THIS WEEK IN CEON:

Panasonic, Sony Broadcast See Sales Sag
As DTV Transition Lags, Set New Courses
* Panasonic Bows 720p HD Camcorders To
  Reel In Filmmakers, TV Show Shooters
* Sony Makes New HDTV Push At Stations,
  Signals Changes Afoot In Consumer HD Efforts
* An HDTV Challenge Of Olympic Proportions
  At PMA: Digital Imaging Focuses On Services, Cameras
* Sony Mavicas Build In Stick Support,
  Models From Canon, Panasonic, Toshiba, Olympus
* Kodak Comes Up With Combination Camera/MP3 Player
  Working On Wireless Camera-To-PC Picture Transfers
* Kodak, Olympus Team Up to Take On Sony In Cameras,
  While Sony Sets Up Kiosks In Kodak Challenge
* Best Buy Taps Shutterfly For Online Photo Services
* New DV Camcorders From Sony, Canon
Plus:
* Microsoft Names New Windows XP, New President/COO
* Thomson, Philips Report Records For 2000

PANASONIC, SONY BROADCAST SEE SALES SAG
AS DTV TRANSITION LAGS, SET NEW COURSES

Each year in February, Sony and Panasonic's broadcast equipment
divisions schedule press events in the New York area to preview the
products they will introduce at April's NAB. They also update the media on the status of their business and comment on DTV and HDTV from their angle, which often provides insights on the consumer market. Typically, the companies sound a very upbeat note and unveil more new products than ever before, often announcing multi-million-dollar sales with major networks, station groups or post houses. This year was different.

Both companies previewed just a handful of products, and expressed
concerns about sales in the broadcast market. Sony did not even schedule an event, opting to take some broadcast editors to Japan,
post its press kit online, and speak with editors individually. But there
were insights that should be of importance to the CE industry.

The companies attributed sagging station sales to a combination of factors: last year's confusion about a possible change in the DTV modulation standard (now put to rest); the growing possibility that the planned 2006 end to analog broadcasting will be postponed; and shrinking -- or almost no -- equipment budgets at stations. Though the transition to DTV is stalled, hurting the bottom lines of Sony and Panasonic, they are not giving up, coming up with less expensive HDTV models. In the past, Panasonic seemed more enthusiastic about HDTV -- both in its broadcast and consumer operations -- but Sony is sending signals that it is changing its tune.

NEW PANASONIC BROADCAST CHIEF SAYS NO ONE IS BUYING

At his company's NAB preview on February 8, Panasonic Broadcast's
new president Steve Yuhas -- a long-time Panasonic veteran who recently took over after the resignation of Warren Allgyer -- said that no one was buying very much of anything -- not just HDTV products. According to Yuhas, "Sony took some of you to Japan to tell you business is not good. We brought you to Secaucus to tell you business is not good."

Yuhas, who was once a top official in Panasonic's old AV systems division, also heads the newly organized Panasonic Systems Sales Company. As part of a corporate-wide streamlining initiated in Japan, Matsushita U.S. now includes three divisions: Systems Consumer, and Industry. Hitting another theme expressed by top Matsushita Japan officials -- when describing their large but lumbering company -- Yuhas observed that, "Panasonic is like Goliath: too slow and too heavy," adding "we have to change."

SWAPPING STRATEGIES WITH SONY?

Though Yuhas said sales were sluggish in all markets, he observed that, "No one has figured out how to make money in HDTV." VP of marketing Stuart English later admitted that when Panasonic said 2000 would be the year of HDTV, "We got it wrong." But he went on to explain Panasonic's new strategy: "We don't care what broadcasters are transitioning in. We want to create masters with a shelf life by mastering in HDTV." Panasonic also wants to shift filmmakers -- particularly those shooting in 16mm -- to HDTV camcorders, since it is, "not that much more expensive." But company officials did make a point of saying that 70% of digital news production is shot with DVCPRO gear -- though not in HD.

Since stations are not buying HDTV gear -- such as Panasonic's HD
DVCPRO HD camcorders and D-5 HD VTRs -- the company will turn its
attention to other potential HDTV customers, such as video houses, film documentary makers, episodic TV producers, and digital cinema backed by new products. This is similar to the HDTV strategy that Sony Broadcast has been pursuing, but as we will report, Sony has decided to focus more attention on broadcasters. Panasonic will also increase its nonbroadcast efforts aimed a selling its lower priced DVCPRO Proline, which competes with Sony's DVCAM and consumer DV, to the business and industry market as well as wedding and event videographers.

720p CAMCORDERS FOR FILMMAKERS, TV SHOW SHOOTERS

To attract producers currently using 16mm to shoot documentaries
and episodic TV, Panasonic will introduce a 720p/24 fps DVCPRO HD
camcorder, which like other DVCPRO models records on 1/4" cassettes. Though unpriced at this point, the AJ-HDC24A -- slated for later this year -- will be less than the $55,000 quoted for Panasonic's other new 720p DVCPRO HD camcorder. Billed as "the first high frame rate progressive scan camcorder," the AJ-HDC27A acquires 720-line, 60 frame progressive scan HD images, and it is already shipping. Both models feature 1280x720 effective pixel resolution, which Panasonic said is equal to 1920x1080 but less expensive. Keeping with another corporate-wide Matsushita initiative, these DVCPRO HD models incorporate an SD/MMC slot, which in this application is used for storing set-up files. Panasonic also markets a $60,000 1080i/60 DVCPRO HD camcorder.

In HDTV VTRs, Panasonic introduced a portable DVCPRO HD model --
hailed as "the world's smallest HD production recorder" -- that can record in either 1080i or 720p, with a built-in downconverter to 480i. The downconverter also permits outputs of HD and SD signals in parallel so stations can transmit simultaneously in HDTV or SDTV. Also for stations, Panasonic has started delivering its $79,500 DVCPRO server, which records and plays back in several DVCPRO formats, including DVCPRO HD with an optional $29,500 unit. The first system went on the air at WRAL when the Raleigh station began full-time HDTV newscasts on January 28.

SONY MAKES NEW HDTV PUSH AT STATIONS, SIGNALS CHANGES AFOOT IN CONSUMER HD EFFORTS

After reviewing the pre-NAB information posted last week by market leader Sony, we spoke with several company officials, who also admitted that the broadcast hardware business is very soft. But they were quick to add that it was not as bad at Sony as it was at Panasonic. For example, Alec Shapiro, senior VP of marketing communications (and formerly with Panasonic Broadcast) pointed to Sony's successful systems integration operation, where Sony does "two times the business as its nearest competitor." Sony is also developing solutions for datacasting and Webcasting requested by station and corporate customers.

Sony indicated that while it will continue to pursue production houses with its 24p HDCAM HDTV equipment, it was making a new effort to attract broadcasters to HDTV. According to Shapiro, by the time NAB rolls around, "There will be no price difference between HDCAM and Digital Betacam," (Sony's standard definition digital format). He also confirmed an interesting report we had heard from broadcast editors, who had traveled to Japan and met with Sony officials.

Several editors told CEON that Sony Corporation's president and COO Kunitake Ando, the company's number two official, admitted that perhaps Sony had made a mistake by allocating the majority of its consumer 16:9 HDTV resources to Japan. Ando attributed the decision to "internal and external politics" such as Japan's better defined HDTV roll-out schedule. Ando also gave the distinct impression that changes were afoot, and Sony would be making more consumer HDTV introductions in the U.S. during 2001.

LOWER PRICES FOR HDCAM

More consumer HDTV products from Sony would also seem to be
consistent with Sony Broadcast's new HDCAM efforts. According to
Larry Thorpe, VP of acquisition, Sony is making a new push among
broadcasters, and, "It is just a matter of time." Incidentally, Thorpe will receive the 2001 NAB Television Engineering Achievement Award this April in Las Vegas in recognition of his leadership in the HDTV movement.

Thorpe said that Sony's second generation HDCAM camcorders will
be less expensive, smaller and lighter. The HDW-750, slated for May (and with Memory Stick), is priced at $65,000, as compared to $75,000 for the first generation. Another 1080i/60 camcorder, the HDW-730 scheduled for later this year, will be $10,000 to $15,000 less than the 750, though it will not incorporate the 750's downconverting capability.

Sony will also introduce a new family of HDCAM VTRs and players
during the fourth quarter, also geared towards stations, that provide built-in upconversion and downconversion. The new HDW-2000 series starts with a $40,000 recorder/player, and also includes a $60,000 recorder that can play back other 1/2" Sony formats (analog and digital), plus a $50,000 player with the same 1/2" compatibility.

AN HDTV CHALLENGE OF OLYMPIC PROPORTION

Neither Sony nor Panasonic made any announcements about supplying
HDTV gear for the 2002 Winter Olympics, which opens in Salt Lake
City on February 8 -- less than a year away. Panasonic, which is the official equipment supplier for the host broadcast operation, told CEON that the house format would be standard definition, but mentioned that Japan's NHK had been producing some events during recent Olympics in HDTV. Sony has a long-term deal with U.S. Olympics TV rights holder NBC to supply equipment to NBC for its Olympics coverage. But again, Sony had no word on whether NBC would be producing some events in HDTV. To get the latest information on the situation, CEON spoke with Dave Mazza, VP for engineering, NBC Olympics.

Mazza said that at this point NBC planned to broadcast the opening ceremonies in HDTV, most likely taking a feed from NHK. NBC is considering producing in HDTV at three to four Olympic venues, but there are additional costs involved. As result, the network wants to work out an underwriting deal. Mazza indicated that he would most likely speak with Sony first, because of the broadcast equipment relationship, but he was also interested in talking with the Consumer Electronics Association. The Stamford, CT-based official -- who described himself as a believer in HDTV -- also said he would love to see the HDTV portions rebroadcast during the next day in places like malls, so many more Americans could see the Olympics in HDTV.

CEON hopes something can be worked out. The figure skating and hockey finals in HDTV could become defining events in HDTV history and help bring home the HDTV gold in consumer HDTV sales.

AT PMA: DIGITAL IMAGING FOCUSES ON SERVICES, CAMERAS

Running from February 11 to 14, the annual PMA (Photo Marketing
Association) show was held in Orlando, one of the vacation imagemaking capitals of the world. Joining the new digital still and camcorder debuts was another development: a new drive into printing and other related services aimed at expanding the digital imaging business.

NEW SONY MAVICAS WITH ONBOARD MEMORY STICK

Before we get to services, here is CEON's snapshot of the show's
digital still camera debuts. Digital still camera market leader Sony introduced new Digital Mavica and Cyber-shot lines. The new Digital Mavicas include four models, starting at $400, and including two adding direct Memory Stick support to the line's traditional reliance on floppy disks for storage. A Memory Stick slot is featured on the March-arriving MVC-FD92 ($600, 1.3 megapixel resolution, 8X optical zoom) and the-top-of-the line MVC-FD97 ($900, 2.1 megapixels, 10X zoom with stabilization). The two also offer MPEG Movie mode, uncompressed TIFF mode, and USB transfer capability. A 10X optical zoom is featured on the VGA-level MVC-FD75, ($500), and the 1.3 megapixel MVC-FD87 ($400) incorporates a 3X zoom and can store on Memory Stick via an
adaptor, with both cameras available in February.

Three new Cyber-shots, which are smaller and rely on Memory Stick for storage, arrive in May featuring 3X zooms, USB and new cases, controls and compact styling. They include the DSC-P30 ($400, 1.3 megapixel) and the DSC-P50 ($500, 2.1 megapixel), both with MPEG EX Movie, and packed with a 4MB Memory Stick. Because they can operate on two AA batteries, they can be smaller and lighter. The DSC-S75 ($700) is a 3.3 megapixel camera featuring a Carl Zeiss zoom lens, 8MB Memory Stick, Jog Dial navigator as well as MPEG HQ and MPEG EX Movie modes.

POWERSHOT TRIO FROM CANON

Canon's PowerShot S300, the new "Digital ELPH," is an ultra compact 2.1 megapixel still camera with a 3X zoom housed in a stainless steel body. The $699 model features direct print capabilities using Canon's new very compact CP-10 printer that makes credit card-size prints. Print settings are controlled from the camera's LCD monitor, and a new DSP chip delivers high-speed image processing and rapid data transfer via USB interface. The PowerShot S300 can also record movie clips with audio at 20 fps as QuickTime AVI files in three resolutions, and offers
additional storage on an included 8MB CompactFlash (CF) card.

Arriving along with the ELPH during Q2 are two other PowerShots -- the A10 ($499, 1.3 megapixel) and A20 ($599, 2.1 megapixel) -- that are less expensive. Though they do not have all of the ELPH's features, the models do offer direct printing to Canon's new printer and incorporate a 3X zoom.

PANASONIC, TOSHIBA, OLYMPUS DIGITAL CAMERAS

Panasonic offers the currently available PV-SD5000 PalmCam ($1,099, 3X optical zoom), which stores on either floppies or SuperDisk diskettes, and the PV-DC3000 iPalm ($899, 2X optical zoom), which saves to SD or MMC cards with a 16MB MMC included -- both with 3.3 megapixels CCDs and USB. The company will replace the DC3000 with two models this spring but package them with SD cards at $799 (with 16MB SD) and $899 (32MB SD).

Toshiba Imaging Systems unveiled four new digital cameras, all with USB and SmartMedia: a $249 1.3 megapixel with fixed focus lens, a $349 2.1 megapixel with a 2X digital zoom, a $399 2.3 megapixel with 3X optical zoom, and a $599 3.3 megapixel model also with a 3X optical zoom. At PMA, Olympus showed the $699 Camedia C-2040 Zoom, which bowed at CES. It is a 2.11 megapixel camera with a super bright F 1.8 3X zoom lens, QuickTime Movie, and 8MB Smart Media card. At CES, Olympus also introduced the $899 Camedia C-3040 Zoom, a 3.34 megapixel version of the 2040.

KODAK COMES UP WITH COMBINATION CAMERA/MP3 PLAYER,
WORKING ON WIRELESS CAMERA-TO-PC PICTURE TRANSFERS

At PMA, Kodak demonstrated a prototype RF system that wirelessly transmits VGA-level digital still images from the just-announced Kodak mc3 to a laptop in seconds. Kodak's mc3 combines a digital camera with an MP3 player for under $300, and will be available in March in packages and prices depending upon the size of the CF card in the configuration. The mc3, which incorporates a color reflective LCD screen, can record over 20 minutes of video in QuickTime on a 64MB CF card, or use the card to store 600 still images or 1.5 hours of MP3 music.

The camera -- which weighs 5.5 ounces without batteries and easily fits in a small pocket -- is the first to incorporate Kodak's own CMOS image sensor technology, which the company claims can "capture outstanding images under all lighting conditions with excellent color quality." Kodak's CMOS sensor, which produces VGA-level images, also draws less power, increasing battery life on its three AAA batteries.

Regarding the wireless demonstration, Kodak has been working on a low-cost, lower-power, high-speed, compact radio transceiver that can support multimedia and imaging applications. Kodak says that its approach can download the contents of a 32MB card in about 14 seconds, compared to about 6 minutes using Bluetooth. Kodak's transceiver measures about a square inch, with a range of about 150 feet, and the company is actively at work establishing industry standards for High Rate Personal Area Networks.

KODAK, OLYMPUS TEAM UP TO TAKE ON SONY

Olympus and Kodak, which often rank second and third behind Sony in digital cameras, announced at PMA that they had struck an alliance. The two agreed to cross license digital camera technologies designed to expand the market for digital photography, but with the implied goal of taking on Sony.Kodak owns a portfolio of more than 1,000 patents relating to digital cameras and digital photography systems, while Olympus also has over 1,000.

In addition, Kodak and Olympus agreed to work together to promote improved digital printing services. The services are expected to use Kodak Internet capabilities, including the Print@Kodak Internet photofinishing service and Kodak PhotoNet Online. The announcement did not specifically mention Kodak's Picture Maker kiosks, which Kodak reported at PMA is found at nearly 30,000 retail locations worldwide (18,000 in the U.S.), making it the world's largest installed base of digital picture kiosks.

SONY SETTING UP KIOSKS IN KODAK CHALLENGE

Meanwhile, Sony, in its bid to take on Kodak's Picture Maker, announced that it would be launching its own digital imaging kiosks for retailers, backed by a global branding campaign called "Print by Sony." Sony will offer a full line of self-service kiosks, called Sony Digital Photo Finishing Systems, that will produced photo-quality prints from a range memory cards, compact discs and floppy diskettes. Consumers can also bring in prints and slides that can be scanned into the finishing systems, which start arriving later this year.

Since the kiosks will use Sony printers, Sony also hopes that will make customers more aware of, and buy, the company's printers for home use. Sony also said that, "Photo industry forecasts show U.S. sales of digital cameras will exceed sales of film-based cameras for the first time in 2001."

BEST BUY TAPS SHUTTERFLY FOR ONLINE PHOTO SERVICES

Also hoping to capitalize on the services generated by digital imaging, the nation's leading CE chain, Best Buy, announced that it has entered into a strategic relationship with leading online photo service Shutterfly. Best Buy has tapped Shutterfly to create, manage, and market Best Buy's new Online Photo Center. The Photo Center will provide "an easy way for Best Buy customers to learn more about digital photography and have a place to store, enhance, and print their digital pictures," according to the announcement. The privately held Shutterfly, based in Redwood Shores, CA, is backed by Jim Clark, founder of Netscape and Silicon Graphics, who serves as Shutterfly's chairman. Other investors include Adobe and several venture capitalists.

This online service will be tightly integrated with Best Buy's more than 400 retail locations through promotions and information provided in the stores. Customers will be able to access the Photo Center online (http://photocenter.bestbuy.com), as well as from links within bestbuy.com, beginning Monday, February 19 and in-store early this fall at Best Buy's retail locations nationwide. According to Best Buy, "The total digital photo finishing market will be a $3.5 billion dollar industry by 2005."

NEW DV CAMCORDERS FROM SONY, CANON

Shifting back to consumer imaging hardware, there were several new DV camcorders introduced by Sony and Canon at PMA. Sony bowed two new models -- the DCR-TRV17 ($1,100) and the DCR-TRV30 ($1,700) -- that will be available in April. The TRV30 was hailed as, "The industry's first 1.5 megapixel CCD camcorder with an intelligent pop-up flash and a precision color viewfinder." It delivers up to 530 lines of horizontal resolution and 1360x1020 digital stills. Both of Sony's new DV amcorders feature AV inputs, i.LINK (1394) DV interface, USB connector, Memory Stick slot, Carl Zeiss lens, 10X optical/120X digital zoom, progressive shutter system, 3.5" SwivelScreen LCD monitor, MPEG Movie mode, and Super NightShot.

Canon's new DV models are less expensive, and in line with the price and feature trends we saw at CES (CEON, Feb. 10/12). Canon announced three new digital camcorders in its ZR series, starting at $799 for the ZR20. While the ZR20 can capture stills on tape, the $899 ZR25 and $999 ZR30 also incorporate an MMC/SD slot, with an 8MB MMC included, and progressive photo mode. In addition to the SP and LP recording speeds, the ZR30 is the first Mini DV camcorder to include the Extending Recording function, which uses more compression so an 80-minute Mini DV cassette can record four hours of material. Weighing 19 ounces and small enough to rest comfortably in any hand, the trio share the following: 10x optical/200x digital zoom, DV interface, image stabilizer that functions in both video and photo shooting modes, 2.5" color LCD screen, programmed auto exposure, manual and automatic controls.

MICROSOFT NAMES NEW WINDOWS XP, PRESIDENT/COO

Enhanced support for digital imaging is just one of the features that are part of Microsoft's upcoming Windows operating system. The new OS made its first public debut last week in Seattle, and its official name was announced by Microsoft founder and chief software architect Bill Gates. Previously code-named Whistler, the new OS is called Windows XP, short for experience. XP will come in two versions -- Windows XP Home Edition (for consumers) and Windows XP Professional (for businesses) -- and be available later this year. As part of a major rebranding strategy, XP will also be used in naming Microsoft Office programs.

XP features a new look that will simplify computing, and "Extends the personal computing experience by uniting PCs, devices and services like never before," according to Microsoft. The Web-friendly Windows XP also delivers on Microsoft's .NET vision, which links PCs and other devices with the Internet and services -- with digital imaging one of the major categories targeted. XP will also make it easier to download digital music, edit home movies, and play back DVDs, explained Microsoft.

Microsoft, along with PC makers and retailers, hopes the new OS will lead consumers to buy new PCs loaded with XP, plus XP-related software and peripherals. Windows XP is based on the more stable code used for business versions of Windows, like Windows 2000, and it does not run DOS programs.

Also at Microsoft, CEO Steve Ballmer has given up the president's title and promoted Rick Belluzzo -- who heads Microsoft's consumer business -- to become the company's new president and chief operating officer. Microsoft's current COO, Bob Herbold, has decided to retire. Prior to joining Microsoft in September 1999, Belluzzo was CEO of Silicon Graphics, and before that, executive VP of Hewlett-Packard.

THOMSON, PHILIPS REPORT RECORDS FOR 2000

Two European-based CE giants, Thomson and Philips, both reported that 2000 was a record year. But both also issued words of caution about a slowdown in the U.S. at the beginning of 2001. (Currency conversion for both companies' numbers are based on 1.094 Euro to 1 U.S. Dollar published February 16.)

THOMSON EBIT CLIMBS NEARLY 50%

From it Paris headquarters on February 12, Thomson Multimedia (TMM) reported that its revenues climbed to EUR 9.1 billion ($8.3 billion), up 36% over 1999. The company also posted a 49% rise in operating income or EBIT (earnings before interest and taxes). EBIT grew to EUR 546 million ($499 million), which does not count the newly acquired and cash-generating Technicolor. Profits, or net result, increased 70% to EUR 394 million ($360 million). Thomson also observed that objectives set at the time of its November 1999 IPO had been reached a year ahead of schedule.

The results reflect the strong performances of TMM's Displays and Components (revenues up 31.8%), Consumer Products (36.8%), and Patents & Licensing (36%) sectors. In Consumer Products, results were driven primarily by digital products, with Thomson shipping worldwide 6.8 million digital boxes and 1.4 million DVD players, as compared to 800,000 players in 1999. Thomson noted that its progress sets the stage to accelerate its development strategy in new digital segments, which include New Media Services -- with its first material revenues in 2000 -- and Digital Media Solutions (DMS), which was formed during 2000.

NEW BUSINESSES AS BUFFER FOR U.S. SLOWDOWN

Looking to 2001, TMM noted that "markets are not as buoyant as at the beginning of 2000, particularly in the U.S." But "many categories such as digital and high-end products, which constitute the core of the Group's activity, continue to enjoy sustained growth." Because of its geographic and business sector diversification, TMM anticipates double-digit growth both in revenues and EBIT for the full year 2001.

Some of TMM's major business initiatives launched during 2000 will reach market during 2001, and most reflect TMM's continued execution of partnerships: optical modules for Microsoft's Xbox, hard-disk drive (HDD) modules in the CacheVision joint venture with Seagate, as well as Ultimate TV boxes (U.S.) and TAK TVs (Europe) with Microsoft/DirecTV and Microsoft, respectively. In addition, TMM will be expanding Digital Media Solutions, which includes the Nexstream interactive video networks joint venture with Alcatel. DMS also includes TMM's acquisition of Philips' broadcast equipment business and the Technicolor purchase.

BOONSTRA WILL HAND OVER MUCH HEALTHIER PHILIPS

The company officially known as Royal Philips Electronics (or "Koninklijke Philips" in Dutch) also reported record earnings for 2000 from its Amsterdam home base on February 8. Not only do the results reflect Cor Boonstra's success at the helm of the Dutch CE giant since October 1996. They also point to a company that is in significantly better shape to hand over to his successor, Gerard Kleisterlee, at the end of April than the Philips Boonstra inherited. Boonstra transformed Philips from a money-losing and lumbering conglomerate into a profitable 21st century enterprise by selling off unprofitable or non-core businesses, and investing in fast-growing businesses.

For 2000, Philips' total sales grew to EUR 37.9 billion ($34.6 billion), which is 20% higher than in 1999. The strongest performers were semiconductors (revenues up 55%), components (22%), and medical systems (up 22%). Profits, excluding one-time gains from asset sales, rose to EUR 2.6 billion ($2.4 billion), representing a 65% increase over 1999.

Last year's CE sales reached EUR 14.7 billion ($13.4 billion), reflecting an 18% increase in Philips' largest division. CE income grew to EUR 374 million ($342 million) and 2.5% of sales, up from EUR 258 million ($236 million) and 2.1% of sales for 1999. Within the division, Mainstream CE revenues were edged up by consumer TV, branded monitors and DVD players, which each more than doubled sales. Philips Digital Networks recorded sharply higher sales, benefiting from strong demand for set-top boxes.

For 2001, Philips, like Thomson, observed a slow down in economic activity in some areas of the world, particularly the U.S. Philips will keep 2001 capital expenditures below 2000's level, while focusing on semiconductors, components and the digital parts of CE.

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