Multimedia: Joyful And Triumphant?

There's going to be a lot of sound and fury under the Christmas tree this year, and it won't all be coming from the children. Personal-computer makers are gearing up for their biggest Christmas ever, and they're counting on explosive interest in multimedia to bring shoppers into the stores. Check your local computer or home-electronics stores, and you're likely to see PCs that put on a dazzling show of sound, graphics, and video--with programs that entertain and educate both children and adults.

"This is a multimedia Christmas," says Allan C. Thygesen, general manager of multimedia publishing for Media Vision Inc., which makes both multimedia hardware and software. "The consumerization of the PC is really happening this year."

You've heard all this before, right? Ever since IBM, Commodore International, and Apple Computer started pushing their machines as the perfect family Christmas gift a decade or so ago, some computer maven somewhere has been proclaiming that "this is the year of the home computer." And for nearly five years, savants have been predicting the arrival of the multimedia era. Yet only 31% of American homes have a PC, and only 2% of those could be classified as multimedia, according to marketing consultant Creative Strategies Research International.

This year, however, the right mix of forces is turning multimedia into a true mass-market category: low prices, interesting software, and a critical mass of consumers who feel comfortable with the technology. Market researcher Link Resources Inc. estimates that 718,000 multimedia PCs for the home will be sold this year, compared with 279,000 in 1992 (table, page 169). Consumers who already own a plain-vanilla PC will buy 550,000 multimedia upgrade kits, compared with 132,000 last year.

And Christmas will just be the start. "Multimedia PCs will become commonplace over the next 18 months," says William H. Gates III, chairman of Microsoft Corp. "Clearly, people will look back on 1994 as the year that happened. By 1995, people will say, 'Of course my PC has a CD. Yours doesn't?'" Hardware makers say multimedia sales are zooming because there is finally enough software available, and software publishers say it's because the hardware is finally affordable. It's both, of course. Certainly, price is a key driver. A year ago, a true multimedia PC--equipped with a CD-ROM player, a super video-graphics-array (SVGA) color monitor, a sound card, speakers and a microphone, and a 486 microprocessor at the heart of it all--cost about $2,500. This year, it's more like $1,500 to $1,800, retailers say. The difference between a plain PC and one with a CD-ROM player, a basic necessity for multimedia, is only about $150 this year, compared with $500 last Christmas.

NONTHREATENING. The real breakthroughs, however, are coming in the realm of software. There are now multimedia packages for just about every taste and family member, some 2,500 CD-ROM titles in all. Analysts expect the number of titles to double over the next 12 months. Already, about 14% of all software packages shipped are on a CD-ROM, most costing $50 or less, and CD-ROM is the fastest-growing software category. The huge popularity of music CDs has paved the way, says Kevin O'Leary, president of SoftKey Software Products Inc., one of the largest publishers of mass-market programs. "Everyone knows how to use a CD, so they're not scared by a CD-ROM. You don't have to sell the technology."

It also helps that children who have been playing Nintendo and Sega since they were four think nothing of moving up to a PC. There are even those

--software makers, mostly--who contend that the lively animation and sound of multimedia has kids spending more of their time doing homework. That's helping to drive the rapid growth in a new category of "edutainment" software. These are programs that look like games but actually teach something, in a way that feels like fun.

Typical of the genre is Yearn 2 Learn-Peanuts, one of the hot titles for the preschool set. The program, sold by Image Smith Inc., features Snoopy, Charlie Brown, and the gang from the Peanuts cartoon strip. Aimed at ages 3 to 6, the Peanuts characters use animation, voice, music, and video to teach math, geography, and reading. For older children, there's Interactive Encyclopedia from Compton's New Media, one of the best selling CD-ROM packages.

All this edutainment makes multimedia a lot more appealing to parents than the weird-sounding and sometimes violent games that have kept the kids glued to their Nintendos. A parent is more likely to plunk down $1,800 for a PC that can run Knowledge Adventure's 3D dinosaur CD-ROM than LucasArts' Day of the Tentacle: Maniac Mansion. "Parental guilt is a key driver in this market," says Robert W. Bauer, director of desktop marketing for Compaq Computer Corp. "Most schools have PCs now, so parents buy them because they think it's what their kids need."

ESSENTIAL SOFTWARE. Edutainment is also symbolic of a unique phenomenon in multimedia. This is the first significant computing technology to be initially adopted by consumers rather than business customers. CD-ROMs are barely visible in offices because they are slow, they can't record data, and the information on them can't be updated. "At least at this stage, it's going to have to take a 'killer app' to get multimedia into the office," says Tim Bajarin, president of Creative Strategies--something like Lotus Development Corp.'s 1-2-3, which persuaded many businesses to invest in PCs a decade ago.

For the home market though, no single killer application is needed. Different family members will use multimedia PCs for different reasons: parents for work and personal finance, teenagers for games, kids for schoolwork, even some grandparents for interactive bulletin boards that keep them in touch with the cyberspace world.

PC aakers still learning to sell to home consumers admit that they have been caught unprepared by the multimedia groundswell. IBM started shipping multimedia PS/1s for the home market six weeks ago and is already unable to fill orders. "Our expectations were very, very low, but we're finding that there is a lot of demand, " says Robert J. Corrigan, president of the IBM Personal Computer Co. Compaq, AST Research Inc., and Apple Computer Inc. also say sales are way above expectations. About 20% of AST's PCs are selling to home buyers, for example, despite the company's almost complete lack of brand awareness among consumers, and about a third of those are multimedia. It doesn't hurt, say several PC makers, that Compaq is spending a lot of money this fall on consumer-targeted TV ads. "That kind of advertising spikes the market for all of us," says Ed Tazzia, IBM PC's consumer marketing manager.

Another spike could come from new developments in hardware. One key change will be widespread adoption of digital signal processors, or DSPs--chips that can handle audio, voice-recognition, and video. High cost and lack of special software for the chips had kept the technology out of most PCs. But Compaq, Packard Bell, Hewlett-Packard, and IBM are starting to adopt the chips. Says Corrigan: "Multimedia is just beginning to really take off. Between now and next Christmas, I think you'll see an explosion." So if you want a silent night in December, 1994, buy earplugs.