The Next Generation of Red

Red,NAB,Red One,Scarlet,Sony,Panasonic,Canon,Apple,Final Cut Studio

In some previous blog entries, I discussed the new products announced by Red at NAB. Scarlet, the "3K for under $3,000" camcorder announced for shipment next year, takes Red into an entirely new market segment, one in which the Japanese consumer electronic vendors (primarily Sony, Panasonic and Canon) have long played.

The current Red One lists for $17,500, but by the time lenses and accessories have been added, the cost can easily double (or more). At that price, there's enough margin for video system integrators to make money, and the systems are expensive enough for rental houses to have a steady market.

However, at $3,000 plus accessories, the Scarlet will clearly be a prosumer product that should sell in quantities many times that of the Red One. From interviews with Red executives at NAB, it seems clear that they see a market much bigger than that served by the mail-order video resellers such as B&H.

At the show, Red executives talked about the company's close relationship with Apple. It seems to me entirely possible that Scarlet, in a package closely integrated with Final Cut Studio, could be sold in Apple's stores, possibly even exclusively. This would give Red street-level access to consumers and media creation professionals around the world, without having to vet a sales channel store by store.

There have been rumors about Apple purchasing Red, but as I've written about previously, I think that Apple's hardware-agnostic approach to professional audio and video (as opposed to its hardware-centric approach to everything else) has worked in its favor vs. Avid. By buying Red, it could alienate its largest hardware partners, but by simply reselling a Red-branded Scarlet in its stores, it would remain agnostic, yet share the spotlight with the company that is fast becoming the Apple of video cameras.

Please keep in mind that this is speculation on my part; I have no inside information. However, I've felt for a long time that the design of camcorders needs a major overhaul in order to make them more usable, and that Apple is ideally suited to design and build such a next-generation product. A reselling partnership with Red could be the first step to such a product.

Returning from NAB

I'm now back in Silicon Valley, organizing my thoughts about the NAB conference that ends today. Here are a few thoughts to get started:

First, the final attendance count was 105,259, of which 28,310 came from outside the U.S. Press attendance was 1,296.

This year, the organizers expanded the charter of NAB to make it cover everything about content, but I think that the result is that the show is getting too diffuse. What had originally been a show focused on broadcasting now also covers filmmaking (from tiny independent films and documentaries to studio tentpoles,) podcasts (both audio and video,) Internet radio and streaming media, IPTV and more. NAB is probably still the foremost broadcasting, audio/video production and post-production show in the world, but the spectrum of topics and range of products available is getting too broad. Want a bag of three USB cables? You can find them on the show floor, along with products ranging up into the millions of dollars.

In the past, NAB tried to segregate products into physical areas. They still tried to do that this year, but odd products kept cropping up everywhere. There's simply too much demand for exhibit space to maintain any meaningful separation by function or application.

The reality is that the same product can be used for lots of things: A camera light can be used for a TV news interview, a video podcast, a short film or an epic. Almost any production or post-production tool has multiple applications. When a prosumer camcorder can be used for B-roll on a production that uses cameras costing hundreds of thousands of dollars, the walls that previously clearly separated applications start tumbling down.

So, should NAB continue to pursue its "come one, come all" approach to content? Lots of people like it, but I suspect that some of NAB's core membership, broadcasters, are grumbling that it's simply too hard to see, or even find, the products that are relevant to their businesses. The tent, so to speak, is getting uncomfortably large.

Real vs. Vapor

I had a chance to spend time at Sony and Red on the NAB show floor today, along with a return visit to Panasonic. Here are a few thoughts on what I saw:

• Red: If the Red booth had been a conference room in a hotel, the Fire Marshall would have closed it down. Attendees were packed in like sardines. The Red One is definitely real; there were several being demonstrated, and many satisfied customers were in attendance. On the other hand, the Scarlet, Epic and Red Ray were vapor; each product was in a glass case, and none of them was functional in the least.
  
  
• Sony: Unlike previous NABs, Sony came with a full suite of real (or nearly real) cameras. In my opinion, the PMW-EX3, which will ship this summer, is the real deal. It adds several features to the EX1, the most important of which is interchangeable lenses (which perhaps means not as much as it might, since Sony is introducing its own proprietary lens mount, although an adapter will allow some 2/3" lenses to be used with the 1/2" EX3.) The other huge thing that Sony has addressed is ergonomics; the EX1 was widely reported to be highly uncomfortable to hold for any length of time. The EX3 is designed to be very easily shoulder-mounted. There were several operational EX3s in the booth, configured for handheld, studio and cinematography applications.
  
  
• Panasonic: The company's hot new announcement, the AVCHD HMC150, was a non-functioning mockup made to look like it was operating. (A product manager explained that "...it isn't shipping for six months," to explain why it looked like it was working when it wasn't.) I asked him about the relative performance problems to date with AVCHD vs. HDV--it's been widely reported that while under ideal conditions, the two formats look very similar, but when things get suboptimal, such as low lighting and motion, HDV still looks better. The product manager challenged my statement, and asked me to "find the artifacts" in a perfectly lit video with little motion. I told him that I couldn't find any, but I didn't expect to.
  

He then whipped out a chip with what he told me were many samples of AVCHD footage that would disprove my contention. The first (and only) clip that he showed me was of a backyard barbeque, again with lots of light and, for the most part, little motion. He told me how wonderful the footage looked, ignoring the motion artifacts visible when the camera moved. However, when I asked him if he had any low-light footage, he took his chip out and put it away, telling me that "low light is a problem with the camera, not the compression." I rest my case.

Now, I have no doubt that Panasonic will eventually deliver the camera (let's not forget that the first P2 prototypes shown at NAB were made of balsa wood, but they delivered cameras in time for the next year's show.) However, I'll still take a strong "show-me" position on AVCHD. I'd love it to be as good as (or preferably better than) HDV, but I'll believe it when I see it.

NAB: Fun With Audio

A few months ago, Avid made big news by pulling out of NAB. Well, apparently that decision didn't sit well with Digidesign, the pro audio division of Avid, which normally exhibits in the Avid booth. I discovered a Digidesign booth in the North Hall, much smaller than even Digidesign's normal display space within Avid's previous NAB booths, but a 20' x 20' booth nonetheless. There was a full-blown Icon console on one side, and a new C24 console and some other equipment on the other.

I also stopped by Euphonix's booth. The company, which specializes in very large, very expensive audio consoles, recently announced the MC Control and MC Mix, a pair of low-cost control surfaces for software such as Apple's Logic Studio and Final Cut Studio. There were two MC setups in the booth, and I had a number of questions and would have liked a demonstration. However, even though there were no other customers and a half-dozen Euphonix staffers in the booth, I was totally ignored.

Now, I'm not entirely chopped liver; I'm an Audio Engineering Society member, and I could have had an intelligent conversation, but I never got the chance. I suspect that Euphonix's salespeople were far more interested in selling their big, expensive "pro studios" products, but if that was the case, why did they even bother bringing the MC control surfaces to NAB? Note to exhibitors: Don't waste the space in your booths displaying products that you don't want to sell. And if you do want to sell them, don't ignore your customers. There are way too many competitors in the low-cost control surface market for Euphonix to take it for granted.

Live from NAB (Part 1)

I'm blogging from the show floor at NAB (the North Hall, to be precise.) It's too early for me to make any generalizations about announcements at the show, but the sound and fury is coming thick and fast in the camcorder world:

• Panasonic announced five new camcorders: Two top-end Varicam models (including one that uses P2 flash storage exclusively), an update of the prosumer HVX200, a higher-end HPX170 model and the HMC150, a prosumer AVCHD camcorder that should (at least in theory, based on its compression bitrate) match or exceed HDV quality.
  
• Sony announced US availability of the PDW-700, a XDCAM HD (optical disc) model, along with a preanouncement of the PMW-EX3, the next model in the highly-regarded XDCAM EX (flash-based, using the SxS format) family. The EX3 will feature interchangeable lenses, addressing perhaps the biggest drawback of the EX1. (The EX3 also looks as though it will be better balanced in the hand than the EX1, addressing the other major complaint.)
  
• Red fired off a couple of preannouncements: Scarlet, a 3K handheld camcorder expected to be priced under $3K, and Epic, a next-generation 5K camcorder expected to be priced in the $40K range. At this point, both products are scheduled for release in "early 2009," with features, specifications and prices highly likely to change.
  

Leaving MRG

MRG,Multimedia Research Group,NAB

Late last week, I gave notice to my employer, Multimedia Research Group (MRG), that I'll be leaving as soon as the Spring five-year Forecast is done, which will probably be before the end of April. It's never easy to leave a job, especially one that enabled me to return to Silicon Valley, and one in which the company's owner is a good friend with whom I've worked off and on for almost 20 years, but it's time to make a move.

There are three key reasons for me to move on. The first, and most important, is that MRG is a small company, and I need to increase my income. I recently got engaged, and the money that was sufficient for myself and two cats won't cut it for a family. The second reason is that the travelling that I've been doing has been exhausting. In the last fifteen months, I've visited London twice, Shanghai and Shenzhen, China on two separate trips, Singapore, Chicago, Boston, Amsterdam, Paris, Rio de Janeiro, and undoubtedly places that I've forgotten. It's harder for me to rebound than it was when I was travelling back and forth between California and Tokyo when I worked for Toshiba in the late 1980s.

My final reason is that I'd really like to get my hands dirty again with products or services, rather than just write and speak about what other people are doing. Analysts are observers--we sometimes consult one-on-one with clients, but we rarely have an integral role in defining or launching products.

I'll be representing MRG on a panel at the National Association of Broadcasters' convention in Las Vegas later this month, and I'll be continuing this blog. I'm "pursuing other opportunities," as the saying goes, so if you know of an opening, please let me know at lfeldman(at)feldmanfile.com.

On ZTE

ZTE,UTStarcom,Huawei,Ericsson,Nokia Siemens Networks,Cisco,IPTV

As I mentioned in some previous posts, I spent most of last week at an analysts' conference in Shenzhen, China, sponsored by ZTE Corporation. To folks like myself in the U.S., ZTE has been a fairly "invisible" company; this conference was an attempt to make the company, and its products, more visible.

ZTE is one of the largest telecommunications equipment manufacturers in China. Its largest local competitors are Huawei and UTStarcom. The Western companies that I'd compare ZTE to most closely are Ericsson, Alcatel-Lucent, Nokia Siemens Networks, and to a lesser extent, Cisco. ZTE is a wireless powerhouse; it has product lines covering GSM, CDMA, WiMAX, and the Chinese standard TD-SCDMA (where it's the market leader). It's also a large supplier of wireline access equipment (IP DSLAMs and xPONs) and routers.

In IPTV, ZTE supplies all the key system components except live encoders. Everything else--Video-on-Demand systems, Set-Top Boxes, Middleware and Content Protection--ZTE can provide itself, or integrate other companies' products into a turnkey system. ZTE's approach is closest to that of UTStarcom, a U.S.-based company with a huge presence in China, but the companies have two different strategies: UTStarcom prefers to sell complete, turnkey systems using its components, while ZTE will sell complete systems or individual components. This enables ZTE to sell to service providers that want "best-of-breed" products, as well as those who want everything from one company.

What both ZTE and UTStarcom have in common is that they're both focusing on China, India, and developing markets. In my opinion, this is a very smart approach for ZTE. While the company has some advanced technology, such as software-defined base station radios for mobile applications, it can best be thought of as a "fast follower." ZTE is unlikely to be the company to bring technology to market first, but when its products do come to market, they tend to be less expensive than their Western counterparts. This is very important for service providers in developing countries with very low ARPUs (Average Monthly Revenues Per User).

Even though ZTE isn't much of a market factor in Western Europe or North America, it doesn't mean that the Western equipment vendors can breath easy. I see ZTE, Huawei and UTStarcom much as Toyota, Honda and Nissan were when they entered the U.S. automobile market in the early 1960s. The first Japanese cars to reach U.S. shores were tiny, underpowered and not terribly reliable, which made it easy for both American and European manufacturers to ignore them. However, the Japanese manufacturers learned what American consumers wanted, and gave it to them with high quality and low prices, eventually driving American manufacturers out of the small car market. Even after Japanese manufacturers went upmarket and raised their prices, U.S. consumers still preferred their products.

I think that ZTE is going to be one of the world leaders in mobile, and possibly wireline, communications by the middle of the next decade. In fact, it may not take that long.