Computer Makers Focus on Set-top Boxes to Merge TV, PC

Despite the ocean of ink that has been spilled on the subject, most consumers are indifferent about the inclusion of TV tuners in their computers. "Convergence" might be simply another intellectual fad---popular among journalists because it seems so logical, yet flopping among consumers because it really isn't. Most computer users who have responded to marketing studies indicate they don't care if they can receive television on their computers or not.

As a result, many computer makers have backed off from including TV-reception capabilities in their new products. Among the big players this year, only Gateway will ship hardware with circuitry to support Windows 98 TV-tuner functions. Sean Kaldor, an International Data Corporation analyst, says most people don't need the extra complication. Furthermore, the cost is too high. Gateway's high-end PC/TV lists for over $3000 at a time when 40% of new computers sold are priced under $1000.

Even Microsoft, the owner of WebTV---the $300 set-top box that allows TV viewers to surf the Internet and send and receive e-mail---predicts that PCs with TV-tuner cards won't gain popularity until next year, if at all. However, the concept of a set-top box allows computer makers to hedge their bets.

Compaq has decided to follow Microsoft's lead by developing two new set-top boxes of its own. One of these boxes, which runs Windows 98, is now in production and should be market-ready by June. The other box, running Windows CE, is being readied for a November release to coincide with the debut of digital television.

Compaq's two previous excursions into the convergence market both failed. A TV-tuner card was offered as a system upgrade, but it went nowhere. A year ago, the company attempted a high-end PC/TV in collaboration with Thomson---the PC Theatre---which retailed at $5000. In January, it was deleted from Compaq's line after winning very few sales.

Is convergence a case of much ado about nothing? Do home-theater fans care as little about the Internet as computer folks seem to care about television? Is a bridge between the two really necessary? Or are convergence products a different category altogether for the vast bulk of the population who are neither computer-savvy nor really plugged into high-end home entertainment? The majority of the buying public are curious but reluctant to commit big bucks to potentially dead-end technology. Three hundred dollars might be as much as most are willing to gamble.

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