Philips Electronics Again Gambling to Set Industry Standard : Technology: Though recent innovations have flopped, the firm is sticking by its CD-I, which trails CD-ROMs.

From Reuters

Philips Electronics NV was a founding father of the multimedia industry a decade ago but, as the industry enters a dramatic new phase, the Dutch electronics giant is battling hard to stay at the top.

The multimedia cocktail of sound, video, text and graphics on interactive screens was born when Philips and Sony started upgrading the music compact disc in 1985.

As it grows, the industry is becoming gripped in a dogfight to set world standards, which to anyone familiar with Philips' recent inventions may ring a depressingly familiar note.

Last month's announcement from Toshiba Corp. and Time Warner that they plan to develop a rival standard to Philips and Sony's planned high-density video disc is only the latest challenge to Philips' attempts to cash in on technology it has invented.

To many industry observers, that announcement recalled a bruising 1980s battle for the supreme standard in videotapes, when Sony's Betamax and Philips' Video 2000 lost out to the Matsushita-backed VHS standard.

Philips has also recently lost other technological battles--its High-Density Television and Digital Compact Disc either flopped or at best failed to triumph.

And crucially, the technology Philips has backed for the new age of multimedia--compact disc interactive or CD-I--appears not to be triumphing as the main vehicle for new products. CD-ROM (compact disc with read-only memory) is more widely used.

Of the 500 or so exhibitors touting interactive games, "edutainment" and information at an industry fair in Cannes, France, earlier this month, only 67 were showing titles for CD-I. The majority were developing products for CD-ROM.

The difference between the two systems is essentially the machine on which they run. CD-I is television-based while CD-ROM runs on multimedia computers.

Philips says CD-I means easy-to-use multimedia "for all the family," and CD-ROM is just for solitary users. Others say CD-ROM is more sophisticated, and point to a future when today's "screenagers" will grow up using computers with ease.

Philips has sold about one million CD-I machines, mainly in Europe, and plans to sell another two million this year. But industry analysts estimate there are already nine million CD-ROM drives in U.S. homes alone.

"The mold was set by the end of 1993," said Julian Dickens, Europe's leading multimedia lawyer with London-based Olswang solicitors. "People in the U.S. were buying CD-ROMs and they weren't buying Philips. In Europe it's different--Philips started selling CD-I relatively much earlier."

Philips is now covering its options, transforming itself into a publisher which focuses on multimedia programs instead of the "platforms"--or machines--they run on.

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