LAS VEGAS A top Chinese TV-set manufacturer is eyeing the U.S. digital-TV market, and plans to start selling comparatively low-priced sets here by Christmas 1999.
Konka Group Co. Ltd., (Shenzhen, China) and its U.S. subsidiary in San Jose, Calif., could be part of the first wave of Chinese manufacturers to target the middle and low end of the U.S. digital-TV receiver market. Price tags for rear-projection and direct-view HDTV receivers sold by European and other Asian manufacturers range from $3,000 to $13,000.
In an interview at the Consumer Electronics Show (CES) earlier this month, Chen Wei-rong, Konka's director and general manager, said the company is ramping up HDTV production for the U.S. market in time for the Christmas season. Chen said Konka is currently evaluating competing HDTV chip sets from STMicroelectronics and Philips Semiconductors, and will decide by the end of March which to incorporate into its HDTV design.
A raft of consumer-electronics companies including Sony, Panasonic, Thomson Consumer Electronics and Philips Electronics are introducing new HDTV receivers into the U.S. market. Konka, which has had little success penetrating the U.S. market through OEM deals, is now hoping to take advantage of the dawn of the digital-TV era to promote its products in the United States under its own brand name.
Chen called the U.S. market "attractive, but tough," adding that "the crucial thing is technology and capability."
Indeed, Konka is ambitious about exports. Although Konka, in 1998, shipped only 300,000 TV sets overseas out of the 4.7 million sets it produced, "Our goal is to make the domestic and export shipment ratio 50:50 in five years," Chen said.
The high cost of HDTV receivers and limited U.S. digital broadcasts have slowed consumer acceptance of digital TV in the United States. The Consumer Electronics Manufacturers Association (CEMA; Arlington, Va.) announced here that 13,176 digital TVs have been sold to retailers so far. "All of the major manufacturers have stepped up," said CEMA president Gary Shapiro.
Konka, which holds 22 percent of the Chinese television market, unveiled a line of HDTV and "improved-definition" TVs at CES. The latter converts analog signals to digital, using a technique called line doubling to improve resolution.
By fall, Chen said Konka will introduce "affordable" HDTV receivers, like its 32-inch, 16 x 9 aspect-ratio, direct-view model, for under $3,000. A standard-definition version that doesn't use a costly flat screen tube will sell for about $2,000, he said.
On the Chinese domestic-market front, a decision on its own terrestrial digital broadcast standard isn't expected before October. For now, China is using the cable and satellite version of the European Digital Video Broadcast (DVB) standard, but industry officials said DVB may not be the long-term solution for terrestrial broadcasting.
Beijing plans to demonstrate the U.S. Advanced Television Systems Committee spec in China this year. Chinese standard setters are also considering coded orthogonal frequency division multiplexing over the U.S.-backed vestigial-side-band (VSB) modulation scheme. Some U.S. broadcasters reportedly complained at CES that the 8-VSB modulation spec may not carry digital TV signals prone to multipath interference, or ghosting, to its viewers without costly antenna upgrades.
Konka is meanwhile stepping up its digital TV software/middleware development efforts at research facilities in Shenzhen and San Jose, Chen said. It plans to open a European research center by the end of 1999.
Along with digital TV, Konka is also promoting its DVD players in China and overseas. With DVD player prices expected to drop to $250 by the end of the year in China, Konka expects to produce about 500,000 players in 1999. About 100,000 will be manufactured for export, Chen said. Konka is using C-Cube's DVD player chip set, enabling its player to play back both video CD and super video CD disks as well as DVD titles.
The confusion over similar but incompatible formats such as super video CD, China video CD and video CD have, however, slowed the Chinese market in 1998, Chen acknowledged. Overall video-CD player sales declined from 8 million sets in 1997 to roughly 7 million units in 1998, with 2 million units of super-video-CD players and 5 million for video-CD players.
Chen predicted that 1999 is likely to be the first year when sales of DVD players will substantially increase in China, matching the combined sales of super-video-CD and video-CD players.
Chinese manufacturers are expected to crank out up to 3 million DVD players in 1999, while they are also expected to make 2 million super-video-CD players and one to two million video-CD players, according to Chen.
Global chip vendors have been working hard to penetrate the Chinese market with their DVD player chip sets. However, the lack of domestic expertise in China to manufacture the DVD-ROM drive mechanism, including its laser pick-up, has been a major factor in keeping the cost of DVD players high in China. The supply of DVD drives is controlled by Japanese manufacturers and Philips, said Chen.
But that situation may change quickly this year. By the end of 1999, Chinese companies expect to manufacture costly DVD-ROM drives under license from joint-venture partners Sanyo, Philips and Panasonic.