Special Report

It's a PC, It's a TV -- It's Multimedia

Add a CD here, a VCR there, and you may have a computer revolution

Maria Shao and Richard Brandt in San Francisco, with Neil Gross in Tokyo and John W. Verity in New York
Business Week

October 9, 1989

Learning a foreign language can be a drag -- the way it's done now, anyway. After you spend a few weeks of parroting that voice on the cassette, or even following a good teacher, motivation starts to wane. More productive, obviously, would be to plunge into the culture and learn its tongue by the simple force of necessity: If a full stomach means speaking French, you'll speak French. Unfortunately, hardly anyone can afford such total immersion, even at the local language school.

But something nearly as good may be coming soon to a desktop near you: Stanford University and Massachusetts Institute of Technology, with a little help from Apple Computer Inc., have put Paris in a box. They've loaded a Macintosh computer with color pictures, video clips, maps, tourist sights, the street sounds of accordions, even a native named Philippe -- all designed to put American Francophiles through an adventure in the City of Light. With Macintosh mouse in hand, students can explore the Metro, visit locals at the boulangerie -- and learn, along the way, parler Francais plus facilement. In this mix of PC, television, and sound, Apple claims, may be the language lab of the future.

Just a decade after it revolutionized the computer industry and the businesses of most of its customers, the personal computer is set to do it again. Before, it simply crunched numbers and processed words, throwing in the occasional bar chart or digitized sketch for decoration. Now, the PC is receiving a major transfusion of video technology. That should lead to a dazzling new hybrid that can display sharp, moving color images on the same screen with spreadsheets and text. Add to that high-fidelity sound and some imaginative software, and the PC may become a ''multimedia'' tool that -- once again -- could change the way people work, learn, and play.

The biggest names in computing -- and some in television, too -- are agog over this prospect. IBM, Apple, Intel, and Microsoft, to name a few, are busily promoting multimedia as the next frontier in PCs -- even though it's a concept they can't quite agree on how to define or market. For some, it means simply choreographing text, sound, and animated graphics to create relatively crude cinematic effects. Others reserve the term for PCs that also can control laser-disk players and VCRs and perhaps even display the contents of these on a PC screen. Still others look forward to sophisticated and expensive systems that would treat video information as just another type of digital data, thus permitting enormous flexibility in how it can be edited, manipulated, and displayed.

Whatever the definition, everyone is captivated by the big numbers emanating from such market researchers as Desktop Presentations Inc. in Mountain View, Calif. It forecasts an $11.4 billion market for multimedia products and services by 1993 -- up from just a few hundred million this year. Accordingly, computer executives are tending toward the hyperbolic: ''Multimedia will change the world in the 1990s as personal computing did in the 1980s,'' says Apple Chairman John Sculley. Microsoft Corp. Chairman William H. Gates III has insisted that ''multimedia will be bigger than everything we do today.''

And, perhaps, more difficult for U. S. companies to dominate. For the first time in the history of PCs, IBM, Apple, and the others may well find themselves matched by the Japanese, whose grip on consumer electronics gives them control of such crucial multimedia technologies as video monitors and optical storage devices. Companies such as Sony Corp. and NEC Corp., moreover, already deal in both TV and computers, and they look increasingly well positioned as the two technologies combine.

MEMORY BUSTER

Some tough technical problems remain to be tackled, too. Most PCs today require extra, specialized circuitry to accept video signals from VCRs. And more powerful multimedia systems will have to cope with the gargantuan memory requirements of digitized video: A standard 1-hour digital audio disk can store merely 30 seconds of digital video. That calls for new ways to compress and store video data without sacrificing too much visual accuracy. But not too many ways, for the lack of a dominant storage format might hold back manufacturers from developing multimedia disks and hardware for the mass market. It could be Beta vs. VHS all over again.

One skeptic, surprisingly, is Steve Jobs, whose Next Inc. sells workstations that boast superior graphics and CD-quality sound. Multimedia capabilities, he argues, aren't a cinch to create a major new market the way the Macintosh gave birth to desktop publishing. In the absence of such a blockbuster application, ''multimedia could become the 'artificial intelligence' of the '90s,'' Jobs says, alluding to a nebulous, early-'80s software fad that failed to meet overblown sales and technological forecasts. ''Everyone used the term 'AI' to mean so many things that nobody ever really understood what it was.''

Such problems notwithstanding, excitement is mounting over multimedia. It has been six years since PCs made their last big leap in user-friendliness: the easy-to-use graphics popularized by the Mac. Perhaps partly for lack of new advances, PC sales gains are slowing to 10% to 15% annually, a crawl by the standards of recent years. The industry hopes that adding sound and video will attract a broader audience. The first target is business, where multimedia already is used in sales demonstrations and training. For instance, Du Pont Co. uses a computer-controlled video system to train truck drivers, just as more sophisticated simulators are used to instruct airline pilots.

The other potential gold mine is U. S. homes, only 20% of which have a computer now. Multimedia systems could break that market open with engrossing new entertainment, education, and electronic-information products. ''Multimedia is necessary to expand the PC market,'' says Gates. That's why Microsoft, the No. 1 producer of PC software, is pumping some $10 million a year into developing technical standards and software for multimedia machines. It isn't alone: Apple is wowing customers with videotapes of what it calls ''desktop media'' and with its flashy new multimedia lab in San Francisco. IBM has a similar setup in Atlanta, where it works on mixed-media systems for merchandising, education, and public information kiosks.

GARBAGE OUT?

Apple's Sculley champions the new technology as a way to extend his Macintosh's shrinking technological lead over IBM PCs and their clones. With a Mac, he claims, virtually anyone can create a new type of ''document'' that adds narration, animation, and music to the usual text and graphics. Says Tyler Peppel, multimedia product manager for Apple: ''Everybody is empowered to be an author.''

But will everyone want to be? Just as desktop publishing produced some early typographical eyesores, multimedia may empower legions of untalented people to turn out bad TV: ''Garbage in, garbage out,'' says Rand Worrell, a graphics production artist at Mattel Inc. in Hawthorne, Calif. In short, an aesthetic mix of text, video, and sound is much easier to envision than to produce.

That perhaps explains why rivals IBM and Microsoft are taking a different tack from Apple, which wants to give its customers the tools to make their own creations. IBM and Microsoft seem determined to create a market for packaged systems -- paintings instead of a palette. Maybe in a few years, multimedia computers in classrooms could present geography lessons through a mix of words, maps, video, and sound, provided on compact disks that students could explore at their own pace. At home, one might watch Charlton Heston as Moses on some advanced relative of a PC, interrupting the film to dip into a history of the Old Testament. Multimedia technology won't ''replace the actual experience of smelling a rose or taking a walk. But it will give a richer experience'' than either computers or TV, says Stephen D. Arnold, head of the games division at Lucasfilm Ltd., which is developing multimedia software for schools.

What's beginning to make all this possible is that PCs are rapidly gaining the power to store, manipulate, and display more kinds of information, eventually including full-motion color video. Faster microprocessors already have made computer-animated graphics superior in many ways to what traditionally has been seen on videotape and film. And the price of special computer chips capable of processing zillions of digital bits of audio, video, and traditional data at the same time is falling rapidly. Soon, that will make it possible for even some armchair enthusiasts to afford the necessary equipment.

FURNITURE MOVER

Long before that happens, however, the main venue for multimedia's earliest incarnations will be the office, where applications already include merchandising, training, and delivering formal presentations. Desktop Presentations figures that companies worldwide spend some $ 4.6 billion a year to create charts, graphs, and other visuals for use in places such as boardrooms and front lobbies -- much of it done with computers. Once the right hardware and software are ready, analysts say much of that spending could shift to multimedia systems. Some already has.

In merchandising, Steelcase Inc. has come up with an ''electronic brochure'' to launch a new line of office furniture. Using a handheld mouse, customers and designers can move 3-D renderings about a computer screen to see how different furniture would look in a specific room. While a recorded voice provides product details against a musical background, the buyer can rearrange the furniture and change its upholstery in a flash. Mark T. Greiner, Steelcase's director of information strategies, says customers ''can get to information more conveniently than by pawing through pages of brochures.''

Even primitive versions of multimedia are proving useful. Either at home, using a floppy disk they've received in the mail, or in dealer showrooms, prospective Buick customers can browse on a PC through descriptions and animated pictures of cars on a screen, complete with engine sounds. They can select a car model and options and watch a spreadsheet program calculate payments and compare prices with those of Buick's competitors. ''The important thing is the interactive element,'' says Nancy J. Newell, manager of Buick Motor Div.'s electronic product information department. ''People spend more time'' with the PC than they would with a typical brochure. She says 12% of those who bought cars after receiving the ad-on-a-disk ended up picking Buick -- about double its usual market share.

In the training field, too, multimedia looks like a boon. U. S. companies -- not to mention the government and the military -- spent more than $ 40 billion last year on training, much of it on instructors, film projectors, and videotapes. Multimedia has the potential to replace all of those. For instance, GTE North Inc. in Westfield, Ind., is finding that audiovisual computer programs can provide a deeper understanding than do lectures or books. It's using computers to teach workers how to fix telephone cables. They can manipulate pictures of special tools on a computer screen, hear telltale sounds, and watch needles move on simulated meters. At the press of a button, the screen can zoom in on a manhole cover and even peer beneath to reveal a suspect conduit. ''It gives the maximum amount of hands-on experience,'' says Dan P. Rice, an instructor at the GTE subsidiary. ''The retention rate has to be three or four times higher than lectures and pencil testing.''

Multimedia has caught lots of imaginations in education, too. The American Heart Assn. is distributing to medical schools a set of digitized, interactive lessons on how to manage blood cholesterol levels. Designed to run on a Macintosh, the program gives students an audiovisual rundown. The centerpiece is a five-minute computer-animated cartoon, in color, detailing how cholesterol moves through the blood and the liver.

TIME AND PLACE

The value of multimedia won't be only in presenting information, though, but in retrieving and evaluating it. Workers at Owens Corning Fiberglas Inc.'s Huntingdon (Pa.) plant use multimedia terminals to analyze and troubleshoot production. If a glitch occurs in a compressor, for instance, a worker can view close-up pictures of the affected parts. Meanwhile, another computer can help diagnose the problem by posing a series of questions about the breakdown and making inferences from the answers it receives. Digitized sounds of tapping or hissing can also help identify the problem. And a recorded voice guides the worker through the entire procedure. ''Multimedia allows people easier access to information and pulls together diverse knowledge,'' says William H. Corbin, a systems engineer at the fiberglass plant.

Just like film, moreover, multimedia can transcend the constraints of time and place -- at a fraction of the cost. Competitive Solutions Inc. in McLean, Va., is working on a computer system for realtors that would let home buyers take an audiovisual tour of houses across the country. Someone in Boston could see full-screen photos of houses in San Diego, for instance, and could even stroll through the house room by room to the accompaniment of audio descriptions and music. A national data base of houses could be updated daily.

'BASEBALL CARDS'

Multimedia could open up new forms of communication, too. If and when PCs handle video as a standard feature, workers in different offices could see one another and inspect documents while on the phone. Reese Jones, president of Farallon Computing Inc., which produces software for the Macintosh, foresees multimedia mail services: Today's electronic mail messages could be extended to include animation, video, and voice-annotations.

In a step in that direction, Domino's Pizza Inc. already has installed a nationwide information system at its warehouse and distribution operations that acts as a giant audiovisual bulletin board. Employees call up animated graphics illustrating the company's financial performance and still pictures of their bosses -- posed as if on baseball cards. Workers can draw on a library of video, sound, and text to create their own training manuals, too.

So far, these and most other multimedia systems incorporate only still pictures or computer-animated cartoons. But multimedia will take on an entirely new character -- and cost -- when full-motion video is added. Such technology is not that far away. The PC already is revolutionizing the making of semiprofessional and industrial videotapes: PCs are the primary tool for creating their titles and special effects. And analysts believe that the opportunities for using PCs in filmmaking will multiply as multimedia computing adds true video. U. S. companies currently spend millions a year to crank out videos -- everything from the CEO's annual pep talk to new-product launches.

The leader in this niche, and a company that may enjoy renewed growth as multimedia computing catches on, is Commodore International Corp. Its Amiga computer was designed with mixed-media applications in mind, says David Archambault, director of business marketing. The machine accepts analog video signals using only a fraction of the add-on equipment that most other PCs require. It includes special microchips for animating complex graphics and producing stereo sound. And, in contrast to most other PC brands, its basic software can make all of these functions work simultaneously. Says Archambault: ''We feel perfectly positioned to take advantage of the new awareness of multimedia computing.''

Far more popular in the overall PC market, though, is Apple's Macintosh, which many view as a good machine for multimedia because of its adeptness with color graphics and sound. Apple's HyperCard software, built into the Mac, also makes it easy to create programs incorporating text, pictures, and sound. Still others hail Jobs's Next computer as potentially better, because it includes as standard equipment an optical disk drive that could cope with the voluminous audio and video data that sophisticated multimedia programs will use. The machine also contains special high-speed chipsto synthesize quality sound and graphics. Imagine Inc. in Ypsilanti, Mich., is creating multimedia software for Next's computer that is similar to MacroMind Inc.'s Director program for the Mac (page 41).

Microsoft's Gates, on the other hand, believes the multimedia market won't blossom until very low-priced computers come with compact optical-disk drives and better graphics and sound. Currently, a Mac II or IBM PS/2 equipped to handle CDs and high-quality graphics can cost upward of $10,000. Gates thinks that $3,000 is the price at which demand will soar -- and that may not be far off. IBM is said to be working on a low-priced, CD-playing PC to be introduced next year. Meanwhile, Japan's Fujitsu Ltd. has sold some 27,000 units of its $ 2,300 FM-Towns machine -- essentially a PC with a built-in CD drive. And that was in just three months on the market. Says Apple's Peppel: ''To make multimedia mainstream or mass market, there needs to be tighter integration of components than today -- so you don't need a PhD in cables.'' Once the price dips below $ 1,000, Gates believes, such machines will start moving into homes -- perhaps by the mid-1990s.

Japanese companies may have the edge in selling cheap multimedia machines by virtue of their control of the U. S. consumer electronics market. They already are dominant suppliers of key components such as CD drives and color monitors. All that's needed is a firmer set of technical standards, analysts say, and the Japanese will have a low-priced system to sell.

Already, Dutch laser-disk pioneer Philips has lined up Sony and Matsushita of Japan to work with it on something called Compact Disc-Interactive (CD-I) -- a low-cost computer that plugs into standard TVs to display text and video stored on CDs. American Interactive Media, a Philips subsidiary, is creating such presentations as a tour of the Smithsonian Institution, a ''coloring book'' for tots, and a collection of children's Bible stories. Philips also is aiming CD-I at industrial training jobs. Sony, meanwhile, is considering forming a consortium of companies interested in developing other multimedia equipment.

More intriguing is a more flexible alternative to CD-I that's slated to be on the market next year: a technology called digital video interactive, or DVI. Developed originally by RCA Corp., which sold it to Intel Corp., DVI attempts to solve the problem of compressing bulky video footage into a form that even low-performance computers can cope with. It can reduce memory requirements by factors of 100 or more. Compressed data are stored on optical disks, but when needed for display, a pair of special Intel microchips retrieves from them full-color video images -- at a rate of 30 frames per second. That makes it easier for a computer to ramble through large collections of video clips, rapidly plucking out whichever scene is called for. That's much faster than searching for scenes by scrolling back and forth through a videotape.

Intel's technology still has weaknesses. DVI images move less smoothly than standard video. And the gear needed to record DVI data now costs more than $ 20,000, though Intel says that could drop next year, to between $ 5,000 and $ 15,000 depending on the quality needed.

Still, DVI stands to catch on as a standard video format for small computers -- if only because IBM has chosen the technology for future use in its PS/2s. Says Satish Gupta, manager of IBM's mixed-media products group: ''We see multimedia as a natural extension of the PC. And DVI will help us move video more efficiently through networks.'' Other companies -- including Apple, Philips, Sony, Toshiba, and Fujitsu -- are working on competing techniques. But none is as close to being marketed as DVI.

'BIG JUMP'

Hardest to predict is when the technology will be mature enough and cheap enough to bring full-blown multimedia systems into the office and home. Some observers are not sure that desktop computers are up to handling DVI yet. ''Even if you say it's several years away, you're talking a pretty big jump in memory and processing speed,'' says Darrel Whitten, electronics analyst at Prudential-Bache Securities Ltd. in Tokyo. And the software needed to create DVI and similar full-video presentations will take even longer to create.

Given the technical obstacles, ''it's a long road'' to full multimedia computing, says Steven T. Mayer, chairman of Digital F/X Inc., a Mountain View (Calif.) maker of desktop computers used in video production. ''But we're reaching milestones faster and faster.'' And one day, even for the most demanding Francophile, perhaps a PC really will be the next best thing to being there. 

GRAPHIC: Photograph, Eyes on the road, Du Pont is using multimedia in training its truck drivers, whose reflexes are tested under simulated road conditions PHOTOGRAPH BY JOHN MCGRAIL; Photograph, Buick-on-a-chip, Numbers, graphics, and sound effects combine in a state-of-the-art sales pitch PHOTOGRAPH BY SHONNA VALESKA; Graph, THE MONEY IN MULTIMEDIA Data: Information Workstation Group CHART BY JOHN DECKERT/BW; Photograph, Polishing the Apple, At the company's Cupertino (Calif.) labs, researchers are refining ways of marrying audio and video to the Macintosh PHOTOGRAPH BY JAMIE TANAKA; Photograph, 'Edutainment', With a Mac and a laser disk, students can create their own documentaries ANDY FREEBERG

Copyright 1989 McGraw-Hill, Inc.