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In the aftermath of the U.S. switchover to a new digital television standard, which became official on June 12, the man who saw it through a 25-year transition, Consumer Electronics Association President Gary Shapiro, likened the effort recently to "putting a man on the moon."

Gary Shapiro, president of CEA.

(Credit: CEA)

Speaking with CNET News by telephone from his Washington, D.C. office this week, Shapiro reflected on the cooperative effort undertaken by consumer electronics companies worldwide, the U.S. government, and broadcast, cable, and satellite providers. He says the transition was completely smooth but reflects on the bumpy road behind the scenes in getting to this point.

In the edited conversation below, he also talked about the major missed opportunity by U.S. broadcasters, why the CEA was no fan of the free coupon program for digital-to-analog converters, and where he sees the next phase of television (hint: it's not in your house).

Q: You said last week that the DTV transition was "the equivalent of putting a man on the moon." That's quite a comparison. Can you explain why you think this was such a dramatic feat?
A: We first started this in the early 1980s as the next generation of television. (The CEA) along with broadcasters got together and talked about ways to (move to digital). We agreed on a joint effort and a whole bunch of things over time: It was going to be over a large geographic area, both urban and rural, and would meet the needs of over-the-air broadcasters. There were 20 proposals from companies, and eventually we created the Advanced Television (eventually called "digital TV") testing centers. Then General Instruments came in the late '80s/early '90s and had a digital way of doing it. That stopped everything. We said, "This is such a revolutionary thing. We have to look at this again." Eventually everything came around from that.

Was it a harder sell to the manufacturers or the broadcasters?
Manufacturers are always wanting the next big thing. The broadcasters were the biggest challenge by far. They saw nothing to be gained by this. The only argument was, "Look, cable will get there, satellite will get there, and you'll become the inferior medium." They felt they couldn't charge more for advertising in HD. They (eventually) had the foresight to say look, if we're going to do this right, broadcasters can't be left in the dark. And frankly they on their own funded a lot of the testing and research.

But I think broadcasters blew it in that HDTV was their one opportunity to get ahead of cable and satellite in the sense that it was cheaper for them to go to HDTV because they could just send out (an HD) broadcast signal. They just have to invest in the towers. It could have been their competitive advantage. With cable, everything they sell has to be in HDTV. And broadcasters did not push the concept of free over-the-air television and their market share has gone down still to this day dramatically. And along came not only cable and satellite but now the Internet, and soon mobile devices.

(Once agreed upon) in 1996 we went forward and developed the first and best DTV standard. And if you compare that with other places in the world, Japan started with an analog advanced television standard, and they sold TV sets and had to recall them when digital came along because they realized they'd be left behind. Europe went a totally different way. They said high definition is not important, regular digital television is fine, European consumers don't care about the quality that Americans care about. And that also turned out to be a huge mistake, because although their broadcasters were fine with that, along came the satellite people and the TV set makers that started selling high-definition televisions and (high-def feeds). And all of sudden the broadcasters are left out in the cold. So they had to quickly develop their own high-definition standard. So the U.S. is really the first place in the world that did it right and a lot of people are trying to emulate us.

The U.S. was the first actually to transition in such a wide scale way, to all of the country all at once. The Europeans, they kind of did it segmented by geographic area and countries are still doing it. Most of the world hasn't even gotten there yet. So we're so far ahead of everyone at this point and it was unique in that it wasn't only manufacturer and broadcaster but the cable industry got involved, the satellite industry got involved. In terms of the transition itself, we saw 200 different groups, for seniors and minorities and different languages, everyone got involved to educate the public. And we did it right and it's been fabulous, and it wasn't really celebrated, but I think it deserves celebration.

Not really celebrated? How so?
Well, when Neil Armstrong stepped on the moon, it was like, "Wow, here's a defining moment." When we turned off analog broadcasting a couple months ago, it was kind of like the last item in the news. "Oh, it's done." There wasn't any grand finale, it was more of a non-event because by that point you're dealing with the latest adopters and you know, most everyone you know had digital television in one form or another.

There was a lot of angst among policy makers. I say I couldn't deal with members of Congress the last couple years because they thought they'd be thrown out of office because consumers would protest that their TV would be taken away from them. When I've asked members of Congress now how many people they've heard from complaining, senators have told me not one person in the entire state has called their office. So, could be the angst was overblown.

You know, the Obama administration made the decision for the (transition) delay before they were in office. It was acceded to by the Democrats in Congress because here there was this phenomenally popular, historic president...In my view it wouldn't have mattered whether they gave it or not. We would have the same result.

But wasn't the reason that the coupon program ran out of money?
Theoretically ran out of money. They actually never ran out of money until a couple weeks ago. It's just a matter of the way the government accountants chose to count. It was to count every coupon they gave away, not every one that was cashed, which is not traditional in the coupon world. There's a large number that are never cashed.

The government was exceedingly generous. I mean, think about it: you buy a television 15 years ago. Why do you have the constitutional right that it'll last forever? Any other product you use you know that it's likely to break down, service will be stopped. That's just the risk you take. Hell, I signed up for ClearPass to get through airports three months ago and a month after I signed up it went out of business. I wasn't thrilled, but that's the risk you take. So, we were never an advocate of the coupon program.

Why not?
Well, because we at the CEA have never asked the government for money, especially for our industry. That money is going to our pocket. And we have a position that we believe in the free market and we don't think we should be asking government for special favors for our industry.

So does that mean everybody's gotten a new converter than needs one?
Ninety percent of the population has cable or satellite. And then one out of four families buys a TV set every year. And this has been out there for five years now, and you have (the requirement for) a digital tuner in (new TVs) there for three or four years, all those people have it. So there's almost nobody who's disenfranchised. Now there is a small segment of perhaps and the most sympathetic segment is someone who is horribly poor or old or disabled who wasn't able to afford this, and they had the coupon program. Every survey we've done shows that over 99 percent of Americans knew about the program. So, we've succeeded, and we'll move on to the next thing.

In another 15 or 20 or 30 years there'll be another TV standard. We're working now on 3D TV and certainly mobile TV, which are the two big categories. But I don't think that requires a dramatic change like we've gone through. The really dramatic change the country's gone through is 40 years ago you got three networks over the air and then cable came along and then satellite, and now fiber, and the Internet and there are so many ways of getting that video signal into your home that over-the-air television does not have the power that it used to have. But they are using still a tremendous amount of spectrum. And that spectrum is going to increasingly come under scrutiny as policymakers in Washington try to figure out how we can fulfill this tremendous need that Americans have to have broadband wherever they are. The issues are still going to be discussed in Washington over the next five to 10 years.

You spoke of the next thing, which is 3D, and mobile TV. How do you see us getting there?
Well, one of the most successful products in cars has been the screen in the back for kids to watch. There's no theoretic reason that can't be a mobile device for reception. If you combine it with the Internet, you could have location-based service, if you're driving by somewhere. You have the broadcaster using their spectrum, which gives them an opportunity for advertising, which they otherwise would not have had, and to expand their audience to a mobile environment.

We're very close (to that). You'll see products at CES, which will show mobile television. Many different manufacturers, many different products and broadcasters doing demos in January.

And then 3D television is something which has long been around, certainly Hollywood is very excited about it. It is challenged by the fact that you need special glasses...But people love it. More and more is being done that's 3D capable.

Can you describe where we're at in getting a 3D standard?
Well, CEA has created a committee to look at the standard that's similar to the problem we had with HDTV, where you have different proprietary systems out there. Now Hollywood is really engaged on that, which is very helpful. And the way things work in standards setting is you really need an industry to agree on it, and if they can't, it's fought out in the market place. Sometimes when things are fought out in the marketplace it's very difficult because the consumer freezes--they don't' want to make a mistake like they did with Betamax, or even with Blu-ray versus HD DVD.

It's too early to say which way this will go on 3D now. Everyone's fresh from the HD DVD/Blu-ray battle, and I don't think that's viewed as positive battle for anybody. It certainly inhibited the growth of the technology and the format in a way which wasn't helpful. The government was involved in the HDTV one because it involved spectrum, which is regulated by the government. The government was actually helpful in that standards issue, which is why it was a man-on-the-moon approach. It was such a big precedent, it involved so many industries, the government. They did it right. And that was refreshing.

We're not asking government to get involved in 3D TV or anything else. And I'm not saying we're going to do it right, but we're going to try to come up with one standard, and if we can't the marketplace will, which is fine also.

Update: This article was corrected to reflect that the information is for the fourth quarter of 2008, not the whole year.

The liquid crystal display TV market is beginning to lose some steam.

The fourth quarter was the first time that the total number of shipments of LCD TVs in North America was lower than the same quarter the previous year. Just 8.7 million units were shipped during the last quarter of 2008, a 2 percent decline from the 8.9 million shipped during the same time in 2007, according to data released Thursday by DisplaySearch, which tracks the TV industry.

In December, DisplaySearch issued a warning that in 2009, revenue from selling LCD TVs will also fall for the first time ever.

Plasma TV makers were ready for this, it seems. Plasma TV shipments actually increased 28 percent during the fourth quarter of 2008 (peak holiday season), and overall were up 10 percent for the year.

Plasma may have seen a bigger demand during the quarter because of the current economic climate and increasingly cost-conscious buyers: plasma tends to be more cost effective, and TVs sporting the technology are generally 5 to 10 percent lower in price than similarly sized LCD TVs, according to Paul Gagnon, who monitors the TV market for DisplaySearch. In some cases, plasma shipments actually grew at the expense of LCD, he said.

Meanwhile, the number of major manufacturers producing plasma sets is declining. No. 3 plasma maker Vizio said Wednesday it would cease production of plasma and focus entirely on LCD TVs. And late last week a report surfaced that Pioneer was leaning toward exiting the plasma business as well. That leaves just Panasonic, Samsung, and LG Electronics as the major producers of plasma TVs. Gagnon expects Panasonic and Samsung, who already hold about three quarters of the plasma market in North America between them, to pick up where Vizio--and possibly Pioneer--leaves off.

"Both Samsung and Panasonic will probably evenly split (what's left) up," he said. "But Panasonic is in a little bit better position in club store channels than Samsung," where Vizio is strongest.

Also of note in DisplaySearch's data: Sony gained a lot of ground in LCD TVs during the fourth quarter of 2008. The company shipped just over 16 percent of all LCD TVs to North America, creeping closer to Samsung's 19.3-percent share. Sony hasn't had a share that high in more than three years. Gagnon says that the fourth quarter is always a highlight for Sony, but that the company, which usually positions its brand as higher end, was actually "neck-and-neck" with Samsung on pricing during the holidays.

We shouldn't expect that to continue into 2009, according to Gagnon. "They'll probably be more conservative" about pricing, he said.

Samsung Electronics is reconfiguring four divisions into two, in a move to bring its consumer products under one roof and its components business under another, according to a report Friday in The Wall Street Journal

The electronics giant will house such areas as its TVs, cell phones, and other consumer electronics into one group, while the components division will now include its liquid crystal displays and semiconductors, according to the report.

Samsung's restructuring comes at a time when a number of companies are retooling their operations in an effort to minimize the effect of a slowdown in corporate IT spending and pullback from consumers.

Samsung's consumer products division will be overseen by Choi Gee-sung, who manages the company's cell phone business and is the former head of Samsung's TV and video operations. CEO Lee Yoon-woo will run the components division.

Intel and Adobe Systems on Monday announced that they're working to adapt Adobe's Flash media technology, widespread on PCs, to work in TV-focused devices.

The two companies will work on fine-tuning the Flash Player and Flash Lite for Intel's Media Processor CE 3100. The goal is for Intel to ship the first CE 3100 chip with Flash Lite support before the middle of this year.

A Flash-CE 3100 combo would give consumers a better viewing experience of Web-based and other videos via digital TVs, Blu-ray Disc players, cable set-top boxes, and audiovisual devices, the companies said.

"Our effort with Adobe is poised to accelerate a rich yet relevant Internet experience on the TV that will provide consumers with access to a growing number of Flash-based applications that will ultimately be enjoyed across a number of screens seamlessly, from the laptop to a MID and now the TV," William O. Leszinske Jr., general manager of Intel's Digital Home Group, said in a statement.

Intel says the Media Processor CE 3100 is the first to come in a lineup of system-on-chip offerings for consumer electronics. The CE 3100, earlier known by the code name Canmore, also factors into software work that Yahoo is doing for Internet-enabled TVs with its Yahoo Widget Engine.

Televisions aren't the only non-PC devices that Adobe has in its sights. In November, the company said it is in the midst of "evolving Flash Player 10 for mobile."

Next year is shaping up to be a nightmare for LCD TV makers.

Revenues for LCD TVs sold worldwide in 2009 are expected to fall 16 percent from 2008, to $64 billion, according to an update to DisplaySearch's Quarterly Global TV Shipment and Forecast Report, released Thursday. Next year will be "the most difficult year yet for the TV industry and supply chain," DisplaySearch writes in the report.

The culprits are rapidly declining prices of LCD TVs and lower shipments to retailers due to slackening demand. DisplaySearch expects 2009 LCD shipments to drop to 205.3 million unites, which is a 1 percent decline from the 2008 total of 206.4 million units.

The recession in the U.S., and the instability in the global financial markets, have hit the consumer electronics industry hard. By the second half of 2008, TV prices were already beginning to fall as manufacturers competed heatedly for customers. But as prices drop, so do the margins that TV makers, suppliers, and retailers can bring in.

So far, few have been immune, including some of the biggest names in electronics. Sony's TV shipments fell drastically, leading to layoffs and factory closings last week, Panasonic has said its profits will take a hit, and Samsung has said it is planning on cutting back on investments as its sales and profits fall.

The problems developing in the LCD TV business have been brewing for over a year. When LCD TVs were still a relatively new product and the top tier brands were still charging fairly hefty premiums for their sets, small, lower-tier brands found their way into the mainstream by selling through club stores and discount chains at lower prices.

Customers responded in a big way, driving lower tier Vizio, for one, into one of the top TV makers in the world. Sony, Samsung, Sharp, LG, and others, responded too--by lowering their prices in what became a slow race to the bottom.

But looking ahead to next year, just treading water appears to be a lofty goal. The keys will be taking advantage of emerging markets where LCD TVs are still a novelty, by creating or beefing up a line of lower-end TVs for North American and Western European markets.

It could hold them over until the LCD market rebounds, which DisplaySearch says will happen in 2010. By then, revenues for LCD makers should push back above $70 billion.

Broadcom on Tuesday said that it completed the acquisition of Advanced Micro Devices' digital TV chip business--at a discount to the original price.

On August 25, the two companies announced a price for the unit of $192.8 million. But Broadcom now expects that AMD's digital TV business will have fourth-quarter revenue of between $15 million and $20 million, lower than previously expected, the Irvine, Calif.-based company said.

Accordingly, the price has been slashed to $141.5 million, about a 27 percent reduction from the original price.

Broadcom had said in August that AMD's DTV unit would strengthen its own digital TV system business by expanding the tier-one customer base. Broadcom offers digital chips for TVs, including digital TV system-on-chip solutions.

AMD sold the unit to Broadcom to become "leaner and more focused" as it faced a string of quarterly losses and needed to create a "business model to deliver sustainable profitability and leadership in core x86 computing and graphics businesses," the company said.

Broadcom is paying $192.8 million in cash to acquire Advanced Micro Devices' digital television business, the companies said Monday.

AMD's DTV assets include Xilleon integrated DTV processors and reference designs, NXT receiver ICs, the Theater 300 DTV processor, and a line of panel processors that perform advanced motion compensation, frame rate conversion and scaling.

AMD had announced last month that it was quitting the DTV market, as part of an effort to streamline its businesses. CEO Dirk Meyer said in a press release that the sale was a "key step" toward helping the company boost its financial performance.

Roughly 530 AMD employees working for the DTV business will be "invited to join Broadcom" as part of the sale, which has been approved by both companies' boards of directors.