WORMI
Drive

Video-GameInteractive
Titles

DVDA^ide
DVD-WORM
Recorder/Video Device
DVD/Netviiofk
DVDA/ideo Ga
1 Computer Hybrid] Console Hybrid
DVD-RAM]
Drive

DVD-Encoderj
Board

DVD-Audio
Player

DVD-WORM

IDVD-RAMI
DVD-Audio!

o
ca
f-i(U

.o
c:
CD
C/3

I DVD-ROM I

Technology

DVD-Video

Commercialization

1996

*
c»
CO
CO
<Ji

Source: Dataquest (June 1dS|t)|

1997

1998

1999

O)

>

Figure 1-6
Support of Multiple, Key Industries Required for DVD Market Success

33
I

CD

o>
O

ro

@
CO
CO

a>
a
K.
(U

J3

cr
CD
V>

><
OO
CO
CO

a>

Source: Dataquest (June 1996)

Chapter 2

DVD Challenges: Past and Future
As they race to the market, DVD proponents will have to avoid being
tripped up by some of the major hurdles shown in Figure 2-1. They havealready overcome significant technological and standards hurdles, butthey still do not have a clear sprint to tiie finish line. It is to be hoped thatthe potential rewards will provide th^ necessary momentum to allow the
emerging DVD market to reach its full potential. An outline of the pastand future challenges facing DVD is presented below.

Technology Development
The following major technological developments provide the foundation
for DVD:• Video and audio compression make it possible for high-quality video
and surround-sound 3-D audio to be played back from the DVD disc. In
particular, MPEG-2, which also provides the backbone for direct broadcast satellite (DBS) set-top boxes, is used for compressing the video. It isalso used for audio compression in regions that use the PAL TV standard. Dolby Labs and Zoran must be given credit for the developmentof the AC-3 audio compression standard, which is used in DVD players
in countries that comply with the NTSC TV standard. The AC-3 5.1
standard allows a complete home-theater sound system to be delivered
by DVD. Linear PCM compression is also used as an alternative audio
compression standard.
• The variable bit rate (VBR) encoding scheme is what makes it possible
to store a full-length movie on a single DVD disc. As shown in Figure
2-2, if a 130-minute movie were compressed at a constant 3.5 Mbps, itwould require about 8GB of storag;e. Because a single-layer DVD disc
only provides 4.7GB of storage, VBR encoding must be employed. The
basic VBR concept is that scenes with a lot of action that cause the image
to change significantiy are allocated more storage space, while slowerchanging images can be stored with less space.
• The file structure that was developed for DVD enables multiple attractive benefits, from the ability to store a movie in multiple languages tothe ability to control the content that is played back. As shown in Figure
2-3, future video producers will even have the ability to store multiple
camera angles so a viewer can see the action from a variety of perspectives. The interactive features of DVD wiU be valuable in video gameapplications. The structure also allows a user to jump among multiple
scenes with no pause in the video. This is accomplished by storingenough content at the branch points on the disc so that the DVD player
can play out the lead-in to the next scene from its buffer while it finds
the next video sequence.

MSAM-WW-FR-9602©1996 Dataquest

11

cyj

>

Figure 2-1
Hurdles on the DVD Path

CD

a>
CD

ro

W

Hardware Costs a
Consumer Price P

@
CD
CD
Oi
O
1=^

Infrastructure Development' Postproduclion sludto equipment• Disc stamping machinery upgrades
Software and Content Creation• Movie Ittle support• Interactive title devreltpment• Profitable multimedia content creation
Intellectual Property Struggles• Standards finalization and royalty Interests• Copyright protection

MIVICD• CO-ROM backward compatibitity-^^^^^

oo
CO
CD
CO

Source: Dataquest (June 1996)

Technology Developmenl• Compression—MPEG, AC-3, VBR• Opiical Recofding—Pitwidth, length• Laser Diode» Dual layer, dual Sida discs• Dual lens, dual loctis CD/DVD

DVD Challenges: Past and Future13

One of the critical elements in a DVD player is the red laser diode. Thisis a shorter-wavelength diode (635/650nm) than the infrared diodeused for CD players. At the end of 1995, concerns were raised that there
may not be an adequate supply of red laser diodes to meet demandbecause of difficulties in moving out of the lab to volume production
quantities. Also, there were concerns about the life of the red laser diodebeing long enough. A 10,000-hour life is considered the minimum
requirement for this component. While manufacturers appear to havemade progress in preparing for volume production, the cost of an optical pickup unit that incorporates the red laser diode will be very high,$35 to $50, initially. Major suppliers of this component are Toshiba, Philips, Sony, Sharp, Sony, and Sanyo. Sony has stated that it will be prepared to supply red laser diodes in volume for $10 at the end of 1996.
One of the key requirements of the DVD standard is that the players bebackward-compatible with CD discs. Because of the different structuresof DVD and CD discs, this created a costly problem for DVD manufacturers. The differences in pit sizes and depth on the disc create thenecessity for changing the focus between DVD and CD discs. Figure 2-4
shows the two most popular methods that have been developed forsolving this problem, the dual focus and the dual lens optical pickup. A
scheme using LCDs and polarized gratings has also been developed.
Again, the necessity to build in backward compatibility adds a significant cost to a DVD player. Early rumors raised the possibility that thefirst DVD players would not be compatible with CD discs because of
the cost of implementation.

^

Standards Unification
Standards, copyright, and royalty issues have been at center stage in the
DVD story• It should be remembered that both Sony and Toshiba were demonstrating DVD technology as far back as the 1995 Winter Consumer Electronics Show (CES). Throughout 1995, the industry watched closely as
intense competition was played out between two formats. Super Density (SD) and Multimedia CD (MMCD). Nobody wanted to see a repeatof the format wars that hindered the early growth of other consumer
electronics markets, and the two camps were finally pushed into negotiation on a common standard. The announcement of an agreement on aunified DVD specification allowed manufacturers to begin rolling out
their products with confidence at the 1996 Winter CES.

Inteliectual Property Struggles
Although a common standard has been agreed on, the details of theactual specifications are still being worked out. Two similar forces are atwork to hold up the creation of a final specification for DVD, royalty
interests and copyright protection. Creation of a final specification is not
being held up by technical considerations; the real battle is over how theroyalty revenue will be split among the different technology contributors. The battle over this issue has resulted in unfulfilled promises every
month since January that an agreement would be reached within thatmonth and a firial specification would be published.

>

MSAM-WW-FR-9602©1996Dataquest

July 8,1996

CO>

Figure 2-2
The Key to Movie Storage on a Single Disc: Variable Bit Rate Encoding
Constant Bit Rate Encoding

COSingle Disc Capacita>oro
8 Mbpsw^^!mcwEBHIIiJMlMi^i^MMi^MMa

@
CO
CO
CD
O
01

sr
CD
C/}

4,7

Constant Bit Rate Encoding
SMbpS'

4- »_133-Minute Movie

Avgragtu^SkS i%pj3

4.7

storage Required

VBR Enables Single DVD Disc Full-Feature Movie

oo
CD
CO

a>

Soue^ O-Ciibii Mk^rD«ystenri$DVD Challenges: Past and Future

15

Figure 2-3
T h e S e a m l e s s , Interactive Playback Concept

Parental Level 7

Japanese
Playback Pass

roi
^If^

French

LQQ
EnglishT

Panoramic View

azv

Parental Level 1

rODi
Actor

aofoomaLnn^nActress

Language credit

Director's Cut(Parental Lock)

Multicamera Angles

X 1

Seamless Playback(Playback of audio/video streams without pause)
964D&1

Source: Mitsubishi

The most recent fight over DVD revenue was launched when the Consumer Electronics Manufacturers Association (CEMA) and the MPAA
proposed legislation that would require anticopying protection to be
implemented through hardware. This proposal was met with immediate objections from the PC industry, which opposed the additional costs
this would create and insisted that this type of scheme was incompatible with the entire PC storage concept. While the PC commuruty, represented by Information Technology Industry Council (ITI), vowed tofight the legislation, a number of HoUjrwood studios announced theywould not release their movies on the DVD format unless theirdemands were met. The two sides were preparing to negotiate in Juneto break the deadlock as retailers warned that any significant delays
would push the possibility of a market launch beyond 1996. There ishope that some type of software encryption solution will create groundfor agreement. However, this issue holds the greatest potential fordelaying the launch of DVD.

>

MSAM-WW-FR-9602©1996Dataquest

July 8,1996

16

Consumer Multimedia Semiconductors and Applications Worldwide

Figure 2-4
Alternative DVD/CD-ROM Optical Pickup Solutions

Dual-Focus Solution
Developed DVD(SD) Pickup
DVD(SD}CD

DCurrent CD Pickup
CD

1.2mm

)•!-

)

•

•

\

A

Hologram-Integrated
Aspherical Molded
Glass Lenss') It1.2r

Aspherical
Molded Lens

Dual-Lens Solution

Objective Lens
for D V D

Laser Beam

Objective Lens
for C D
964065

Source: Matsushita, Mitsubishi

MSAM-WW-FR-9602©1996Dataquest

July 8 , 1 9 9 6

DVD Challenges: Past and Future

17

Software and Content Creation
Software and compelling content will be critical to both the near-term andlong-term success of DVD.
• Since January 1996, the supporters of DVD have announced that anywhere between 250 and 400 movie titles would be launched when DVDVideo players went on the market at the end of August or beginning of
September. Availability of these titles is critical for early sales of DVDVideo players. However, concerns continue to surface that the fight overcopyright protection and the significant effort currently required toconvert a title to DVD format may result in very few titles being readyfor market launch.
• In the PC world, the creation of software content for DVD is facing achicken-and-egg dilemma. Software developers have not begun workon DVD titles, and most do not plan to do so until there is an installedbase of DVD-ROM drives sufficient to create a market for their products. Very few CD-ROM titles were profitable in 1995, and content
developers are cautious about investing effort in a market that does notexist yet. The large installed base of CD-ROM drives in PCs presents amuch more attractive opportunity for software developers, and it will
require significant effort to redirect this energy to the DVD platform.
This creates a problem for PC manufacturers working to deliver new
PCs that incorporate a DVD-ROM drive. Without compelling DVD
titles, the consumer has no incentive to pay extra money for a DVDROM drive. Even after interactive software companies begin working
on new titles that take advantage c»f the capabilities of DVD, it will take12 to 18 months for them to bring c\ product to market. Until then, most
DVD titles will probably be nothing more than repackaged CD-ROM
titles. This will leave PC manufacturers with the task of convincing consumers that it is really fun to watch movies on a PC.

Infrastructure Development
Two of the important support industries for DVD are the postproduction
houses and the disc manufacturers.
• There are currently a limited number of postproduction studios withthe equipment necessary to convert a movie to the DVD format. However, a number of companies have ordered the expensive equipment
required for DVD encoding. Three companies are cooperating todevelop and market professional-use tools for DVD content and authoring systems. Sonic Solutions, Daikin Industries, and Toshiba Corporation. Companies that currently have the equipment to convert movies tothe DVD format or that have ordered the equipment are as follows:a California Video Center (CVC), which is backed by Toshiba/
Time-Warnera Laser Pacific Media Corporation
Q Crest Nationala Patapsco Design
Q Sunset Post>

MSAM-WW-FR-9602©1996Dataquest

July 8,1996

^8Consumer Multimedia Semiconductors and Applications Worldwide• Thomson Electronics
Q Warner Advanced Media Operations and Warner Brothers• It has been estimated that by the end of 1996 there will be 600 CD manufacturing plants worldwide. Half of these plants will come into operation in 1996. The cost of converting their CD stamping equipment toproduce DVD discs has created another potential barrier. The cost toconvert an existing CD machine has been estimated at $600,000 to$750,000. The cost of a new DVD plant could be between $10 million
and $15 million. These steep costs have created a question about theability to generate a profit in this business. Manufacturers such as Matsushita have jumped in to try to create a solution by building DVD manufacturing plants and selling them to companies willing to operatethem.

Hardware Costs and Consumer Price Points
As always, one of the critical elements for a successful consumer productis hitting the right price point.
• DVD manufacturers had origir\ally targeted a price of $499 for the first
DVD-Video players. However, the steep costs of manufacturing theseplayers pushed Toshiba to armounce two products at $599 and $699 fordelivery in September 1996. Thomson Consumer Electronics has continually stated its intention of meeting the $499 price goal, but it appears
that it may be subsidizing its early players to capture market share.
Thomson will rely on Matsushita for production of its early models
until it can establish its own DVD production capacity. Long experiencehas shown that price plays a key role in a consumer's purchase decision.
Manufacturers will be under strong pressures to reduce the costs of
their DVD players in order to stimulate the market. It is widely
expected that most companies will be subsidizing the cost of their early
DVD models in order to create attractive consumer price points that will
drive market growth.

Writing and Encoding Tectinology
Although today's DVD products are read-only devices, the long-term
growth path will rely on the development of writing and erasing
technologies.
• Writable DVD drives are expected to employ phase-change (PD) opticaldisc technology. With this technology, spots on the recording layer of adisc are changed from an amorphous to a crystalline state using the heatfrom a laser diode. A high temperature is used to erase, a lower one torecord, and very low power is used for reading. Toshiba has backed thistechnology because of its low dependence on wavelength, anticipating
the use of blue or green laser diodes in the future. However, some companies, including Sony, are supporting the use of magneto-optical technology (MO) for writing to DVD discs. They believe that MO is better
suited than phase-change to assure signal read-time margins using
signal-processing technologies such as partial response maximum likelihood (PRML). Issues such as these will come to the forefront as specifications for the DVD-WORM and DVD-RAM drives are examined.

l\^SAM-WW-FR-9602©1996 Dataquest

July 8,1996

DVD Challenges: Past and Future

19

The storage capacity of future DVD drives will be increased through theuse of shorter-lengtih blue/green diodes. In May 1996, Philips
Research's Photonics Research Lab and 3M demonstrated a 520nm
blue/green laser diode based on zinc selenide that can be used for DVD
applications. They claim that this laser would increase DVD disc storage by 60 percent. Currently, this laser diode only has a life of fourhours, but scientists believe they can develop a commercial product by
the turn of the century. A competitive solution is being developed by
Nichia Chemical Industries, which has produced a purplish-blue laserusing galliuni nitride that operates at 410nin. Philips has decided towork with both gallium nitride and zinc selenide because it is not possible to predict which solution will become feasible first.
Development of low-cost MPEG-2 and AC-3 encoder chips will benecessary for creation of a DVD-Video recorder. Currently, MPEG-2
encoder chipsets for DVD are very expensive, between $1,500 and$2,500, and are used in high-end professional production equipment.
An encoder product targeted at the mass consumer market will requirethat these costs be reduced to around $50. C-Cube Microsystems has
been the pioneering semiconductor player in the MPEG-2 encoder market. In 1996, IBM and LSI Logic announced their entry into the market,
and Mitsubishi Research is working with Futuretel to develop an
encoder chipset. All these companies will face the task of developing a
low-cost encoding solution for the DVD market. A DVD-Video player
with recording capability will present a true upgrade opportunity fromthe VCR and open up additional growth opportunities for this segmentof the DVD market.

MSAM-WW-FR-9602©1996Dataquest

July 8,1996

.

Chapter 3

Market and Production Forecast
The exciting opportunity presented by DVD technology has attracted ahost of manufacturers to tiie market. The product plans announced bymanufacturers that have declared their entry into the DVD arena aresummarized in Table 3-1.
During DVD's long, slow march to the market, the DVD publicity machine
has done a very effective job of raising consumer awareness of this new
product. A recent survey by Video Business magazine found that 45 percentof the survey respondents had heard of DVD. There were high awarenesslevels among the likely early adopter group of males between the ages of
18 and 45. Based on an analysis of consumer market behavior andexpected price trends, Dataquest has developed the market forecast for
DVD-Video players, DVD optical storage drives, and DVD PC decode/
encode add-in boards shown in Figure 3-1 and Table 3-2. This market forecast demonstrates Dataquest's optimism regarding the future of DVD. Our
projections show the combined annual market shipments of DVD-Video
players and DVD drives growing to over 33 million by the year 2000, making it one of the most successful products introduced in the 1990s. The
combined market shipments of all DVD products including decode/
encode add-in boards would drive factory revenue over $10 billion by theyear 2000.
Certainly, there are factors that could drive the market above or below thisforecast. If manufacturers are able to drive prices below Dataquest's expectations, this would stimulate higher growth. O n the other hand, if the creative community fails to develop software products in a timely fashionthat exploit the advanced capabilities of DVD, it will be hard to push the
installed base of CD-ROM users and VCR owners to a more expensive
platform. All the hurdles discussed earlier in this report could impact thegrowth of the DVD market.
Based on the predicted market growth. Figure 3-2 and Tables 3-3, 3-4, and3-5 present Dataquest's DVD production forecast. It should be noted thatthe enthusiasm and competitive drive of DVD manufacturers could leadto supply exceeding demand for DVD in the near term and cause some
temporary jolts and lurches in the market. It seems that every manufacturer is planning to capture over 50 percent of the market, and with 16
players expected to compete in the market over the next two years, there
could be some casualties. An examination of the forecast will also revealthat Dataquest expects products based on the DVD-WORM technology tofind transitional and niche markets. Although some manufacturers haveannounced plans to produce DVD-WORM products, many others areplanning to jump directly to DVD-RAM technology. With very little todifferentiate DVD-WORM from DVD-RAM in terms of cost, the DVDWORM market will be limited, and the growth opportunity for writable
DVD devices will move to DVD-RAM.

MSAM-WW-FR-9602©1996 Dataquest

21

CO

>

Table 3-1
DVD-Video Player and DVD-ROM Drive Manufacturerss

DVD-Video Player

^

CO
CD

o
ro

@
CO
CO
C7>
O

Manufacturer
Aiwa
Hifachi/Denon
JVC
LG Electronics
Matsushita

Supplying a DVDVideo Product?
Yes
Yes
Yes
Yes
Yes

Mitsubishi
MitsumiNEC
Onkyo
Philips
Pioneer

Yes

Samsung
Sanyo
SonyThomson Consumer
Electronics

Yes
Yes
Yes
Yes

ToshibaZenith

Yes
Yes

Yes
Yes
Yes
Yes

CO

X3
c=

CD

cn

Source: Dataquest (June 1996)

c»
CO
CO

(J>

ModeKs)

DVD-AIOO/DVDA300

Planned ProductIntroduction Date
Q4/97
Ql/97

Planned ProductIntroduction Price

Q4/96$500 - $700

Supplyin
ROM Pr
Yes
Yes
Yes

Yes
Yes

DVL-90/DVI.-700/
DV-500DVD-760U

RCA: RC-5200/
RC-5500P
PiwScan:PS8600P
SD-3006/SD-1006

Yes
Yes

Nov. 1996/Oct. 1996
Nov. 1996$599 - $699

Yes
Yes
Yes

$499/$599-$649$649-$699
Aug. 1996$699/$599

Yes

Market and Production Forecast

1

23

Figure 3-1
DVD Market Revenue Forecast
Millions of Dollars

12,000-S

10,000-DVD Decode/
Encode Board

8,000DVD(ROM/WORM/RAM)
Drive

6,000 4,000-

DVD-Video
Player2,000 -

1996

1997

1998

2000

1999

SS4D66

Source: Dataquest (June 1996)

Table 3-2
DVD Market Forecast (Thousands of Units)
DVD-Video Player
Playback Only
One-Time Record/Playback
Recorder and Player
Total

1996

1997

1998

1999

2000

60

750

2,750

5,350

6,983

0
0

125
0

500
725

330
2,313

60

0
0
750

2,875

6,575

9,626

150
0

1,450
150

3,700
600

9,200
750

0
150

0
1,600

500
4,800

4,850
14,80012,200880
10,42023,500

23

850

3,589

0
23

0
850

611
4,200

9,016
984

12,0783,217

10,00015,295DVD Optical Drive
DVD-ROM
DVD-WORM
DVD-RAM
Total
DVD Video Decode/Encode Board for PC
Decode Board
Encode/Decode Board
Total
Source: Dataquest (June 1996)

l\yiSAI\/l-WW-FR-9602©1996 Dataquest

July 8,1996

24

Consumer Multimedia Semiconductors and Applications Worldwide

Figure 3-2
DVD Production Forecast
Thousands of Units
25,000-20,000^

DVD-Video PlayerM

DVD (ROMA/VORM/RAM) DriveS

DVD Decode/Encode Board

15,000•10,000

5,000

1996

1998

1997

1999

2000

e^oe?

Source: Dataquest (June 1996)

Table 3-3
DVD-Video Player Production Forecast

i

1996

1997

1998

1999

2000

CAGR (%)
1996-2000

Units (K)Factory ASP ($)

360
428

1,495
394

3,631
348

5,798
299

6,769
264

108.2
-11.4

Factory Revenue ($M)
Semiconductor Content ($)

154
146

589
133

1,263
116

1,731
100

1,786
88

1 Semiconductor TAM ($M)

53

199

419

577

595

84.6
-11.9
83.4

325
555

422

299

510

445

180
190
62

215
168
71

133
148
44

NA
NA

-

-

0
0
0

0
0

1,535
538

NA
NA

826
166

3,215
462
1,487
147

255

473

Playback Only

One-Time Record/Playback
Units (K)Factory ASP ($)

-

-

0

Factory Revenue ($M)
Semiconductor Content ($)

0-0

Semiconductor TAM ($M)
Recorder and Player

0Units (K)Factory ASP ($)

0

Factory Revenue ($M)
Semiconductor Content ($)
Semiconductor TAM ($M)

0
0

0
0

0

NA
NA

NA

NA
NA
NA
(Continued)

MSAM-WW-FR-9602©1996 Dataquest

Julys, 1996i

25Market and Production Forecast

Table 3-3 (Continued)
DVD-Video Player Production Forecast
CAGR (%)
1996-2000

1996

1997

1998

1999

2000

360
428
154

1,495
394
589

7,755
357
2,772

10,283

146
53

133
199

3,956
365
1,443
122
481

116
903

108
1,112

116.9
-7.3
114.4

CAGR (%)
1996-2000

Total
Units (K)Factory ASP ($)
Factory Revenue ($M)
Semiconductor Content ($)
Semiconductor TAM ($M)

331
3,406

131.2
-6.2

NA = Not applicable
Source: Dataquest (June 1996)

Table 3-4
DVD Optical Drive Production Forecast

DVD-ROM
Units (K)Factory ASP ($)
Factory Revenue ($M)
Semiconductor Content ($)
Semiconductor TAM ($M)
DVD-WORM
Units (K)Factory ASP ($)
Factory Revenue ($M)
Semiconductor Content ($)
Semiconductor TAM ($M)

1996

1997

1998

1999

2000

295

2,230

4,891

9,646

12,778

230
68
81
24

211
470

186
909

165
1,589

146
1,870

156.5
-10.7
129.1

73
164

65
316

58
559

53
676

-10.1
130.7

'-

210
298
63

713
248
177

762

785

NA

103
22

85
61

220
168
76
58

193
151
68
54

NA
NA
NA
NA

7,091
232

11,335

NA

1,646

205
2,328

NA
NA

0,.r

e
©••

DVD-RAM
Units (K)-Factory ASP ($)
Factory Revenue ($M)

0
-

<3t

Semiconductor Content ($)

0
0

0
0

86
74

78
554

71
803

NA
NA

295

2,440

6,467

24,898

230
68
81
24

218
533

204

203.1
-6.7

1,316

17,500
194
3,402

76
185

70
451

67
1,170

Semiconductor TAM ($M)
Total
Units (K)Factory ASP ($)
Factory Revenue ($M)
Semiconductor Content ($)
Semiconductor TAM ($M)

^

-

•

•

864
266
230

175
4,348
62
1,532

182.9
-6.6
183.1

NA = Not applicable
Source: Dataquest (June 1996)

MSAM-WW-FR-9602©1996 Dataquest

July 8,1996

26

Consumer Multimedia Semiconductors and Applications Worldwide

Table 3-5
DVD-Video Decode/Encode Board/Chipset Production Forecast

Video Decode Board
Units (K)Factory ASP ($)
Factory Revenue ($M)
Semiconductor Content ($)
Semiconductor TAM ($M)
Video Encode/Decode Board
Units (K)

1996

1997

1998

1999

2000

CAGR (%)
1996-2000

40

1,623
218
354

4,603
184
848

9,628

12,787

324.2

155
1,492

134
1,712

-15.1
260.1

77

68
311

57
550

49
632

-12.6
270.7

258
10
85
3

Yld

758

1,480

3,824

NA

0
-

0
-

365
277

303
449

264

NA
NA

0
0

0
0

121
92

108
159

40

1,623

5,361

11,108

Factory Revenue ($M)

258
10

218
354

210
1,125

175
1,941

Semiconductor Content ($)

85

77

64

Semiconductor TAM ($M)

3

126

75
403

Factory ASP ($)
Factory Revenue ($M)
Semiconductor Content ($)
Semiconductor TAM ($M)
Total
Units (K)Factory ASP ($)

T.-

^

•

709

1,008
94
361
16,611
164
2,720
60
993

NA
NA
352.8
-10.7
304.3
-8.4
315.0

NA = Not applicable
Source: Dataquest (June 1996)

MSAM-WW-FR-9602©1996 Dataquest

July 8,1996

Chapter 4

The DVD Semiconductor Opportunity,
The block diagram shown in Figure 4-1 illustrates the major semiconductor elements in a DVD product. As shown in this illustration, there are significant portions of a DVD-ROM drive and DVD-Video player that arecommon. This commonality is one of the strengths of the DVD standards.
The only additional component needed for a DVD-ROM drive is a SCSI or
EIDE interface. In a PC application, the only additional component needed
for a DVD-Video decode board is a PCI interface. Table 4-1 provides
greater detail of the various DVD functional blocks.
The semiconductor community has invested in DVD technology early.
Although the early DVD players that come to market will have Uttle
integration, they will be replaced in a matter of a few months by productsthat will take advantage of integrated chipsets that have already beenarmounced. The second-generation chipsets will be ready before the firstgeneration systems have even shipped! Figure 4-2 presents the projected
integration trend for semiconductors targeted at DVD. Semiconductor
manufacturers have outlined aggressive integration plans for DVD andother products that are based on MPEG-2 and AC-3 compression technology. Some companies have even presented plans to develop single-chip
DVD processing solutions, Dataquest stops short of this level of integration because of the belief that there are no cost or performance advantages
to be gained from integrating the channel-processing function and audio/
video codec.
Announced chipsets for audio and video processing, the servo processor,
and some charmel demodulation functions will be based on a 0.35-micron
CMOS process, which will migrate to 0.25 micron CMOS over the following two years. Other components in the DVD-drive electronics will bebased on bipolar technology. As chipsets move along the integration path,a growing opportunity for BiCMOS will develop.

Semiconductor Market Forecast
Figures 4-3 and 4-4 and Tables 4-2, 4-3, and 4-4 present the semiconductor
forecast for chips used in DVD applications. This forecast is based on the
DVD production forecast and an analysis of semiconductor content andchip pricing trends. Dataquest forecasts the total DVD semiconductor
market to grow from less than $80 million in 1996 to over $3,6 billion injust four years.

\

MSAM-WW-FR-9602©1996 Dataquest

27

CO

>

Figure 4-1
DVD-Video Player Block Diagram

5
I

-n
33
I

a
ro

DVD-Vide. DVp-^deo_ De

Common to DVD-ROM and DVD-Video Player

CD
CJ>

"T

iDlsk^CD Data
Processor

Audio De
(AC-3. M
Linear P

J-

Data Processor
Read Channel
Demodjiator
ECC

Servo
Processor

@
(O
CO

o>
o

I

01
f-llU

SRAM
256KB

ROM

I
For DVD-ROM Only,
Add EIDE or SCSI Interface
><
<»
CO
CO

ai

Source: Dataquest (June 1996)

DRAM
4Mb

MCU
(16-bit)I

SystemStreamDecoderVideo
Decoder
MPEG-2

I

DRAM/
SDRAM
16Mb

I

Subptcture
Decoder

V
Mix
il

Fr
Co

IT

CPU BusFor DVD-Video
Add PCThe DVD Semiconductor Opportunity

29

Table 4-1
Functional Description of Major DVD Elements
Functional Block

Description

Optical Pickup/Laser Diode635/650nin laser diode, pin diode, and current-tovoltage (I/V) conversion

RF Amplifier

Focus and tracking error detector, search signal generator, automatic gain control (AGO and equalization, and laser diode automatic power control(APC)

Servo Electronics

Search control and servo control for focus and tracking actuators

Data Processor

DVD: EFM Plus demodulator, sync/ID detector,
Reed-Solomon error correction code (ECC), anddescrambler
CD: data separator, EFM demodulator, ECC, interpolation, and muting

Audio Decoder

NTSC: AC-3 and linear PCM, plus optional standard
audio decoding
PAL: MPEG and linear PCM, plus optional standard
audio decoding
Sony/Philips digital interface (S/PDIF) formatterVideo Decoder

MPEG-2 video decoding

Subpictvire Decoder, Mixer

Subpicture decoding and on-screen display (OSD)
generator, audio/video synchronization, video
image resizing, and graphics overlay and mixing

Source: Dataquest (June 1996)

MSAM-WW-FR-9602©1996 Dataquest

July 8,1996

CO>

Figure 4-2
Semiconductor Integration Trends in DVD

1996

CO
CD
CD
tV3

1997
\

Video DAC

©
—A

CO
CO
CO

a
Si

Audio DACMCU.
Audio/Video Decode

Subpicture Decoder/
Mixing

NTSC/PAL Encoder

1999

Video Encoder

Video Decoder

Audio Decoder

1996

jm and Mixing^

Audio/Video Decodeand Mixing^ ^Audio Encoder

r*
h.

w
k

^

Video Encode DAC

NTSC/PAL CODEC
ADC/DAC

Audio DAC

Audio DAC/ADC

MCU^

w Audio/Vide

h MCU

h MCU
w\

w

(U

.a
c
CD
C/)

Demodulator/ECC

Modulation
DVD Data processing

Read Channel

Single-Chip Read
Processor

CD-Data Processor

Servo/CD-Data
Processor

Servo Processor

OO
CD
CO
C»

Write Channel- ^ ^^ ^ - . ^ ^^ ^JfSingle-Ch
Read/Writ^ ^ ^ ^^^^

R/FAMP^ RFAmp^ RFAmpWhOptical Pickup (3)^ Optical Pickup (3)h Optical Pickup (3)^ Optical Pic^ Motor Drivers (2)h Motor Drivers (2)kMotor Drivers (2)><Aucli{Q/V{((|9Source: Dataquest (June 1996)

w
w

w

w

RFAmp

w
w

Motor DrivThe DVD Semiconductor Opportjnity

31

Figure 4-3
DVD Semiconductor Market Forecast by Platform
Millions of Dollars
4,000DVD Video Encode/

S Decode for PC

DVD Optical Drives
DVD-Video Players

1996

1997

1998

2000

1999

354070Source: Dataquest (June 1996)

Figure 4-4
DVD Semiconductor Market Forecast by Device Type
Millions of Dollars

3,500 3,000-

y^7^2,500 -S

OthersH

Optical Pickup/Laser Diodem

Servo System

1

Memory[ID MCU1^^^^^yj^^^^H

2,000 -

EIDE/SCSI
and PCI Interface

1,500-

1—1 Channel Decode/'—' Encoder and ADC/DAC

1,000-r-j'^

NTSC/PAL Decode/
Encoder andADC/DAC

H

Audio ADC/DAC^•^

Audio/Video Decode/
Encode50001996

(
1997

I
1998

1
1999

m

2 0 009& (071

Source: Dataquest (June 1996)

MSAM-WW-FR-9602©1996 Dataquest

July 8,1996

32

Consumer l\/lultimedia Semiconductors and Applications Worldwide

Table 4-2
DVD-Video Player Semiconductor Market Forecast (Dollars)
1996

1997

1998

1999

2000

CAGR(%)
1996-2000

Units (K)

360

1,495

3,631

5,798

6,769

108.2

Total Semiconductor Content

146.2

133.3

115.5

99.5

87.9

-11.9

40.0
4.5
6.4
25.0

37.0
4.2

32.0
3.7

22.0

6.0
23.0

5.5
20.0

26.0
3.2
4.7

-13.9
-11.2
-11.1

4.6
22.2
12.0

Playback Only

Audio/Video Decode
Audio DACNTSC/PAL Encoder and DAC
Channel Decode

17.0

2.8
4.0
15.0

-12.0,

4.0
18.8

3.5
16.2

3.0
14.1

-12.0
-13.6

10.5
9.0

10.2
8.5

10.0
8.0

-6.3
-9.6

8.0
2.2

7.0
2.0

-12.6

MCU

5.0

DRAM
SRAM and ROM
Servo System

25.3
13.0
12.0

10.5

Optical Pickup/Laser Diode

12.0

11.0

Others

3.0

2.8

9.5
2.5

52.6
14.4

199.3

419.4

576.9

595.0

83.4

55.3
6.3
9.0
34.4

116.2
13.4

150.8
18.6

79.3
84.9

20.0
72.6

6.9
33.2

14.5
68.3
38.1
32.7

27.3
98.6
20.3
93.9
59.1

148.9
19.0
27.1
101.5
20.3
95.4

83.3
79.9

67.7
54.2

95.0
88.2

47.4

Total Semiconductor Market ($M)
Audio/Video Decode ($M)
Audio DAC ($M)
NTSC/PAL Encoder & DAC ($M)
Chaimel Decode ($M)
MCU ($M)
DRAM ($M)
SRAM and ROM ($M)
Servo System ($M)

1.6
2.3
9.0
1.8
9.1
4.7

-9.6

85.1
83.3

4.3

17.9
15.7

4.3
1.1

16.4
4.2

34.5

49.3
46.4

9.1

12.8

13.5

82.0
88.2

Units (K)

-:

'

325

422

299

NA

Total Semiconductor Content
Audio/Video Decode/Encode

0
0

0
0

168.0
58.0

148.2

NA
NA

Audio ADC/DAC
NTSC/PAL Decode/Encoder &ADC/DAC
Charmel Decode/Encode

0
0

0
0

189.6
65.0
5.2
9.5

4.5
8.6

4.0
!.'?>

NA
NA

0
0

0
0

27.0
3.5

23.0
3.0

NA
NA

0
0

0
0

32.0
4.0
33.4
16.0

29.0
15.3

25.6
14.7

NA
NA
(Continued)

Optical Pickup/Laser Diode ($M)
Other ($M)
One-Time Record/Playback

MCU
DRAM
SRAM and ROM

MSAI\/l-WW-FR-9602©1996Dataquest

50.0

Julys, 1996

33

The DVD Semiconductor Opportunity

Table 4-2 (Continued)
DVD-Video Player Semiconductor Market Forecast (Dollars)
1996

1997

1998

1999

2000

CAGR (%)
1996-2000

Servo System
Optical Pickup/Laser Diode

0
0

0
0

9.0
12.5

Others

0

0

3.0

8.5
10.8
2.8

8.0
9.6
2.5

NA
NA
NA

Total Semiconductor Market ($M)
Audio/Video Decode/Encode ($M)

0
0

0
0

61.6
21.1

70.9
24.5

NA
NA

Audio ADC/DAC ($M)
NTSC/PAL Decode/Encoder andA D C / D A C ($M)

0
0

0
0

1.7
3.1

1.9
3.6

44.3
14.9
1.2

Channel Decode/Encode ($M)
MCU ($M)

0

0
0

10.4

11.4

1.3

0
0

10.9
5.2

1.5
12.2

0
0

2.9
4.1

0

1.0

6.5
3.6
4.6
1.2

.-

DRAM ($M)
SRAM and ROM ($M)
Servo System ($M)
Optical Pickup/Laser Diode ($M)
Others ($M)

0
0
0
0
0
0

Recorder and Player
Units (K):-

Total Semiconductor Content
Audio/Video Decode/Encode

0
0

-

•

0
0
0

2.3
6.9
0.9
7.6
4.4
2.4

NA
NA
NA
NA
NA
NA

2.9
0.7

NA
NA
NA

1,535

3,215

NA

0

166.2

147.1

NA

58.0
4.5
8.6

50.0
4.0

NA
NA

7.8

NA

Audio A D C / D A C
NTSC/PAL Decode/Encoder and
ADC/DAC
Charmel Decode/Encode

0
0

0

0
0
0

0

0

0

27.0

23.0

NA

MCU
DRAM

0
0

0

0
0

3.5
25.0

3.0

NA
NA

SRAM and ROM
Servo System
Optical Pickup/Laser Diode
OthersTotal Semiconductor Market ($M)
Audio/Video Decode/Encode ($M)
Audio A D C / D A C ($M)
NTSC/PAL Decode/Encoder andA D C / D A C ($M)
Charmel Decode/Encode ($M)
MCU ($M)

0

22.0
14.7

NA
NA

0
0

0
0

0
0

15.3
8.5

0
0

0
0

0
0

13.0
2.8

8.0
12.1
2.5

0
0
0

0

0

255.0

473.0

0
0

0
0

160.8
12.9

0

0

0

89.0
6.9
13.2

25.1

NA

0

0

0

41.4

74.0

NA

0

0

0

5.4

9.6

NA
NA
NA
NA
NA

NA
(Continued)

IVISAM-WW-FR-9602©1996Dataquest

July 8,1996

34

Consumer Multimedia Semiconductors and Applications Worldwide

Table 4-2 (Continued)
DVD-Video Player Semiconductor Market Forecast (Dollars)
CAGR(%)
1996-2000

1996

1997

1998

1999

DRAM ($M)
SRAM and ROM ($M)

0
0

0
0

38.4

Servo System ($M)
Optical Pickup/Laser Diode ($M)

0
0

0
0

0
0
0
0

2000
70.7

23.5
13.0
19.9

47.3
25.7
38.9

NA
NA
NA
NA

Others ($M)

0

0

0

4.3

8.0

NA

360

1,495

3,956

7,755

10,283

131.2

146.2

133.3

116.4

108.2

40.0
4.5

37.0
4.2

121.6
34.7

34.1

3.8

6.4

6.0

5.8

3.5
5.7

31.6
3.2

-7.3
-5.7

25.0
5.0
25.3

23.0

21.0

4.6
22.2

13.0
12.0

12.0
10.5

Optical Pickup/Laser Diode
Other

12.0
3.0

11.0
2.8

4.0
20.0
11.0
9.0
9.7

Total Semiconductor Market ($M)
Audio/Video Decode/Encode ($M)

52.6
14.4

Audio ADC/DAC ($M)

Total
Units (K)
Total Semiconductor Content
Audio/Video Decode/Encode
Audio ADC/DAC
NTSC/PAL Decode/Encoder and
ADC/DAC
Channel Decode/Encode

-8.1

5.3

-4.6

19.5
3.5
18.6

17.7

-8.2

3.0
16.9

-12.0
-9.6

11.5
8.5

-2.8
-9.6

2.5

9.1
2.4

11.6
8.0
8.7
2.2

199.3

481.0

902.9

1,112.2

114.4

137.3

1.6

55.3
6.3

15.1

264.2
27.4

324.6
33.0

117.9
112.5

NTSC/PAL Decode/Encoder and
ADC/DAC ($M)
Charmel Decode/Encode ($M)

2.3

9.0

23.1

44.1

54.5

120.5

9.0

34.4

83.0

151.4

182.4

112.2

MCU ($M)
DRAM ($M)

1.8
9.1

6.9
33.2

15.8

27.1

30.8

144.5

173.8

SRAM and ROM ($M)
Servo System ($M)

4.7
4.3

17.9
15.7

79.1
43.3
35.6

103.5
109.0

89.1
65.9

Optical Pickup/Laser Diode ($M)
Others ($M)

4.3
1.1

16.4
4.2

38.6

70.9
18.2

119.3
82.3
89.2

MCU
DRAM
SRAM and ROM
Servo System

10.1

22.3

-7.8
-7.8

124.7
108.9
113.1
113.2

NA = Not applicable
Source: Dataquest (June 1996)

MSAM-WW-FR-9602©1996 Dataquest

July 8,1996

35

Tlie DVD Semiconductor Opportunity

Table 4-3
DVD Optical Drive Semiconductor Market Forecast (Dollars)
1996

1997

1998

1999

2000

CAGR (%)
1996-2000

DVD-ROM
Units (K)

295

2,230

4,891

9,646

12,778

156.5

Total Semiconductor Content

80.9

73.4

64.6

57.9

52.9

-10.1

Channel Decode
EIDE/SCSI Interface

25.0
6.5

23.0
6.2

20.0
5.9

17.0
5.5

15.0
5.2

-12.0
-5.4

MCU
DRAM
SRAM and ROM
Servo System

5.0
5.9

4.6
4.7

4.0
4.4

3.5

3.0

13.0
12.0

12.0
10.5

10.5
9.0

4.0
10.2

12.0
1.5

11.0
1.4

9.5
1.3

8.5
8.0
1.2

3.6
10.0
8.0

-12.0
-11.6

23.9

163.7

7.4
1.9

51.3
13.8

316.0
97.8
28.9

558.5
164.0
53.1

676.0
191.7
66.4

MCU ($M)
DRAM ($M)

1.5
1.7

10.3
10.5

3.8
3.5

26.8
23.4

33.8
38.6
98.4

44.0

3.5

24.5

46.5

82.0
77.2

38.3
46.0
127.8
102.2

125.8
126.7

SRAM and ROM ($M)
Servo System ($M)
Optical Pickup/Laser
Diode ($M)
Others ($M)

19.6
21.5
51.4

89.4

124.2

0.4

3.1

6.4

11.6

14.1

137.4

Units (K)

-

210

713

762

785

NA

Total Semiconductor Content
Charmel Decode/Encode

0
0

102.7

85.2

42.0
6.2

68.3
23.0
5.2

MCU

0
0

DRAM
SRAM and ROM
Servo System
Optical Pickup/Laser Diode

0
0
0
0

4.6
4.7
19.0

4.0
4.4

75.9
27.0
5.5
3.5

NA
NA

EIDE/SCSI Interface

32.0
5.9

4.0
15.3

3.6
14.7

8.5
10.8

Others

0

8.0
9.6
1.2

Optical Pickup/Laser Diode
OthersTotal Semiconductor Market ($M)
Charmel Decode ($M)
EIDE/SCSI Interface ($M)

7.0
1.1

-6.3
-9.6
-12.6
-7.5
130.7
125.8
142.6

140.3
131.8

DVD-WORM

10.5
14.0
1.7

16.0
9.0
12.5
1.4

1.3

3.0

NA
NA
NA
NA
NA
NA
NA
(Continued)

MSAI\/l-WW-FR-9602©1996Dataquest

July 8,1996

36

Consumer Multimedia Semiconductors and Applications Worldwide

Table 4-3 (Continued)
DVD Optical Drive Semiconductor Market Forecast (Dollars)

Total Semiconductor Market ($M)
Channel Decode/Encode ($M)
EIDE/SCSI Interface ($M)
MCU ($M)

i

1996

1997

1998

1999

2000

CAGR (%)
1996-2000

0

21.6
8.8

60.7

57.9

22.8
4.2

20.6
4.2
2.7

53.6
18.1
4.1
2.4

NA
NA
NA
NA

2.8
11.5
6.3
7.5

NA
NA
NA
NA

0
0
0

DRAM ($M)
SRAM and ROM ($M)

00Servo System ($M)
Optical Pickup/Laser Diode
($M)
Others ($M)

1.3
1.0

2.9

3.0
11.7

0

1.0
4.0
2.2

3.1
11.4
6.4

0

2.9

8.9

6.5
8.2

0

0.4

1.0

1.0

0.9

NA

DVD-RAM
Units (K)

-

-

864

7,091

11,335NA

Total Semiconductor Content

0

0

86.1

78.1

70.8

Channel Decode/Encode

0
0

0
0

30.0
5.9

27.0
5.5

23.0
5.2

NA
NA
NA

0
0

0
0

4.0
4.4

3.5
4.0

0
0

0
0

15.8
9.0

15.3
8.5

3.0
3.6
14.7
8.0

NA
NA

12.1
1.2

NA
NA

802.5
260.7

EIDE/SCSI Interface
MCU
DRAM
SRAM and ROM
Servo System
Optical Pickup/Laser Diode
Others

0
0

0
0

15.5
1.5

13.0
1.3

Total Semiconductor Market ($M)

0

0

74.4

553.8

Channel Decode/Encode ($M)
EIDE/SCSI Interface ($M)

0
0

0
0

25.9
5.1

191.5
39.0

MCU ($M)

00

DRAM ($M)

0

0

3.5
3.8

24.8
28.4

SRAM and ROM ($M)
Servo System ($M)
Optical Pickup/Laser Diode
($M)
Others ($M)

0
0

0
0

13.6
7.8

108.5

0

0

13.4

60.3
92.2

0

0

1.3

9.2

NA
NA

i

NA

58.9

NA
NA

34.0

NA

40.8
166.6
90.7

NA
NA

137.2

NA

13.6

NA

NA

(Ck>ntinued)i
MSAM-WW-FR-9602©1996Dataquest

Julys, 1996

The DVD Semiconductor Opportunity

37

Table 4-3 (Continued)
DVD Optical Drive Semiconductor Market Forecast (Dollars)
1996

1997

1998

1999

2000

CAGR(%)
1996-2000

Units (K)

295

2,440

6,467

17,50024,898142.8

Total Semiconductor Content

80.9

75.9

69.7

66.9

-6.6

Channel Decode/Encode
EIDE/SCSl Interface

25.0
6.5

24.6
6.2

22.7
5.9

21.5
5.5

61.5
18.9
5.2

MCU

5.0
5.9

4.6
4.7

4.0
4.4

3.5
4.0

3.0
3.6

13.0
12.0

12.6

11.8
9.0

12.5
8.5

12.3
8.0
9.4

Total

DRAM
SRAM and ROM
Servo System

10.5

12.0
1.5

11.3
1.4

10.6
1.3

10.1
1.2

185.2

451.0
146.5
38.2

1,170.2

Channel Decode/Encode ($M)
EIDE/SCSI Interface ($M)

23.9
7.4
1.9

MCU ($M)
DRAM ($M)

1.5
1.7

Optical Pickup/Laser Diode
OthersTotal Semiconductor Market ($M)

SRAM and ROM ($M)
Servo System ($M)
Optical Pickup/Laser
Diode ($M)
Others ($M)

60.1
15.1
11.2

376.0
96.2
61.2

-6.8
-5.4
-12.0
-11.6
-1.4
-9.6
-5.9

1.1

-6.5

1,532.1
470.4

183.1
182.6
186.7

129.5
74.7

3.8
3.5
3.5

30.8
25.6

25.9
28.5
76.4
58.2

27.5

68.8

177.6

234.1

166.8
167.9
198.9
173.9
185.2

0.4

3.5

8.7

21.8

28.6

183.5

11.5

218.5
148.7

89.6
305.9
199.2

70.0

NA = Not applicable
Source: Dataquest (June 1996)

MSAM-WW-FR-9602©1996 Dataquest

Julys, 1996

38

Consumer l\/lultimedia Semiconductors and Applications Worldwide

Table 4-4
DVD Video Decode/Encode Board/Chipset Semiconductor Market Forecast (Dollars)
1996

1997

1998

1999

2000

CAGR(%)
1996-2000

40

1,623

4,603

9,628

12,787

324.2
-12.6
-13.9
-11.2

Video Decode Board
Units (K)
Total Semiconductor Content

84.7

77.4

67.5

57.1

49.4

Audio/Video Decode
Audio DAC

37.0
4.2

32.0
3.7

26.0
3.2

NTSC/PAL Encoder & DAC

40.0
4.5
6.4

6.0

4.7

PCI Interface
DRAM
SRAM and ROM

5.0
25.3
2.0

4.8
22.2

5.5
4.5

22.0
2.8
4.0
4.0
14.1
1.4

-13.6
-8.5

Others

1.5

1.1

-7.5

549.8
250.3

631.7

270.7

281.3

30.8
45.3
41.4

35.8
51.1

265.3
276.7
277.1

51.1
180.3

301.2
266.5

11.6

17.9
14.1

288.0
292.5

1.8
1.4

18.8
1.7
1.3

4.3
16.2
1.5
1.2

-11.1
-5.4

125.6
60.0

310.7

6.8
9.7

17.0
25.3

7.8
36.0

20.7
86.5

2.9
2.3

7.8
6.0

-

758

1,480

3,824

NA

0
0

0
0

121.3
65.0

107.7

94.4

58.0

50.0

NA
NA

Audio A D C / D A C
NTSC/PAL Decode/Encoder and
ADC/DACPCI Interface
DRAM

0

5.2
9.5

4.5

4.0

NA

0

0
0

8.6

7.8

NA

0
0

0
0

4.3
29.0

4.0

NA
NA

SRAM and ROM

0

0

4.5
33.4
1.7

Others00

2.0

Total Semiconductor Market ($M)
Audio/Video Decode ($M)
Audio DAC ($M)
NTSC/PAL Encoder & DAC ($M)

3.3
1.6
0.2
0.3

PCI Interface ($M)
DRAM ($M)

0.2

SRAM and ROM ($M)
Others ($M)

0.1
0.1

1.0

147.3

156.0
14.4

Video Encode/Decode Board
Units (K)
Total Semiconductor Content
Audio/Video Decode/Encode

•

•

*

1.5
1.8

25.6
1.4
1.6

NA
NA
(Continued)

MSAM-WW-FR-9602©1996Dataquest

July 8,1996

The DVD Semiconductor Opportunity

39

Table 4-4 (Continued)
DVD Video Decode/Encode Board/Chipset Semiconductor Market Forecast (Dollars)

Total Semiconductor Market ($M)
Audio/Video Decode/
Encode ($M)
Audio ADC/DAC ($M)
NTSC/PAL Decode/Encoder &A D C / D A C ($M)
PCI Interface ($M)
DRAM ($M)
SRAM and ROM ($M)
Others ($M)

1996

1997

1998

1999

2000

CAGR (%)
1996-2000

0
0

0
0

92.0
49.3

159.4
85.8

361.0
191.2

NA
NA

0
0

0
0

3.9
7.2

6.7
12.7

15.3
29.8

NA
NA

0
0

0
0

3.4
25.3

0
0

1.3
1.5

15.3
97.9
5.4

NA
NA

0
0

6.4
42.9
2.2
2.7

6.1

NA
NA

40

1,623

5361

11,108

16,611

352.8

84.7

77.4

40.0

37.0
4.2

75.1
36.7

63.8
30.3

59.8
28.4

-8.4
-8.2

3.9
6.1

3.4
5.2

3.1
4.9

-9.1
-6.6

4.3
17.9
1.5
1.3

4.0
16.7
1.4
1.2

-9.8
-8.5
-5.1

Total
Units (K)
Total Semiconductor Content
Audio/Video Decode/Encode
Audio A D C / D A C
NTSC/PAL Decode/Encoder and
ADC/DACPCI Interface
DRAM
SRAM and ROM
Others

4.5
6.4

6.0

-5.4

5.0
25.3
2.0
1.5

4.8
22.2
1.8
1.4

4.5
20.9
1.7
1.4

Total Semiconductor Market ($M)

3.3

125.6

402.6

709.2

992.6

315.0

Audio/Video Decode/Encode($M)
Audio A D C / D A C ($M)

1.6

60.0

196.6

336.2

472.5

315.8

0.2

6.8

21.0

37.5

51.1

311.8

0.3

9.7

32.5

58.0

81.0

323.0

0.2

7.8

24.1

47.8

66.4

328.3

1.0
0.1

36.0
2.9
2.3

111.8
9.1

198.9
16.7

278.2

308.5
314.2

7.5

14.2

NTSC/PAL Decode/Encoder &A D C / D A C ($M)
PCI Interface ($M)
DRAM ($M)
SRAM and ROM ($M)
Others ($M)

0.1

23.3
20.2

329.6

NA = Not applicable
Source: Dataquest (June 1996)

lViSAiVI-WW-FR-9602©1996 Dataquest

July 8,1996

40

Consumer Multimedia Semiconductors and Applications Worldwide

Semiconductor Suppliers
Although a number of semiconductor companies have announced plans
to develop and market chips for the DVD market, there are still many
companies that have not made formal announcements of their productplans. Table 4-5 presents a matrix of semiconductor products and chipcompanies that Dataquest expects to enter the DVD market. Many of thecompanies in this table have not actually announced plans for DVD. However, based on their participation in other mass storage markets, including
optical drives and rigid disk drives, Dataquest believes they have a strong
possibility of entering the DVD chip market.
Motorola, Hyundai, and Zoran have all revealed detailed DVD chipsets.
The following sections provide a brief description of their products. Following these descriptions is a brief outiine of DVD semiconductorannouncements from other companies.
IVlotorola
Motorola's DVD chipset solution, shown in Figure 4-5, shows an advanced
stage of integration in both the channel-processing and audio/videoprocessing sections of a DVD design. Its product is also well designed totarget both the DVD-ROM and DVD-Video player segments. WhUe theschematic in Figure 4-5 shows a complete design for a DVD-Video player,
the Rabbit chip can be used separately to create a highly-integrated channel processing solution for a DVD-R(DM drive. The Rabbit chip integrates
all ti\e major functions for a DVD-ROM drive, from the servo control to the
HIDE interface, in a single mixed-signal chip. The company has also leveraged this design to provide a solution for the current high-volume CDROM market. A subsection of the Rabbit chip can be used to provide an
integrated CD-ROM chip called the Raccoon.
Adding the Coyote chip to the Rabbit chip enables the creation of a complete DVD-Video player solution. In addition to providing support for all
the standards for DVD, MPEG-2, AC-3, and linear PCM, the Coyote also
performs MPEG-1 processing support for Video CD players. It is also notable that as of June 1996, Motorola was the only company besides Zoran tohave Dolby Labs AC-3 certification. In a recent move. Motorola licensed
Macrovision's copy-protection technology. This would appear to position
Motorola so it can move quickly with potential enhancements to its DVD
solution, depending on the outcome of copyright protection negotiations.
With the combination of the Rabbit, Coyote, radio frequency (Rf) amplifier, 16-bit microcontroller (MCU), and memory products that.Motorola
can supply, the company is almost a complete one-stop solution for DVD
manufacturers.
Hyundai
The PrAVO decoder from Hyundai leverages earlier designs developed
for the set-top box market. Hjoindai claims that over 80 percent of thefunctional cells used in its DVD decoder, shown in Figure 4-6, havealready been proven in commercial products such as the HDM8200
MPEG-2 decoder and HDM8500 demodulator families for the set-top box
market. At the core of Hyundai's chip is a micro-SPARC RISC processor
that offers 50 mips of processing power. The architecture of this chip and

MSAM-WW-FR-9602©1996 Dataquest

July 8,1996

The DVD Semiconductor Opportunity

41

Table 4-5
Announced and Potential DVD Chip Supplier Matrix
Semiconductor
Manufacturer
Adaptec
AllegroAnalog Devices
C-CubeCirrus Technologies
GEC Plessey
HitachiHyundaiIBM
IMP
LSI Logic
Lucent Technologies
Matsushita
MicroLinear
Mitsubishi
1 Motorola
National Semiconductor
Oak Technology
Philips
Pioneer
Q Logic
Samsung
Sanyo
SGS-Thomson
Sharp
Silicon Systems
SihconixSony
Symbios
Texas Instruments
Toshiba
VLSI Technology
Zoran

Aimounced
or Expected
Supplier
E

Video/
Audio
Laser
Processing Diode

X
X

X

X

X
X
X

X
X
X

X
X
X

X
X

1
A
E
A
E
A
A
E
A
A
A
E
E
A
A
A
A
E
E
E
A
A
A
A

HIDE/
SCSI
Interface
X

M

m
E
A
E
E
A
A
A

ChannelServo
Decode/Electronics Encode

X
X
X

X

X
X
X
X
X

X

X
X
X

X
X
X
X

X
X

X

X

X

X

X

X
X
X
X
X
X

X
X
X
X
X

X

X

X

X

X
X
X
X

X
X
X
X
X

X

X
X

X
X

X

Note: A = announced supplier, E = expected supplier
Source: Dataquest (June 1996)

MSAM-WW-FR-9602©1996 Dataquest

July 8,1996

(yj

>

Figure 4-5
Motorola DVD Player Chipset

CD
CD
CD
tSD

A

D/A Inte

Pickup Data
RF Amp.

D-oowith Digital Filter,
3
Sledge^ttndle1

CD-DA Decoder

Focus
Tracking

CD-ROM/DVD
Decoder, Digital

1 Mb or 4Mb
RAM

PLL and Servo
ControlServo Amp,@

Rabbit

CD
CD

a>

a
cu
f—I-

•^^-o-i

MPEG-2 Video a
Audio (Musicam a
Dolby AC-3) Decowith SubPict Decoand OSD

cu
c=

CD

cn

\
IR

Front Panel
Control and Display

Coyote4Mb or 16Mb
RAM

I

1
Timing andControl

v;
oo
CD
CD

a>

Source: Motorola

Digital Video Encod(NTSC/PAL)
ROM

ROM

MCU {IWiit)

CO>

Figure 4-6
Hyundai PrAVO DVD Chip Solution

I

-n
30
I

<o
a>
o
ro

OSD Character
Generator Chip

DRAM
BItstream Management

Optional

PCM Audio

@
(O

CO

HDM8111P\

nMPEG-2ECC/
Demodulationa>oSeria!

lU(U
l - • •PrAVO
DecoderHost CPU or
Bus Interface

8
SPDIF Audio

c
CD
(/]

T
ROM

Servo Motor andHousing Optical
Pickup Head

oo
CO
CO

o>

YUV
Digital Video

Source: HyundaiRAM

16Mb DRAM PAL/NTSC

44

Consumer Multimedia Semiconductors and Applications Worldwide

the support offered by important software tools help to simplify the overall system design task. For example, the PrAVO is programmable using
the high-level C programming language, which will help reduce time tomarket, and the chip offers a glueless interface to both Intel and Motorola
bus types. Samples of the PrAVO will be available in July 1996, with volume production planned for October 1996. Cost of the chip in production
quantities will be under $45.
Zoran
The DVD4PC from Zoran is actually a reference design that implements acomplete DVD decode solution on a PCI add-in card. At the heart of thedesign shown in Figure 4-7 are a two-channel AC-3 chip, the ZR38521,
from Zoran and an MPEG-2 video decoder from SGS-Thomson, theS113520A. At the time AC-3 was selected for the audio decoding in the
final DVD specification, Zoran was the only Dolby-approved manufacturer of an AC-3 chip. AC-3 chips were actually developed as part of atechnology partnership between Dolby Labs and Zoran beginning in 1991.
The DVD4PC solution offers the advantage of fast time to market, since it
is based on chips from the current high-volume producers of AC-3 and
MPEG-2 chips, Zoran and SGS-Thomson. The availability of a current
Dolby-approved solution is significant because in the Dolby certification
process a chip must pass strict tests at both the system and chip level,
which can be a lengthy process. While other manufacturers can claim thatthey offer AC-3 solutions, they must pass this certification process before
they can actually supply chips.
Zoran's track record in the audio decoder market is very impressive, withan established presence in the Japanese company-dominated audio electronics sector. Zoran claims that 11 Japanese manufacturers are using its
AC-3 chip in their audio products and that its six-channel surround-soundchip has also been designed into a number of first generation DVD-Video
players. Over 5,000 theaters also offer AC-3 audio based on Zoran products. Zoran is working to migrate from a high-performance/high-end
product market to a high-performance/high-volume product. The
DVD4PC reference board is targeted at the PC add-in decoder card market. Zoran has announced that the ZR38521 is available now for $22 inquantities of 10,000. Zoran also supplies a PCI controller for this design,
the ZR36120.
Other Announced Plans from Chip Suppliers
Information on DVD semiconductor armouncements from other chip companies is presented below. These companies, along with Motorola, Zoran,
Hyundai, LSI Logic, and VLSI Technology, have been working with
DVD manufacturers for many months leading up to the launch of DVD
products.
Philips

The company is offering a DVD chipset that includes a servo IC, a readchannel IC, motor controllers, and an MPEG-2 audio/video decoder. Its
current audio/video decoder, the SAA7201, will soon be replaced by a second-generation design, the SAA7202.

MSAM-WW-FR-9602©1996 Dataquest

July 8,1996

CO>

Figure 4-7
Zoran's DVD4PC Reference Design

CO

o>
o
rv)
$ll»iiKi speakers

DRAM

DAC

/S?E

Video
EncxiderSTI3520A@.^

MPEG'2 Decoder

ZORAN ZR38521
Two-Channel AC-3

CO
CO

cr>
o

I

J3

c:
Disk Controller

ZORAN ZR36120

DVB Front-End or

PCI Contfolter

Cable Modem•*
PCi Busit•illilllll

I

CPU + System Memory

><

oo
CO
CO
CJ>

Source: Zoranm

I

VGA Adapter

PC VG
Monito46

Consumer Multimedia Semiconductors and Applications Worldwide

Texas Instruments

Texas Instruments has presented a complete chipset solution, from the RF
amplifier to the channel and audio/video decoders. Its design includes an
ARM7 RISC processor and TMS320XXXX DSPs in the decoder functions
and a TMC578xx for the servo controller. The company already has a second-generation integrated DVD solution in development.
Silicon Systems

In May 1996, Silicon Systems Inc. (SSI) armounced two new chips for
DVD-ROM drives, the 33P3720 analog front-end/read channel processor
and the 33C3911 CD-ROM decoder with HIDE interface. The 33P3720 is ahigh-performance BiCMOS chip that includes a complete DVD servo algebra repertoire. The company plans to begin sampling chips in January
1997, with the 33P3720 priced at $10 and the 33C3911 at $12 in quantities of
1,000. SSI has been a strong player in providing semiconductor products
for optical storage devices and is one of the earliest companies toannounce a front-end solution for DVD drives. Shortly after it announced
its DVD chipset, the company was acquired by Texas Instruments.
SGS-Thomson

On the front end, SGS-Thomson has been working on two analog ICs,
including a preamplifier and two digital ICs for demodulation. The company has already begun sampling these chips to its customers. In addition
to supplying MPEG-2 chips to the market, it is developing its own integrated back-end solution and working on new architectures for the PC
and DVD-Video player market, which it plans to patent. It is now producing chips in a 0.5-micron process and will soon move to a 0.35-micron
fabrication.
Oak Technology

Oak Technology has announced a single-chip audio/video decoder, theOTI-226. The design is based on a proprietary 32-bit RISC engine core andis fabricated in 0.35-micron technology.

Summary and Conclusions
The number of systems manufacturers and chip companies that will compete in the DVD arena will create a dynamic arid highly competitive environment. While the forecast market growth will create very profitable
opportunities, the nature of the competition will lead to a number of casualties among systems and semiconductor players. Competitors should
expect the consumer to be very demanding in terms of system performance and price. These demands wiU be reflected back to the semiconductor companies, which will be placed under heavy price and performancepressures.
Because the technologies shaping this market will continue to develop
over the forecast period, chip companies seeking to be successful in thismarket should be prepared to continue making major investments in theirproduct development. As they seek to reduce their product development
costs, systems manufacturers will value complete systems solutions fromsemiconductor manufacturers. Chip companies that are unable to provide
a complete solution with their own product line should seek allianceswith other companies that can complement their strengths. Also,
MSAM-WW-FR-9602©1996Dataquest

July 8,1996

The DVD Semiconductor Opportunity

47

semiconductor manufacturers should develop strategies that will allow
them to leverage their products across multiple next-generation consumer
electronics products. TTiis will allow them to maximize their profits andreduce their risks in this exciting but turbulent market segment.

MSAM-WW-FR-9602©1996 Dataquest

July 8,1996

ii

For More Information...

Dale Ford, Senior Industry Analyst
Internet address
Via fax.
I j OTO/^l I^CT•^"^ ^ ^ * ' > t r'^
A Gartner Group Company(408) 468-8311
dford@dataquest.com(408) 954-1780

The contervt of this report represents our interpretation and analysis of informalion generally available to the public
or released by responsible individuals in the subject companies, but is not guaranteed as to accuracy or completeness.
It does not contain material provided to us in confidence by our clients. Reproduction or disclosure in whole or inP^^ to other parties shall be made upon the written aiul express consent of Dataquest.
©1996 Dataquest—Reproduction Prohibited
Dataquest is a registered trademark of A.C. Nidsen Companyi

i
DATAQUEST WORLDWIDE OFFICESNORTH AMERICAWorldwide Headquarters

EUROPE
European Headquarters

ASIA/PACIFIC
Asia/Pacific Headquarters

251 River Oaks Parkway
San Jose, California 95134-1913
United States
Phone: 1-408-468-8000
Facsimile: 1-408-954-1780

Tamesis, The Glanty
Egham, Surrey TW20 9AW
United Kingdom
Phone:+44 1784 431 611
Facsimile: +44 1784 488 980

7/F China Underwriters Centre
88 Gloucester Road
Wan ChaiHong Kong
Phone: 852-2824-6168
Facsimile: 852-2824-6138

East Coast Headquarters

Dataquest France

Nine Technology Drive
RO. Box 5093
Westborough, Massachusetts 01581-5093
United States
Phone: 1-508-871-5555
Facsimile: 1-508-871-6262

Immeuble Defense Bergdres
345, avenue Georges C16nenceau
TSA 40002
92882 - Nanterre CTC Cedex 9
FrancePhone: +33 1 41 35 13 00
Facsimile: +33 1 41 35 13 13

Suite 2407, Trade Tower
159 Samsung-dong, Kangnam-gu
Seoul 135-729
Korea
Phone: 822-551-1331
FacsimUe: 822-551-1330

Dataquest Gemiany

Dataquest Taiwan

Kronstadter Strasse 981677 Miinchen
Germany
Phone: +49 89 93 09 09 0
Facsimile: +49 89 93 03 27 7

llF-2, No. 188, Section 5
Nan King East Road
TaipeiTaiwan, R.O.C.
Phone: 8862-756-0389
Facsimile: 8862-756-2663

Dataquest Korea

Dataquest Global Events

3990 Westerly Place, Suite 100
Newport Beach, California 92660
United States
Phone: 1-714-476-9117
Facsimile: 1-714-476-9969
Sales Offices:
Washington, DC (Federal)
New York, NY (Financial)
Dallas, TX
LATIN AMERICA

Research Affiliates and Sales Offices:
Buenos Aires, Argentina
Sao Paulo, Brazil
Santiago, Chile
Mexico City, Mexico

Sales Offices:
Brussels, Belgium
Kfar Saba, Israel
Milan, Italy
Randburg, South Africa
Madrid, Spain
JAPANJapan Headquarters

Aobadai Hills 4r7-7
Aobadai
Meguro-ku, Tokyo 153
Japan
Phone: 81-3-3481-3670
Facsimile: 81-3-3481-3644

iDataquest Singapore

105 Cecil Street#06-01/02 The Octagon
Singapore 069534
Phone: 65-227-1213
FacsimUe: 65-227-4607
Dataquest Thailand

12/F, Vanissa Building
29 Soi Chidlom
Ploenchit Road
Patumwarv Bangkok 10330
ThailandPhone: 662-655-0577
Facsimile: 662-655-0576
Research Affiliates and Sales Offices:
Melbourne, Australia
Beijing, China

Dataquest
A Gartner Group Company©1996 Dataquest<

I
DataQuest
New Video Game Hardware;Technology Playing at the
Next Level
I
Focus Report

Program: Consumer Multimedia Semiconductors and Applications Worldwide
Product Code: MSAM-WW-FR-9601
Publication Date: January 29,1996
Filing: Reports

I

New Video Game Hardware:Technology Playing at the
Next Level
I
Focus Report

I

Program: Consumer Multimedia Semiconductors and Applications Worldwide
Product Code: MSAM-WW-FR-9601
Publication Date: January 29,1996
Filing: ReportsNew Video Game Hardware: Technology Playing at the Next Level

I

Table of Contents
1. Executive Summary
2. Market Overview
The Video Game Controller Market
Major Players in the Video Game Market
Production Trends
Strategic Relationships
The Semiconductor Market Opportimity
3. Sega
Sega Saturn
Executive Product Summary
Vendor Sourdng
Packaging/Manufacturability
Product Observations
4. SonySony Playstation
Executive Product Summary
Vendor Sourdng
Packaging/Manufacturability
Product Observations
5. Nintendo, 3DO, Atari, and a Cross-System Comparison
Nintendo
3DO
Atari
Performance and Feature Comparison
6. Emerging Semiconductor Opportunities in Interactive GamesKey Technology Trends and Issues
Compression
Advanced DRAM Architectures
3-D Graphics
CD-ROM Technology
Sound
Modems
Virtual Reahty
Emerging Features and Technologies Summary
Semiconductor Opportunities
MFUs
Graphics Chips
Controller Chips
MemorySemiconductor Forecast for Next-Generation Video Game
Controllers
7. Major Semiconductor Suppliers to the Video Game Industry
Hitachi
LSI Logic
MIPS/Silicon Graphics
Toshiba

I

I
IVISAI\/1-WW-FR-9601©1996 Dataquest Incorporated

Page
1
3
3
5
6
6
8
9
10
10
17
20
20
23
23
23
29
31
33
35
35
38
38
39
41
41
41
42
42
44
46
47
49
49
50
50
52
52
53
53
57
57
57
57
59

January 29,1996

Consumer Multimedia Semiconductors and Applications Worldwide

Table of Contents (Continued)
NEC
YamahaMotorola
8. Conclusion and Dataquest Perspective
The 32- and 64-bit Video Game Generations
The Semiconductor Market Challenge
The Semiconductor Market Opportunity
Appendix A—Bill of Materials of Sega Saturn
Appendix B—Bill of Materials of Sony Playstation
Appendix C—Pricing Assumptions

MSAM-WW-FR-9601©1996 Dataquest Incorporated

Page
59
59
59
61
61
61
62
63
71
79

January 29,1996

Mew Video Game Hardware: Technology Playing at the Next Level

List of Figuresm•
FigurePage
2-1 Worldwide Video Game Hardware Shipment Forecast
3
2-2 Alliances and Investments in the Video Game Industry
7
2-3 Next-Generation Chips Delivering Next-Generation Features8
3-1 1995 Best Costs for System Electronics
12
3-2 1995 Best Costs for Total System
13
3-3 Sega Saturn—System Card (Top)14
3-4 Sega Saturn—System Card (Bottom)
15
3-5 Sega Saturn—Interface Card
16
4-1 1995 Best Costs for System Electronics
25
4-2 1995 Best Costs for Total System
26
4-3 Sony Playstation—System Card (Top)27
4-4 Sony Playstation—System Card (Bottom)
28
5-1 Nintendo Virtual Boy
37
6-1 New Memory for the Next Level
43
6-2 Sega Game Data Delivery System
48
6-3 Generic Block Diagram of RISC Video Game Controller
51
6-4 Next-Generation Video Game Controller Semiconductor
Market Forecast, Worldwide
55
6-5 Next-Generation Video Game Semiconductor Market
Opportimity by Major Segment
56
7-1 The Sony Playstation CPU
58

IVISAM-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

_iv

Consumer Multimedia Semiconductors and Applications Worldwide

List of Tables ^ ^ ^ ^ ^ . . ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ . ^ . ^
Table
Page
2-1 Shipments, Revenue, and Average Selling Price of Video Game
Hardware Worldwide
4
2-2 Worldwide Video Game Hardware Revenue Market Share, 1994 ... 5
3-1 Summary Cost Analysis by Semiconductor Category
11
3-2 Summary Cost Analysis by Subsystem
12
3-3 Sourcing Summary of the Sega Saturn17
3-4 Sega Saturn Slots and Bays
19
3-5 Construction Analysis
21
3-6 System Card/Electronics Observations
22
3-7 Mechanical/Power Observations
22
4-1 Summary Cost Analysis by Semiconductor Category
24
4-2 Summary Cost Analysis by Subsystem
25
4-3 Sourcing Summary of Sony Playstation29
4-4 Sony Playstation Slots and Bays
30
4-5 Construction Analysis
32
4-6 System Card/Electronics Observations
33
4-7 Mechanical/Power Observations
33
5-1 Feature and Performance Comparison of Selected VideoGames40
6-1 CD-ROM Drive Specifications45
6-2 Emerging Features and Technology Requirements for VideoGames50
6-3 Next-Generation Video Game Controller Production Forecast,Worldwide54
6-4 Semiconductor Content of Average 32/64 Bit and Beyond Video
Game Controllers
54
6-5 Next-Generation Video Game Controller Semiconductor Market
Forecast, Worldwide
55
A-1 Bill of Materials Model: Sega Saturn64
B-1 Bill of Materials Model: Sony Playstation
72

MSAM-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

.

Chapter 1

f

Executive Summary.
Exciting new video game platforms such as Saturn, Playstation, Ultra-64,
Virtual Boy, M2, and Jaguar have captured the attention of the video
game industry in 1995. With the 16-bit video game market continuing toslump after its 1993 peak, video game companies are looking to these nextgeneration 32- and 64-bit platforms to drive a new wave of video games
into the consumer markets. Behind these new platforms is an impressivearray of technology enabling the features that will draw video game players back into the market for new video game controllers and software.
Dataquest predicts that worldwide shipments of these new video gamecontrollers wiU climb to almost 18 million by the year 2000. With the semiconductor content in this new generation of controllers leaping to over66 percent of manufacturing cost, the semiconductor market driven byvideo game controllers will reach $2.3 billion by the year 2000. This forecast is based on the average factory price of new video game controllers
dropping below $200 bytiheyear 2000. If prices decline more rapidly, theunit shipments and semiconductor market could grow even larger. This
report presents an in-depth analysis of the technologies and semiconductor products shaping the new game controllers that will fuel the video
game market.
Building on the market overview presented in Chapter 2, exhaustive analyses of the Sega Saturn and the Sony Playstation are presented in Chapters
3 and 4. A complete bill of materials wiih. forecast component and manufacturing costs is also provided for these two systems. Chapter 5 provides
detailed information on products from other major players, such as Nintendo, 3DO, and Atari, along with a cross-platform system comparison ofthese new video game controllers. In-depth discussions of critical technologies such as compression, advanced DRAM architectures, 3-D graphics,
CD-ROM drives, sound, modems, and virtual reality are presented in
Chapter 6. This is followed by an analysis of the new MPUs, graphics
chips, controller chips, and memory products that are competing for aslice of the next-generation video game semiconductor market. At the endof Chapter 6, a detailed forecast of the market opportunity by major semiconductor categories is presented. Chapter 7 highlights the products anddesign wins of a number of key semiconductor suppliers. The final chapter provides insight into the challenges faced by semiconductor companies
competing in this market segment and strategies that may be employed toleverage investments and reduce risks.
Project Contributors: Dale Ford, Geoff Ballezv, Allen Leibovitch, Greg Sheppard,and Kun Soo Lee

MSAM-WW-FR-9601©1996 Dataquest Incorporated

Chapter 2

Market Overview
The Video Game Controller Market
The major news in the video game market during 1995 has been the introduction of 32/64-bit next-generation video game controllers by major
players in the industry. FoUowing the 8- and 16-bit market cycles, these
32/64-bit controllers are expected to drive the next wave of video gamesales and technology. As shown in Figure 2-1 and Table 2-1, overall
shipments of video game controllers peaked during 1993 on the strengthof the 16-bit game generation. However, 1994 saw a sharp decline in bothplayer and software sales. Shipments of a new generation of controllers is
expected to slow the overall market decline during 1995 and then provide
the strength for a return to market growth during 1997. This report focuseson this new emerging market of 32/64-bit and beyond game technology
and the opporttmities it presents for suppliers of semiconductors in (hismarket.
Figure 2-1
Worldwide Video Game Hardware Shipment Forecast
rhousands
35,000-

1992

1993

1994

1995

1996

1997

1998

1999

^

Handhelds^™

CD-ROM
Peripherals

M

CD-ROM
PlayersH

32/64-Bif
Future RISC
Players[ID

16-Bit Players^

8-Bit Players

2000
aewoTE

Source: Dataquest (July 1995)

MSAM-WW-FR-9601©1996 Dataquest Incorporated

CO

>

a>
o

Table 2-1
Shipments and Revenue of Video Game Hardware, Worldwide
1992

1993

1994

1995

1996

1997

Shipments (K)8-Bit Players

5,460

1,110

400

280

182

-

16-Bit Players

20,62018,710

6,202

1,954

32/64-Bit/Future RISC Players
CD-ROM Players
CD-ROM Peripherals
Handhelds
Total

-

100

8,860
1,237

4,802

4,341
6,809

1,115

1,525

860

120

-

200

900

900

1,200

1,500

5,558

4,115
16,372

4,455
17,0592,200

32,953

6,196
28,541

15,032369,278
1,958,929

53,3201,665,144

13,720713,218

8,400
424,3444,914
252,485-

32,800395,840

1,680,700

1,940,565

8,886
2,794
660
• 14,294

@

I
o

I

Revenue (U.S.$K)
8-Bit Players
16-Bit Players
32/64-Bit/Future RISC Players

96,5952,292,588

CD-ROM Players

375,397496,249

239,962

25,144--ooCD-ROM Peripherals

32,060144,270

144,270

313,950"^

Handhelds

360,550

350,785

215,485

251,160
267,907

125,860

444,265
36,658

Total

3,096,213

2,742,569

1,722,495

2,657,655

2,637,774

2,870,1068-Bit Players

68

48

34

30

27

-

16-Bit Players
32/64-Bit/Future RISC Players

95

89

80

68

58

49

-

328

320

350

285

258

CD-ROM Players

337

325

279

210

-

CD-ROM Peripherals

160

160

160

209

209

159

65

57

52

60

57

56

86

82

92

98

102

98

O

lu
CD

Average Selling Price, Factory (U.S.$)

c_
{U

c:
tu

Handhelds
Overall Average
Source; Dataquest (July 1995)

CO
CO
CO

a>

Market Overview

Major Players in the Video Game IVIarket
The most familiar names in the video game industry have been Sega andNintendo. Table 2-2 shows the dominance of these two companies in thevideo game industry, where they captured 99 percent of the 16-bit player
market in 1994. However, the rise of new 32/64-bit controllers has brought
the entrance of new players 3DO and Sony, along with the re-emergenceof certain players such as Atari.
Table 2-2
Worldwide V i d e o Game Hardware R e v e n u e Market Share, 1994
(Thousands of Units and M i l l i o n s of U.S. Dollars)
Units (K)

Percentage
Share

Revenue(U.S.$M)

Percentage
Share

6,296
5,584

52.5
46.5

506.83449.51

52.5
46.5

119

1.0

9.56

1.0

37.5

71.96

23.5

Sony

500
412
300

30.9
22.5

Atari
Others

50
70

3.8
5.3

129.55
84.00
8.75
12.25

42.3
27.4
2.9
4.0

16-Bit Players
Nintendo
Sega
Others32/64-Bit Players
Sega
Panasonic/3DO

Source: Dataquest (July 1995)

Although this report focuses on video game products from leading
players such as Sega, Sony, and Nintendo, a brief overview of all tibie
players with a significant presence in the market is given below:• Sega: Beginning with the introduction of its 16-bit Genesis video game,
Sega has been one of the major forces in the industry. Since then thecompany has brought the following systems to the market: Sega Game
Gear, Sega CD, Sega 32X, and, most recently, Sega Saturn. Although thecompany has discussed another platform called Neptune, the status of
this system is still uncertain.
• Nintendo: This is one of the pioneers of the video game industry andone of the top players today. Nintendo Entertainment System (NES)
established the company as a major player, and it followed this 8-bit
system with the 16-bit Super NES and portable Game Boy. Its mostrecent introduction is the 32-bit Virtual Boy, and the 64-bit Ultra-64
platform is expected to ship in April 1996.
• Sony Computer Entertainment: A newcomer to the video game market,
Sony has made a big splash with its 32-bit Sony Playstation. It is
expected to benefit from its consumer marketing experience and its
knowledge of U.S. consumer markets.
• Atari: Following its phenomenal early success with the Pong and Atari
2600 systems in the 1970s and early 1980s, Atari made significant investments in the emerging PC market and lost its presence in the video
game industry. The introduction of Jaguar in 1993 signaled its return tothe video game market.
MSAM-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

Consumer Multimedia Semiconductors and Applications Worldwide• 3DO: Its initial product design was a 32-bit 3DO interactive multiplayer,
introduced in October 1993, that used CD-ROM technology insteadof the traditional cartridges for games. Panasonic, LG Electronics(Goldstar), Sanyo, and Creative Labs offer four brand names with 3DO
technology. 3DO introduced an upgraded version of this 32-bit system
in 1995 and has annovmced plans to ship a 64-bit platform called M2.
• Philips: Its CD-i machine was first introduced in October 1991 at a list
price of $899. The digital video cartridge premiered two years later. Its
newest box, the CDI450, was introduced at the end of 1994 for $299($399 with MPEG). Philips has tried to position its player as a homeentertainment system because of its ability to play movies and music aswell as video games. Most of its success has been in European markets.
• NEC: NEC Home Electronics has enjoyed most of its success inJapanese video game markets. It introduced its PC-FX machine at theend of 1994.
• SNK: It marketed its first NeoGeo platform several years ago. Its firstgame player was a high-end system ($600) that played $200 video tapesized cartridges. It introduced its NeoGeo CD system at the ElectronicEntertainment Expo (E3). This system will begin shipping in the UnitedStates in fall 1995 for imder $500.
Production Trends
The dramatic rise in the value of the yen has created a major challenge forJapanese manufacturers of video games. Under the business model followed by the many video game companies, hardware is priced very
aggressively and sold at little or no profit. These companies realize theirprofits from software and licensing fees. Production and sale of hardware
is viewed chiefly as a means to an end for video game companies like
Nintendo, Sega, and Sony. The strong yen has forced these companies tobegin moving production of video game players offshore to meet criticalprice targets for increasing consumer demand.
At the end of 1994, Sega Enterprises annoimced that it would shift production of its next-generation 32-bit video game machines to Taiwan andother Southeast Asian countries during 1995. The appreciation of the yen
was given as the principal reason for this shift. In the past, a subsidiary of
Hitachi in Japan has manufactured video game hardware for Sega. In its
last public announcement, Sega said it was meeting with a possible
foreign partner for producing video games. Sega has also explored thepossibility of using Hitachi's overseas manufacturing plants.
Strategic Relationsliips
Alliances and joint ventures play a central role in the development of thevideo game market. Figure 2-2 maps out a summary of some of the major
alliances in the industry. Players in the video game industry have foundthat capitalizing on the skills and assets of leading semiconductor companies, hardware manufacturers, and software houses is critical for leveraging resources in an extremely competitive market. Well-managed strategic
relationships can improve chances of success in this rapidly evolving
industry.

MSAM-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

C/3

>

Figure 2-2
Alliances and Investments in the Video Game Industry

I

-n
33
I
CO

o>
o

RambusCreativeLabs

ToshibaiHafdware
License
Sanyo

@

LG
Electronics(Soidstar)<o

I MPEG

(O
05

IBM

L
T

I Hardware
Licenseooo{UHardware:LicenseG

NintendoR
TeE^nDlagy
CoopQ^abon

ModulePliilips

Time
WarnerTelecommunications (U.S.)

Sales

Sega
L09IC
Enterprises
Onitna 'Karaoke'III

I

32-BitCPU

HitachiToshibaEMI

Cable MwKsma andH^Hctend £<]u!pnKnl

ScientificAtlanta

32-Bil tiame
OperatingSyslertl

CO
CO
C7>

Source. Dataquest (July 1995)

Software LicenseNEC
3 2 ^ i t CPU
SupplyMicrosoft

NEC

Sound
Technology

HomeElectronics

Q SoundLabs
License Agreement

Arcade G a m e License

CO

Son

yideo-CDiDovfliopFrenr

Namco
OftiineGame
DevetQpmcnl

Hitactiir
MediaForce

toCo

32-BH Graphics Proces

CD

Ci>

Satellite
Digital Audio
Broadcasting

MuitiQen

o
£}.
.o
CD
CO

Reflection
Tectinology

Catapuit
Entertainment

"I

Atari

|

HudsonAfcade G
DevelopConsumer Multimedia Semiconductors and Applications Worldwide

The Semiconductor Market Opportunity
The video game market presents a very attractive opportunity forsuppliers of RISC-based CPUs, new DRAM architectures, graphics andaudio controllers, compression solutions, and CD-ROM controllers. Keyfeatures enabled by each new generation of chips in video game hardware
are illustrated in Figure 2-3, The semiconductor market opportunity presented by this new generation of video games is expected to grow from$263 million in 1994 to $2,3 billion by 2000. A discussion of semiconductors and the video game market is presented in Chapter 6, along with adetailed forecast,
Figure 2-3
Next-Generation Chips Delivering Next-Generation Features•3a'$4-Bit• 3-D graphics• Photorealism •• •"••*" Ad\ftsnced:audib-:features.v- . •• -"• V . i e o

ifi-Bit•'''^^^^^^'^''"••''• e More objects on screen^K^h-<• Mai*e r-eaijstic motion^•jiv^'^vjj;* Stem-3 sound^ ^"l^t' color• Fastftr gftnie reyc-onse^:"'-:mMh...,:.

;.•...

••"•"^^^•' • L •1 r-.

WiWSBMS.

Source: Dataquest (July 1995)

l\/ISAM-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

.
fChapter 3
Sega i _Sega was founded in the 1950s in Japan as Service Games by an American
named David Rosen. The charter of Service Games was to develop andmanufacture amusement games, but in 1956, after seeing the popularity ofmechanical amusement games in the United States, Rosen began importing them for U.S. military bases. In 1965, Service Games purchased a factory for making jukeboxes and slot machines and returned to
manufacturing games. The company began stamping SEGA on its units asa shorthand for SErvice GAmes, and the short form stuck.
After successfully introducing a game called Periscope, Rosen sold Sega to
Gulf+Western, retaining his position as CEO. Sega enjoyed continued success and in 1982 posted over $200 million in revenue. The following year,
Sega made headlines with three firsts, all in the Japanese market: the firstlaser disc game, the first 3-D video game, and the first home video gameplatform.
Soon after, the market crashed for both arcade and home video games.
Gulf+Western sold the U.S. assets of Sega to Bally Manufacturing Corporation, but retained Sega's Japanese assets. In 1984, Gulf+Western sold theremaining assets to a group of investors led by David Rosen and a Japanese entrepreneur named Hayao Nakayama. Rosen became the head of
U.S. operations and Nakayama assumed CEO responsibilities. Later thatsame year, the ownership changed once again as Sega's management teamand a company called CSK purchased Sega from the previous investor
group. Now renamed Sega Enterprises Limited, the company is still basedin Japan. Sega Enterprises Limited was listed on the Tokyo Exchange as anover-the-counter stock in 1986. Sega of America Inc. was created that same
year with a charter to develop software titles targeted to the U.S. market.
Sega's fortunes as a company truly turned in 1989 with the introduction of
the Sega Genesis game unit. The Genesis 16-bit design brought a new levelof video game performance to the consumer. Tom Kalinske, president andCEO of Sega of America Inc. since 1990, has championed an aggressive, inyour-face marketing strategy with MTV-style advertising. This marketing
effort paid off in skyrocketing Sega Genesis sales, with even greater popularity in the teenage market. Genesis competed primarily witti Nintendo's
8-bit Entertainment System (NES) until Nintendo introduced its 16-bit
Super NES in 1991. Between 1989 and 1991, Sega captured significant
market share from Nintendo.
To keep revenue up as the Genesis game unit grew older and faced newcompetition from Nintendo, Sega introduced a series of accessories,
including the Sega CD and Sega 32X game accelerator. Most recently, ofcourse, Sega brought out its next-generation game platform, Saturn. Introduced in Japan in the fall of 1994, the Sega Saturn was unleashed for the
U.S. market on May 11,1995, the opening day for the Electronic Entertainment Expo in Los Angeles, with much fanfare. Despite rumors of an early
release, the announcement was a surprise because Sega had doggedly
maintained a release date of September and had even designatedSeptember 2 as "Saturn Day."

MSAM-WW-FR-9601©1996 Dataquest Incorporated

^Consumer Multimedia Semiconductors and Applications Worldwide

The Sega Saturn was developed in partnership with Hitachi. The unit uses
an abundance of Hitachi parts and is actually manufactured by Hitachi for
Sega. For a more detailed discussion of Hitachi's role in the Sega Saturn,
see Chapter 7.
Today, Sega Enterprises Limited is still based in Japan, but holds four
regionally focused companies: Sega of America Inc., Sega of Canada Inc.,
Sega of Mexico Inc., and Sega of Europe Ltd. For fiscal year 1995, endingin March 1995, Sega posted net earnings of $59.1 million, down 54.3 percent from the previous year. Also in fiscal year 1995, Sega had $4.42 billion
in sales, down 7.9 percent from fiscal 1994. Sega's losses were tied to thehome video game market, which posted an operating loss of $52.7 million
in fiscal 1995. These losses were offset by operating profits in both thearcade video game and karaoke markets.

Sega Saturn
Executive Product Summary
Announcement/Shipment• Japan: Shipped November 1994
• United States: Announced March 1995, shipped May 1995
Configuration• Game unit case with top-mounted CD-ROM drive and cartridge slot
• Two SH2, 32-bit RISC processors, 28.6 MHz, 25 MIPS
• 2MB main memory, two SDRAM 128Kxl6x2,17.5ns, 3.3V, two DRAM
256Kxl6, 70ns, 5V, soldered, expandable (RAM cartridge)• 32Kx8,100ns backup SRAM
• Core logic implemented in ASICs, FH3007 and 4L02F2718• CD-ROM drive, double-speed, with 16-bit RISC controller and 512KB
DRAM buffer (256Kxl6,80ns), compatible with Saturn CD, audio CD,
CD with graphics, and photo CD• Graphics processors, HD64440F (sprites and polygons), FH3006 (backgrounds), 32K simultaneous colors from a 16.8-million color palette,
320x224 and 720x576 resolution• 1.5MB SDRAM frame buffer, one 128Kxl6x2,17.5ns, 3.3V, four
128Kxl6,12ns, 3.3V
• 68EC000 sound processor, YMF-292-F FM sound synthesizer• 32-channel PCM stereo sound, 44.1KHz FM samphng, DSP, QSotmd
compatible• Audio buffer, 512KB DRAM, 256Kxl6, 80ns
• Composite video output and communication connector• Hand controller, with directional input and nine buttons• Power supply, lOOV in, 15W• Expansion slot for MPEG (full-motion video) capability

MSAM-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

Sega

11

Design/Cost Advantages

I

The following are the design and cost advantages of the Sega Saturn:• Large memory, wide array of specialized controllers• CD-ROM drive for software, cartridge slot for game-saving memory
cartridge (battery-powered, sold separately)• Sturdy case appropriate for yoimger users
Design/Cost Disadvantages

The following are the design and cost disadvantages of the Sega Saturn:• High numbers of expensive controllers, ASICs, DRAMs• System card components spread out; board could have been snxaller,
more integrated• Bulky CD-ROM drive increases case height.
Costs and PCB Layouts

A summary semiconductor cost analysis is shown in Table 3-1. A summary of total cost by subsystem is shown in Table 3-2. Figures 3-1 and3-2 show costs for system electronics and total system, based on highvolume, best-pricing component purchases. Figures 3-3,3-4, and 3-5 show
PCB layouts with functional subsystems.

•

Table 3-1
Summary Cost Analysis by Semiconductor Category (U.S. Dollars)
1996 Best Pricing

1997 Best Pricing

Total Semiconductor
Total IC

1995 Best Pricing
261.61
261.22235.69235.31212.61
212.23

Bipolar Digital
MOS Digital

1.79
259.42

1.58
233.73148.531.40
210.84132.45

82.72
10.07
0

76.52
8.67
0

70.90
7.48
0

0.39
0

0.39
0

0.38
0

MOS Memory
MOS Microcomponent
MOS Logic
AnalogTotal Discrete
Total Optical Semiconductor

166.64

Source: Dataquest (July 1995)>

MSAM-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

12

Consumer Multimedia Semiconductors and Applications Worldwide

Table 3-2
Summary Cost Analysis by Subsystem (U.S. Dollars)
1997 Best Cost
76.88
27.19

Three-Year
Average Cost
85.85
29.45

12.84
32.55

14.40
34.29

64.50
22.54

56.93
22.09

64.85
22.54

28.00
303.1829.12
279.6130.28
258.7529.13
280.51

92.70
8.98
8.85
0.25
5.24

83.50

85.23

2.81
6.00
428.01

2.92
6.00
395.37

79.50
8.94
9.13
0.25
5.03
3.04
6.00

1995 Best Cost

1996 Best Cost

95.16
31.80
16.02
36.07

85.51
29.35
14.33
34.26

PCBs

73.13
23.00

Electronics MVA
Total Electronics
CD-ROM Subsystem

Graphics Subsystem
Central Electronics
Audio Subsystem
Microprocessor
Main Memory

Power Supply
MechanicalPublications
Hand Controller
Box MVA
Freight/Duty
Total

8.96
8.99
0.25
5.14

370.65

8.96
8.99
0.25
5.14
2.92
6.00
398.01

Note: A complete bill of materials with detailed pricing is found in Appendix A.
Source: Dataquest (July 1995)

Figure 3-1
1995 Best Costs for System Electronics
Audio Subsystem (5.3%)
PCBs (7.6%) —Electronics MVA (9.2%)

Central Electronics (10.5%)

Microprocessor (11.9%)

Total = $303.18
Source: Dataquest (July 1995)

MSAM-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

m

Sega

>

Figure 3-2
1995 Best Costs for Total System
Others (7%)

1Power Supply
Mechanical
Hand Controller
Box MVA
Freight/Duty

2.1
2.1
1.2
0.7
1.4

1

/ \
/ CD-ROM/ SubsystemI(22%)
V—""""^\\\\
Electronics
(71%)

m
#

Total Cost = $428.01
B50W76

Source: Dataquest (July 1995)^

MSAM-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

14

Consumer Multimedia Semiconductors and Applications Worldwide

Figure 3-3
Sega Sattxrn—System Card (Top)

i
'i—
I -

DRAM
SSEKxie. 8ans

ig

Audio
Subsystem

InCentralElectronics
Subsystem

—c
ru IB

S T

3:

Philips
TD A13861
Bit ScreamDAC

3 S

AA/Out1 Sony ICXA1645M
NTSC/PAL
ErrcoderCommunicfltion
Connector

FH3006Graphics
Processor
AIEC

SDRAM
128KX1S

Hitachi
HD494a2til =:

So

Hltactii
HDS4440F
Gmphio^Processor
w/Sega ROM

SDRAM
12BKX16

Hitachi I
HCM049aOFS
4-bi!
MicrocorttfOlterw/Sega.ROW

sS

Graphics Subsystem

Yamaha
YMF-a92-F
FM Sourid
Synthesiisr
w/Ssga ROM

Motoroia
68Ecaoa
EmbKtttect
Cantraiter

^g

is

SRAM

FH3007
Prooessof
AS!C

100ns

c
*o>>l
£

Jl.

il

Toshiba
4L02F
2718

I SDRAM
SDRAM|l28Kx16i<2 128Kx16x2
17.5ns, 3.3V 17.5ns. 3.3V
HitachiSH232-blt MIPS
Processor

Hitachi
SH232-Bit MIPS
Processor

Connector to Interlace Card

Source: Dataquest (July 1995)

MSAM-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

15

Sega

>

Figiire 3-4
Sega Saturn—System Card (Bottom)^D0

LS245J —

db

/D
^D

VHC04

I

74HC157A

D

Communication
Connector

Graphics
Subsystem

Audio

Subsystem

A/VOut

L

L_/

Source: Dataquest (July 1995)

MSAM-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

16

Consumer Multimedia Semiconductors and Applications Worldwide

Figure 3-5
Sega Satum- -Interf ace Card

IK
~
—
~

I
J

[

CentralEletronics
Subsystem]tj\
CD-ROM
Subsystem

Top

HitachiSHI
16-BilMicrocontroller

HitachiYGR019A
Gate Array
A3IC

CO

5

.1

1

9
i
a
s
a
tc

O
o
ZJ

m

O

3

^

M
CJl

en

f^
CJ>

CentralElectronics
Subsystem

Bottom>o:3
Ui

CD-ROM
SubsystemCDaConnector to System Card
I

Source: Dataquest (July 1995)

MSAI\/1-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

Sega

17

Major Commodities-Sourcing

Table 3-3 provides a sourcing summary for the Sega Saturn.
Table 3-3
Sourcing Summary of the Sega SaturnProcessor
Core Logic
Main Memory
Graphics Processors
Frame Buffer
Audio Processor
Audio Synthesizer
CD-ROM Drive
Power Supply
Hand Controller
System Raw Card
Interface Raw Card
Final Assembly

Hitachi/Japan
Toshiba (ASIC)/Japan
Sega (ASIC)/Japan
Hitachi/Japan, Korea
Hitachi/Japan
Sega (ASIC)/Japan
Hitachi/Japan
NEC/Japan
Motorola/USA
Yamaha/Japan
Unknown
Voltek/Taiwan
Sega/Japan
Unknown
Unknown
Hitachi/Japan

Source: Dataquest (July 1995)

Mechanical Package

The following is an overview of the mechanical packaging of theSega Saturn:••••

Rugged two-piece ABS case is also main structural member.
Soft-motion CD door opens and closes slowly.
Top-mounted cartridge slot has spring-loaded door.
Small rear pemel opens for access to backup battery, reset switch, andexpansion slot.
• Fan was designed into the unit, but not implemented.
• CD-ROM drive is mounted on shock absorbers.

Vendor Sourcing
Availability• Japan: Shipped November 1994
• United States: Announced March 1995, shipped May 1995
Processors• Two SH2, 32-bit RISC, 28.6 MHz, 25 MIPS
• Hitachi/Japan

MSAI\/1-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

18

Consumer Multimedia Semiconductors and Applications Worldwide

Core Logic• Implemented in ASICs• 4L02F2718, Toshiba/Japan• FH3007, Sega/Japan

M"

Main Memory• 1MB SDRAM 128Kxl6x2,17.5ns, 3.3V, Hitachi/Japan,• 1MB DRAM 256Kxl6, 70ns, 5V, Hitachi/Korea
Caciie• No secondary cache
Grapliics Subsystem

•
•
•
•
•

HD64440F, 32-bit, sprite, polygon, and geometry, Hitachi/Japan
512KB SDRAM 128Kxl6x2,17.5ns, 3.3V, Hitachi/Japan
512KB SDRAM, 128Kxl6,12ns, 3.3V, NEC/Japan
FH3006, 32-bit, backgrovmd, Sega (ASIC)/Japan
Five simultaneous scrolling backgrounds, two simultaneous rotating
playfields• 32K simultaneous colors from a palette of 16.8 million colors, 320x224
and 720x576 resolution• 512KB SDRAM, 128Kxl6,12ns, 3.3V, NEC/Japan
Audio Subsystem^• 68EC000processor, 11.3 MHz, Motorola• YMF-292-F FM soimd s5Tithesizer, Yamaha/Japan• 512KB DRAM buffer, 256Kxl6, 80ns, Hitachi/Malaysia

M

CD-ROM Subsystem• Double-speed drive, ball bearings locking disc into place• Controller, SHI 16-bit RISC, Hitachi/Japan• 512KB DRAM buffer, 256Kxl6, 80ns, Hitachi/Korea
Power Supply• lOOVin, 15W• Voltek/Taiwan
Controller• 13 buttons, 10 rubber membrane, three switches• Sega/JapanMSAIVl-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

19

Sega

Slots and Bays

Table 3-4 outlines the slots and bays in the Sega Saturn.
Table 3-4
Sega Saturn Slots and Bays
System Slots
Total Slots
8-Bit
16-Bit32/64-Bit
Slots Left
8-Bit
16-Bit32/64-Bit
Dedicated Slots
Used
Available

System Ports
1
1

Total Ports
Cartridge
Video/TV Signal
Communication
Controller

5
1
1
1
2

Total Storage Bays

1

1
-1
1

Source: Dataquest (July 1995)

System Specifications

•
•
•
•

System—10.6 inches wide x 9.1 inches deep x 3.3 inches highSystem—260mm wide x 230mm deep x 83mm highHand Controller—5.8 inches wide x 3.5 inches deep x 1.2 inches highHand Controller—147mm wide x 88.9mm deep x 30.5mm high

FCC Classification• Class B
Warranty• Unknown
Software• No software included with evaluation unit
Publications• Manual• Registration card
System Observations• Final assembly in Japan• Dual 32-bit MIPS RISC main processors, separate audio and graphics
processors• CD-ROM and audio with separate buffers• Supports audio CD, photo CD, and CD+G, as well as Saturn CD
software• JVC and Hitachi also manufacture their own versions of the Saturn.

MSAM-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

20

Consumer Multimedia Semiconductors and Applications Worldwide

Card Assessments• System Card
• 9.4 X 8.25 X 0.07 inches thick, 2S2P
Q Bare board: Unknown
Q Board assembly: Unknown• 32 ICs, 24 SMT and one DIP on top, seven SMT on bottom
Q No rework jumpers or components, wave soldered• Interface Card
• 4.75 X 2.4 X 0.049 inches thick, 2S2P
a Bare board: Unknown
a Board assembly: Unknowna Three ICs, two SMT on top, one SMT on bottom
a No rework jumpers or components, wave soldered

Packaging/Manufacturability
Overview

The Sega Saturn is packaged in a compact ABS case, with a top-mounted
CD-ROM drive and cartridge slot. The two-piece, 0.097-inch-thick case isrugged enough to have the internals mounted to it and stand up to the
expected abuse of young users.
The system card screws directly into the case bottom plastic, and thepower supply board mounts to the case top via CRS brackets. Light-gauge
metal EMI shields sit directly above and below the system card. A smaller
interface card cormects to the top of the system card and is held in place byclips that rise from the case bottom. A plastic tray sits on the system cardbehind the interface card to hold an expansion card or module. A rear
panel allows easy access to the master reset switch, backup coin battery,and expansion slot.
The CD-ROM drive is mounted on standoffs that sit on the system cardand screw to the case bottom. Rubber shock absorbers between the standoffs and the drive isolate the drive from vibrations. The drive itself has thelaser and disc holder mounted to a CRS plate and the motors and electronics moimted to a card with 3/4-inch plastic standoffs between. A door
with a soft spring-loaded hinge provides access to the drive. Cartridges
are inserted into a door in the rear of the case top and plug directly into araised slot on the system card. The cartridge opening has a spring-loaded
door to keep dust from falling into the unit. The front of the case top is theoperator panel, which includes power and CD-ROM access LEDs, power
and reset switches, and a button to open the CD door.
Table 3-5 provides a construction analysis.

Product Observations
System Card/Electronics

Table 3-6 provides an overview of the system card and electronics characteristics of the Sega Saturn.
MSAI\/1-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

Sega

21

Table 3-5
Construction Analysis
Thickness (mils)
Metal

Case Top
98

Case Bottom

Shielding

96

13

CRS Post-Zinc
CRS Post-CAD
CRS PreZinc
CRS PreTin
CRS PreAluminum
Aluminum (AL)Die Cast (AL)Die Cast (Zinc)X

Other Stainless
Plastic
ABS

X

X

X

X

ABS Blend
Polycarbonate (PC)ABS PC Blend
Poljrpropylene (PP)
Structural Foam
Other
Decorative Finish
Molded In
Paint
Vinyl Clad
Other Powder Coat
EMC Coating
Sheet Metal Liner
Copper (CU) Paint
Nickel (NI) Paint
N I / C U Paint
AL Deposition
Foil Laminate
Source; Dataquest (July 1995)

MSAM-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

22

Consumer Multimedia Semiconductors and Applications Worldwide

Table 3-6
System Card/Electronics Observations
Design/Manufacturing
Opportunity

Advantage

Low level of chip integration

Disadvantage
C

Rationale
Higher integration would reducechip count and board size.

Fast, high-quality audio and video

F

Large number of processors andcontrollers, audio and CD buffers

Large frame buffer memory

F

Several screens can be stored forfast scrolling.

Can play audio. Photo CD, CD+G

F

Versatile machine can do morethan play games.

Note; C = Cost, F = Function, Q = Quality, O = Other
Source: Dataquest (July 1995)

Mechanical/Power

Table 3-7 provides an overview of the mechanical and power characteristics of the Sega Saturn.
Table 3-7
Mechanical/Power Observations
Design/Manufacturing
Opportunity
Rugged ABS case, shock-absorbing pillars allow CD-ROM drive
movmting.

Advantage

Disadvantage

Rationale
Unit can stand up to use andabuse; antishock mechanism
reduces track skipping.

O

Overall size is much larger than theSony Playstation.

More difficult to store when not
in useNote: C = Cost, F = Function, Q = Quality, O=Other
Source: Dataquest (July 1995)

MSAM-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

.

Chapter 4

I

Sony _
Consumer electronics giant Sony needs no introduction. But what about
this sassy new upstart called Sony Computer Entertaiiunent? Sony Computer Entertainment of America was established in May 1994 as a business
unit of Sony Electronic Publishing. The company's charter is threefold: tomarket and distribute the Sony Playstation, to design and produce software titles and peripherals for the Playstation platform, and to manage all
third-party software developers in North America.
Sony Computer Entertainment of America (SCEA) is scheduled to begin
selling products in September 1995. Only one of Sony's competitors isshipping a competitive system^ the Sega Saturn, so strong sales are
expected this fall when the Playstation is released. The Playstation isalready selling well in Japan, where it was introduced for the Christmas
1994 buying season. SCEA will be selling the hardware and numerous
software titiles at launch.
In a direct comparison with the current competition, Sony appears to havea significant manufacturing cost advantage. It has already aiuiounced asuggested retail price of $299, which is aggressive, based on Dataquest's
manufacturing cost estimates for the Playstation, and which is $100 lower
than the suggested retail price for the Sega Saturn. This price difference
shoiild give SCEA a significant edge as it works to build market sharewith its first product.
SCEA has all of the ingredients for success, with the exception of a goodtrack record (because it has not yet started selling any products). However, it does have a solid hardware platform, impressive software titles,
financial backing from consumer electronics giant Sony Corporation, anda marketplace eager for the next generation of video games. The next few
years will tell whether SCEA is going to succeed.
Sony Playstation
Executive Product Summary
Announcement/Shipment• Japan: Armoimced October 1994, shipped December 1994
• United States: Shipment planned September 1995
Configuration• Small game unit case with top-mounted CD-ROM drive• Custom CPU chip with R3000 32-bit RISC MIPS microprocessor core
(33 MHz), motion-JPEG decompression engine, graphics coprocessor,
and core logic• 2MB DRAM main memory, 256Kxl6, 60ns, soldered, not expandable• CD-ROM drive, double-speed, all electronics integrated onto
system card
• CD-ROM buffer, 32KB SRAM, 32Kx8, 70ns

MSAIVl-WW-FR-9601©1996 Dataquest Incorporated

23

24

Consumer Multimedia Semiconductors and Applications Worldwide• Custom Toshiba 32-bit graphics processor, 16.7 million colors, 256x240
resolution• 1MB VRAM frame buffer, 256Kxl6, 60ns, soldered, not expandable• Video outputs, S-video and composite• Custom audio chip with 24-channel PCM sound• Audio buffer, 0.5MB, 256Kxl6, 80ns, 3.3V
• Power supply, 10.5W, lOOV
• Hand controller, 10 buttons (not included with evaluation unit)
Design/Cost Advantages

The following are the design and cost advantages of the Sony Playstation:• Highly integrated system card includes all CD-ROM drive electronics.
• Memory card slots above controller connections allow user to store
game data on self-powered module (not included).
• Internal space maximized for low profile, small footprint.
• Large buttons on unit increase usability.
Design/Cost Disadvantages

The following is the design and cost disadvantage of the Sony Playstation:• Uses VRAM as frame buffer
Costs and PCB Layouts

Table 4-1 provides a summary of costs by semiconductor category. Table
4-2 provides a summary of total cost by subsystem. Figures 4-1 and 4-2
show costs for system electronics and total system, based on high-volume,
best-pricing component purchases. Figures 4-3 and 4-4 provide PCB layouts with functional subsystems.
Table 4-1
Summary Cost Analysis by Semiconductor Category (U.S. Dollars)
Total Semiconductor
Total IC
Bipolar Digital
MOS Digital
MOS Memory
MOS Microcomponent
MOS Logic
AnalogTotal Discrete
Total Optical Semiconductor

1995 Best Pricing
196.891997 Best Pricing
196.89195.791.22

194.57105.191996 Best Pricmg
196.89195.791.22
194.57105.19

80.92
8.46

80.92
8.46

80.92
8.46

0
1.10
0

0
1.10

0
1.10

0

0

195.791.22

194.57105.19Source: Dataquest (July 1995)

MSAM-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

i

Sony

25

Table 4-2
Summary Cost Analysis by Subsystem (U.S. Dollars)
1995 Best Cost
Graphics Subsystem
Central Electronics

61.68
20.36

Audio Subsystem
Microprocessor

25.09
21.11

23.67
17.94

Main Memory
PCBs

45.49
12.25

Electronics MVA
Total Electronics

49.45
12.50
15.00
205.19

22.36
15.25
41.85
12.01

15.60
191.1216.22
178.5015.61
191.61

CD-ROM Subsystem

55.17

50.29

Power Supply
MechanicalPublications*
Hand Controller*
Box MVA
Freight/Duty

8.00
7.43
0.25
5.24
2.10
6.00

52.66
8.00
7.58
0.25
5.14

0.25
5.03
2.27
6.00
258.07

52.71
8.00
7.58
0.25
5.14
2.19
6.00
273.46289.39

Total

2.18
6.00
272.931997 Best Cost
51.56
19.25

Three-Year
Average Cost

1996 Best Cost
56.36
19.79

8.00
7.73

56.54
19.80
23.71
18.10
45.60
12.25

'Estimated costs; items were not included with evaluation unit
Note: A complete bill of materials with detailed pricing is included in Appendix B,
Source: Dataquest (July 1995)

Figure 4-1
1995 Best Costs for System Electronics

PCBs (6.1%)
Electronics MVA (7.3%)

Total = $205.19
Source: Dataquest (July 1995)

MSAI\/1-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

26

Consumer Multimedia Semiconductors and Applications Worldwide

Figure 4-2
1995 Best Costs for Total Systemi

Others (10%)

Power Supply
Mechanical
Hand Controller
Box MVA
Freight/Duty

2.9
2.7
1.9
0.8
2.2

/cD-ROM \/ Subsystem
\
f
(15%)
\

V
\

Total
Electronics
(75%)

m
#
#

Total Cost = $275.59
9504076

Source: Dataquest (July 1995)

MSAM-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

Sony

m

27

Figure 4-3
Sony Playstation—System Card (Top)

„
m
a
~n
5 cna I to

is|r

O
5UJ
S
s>
3

Sony
— CXD8530AQ
LSI Logic
L900020
CPU Chip

.^g

Ltl

PO

s g>s

pa

CentralElectronics
Subsystem

Oraphics Subsystem

AKM AK4310VM
Stereo DAC
Audio
Subsystem

|

s

^ S

:=]

at

Sony
CXD8514Q
ToshibaGraphics Processor

D

FO

ra

^^

5<
3

s5

tn
Di

^

Ol

o

s

Connector to Ma^idset
Connector Module

Z

CQ

Sony
0XA1645M
NTSC/PAL Encoder

9601812Source: Dataquest (July 1995)

IVISAM-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

28

Consumer Multimedia Semiconductors and Applications Worldwide

Figure 4-4Sony Playstation—System Card (Bottom)

iCD-nOM Subsystem
Sony ComjSuler
Entertainmenl
esSD 4246B6
ASIC
1

n

A1782BR
CD Componen
Sony

I
/C

m
s^
E-

r-

\

c

(O

c

V3
ro

1
Rohm
1 BA6398FP< -^ S
o S
fn

1

II

._1

CD Driver

1
1

D

•

Comparators

Central Electronics Subsystem

Op AmpI

Source: Dataquest (July 1995)

MSAM-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

Sony

29
Major Commodities-Sourcing

Table 4-3 provides a sourcing summary of major commodities of the Sony
Playstation.
Table 4-3
Sourcing Summary of Sony Playstation
Processor
Core Logic
Main Memory
Graphics Processor
Frame Buffer
CD-ROM Drive
Power Supply
Hand Controller
System Raw Card
Final Assembly

LSI Logic/Hong Kong
LSI Logic/Hong Kong (integrated with processor)
Samsung/Korea
Toshiba/Japan
Samsung/ Korea
Sony/Japan*
Matsushita /Japan
Not included with evaluation unit
Unknown
Sony/Japan*CD-ROM electronics are integrated onto system card.
Source; Dataquest (July 1995)

Mechanical Package

The following is an overview of the mechanical package of the Sony
Playstation:• Two-piece, rugged ABS case is main structural member.
• CD-ROM mechanism is mounted on CRS EMI shield/structuralmember.
• Soft-motion CD door opens, closes slowly.

Vendor Sourcing
Availability• Japan: Annotinced October 1994, available December 1994
• United States: Available fall 1995
Processor• Custom CPU chip with R3000 32-bit RISC MIPS microprocessor core
(33 MHz), JPEG video-decompression engine, graphics coprocessor,
and core logic• LSI Logic/Hong Kong
Core Logic• Implemented on CPU chip
• LSI Logic/Hong Kong
Main Memory• 2MB DRAM, 256Kxl6,60ns, soldered, not expandable• Samsung/Korea
Cache• No secondary cache
MSAM-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

30

Consumer Multimedia Semiconductors and Applications Worldwide

Graphics Subsystem• Custom 32-bit graphics processor, 16.7 million colors, 256x224
resolution, Toshiba/Japan• 1MB VRAM frame buffer, 256Kxl6, 60ns, soldered, not expandable,
Samsung/Korea
Audio Subsystem• Custom audio chip with 24-charmel PCM sound• Audio buffer, 0.5MB, 256Kxl6, 80ns, 3.3V
CD-ROIVI Drive• Double-speed drive, ball bearings locking disc into place• All CD-ROM electronics integrated onto system card
• Sony/Japan
Power Supply• 10.5W,100V• Matsushita/Japan
Controller• Not included with evaluation unit
• 14 buttons
Slots and Bays

Table 4-4 outlines the slots and bays in the Sony Playstation.
Table 4-4Sony Playstation Slots and Bays
System Slots
Total Slots
8-Bit
16-Bit32/64-Bit
Slots Left
8-Bit
16-Bit32/64-Bit
Dedicated Slots
Used
Available

System Ports
Total Ports
Video
A/V
Expansion
ControUer
Other

7
2
1
1
2
1

Total Storage Bays 1

Source: Dataquest (July 1995)

MSAM-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

Sony

Si

System Specifications• System—10.5 inches wide x 7.25 inches deep x 2.3 inches high• System—267mm wide x 184mm deep x 58.7mm high
FCC Classification• Japanese model, no classification
Warranty• Unknown
Software• Not included with evaluation unit
Pubiications• Not included with evaluation unit
System Observations• Final assembly in Japan• Custom-integrated CPU chip including 32-bit MIPS RISC processor• Low-profile case• Can play audio CDs as well as Playstation CDs
Card Assessments• System card
• 6.31 X 7.5 X 0.041 inches thick, 2S2P
• Bare board: Unknown• Board assembly: Sony/Japan• 26 ICs, 19 on top, seven on bottom, all SMT• One rework component on bottom

Packaging/Manufacturabiiity
Overview

The Sony Playstation is packaged in a low-profile, compact ABS case witha top-mounted CD-ROM drive. The two-piece, 0.116-inch thick case isextremely rugged.
The system and power supply cards are screwed to the case bottom. A
rigid CRS structural member sits on top of the system card and is held by
the same screws. This member serves as EMI shielding above the systemcard and has three smadl posts for mounting the CD sprndle/motor/laser
unit. The CD unit, not considered a separate drive because it has no electrorucs, has three rubber shock absorbers to isolate it from the posts. A
light-gauge (0.009-inch) metal EMI shield sits below the system card. A
shielded connector module screws down on the front edge of the systemcard and contains the controller and memory card cormectors. A small
EMI shield sits on top of the module. All other I/O cormectors are integrated onto the system card at the rear edge. The front area of the case top
serves as the operator painel, with large power and CD door buttons, asmaller reset button, and a power LED. The CD door is spring loaded,with a soft-motion mechanism.

MSAM-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

32

Consumer Multimedia Semiconductors and Applications Worldwide

The Playstation is designed for minimized profile and footprint space andeasy assembly, with a low part count. There are two flex and two discrete
cables internally, and the case top secures the internals via screws from thecase bottom and positioning posts for the CD mechanism. The small size,
thick casing, large buttons, and rugged construction show a consideration
for the young target market.
Table 4-5 provides a construction analysis.
Table 4-5
Construction Analysis
Thickness (mils)
Metal
CRS Post-Zinc

Case Top
116

Case Bottom
116

Upper Shielding
33

Lower Shielding
9

X

CRS Post-CAD
CRS PreZinc
CRS PreTin
CRS PreAluminum
Aluminum (AL)Die Cast (AL)Die Cast (Zinc)
Other Stainless
Plastic
ABS
ABS Blend

X

X

X

X

X

Polycarbonate (PC)ABS PC Blend
Polypropylene (PP)
Structural Foam
Other
Decorative Finish
Molded In
Paint
Vinyl CladX

Other Powder Coat
EMC Coating
Sheet Metal Liner
Copper (CU) Paint
Nickel (NI) Paint
N I / C U Paint
AL Deposition
Foil Laminate
Source: Dataquest (July 1995)

MSAM-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

i

Sony

33

Product Observations
System Card/Electronics

Table 4-6 provides an overview of the system card and electronics of theSony Playstation.
Table 4-6
System Card/Electronics Observations
Design/Manufacturing
Opportunity

Advantage

Disadvantage

Rationale

System electronics are highly
integrated with stirprisingly
few ICs.

C,Q

This design packs lots offunctionality into a very conipact
package.

CD-ROM electronics are integrated
onto system card.

C

Design reduces total number of
ICs and board space.
C

VRAM is used for frame buffer.
Memory card slots are provided.

Expensive compared to DRAM
alternatives
User can save game information
on separate, battery-powered
module (sold separately).

^'Note: C = Cost, F = Function, Q = Quality, O = Other
Source: Dataquest (July 1995)

Mechanical/Power

Table 4-7 provides an overview of the mechanical and power characteristics of the Sony Playstation.
Table 4-7
Mechanical/Power Observations
D esign/Manuf acturing
Opportunity

Advantage

Disadvantage
O

Small profile and footprint

Rationale
Convenient to store when not
in useLarge buttoris on unit

F

Easy to use

Rugged case with shock absorbers
for CD-ROM mechanism

Q

Can stand up to use and abuse;shock system reduces trackskipping problems

CD-ROM structural member doubles as EMI shielding

C

Saves an extra part, contributes tosolid construction

Note: C = Cost, F = Function, Q = Quality, O = Other
Source: Dataquest (July 1995)

MSAM-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

Chapter 5

Nintendo, 3D0, Atari, and a Cross-System Comparison
In addition to the Sega and Sony systems described in Chapters 3 zmd 4, it
is important to note the products and plans of Nintendo, 3DO, and Atari.
This chapter provides information on major announcements and products
from these companies and then concludes with a cross-system comparisonof the Sega Saturn, Sony Playstation, Atari Jaguar, and 3DO M2.

Nintendo
Now one of the giants of the video game industry, Nintendo made its
initial entrance into the industry in 1981 when it introduced its successful
Donkey Kong game in arcades. In 1983 Nintendo introduced the Family
Computer System (Famicon) in Japan, and by 1985 it was test marketing
the Nintendo Entertainment System (NFS) in New York. Sales of the 8-bit
NES, introduced in the United States in 1986, moved Nintendo into thedominant position in the industry. It followed this success with the introduction of the popular Game Boy in 1989. However, Nintendo experienced stiff competition from Sega with the introduction of 16-bit video
game systems. Its Super NES was launched in the U.S. market in 1991.
Nintendo's sales and earnings for fiscal year 1995, ending March 31,1995,
fell sharply from 1994 levels, reflecting the slowdown in the 16-bit gamemarket, intense competition, and the high value of the yen. It announced
consolidated net earrungs of $480.5 miUion, down 20.9 percent from fiscal
1994, and total sales of $4.79 billion, down 14.4 percent. These numbers
include revenue from both hardware and software sales. The approximate
shipment numbers aimounced by Nintendo for major video game hardware categories were 4 million Super NES units, 3.2 million Game Boy
units, and 1 million NES units.
Shipments of Nintendo's next-generation Ultra-64 have been delayed fromthe originally announced date of November 1995 to April 1996. Nintendo
maintains that the actual hardware is ready for market, but they havedecided to hold back on launching the product until a library of truly
breakthrough software has been developed. Late software development
kit shipments have slowed the development of software for this platform.
So far, Nintendo has kept this new hardware under wraps and has demonstrated only the machine's graphics and speed, which are impressive.
Nintendo is the sole hardware vendor introducing a cartridge-based nextgeneration system. The company will pursue a strategy of reducing theprice on the video game hardware to gain market penetration whileabsorbing higher costs to produce and distribute software titles. It has
stated its plan to bring the Ultra-64 to market with a very aggressive priceof $250 or less, with the goal of gaining quick acceptance by consumers.
Nintendo has assembled what it calls a dream team to drive the development and marketing of the Ultra-64. Participants in the alliance to design
and test the hardware and software for the Ultra-64 include Nintendo,
Silicon Graphics, Rambus, Alias Research, and MultiGen. This nextgeneration game is the first application of "reality immersion technology,"
a new generation of video entertainment that enables players to step

MSAM-WW-FR-9601©1996 Dataquest Incorporated

35

36

Consumer Multimedia Semiconductors and Applications Worldwide

inside real-time, three-dimensional worlds. Silicon Graphics/MIPS Technologies is supplying a 64-bit RISC processor, which will be combinedwith 500-MHz Rambus memory technology to enable fluid three-dimensional imagery. Alias and MultiGen, software development tool companies, are supplying tools to allow game publishers to create games withrealistic imagery, graphics, environments, and character movements.
Its new Virtual Boy platform was demonstrated at both the WinterConsumer Electronics Show and the E3 show in Los Angeles. This new
game will be introduced in both the Japanese and U.S. markets at about
5ie same time. Nintendo has announced August 16,1995, for the U.S.
market introduction, at a price of $179.95. At laimch, the Virtual Boy will
be supported by six games and a $25 million marketing budget. Nintendo
has projected Virtual Boy hardware sales of 2 million units in the UnitedStates by March of 1996.
Nintendo's Virtual Boy game unit breaks the mold of the consoleattached-to-TV standard. It is difficult to classify this product as either ahandheld device like the Game Boy or a console device like the Super NES
because it delivers a very different experience. Virtual Boy provides visually immersive, three-dimensional gaming using a self-contained display.
As shown in Figure 5-1, the unit resembles a pair of large goggles resting
on a small stand, wired to a handheld controUer. The Virtual Boy is portable, but is designed for a stationary user because walking around with thegoggles on would be dangerous. The unit is deceptively lightweight. The
battery pack is attached to the hand controller, with all of tiie mainelectronic components contained in the goggles. A 32-bit RISC processor
riinning at 20 MHz and a dual LED display create a smooth, threedimensional display.
The display for Virtual Boy, designed by Reflection Technology, has an
LED strip and a mirror assembly for each eye. Unfortunately, fiie colors on
the Virtual Boy are limited to a few shades of red, but the images are crisp
and offer surprising depth because each eye receives a different image.
Previous concerns about image flicker associated with this type of display
appear to be unwarranted, based on our "test drive" of the unit. The
Nintendo Virtual Boy delivers a flicker-free image with sharp definition.
Nintendo's belief in the LED display technology developed by Reflection
Technology was demonstrated by its decision to acquire a minority interest in the privately held company. Nintendo's investment gives it
exclusive worldwide licensing rights, within the video game market, toReflection's patented virtual display technology. The 3-D titles that havebeen demonstrated for the Virtual Boy involve vertical graphic planes atdifferent apparent distances from the viewer and true three-dimensionalgraphics where objects move fluidly toward or away from the viewer.
Stereophonic sound is also incorporated in the headset.
Even after the introduction of the Virtual Boy platform during the 1995
holiday season, Nintendo will rely heavily on revenue from software salesof three 16-bit titles that use the Advanced Computer Modeling (ACM)
technology that helped make Donkey Kong Country a hit.

I\/ISAIVI-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

Nintendo, 3D0, Atari, and a Cross-System Coniparison

37

Figure 5-1
Nintendo Virtual Boy

Source: Nintendo

iVISAM-WW-FR-geOI©1996 Dataquest Incorporated

January 29,1996

5§Consumer Multimedia Semiconductors and Applications Worldwide

3D0
The 3DO Company develops and licenses advanced interactive technology to hardware manufacturers and software developers. Its initial
product design was a 32-bit 3DO Interactive Multiplayer, introduced in
October 1993, that used CD-ROM technology instead of the traditional
cartridges for games. Panasonic, LG Electronics (Goldstar), Sanyo, andCreative Labs offer four brand names with 3DO technology.
Upgraded versions of its 32-bit player were introduced in 1995 at theWinter Consumer Electronics Show. The FZ-10 REAL 3DO Interactive
Multiplayer was developed to replace the earlier FZ-1 model. The newmodel features a dual-speed CD-ROM drive and a new memory management system for saving games in progress. Slowing sales of 3DO hardware in mid-1995 have been attributed to customers waiting for theannounced M2 upgrade and momentum lost to the Sega Saturn launch,which has captured early adopters. Sales were stimulated by LG Electronics' aimouncement of a $50 rebate that brought the price of the newmachine to $299 to $349, depending on the outlet. Both Panasonic and LG
Electronics have also announced MPEG-1 adapters that can be used with
their multiplayers to allow users to watch movies and music videos conforming to Video CD format.
3DO used the May 1995 E3 show in Los Angeles to announce many of thespecifications for its next hardware offering, called the M2. (This was also
the first show where there was a unified showing by 3DO, Panasonic, andLG Electronics.) The M2 represents 3DO's step into 64-bit technology.
Although 3DO was not showing M2 hardware on the show floor, it did
share many technical details. The core of the M2 technology is a 66-MHz
IBM PowerPC 602 CPU with 10 custom coprocessors providing high-end
three-dimensional graphics, advanced audio capabilities, and enhanced
I / O performance. Other specifications include a 64-bit memory bus with
6MB (48Mb) of memory, including synchronous DRAM and ROM, an
MPEG engine supporting both MPEG-1 and JPEG decompression, alphachannel graphics processing, a 66-MHz DSP for audio processing (including MPEG audio decompression), and backward compatibility with existing 3DO software titles. The M2 architecture enables die processing of
more than one million polygons per second, with each processor dedicated to a specific task. 3DO claims that the M2 technology will allow it toleapfrog the 32-bit competition with seven to 10 times more power andfeatures such as Gouraud shading, texture mapping and filtering, and 3-D
perspective correction. Availability of the new M2 system and a module
for upgrading earlier game players, the M2 accelerator, is expected by theend of 1995.

Atari
Atari is a company steeped in video gaming tradition. From its groundbreaking introduction of Pong in 1972 to its wildly successful Atari 2600
home video game system. Atari made an early impact as the video gameindustiy grew from infancy. Cumulative sales of tiie Atari 2600 topped
25 million vinits in 1983. Shortly thereafter, the market for home andarcade video games crashed, as did Atari's fortunes. The next year, agroup of investors purchased the remains of Atari. That group included
Jack Tramiel, founder of Commodore Business Machines, whose son Sam
joined the company as chief operating officer.

MSAM-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

Nintendo, 3D0, Atari, and a Cross-System Comparison

39

Atari went public in 1986 and raised over $54 million, traded on the American Stock Exchange. Atari followed a business model of designing andbuilding home computers with propriety technology, and its fortvmes first
improved, with revenue of almost $500 million in 1987, and then declined
as it failed to compete with IBM PCs and clones. After losing $72 million in
1992, Atari gave up the computer business and revenue plummeted to$8 million per quarter, Sam Tramiel managed the corporate downsizing
from 2,500 employees to only 100. Atari became a research and development company working on a next-generation home video game system.
In 1993, Atari introduced the Jaguar game system, the result of over a
year of R&D. The Jaguar is a cartridge-based system, but has an optional
CD-ROM drive for CD-based software titles. Sales of the Jaguar have beenslow, with roughly 200,000 units sold through spring 1995, but Atarireceived a much-needed boost from Sega a few months ago. Atari's suitagainst Sega for violation of patents was settled, with Sega purchasing
7.4 percent of Atari for $40 million and paying an additional $50 million
for future patent royalties. This gives Atari the cash necessary to competewith new entries to the market, such as the Sega Saturn and Sony
Playstation.
Today, Atari is as close to a family-run organization as a publicly traded
company can be. Jack Tramiel is chairman and three other Tramiels (hissons) are on the executive list. Sam Tramiel is president and CEO, andGarry Tramiel and Leonard Tramiel are vice president of sales and vicepresident of advanced software development, respectively.

Performance and Feature Comparison
Table 5-1 provides a comparison of performance and features based on
information supplied by vendors of these video game systems.

MSAM-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

C/5

>

33

Table 5-1
Feature and Performance Comparison of Selected Video Games
FeatureSega Saturn

Sony Playstation

Atari Jaguar

Number of Processors

Eight

Five

Five

Main CPU

Hitachi SH-2 (two)MIPS R3000 core from
LSI Logic

Atari proprietary RISC-bas
64-bit graphics processor

CPU Clock Frequency (MHz)

28.6

33

Unknown

Memory2MB main, 1.5MB video, 512KB 2MB main, 1MB video,
audio, 512KB CD-ROM cache 512KB audio, 32KB SRMJ

Unknown

Graphics

Two processors, 180,000
Two processors, 200,000
texture-mapped polygons/
texture-mapped polygons/
sec, 360,000 flat-shadedsec, 500,000 flat-shaded polypolygons/sec, 16 million
gons/sec, 16 million colors,
colors, 640x480 maximum
720x576 maximum resolution
resolution

Three proc^s^iS/ polygpa
performfflice unknownSound

Yamaha FHl DSP, Motorola
68EC0O0 processor, 32 PCM
channels, 8 FM channels,
44,1-KH2 sampling, QSound
3-D sound capabilities

Sound processor, built-in
digital effects such as reverb
and envelope, 24 PCM channels, 44.1-KHz sampling

32-bitDSP,built-in digitaleffects such as reverb andenvelope, 24 channels,
44.1-KHz sampling

Decompression Standards

Proprietary

JPEG

Proprietary

CD-ROM Drive

2x speed

2x speed

Cartridge-based,
2x speed optional

Video Output

Composite video standard,
optional NTSC, S-video,
RGB, and HDTV

Composite video, S-video,
RGB output, 5V power for
external RF converter

Composite video

I

CO
05
O

@
_x
(O
CO
CD

O

Si
(U

.o
c:
(D

=1

en
o

o

"O

o
09
»—*•

CD

(U
=3
C
(U
rs3
CO
CO
CO
<y>

Source; Sega, Sony, Atart 3DO

.

Chapter 6f

Emerging Semiconductor Opportunities inInteractive ^^^^^^^
There are a number of critical technologies, such as compression,
advanced DRAM architectures, 3-D graphics, CD-ROM drives, sound,modems, and virtual reality, that play a central role in video game hardware development. The following sections provide analysis of thesetechnologies, followed by a discussion of the new MPUs, graphics chips,
controller chips, and memory products that are competing for a slice of thevideo game market. In the final section, a forecast of the semiconductor
opportunity in next-generation video games is presented.

Key Technology Trends and Issues
Compression
So far, the use of motion video images to enhance the gaming experiencehas received mixed reviews in the marketplace. Until recently, game producers struggled to integrate compelling motion video into all but thestrategy games and reference titles.
One recent trend is typified by Sega's adoption of The Duck Corporation's
TrueMotion software compression technology for elements of its NHL
All-Star Hockey title. Software-based video decoders like TrueMotion,
CinePak (SuperMac), Indeo (Intel), and MPEG (several suppliers) performthe decompression function while running on the host CPU. Game developers are using a variety of approaches, taking into account quality andperformance trade-offs, for particular titles.

^

Until recently hardware MPEG 1 decoders, which offer superior performance and quality, have remained an expensive aftermarket option for
consumers. 3DO's M2 and Philips' CD-i are the only systems employing
MPEG hardware. As the prices come down, MPEG decoders could
become more mainstream as part of an ASIC or standalone IC in model
updates. MPEG's presence as a fixture in Windows 95 should help sway
game developers because they can save resources by using one approachfor two platforms.
The Sony Playstation does have built-in JPEG still frame decompression
hardware (part of an ASIC) for decoding bit-mapped backgrounds andimages. This appears to be a very practical use of compression for thelarge "twitch" segment of titles.
Audio compression is appearing in the form of ADPCM (Sony) and
MPEG-1 (3DO and Philips). Botih are popular in other markets, although
MPEG appears headed for broader deployment—another consideration
for game developers interested in leverage.

I
MSAM-WW-FR-9601©1996 Dataquest Incorporated

41

42

Consumer Multimedia Semiconductors and Applications Worldwide

Advanced DRAM Architectures
It's interesting to note that although PC manufacturers are clamoring tofind a way to move to a unified memory architecture, one in which tiiesame DRAM chips are used for the main memory and the display memory, games manufacturers have moved from a unified memory model to a
split memory model for the current 32-bit systems. A unified memory
system tends to use fewer DRAM chips than a split memory system,
which helps to reduce costs.
Games manufacturers have moved from unified memory to a split memory model because the increasingly sophisticated graphics demanded by
the highly competitive games market creates mushrooming demand for
DRAM bandwidth. Early evidence of this trend showed up in the 3DO
REAL machines, and it is pronoimced in the Sega Saturn and the Sony
Playstation. Even with the use of high-bandwidth wide synchronous
DRAMs, parts which were unavailable until just recently, Sega still finds a
split memory necessary to simultaneously perform graphics manipulationand MPEG decompression while feeding a data-hungry high-performanceCPU.
Nintendo, in its Ultra-64 system, has armounced that it will take advantage of the Rambus DRAM channel to combine the meniories in its system.
The M2 architecture from 3DO will also employ a unified memoryarchitecture. These are the first instances of unified architectures using oneof the new DRAM I/O architectures in next-generation video game platforms. Dataquest expects other systems to follow this approach simply to
reduce system costs.
In the far future we may see more exotic approaches, such as Mitsubishi's
3D-RAM or a synchronous graphics RAM (SGRAM). It is notable that themost sophisticated approaches to graphics rendering are poised to be usedin workstations and video games, while tamer approaches are currently
slated for use in PCs. This is driven by the less compelling graphics
requirements for standard PCs as compared to workstations, which needto perform 3-D modeling and other sophisticated scientific and engineering functions, and for games, which compete more strongly if they use
more sophisticated images. A graphical representation of the highperformance graphics driving the use of more advanced DRAM architectures in video games is shown in Figure 6-1. With the growing importanceof multimedia PCs in the market, PC designers could be expected eventually to incorporate more advanced DRAM technology in their products,
but they would be in the late majority segment of the traditional adoption
curve. It is quite reasonable to assume that gqmes will increase in importance as the high-performance DRAM driver of the future.
3-D Graphics
Three-dimensional perspective is a major component of enhancing thevisual experience of video games. This draws the player into the gamebecause it provides a closer approximation of everyday visual experience,
which includes depth as well as height and width. Adding 3-D features to
the graphics capabilities of a game unit (or other electronic equipment)
requires a huge increase in processing power and greater use of floatingpoint functions.

MSAM-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

43

Emerging Semiconductor Opportunities in Interactive Games

Figure 6-1
New Memory for the Next Level
Performance
Pixel Bus
DemandConventional
DRAM

Time
9S04079

Source; Dataquest (July 1995)

Sprites are important graphic tools for two-dimensional graphics. A sprite
is a graphic object that moves arovmd but changes little. Sprites are efficient because ihe pixels within the sprite do not need to be recalculated;
they move around the screen as a single block of pixels (rather than many
single pixels). However, with 3-D graphics, objects need to change size as
they move closer or farther from the viewer. Sprites may still be used with
3-D graphics, but the pixels within the sprite need to be recalculated as the
sprite moves along the Z-axis. The calculation may be more involved thanjust resizing the sprite if a game or other application has diminished lighting effects where objects lose color and detail as they move farther away.
Polygons are used as building blocks for three-dimensional applications
just as sprites are used for two-dimensional graphics. In the same way thatsprites help reduce the number of calculations required, polygons are useful because they are relatively simple to resize and reposition in a graphic
image. Multiple polygons can be drawn together to create an object thatappears to be three-dimensional, with fewer calculations than rendering atrue three-dimensional object. The human figures from the popular video
game Virtua Fighter are a good example. Virtua Fighter pits two humanfigures in a martial arts match with a three-dimensional perspective. The
figures themselves are drawn with polygons to give the appearance of
having round arms and fuU hair.
Polygons placed next to each other but at different angles to the viewer
give the impression of a three-dimensional object with many flat sides,
in much the same way that an octagon gives the impression of a circle.
Of course, the image is improved if more polygons are used, just as a
16-sided polygon is a closer approximation to a circle than an octagon. As
IVISAM-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

44

Consumer Multimedia Semiconductors and Applications Worldwide

more polygons are added, the angle and color changes from one polygon
to the next are reduced, making the three-dimensional object appear
smoother and more realistic. Polygojis are so important for threedimensional graphics that most companies designing hardware will use
number of polygons per second as a measure of performance.
Lighting and shading are also critical issues for three-dimensional graphics. Good shading dramatically increases the realism in a graphic picture.
When polygons are drawn, a color (or pattern of colors) must be chosen
for each polygon. These colors must be chosen with respect to apparent
light sources in the picture itself. For example, if the sun is shining, objects
should cast shadows and the sides of objects facing the sim should belighter. Common applications use two main techniques: flat shading and
Gouraud shading. Another, Phong shading, produces better results thaneither flat or Gouraud shading but is too complex for common or low-cost
applications.
Flat shading is the simplest of these techniques and involves the fewest
calculations. A single color is calculated for each polygon according to
its orientation to light sources and the object's intended color. The drawback to this technique is that sharp color transitions from one polygon
to the next reduce tiie image's realism. Gouraud shading involves calculating a color for each vertex rather than each polygon. Once the vertex
colors have been chosen, the polygon is shaded using the vertex colors as
fixed points and interpolating colors between those vertexes. The result ismore realistic than flat shading because many colors are used on eachpolygon. As the number of polygons in an object increases, the visualdifference between these two methods is reduced, but Gouraud shading
increases the realism more cost-effectively than adding additional
polygon-processing capability.
3-D graphics have been available on high-end graphics workstations foryears, but these features are becoming increasingly affordable for desktop
PC and home video game use. The leading solution for low-cost 3-Dgraphics is the GLINT processor from 3D Labs, a single chip with capabilities previously achieved only with multiple chips, l l i e performance specifications are: 300,000 shaded, depth-buffered, and anti-aliased polygons
per second; 32-bit color; 2-D and 3-D graphics acceleration; PCI-bus interface logic; and integrated LUT-DAC control. A quick examination of
Table 5-1 shows this to exceed the performance of the current generationof home video game hardware by 50 percent. The GLINT processor supports OpenGL, which is a the public variation of Silicon Graphics' graphic
library, GL.

CD-ROM Technology
Speed and storage capacity are the two critical factors in measuring performance of CD-ROM drives. Two elements affect speed: transfer rates
and access times. Transfer rates are established by how many bytes can betransferred or moved in a single second. The original CD-ROM standard
established 150 KBps as the minimum transfer rate for "single speed."
Subsequent CD-ROM technologies have been labeled according to theirrelationship to the single-speed standard (see Table 6-1).

MSAM-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

45

Emerging Semiconductor Opportunities in Interactive Games

Table 6-1
CD-ROM Drive Specifications
Speed Label
Single Speed
Double Speed (2x)Triple Speed (3x)Quad Speed (4x)Transfer Rate (KB/sec)
150
300
450
600
900

6x

Access Rate
(Milliseconds)
300 to 450
250 to 400
250 to 350
175 to 300
150 to 250

Source: Dataquest (July 1995)

Access rates may be just as important as transfer rates, especially for
applications such as games where response times are critical. While
CD-ROM technology has improved in both overall speed and transfer
speed, access rates have also improved. One could have a drive that could
transfer bytes out very quickly but that would be very slow in getting to
the information in the first place. Thus, the slowest transfer rate drive canbe more responsive than the highest transfer rate drive if its access time issubstantially better.
3DO was the first video game maker to introduce CD-ROM drive technology in its platform when it used a single-speed drive in its first FZ-1
model. One of the key features of 3DO's new FZ-10 model was the introduction of a double-speed drive. Both the Sony Playstation and the Sega
Saturn have also incorporated double-speed drives. In a market where
profits are derived mainly from software sales, these companies havedecided to take advantage of the lower costs in production and inventoryoffered by CD-ROM discs over cartridges. However, these platforms will
pay a penalty in the form of higher costs for the actual video game playerswith CD-ROM drives. The additional cost of including CD-ROM drives invideo game players will make it more difficult to lower prices enough toattract strong consumer market sales of video game players. Most CDROM drive companies shut down production of single-speed drives in
1995. They are now shutting down, or have already shut down, doublespeed CD-ROM drive manufacturing lines and have converted, or will be
converting soon, to quad-speed drives. Nintendo will be exploiting the
hardware cost savings in its cartridge-based Ultra-64 system to introduce
its new platform at or below $250.
In early 1995, a major competition developed between two proposed
standards for the next generation of multigigabyte high-capacity opticaldisks—critical for space-constrained multimedia. This new generation ofvideodisk technology is called digital video disk (DVD). Sony and Philips
have developed one technology. Multimedia CD (MMCD); Toshiba andTime Warner have developed another, called Super Density (SD). Bothstandards employ MPEG-2 compression to achieve much higher levels of
storage capacity. Efforts to develop one common standard have failed.
However, PC manufacturers, who would play the major role in determining a winner, are exerting their influence to push the two competing parties to a single standard. Before DVD technology could be employed invideo game players, its cost would have to come down significantly. Sega

i\/lSAM-WW-FR-9601©1996 Dataquest incorporated

January 29,1996

46

Consumer Multimedia Semiconductors and Applications Worldwide

has said it is examining the SD format, but it is still too early to predict
when this technology could be used in video games.

M

Sound
Sound processing in computers and video games has progressed from
simple beeps to 8-bit FM S5mthesis and then to three-dimensional soundprocessing and wavetable synthesis. The progression from one technology
to the next has involved trade-offs between cost and performance, but
high-performance technologies are now being bundled as standard features in both home video games and midrange and higher multimedia
PCs. Just as the change from the simple PC speaker to the original Sound
Blaster audio cards represented a leap in performance, the progression
from those same 8-bit, FM-synthesized cards to the newest technologies
represents another leap in performance. The advances are dramatic interms of both the quality of sound reproduction and reproduction of
spatial positioning.
Audio signals are naturally analog signals that must be converted todigital iriformation before they can be stored on digital media such CDROM discs and rigid disk drives. This conversion is performed by a digital-to-analog converter (DAC). Because analog signals are continuous anddigital signals are quantized, the digital-to-analog conversion involves theloss of some information about the signal. The digital signal is quantizedin terms of both voltage and time. (If you graph an analog signal on asheet of paper as it varies with time, you should be able to draw a single
line on the graph to represent that signal.) However, if you digitize thatsignal, the information is stored periodically rather than continuously.
(You would have to lift your pencil between each of the digital samples,and your graph of the digital signal would be a series of dots rather than asmooth, continuous line.) How much information is lost during the conversion from analog to digital depends on the sampling rate and the bit
resolution of the DAC. Eight-bit DACs were used in the first sotmd cards,
but they have been almost completely replaced by 16-bit DACs, which
provide an overwhelming boost in audio quality.
FM synthesis has been the mainstream technique for reproducing an
audio signal from digital information. This technique uses a carrier signalthat is frequency modulated to store audio information. This carrier signal
is digitized for storage on media such as hard disks. When the sound isplayed back, the digital information must be converted into frequencymodulated analog signals, then demodulated and mixed by the FM syrithesizer before being amplified and sent to the speakers. The demodulation and mixing steps rely on algorithms to approximate the sounds ofspecific instruments, and these approximated sounds are noticeably different from the true sounds of the instruments.
Wavetable synthesis is overtaking FM synthesis in popularity because it
reproduces sounds more accurately. This technique uses a stored sample—a high-quality, digitized recording—as an example of a specificinstrument's sound. Samples are stored permanently in read-only memory (ROM). Because this method stores more information about the complex sound of an instrument than FM S5mfhesis, it more closely
approximates the real instrument's sound. Wavetable synthesis produces
audio quality comparable to audio CDs.

MSAM-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

iEmerging Semiconductor Opportunities in Interactive Games

47

Spatial positioning, or 3-D sound, also enhances the realism of audio playback by recreating sound directionality, the impression that a particularsound is coming from a particular direction, or even that the source of asound is moving. The earliest application of this to audio equipment is stereo processing. Stereo soimd uses two audio channels, left and right, toprovide simple directionality to sovmd. Stereo is now being replaced withsurround sound (three channels: left, right, and rear) and pro-logic, whichadds a center channel to surround sound. Multiple channels enhance theaudio realism by providing more unique sound sources. However, evenwith pro-logic's four channels, listeners can still feel that all of the sounds
are coming directly from a speaker rather than from many directions.
3-D soxmd uses advanced audio processing (phase shifting) to trick the listener into believing that sounds are not tied to the speakers at all but emanate from all directions in front or at the sides of the listener. The listener
may also believe that the source is moving. This has the effect of separating the apparent sound source from the actual sound source. When pairedwith visual cues, this audio effect provides a more realistic experience. For
example, watching a graphic jet airplane fly across a computer screen is
likely to be more interesting if the roar of the engines seems to follow the
jet's path. The experience seems more real when the senses receive simultaneous and consistent information that closely approximates everyday
experience.
Several companies are currently licensing or developing 3-D sound technologies. Offerings include Desper Products Spatializer, SRS Labs' Sovmd
Refrieval System, and QSound Labs' QSound Virtual Audio System.
Dolby Laboratories and Roland are also working on 3-D sound solutions.

ModemsModem technology has begun to make inroads into the video game arenaand is showing promising potential. Catapult Entertainment has enteredinto licensing and support agreements with Sega and Nintendo that willallow Catapult to market its XBAND Video Game Modem for Sega's Genesis and Nintendo's Super NES platform. The XBAND modem makes it
possible for video game players to hook into a network that allows themto compete against opponents in other locations in real time over a telephone line. Catapult claims that the XBAND game modem and network
are designed to support all of today's popular multiplayer video games
without modification to either game machine or software, which should
allow it to gain easier market acceptance. Atari offers the Jaguar Modem,
which will allow friends to play over phone and cable lines.
Video game companies are also taking advantage of modems to deliver
software to the home. Sega completed testing of its Sega Channel in the
United States during 1994 and began to roll out its interactive system inlate 1994 and early 1995. More than 90 local cable systems have launched
the Sega Channel service as part of plans by nearly 50 cable multisystem
operators to offer the service around the United States. By the end of 1995,
Sega Charmel plans to be launched in systems serving about 20 million
U.S. subscribers.

MSAM-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

48

Consumer Multimedia Semiconductors and Applications Worldwide

The technology developed for Sega Channel allows the channel to receive
Genesis games from Sega and other publishers of Sega games, uplinkthem to a satellite and beam them to cable headends. At the headend, theoperator will use a specially designed General Instrument or ScientificAtlanta receiver/modulator to pick up the games and pass them throughto subscriber homes. In the home, the system entails modif3dng a Sega
Genesis video game controller with a special cable adapter that downloads the games. A subscriber can select a game and, within a minute, thegame will be downloaded into the adapter. A diagram of this system isshown in Figure 6-2. The adapter, whidi sells for $160 and is also made byGeneral Instrument and Scientific Atlanta, manages the back channel forordering specific games from the TV screen and &ie memory for storing
downloaded games. The service costs $12 to $20 per month and allows
subscribers to choose from 50 updatable games, preview soon-to-bereleased titles, access special titles created solely for the Sega Channel,
view game tips, and participate in contests and promotions. Sega worked
with TCI and Time Warner to develop the Sega Channel, and each of theadapter makers. Scientific Atlanta and General Instrument, has been guaranteed an order of 250,000 adapters by TCI and Time Warner.

i

Atari has also been developing an interactive game delivery system working with Time Warner Cable and its Full Service Network trials in
Orlando, Florida. In this system users are able to access games that are
digitally compressed and stored on servers. The system supports games
for Atari's Jaguar video game player.
Figure 6-2
Sega Game Data Delivery Systemi

CD-ROM
Drive

National
Game ServerTransmitter

UplinkAntennaGame
Inventory

Games
ReceiverModulator

Demultiplexer-

Modulator

Cable HouseholdVideo Game System

I

Source: Sega

MSAM-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

Emerging Semiconductor Opportunities in Interactive Games

49

Virtual Reality
The phrase "virtual reality" is an oxymoron, but does embody many
important ideas. As the processing power of computers and other video
game hardware increases, these games will feature more virtual reality(VR) features such as photorealism, three-dimensional audio capabilities,
and natural input devices. Virtual reality aims to create an artificial
environment that is experienced as real or at least as a suitable model ofreality. Advances in hardware and software are narrowing the gap
between the capabilities of both consumer and professional devices andthe requirements for suspension of disbelief.
The newest generation of home video game hardware has taken steps
toward the ideal of VR. The Sony Playstation and Sega Saturn support
more colors than previous generations, as well as 3-D rendering capabilities using polygons. Nintendo's Virtual Boy is visually immersive, with aset of gogglestiKatprovide a stereo image (one image for each eye) for
crisp 3-D graphics. The most VR-oriented game platform is the Atari
Jaguar VR system. The Jaguar VR includes a head-mounted display anduses natural inputs created by tracking head motion and hand niotion. In
tihis system, turning the head to the left causes the screen to change: The
viewer sees what previously was to the left. To point a gun to the right,
simply move the arm to the right. This separation of view and gun pointing adds to the realism but is extremely difficult to control without natural
inputs (those which require no learning) such as head movement tracking
and joystick tracking.
Virtual reality is not all fun and games, however. There are practicalapplications for artificial environments in industry and science. For example, it may be useful to simulate human interaction with a machine being
designed to determine if controls or gauges are converuently placed. Is a
new car design suitable for someone five feet tall as well as for someone
six feet tall? Which of two (or more) designs do potential users prefer?
These kinds of questions can be answered by building a physical model,
but building iterative physical models is time consuming and expensive.
One drawback to virtual reality is the potential for negative side-effects.
Some users of head-mounted displays have reported a type of simulator
sickness that appears to be related to poor image stabilization. Others areconcerned about possible long-term effects from using head-mounted displays. More research is needed before any long-term effects can be understood. In any case, short-term use of these devices is considered safe andrisk-free.
Emerging Features and Technologies Summary
Table 6-2 illustrates emerging features that are being, or will be, deliveredby the next-generation of video games and the key technologies behindeach of these features.

I\/ISAM-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

50

Consumer Multimedia Semiconductors and Applications Worldwide

Table 6-2
Emerging Features and Technology Requirements for Video Games
FeatureAdvanced Graphics
3-D Processing
Texture Mapping
Rotation/Scaling
Scanned Images
Motion Videoi

Technology Requirement
16-bit, 32-bit, 64-bit MPU
Specialized sprite and backgrovmd processors (100-200K-gate CMOS ASIC)
JPEG/MPEG decoders (ASSP or ASIC)
Fast video memory (1MB, 2MB)VRAM
S3mchronous DRAM
Rambus DRAM (RDRAM)

Advanced AudioCD Quality
Unlimited Soimds
3-D Sovmd

DSP processor (16-bit, 32 bit)Compression
ADPCM
MPEG
AC-3
CD DAC (16-bit, 44 KHz)
Audio RAM (0.5MB to 1MB)

Human Control Interface
Memory Card
Wireless Control
VR Goggles/Headphones
Cost-Effectiveness

PCMCIA or Carbus (PCI) Interface
IrDA and RF interface, UART, protocol processor
IEEE 1394 interface
Further integration onto a 3- to 4-chip chipset

iSource: Dataquest (July 1995)

Semiconductor Opportunities
A generic block diagram of a RISC video game controller is shown in
Figure 6-3. This diagram provides an overview of the key elements inadvanced video game controllers and a valuable framework for understanding the key technologies and semiconductors in these systems. The
following sections discuss specific semiconductor opportunities presented
by this next generation of video game players.

iViPUsThe opportunity for microprocessors in home video games is biased
toward 64-bit RISC architectures. The current generation of hardware isoverwhelmingly 32-bit RISC-oriented. Current systems do vary in theirimplementation strategies for the CPU, from using an off-the-shelf MPU
to integrating a RISC core into an ASIC. The Sony Playstation uses a custom MPU from LSI Logic that includes a MIPS R3000 core with other functionality, and the Nintendo Ultra-64 is expected to have a custom MPU
with a RISC core from Silicon Graphics. Other units, such as the 3DO M2
and the Sega Saturn, use generic microprocessors surroimded by custom
processors for graphics and audio processing. The 3DO M2 will use aPowerPC 602 microprocessor, and the Sega machine has two Hitachi SH-2
microprocessors.

MSAM-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

>Figure 6-3
Generic Block Diagram of RISC Video Game Controller

(O

o>
o

Video Buffer

Graphics/
Video
Controlter

VRAIVI/SDRAH/I/
1-ZMB RDRAM

RAMDAC

NTSC
Enco

Host
CO-ROM
Controller

Sound
Control

CD-ROM
Drive
Controller

Audio R
0.5MB

Main Bus

SystemCPU@

32/64-bitCO<oSystem
Support

CT>

a
CD
CO

O

o
•o
o

-^

Video
Compression
Decoder(M/JPEG
Optional)

Main
Memory
2-4MB
DRAM

OS
Memory4Mb
Nonvolatile

Hi
CD

I/O
ControllernHandheld Controller etc.

=3
C

su

ro
CO
CO
CO
O)

Source: Dataquest (July 1995)

52

Consumer Multimedia Semiconductors and Applications Worldwide

Opportunities for Motorola and IBM to supply microprocessors for the
64-bit generation of home video games are good because these companies
already have a 64-bit chip m production (PowerPC 620), as well as acurrent design win in the M2. A rumor is circulating that Sega is interested
in 3DO's M2 accelerator, but is denied by both companies. However, thisspeculation is interesting because Hitachi, which supplies microprocessors for the Sega Saturn, does not have a 64-bit microprocessor. Sega
will have to design around a new CPU for its next system in any case. A
second design win would be strong boost for the PowerPC architecture.
The Atari Jaguar uses a little of both these strategies: a powerful RISCbased graphics processor and a Motorola 68000 for central processing
functions. The arguments for and against these two methods involve
trade-offs. A highly integrated system is likely to be less expensive tomanufacture in volume, but systems designed around standard microprocessors may be able to run variations of popular operating systems. As theopportunities evolve to leverage video game designs into set-top boxes fora multipurpose design, these issues become more important. Silicon
Graphics has already taken the step of developing its Magic Carpet architecture to be used in its own set-top box designs as well as in Nintendo's
Ultra-64. At this point, the best strategy is unclear, but there are opportunities for MPU companies to license iJieir RISC cores as well as provide
standard products for these units. Companies willing to do both will beable to take greatest advantage of opportvinities. As far as functional
requirements are concerned, tiie more powerful the processor, the better,but floating-point performance is becoming more critical as 3-D graphics
increase in popularity.

Graphics Chips
Graphics chips are a critical component of hon\e video games. The quality
and speed of graphics are the primary performance benchmarks for video
game hardware. As three-dimensional graphics grow in popularity, thegraphics processor will increasingly define the system.
Polygon processing for 3-D graphics is floating-point mathematics intensive, so either the graphics controller or the CPU must provide good
floating-point performance. Gouraud shading is also important, providing
a dramatic improvement in 3-D images with lower processor overhead
than that involved in increasing polygon-drawing capabilities. The third
essential feature for video game graphics chips is video capabilities. Mostof these units are CD-ROM based or have an optional CD-ROM accessory.
The 680MB storage capability for CD-ROM discs allows many video clips
to be stored inexpensively, line graphics chips must be able to decompress
the video stream and to perform the color-space conversion and scaling
required for playback. Semiconductor companies that want their graphics
capabilities designed into home video games must address all these functional issues and must be willing to integrate functions into custom ICs for
specific game platforms. Standard graphics controllers do not generally
have the level of integration required for home video game designs.

Controller Chips
The key to auxiliary controller chips in home video games is flexibility.
Seiniconductor companies looking to sell disk controllers or audio controllers in the home video games market should be willing either to license

MSAI\/I-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

Emerging Semiconductor Opportunities in Interactive Games

53

their technology or to provide a custom IC to the buyer's specification.
Home video game designers push the limits of technology in polygon
processing and 3-D graphics, but they do not spend the time or money
to create new disk I/O or audio standards because those standard technologies are suitable as they are. For this reason, they need off-the-shelftechnologies, but may want to integrate these functions into custom ICs
to reduce overall manufacturing costs.

MemoryHome video games have created a new market opportunity for memory
device manufacturers. The current generation of games has set records interms of megabytes of memory per system and for acceptance of alternative memory architectures. Almost all of this generation's units use varying amounts of standard DRAM, VRAM, SRAM, and ROM, but some ofthem break the mold. The Sega Saturn has 2.5MB of SDRAM, and theNintendo Ultra-64 is scheduled to have a Rambus memory interface.
Price/performance is the key trade-off for memory devices in these systems. New architectures sudi as SDRAM and Rambus are acceptablebecause the ability of the user to upgrade and to use standard modules(SIMMs or DIMMs) is not important. With price/performance critical,
there is little opportunity to use flash or EPROM devices inside the boxes.
Flash and EPROM provide programmability benefits but cost so much
more than standard ROM devices that they are not currently attractive.
Video game designs are fairly static within a generation, so reprogrammability is not a critical issue. The largest opportunity for these devices is in
auxiliary memory cards that would allow players to save games and later
resume play. Several game makers have announced tihis capability fortiieir CD-ROM-based games and some popiilar cartridges for cartridgebased games have a provision for saving games, but the memory requirements for this feature are measured in kilobytes rather than megabytes.

Semiconductor Forecast for Next-Generation Video Game Controllers
The emerging market for next-generation RISC-based video game controllers is expected to to reach almost 18 million unit shipments by the year
2000 (see Table 6-3). The average semiconductor content forecast for these
new machines is outlined in Table 6-4. Some of the key assumptions
behind this forecast are as follows:• Average prices for video game controllers will drop below $200
by 2000.
• Advanced DRAM architectures that command a price premium will be
used and the megabytes per system will increase.
• CD-ROM technology will be successful in video game applications.
• Decompression hardware will eventually penetrate 20 percent of thecontroller shipments.
• New MPUs and graphics controllers delivering more advanced features
will be introduced in the future.
Forecasts for next-generation video game controller production is shownin Table 6-3. Semiconductor content is forecast in Table 6-4. Table 6-5 andFigure 6-4 present the semiconductor market opportunity for next-generation video game controllers, based on these forecasts. The semiconductor
market share forecast by major segment is shown in Figure 6-5.

^

MSAM-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

54

Consumer Multimedia Semiconductors and Applications Worldwide

Table 6-3
RISC Video Game Controller Production, Worldwide
Controller Shipments
Units (K)
Average Selling Price,
Factory (U.S.$)
Revenue (U.S.$M)

1993
100

1994
1,237

1995
4,802

1996
6,809

1997
8,886

1998
12,791

1999
15,797

2000
17,869

328
33

320
396

350
1,681

285
1,941

258
2,293

238
3,044

202
3,191

190
3,395

Source; Dataquest (July 1995)

Table 6-4
Semiconductor Content of Average RISC Video Game Controller(U.S. Dollars)
Total Semiconductor Cost

1993
209.2

1994
212.5

1995
230.0

1996
186.7

1997
169.7

1998
158.3

1999
133.8

2000
127.0

MemoryDRAM/VRAM/SDRAM/RDRAM
MB per system
Nonvolatile
Mb per system
MPU
System Support (ASIC)
Audio
ControUer (ASIC)
Audio DAC (ASSP)
Amps/Mixer/etc.
Graphics/Video
Controller (ASIC)
TV Encode (ASSP)
Triple Video DAC (ASSP)
Compression
CD-ROM Control
I / O Control (MCU)
Standard Logic/Linear
Discrete

96.8
93.6
3.0
3.2
4.0
28.0
4.4
15.3
10.3
4.5
0.5
23.8
19.5
1.4
2.9
0
34.7
3.1
2.1
1.0

100.2
97.2
3.0
3.0
4.0
33.0
4.2
14.2
9.6
4.1
0.5
21.1
17.4
1.3
2.4
0.5
33.1
3.1
2.0
1.0

127.7
124.8
4.0
2.9
4.0
28.0
4.0
13.2
9.0
3.7
0.5
18.7
15.5
1.2
2.0
0.9
31.5
3.0
2.0
1.0

100.8
98.0
4.0
2.8
4.0
24.0
3.8
12.2
8.4
3.3
0.5
16.3
13.6
1.1
1.6
2.8
20.9
2.9
2.0
1.0

91.6
89.0
5.0
2.6
4.0
22.0
3.6
11.3
7.8
3.0
0.5
14.3
12.0
1.0
1.3
2.4
18.8
2.9
1.9
1.0

85.3
82.8
6.0
2.5
4.0
21.0
3.4
10.4
7.2
2.7
0.5
12.5
10.6
0.9
1.0
2.2
17.8
2.8
1.9
0.9

65.4
63.0
6.0
2.4
4.0
20.0
3.3
9.6
6.7
2.4
0.5
10.9
9.3
0.8
0.8
2.2
16.9
2.8
1.8
0.9

61.7
59.5
7.0
2.2
4.0
20.0
3.1
8.9
6.3
2.2
0.5
9.5
8.2
0.7
0.7
2.2
16.1
2.7
1.8
0.9

Compression Content Assumptions
Compression Hardware Cost
Market Penetration (%)
Average Cost per Player

35.0
0
0

25.0
2
0.5

18.0
5
0.9

14.0
20
2.8

12.0
20
2.4

11.0
20
2.2

11.0
20
2.2

11.0
20
2.2

CD-ROM Content Assumptions
CD-ROM Control Hardware Cost
Market Penetration (%)
Average Cost per Player

34.7
100
34.7

33.1
100
33.1

31.5
100
31.5

29.9
70
20.9

28.4
66
18.8

27.0
66
17.8

25.7
66
16.9

24.4
66
16.1

Source: Dataquest (July 1995)

MSAM-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

55

Emerging Semiconductor Opportunities in Interactive Games

Table 6-5
Next-Generation Video Game Controller Semiconductor Market Forecast, Worldwide(Millions of U.S. Dollars)
1993
20.9
9.7
9.4

1994
262.8
124.0
120.2

1995
1,104.5
613.2
599.3

1996
1,271.2
686.0
667.3

1997
1,507.7
814.1
790.9

3.8
40.8

25.9
83.0

23.3
195.5
32.1
100.1

Controller (ASIC)
Audio DAC (ASSP)

1.0
0.5

5.2
17.6
11.9
5.1

13.9
134.5
19.2
63.4

18.8
163.4

System Support (ASIC)
Audio

0.3
2.8
0.4
1.5

43.2
17.8

57.0
22.7

69.2
26.6

Amps/Mixer /etc.
Graphics/Video

0.1
2.4

0.6
26.1

2.4
89.8

3.3
111.1

4.3
126.7

Controller (ASIC)
TV Encode (ASSP)
Triple Video DAC (ASSP)
Compression

2.0
0.1
0.3
0

21.5
1.6
3.0
0.6

74.4
5.8

92.9
7.4
10.9
19.1

106.7
8.6

CD-ROM Control
I / O Control (MCU)
Standard Logic/Linear
Discrete

3.5
0.3
0.2
0.1

40.9
3.8

Total Market
MemoryDRAM/VRAM/SDRAM/
RDRAM
Noiwolatile
Processor MPU/ASIC (32/64)

2.5
1.3

9.6
4.3
151.3
14.4
9.6
4.8

142.6
20.0
13.3
6.7

11.4
21.3
166.7
25.6
17.1
8.5

1998
1999
2,024.3 2,113.8
1,090.9 1,032.5
1,059.1
995.2

2000
2,269.2
1,103.3
1,063.2

31.8
268.6

37.3
315.9

40.1
357.4

43.9
133.1
92.6
34.5

51.5
152.0
106.4
38.3

55.3
159.0
111.9
39.0

6.0
159.4
135.1
11.2

7.3
172.2

8.1
170.5

146.8
12.4
12.9
34.8
267.5
43.7
29.1
14.6

146.2
12.7
11.7
39.3

13.1
28.1
228.0
36.1
24.1
12.0

287.5
48.5
32.3
16.2

Source: Dataquest (July 1995)

Figure 6-4
Next-Generation Video Game Controller Semiconductor Market Forecast, Worldwide
Millions of U.S. Dollars

2.500 tl
2,000

1993

1994

1995

1996

1997

199S

1999

2000
aso4oaz

Source: Dataquest (July 1995)

MSAM-WW-FR-9601©1996 Dataquest incorporated

January 29,1996

56

Consumer Multimedia Semiconductors and Applications Worldwide

Figure 6-5
Next-Generation Video Game Semiconductor Market Opportunity by Major Segment
2000

1995
Compression (0.4%) — \ j — Others (2.6%)
Compression (1.7%)

Audio (5.7%)
Graphics/
Video(8.1%)

Graphics/
Video(7.5%)

Total Market = $1.1 Billion

Total Marl(et = $2.3 Billion
3504DB3

Source: Dataquest (July 1995)

MSAM-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

.

Chapter 7fMajor Semiconductor Suppliers to tiie Video
Game industry _ ^ ^ . . ^ ^ » ^ _ ^ ^ . . ^A number of semiconductor suppliers have won key slots in the new
32-and 64-bit video game controller markets and are positioning themselves to develop future opportunities in the video game industry. A brief
description of the products and design wins of some of these companies
follows.
Hitachi
Hitachi's 32-bit SuperH RISC engines, graphics processors, controller
ASICs, SDRAM memory, and otiKer DRAM and memory chips dominate
the Sega Saturn platform. The SH-2 and SH-1 processors provide thepower that drives the Saturn. As one Sega executive phrased it, "We speakSH." The SH-1 includes on-board ROM, RAM, and peripheral control
functions. Capitalizing on its success, Hitachi recently announced a newmini-RISC SH-1 core as part of a new cell-based ASIC family. The SH-2
offers high bus bandwidth, on-chip cache, and an SDRAM interface. Its
design is optimized for use in multimedia applications such as video gamecontrollers. The next series of the SuperH ardutecture, the SH-3, should beavailable in 1995. Hitachi claims this chip will be capable of 100 mips at 3.3
volts, with operation down to 1.8 volts.

•

LSI Logic
At the heart of Sony's Playstation is LSI Logic's custom 32-bit R3000
RISC processor, which was designed using LSI's proprietary CoreWare
methodology and O.Sp. process technology. The Playstation CPU, which
was customized for Sony Computer Entertainment, comprises three highperformance subsystems that are part of LSI's Video Compute Engine
architecture: a 32-bit RISC CPU, a graphics transformation engine (GTE),
and a video decompression engine (VDE) based on Motion JPEG technology. This processor, which is illustrated in Figure 7-1, delivers 200 MIPS
rurming at 34 MHz.
MlPS/Silicon Grapiiics
Few details about the RISC processor developed by Silicon Graphics aspart of the Nintendo Dream Team have been disclosed. Perhaps the closest information about this chip comes from comparing it to the R4300i
CPU, which was aimounced as part of the Magic Carpet Architecturedeveloped by MIPS Technologies for the set-top box market. The CPU
developed for Nintendo's Ultra-64 was based on the MIPS R4400 initially,
but also borrowed ideas from the R4200. Although the Magic Carpet
architecture uses a multimedia accelerator (MMA) to perform real-time
MPEG-2 decoding, the Ultra-64 chipset will use a scaled-down Reality
Engine coprocessor without a transformation engine to provide rendering,color conversion, and scaling functions. The chipset will be manufactured
by NEC using 0.35|J. process technology and should cost less than the $35
R4300i processor.

I
MSAM-WW-FR-9601©1996 Dataquest Incorporated

57

Consumer Multimedia Semiconductors and Applications Worldwide

58

Figure 7-1
The Sony Playstation CPU
KlliBPPPPPP-ViiiiplMi'iOiOiuaiBPPiiMiHrppK

HEHBiwimBglgggWBtf^M^ i-^-il%«'lQUi^jra:mp)MPWjniKPPp»p'ppppji »p>pppvp]iP'jiHPPPP HP « P B P P « I I P P : « ^ I ^ ^ ^ ' r

Source: LSI Logic

MSAM-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

Major Semiconductor Suppliers to the Video Game Industry

59

Toshiba
Toshiba supplies a variety of parts for the latest home video game systems, including custom logic, standard logic, and memory devices.
The bill of materials for the Sony Playstation (shown in Appendix B-1)
details a custom graphics processor and a 512K audio DRAM from
Toshiba. The list is more varied in Sega Saturn bill of materials (shown inAppendix A-1) where Toshiba supplied custom logic, standard logic, andROM. Two additional ASICs in the Saturn may have been fabricated by
Toshiba, but this is uncertain.

>

NEC
NEC supplies synchronous DRAM (SDRAM) for the Sega Saturn. Hitachi
also supplies SDRAM for the Sega Saturn, but the Hitachi devices are a little slower at 17.5ns compared to the 12ns access time for the NEC devices.
NEC did not supply any parts for the Sony Playstation bill of materials
shown in Appendix B-1.
YamahaYamaha supplies one chip for the Sega Saturn and, not surprisingly, it is asound chip. The Yamaha chip is an FM sound synthesizer and is pairedwith a Motorola embedded controller and some audio DRAM. Even
though the package carries a Yamaha part number, there is probably some
Sega ROM on chip.
Motorola
Motorola supplies an embedded 68EC000 controller for the Sega Saturn.
This controller is tightly wired to a Yamaha FM synthesizer and appears toprovide general audio control functions. Motorola has additional opportuluties in the 3DO M2 design, which includes a PowerPC 602 microprocessor, though it will have to compete vdth IBM to supply those devices tothe M2 equipment manufacturers, currently Goldstar and Panasonic.

>f
WISAM-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

.

Chapter 8fConclusion and Dataquest Perspective
The 32- and 64-Bit Video Game Generations
The newest generation of home video game hardware is a mixture of
32-bit and 64-bit designs. Of the systems that are shipping today, only the
Atari Jaguar can lay claini to having a 64^bit architecture because of its
64-bit bus and graphics processor. The central processor for the Atari
Jaguar is a 32-bit microprocessor hke that of the Sega Saturn, Sony Playstation, and Nintendo Virtual Boy. It is likely that all new systems announced
will be 64-bit or higher designs. Two other 64-bit systems that have beenannounced (but are late to market) are the Nintendo Ultra-64 and the 3DO
M2 units. However, the 3DO M2 is designed around a 32-bit CPU. Thesedesigns will raise the benchmark for the next round of systems, but millions of 32-bit units will already be sold by the time they ship next year.
All of the current designs may receive some intermediate upgrades, suchas quad-speed CD-ROM drives, to prolong their product life, but they will
be replaced with 64-bit/128-bit units in a few years. The next generation ofvmits will most likely be based on 64-bit MPUs and 64-bit buses, but some
may feature 128-bit buses or 128-bit graphics controllers. It is extremely
unlikely that a 128-bit microprocessor wiU be cost-effective for these imits
within the next few years.

Tlie Semiconductor Maricet ChallengeVideo game units are becoming fixed-function PCs in terms of both processing power and industry-standard features. The number and complexity of semiconductor devices in each imit are overwhelming, and thesedevices represent the cutting edge of consumer technology. All of theunits are targeted to the price-sensitive and highly competitive consumer
electronics market, which makes video game hardware a low-margin
business where high volumes are required to recover start-up costs. Basedon a teardown analysis of two game unite, Dataquest expects that hardware platforms sold at very low margins, possibly at a loss, will capture
early market share in the emerging 32-bit game market. Profits appear tobe tied to software sales.

•

The market dynamics and pricing policies for video game hardware makethis a high-reward and Hgh-risk market for semiconductor manufacturers. Custom ICs are the rule rather than the exception inside these boxes,
because each must have cutting-edge features in a highly integrated
design. Standard chip products witti these features either are not available
or are not as integrated as they need to be to meet aggressive cost goals.
Hardware designs for these game imits are a mix of technologies from different vendors, but most of the technologies are integrated in ASICs rather
than purchased as standard components. Sega, Nintendo, Atari, 3DO, andSony are not defining the compression standards and sampling rates for
multimedia technology; however. They are picking and choosing among
the standards to deliver the greatest punch at the lowest price. For thesereasons, semiconductor companies that want their core processors, MPEG
decoders, or audio syntliesizers in these unite must work with the gamedevelopers from the beginning. The high level of integration required to>

MSAM-WW-FR-9601©1996 Dataquest Incorporated

61

62

Consumer Multimedia Semiconductors and Applications Worldwide

make these game platforms profitable does not allow substitution of semiconductor technologies in the middle of the design process.
In spite of the risks, the high product volumes of successful home video
game platforms make this market irresistible for many semiconductor
companies. It is critical for semiconductor manufacturers to reduce therisk once a decision to pursue this market has been reached. Silicon
Graphics is working to reduce the market risk of its Magic Carpet architecture by targeting multiple markets with the same core technology. For
example, a proprietary version of the Magic Carpet architecture is the coretechnology for Nintendo's Ultra-64 video game platform, but Silicon
Graphics is also releasing an open systems version of the architecture forthe interactive set-top box market. In other words, Silicon Graphics hasleveraged its design efforts to create opporturuties in two different markets. "Hiree alliance partners (AT&T Network Systems, Samstmg Electronics, and Philips Electronics NV) have already announced plans to use the
Magic Carpet architecture in set-top box products. Silicon Graphics has
successfully reduced the market risk of this architecture by pursuing bothof these growing opportunities and plans to promote the Magic Carpet
architecture for additional consumer products in the future.
The Semiconductor Market Opportunity
Worldwide shipments of next-generation video game controllers are
forecast to grow to almost 18 million by the year 2000, with the chip
opportunity in these systems projected to grow to $2.3 billion in the same
period. This would represent a compound annual growth rate of over
43 percent between 1994 and 2000. This forecast is based on the averagefactory price of new video game controllers dropping below $200 by theyear 2000. If prices decline more rapidly, the unit shipments and semiconductor market could grow even larger. Semiconductor companies withtechnologies ranging from RISC-based CPUs to advanced DRAM architectures will be competing aggressively to demonstrate their ability to deliver
optimized performance at low cost as they seek a slice of this rapidly
expanding market.

MSAM-WW-FR-9601©1996 Dataquest Incorporated

January 29,1996

.

Appendix A

fBill of Materials of Sega Saturn
Table A-1 shows the detailed bill of materials for the Sega Saturn.

>>

MSAM-WW-FR-9601©1996 Dataquest Incorporated

63

C/3

>

Table A-1
Bill of Materials Model: Sega Saturn(Dual SH2 32-Bit MIPS RISC Processors, Double-Speed CD-ROM)
Cost in Dollars

Qty.

Best
1995
Cost

Part#

1

0.42

CR2032

1

0.33

PIH-4

Button, small

SMT

Capacitor, electrolytic, 22
metal can

CO
05
C3

Type

Manufacturer

CES

Battery

Panasonic

CES

ButtonSubsystem

Package

Description

System Card
Battery, 3V coin-type

Graphics

Capacitor2

0.04

Graphics

Capacitor

6

0.04

SMT

Capacitor, electrolytic, 22
metal canCES

Capacitor

2

0.04

SMT

Capacitor, electrolytic, 10
metai canGraphics

Capacitor

4

0.04

SMT

Capacitor, electrolytic, 10
metal canAuciioCapacitor

1

0.04

SMT

Capacitor, electrolytic, 10
metal canCES

Capacitor

3

0.04

SMT

Capacitor, electrolytic, 47
metal canGraphics

Capacitor

1

0.04

SMT

Capacitor, electrolytic, 47
metal canCES

Capacitor

2

0.04

SMT

Capacitor, electrolytic, 1U
metal canCES

Capacitor

2

0.04

SMT

Capacitor, electrolytic, 10
metal canGraphics

Capacitor

2

0.04

SMT

Capacitor, electrolytic, 10
metal canCES

Capacitor

2

0.04

PIH

Capacitor, electrolytic, 33
85C, metal can

CES

Capacitor

79

0.03

SMT

Capacitor, small 0805

Graphics

Capacitor

27

0.03

SMT

Capacitor, small 0805

0.03

SMT

Capacitor, small 0805

@
CO
CO
Oi

o

til

cz
CD

<n

5"

o
o
•a
o

0>

(U
:3

lO
CO

CO
CO

en

Audio

Capacitor

12

>

Table A-1 (Continued)
Bill of Materials Model: Sega Saturn(Dual SH2 32-Bit MIPS RISC Processors, Double-Speed CD-ROM)
Cost in Dollars

<o
05
CD

©

SubsystemType

Graphics

Capacitor

CES

Capacitor

CES

Manufacturer

Qty.

Best
1995
Cost

Part#

Package

Description

0.04

SMT

Capacitor, tantalum, EIA

0.03

SMT

Capacitor, small 1206

Crystal/Osc

0.35

METAL
CAN, PIH

Crystal, 14.318138, metal
2 leads

CES

CrystaVOsc

0.35

METAL
CAN, PIH

Crystal, unmarked, meta
package

CES

Crystal/Osc

1.09

PIH-3

Crystal/oscillator, ceram
package, 3 pins

CES

Diode

0.01

SMT

Diode, small

CES

Diode

0.01

SOT-23

Diode, small

Graphics

Diode

SOT-23

Diode, small

CES

Filter

25

0.11

101

PIH-3

Digital noise filter

Graphics

Filter

10

0.11

101

PIH-3

Digital noise filter

CO
CO

en
O
ta

c:

0.01

CD

Vt
O
O

—1

•a

o

—1

Graphics

Header/Conn.

0.11

PIH-8

Connector, round DIN, 1

CES

Header/Conn,

0.21

PIH-11

Tab connector, male, 11 cright-angle, shrouded

CES

Header/Conn.

1.31

PIH-124

Card-edge slot, 36+31 wi

CES

Header/Conn.

0.04

PIH-5

Header, 1x5, 0.15, w / t a b

CD

CES

Header/Conn.

0.05

PIH-4

Header, 1x4,0.1, SH

CES

Header/Conn.

0.04

PIH-4

Header, 1x3, 0.1, SH

CES

Header/Conn.

0.08

PIH-18

2X tab connector, male, 9right-angle, shrouded

CES

Header/Conn.

1

0.35

PIH-2

Socket for coin-type batte

CES

Header/Conn.

0,25

0.92

SMT-100

Header, board-to-board,

Header/Conn.

0.75

0.92

SMT-100

Header, board-to-board,><

CD-ROM
Driver<oProcessor

IC

2

18.03

PQFP-144

SH2 32-bit mips RISC pro

(U

CO
CO
CO

<y>

2

Hitachi

BCR20H4

HD6417095

CO>

Table A-1 (Continued)
Bill of Materials Model: Sega Saturn(Dual SH2 32-Bit MIPS RISC Processors, Double-Speed CD-ROM)
Cost in Dollars

(O
oi

o

@
CO

<o
05

o
CD
CO

O

o
•o
o

Description

1.00

TDA1386T

SOIC-24

Bit stream continuous
calibration DAC

Manufacturer

Graphics

IC

Philips

Graphics

IC

Sony

1.15

CXA1645M

SOIC-24

NTSC/PAL encoder

Graphics[C

Hitachi

14.02

HD6440F

PQFP-168

Graphics processor, w / S

Audio

IC

Yamaha

2.57

YMF292-F

PQFP-128

FM sound synthesizer,
w/Sega ROM

Audio

IC

Motorola

6.62

MC68EC0O0

PLCC-68

Embedded controller, Ifr

FH3006

PQFP-160

Graphics processor ASIC

Qiy1

Graphics

IC

SEGA

5.66

CES

IC

Hitachi

1.72

HD404920F

PQFP-644-bit microcontroller,
w/Sega ROM

CES

IC

Hitachi

0.39

HD49422

TQFP-32

Analog control ASIC, Hi

CES

IC

SEGA

5.92

FH3007

PQFP-208

Core logic ASIC

MPR-16606-T

DIP-40

Sega ROM, 0,5MB

CES

MemoryToshiba

2.46

CES

IC

Toshiba

0.55

74ACT245

SOIC-20

Octal bus transceiver, thr
true

CES

IC

Toshiba

0.70

4L02F271S

PQFP-100

Core logic ASIC, Toshiba

Audio

IC

Toshiba

0.30

MUX, quad, 2-input dataIC

Toshiba2

0.08

74HCT157A
74HC04

SOIC-16

CES

SOIC-14

Hex inverter

CES

IC

National

40.31LS245SJ

SOIC-20

Octal bus transceiver, thr
true

CES

Transistor

3

0.07

SOT-223

Transistor, SOT-223

CES

Inductor

6

0.18

SMT

Inductor, EI A size B

Graphics

Inductor

2

0.18

SMT

Inductor, EIA size B

Graphics

Memory

NEC

4

11.68

D4502161G5

TSOP-50

SDRAM, 128Kxl6,12ns

23.37

HM5241605

TSOP-50

Synchronous DRAM, do
128Kxl6,17.5ns

23.37

HM5241605

TSOP-50

Synchronous DRAM, do
128Kxl6,17.5nsc:MemoryMemoryHitachiroGraphics

MemoryHitachi

1

CO
CO
C7>

Package

Type

2

CO

Part#

Subsystem

£5.
CD

Best
1995
Cost

C/3

>
I

I

-n

Table A-1 (Continued)
Bill of Materials Model: Sega Saturn(Dual SH2 32-Bit MIPS RISC Processors, Double-Speed CD-ROM)
Cost in Dollars

30
I

(£3

o>
O

©
<o

(O
05

a

Best
1995
Cost

Part #

Package

Description

SubsystemType

Manufacturer

CES

Memory

S-MOS

Qty.
1

2.53

SRM20257

SOIC-28

SRAM, 32Kx8,100ns

MemoryMemoryHitachi

2

13.20

HM514260A

SOJ-40

DRAM, 256Kxl6, 70ns

Audio

MemoryHitachi1

6.13

SOJ-40

DRAM, audio, 256Kxl6, S

CES

Resistor

8

0.08

SMT-10Resistor network, 8 pins, 2

CES

Resistor

73

0.01

SMT

Resistor, small 0805

Graphics

Resistor

28

0.01

SMT

Resistor, small 0805

Audio

Resistor

5

0.01

SMT

Resistor, small 0805

CES

Transistor

1

0.04

SOT-23

Transistor, small, SOT-23

Graphics

Transistor

3

0.04

SOT-23

Transistor, small, SOT-23

PC Boards

System Raw
Card

1

19.00

4 layer card

Card MVA

System Card
MVA

1

22.00

32 ICs, wave soldered

CD

tn

o
o

Subtotal—System Card;

"1

T3
O

-^

r-l<D

Header/Connector
CD-ROM
Drive

Capacitor

1

0.04

SMT

Capacitor, electrolytic, 47U
metal can

CD-ROM
Drive

Capacitor

8

0.02

SMT

Capacitor, 0503

CES

Capacitor

4

0.02

SMT

Capacitor, 0603

CD-ROM
Drive

Crystal/Osc

1

0.35

METAL
CAN-SMT

Crystal, unmarked, metal
package

C_
B>
=]

CES

Header/Conn.

1

0.88

SMT-50,
PIH-50

Card-edge slot, 50 wide—I

CD-ROM
Drive

Header/Conn.

1

0.21

SMT-40Flex cable connector, 20 lelocking tab

C=
M

to
CO
CO
CO
C35

>

Table A-1 (Continued)
Bill of Materials Model: Sega Saturn(Dual SH2 32-Bit MIPS RISC Processors, Double-Speed CD-ROM)
Cost in Dollars

C3

@
to
CO
CT)
lU

(D
CO

I

Manufacturer

Best
1995
Cost

Fart#

Package

Description

0.96

SMT-100

Connector, 2x50, board to

0.75

0.96

SMT-100

Connector, 2x50, board to

Subsystem

Type

CES

Header/Conn.

Qty.
0.25

CD-ROM
Drive

Header/Conn.

CES

IC

Hitachi

0.5

2.97

YGR019A

PQFP-168

Gate array ASIC

CD-ROM
Drive

IC

Hitachi

0.5

2.97

YGR019A

PQFP-168

Gate array ASIC

CD-ROM
Drive

IC

Hitachi

1

13.53

HD6437097F20

PQFP-112

SHI 16-bit MIPS RISC
microprocessor

CD-ROM
Drive

MemoryHitachi

1

12.27

HM514270A

SOJ-40DRAM 2S6KX16, 80ns

CD-ROM
Drive

Resistor

4

0.08

SMT-8

Resistor network, 8 pins,

CD-ROM
Drive

Resistor

10

0.01

SMT

Resistor, small 0603

PC Boards

Interface Raw
Card

1

4.00

4 layer card

Card MVA

Interface Card
MVA

1

6.00

3 ICs, wave soldered,

Subtotal-—Interface Card:
Other

(U
:3
d
M

><
to
CO

to
CO

CJ>

Controller

Handsetcontroller

CD-ROM
Drive

CD-ROM
Drive

Power

Power Supply

Sega

Voltek

HSS-0101

1

5.24

1

62.00

Internal CD-ROM drive, dspeed, with ball-bearing
retainers

1

8.00

Power supply, internal (nlOOV in, 15W

Handset controller, direct
and 9 other buttons

CO>

Table A-1 (Continued)
Bill of Materials Model: Sega Saturn(Dual SH2 32-Bit MIPS RISC Processors, Double-Speed CD-ROM)
Cost in Dollars

30
I
CO

Qty.

Best
1995
Cost

Switch/LRD
Card Assy.

1

0.50

Small card with I button
2LEDS

LED Card

1

0.30

Small card with 2 LEDs

1

0.98
3.80

Case top, ABS, including
and mechanisms, CRS P
bracketso>oSubsystem

Type

CES
CES

Manufacturer

Part#

Package

Description

Assy.
Power

SwitchMechanical

Mechanic^1

Mechanical

Mechanical

1

1.95

Case bottom, ABS

Mechanical

Mechanical

1

0.35

Upper EMI shield, 0.013 b

CD
COMechanical

Mechanical

1

0.30

Lower EMI shield, 0.013 b=3

Mechanical

Mechanical

1

0.15

Expansion module bracke
ABS/PC

CD-ROM
Drive

Mechanical

4

0.15

CD-ROM drive standoff,

Mechanical

Mechanical

1

0.40

Expansion/battery door,

CD-ROM
Drive

Cable

I

0.25

Flex cable, 20 leads

Mechanical

Cable

1

1.30

Round-DIN to composite
patch cord

Mechanical

Cable

1

0.60

Line cord, two conductor

Pubs

Publications

1

0.25

Manual, registration card
slip

BoxMVABoxMVA1

2.81

Box MVA

Freight/
Duty

Freight/Duty

1

6.00

Freight/Duty

@

Alps

SDLIP-A

<o
CO

a>
CO
r-^
CO
.Q

c=

o
o

"t
T3
O

CD

a.

w
c:

ro

Tokai
(Hitachi)CO

Medium two-position bu
switchSubtotal—Other:

CO
CO
CD

Total;
Note; CES = Central Electronics Systern;MVA = Manufacturing Value-Added
Source: Dataquest (July 1995)

.

Appendix B^

Bill of Materials of Sony Playstation
Table B-1 shows the detailed bill of materials for the Sony Playstation.

WISAM-WW-FR-9601©1996 Dataquest Incorporated

71

C/5

>

Table B-1
Bill of Materials Model: Sony Playstation(Custom MIPS RISC Processor, Double-Speed CD-ROM)
Cost in Dollars
Qty.

Best
1995
Cost

CO
O)

o

SubsystemType

Manufacturer

Part #

Package

Description

System Card

@
CO
CO
Oi

o

(U

ft*

CES

Button

1

0.33

PIH-4

Button switch, right-an

CES

Capacitor

2

0.09

SMT

Capacitor, electrolytic,
metal can

Audio

Capacitor

2

0.09

SMT

Capacitor, electrolytic,
metal canCES

Capacitor

14

0.04

SMT

Capacitor, electrolytic,
metal can

CD-ROM
Drive

Capacitor

4

0.04

SMT

Capacitor, electrolytic,
metal canGraphics

Capacitor

6

0.04

SMT

Capacitor, electrolytic,
metal can

Audio

Capacitor

11

0.04

SMT

Capacitor, electrolytic,
metal canCES

Capacitor

1

0.04

SMT

Capacitor, electrolytic,
metat canCES

Capacitor

3

0.09

SMT

Capacitor, electrolytic,

Graphics

Capacitor

8

0.04

SMT

Capacitor, electrolytic,
metal canCES

Capacitor

2

0.09

SMT

Capacitor, elech-olytic,

CD-ROM
Drive

Capacitor

1

0.09

SMT

Capacitor, electrolytic,

CD-ROM
Drive

Capacitor

1

0.09

SMT

Capacitor, electrolytic,

CD-ROM
Drive

Capacitor

1

0.09

SMT

Capacitor, electrolytic,

CES

Capacitor

1

0.04

SMT

Capacitor, electrolytic,
100uF16V,mc

CES

Capacitor

1

0.04

SMT

Capacitor, tantalum, EI

m

o
o
•a
o^
—
lu

f—»•

CD

><
rvs
CO
CO
CO
C3>

CO

>

Table B-1 (Continued)
Bill of Materials Model: Sony Playstation(Custom MIPS RISC Processor, Double-Speed CD-ROM)
Cost in Dollars

30
I

Subsystem

Type

Qty.

Best
1995
Cost

CD-ROM
Drive

Capacitor

4

0.04

<o
05

o

Manufacturer

Part #

Package

Description

SMT

Capacitor, tantalum, E

CES

Capacitor

75

0.03

SMT

Capacitor, small 0805

Graphics

Capacitor

15

0.03

SMT

Capacitor, small 0805

Audio

Capacitor

6

0.03

SMT

Capacitor, small 0805

CD-ROM
Drive

Capacitor

31

0.03

SMT

Capacitor, small 0805

CD
CO
CJ>

CES

Crystal/Osc

1

1.24

RC67.73 JVC 4J

SMT-5

Oscillator, 67.73, SMT-O

Graphics

Crystal/Osc

1

1.28

JC53.69JVC4J

SMT-6

Oscillator, 53.69, SMT-

CES

Crystal/Osc

1

1.26

SMT-6

Oscillator, 4000, SMT-6

CES

Diode

2

0.01

SOT-23

Diode, small, SOT-23

CES

Diode

22

0.01

SMT

Diode, small

Graphics

Diode

7

0.01

SMT

Diode, small

CD-ROM
Drive

Diode

7

0.01

SMT

Diode, small

Graphics

Ferrite

2

0.18

SMT-6

Ferrite, small 2012

Graphics

Ferrite

2

0.04

SMT-4

Ferrite, small 1210

CES

Ferrite

4

0.04

SMT

Ferrite, small 1206

CES

Ferrite

10

0.04

SMT

Ferrite, 0805

CES

Header/Conn.

1

0.64

PIH-64Header, card-edge typeshrouded, right-angle

CES

Header/Conn.

1

0.08

PIH-8

Tab connector, 8 leads,
right-angle

Graphics

Header/Conn,

3

0.04

PIH-2

Connector, coaxial RCA

CESHeader/Conn,

1

0.19

PIH-2

Connector, mint-DIN mGraphics

Fleader/Conn,

1

0.11

PIH-4

Connector, round DIN

@

CD
CO

O
O

•a

o
Si
CD

—1

IV3
CO

CO
CO
Oi

(/3

>

Table B-1 (Continued)
Bill of Materials Model: Sony Playstation(Custom MIPS RISC Processor, Double-Speed CD-ROM)
Cost in Dollars
Qty

Best
1995
Cost

Header/Conn.

L

CES

Header/Conn.

CES

CO

a>
o

@
CO
CO
CJ5

o

Package

Description

0.12

PIH-12

Tab connector, 12 leads
right-angle

I

0.39

SMT-10Flex cable connector, 10
locking tab

Header/Conn.

I

0.07

PIH-7

Header, 1x7, 0.08 pitch

CES

Header/Conn.

I

0.04

SMT-4

Header, 1x4, 0.08 pitch

CD-ROM
Drive

Header/Conn.

I

0.16

SMT-16Flex connector, 16 wide

Graphics

IC

I

11.28

CXD8514Q

PQFP-160

Graphics controller, cu

SubsystemType

Graphics

Manufacturer

Toshiba

Part#

CES

IC

Sor^y C.E.

I

2.94

RS53430F

SOIC-40

ROM, 4Mb

.a

Audio

IC

AKM

I

5.03

AK4310VM

SOIC-24

16-bit stereo DAC, 92d
range

o
o

Graphics

IC

Sony

I

1.15

CXA1645M

SOIC-24

NTSC/PAL encoder

Graphics

IC

Sony

I

2.98

CXD2923AR

TQFP-64

Triple RAMDAC ASIC

11.73

CXD2922Q

PQFP-100

Sound chip ASIC

7.63

CXD1199BQ

PQFP-100

Sea-of-gates ASIC

11.24

CXD251Q

PQFP-100

Processor ASIC

Di

!-*•

•o

o
—^
05

CD

CD

><
N3
CO
CO
CO
<J>

Audio

IC

Sony

I

CD-ROM
Drive

IC

Sony

I

CD-ROM
Drive

IC

Sony

CES

IC

JRC

I

0.23

2904

SOIC-8Op amp, dual, 15mV of

CES

IC

JRC

I

0.21

082B

SOIC-8Op amp, dual, 6mV off

CES

IC

JRC

[

0.21

2100

SOIC-8Op amp, dual, 6mV off

1

0.18

LC46 XJKBSOIC-8IC

6.90

E35D 424666

PQFP-80

CD controller ASIC

0.64

2903

SOIC-8Comparator, dual, 6iftV

CD-ROM
Drive

IC

CD-ROM
Drive

IC

Sony C.E.

CES

IC

JRC

I

CO

>
I

Table B-1 (Continued)
Bill of Materials Model: Sony Playstation(Custom MIPS RISC Processor, Double-Speed CD-ROM)
Cost in Dollars

CO
OJ

o

@
(O
CO
C3>

O
M

Best
1995
Cost

Part#

Package

Description

5.41

BA6398FP

SOIC-30

Compact disc driver

SubsystemType

Manufacturer

CD-ROM
Drive

IC

Rohm

Qiy.
1

CD-ROM
Drive

IC

Sony

1

4.09

A1782BR

TQFP-48

CD player component (controller?)

CES

IC

JRC

2

0.21

2100

SOIC-8Op amp, dual, 6mV offs

CES

Inductor

4

0.18

SMT

Inductor, ElA size B

CES

Inductor

2

0.13

SMT

Inductor, ElA size A

CD-ROM
Drive

Inductor

4

0.13

SMT

Inductor, EIA size A

Audio

Inductor

1

0.13

SMT

Inductor, EIA size A

CES

Inductor

6

0.20

SMT

Inductor, small, EIA siz

CES

Inductor

5

0.07

SMT

Inductor, EIA size B, lab

MemoryMemorySamsung

4

12.36

KM48V514BJ-6

SOJ-28

DRAM, 512Kx8, 60ns

Graphics

MemorySamsung2

21.54

VR256KX16,
60NS

SOIC-64

VRAM, 256X16, 60ns

3

Audio

MemoryToshiba1

7.08

TC51V4260B

SOJ-40

DRAM, 256Kxl6, sonsCD

CD-ROM
Drive

MemoryHitachi

1

2.65

HM62W256LFP

SOIC-28

SRAM, 32Kx8,70ns, 3.3

Processor

IC

LSI Logic

1

21.11

CXD8530AQ

PQFP-208

32-bit MIPS RISC proce
decoder, 3D graphics

CES

Resistor

1

0.20

SMT-3

Variable resistor, screw
controlled

CD-ROM
Drive

Resistor

2

0.20

SMT-3

Variable resistor, screw
controlled

CES

Resistor

54

0.01

SMT

Resistor, small 1206

CES

Resistor

145

0.01

SMT

Resistor, small 0805

Graphics

Resistor

10

0.01

SMT

Resistor, small 0805

CD

O

o
-1

x»
o

c

<<
N3

<p
CO
CO

05

*

C/3

>

Table B-1 (Continued)
Bill of Materials Model: Sony Playstation(Custom MIPS RISC Processor, Double-Speed CD-ROM)
Cost in Dollars
Qty.

Best
1995
Cost

OJ

o

SubsystemType

Manufacturer

Part #

Package

Description

Audio

Resistor

24

0.01

SMT

Resistor, small 0805

CD-ROM
Drive

Resistor

54

0.01

SMT

Resistor, small 0805

CES

Resistor

10

0.08

SMT-8

CES

Transistor

1

0.15

TO-220Resistor network, 8 pvpi
VR, 5V, fixed, pos

CD-ROM
Drive

Transistor

1

0.07

SOT-223

Transistor, SOT-223

@
<o
<o

CES

Transistor

14

0.04

SOT-23

Transistor, small, SOT-

Audio

Transistor

4

0.04

SOT-23

Transistor, small, SOT-

CD-ROM
Drive

Transistor

2

0.04

SOT-23

Transistor, small, SOT-PC Boards

System Raw
Card

1

12.50

System raw card

Card MVA

System Card
MVA

1

15.00

System card MVA

78M05P

C7J

o
0>

<D
CO

O
O
-1

•a

o

<u
i-^

CD

•

Subtotal—System Carck

Others

(U

•<
^^
CO
CO
CO
C73

CD-ROM
Drive

CD
Mechanism

Power

Power Supply

Matsushita

i-

13.80

CD spindle, laser, and mball bearings on spind
retention

1

8.00

Power supply, lOOV in,

1.65

Handset connector mod

CES

Header/Conn.

1

Controller*

Handsetcontroller

1

5.24

Handset controller, 14 b

Mechanical

Mechanical

1

3.60

Case top, with button c
CD door/mechanism,

C/3

>

Table B-1 (ConHnued)
Bill of Materials Model: Sony Playstation(Custom MIPS RISC Processor, Double-Speed CD-ROM)
Cost in Dollars

33
I
CO

a>
C3

Subsystem

Manufacturer

MechanicalType
Mechanical

Mechanical

Mechanical•

Mechanical

Mechanical

Mechanical

Mechanical

Mechanical

MechanicalO

CD-ROM
Drive

.a

@
CO
CO
C7>

CD
CO

O
O

•

Qty

Best
1995
Cost

Part #

Package

Description

L

1.80

Case bottom, ABS

I

1.45

Upper EMI shield/CD
support, CRS

L

0.28

Lower EMI shield, 0.00

0.15

Connector module EM
0.009 brjte

I

0.15

Expansion connector c

Cable

L

0.15

Flex cable, 10 leads

Publications*Publications

L

0.25

Manual, other publicat

Box MVA

Box MVA]

2.10

Box MVA

Freight/
Duty

Freight/Duty

1

6.00

Freight/dutyoSubtotal—Other:—1

Total:

09
CD*Nol included with evaluation unit; costs estimated; details not confirmed
Note: CES = Cenlral Electronics System; MVA = Manufacturing Value-Added
Source: Dataquest (July 1995)

rv3
CO
CO
CO

Oi

Appendix C^

Pricing Assumptions
All costs are based on Dataquest's pricing databases, discounted
catalog, or discounted vendor quotes.
lOOK unit production pricing is employed. NRE charges are notincluded.
Final assembly and test are included in Box MVA (manufacturing
value-added).
MVA analysis includes assumptions about where the process is done so
appropriate labor rates can be employed.
Only freight charges to the final assembly point are included.

••
MSAM-WW-FR-9601©1996 Dataquest Incorporated

79

i

i

For More information...

Dale Ford, Senior Industry Analyst
Internet address
Via fax(408) 468-8311
dford@dataquest.com(408) 954-1780

The content of this report represents our interpretation and analysis of information generally available to the public
or released by responsible individuals in the subject companies, but is not guaranteed as to accuracy or completeness.
It does not contain material provided to us in confidence by our dients. Reproduction or disclosure in whole or in
Ll3l2QUCSt
part to other parties shall be made upon the v^rritten and express cor\sent of Dataques t.
,©1996 Dataquest Incorporated—Reproduction Prohibitedn n aoompanyof^'^'^
MMMB ThcDun&Bradsticct Oirpontion Dataquest is a registered trademark of A.C. Nielsen Companyi

i
DATAQUEST WORLDWIDE OFFICESNORTH AMERICAWorldwide Headquarters

EUROPE
European Headquarters

ASIA/PACIFIC
Asia/Pacific Headquarters

251 River Oaks Parkway
San Jose, California 95134-1913
United States
Phone: 1-408-468-8000
Facsimile: 1-408-954-1780

Hohners Farm Way
High Wycombe, Bucks HP12 4XH
United Kingdom
Phone:+44 1494 422 722
Facsimile: +441494 422 742

7/F China Underwriters Centre
88 Gloucester Road
Wan ChaiHong Kong
Phone: 852-2824-6168
FacsimUe: 852-2824-6138

East Coast Headquarters

Dataquest France

Nine Technology Drive
RO. Box 5093
Westborough, Massachusetts 01581-5093
United States
Phone: 1-508-871-5555
Facsimile: 1-508-871-6262

Immeuble Defense Berg^res
345, avenue Georges CMmenceau
TSA 40002
92882 - Nanterre CTC Cedex 9
FrancePhone: +33 1 41 35 13 00
Facsimile: +33 1 41 35 13 13

Suite 2407, Trade Tower
159 Samsung-dong, Kangnam-gu
Seoul 135-729
Korea
Phone: 822-551-1331
FacsimUe: 822-551-1330

Dataquest Geimany

Dataquest Taiwan

Kronstadter Strasse 981677 Miinchen
Germany
Phone: +49 89 93 09 09 0
Facsimile: +49 89 93 03 27 7

llF-2, No. 188, Section 5
Nan King East Road
TaipeiTaiwan, R.O.C.
Phone: 8862-756-0389
Facsimile: 8862-756-2663

Dataquest Korea

Dataquest Global Events

3990 Westerly Place, Suite 100
Newport Beach, California 92660
United States
Phone: 1-714-476-9117
Facsimile: 1-714-476-9969
Sales Offices:
Washington, DC (Federal)
New York, NY (Financial)
Dallas, TX
LATIN AMERICA

Research Affiliates and Sales Offices:
Buenos Aires, Argentina
Sao Paulo, Brazil
Santiago, Chile
Mexico City, Mexico

Sales Offices:
Brussels, Belgium
Kfar Saba, Israel
Milan, Italy
Randburg, South Africa
Madrid, Spaini

Dataquest Singapore

105 Cecil Street#06-01/02 The Octagon
Singapore 069534
Phone: 65-227-1213
FacsimUe: 65-227-4607

JAPAN
Japan Headquarters

Dataquest Thailand

Shinkawa Sanko Building
6th Floor
1-3-17, Shinkawa
Chuo-ku, Tokyo 104
Japan
Phone: 81-3-5566-0411
Facsimile: 81-3-5566-0425

12/F, Vanissa Building
29 Soi Chidlom
Ploenchit Road
Patumwan, Bangkok 10330
ThailandPhone: 662-655-0577
FacsimUe: 662-655-0576\

Research Affiliates and Sales Offices:
Melbourne, Australia
Beijing, China

Dataquest
A Gartner Group Company©IS% Dataquesti