Hard Drives Meet Hard Bodies--'Baywatch' Style.

Will your VCR morph into an HDD?

The PC market is saturated with hard disk drives. Yet manufacturers have to mass-produce to hold down unit costs and strike OEM deals that are dangerously close to breakeven, while end-users are hooked on getting ever-higher capacity at bargain prices.

So where, now, can the HDD industry sell its goods? Into consumer electronics, apparently, and, in particular, into the television market. That was the theme of a symposium in February, hosted by the industry's International Disk Drive Equipment and Materials Association (IDEMA).

The idea is to replace the home videocassette recorder with a new box that has a hard drive inside; or-better--with a television set that has the HDD built in. What's being called a "personal video recorder" would not merely time-shift programs (record them for later playback), but would give viewers the kind of control over live broadcasts or real-time programming that has so far been possible only with taped material.

Besides the familiar slow motion, stop-motion, and instant-replay effects, it would offer one never before available to consumers. Upon touching a "pause" button, viewers could walk away and watch the program some time later, resuming at the moment they had left off. The HDD would have recorded all the fresh, incoming material, unattended, and it could play back everything it had stored while simultaneously recording what was still being broadcast.

The Drive's The Easy Part

The tech-specs are a no-brainer for the HDD industry. Two hours of video in the American NTSC television format, compressed with the MPEG-2 algorithm, consumes only about 4.7GB of storage capacity, and Glen Stone, manager of host ASIC design at Sony's U.S. Research Laboratories, told the IDEMA attendees that an appropriate interface connection--Sony favors IEEE 1394 ("Firewire"), by the way--should deliver data at a rate between 4Mbps-8Mbps. Products with far more spectacular capacity and performance specs have long been in production (have you tried to buy a drive of less than 8GB lately?). So the hardware is generally available and additional manufacturing volume can always be ramped up to meet demand, all of which keeps prices low--and that, of course, is the HDD-maker's headache.

The Audio-Visual (A/V) industries favor somewhat more commodious and swifter HDDs for applications such as video editing. Russell Krapf of Western Digital Corporation in Irvine, CA, declared that "the largest capacity drives available today represent about five percent of the PC market, but about 30 percent of the A/V market" and he foresaw new opportunities for drive makers in serving what he called "a new set of customers," consumer-electronics companies, cable-TV, and satellite equipment suppliers.

It will not be difficult for set-top boxes with HDDs to offer features such as "pause." Merely attaching an HDD to a video input/output connector, linking it with analog-to-digital conversion circuitry, and giving it a user-friendly, TV remote-control interface, is well within the capabilities of a homebrew-computer hobbyist, not to mention a major consumer-electronics manufacturer or a well-funded start-up company with custom chips.

So what's so difficult? Why isn't the market flooded with product already? Because such a product must satisfy all the demands that consumers will make on it without either bankrupting the manufacturer or angering the powers-that-be in Hollywood who are spooked by the prospect of unauthorized copying. Exactly how that's accomplished will have a major impact on the HDD market over the next five years. Analyst Mark Geenen, of Palo Alto, CA-based TrendFocus, has developed scenarios for both a rapid growth of personal video recorders--meaning over 1 million units in 2000 and 3 million in 2001--and for "slow adoption" with far lower demand.

Calculating The Cost

Two California start-ups are already in the set-top box business: TiVo of Sunnyvale and Replay Networks of Mountain View. Dave Platt of TiVo told attendees that HDDs are "the obvious choice" for recording television programs, compared to videotape, or even optical media such as DVDRAM. "HDDs offer rapid access to any point in a recording; they can simultaneously read and write and they have a lot of 'space' inside for programming."

Dan Levin, of Replay Networks, explained that, "For the rest of the world, speed king: meaning higher spindle speed, faster seeks, lower latency, and higher transfer rates. But for us [set-top box makers], speed is useless. The worst case might be a demand for four simultaneous vide streams at 19Mbps apiece. That can be handled by a transfer rate of 10MB/sec." He noted that "single-chip MPEG-2 encoders used to cost $150; now they're about $30 and large disk drives used to cost $500; now you can get 20GB drives for about $150."

In the future, HDDs will be somewhat cheaper anyway, according to Mike Warner, VP of product development a chip-maker Tessera Corp., of San Jose, CA. "Electronics will move inside the drives," he said, "and will then be the lowest-cost element of an HDD. With no more printed circuit board assemblies; with firmware and other features stored on flash memories, and with a single wire for data input and output, the HDD will become a 'universal memory appliance.'"

Yet Mike Machado, president of KnowledgeTek, an engineering-training company in Broomfield, CO, raised a serious issue. "The problem is that customers need only about 5GB to record a movie," he said, "while the sweet-spot for manufacturers is in drives of about 10GB capacity. Visit Fry's [a major California retailer] and you'll see that customers will always take more [capacity] if it doesn't cost much more."

Since one of the attractions of home video recording is archiving favorite material, he added, "Experience has shown us that the cost must be less than ten percent of the cost of the item [in this case, movie on replicated media] to be cost-effective. If movie cost about $20, the archive cost should be about $2, which will require storage to cost less than forty cents per gigabyte. So we can expect movies to be archived on [hard] disk drives when 500GB drives sell for about $200 and, at current areal growth rates, we expect this about 2004 to 2005."

Targeting The Price Point

For now, though, adding in all the associated costs, including marketing and advertising, an HDD-based video recorder will probably wholesale for $500 or so and every speaker at the seminar either said or acknowledged that only the early-adopters in the high-tech market--people who feel they "have" to have the latest gadgets--will pay the likely $1,000 retail price for first-generation set-top boxes. According to Tony Francesca, VP and GM of Quantum Corporation's consumer electronics business unit, the target price for a "personal video recorder" is $299. In fact, that's the target price for almost every new consumer-electronics product, around which a mass-market can coalesce. (At $99, he noted in passing, a product becomes "almost an impulse item.")

Francesca said that some service providers such as cable TV companies might subsidize the cost of set-top boxes, just as wireless-telephony companies offer cell-phones to customers free or at a deep discount. He also predicted that, within a few years, set-top HDD technology would be applied not only to video recording, but also to other consumer products. Besides Internet-access appliances, he expects to see audio jukeboxes into which users could dub hundreds of their CDs and what he called "game consoles" that would similarly archive various recreational software packages that are now stored on solid-state cards, CDs, or DVDs.

Run Silent, Run Deep

High price isn't the only factor keeping consumers from demanding HDDs in their "personal video recorders." PC users hardly ever notice the hard drives in their computers because the platters don't spin all the time, only during bootup, or whenever the head actually reads or writes. Then, it makes that familiar whirring or growling noise. If it's not being accessed, it's silent.

However, a set-top video box can be expected to whir and growl almost continually. Running for hours at a time while the viewer is sitting nearby, especially if it's expected to record and play back simultaneously, the sound of the drive will be very noticeable. What Replay Networks' Levin dubbed "noise, noise, noise" will compete vigorously against programming for the listener's attention.

This has not escaped the notice of MSC Laminates and Composites, Inc., of Elk Grove Village, IL, which makes noise-and-vibration dampeners for the automotive and home-appliance industries. According to new-product development officer John Anthony, replacing the sheet-metal in today's HDD enclosures and brackets with a "sandwich" of sheet metals and modified acrylic polymers will knock a couple of decibels (dB) off the noise level. He passed along to the set-top-box makers, however, the task of setting a maximum acceptable volume of noise.

Anthony noted that a sound-dampening enclosure will give a set-top box additional reliability by protecting it against external vibration, but at the expense of keeping its heat inside and HDDs that are expected to be in continuous operation will get hot. Most PCs have cooling fans, which adds to their noise; but it's unclear whether set-top boxes will--or should--have fans and Anthony noted that each of MSC's laminate sandwiches performs best at a specific operating temperature. So (as it were) one size won't fit all: each model of drive may have to be custom-fitted with a specific composition of noise-dampening material, which will add still more to the manufacturing cost.

Customer Service

Ruggedness aside, "reliability" is something that we, as consumers, absolutely demand, at least in brand new product categories. With VCRs and portable tape players or transistor radios, we have come to the point where it is almost always cheaper for the user to replace a faulty device than to have it repaired, but for more expensive products such as camcorders, projection-TVs, or computers, we expect swift repairs from trained service personnel at convenient locations and at a cost that is not out of proportion to the purchase price.

At a $299 price-point, will manufacturers be able to provide such a high level of support? No one knows, but if they have to keep cutting prices just to make a sale, service is likely to be trimmed early and often. Glen Stone, of Sony, went so far as to suggest that consumers will accept the idea of simply replacing faulty boxes with new ones and of moving up to ever higher and higher-capacity boxes at will. Sony would give customers the option of either replacing an old box or connecting a new one in series with it, but in response to a question, Stone conceded that the specs for such configuration options have not been set--especially if the primary HDD is not an external peripheral but is built into the TV set. He acknowledged that some fundamental issues such as the extra electrical power demands imposed by secondary or tertiary HDDs have not been thoroughly addressed.

A Daunting Task

Prospective customers will probably think twice before moving en masse from VCRs to HDDs. It's a rare occurrence, nowadays, for a videotape to be damaged irrevocably by a malfunctioning recorder, but an HDD that crashes or overheats will almost certainly ruin whatever's recorded inside. Will consumers trust their favorite movies--not to mention their irreplaceable home videos--to an HDD? The proponents face a big job of education there.

Yet paradoxically, they face a big job of re-education, as well: getting people to switch from removable media to a fixed drive. In the 1970s and '80s, the VCR manufacturers, led by Sony, worked hard to persuade regular television viewers (we didn't call them "couch potatoes" then) to invest in the then-new concept of home video recording. Now, they need to convince prospective users to pay the same amount for an HDD-based recorder as for a VCR to accept its large, but strictly limited capacity, and to be willing to pay hundreds of dollars more for additional gigabytes.

Yet one of their strongest selling points 20 years ago was that a VCR-enabled ordinary people to create personal "libraries" of movies, TV specials, or episodes that were important to them on removable, inexpensive media. Sure enough, demand soared and, now, recorders cost well under $300 and tapes barely $2 apiece. Where is the removable-media option now? It's being actively discouraged.

Removable media is a touchy subject at IDEMA gatherings. It works against the interests of HDD makers, of course, but also against the interests of Hollywood studios whose cooperation must be secured before a mass market can be promoted. Sony faces an especially sharp dilemma over this issue: as the Betamax manufacturer, it prevailed when the U.S. Supreme Court ruled that home video recording did not violate motion picture copyrights; but now Sony owns a movie studio too!

There's no disputing that copyright holders have a right to be anxious these days. MP3 downloads and CD "rippers" will increasingly challenge sales of music on replicated media and recordable DVD systems, if they should ever produce disks capable of being read by DVD-ROM drives or DVD-Video players, especially at near-CD prices, pose an incalculable threat to the economics of motion picture distribution.

Yet thanks to Sony and its competitors, the advantages of removable media are blazingly obvious to consumers by now. Even if a tape or disk recorder costs a bit more than one with a fixed drive, additional storage capacity is simply dirt-cheap. It will be hard to pitch "pause" alone as the killer-app for the "personal video recorder."