Wednesday, April 20, 2011

How I learned to love Expensive Cables and other Rip Offs.

I am looking for a hdmi cable so yesterday I wandered into a major home entertainment store to see if they had the cable I need. Sure enough they had a big stand of hdmi cables between the home theatre systems and flat screen TVs. It was a slightly heavier sell than I expected for a simple cable. A multi-screen display looped a presentation eulogising the benefits of hdmi and stressing the importance of choosing the right cable for the job. It was pretty clear from the presentation that the "right cable" was the top of the range "ultimate super duper awesome adamantium plated" cable costing a staggering €120. If you are a cheapskate and prepared to take chances with your shiny new home theatre system you could always settle for the lowly "super duper gold plated" cable costing only €80.

Now I am an electrical engineer and I know that hdmi is a purely digital protocol.  As long as the cable has sufficient bandwidth to carry the digital signals the metre or so from your player to your TV you will get perfect transmission and no amount of adamantium in the cable is going to make it any better. Professional studios might need cables that are designed to take more abuse, to carry the signal over longer distances or to survive many insertions but for the average home user a €5 cable bought on Ebay is just as good as that €120 cable.


Don't get me wrong. I fully understand that for many non tech savvy customers it is often better to pay more for a product that is easier to use or comes with better support. Microsoft Windows for example is a better choice for the vast majority of users than Ubuntu even though the latter is free. This is a frigging cable however. You plug it in and forget it and two seconds of advice from the sales assistant to make sure you have  the right connector at each end is not worth €120.

I nearly ran out of the shop fuming with anger. Clearly they are duping non savvy customers into buying ludicrously expensive cables they don't need. It is probably a very easy scam to run too: "Now that you have bought our €1500 home entertainment system make sure you get a really good (€120) cable to hook it all up."

I was so incensed by this that I looked it up on the internet and sure enough it seems to be a universal phenomenon that high street shops only sell over priced hdmi cables. My anger subsided a bit when I stumbled across this short blog post on the subject by Alex Tabarrok in which he refers to the hidden fee model of Xavier Gabaix and David Laibson. The expensive hdmi cable phenomenon is just another example of  a business practise where a competitively priced big ticket item comes with a lot of expensive add ons: Hotel room phone and mini bar charges, extended warranties, and printer inks are cited as other examples. Naive customers are attracted by the competitive offering on the big ticket item but then spend too much on the add ons.

Gabaix and Laibson's paper is particularly interesting because they show that even though the market is operating inefficiently there is no incentive for a competitor to  challenge the practice. The retailer is using the margin on the expensive cables to subsidise the price of their TVs and Blue Ray players. A competitor who offers cheap cables will not be able to compete on the big ticket items because they don't have the subsidy. Even if the competitor aggressively advertises the scam they still won't win because educated customers will continue to buy the cheap subsidised TVs.


Why am I not angry any more? Well because the nub of this story is that the retailer is not really making a killing. They are using the expensive cables to subsidise cheaper TVs and Blue Ray players. The only people making a killing are tech savvy folk who know enough to buy the subsidised home theatre system in a major retailer and then head around the corner to a local electronics shop for a cheap cable. The only people making a killing are people like me. Less tech savvy folk are directly subsiding my purchases. Alex Taborrok somewhat cruelly calls it an Idiot Tax and IQ Subsidy.

Roll on overpriced cables I say. I certainly never intend to buy one but I am a beneficiary of them.

Edit: A bit more googling has convinced me that hdmi cable does not have error checking which is somewhat surprising for a digital protocol but it means that the system cannot automatically compensate for cable losses.  Nevertheless the point still remains that a digital cable will give perfect transmission up to the point at which signal distortion is so severe that individual bits can no longer be detected. It is like a cliff effect with a cable working very well up to a certain length beyond which there is severe signal deterioration with sparklies and drop-outs. The typical 1m to 2m home cable comes nowhere near this limit so €120 cable is still pointless.









10 comments:

Cap'n John said...

After we bought our shiny new, 50" plasma TV, I noticed horizontal waves scrolling down the screen, and there was a barely audible background hum. That is, it was barely audible until you turned up the volume on the TV; then the hum got louder. I ended up buying a super-duper power board (for around $100, I think) which had labeled power outlets (pretty!) but not just power outlets, even the cable TV signal could be passed through it. I got home, plugged in this new super-duper power board, and the scrolling waves AND the hum disappeared.

Could I have got this super-duper power board for less than $100? Most likely.
Was it $100 well spent? Considering I went from thinking I'd bought a $1,000 POS TV to being able to totally enjoy my overindulgent purchase, yeah, it was.

Now we've got a BluRay player on order which should arrive here sometime this week. If it doesn't come with an HDMI cable (and all signs point to it not) will I be buying the super-duper $100 HDMI cable to connect it to my TV which sits just inches above it? Not likely. I see by their website that my local Best Buy have a 6' cable for ~$13. That should do the trick.

mbp said...

Cap'n John your super duper power board was totally worth the money because it solved a real problem. And if by some (unlikely chance) your €12 cable does not give you a perfect picture there is nothing stopping your from getting a more expensive cable later. You have already passed the IQ test by not ticking the box which said "please include a $100 hdmi cable with my blue ray player".

Cap'n John said...

Our Blu-Ray player arrived yesterday so I went out shopping last night and ended up buying a 6' HDMI cable from Walmart for $22. First I checked Target (the wife gave me a $25 gift card) but they only had 3' cables for $22 and 6' cables for around $30. Then I went to Best Buy (which were next door) and their cheapest cables were $30. They have $10 cables online, but I wanted my cable now! so I went to Walmart, next door again (sort of), where I got my 6' cable.

In my experience 3' is often not quite long enough. Even 6' is sometimes stretching it, which I did when I took it out of the box. One end in each hand, stretch, and that was pretty much the length of the cable. That's how long 6' is. (Can you touch both components with each hand, at the same time, without stretching? No? Then a 6' cable is too short, and a 3' cable is waaaay too short.)

So I got the Blu-Ray hooked up to the TV via the HDMI, turned them on, and...Invalid Format???

I hooked up the Blu-Ray with the included A/V cables and I got a picture, the Set-Up screen to be precise. So the player works but who wants to watch 1080p output at 480i?

I ran the Set-Up process then because I'd already hardwired the Blu-Ray into my LAN I also downloaded the latest software updates. And while that happened I read the manual to see why I might be getting the "Invalid Format" error message on my 50" Plasma TV.

"Check the cable connection", the Troubleshooting section said, followed by, "maybe your TV can't do 720p or 1080p".

Riiiiiiight.

I unplugged the HD satellite receiver's HDMI cable, and plugged it into the back of the Blu-Ray. Nada. I took the new HDMI cable, already plugged into the HDMI #2 on my TV and plugged it into the satellite receiver and...got a picture. So the new HDMI cable is fine, and the TV's HDMI #2 input works.

What's the problem? It's got to be the player not outputting the correct HD signal, or any HD signal at all.

A/V output works like a charm, but again, 480i vs 1080p? No thank you, especially not when I could be watching 1080p.

So I posted to a support Forum for my specific model of Blu-Ray player (a Samsung BD-C5500) and one of the responses was "The BD-C5500's HDMI output is set at 1080p by default. Maybe your TV can only do 720p?"

What??? That's preposterous!!! It's a 50" Plasma! Of course it can do 1080p! You're...you're...you're...possibly right.

Now I was pretty sure we specifically shopped for 1080p TVs but maybe, just maybe, we only got a 720p.

That means I may need to set the output on the Blu-Ray to 720p, and if it works...I'll still be a little pissed because I was sure we bought a 1080p TV.

Cap'n John said...

Well this is a real kick in the pants. I managed to get the Blu-Ray connected to the 50" Plasma TV via HDMI by changing the Blu-Ray to output a 720p signal, because my 50" Plasma TV only does 720p, not 1080p. Boo. Ahh well, I probably can't tell the difference between 720p and 1080p anyway :P

Anonymous said...

Cap'n John: The hum would be due to some bad earthing, which was subsequently eliminated by the multibox. I'd hazard a guess that double insulated mains is the problem and that commoned up and earthed shields on the data/signal cables was the solution.

Regarding the lack of 1080p, have you tried 1080i? Plasma's do interlace encoding very nicely, unlike LCD's although deinterlacers are very good at making that moot. Of course, if the 50" is a 720 line display then forcing 1080 anything is pointless.

Progressive encoding, unlike an average computer monitor which uses sequential encoding, isn't all it's cracked up to be really. It's basically a variant encoding of interlace where the framerate is halved. It's used when the original footage is recorded at a lower framerate and therefore has no need to use both interlacing fields as individual frames.

That said, setting 720p/1080p may actually be telling the player/display to use sequential encoding only and therefore forcing the player to perform deinterlacing. So the display never gets a chance to handle the picture correctly.


Solbright

Anonymous said...

mbp wrote: "The only people making a killing are people like me. Less tech savvy folk are directly subsiding my purchases. Alex Taborrok somewhat cruelly calls it an Idiot Tax and IQ Subsidy."

Hmm, well it is cruel and I still get mad at shops even if I'm getting the better end of the deal on occasion. It does require me to go out of my way quite a lot and I certainly know I'm not always on the winning end.

There is so many of these scams going on now. Take credit cards, every shop has pay 5%, or something like that, on every sale they put through by credit card. This is not directly passed on to that purchaser. But now that credit cards are so popular, due to bank fees!, we are seeing every reseller including the extra cost in the standard prices. So, assuming I don't use a credit card at the supermarket, if I don't try brow-bashing every salesman I end subsidising those that do.

This goes for other things too, like fuel coupons and air points and the likes. They'll all be incorporated in the retail pricing. So, if you prefer your identity to be a little private you end up subsidising those that are freely advertising their lives.


Solbright

Anonymous said...

*Modified for clarity...

mbp wrote: "The only people making a killing are people like me. Less tech savvy folk are directly subsiding my purchases. Alex Taborrok somewhat cruelly calls it an Idiot Tax and IQ Subsidy."

Hmm, well the scams are a bit cruel themselves and I still get mad at shops even if I'm getting the better end of the deal on occasion. It does require me to go out of my way quite a lot and I certainly know I'm not always on the winning end.

There is so many of these scams going on now. Take credit cards, every shop has to pay 5%, or something like that, on every sale they put through by credit card. This is not directly passed on to that purchaser. But, now that credit cards are so popular due to bank fees which is another whole story!, we are seeing every reseller including the extra cost in the standard prices. So, assuming I don't use a credit card at the supermarket, if I don't try brow-bashing every salesman I end subsidising those that do.

This goes for other things too, like fuel coupons and air points and the likes. They'll all be incorporated in the retail pricing. So, if you prefer your identity to be a little private you end up subsidising those that are freely advertising their lives.


Solbright

mbp said...

@Solbright I finally figured out where your missing comments end up. Blogger introduced a spam filter. Now that I know where it is I have flagged your comments as not spam. Hopefully that will train the filter in.

Anonymous said...

Neat, good find, thanks. Heh, I imagine it was a bit of a hassle having to repost on my behalf.


Solbright

Anonymous said...

I don't think the filter flagging has done it's job. :(


Solbright