The Rise of Consumer Electronics: A Threat to Personal Computers

Strategic Insights -

The personal computer industry may be in for a shock, as consumer electronics companies plan to introduce devices that outstrip the processing power of the fastest desktop computers. Consumer devices like Nintendo's Project Reality video-game player and Sony's set-top "interactive TV" players will have the ability to manipulate large amounts of data, surpassing even the original Cray 1 supercomputer. This new technology is based on chips originally developed by Silicon Graphics for use in high-powered technical work-stations, and is expected to revolutionize the way consumers interact with technology.

Key Takeaways:

  • Consumer electronics companies are planning to introduce devices that outstrip the processing power of the fastest desktop computers, with Nintendo's Project Reality video-game player set to surpass even the original Cray 1 supercomputer.
  • The new technology is based on chips originally developed by Silicon Graphics for use in high-powered technical work-stations, and will allow for interactive, TV-quality video and sound, as well as acting as a communications device over cable television networks.
  • Personal computer manufacturers deny that the new class of video-game machines and set-top "interactive TV" players will be a threat, but experts say that the industry is too bound to its huge installed base to make radical shifts toward new technology.
  • The design and software will be overwhelmingly American, but it is also expected that the Japanese and Koreans will manufacture this new technology.
  • The economics of the industry are shifting, with consumer applications becoming increasingly important, and video-game titles dwarfing even the most spectacular Hollywood movies.
  • The Asian consumer electronics giants are likely to benefit from the transition, with companies like Sony and Nintendo leading the way.
  • The trend is for the fastest also to be the smallest and cheapest, which will continue to disrupt the computer industry.
  • The PC industry is no longer the center of innovation, with companies like Sony and Nintendo driving innovation in devices and applications.

Statistics:

  • Nintendo plans to introduce its Dollar 250 Project Reality video-game player next year, which will surpass the performance of even the most powerful personal computers.
  • The Project Reality player will have the ability to manipulate large amounts of data, and will act as a communications device over cable television networks.
  • The original Cray 1 supercomputer, introduced in 1976, is being surpassed by consumer devices.
  • The new technology is expected to revolutionize the way consumers interact with technology, with a focus on convenience and flexibility.
  • The PC industry is expected to experience significant disruption, with consumer electronics companies driving innovation in devices and applications.
  • Sega's Sonic the Hedgehog 2, released in 1993, was a Dollar 400 million software bestseller, dwarfing almost all of the most popular business software titles for personal computers.
  • NBA Jam, introduced by Acclaim Software as a video game last month, is expected to generate revenues of Dollar 120 to Dollar 180 million this year, surpassing even most blockbuster films.
  • The home market for consumer electronics is potentially much larger than the Dollar 66 billion annual market for personal computers.

Sources:

  • "John Markoff is" by New York Times
  • "The PC Industry: A Threat from Consumer Electronics?" by Howard Lincoln, Chairman of Nintendo of America
  • "The Future of the PC Industry" by Jim Clark, former chairman of Silicon Graphics
  • "The Trend is for the Fastest Also to Be the Smallest and Cheapest" by John Moussouris, co-founder of MicroUnity
  • "The PC Industry is in for a Shock" by Charles Ferguson, consultant based in Cambridge, Massachusetts
  • "Sonic the Hedgehog 2" by Sega
  • "NBA Jam" by Acclaim Software
  • "Cray 1 Supercomputer" by Cray Research