While much of the mainstream media focused on Apple’s new video-capable iPod, the unveiling of Echostar Communications Corp.‘s new portable video player seemed to slip underneath the radar.

Dubbed Pocketdish, the device will allow users to download and store video and audio files for viewing and listening on the go. The device can accept content from computers and consumer electronics devices such as DVD players and VCRs, but the key selling point will be the ability to download content stored on digital video recorders (DVRs) and record live television directly.

Three Different Models

Echostar plans to enter the market with three Pocketdish variants. The top model, with a suggested retail price of $599, will feature a 7-inch widescreen LCD display with a 16:9 aspect ratio and 40 gigabytes of storage capacity capable of storing up to 40 hours of Dish programming, 400,000 photos or 30,000 songs. The $499 mid-range Pocketdish comes with a 4-inch widescreen and 30 gigabytes of storage. The $329 entry-level device comes with a 2.2-inch display and 20 gigabytes of storage.

The top two models will be able to receive video content from non-Dish sources, including DVRs provided by competing cable and satellite services, Echostar said. Additionally, all models come with a rechargeable lithium-ion battery that will provide up to four hours of video and 12 hours of music playback, stereo headphones, USB cables, adaptor cables, audio/video cables, an AC/DC power adapter and a carrying case.

Echostar spokesman Mark Cicero declined to talk specifics in terms of how the device is going to be marketed but offered hints as to what marketing campaigns might emphasize.

“When hooked into one of our select DVRs with the USB 2.0 cable, you can transfer content an hour of content in about five minutes,” Cicero told Satellite News. “It really enhances the customer experience. If they are a Dish Network subscriber, they will be able to take that same digital quality programming that we offer and watch it anywhere they want.”

In particular, Cicero emphasized the unique content that may not be available to portable users otherwise. “This will allow you to take content with you that will never appear on DVD,” he said “If you are a Jay Leno fan, you can record The Tonight Show and take it with you. If you [are going to miss a sporting event], you can record that the night before and download it in the morning. And since you can record with it in real time, you could hook the Pocketdish up to the DVR in the morning and record the news broadcast and take it with you on the subway if you are a commuter.”

Slow Buildup

The portable media devices, first mentioned by Echostar Technologies Corp. President Mark Jackson at the Consumer Electronics Showcase a few years ago, should be a positive product offering for Echostar, said Carmel Group President Sean Badding.

“It just adds another piece of an advantage for Echostar over its competitors when it is able to offer more hardware products to its consumers,” Badding told Satellite News. “I don’t see it as a significant advantage, but for Echostar, one of its advantages always has been to deploy new technology before its competitors. This is just another example of Echostar leading the pack when it comes newest technology.”

Badding noted that Echostar usually lags behind its largest cable rivals, as well as DirecTV, when it comes to content offerings, so Echostar “relies on being ahead of the market [in terms of technology] to attract new subscribers to its system.”

The deploying of Pocketdish provides Echostar a way to extend the reach of it Dish Network outside the home and into the space traditionally reserved for portable MP3 players and cell phones, “which seems to be the great new growth horizon,” Stephen Blum, president of Tellus Venture Associates told Satellite News.

“It’s really a way for Echostar to increase its constituency,” Blum said “The people that are likeliest use this are not the people who are paying the bills. [Pocketdish] is the kind of thing that tends to slide down into the younger demographics. It is going to appeal to kids, to teenagers, to people in the household other than the people paying the bills. That is going to increase the staying power of a Dish subscription in a household, which in turn is going to cut churn.”

As far as a driver for subscriptions, the role the device will play is cloudy. Cicero declined to discuss subscriber projections that Echostar has relative to Pocketdish. Given its non-exclusive nature in terms of devices the unit can interact with, Pocketdish may work better as a churn-reduction product than subscription driver, analysts said.

“This is another marketing and retention tool for Echostar. It helps to keep their subscribers on board and gives them less reason to churn out to a competitor’s system,” Badding said.

“Assuming it catches, and I believe it will, you will see the growth over the next couple of years, and that is going to start to impact Echostar’s churn,” Blum added. “In terms of churn and a real impact on the bottom line, you are going to see that impact three, four or five years out. And there is nothing wrong with that.”

Pricing

For a consumer electronics device, the initial pricing of the Pocketdish may be a bit high but did not raise any red flags.

“Those are typical price points for first generation products,” Badding said. “It’s not going to capture a large audience immediately. It is really for people that are not so price sensitive. These are typically people with higher incomes and are early adopters.”

Blum suggested the magic price point for this product to really take off will be around the $199 price range. That “is kind of a magic point in the consumer electronics business,” he said. “Once it gets under $200 it is much less of a decision for people, and then it drops even further. You are down on the point now, for example, on DVD players where you can buy one for $30 and at that point it is not a consumer electronics product anymore, it is a disposable. If you look at the pricing on Apple’s iPods, they have always managed to keep something more or less within reach of that $200 price point.”

Current pricing may be more of a reflection of inventory, Blum said. “If they are trotting this out at a $600 price point, that tells me they don’t have a lot of supply,” he said. “I am presuming they priced it so they are at a point they are going to be able to sell whatever their stock is for the next three months. What is going to happen over the course of the next year is they will be able to mass produce it and bring those price points down.”

Security

In the age of video piracy, the capabilities of Pocketdish will raise content security concerns. Echostar has designed Pocketdish so that the device cannot send out a signal to another device that could capture the content, the company said.

“A lot of our programmers actually are on board with the idea of the Pocketdish because there is encoding inside the Pocketdish so that when somebody transfers the content from their DVR to the Pocketdish it cannot be rebroadcast,” Cicero said. “You go in and you can watch it, but you cannot transfer [content] out from your Pocketdish to a PC. So the programmers are fine, as far as we know right now, with the way that it works because we built in those protections.”

Cicero declined to comment on whether Echostar has been in conversation with the Motion Picture Association of America or other organizations that have a vested interest in the content rights.

“I think probably it is inevitable” that piracy concerns will be voiced, Badding said. “Anytime you are trying to control the content, you really need to bring in the [content owners’] association to ease their concerns. I am sure that as video is being manipulated, it is going to raise more concerns in the future.”

–Gregory Twachtman

(Sean Badding, The Carmel Group, 831/238-5857; Mark Cicero, Echostar, 720/514-5065; Stephen Blum, Tellus Venture Associates, 831/582-0700)