CED092910

Opportunities Abound
Despite Challenges, There's 'More Reasons
for Hope Than Despair,' NPD Analyst Says
DALLAS — "There’s lots of challenges in 2010," but there are "more reasons for hope than despair," in-
cluding the emergence of 3D TVs and the coming Google TV, as well as growing demand for digital single-lens
reflex (SLR) cameras, NPD analyst Stephen Baker said at the NATM Buying Corp. conference Tuesday. NATM
retail members we polled at the conference said they were seeing a general softness in consumer CE purchases.
But for those CE dealers who can survive until 2011, the industry is heading into a period of resurgent growth,
Baker said.
The market share for 3D TVs among flat-panel sets was only about 2 percent in March, but grew to about
10 percent by August, Baker said. Blu-ray players, meanwhile, continue to be a strong category, with stable pricing
Today’s News:
‘MORE REASONS FOR HOPE than despair’ for CE
retailers this holiday season, NPD analyst tells NATM
conference. (P. 1)
SONY WILL SHIP 46-INCH Google TV-equipped LCD
TV this fall along with Blu-ray player, with Best Buy,
Sony Style stores among first to sell products. (P. 3)
FLEXIBLE AMOLED TVs 'next big thing' after
OLEDs, whenever that is, says Samsung representa-
tive. LG's just-demoed 31-inch 3D OLED tentatively
due in 2013. (P. 5)
BOSE ENTERS VIDEO MARKET with integrated 46-
inch audio/video TV at $5,349. (P. 5)
MOBILE GROWING PAINS include monetization,
bandwidth, small screens, but apps expected to escape
'store,' conference told. (P. 8)
‘DEEP SLEEP’ FEATURE in set-top boxes to be re-
warded with incentives for service providers, box
makers in draft 2 of Energy Star version 3.0 specifi-
cation. (P. 9)
NONPROFIT ORGANIZATION formed to administer,
oversee R2 electronics recycling standards. Industry
hails move but green groups say R2 still ‘condones’
exports to developing countries. (P. 10)
COMPONENTS & DEVICES: Most Americans are will-
ing to consider paying 30-cent cost for wireless-device
chip, CEA says. (P. 11)
DIGITAL TV: Entravision adds HD news at Texas sta-
tions KNVO-TV, XHRIO-TV. (P. 11)
CAPITOL HILL: NCTA exaggerates cost of using IP
backchannel switching to send switched digital
video programming to plug-and-play CE devices,
TiVo tells FCC. (P. 11)
Copyright© 2010 by Warren Communications News, Inc. Reproduction or retransmission in any form, without written permission, is a violation of Federal Statute (17 USC01 et seq.).
WEDNESDAY, SEPTEMBER 29, 2010 VOL. 10, NO. 188

2—CONSUMER ELECTRONICS DAILY WEDNESDAY, SEPTEMBER 29, 2010
and good unit growth, Baker said, telling the conference about 200,000 units are being sold each month in the U.S.
About 25 percent of the Blu-ray players sold in August were 3D-capable, he said. While there’s about a 20 percent
price premium on 3D players now, he said prices are coming down and "pretty soon" there won’t be a premium for
the feature.
Another area of opportunity for retailers is CE accessories, Baker said. That opportunity grows as the in-
stalled bases of devices including flat-panel TVs mature, he said. Close to 60 percent of all CE accessory sales now
come from high-end headphones, he said.
Pricing across all CE categories is "very stable" now and there’s high consumer interest for many products
and technologies, Baker said. But he said "it’s going to be a tough year" because many consumers are waiting for
prices to drop further before they buy products, after already buying many items last year, creating difficult com-
parisons for the industry to meet, he said.
There is a lot of product innovation being offered by manufacturers this year, including 3D TVs, smart-
phones and Apple TV, said Baker. But those categories are "immature" and "not quite mass market" yet, so they’re
not yet driving consumers into stores, he said. There’s various factors standing in the way of the transition to 3D
TVs moving as quickly as the transition to HD sets, he said. First, there’s no plan to stop 2D content from being
broadcast on TV, he said. In comparison, there was a federally mandated date in which analog TV signals were
stopped. There’s also been no major form factor change justifying higher average selling prices as there was with
the emergence of flat-panel TVs, he said. The current need for consumers to buy and wear 3D glasses remains an-
other barrier, he said. More than 60 percent of 3D TV sold are above 55 inches, but there’s a limited number of
consumers who can buy larger screen sizes, he also said.
U.S. consumer confidence also remains weak, Baker said. About 66 percent of consumers that NPD
polled last year indicated they weren’t going to buy CE products or planned to spend less on them, he said. In
early 2010, they started to say only that they didn’t plan to buy CE products, likely because they spent so much
on such products last year, he said. CE sales were flat in August compared to August 2009, he said. CEA said
Tuesday that consumer confidence in the economy "climbed more than five points" this month, with consumer
expectations about technology spending up 1.1 points from August, but down two points from September 2009.
Despite growing more than five points to 163.4, the Index of Consumer Expectations (ICE) is "down nearly six
points from this time last year," CEA said. The ICE "rebounded" in the last two months from an all-time low of
157.3 in July, it said.
The CE sector is dependent on four product categories now: PCs, flat-panel TVs, videogames, and mobile,
Baker said. PCs accounted for $29.2 billion in sales in the U.S. in the 12 months through May, compared to $20.4
billion for flat-panel TVs, $16.4 billion for videogame products, and $11.5 billion in cellular products, he said. Of
the videogame sales, $9.7 billion was from software and $6.7 billion was from hardware, he said. Digital camera
sales, however, improved in recent months, driven in part by digital SLR models, which offer significant opportu-
nity for retailers, he said. New camera form factors in the digital SLR models are appealing to consumers and they
also drive sales of accessories, he said.
Sales of big-screen TVs 40 inches and up will "determine the success" of this holiday season for retailers,
Baker projected. Sales of those TVs were pretty good last year, but there have been signs of weakness so far in
2010, he said. Sales of TVs 32 inches and under, meanwhile, have been "a train wreck" as high-end TVs with an
abundance of features are driving customers to 40-50 inch models, he said. He predicted small-screen TV sales
will remain weak in 2011.
There are three main factors for NATM retail members to feel good about for the coming holiday season
and 2011, Baker said: The changing TV buying habits of U.S. consumers, including their shift to large-screen TVs;
the growing importance of good salespeople due to the increased complexity of CE products; and multimedia

WEDNESDAY, SEPTEMBER 29, 2010 CONSUMER ELECTRONICS DAILY—3
opening up "a lot more opportunities" to sell accessories, audio, and peripherals. Many consumers need a salesper-
son to fully explain products to them, to help "validate" that a purchase makes sense for them, he said. "You’re not
going to get" that at Wal-Mart, he said.
Estimated flat-panel TV household penetration is about 65 percent in the U.S., Baker said. There’s an aver-
age of three TVs in each U.S. household, with 29 inches the average size, he said. That implies the transition cycle
from CRT sets to flat-panel models is nearing the end in U.S. households, he said. Therefore, he predicted, the
growth rate of flat-panel TV sales will slow unless the CE industry can drive the average TV sets per household to
more than three. Replacement and additional purchases represented almost 50 percent of flat-panel TV sales in the
past 12 months, he said.
Plasma TV sales have been one of the bright spots in recent months, Baker said. While 45-49 inch LCD
TVs have been selling well, 42-inch LCD sets are losing market share to aggressively priced plasma models, he
said. He predicted that LED LCD TV sales will grow significantly, but said LED remains rare and expensive in
TVs under 50 inches. The $700 in extra cost for that feature is hard for many consumers to justify now, and bene-
fits of the feature are relatively hard for dealers to explain to customers, he said. It's easier to explain to consumers
the advantages of Internet-enabled TVs, but networked TVs are now out of the price range many consumers can
afford, he said.
Retailers including Wal-Mart, meanwhile, are continuing to benefit from the exit of Circuit City, Baker
said. Ex-NATM member hhgregg, for instance, is bound to pick up some market share via its growing presence on
the East Coast, he said. "You gain some share just by opening up stores," he said. But Baker questioned how much
longer such dealers can continue to benefit from Circuit’s exit. Some CE retailers have benefited little from Cir-
cuit’s demise. Nebraska Furniture Mart wasn’t impacted much because Circuit had a weak presence in its markets,
Mark Shaw, electronics division merchandising manager, told Consumer Electronics Daily. Nebraska Furniture
Mart has one store each in Omaha and Kansas City, Kan., as well as a much smaller location in Clive, Iowa.
One advantage that Best Buy has over many specialty CE retailers is that it has more products at its
disposal, such as movies and games, that it can bundle together to sweeten a deal, Baker said. But there are
still opportunities for NATM and other smaller CE retailers with vendor relationships, in part because not all
manufacturers are comfortable with one retailer, like Best Buy, accounting for about 50 percent of their busi-
ness, he said. — Jeff Berman
New Platform
Sony to Ship 46-Inch Google TV-Equipped LCD TV, Blu-Ray Player This fall
Sony will ship a 46-inch Google TV-based LCD TV and Blu-ray player this fall, while Logitech fields a
standalone set-top box, Google Product Marketing Manager Brittany Bohnet told us Tuesday. Google was demon-
strating the TV at a Best Buy news conference in New York City highlighting the chain’s holiday plans.
Best Buy and Sony Style stores will be among the first to carry the products, which will contain an Android
operating system, Chrome browser and applications stored in 5 GB of the LCD TV’s 8 GB of flash memory,
Bohnet said. The Sony and Logitech devices will be built around an Intel Atom processor and will have Ethernet
and Wi-Fi connections, she said. Sony has scheduled a news conference Oct. 12 in New York City to introduce its
Google TV products, a Sony spokesman confirmed, declining further comment.
Google will launch an applications store for Google TV after planning to release a software development kit
in early 2011, Bohnet said. Google TV will launch an open source strategy as Google seeks to attract additional
partners to introduce products, Bohnet said.

Sony and Logitech don’t have any exclusivity on introducing products, she said. The Google TV products
will be packaged with a "unique" remote for controlling the devices, details of which have not been released, said
Bohnet, who was using a keyboard to show off Google TV. Google hasn’t disclosed content partners for the ser-
vice. HBO Go, CNN, CNBC and programmers that appear as icons on the Sony TV at the Best Buy news confer-
ence aren’t necessarily signed on as content suppliers, Bohnet said.
Google is negotiating with other potential partners, but isn’t "ready to announced anything yet," Bohnet
said. "That’s obviously the goal" to attract additional CE companies to the Google TV and "and part of the An-
droid strategy to be on other platforms," Bohnet said.
While Google TV may not be a "huge" product in terms of sales for Best Buy this holiday season, "it is im-
portant for showing what is going to come around that big screen," Best Buy CEO Brian Dunn said.
Google TV, which operates within Google’s YouTube group, started with a small beta test in early summer
that expanded to "several hundred" of the company’s employees, Bohnet said. The service requires a minimum 1
Mbps data rate and works best in the 3-6 Mbps range, Bohnet said.
"It’s only really been possible over the last year" to launch a service like Google TV, Bohnet said. "The
amount of people with Internet-capable TVs and the ability to build applications into a processor converged and it’s
the right time because people are starting to understand it."
Meanwhile, 3D TV sales have been "slower" than the industry expected because "I think we all underesti-
mated the complexity of how to best and most effectively demonstrate that story for the consumer," Dunn said.
The 3D technology will be "more broadly distributed" in products next year and be in "virtually every TV" in 2012,
Best Buy Americas President Michael Vitelli said. The 3D category will likely get a boost from a growing assort-
ment of 3D games, he added.
"A 3D TV is your best 2D TV as well and 3D is a feature in that set," Vitelli said. "I think as people start to
understand more about that I think gaming will help make it interesting to a niche of consumers that aren’t out there
in that space right now."
Best Buy’s CinemaNow video download service has been added via firmware upgrade to a range of Sam-
sung Internet-capable LCD and plasma TVs, including 40-, 46-, 50- and 55-inch 7000 series LCD TVs priced at
$1,599 to $2,599. It’s available with Samsung and LG Electronics Internet-capable Blu-ray players and LG LCD
TVs. CinemaNow, which gets content from Sonic Solutions, has a library of 10,000 titles ranging from TV shows
priced at $1.99 to new releases that are available for rent in HD and SD versions at $4.99 and $3.99. The new titles
also can be purchased for $15.95. The CinemaNow service will be deployed across a broader array of products in
2011, including Best Buy’s private label Insignia goods, Vitelli said. In addition to being available in products,
CinemaNow is being marketed with pre-paid cards and Geek Squad installers are promoting the service, said Nick
DeVita, a home theater adviser in the Geek Squad in the New York City market.
"At the store and install level we’re trying to let customers know how powerful their electronics can be,"
DeVita said.
Best Buy also will increase the number of stores featuring a section for trading in and buying used video-
games to 1,000 stores from the current 600, Vitelli said. The new department fills some of the space left when Best
Buy "condensed" its assortment of CDs and DVDs in eliminating the slow sellers in each market, Vitelli said. Best
Buy uses a third party to buy back the games and help with the assortment of used titles, Vitelli said. Best Buy also
has freed space for demonstrating Sony’s PlayStation Move and Microsoft’s Kinect systems, which occupy an area in
some stores previously used to demonstrate Guitar Hero, DeVita said. "Gaming is a big traffic driver and the trade in
and used piece of that is for that young demographic," Vitelli said. Best Buy also has increased the number of Blu-ray
titles that stores carry, Vitelli said. And it also has a new e-reader section at the front of each outlet merchandising
Sony’s e-Reader, Barnes & Noble’s Nook and Amazon’s Kindle, which arrived in Best Buy stores last week.

Best Buy will launch TiVo DVR-equipped Insignia LCD TVs in 2011 as step-up product in a range of
screen sizes, Vitelli said. While Best Buy has long carried standalone TiVo DVRs, many customers initially balked
at paying a monthly fee, Vitelli said. But with the growth of cellphone, broadband and other services, all of which
carry a fee, that barrier has been eliminated, Vitelli said. "I think now" the monthly fee is "more ubiquitous" and
TiVo’s DVR service "will do great once we get it embedded in more products," Vitelli said. — Mark Seavy
LG's 31-Inch 3D Due 2013
With Midsized OLED TVs Still Years Off, Samsung
Says Flexible AMOLEDs Will Come After
SAN FRANCISCO — Samsung is less sure when long-anticipated large OLED TV sets are coming than it
is about what will follow, a representative said Tuesday. "Don't ask me when" OLED TV will arrive commercially,
said Ho Kyoon Chung, adviser to Samsung Mobile Display. Asked when Samsung will sell OLEDs with plastic
substrates, he replied after delivering a keynote at the OLEDs World Summit: "My favorite word is 'coming soon.'"
But Chung expressed confidence that he knows "the next big thing" after OLED TV: flexible AMOLED technol-
ogy for bendable, unbreakable displays. AMOLED is short for active matrix organic light-emitting diode.
Even moderate-size OLED TVs won't be commercialized until 2013, an LG representative said at the con-
ference. That's when a 31-inch 3D set that LG showed at IFA in Berlin, and perhaps the first other sets larger than
15 inches, are tentatively scheduled to be out, said Jueng-Gil Lee, a research fellow at LG Display. OLED sets will
be in the "premium market" then, their costs having dropped to triple those of LCD competitors from 10 times, he
said. The newer technology will go mainstream in 2017, when OLED will have gained a cost advantage, he said.
The first sets larger than 50 inches should arrive in 2015, Lee said. Asked about prices, he said, "I'm not the right
person to answer that."
Samsung has made important advances in flexible AMOLED technology, said Samsung's Chung. But he
withheld important details on the progress as proprietary and was vague on timing. Chung did offer a presentation
slide of Displaybank projections that the flexible AMOLED will quickly build in the second half of the decade to
$30 billion in 2020. With unspecified collaborators, Samsung "found a solution" for plastic substrates that "believe
it or not ... can go over 400 degrees centigrade," he said. It uses a multilayer inorganic barrier and provides thermal
stability to compete with metal foil substrates and improve thin-film transistor (TFT) performance, a point on
which there can be "no compromise," Chung said.
And Samsung has developed an Atomic Layer Deposition/Molecular Layer Deposition (ALD/MLD) coating
that offers high throughput, scaling and "excellent uniformity," Chung said. He said he was showing how it works for
the first time publicly. "This is a new approach — innovation" in relation to the only known alternative process for
thin-film encapsulation, Vitex's Barix coating, which Chung said has high equipment costs and "not ideal" film qual-
ity. Samsung's technology "is very early stage" but is the way the industry will go, he said. — Louis Trager
'Decade of Research'
Bose Unveils First Video Product: $5,000 Integrated TV
With Complete Audio/Video System Inside
Bose unveiled its first video product Tuesday, a $5,349 46-inch, 120Hz, 1080p LCD TV with an integrated
multi-speaker audio system, outboard console switcher and a game-changing remote control. All sound comes
from the screen, with no subwoofer, and the system was designed to create "spaciousness, to reproduce low notes"

and to "transport listeners to another place just by using sound," according to Santiago Carvajal, business director
for Bose video products.
During demos at the Four Seasons hotel in New York Tuesday, company officials repeatedly referred to the
spaciousness of the sound, taking care not to refer to the system as surround sound. The VideoWave entertainment
system arrives in Bose stores in the U.S. Oct. 14, the company said, along with Bose retail locations in Europe and
other areas worldwide. Bose said its stores offer the best demo opportunities and customer training opportunities,
which Phil Hess, vice president of product marketing in the home entertainment division, told Consumer Electron-
ics Daily is critical to the success of the pricey product in a highly discounted category. For now, the VideoWave
is a Bose store exclusive, and the company will evaluate expanded distribution over the next six months, Hess said.
"First, we have to communicate the value because by every appearance it's a TV," he said, noting that a comparably
priced LCD — without the sound system or product integration — sells for about $1,000.
The $5,349 includes the "white-glove delivery service" for set up, connection to source components, and
30-60 seconds of training, Hess said. The company will also take away the customer's old TV. A company spokes-
woman said Bose is working with a third-party to ensure old televisions are recycled "in an environmentally re-
sponsible manner."
Hess said there are two schools of thought on the price of the system. "You cost-up to afford the parts
you're putting in," he said, and costs for the LCD technology, home theater, music and remote control are signifi-
cant, he said. The market price is another matter. "Pricing isn't a science," he said. Consumers who see value in
the benefits of VideoWave will pay the price, which will support future product research, he said. "When consum-
ers don't buy our products that means we haven't put enough value in it," he said. "Consumers will vote." There's
no question VideoWave "isn't for all customers," he said, but the company believes there are customers "tired of
seeing speakers and wires and too many remote controls" who will understand the value.
The system incorporates "a decade of research," according to Carvajal. The integrated technologies include
a six-woofer array for bass and a custom-designed Waveguide leveraging the company's existing Wave technology.
The challenge in a TV cabinet, Carvajal said, was to make a Waveguide thin enough for a product designed to hang
on a wall and to minimize vibration that could interfere with the sensitive LCD panel. The woofers were mounted
in a way that they would cancel each other's vibration, Carvajal said, and are housed in a magnesium case.
For high frequencies, Bose designed a new sound radiator technology called Bose PhaseGuide that com-
bines a seven-element speaker array coupled with a tube that ports out to the room through mesh openings in the
TV cabinet. Listeners hear sound from the first reflection point, Carvajal said, rather than from the location of the
port. The two PhaseGuides in the TV cabinet work with the speakers and Bose digital signal processing "to create
sound from locations where there are no speakers," he said. The system also incorporates a new version of Bose's
ADAPTiQ audio-calibration technology that adjusts the sound to the size, shape and characteristics of a room.
ADAPTiQ was essential for the system, he said, because buyers will place the TV where it's best for viewing, not
best for sound.
According to Carvajal, only one-third of U.S. households connect their TVs to a home theater sound system
because of complicated setup and operation. Bose saw an opportunity to target that market with a product that
"minimizes complexity," he said. Central to the system is the click pad learning remote control, which uses a mini-
mum number of hard buttons for the most commonly used functions including power, volume and channel up and
down, last channel, source select, mute and a navigation pad with select button. Once a source is selected, only the
remote functions for that source appear on screen, the company said. According to Ken Jacob, Bose research engi-
neer, the company researched how consumers used their remote controls at home using "IR sniffers" to record the
activities people do most with their remotes and selected those functions for hard buttons. When users touch the
click pad area on the remote, other remote functions for the device being operated appear around the on-screen in-
terface, without interfering with the program. Users click on a function such as page up or down or a number to

activate a command. With the buttons appearing on screen rather than on the remote, users don't have to refocus
going from the remote to the screen, Carvajal said. He maintained that "anyone can pick up and use" the simplified
remote, solving the problem of many households where only one or two members know how to operate a home
theater system.
Up to five HD video source components can be connected to the system, Carvajal said, and the console in-
cludes an iPod dock. A single, proprietary Bose cable connects the console to the TV. the system uses Unify, a
Bose technology that allowed engineers to customize user interfaces for the TV's display. When a component such
as a Blu-ray player, Apple TV or cable box is connected to the console, the system automatically recognizes it "in
99.9 percent of cases," according to Bose president Bob Maresca, and the component is identified on the on-screen
GUI when users press the source button on the remote. The Bose remote still has to learn the commands of the
product's original remote control, however. During setup, users follow on-screen commands to press 5-10 buttons
from the original remote until the component codes are recognized by the system, officials said.
Bose plans to sell the system as a no-compromise audio system as well, Carvajal said, and the company
designed a video mute feature that turns off the display when users want to listen to an iPod or other music
source without distraction. To engage the function, users press and hold the power button for two seconds to turn
display off. "It's a great music system that has no visible speakers," he said. Maresca said the talk at Bose is that
the audio system in the Video Wave is the company's "biggest advancement in sound" since the seminal model
901 loudspeaker.
Maresca said the company chose a conventional LCD TV with CCFL backlight versus LED lighting be-
cause "there's not much difference in fluorescent backlighting versus LED in terms of performance," he said. LED
offers the advantage of a thinner panel, he said, which wasn't something the company needed to consider given its
6-inch depth to accommodate audio components. "We're not going for the thinnest panel," he said, "so it would add
more cost with no benefit." Maresca wouldn't disclose the panel maker, other than to say it was "one of the top
high-end manufacturers," but he said the relationship was important because as technology changes in panels,
"we're going to be working with them to make sure the attach points don't change and we can incorporate new
things as panel technology changes."
Bose officials conceded that the $5,000-plus price point will be a challenge. "We put a lot of technology
into this, and the price reflects it," Hess said, saying now it's about seeing how the market reacts. "If the pain point
is larger than we imagined, we're going to have a high-class back-order problem," he said. "If it's smaller than we
imagined, we'll have good market learning and the technology is transferable to other products we'll do."
According to Maresca, the company made a significant investment in building the database and the en-
gine to recognize the clicks from third-party remote controls so the system can integrate the codes and put con-
trol screens on the TV. Having to update that database will be a challenge for a company used to building an au-
dio product that "doesn't require maintenance." The database needs to be updated every time a new product
comes out, Maresca said, and customers will have to download updates from the Bose website and then upload
them to the system using a USB port on the front of the console. In response to our question regarding whether
the company considered an Internet-connected TV that would provide a more direct upgrade path for consumers,
along with applications, Maresca said, "There was thought to it, but then you're vulnerable to viruses. We de-
cided to keep it simple."
According to Gregg Duthaler, program manager, it will be a challenge to keep up with the TV indus-
try "that moves very quickly." He said the panel was designed to be flexible to afford "latitude in aligning
with ongoing development in the industry." Duthaler wouldn't comment on the possibility of an Internet TV
but he said third-party products such as DVRs and Blu-ray players offer that capability to users. "We'll let
the third-party companies deal with that complexity, and we'll focus on the Unity technology that integrates
products. — Rebecca Day

Data Tiers Predicted
Bright Future for Apps Seen Outside 'Store,' but Mobile Has Money Problems
SEATTLE — Applications will break the bounds of "stores" operated by Apple, Google and others as Web
technology advances, a Motorola director told the TechNW conference. Other company representatives agreed
apps aren't simply a passing "fad," but said mobile growth could be hampered by problems including bandwidth
crunches, unproven monetization strategies and small screen sizes.
Yahoo's search engine started as a directory, a format basically adopted by mobile application stores, said
Sandeep Sinha, Motorola director of strategy and business development. The rollout of HTML5 and improved search
capability will make app stores obsolete, but "discoverability is really challenging" for now, leaving app makers de-
pendent on stores, Sinha said: "Anybody who can crack the code of search" will reap rewards in the app market.
"There's almost a democratization of the business model" for app makers, said Tyler Davidson, vice presi-
dent at Amdocs, which manages "customer experience systems" for service providers. A new wave of "garage
startups" is finding success, such as Mobiata, whose TripDeck application manages travel itineraries and recently
converted from paid to free, he said. The line will blur between mobile applications and Web services as 4G ser-
vice expands, said Jeff Giard, director of strategy at Clearwire, which provides 4G through WiMAX. He said the
Android Market would serve as the app store for Clearwire-powered devices, declining to answer whether Clear-
wire would start its own app store.
But apps that are hard to use on a small screen will hamper the future of mobile, said Alex Tokman, CEO of
Microvision, which is building projection technology to better display content from mobile devices, such as magni-
fying a screen by 200 times or projecting a screen to a pair of networked glasses. Multimedia content is the hurdle
for devices because so many components determine how content will perform, Sinha said: A slow processor will
frustrate HD content on a device with a high-res screen, and 5-to-7 inch screens may not correctly display content
devised for 3-to-4 inch screens.
The challenge for service providers is making money from wireless customers whose apps increasingly hog
bandwidth, Davidson said: "There's still some wrangling going on there" among service providers and device and
app makers on revenue splits. "You can only put so many banner ads on a YouTube video" to cover the cost of
streaming, he said, predicting "more TV-like advertising" to raise ad rates within applications.
Tiered data plans are likely to emerge, Giard said: Carriers start losing money when a customer uses more
than three gigabytes of data a month. "The networks aren't able to keep up" with demand, he said, proving the
value of Clearwire's 4G service — its customers use seven gigabytes a month on average, much of it streaming
video. Clearwire doesn't consider Wi-Fi in cafes and other locations to compete with its service, so much as
"complete the service offering," Giard said. Customers may also "snack on a 4G network" if the Wi-Fi at their lo-
cal Starbucks is overloaded.
Microsoft has a similar monetization problem in getting adoption of its pending Windows Phone 7 soft-
ware, in contrast to Google, whose Android software is free, said Tricia Duryee, editor of mobile content blog mo-
coNews.net. "You should never count Microsoft out," Giard said: "They are scrappy and have deep, deep pock-
ets," and could convert to free mobile software to challenge "one-trick pony" Google. "Microsoft doesn't appeal to
our reptilian brain as well as Apple," Tokman said, predicting Microsoft's strength would remain in enterprise soft-
ware — but also that Apple "mindshare" would stall in the next few years as Android devices and apps take a com-
manding lead. Nokia has a "tremendous opportunity to reinvent itself" and its Symbian OS, having recently
poached a Microsoft executive for its CEO and heavily recruited engineers in the Northwest, Sinha said.
The competition between companies in the San Francisco and Seattle areas for engineering talent is partly a
result of wireless industry's changing nature, Davidson said. Duryee said telecom-related employment in the Seat-

tle area, home to T-Mobile and a large AT&T presence, had largely stayed flat in the past six years. "The job clas-
sification has changed," with more focus on software and less on the network itself, Sinha said: Microsoft and
Amazon are just as much mobile players as T-Mobile. "The entire local industry has changed," Davidson said,
pointing to Rhapsody's spinoff from RealNetworks and focus on mobile business. "It's almost the start of another
boom" as application development costs plummet — developing and shipping a product in the 1990s started at
about $5 million, Davidson said.
TechNW Notebook
The biggest challenge facing cloud computing is "legacy" resistance, executives told the TechNW confer-
ence in Seattle. Traditional information technology workers are afraid for their jobs, and too few new workers are
learning the skill sets necessary for the cloud, said Simon Crosby, chief technology officer at Citrix. "The legacy
has enormous legs," he said, pointing to a major airline's continued use of Windows 3.1, first released in the early
1990s. Doug Hauger, Microsoft general manager of Windows Azure, said he tries to change the "mindset" of cus-
tomers who fear the cloud means less security and compliance problems. "You can answer many of those" fears by
getting certifications from standards groups, but the "nebulous fear" of losing control over data is still the biggest
obstacle to adoption, mainly for large enterprises, he said. It's not for lack of effort by big software companies that
the cloud is faltering, said Werner Vogels, Amazon Web Services CTO: Oracle, SAP and CA have all collaborated
with Amazon for AWS-hosted applications. Consumer familiarity with mobile computing devices such as smart-
phones will drive enterprise adoption of the cloud, as consumers come to expect the same advanced features in
business applications, Vogels said. This year has actually seen "dramatic action" in enterprise cloud adoption, with
companies moving their human-resources platforms to the cloud and one pharmaceutical company in particular
closing a data center and moving those applications to the cloud, he said. Hauger pointed to retail banking applica-
tions built on Azure and the banks managing their own security compliance. It's also good for customer confidence
that so many cloud providers are competing for their business, so no one feels boxed in by a single, untested pro-
vider, Hauger said. Crosby said the biggest loser in the move to the cloud could be Microsoft: "There's this thing
that's paying the bills and it's not Azure," a reference to Microsoft's dominant Windows business. Hank Skorny,
senior vice president of media cloud computing and services at RealNetworks, said the company is "trying to rein-
vent" its core businesses, despite its long familiarity with the cloud as a streaming music provider. Speaking of the
RealNetworks' engineers, he said: "The fear that I see in their eyes at the new products I'm building ... is just mas-
sive." IT will become a "more intellectual business" focused on intelligence and analytics, Skorny said: "I don't
know why anybody would install a [Microsoft] Exchange server anymore." Hauger didn't respond to the jabs at
Microsoft. What's most important is ensuring there's no "vertical requirement for integration on a single technol-
ogy," he said, allowing the use of Azure-hosted applications on an iPad, for example. — Greg Piper
Not Mandatory
EPA Proposes Incentives for Adoption of 'Deep Sleep' Features in Set-top Boxes
The EPA proposed incentives to encourage adoption of what's called "deep sleep state" capabilities in set-
top boxes as part of changes it proposed in draft two of Energy Star version 3.0 specification. Deep sleep is defined
as a "power state" within the sleep mode that uses less power "due to lack of network access and increased time
required to return to full on mode functionality." The industry has raised concerns about the deep sleep require-
ments, especially about consumer experiences with the delayed waking of boxes from the deep sleep mode.
The deep sleep feature is not being mandated now and is only being included as an option, a consultant for
the agency said. The idea is to first encourage box makers to incorporate the feature and have them "figure out how
to do it right," he said. Depending on the results, the agency would consider making it a requirement in the future,
he said. Even Energy Star-qualified boxes use power ranging from 10 watts to 15 watts in the sleep mode, so
there’s "substantial opportunities" for power savings, he said.

To boost adoption of the deep sleep mode, the agency is proposing that service providers who deploy
boxes with the capability will be able to count them as one and half times the qualified boxes they need to purchase
to join the Energy Star program. One way service providers can now qualify for Energy Star is to make Energy
Star-qualified boxes at least 50 percent of their annual box purchases. Box makers who incorporate the features
will be rewarded with typical energy consumption (TEC) requirements that are different from those for other boxes.
The agency also incorporated changes in the new draft to reflect the new testing and verification rules that are
due to take effect in December. Service providers can now only "associate" the Energy Star with products certified by
an EPA-recognized certification body," Katharine Kaplan, Energy Star product manager, wrote stakeholders. Other
differences in draft two include changes to definitions of advanced video processing and home network interface, re-
naming of the "additional tuner" adder as "multi-stream" to allow IP boxes that offer similar functionality to qualify
for a TEC allowance and the addition of a pro-rated first year purchase rule for service providers.
No effective dates have been finalized for version 3.0 and version 4.0 of the set-top box specification, Kap-
lan said. The agency expects to complete the specification revisions by December and "anticipates a version 3.0
effective date no earlier than September 2011," she said. Comments on draft two are due Oct. 22. The EPA will
host a webinar Monday to discuss the proposals in the draft, she said. — Dinesh Kumar
‘Condones’ Exports?
Nonprofit Created to Administer R2 Standards for Electronics Recyclers
A group of industry and recycling players announced the creation Monday of R2 Solutions, a non-profit
that will administer and oversee the Responsible Recycling (R2) standards for electronics recyclers. The R2 stan-
dards were developed by a group of industry and recycler stakeholders led by the EPA. The new outfit will pro-
mote the use of R2 standards, provide administrative support and help educate the public about responsible recy-
cling, it said.
The CEA, Information Technology Industry Council (ITI) and the Institute of Scrap Recycling Industries
(ISRI) welcomed the launch of R2 Solutions, but environmental groups, which walked out of the R2 process saying
it didn't do enough to stop exports to developing countries, said the R2 standards "still condones" such exports.
With electronics recycling becoming a critical part of the global information and communications technol-
ogy industry, "it’s critical that a high set of standards is in place to ensure the development of a responsible indus-
try," said John Lingelbach, acting executive director of R2 Solutions. His organization will "create the home
needed for the R2 standard to continue to develop and be adopted by the technology industry," he said. The stan-
dard will be managed and further developed "openly and transparently," Lingelbach said, and "there is no pay to
play" requirement for recyclers to use R2.
Seed money for setting up R2 Solutions came from "stakeholders interested in seeing the R2 practices ad-
ministered by an independent non-profit entity," said a spokesman for the organization. They included electronics
recyclers and their customers, he said. The organization will be "further developing and implementing a long-term
funding strategy over the next few months," it said. He did not say whether it included continued funding from in-
dustry players. Clare Lindsay of the EPA’s Office of Resource Conservation and Recovery did not respond by our
deadline to a request to clarify whether the agency would have any role in how R2 Solutions operates and whether
it had any say in its formation.
The R2 standard was developed via a "robust and transparent consensus-based process" by a group led by
the EPA that included device makers, recyclers and environmental organizations, said Rick Goss, ITI vice president
of environment and sustainability. The suggestion that environmental groups were a party to the final R2 standard
is misleading, said Barbara Kyle, national coordinator of the Electronics TakeBack Coalition. Kyle’s group and the

Basel Action Network walked out of the R2 process, saying the EPA had set the bar too low for exports. BAN has
since developed its own e-Stewards electronics recycler certification program which has the backing of other envi-
ronmental groups and some recyclers. Lingelbach said R2 is supported by government, industry and non-
governmental organizations, a term used to refer to advocacy groups.
Green groups abandoned R2 after it became clear that "they were going to develop a standard that condoned
exporting and they weren’t willing to change it," said Kyle. The R2 standard "still condones exports" to developing
countries, she said. "It is a standard that doesn’t address the most important issue with electronics recycling which
is that these fake recyclers are exporting" electronics," she said. Although R2 has language that says it permits only
"legal exports," there’s a "problem with that language," she said. "It still allows recyclers to dump e-waste in de-
veloping nations, which is wrong."
The R2 standard reflects the "best thinking of what will work in the marketplace and what makes the most
sense for the environment in the long term," said Goss. The CEA supports use of third-party certification systems
for electronics recycling, said Walter Alcorn, vice president of environmental affairs. The launch of R2 Solutions
is a "major step toward making responsible electronics recycling business as usual" in the U.S. and abroad, he said.
ISRI believes a "neutral, third-party" organization like R2 Solutions is a "more appropriate administrator" of R2,
said President Robin Wiener. — Dinesh Kumar
Components & Devices
CEA, foe of any FM-on-cellphone legislation, countered an NAB survey (CED Sept 15 p9) saying most
Americans are willing to consider paying the 30-cent cost for a wireless-device chip. Seventy percent of the 1,257
U.S. adults CEA itself polled Aug. 26-29 aren't interested in getting FM broadcasts on their cellphone, the group
said Tuesday. And 80 percent don't support a government mandate requiring wireless device makers include an
FM tuner, CEA said. — JM
——
Farnell, a European electronics components distributor, said its "unique" biodegradable packaging got
the environmental product of the year award at the U.K.’s Sustainability Live Environment and Energy Awards.
The packaging is capable of breaking down in an industrial composter or dissolving in hot water, without releasing
any harmful chemicals into the environment. Farnell plans to roll out the new packaging to its warehouses in Asia
and the U.S., it said.
Digital TV
Entravision said it began producing newscasts in HD at its KNVO-TV McAllen, Texas, a Univision affili-
ate, and XHRIO-TV, a Fox affiliate it owns a minority stake in that’s based in Mexico.
Capitol Hill
NCTA exaggerates the cost to cable operators of using IP backchannel switching to send switched digital
video programming to plug-and-play consumer electronics devices such as DVRs, TiVo told the FCC. Cable op-
erators with no more than 15 million digital video subscribers use switched digital, but NCTA "divides its esti-
mated total cost for the entire cable industry" to reach "a very misleading per subscriber figure," TiVo said in a
Monday filing to docket 97-80. "NCTA’s concerns about standardization and operation are overstated." The com-
pany didn't counter with a figure of its own to compare to NCTA's estimate of at least $16 million in start-up costs
and at least $3 million in annual operating costs for IP signaling, which cable operators including Time Warner Ca-
ble oppose in favor of tuning adapters (CED Sept 20 p5).

Retail
Tekserve, an independent New York Apple store and service center, is teaming up with the Lower East
Side Ecology Center to host an e-waste recycling event in the city Oct. 9. Tekserve has collected more than 125
tons of used electronics — including computers, printers, monitors, iPods and cellphones — since it started recy-
cling events in 2007, the company said.
Industry Notes
The EPA should "keep its focus on toughening" the qualification rules for Energy Star, Consumer Re-
ports said. Energy Star qualification rules were written for shoppers to identify the top 25 percent of efficient prod-
ucts in a given category, it said. But that "bar has fallen woefully over time," it said, citing the fact that about 75
percent of TVs, dishwashers and dehumidifiers qualified in 2009. When more than 35 percent of products in a
given category qualify, that should "signal that the technology and economies of scale have reached a point where
achieving an Energy Star is too easy and that the bar needs to be raised," Consumer Reports said. As for the EPA’s
proposal to start a new Super Star program to recognize the top 5 percent of energy efficient products in a category,
the group said that "given the government’s history with Energy Star, officials would need to be vigilant that Super
Star would single out only the top 5 percent."
Broadband
Policy debates about the future of the Internet are healthy because so many questions remain unresolved,
Google CEO Eric Schmidt told the TechCrunch Disrupt conference in San Francisco Tuesday. “We are giving
people an enormous amount of technological power in their hands,” he said. “And that shapes and changes the
power of relationships between citizens and the government, citizens and private companies and citizens and each
other,” he said. Google is committed to an open Web, Schmidt said. “Google’s core strategy is openness,” he said.
“Other companies, notably Apple, have a core strategy of closedness.”
Videogames
Sales of the Take-Two Interactive game NBA 2K11 are "likely to benefit" from the delay of NBA Elite 11
by Electronic Arts, Wedbush Morgan Securities analyst Michael Pachter predicted Tuesday. He also lowered his
forecast for EA's Q3 and Q4 results. EA Sports President Peter Moore said on the company’s blog that the planned

Oct. 5 release for NBA Elite 11 was delayed until an unspecified time. The game "is not yet ready," Moore said.
The company "set extremely ambitious goals for" the new basketball game franchise, he said. "We are going to
keep working until we’re certain we can deliver a breakthrough basketball experience," he said. EA shares fell
slightly after the announcement.
——
The U.K.’s Game Group retail chain on Tuesday reported weaker results for the first six months of its fis-
cal year ended July 31 compared to the same period last year. Revenue dropped 9.6 percent to 624.6 million
pounds, while same-store sales fell 10.9 percent. It also swung to an 18.8 million pound loss before taxes and non-
recurring costs from a 14.5 million pound profit last year. The company faced a "very challenging marketplace and
an uncertain economy," said Chairman Peter Lewis. But he said it "increased market share in all of our territories
since January and maintained our leading position in Europe." The retailer "returned to our traditional seasonal
trading profile with losses reported in the first half and all profits being made in the second half," he said. It be-
lieves the product release slate for the second half of the year "should play well to the specialist retailer and our
business is ready to maximize these opportunities," he said.
——
Sony Computer Entertainment America added seven games to its bargain line of Greatest Hits PS3 cata-
log titles. They are Activision’s Call of Duty: World at War and Call of Duty 4: Modern Warfare, Demon’s Souls
from Atlus, Namco Bandai’s Tekken 6, and SCE’s MAG, MotorStorm: Pacific Rift and Ratchet & Clank Future: A
Crack in Time. Their prices were reduced to $29.99. (MSRP). New PS3 games typically cost $59.99. There are
now more than 40 Greatest Hits titles available for the PS3, SCEA said.
——
Majesco Entertainment is including a paintball pass valued at $300 with each copy of its new, $39.99
videogame Greg Hastings Paintball 2 for the Wii and Xbox 360, released Tuesday, it said. The pass can be used
for free entry and rental at select paintball locations across the U.S., it said.
——
Hands-On Entertainment expanded its World Poker Tour Texas Hold ‘Em game to the Nintendo DSiWare
service. The game can now be downloaded to the DSi handheld system for 500 DSi Points, $5, Hands-On said. It
"already worked closely with WPT to develop" a version of the game for mobile and Facebook, said Hands-On
CEO Judy Wade.
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