Dallas chipmaker goes after NASCAR fans to spread the word about DLP

10:51 PM CDT on Friday, April 7, 2006

By CRAYTON HARRISON / The Dallas Morning News

FORT WORTH – On Texas Motor Speedway's midway, where NASCAR sponsors sell T-shirts and memorabilia emblazoned with their logos, customers were lined up Thursday in front of a truck that bore the likenesses of Dallas Cowboys legends Troy Aikman and Roger Staubach.

The big corporate logo on the truck was DLP, the TV chip made by Texas Instruments Inc. of Dallas. The vehicle was filled with racing T-shirts and model cars, each featuring the DLP image. Doug Darrow, a TI executive, shook his head as he walked by the scene.

"If you had told me two years ago that we would be selling T-shirts that said 'DLP' for 35 bucks, I wouldn't have believed you," he said.

But the DLP business, which competes against high-definition TV technologies such as plasma, is having to do a lot of things that are new to quiet, buttoned-down TI.

TOM FOX / DMN

Mechanic Matt Millard cleans the No. 96 car, which Texas Instruments uses to promote its DLP technology.

As competition gets fiercer, it's stepping up advertising and marketing efforts and doing battle with big consumer brands such as Sony Corp.

"Now's the time to turn up the volume," said Mr. Darrow, DLP marketing manager.

TI sponsors the Hall of Fame Racing team, co-owned by Mr. Aikman and Mr. Staubach.

The team makes its Texas debut Sunday at the Samsung/RadioShack 500.

By aligning itself with a NASCAR team, TI is setting its sights directly on sports fans, one of the prime target audiences for high-definition TVs.

"Our hope is that we can make DLP synonymous with big-screen TV" for racing fans, Mr. Aikman said. "TI never advertises, but because of DLP technology and what it means to the consumer – big TVs, HDTV – they saw a real need."

TI has traditionally avoided advertising directly to consumers, letting its customers – electronics manufacturers – do the heavy lifting.

But the company has realized that the TV world is different.

The company is still trying to get consumers familiar with DLP, a trademarked term that stands for digital light processor.

TI is trying to associate the three letters with HDTV, the most luxurious way to watch television. Consumers already think about plasma TVs that way, Mr. Darrow said.

"We've got to get on people's radar screens," he said. "We still have to educate consumers about the differences between our technology and the other one."

The first mainstream TVs using DLP chips hit stores about five years ago, selling for $10,000.

They're now widely available from a diverse set of manufacturers, including Samsung, RCA and Toshiba, and many models cost less than $2,000. Roughly 1 million were sold in 2005, according to Austin research firm DisplaySearch.

As the DLP business has grown, it's become more important to TI, which also makes chips for cellphones and many other devices. DLP products, which include chips for movie projectors and business projectors, make up about 5 percent of TI's $13 billion in annual sales.

DLP chips use tiny mirrors that quickly swivel to reflect light and create an image. They are used in rear-projection TVs, which, as the name implies, cast the image to the screen from the inside of the TV.

Sony, meanwhile, makes rear-projection TVs that use two other types of silicon technology, called liquid crystal display and liquid crystal on silicon. Sony and the DLP TV makers wage furious battles throughout the year in the rear-projection market, where chip-based TVs reaped $6.1 billion in sales last year, up 28 percent from 2004, according to DisplaySearch.

In the last two holiday seasons, Sony has trumped the DLP makers with aggressive prices and marketing savvy. In the fourth quarter, more than one out of every two rear-projection, chip-based TVs shipped was a Sony. DLP TVs made up about one-third of the market in that quarter.

The competition may be getting more intense. Growth in the rear-projection TV market is slowing overall, analysts say, as plasma TVs drop in price, said David Naranjo, an analyst with DisplaySearch.

"Flat-panel has panache," he said. "People are willing to spend a little more to get a flat TV."

DisplaySearch predicts that the rear-projection market isn't going to get much bigger. That means DLP will have to scratch and claw with Sony to grow.

The outlook for DLP is "not entirely depressing," Mr. Naranjo said. A rear-projection market that sells "2.2 or 2.3 million units per year is nothing to sneeze at."

DLP still has much in its favor, Mr. Darrow said. Rear-projection TVs can still dominate the market for large TVs, which are more expensive and difficult for flat-panel makers to manufacture, he said.

"In the very biggest screens, it's likely that DLP and the other chip technologies will remain the predominant solutions for a long time," he said. Plasma TVs that measure about 40 inches diagonally will compete effectively, but bigger ones won't, he said. Some DLP screens measure more than 60 inches.

Analysts are also basing their forecasts on current technology, Mr. Darrow noted. DLP TV makers are working on new ideas that could make their products thinner and sleeker – and perhaps more competitive with plasma.

Mitsubishi, for instance, demonstrated a DLP TV this week that uses lasers instead of a light bulb to create an image. The lasers produce beautiful pictures, use less energy than today's sets and can be much lighter than plasma screens, Mitsubishi said.

At first, the laser sets won't be thin enough to hang on a wall in most cases, said Marty Zanfino, product development director at Mitsubishi. But "it's not unreasonable to believe that year by year, incrementally, they'll get thinner and thinner and thinner yet," he said.

Mitsubishi could have laser sets on the market by the end of next year.

Samsung and other manufacturers, meanwhile, have announced plans for DLP sets with light-emitting diodes, another technology that offers longer life than light bulbs.

While it waits for those technologies to arrive, TI will continue its big marketing push. Last year, TI's national advertising campaign started in September to coincide with the professional football season. This year, it began with the Daytona 500 in February. The company is busy planning next year's national campaign, Mr. Darrow said.

TI has declined to disclose how much it's spending on DLP advertising. Primary sponsorships for top NASCAR teams typically cost $15 million to $20 million. It's money well spent, Mr. Aikman said.

"NASCAR makes great sense for any company that has that kind of advertising budget and has a product that appeals to NASCAR fans," he said.

E-mail charrison@dallasnews.com