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Market Opportunity for Smart TV Products

2005 was a good year for high-definition television product sales, and ABI Research expects 2006 to be nearly as impressive. The technology market analyst's research shows that including HDTVs, personal video recorders, DVD players, game consoles and set-top boxes (STBs), the global market for HDTV products should exceed $25 billion this year.

But, says Vamsi Sistla, ABI Research's director of broadband and multimedia research, "pretty much everybody" is making HDTVs these days, from no-name Taiwanese manufacturers to famous global brands. The inevitable trend towards commoditization means that vendors need to look for new ways to differentiate their products. "Two schools of thought have appeared in the HDTV industry, with different ideas about what the future will bring," says Sistla.

"One camp wants to focus on creating intelligence within the TV itself, making it network-ready, and incorporating storage or recording devices." One example is LG Electronics, which announced three models of LCD TV with built-in digital video recorder, eliminating the need for a high-end external device. One of these models also has two tuners to record HD broadcasts while viewing a different channel.

"The other camp," Sistla observes, "wants to focus intelligence in the devices which surround the TV and connect to it: Media Center PCs, recorders, residential gateways and the like. They point out that a high-definition television is a costly device with a long replacement cycle.

Build in advanced features and capabilities, and the price goes still higher � all for a product with intelligence that may be outdated within a few years." They argue that if you keep the HDTV as a "dumb terminal", you can replace and upgrade the high-end devices which surround it without needing to replace the TV.

Sistla concludes, "Since nobody knows yet which of these positions will prove truer, most major vendors are trying to cover all the eventualities. They want to make sure they have a product for every type of consumer who walks into a retail store."

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