PC vs. CE Page 4

Traditional CE companies also still have the upper hand when it comes to brand recognition. Ask the next person you run into in line at the supermarket to name a TV manufacturer, and chances are he or she will give you a name like Sony, Panasonic, or Philips, not Dell or HP. Vern Baker points to Sony in particular as a company with the kind of brand reputation anyone in the CE space would kill for. "Sony was very much behind the curve on flat-screens, but they decided to push into that market with a line of LCD TVs in the U.S.," he says. "Within 6 months, they went from not participating in that market to the No. 1 share - and that's because of the Sony brand equity."

While the longtime CE players have a definite advantage in the brand-recognition department, some PC companies are bound to catch up eventually. "If you look at HP, a number of years ago we weren't in the PC business, and now we're the largest in the world," says Jan Luc Blackborn, director of digital entertainment for HP North America. "So it depends on the time horizon you put on it. If somebody told me right now, 'Look, not everyone knows you're in the TV business,' I would say, 'Yeah, that's right, and I'm not surprised.' For where we are with our plan, that's okay, because our plan is not going to happen in 1 or 2 or even 3 years. CE companies are established brands, and they have a good recognition with the consumer. So do we - we just come from a different angle."

In order to survive, CE companies will have to become more like PC companies. "We're getting into their space," Pioneer's Meyhoefer says. "We've added Home Media Gallery to both our Blu-ray players and plasma TVs, which allows you to share content across a network via a PC. So if you have a Windows Media Connect, for example, you'd be able to share your folders, whether it's music, photos, or movies downloaded from the Internet, and display them onscreen."