News Article: 1993-01-08: Alphabet Soup, With a Dash of Hype From The New York Times

January 8, 1993

Alphabet Soup, With a Dash of Hype

A formidable partnership ladled the name "3DO" into the alphabet soup of new consumer electronics product names at the industry's annual winter trade show here this week, adding more chaos to the most confusing period in the business's history.

Time Warner, Matsushita, MCA and Kleiner Perkins had previously announced the joint formation of the 3DO Company to set a new standard for what are known as interactive multimedia players; the devices use compact disks, called CD-ROM's, that can store enormous amounts of video, sound, graphics and text. But late Wednesday, the 3DO team surprised the industry by announcing the addition of the American Telephone and Telegraph Company, which brings not only another wealthy equity partner but also a company with the telecommunications clout that could eventually give the new standard a tremendous mass-market edge.

The partners also demonstrated their product and revealed details of how it would be distinguished from other technologies vying to become the standard for interactive multimedia players.

3DO, whose odd name stands for "three dimensional optics," plans to ensconce its technology in family rooms in a box much like a compact disk player. The box could access realistic video games and educational and informational software. In the future, the company hopes to pipe all the information through telephone lines or cable television wire, though the data would still require processing by a 3DO system.

"It will be the next major consumer electronics standard," Trip Hawkins, president of 3DO, said to a standing-room-only crowd on hand for the demonstration. Mr. Hawkins, who is also founder and head of Electronic Arts, one of the largest computer and video-game software makers, went on to say that the 3DO standard "could be the biggest breakthrough in education since the invention of the printing press."

Hyperbole is to be expected at this annual bazaar, but this year such talk must compete with a host of other companies' proclaiming themselves the new standard-bearers in digital video formats, with techie product abbreviations like CD-I, VIS and CDTV. The manufacturers are jockeying to generate another hit product like the videocassette recorder and compact disk player.

So what should consumers make of all the new CD-ROM products, which are garnering the most attention here? Which ones are are worth considering? When is the best time to buy? And perhaps most important, which machines are likely to fade into the same consumer-electronics purgatory that claimed quadraphonic stereo and the Sony Betamax in days gone by? Those questions were put to Robert F. Kleiber, an analyst at Piper Jaffray in Minneapolis, whose research reports typically serve up healthy doses of skepticism. Waiting Out the 'Gee Whiz'

Of the 3DO product, which impressed the crowd with its ability to create and move a mosaic of graphics, Mr. Kleiber allowed, "It's wonderful hardware, and it clearly raises the bar."

But whether consumers will be tempted to spend roughly $700 on the player will depend entirely on the quality and quantity of software on the market, he said. For products already on the market, many software developers are taking existing programs and simply adding an interactive patina to the CD-ROM software, resulting in a grainy videotaped program over which users have only a slightly greater degree of control. "There's a lot of 'gee whiz' that diminishes with time," Mr. Kleiber said.

3DO, which acknowledges that a lot of development work still lies ahead, is likely to make a big push for Christmas 1994. And Mr. Kleiber counsels that unless consumers simply have to have the latest gizmo, they should wait until then to revisit the products, and then be wary of breathless claims from manufacturers. Competing With Nintendo

By 1994, 3DO's systems will probably be competing for teen-agers' attention with Sega, which has a CD-ROM system on the market, and Nintendo, which is likely to answer with its own CD-ROM system in 1994.

Nintendo's challenge is to develop a system closer to 3DO's capabilities than Sega's is, but at a lower price than 3DO's $700 tag. Mr. Kleiber recommends that consumers interested in getting into video games should buy a Sega or Nintendo system based on current 16-bit computer technology, for which games are plentiful and increasingly sophisticated.

Currently, the greatest challenge in selling CD-ROM technology into the family room may fall to Philips N.V., the giant Dutch electronics manufacturer that unleashed an advertising blitz this past holiday season for its new "CD-I" machine, which stands for compact disk-interactive.

The $600 CD-I player looks like an oversized compact disk player, and is designed to be attached to a television set. While software offerings include some games, there are also more adult-oriented offerings, like the instructional program on how to take a tour of the Smithsonian.

Philips executives say the machines are selling well, and that the more than $25 million they are spending to advertise the machine is working. But Mr. Kleiber said the machines, as well as a similar offerings from Tandy called VIS and from Commodore International called CDTV, lack compelling programs and the technology is far short of the leap usually required to make an impression on the purchasing public.

To a degree, CD-I, 3DO and other approaches suffer a fundamental problem in selling interactivity: It is a nebulous concept likely to mean different things to different people. Generally, it refers to the ability to control the images on the screen and choose what happens next.

By contrast, the successful new products of the 1980's were easy to explain. Compact disks were a crisper, more durable replacement for records, and videocassette recorders gave consumers the option to record shows and watch movies whenever they wanted.

Compare those innovations with a new machine announced this week from Pioneer known as the Laseractive player, a combination of laser-disk and compact-disk player that can also play Sega video games. Pioneer executives describe the device, which will go on sales this summer, as the "definitive home entertainment product." But the first task may be defining just what a couch potato is supposed to do with it.

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