[opendtv] Re: Barriers eroding to LCD TV adoption

  • From: Tom Barry <trbarry@xxxxxxxxxxx>
  • To: opendtv@xxxxxxxxxxxxx
  • Date: Thu, 05 Aug 2004 08:48:26 -0400

 > But it does not explain why Tom returned his box and is waiting for
 > the version with the LG chips.

The Hisense box has a known and fixable problem (PSIP?) that it cannot 
find some channels on a channel scan even with sufficient signal.  The 
channel scan will hang.  Here in Jax that resulted in missing 2 of the 
big 4 networks.  This can be fixed by calling their support and getting 
a software upgrade on a USB chip.

But I already purchased 6 PCHD cards and only bought the box on impulse 
and out of curiousity when I heard it had a 4'th gen tuner in it.  I 
wanted to see how good the reception was, and possibly pick up WB/HD 
which is currently spotty for me.

The USDTV box more or less matched the reception of the better of my 
PCHD cards but that alone did not give me reason to keep it in the face 
of the hassle of dealing with tech support and waiting for an upgrade 
when I could instead just return it the next day.  I'd assume they will 
start applying the fix at the factory, but who knows?

And this way when/if I try again I can test the 5'th gen box, though I 
did not know that at the time.

- Tom




Craig Birkmaier wrote:
> At 11:23 AM -0700 8/4/04, Lee Wood wrote:
> 
>>Check this... especially the last sentence.
>>
>><snip>
>>
>>Strategic Partnership with Hisense=20
>>      
>>To create the set-top boxes that enable consumers to enjoy the company's
>>unique service, USDTV has entered into a strategic manufacturing and
>>financial partnership with China's Hisense Company, Ltd. The agreement
>>includes $60 million in financing to produce 400,000 of the company's
>>proprietary, ATSC compliant set-top boxes capable of tuning all digital
>>and high-definition formats. The companies are also developing
>>integrated USDTV Ready(TM) plasma and LCD televisions. Hisense is also a
>>minority investor in USDTV.=20
> 
> 
> OK guys you are still missing the big picture here. And it ain't all 
> that pretty.
> 
> Just after USDTV launched I interviewed people at the company to more 
> fully understand what they are doing on the financial front.
> 
> Let's start with the above. Hisense agreed to build the initial run 
> of set top boxes for USDTV, and to finance the entire production run. 
> They would get paid for the boxes as they are sold, and participate 
> in the back end revenues to earn their profit on the deal.
> 
> For sake of argument, let's assume that the $60 million represents 
> the cost to Hisense to manufacture 400,000 units. That works out to 
> $150 per box. That's manufacturing cost, not the retail price. It is 
> not uncommon for the manufacturing cost to be in the range of 40-50% 
> of the price to the consumer; this also includes marketing and 
> distribution costs, and the profit for the retailer or service 
> provider that buys/subsidizes the box.
> 
> When USDTV signs up a customer at WalMart (in a market they serve) 
> the cost to the customer is $99 for the box. So somebody is 
> subsidizing the difference, and the cost to WalMart to sell the boxes 
> (and their profit) must also be accounted for. That accounting is 
> based on the total revenue from the subscriber for a one year 
> committment:
> 
> $99 for the box
> $19.95/month = $239.40
> 
> Total $338.40
> 
> I don't know the exact split, but it is safe to assume that Hisense 
> gets at least the $150 that they invested in the box, and a bit more 
> in profit. Likewise, WalMart is getting something too.
> 
> We can get a clearer picture by looking at the price of a box WITHOUT 
> subscription in markets not currently served by USDTV. As Tom 
> indicated, you can buy the box outright for $199 in these markets. 
> This covers the cost to manufacture the box, and $50 to handle 
> distribution and selling expenses, with a few bucks for WalMart for 
> their effort. Why are they doing this?
> 
> The initial manufacturing run was 100,000 units, as announced in 
> January. The commitment was for 400,000 units.
> 
> If USDTV is signing up subscribers by the droves, they would consume 
> the entire inventory. But they are not. There is no public 
> information on the number of homes they have signed up, but the 
> numbers I've been hearing suggest that it is in the range of 
> thousands, not hundreds of thousands. This leave everyone with a 
> major inventory headache. Hisense has committed to build 400,000 
> units, so they need to ship these units to someone. Walmart has 
> committed to marketing the product nationally, but USDTV is still 
> available in only 3 markets.
> 
> The solution is obvious. Dump the inventory to recover the initial 
> costs and keep the manufacturing lines open. And that is what WalMart 
> is doing. At $199 they can pay Hisense the $150 for the box, and 
> cover their costs. IF some of these boxes wind up being used for 
> USDTV service in the future then everyone gets a cut of the 
> subscriber fees.
> 
> The real question is whether Hisense is going to build the OTHER 
> 300,000 units. My educated guess is that they will not make more 
> boxes until they can integrate the new LG tuners this fall. 
> Meanwhile, if you want a cheap - SUBSIDIZED - ATSC STB, this is the 
> best deal in town...
> 
> But it does not explain why Tom returned his box and is waiting for 
> the version with the LG chips.
> 
> As I said, this is not a pretty picture. It  is highly misleading to 
> infer that the selling price of an ATSC box is now $200, based on the 
> convoluted scheme that USDTV, WalMart and Hisense have developed. As 
> I said before, $300 per box is closer to reality.
> 
> 
> 
>  
>  
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