Mixing Media: Costs Fall For Digitized Video

THE word ``multimedia'' may hint of a Hollywood-hyped event. But in the computer industry, it refers to a new generation of products that allow video, still images, and sound to be processed along with text on a desktop machine. The market is expected to grow to many billions of dollars during the 1990s, finding numerous applications (see box below). But so far high costs have constrained market growth.

In a sign that costs are rapidly falling, New Media Graphics Corporation of Billerica, Mass., is introducing a $695 adapter for digitizing television images. This is the ``first ... multimedia add-on board that costs less than the system it plugs into,'' says president Martin Duhms, who formed the privately held firm in 1981.

``They're definitely shaking up the market,'' says Joan-Carol Brigham, a multimedia analyst with International Data Corporation in Framingham, Mass.

The board fits into personal computers and translates video images from their standard analog format into digital form for editing on the computer. A frame of a moving image can be frozen and stored, zoomed, or otherwise altered on the screen.

The price is about one-third lower than the top-selling competing products, VideoLogic Inc.'s DVA-4000 and International Business Machines Corporation's M-Motion Adapter/A.

New Media began shipping its new Super VideoWindows board yesterday. It replaces a $2,195 product called VideoWindows. Multimedia systems require software for various applications. VideoLogic sells its own software, while New Media has commitments from about two dozen outside vendors to produce software. These venders are getting the first shipments of Super VideoWindows, and they are expected to have software ready by the end of February.

``We're building a huge backlog already,'' says Mark Hopper, a sales manager for New Media.

``The price reduction is very significant,'' says Nick Arnett, president of Multimedia Computing Corporation, a Santa Clara, Calif., market research firm.

Mr. Arnett projects that sales of digital video adapters will reach $38 million this year for 25,000 units. This compares with an estimated $15 million to $17 million in 1990 for 8,000 to 10,000 units, and $8.3 million in 1989 for 3,500 units.

Although New Media is the first to introduce an adapter in this price range, others are soon to follow. ``I'd be very surprised if there aren't at least a couple in the next two months,'' Arnett says.

Competitors developing products may use the same new chip that enabled New Media to cut its price - a microprocessor manufactured by Chips & Technologies Inc. in San Jose, Calif. New Media licensed its own know-how to help Chips & Technologies develop the product. The chip now costs about $50, Mr. Duhms says. And competing chips will be developed.

``Our success will be completely dependent on how well we can leverage our lead time,'' says Mr. Hopper of New Media.

Arnett says the market will really take off when adapters become available for $100 to $200.

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