High-Tech: Through The Looking Glass

Sep 22, 2003  •  Post A Comment

The high-tech industry, which once lusted after new inventions, has now fallen in love with the re-invention. Shaken by shrinking revenues, companies are saying goodbye to old brands and hello to new categories. To wit:

* Cablevision, the cable TV operator, will launch a satellite TV business next month. The service, expected to be called Voom, enters a market for which cable executives have long predicted doom. But don’t tell that to Cablevision CEO James Dolan. “We have a business plan on satellite [that] says we will … break even before reaching the $1 billion investment mark,” Mr. Dolan recently told Forbes.com.

* Gateway and Dell, the PC makers, have either launched or will soon introduce a line of plasma TVs. Once upon a time, the PC world viewed the television as a relic of the past. However, flat PC sales have suddenly made flat TVs look like the future. “It’s a matter of time before we evolve into a broader range of consumer electronics products,” said Kevin Rollins, Dell’s chief operating officer.

* WorldGate, which tripped over itself in the interactive TV field, nearly closing its doors earlier this year, has decided to abandon ITV in favor of videophones. “There’s no doubt in my mind that my grandchildren will say to my children, `You mean, you used to talk to people and you didn’t see them?”’ WorldGate CEO Hal Krisbergh told the Philadelphia Business Journal. They might also ask, “Granddad, you mean you really thought people would order pizzas through their TVs?”

* D&M Holdings, the Japanese company that owns Denon and Marantz, the high-end audio receivers, this year purchased ReplayTV, the Digital Video Recorder service. “We believe that ReplayTV [is] the perfect complement to our existing product line,” said Tatsuo Kabumoto, D&M’s CEO and president.

The list goes on. Pioneer, which once was synonymous with “audio,” has burst into the video market with DVD recorders and plasma TVs. And Disney, a content king, will soon try to conquer the retail world with a receiver that plays movies.

So what is going on? Are things so bad that companies are ready to try anything?

Not entirely. Each company has unique reasons for “evolving.” D&M Holdings and Disney are doing well with their core businesses. But the two companies believe they can expand their profits in the new TV technology category, which is expected to boom in the coming years.

However, some firms appear to be trying to escape tough times by walking through the looking glass. By re-inventing itself, a slumping company hopes to put a new shine on its image, particularly with investors. WorldGate, whose interactive TV plans once attracted a slew of investors, including Comcast, now needs to persuade the financial community that the videophone is the right call.

It might work, for WorldGate as well as the others. However, history is overflowing with unsuccessful efforts to extend or change brands. Few companies have been able to achieve success in unfamiliar territory.

For instance, do you remember Harley-Davidson wine coolers? No? Well, how about Fruit of the Loom laundry detergent?

Phillip Swann is president and publisher of TVPredictions.com. He can be reached at Swann@TVPredictions.com.