Network hardware: Brave, but too clever by half

Philips' CD-i venture has not fulfilled its dream, but has caught the imagination of educators and trainers. By George Cole

Ten years ago, the Dutch electronics giant Philips announced a new format that would revolutionise home entertainment. Compact Disc Interactive (CD-i) built on the success of the audio CD format developed by Philips and Sony. But whereas an audio CD simply stored music, CD-i discs would carry a mixture of sound, text, pictures, graphics and animation. What's more, CD-i would be interactive: users would control what they saw and heard by selecting on-screen items with a control pad or remote handset.

On the face of it, CD-i was going to be a winner. Philips talked of it becoming the world standard for home multimedia, in the same way that VHS was the de facto standard for home video. It was easy to see why Philips was so optimistic: people liked CDs, and CD-i was supported by three of the world's big consumer electronics companies - Philips, Sony and Matsushita (parent to Panasonic, Technics and JVC). The combined marketing muscle of these companies would ensure that almost every home had a CD-i deck sitting next to the VHS recorder. But 10 years down the line, the picture is not so rosy.

According to Philips, over one million CD-i decks have been sold worldwide, although most sales are in Europe (the UK and Netherlands leading the way) and parts of the Far East (notably Korea and Malaysia). CD-i consumer sales have collapsed in the US and domestic players were never sold in Japan. Although Sony and Matsushita pledged their support, the former only ever released a professional player in Japan, while Matsushita launched rival 3DO home multimedia machines.

Philips has every reason to be perplexed: CD-i is clever technology. Although the system uses an ageing 16-bit processor chip, its graphics and animations are streets ahead of Nintendo and Sega's 16-bit consoles. And Philips has showed that you can squeeze a quart out of a pint pot. CD-i's original specification ruled out full motion video: CDs couldn't store enough digital video and CD-i players didn't have enough memory. But a digital video system called MPEG-1 makes it possible to store over an hour of VHS-quality video on a CD, and Philips developed a plug-in video cartridge with extra memory. As a result, CD- i decks can play games and films with full motion video.

All this makes a CD-i deck a very versatile box that can play music CDs, plus CD-i, Video CD and Photo CD discs. But Philips forgot the old adage: when you try and please everyone, you can end up pleasing no one. While Sega and Nintendo fans thrilled to the antics of Sonic the Hedgehog and Mario the Plumber, CD-i users had to make do with a TV version of Battleships. Film fans had thousands of movies to choose from on VHS, but precious little on Video CD. Besides, you can't record TV programmes on a CD-i deck. Photo CD, which lets you watch your snapshots on TV, failed to capture the public's imagination.

The explosion in the home PC market also eclipsed CD-i. Computers can run games, Video CDs, business programs, education software, and surf the Internet. CD-i also suffered from a flawed marketing strategy that saw its main market as education rather than entertainment. As a result, Philips launched a lot of worthy but dull titles, not realising that most people want to be entertained rather than educated in their living room.

But in the past couple of years, Philips has got its act together. There are now a number of good games titles on CD-i (one of them, Burn:Cycle, has even been carried over to the AppleMac, PC, and Sony's PlayStation), and player prices have fallen to less than pounds 300 (pounds 400 if you want a video cartridge). There are also CD-i audio systems and combined TVs and CD- i players.

Philips has had more success in the education and training markets. Unlike a PC or an interactive video system, a CD-i deck is a plug-and-play format: you just plug it into an ordinary TV and off you go. This makes the technology very attractive to teachers and trainers. More than 4,000 schools in Britain have CD-i decks and there are over 100 educational titles. Primary schools in particular like CD-i's attractive and easy-to-use software. In the US, Chrysler has purchased nearly 5,000 CD-i players for training. Philips has even launched CD Online, a service that allows CD-i owners to surf the Net on their TV with the aid of an optional Internet kit (price pounds 100).

But where does CD-i go from here? The format faces stiff competition from the PC and the new 32-bit games systems like Sega's Saturn and Sony's PlayStation, both of which cost the same as a basic CD-i deck. Then there is the forthcoming arrival of the Digital Video Disc (DVD) high-density CD, which stores around seven times more data than today's version.

Despite the amazing growth of the home PC, Philips argues - with some justification - that few people will want a PC in their living room and that there is a market for a multimedia box in the home. The chances are that Philips will launch an upgraded version of CD-i using DVD, although the new machines will also play today's CD-i titles.

CD-i has been a brave venture by Philips. The stakes were high but the prize of setting the standard for home multimedia would have been great. But the future has a nasty habit of surprising everyone. When CD-i was conceived, no one imagined that millions of homes around the world would have a PC, or that home computers would become powerful enough for multimedia. CD-i is still very much alive, and many software companies support it, but even Philips now accepts that its dream of a CD-i deck in every home is unlikely to happen.