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Philips to offer PC-TV

The giant consumer electronics manufacturer will announce a PC-TV with 233-MHz MMX Pentium processor, digital surround sound, and a DVD drive.

Philips Electronics, one of the world's largest consumer electronics companies, is setting its sights on the U.S. market with a PC-TV convergence product that can serve as the centerpiece of a home entertainment network. The device is expected to compete with offerings from Gateway 2000 and Compaq.

Philips will announce today a PC-TV with a 233-MHz MMX Pentium processor from Intel, digital surround sound, and a DVD drive which can play back DVD movies and DVD-ROMs as well as CD-ROMs and audio CDs.

Overall, the market for products which blend the remote-control ease of consumer electronics with PC functions is a small one. Computer Intelligence, a large PC market research firm, estimates that fewer than 100,000 WebTV Internet access devices (a version of which Philips also sells) have been sold.

Far fewer PC-TVs have been sold because they are generally quite expensive--few enough are sold that Computer Intelligence doesn't officially track sales of the expensive devices.

While representing a limited segment of the market right now, PC-TVs seem destined to be part of the future for both the PC and consumer electronics industries as products from the two continue to converge over the next several years.

Convergence products will gain wider acceptance in the home than conventional PCs because they will be easier to use and set up. Most industry analysts estimate that about 40 percent of U.S. households have PCs today, but the convergence trend could increase those numbers to 50 percent by the end of the century, according to industry experts.

PC-TVs are currently offered by Gateway 2000 (GTW), which offers the Destination PC-TV, and Compaq (CPQ), which offers the PC Theater.

"We have a different approach to convergence products. Philips has been in the living room for a long time. These products have to have great audio and video. This thing has to turn on like a TV set and the whole family has to be able to use it," says Brad Beitel, general manager of the Philips Digital Entertainment Group. "We're very bullish about this [market] space," he says.

Both the Compaq and Gateway systems come with large monitors, whereas Philips will sell the DVX8000 Multimedia Home Theater as a standalone component, without a monitor. But it can be hooked up with a user's existing big screen television. The unit includes technology that will offer better picture quality when displayed on a television. This is important since to date TV screens have not offered the image quality that users have come to expect with more precise PC monitors.

Philips also offers hook up to any other audio-video equipment a consumer has already purchased.

"They have really consumerized the PC without taking away the power, expandability, and access to future services," such as digital television, according to Richard Doherty, director of Envisioneering Group, which does market research in computer and consumer products.

"It has a PC under the hood and has got everything but looks like hi-fi equipment," Doherty adds.

The unit essentially serves as the center of a home theater setup because the computer comes with built-in connectors for stereo equipment and can control other pieces of equipment either through a wireless keyboard or a remote control device. A user interface gives access to audio and video functions, including VCRs, cable boxes, and satellite receivers.

Users can view television broadcasts and Internet content on screen simultaneously in resizable windows, but the PC doesn't have to be running in order to watch TV.

Philips says the DVX8000 will be sold through audio and video specialty retailers at a suggested retail price of $5,000.