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Blues and Blu at CES

30 Dec, 2008 By: Erik Gruenwedel



The deepening recession and gloomy consumer confidence underpin a consumer electronics industry that is suffering a downturn.

The Consumer Electronics Association, organizer of the 2009 International Consumer Electronics Show, Jan. 8 to 11 in Las Vegas, attempted to put a positive spin on December spending, citing a 7% decline in consumers’ confidence in CE and technology compared to a 13% decline the previous year.

“Although we have seen consumer confidence dip lower in the past two years, we were hoping that confidence would rebound or at the very least, remain flat during one of the busiest shopping seasons of the year,” said Claudia Haase, director of research with CNET, which coordinated the index. “Unfortunately, we are also seeing a decline in tech confidence which is tied directly to overall consumer confidence.”

Indeed, consumer spending on consumer electronics fell as much as 20% over the holiday shopping season, according to numerous research indexes.

The CEA said steeper than expected price declines on a number of products on Black Friday, including Blu-ray Disc players, would contribute to a 0.1% sales growth in the fourth quarter, down from a previous 3.5% growth estimate.

Tara Dunion, senior director of communications with CEA, said attendee pre-registration remained strong, although exhibitor rentals have dropped 10% to 2,700 from last year. Organizers expect show attendance to drop about 8% to 130,000 from more than 140,000 during last year’s show.

“Some of that reflects changing dynamics of the industry with companies being bought or sold,” Dunion said. “Right now, our expectations are good.”

To help persuade retailers to attend the show, organizers reportedly set aside $1 million to help defray hotel and travel costs.

“CES should be interesting, if vastly smaller than ever before,” said independent analyst Rob Enderle. “It should remind us a lot of Comdex last year, which was great for those of us who needed to get around [the show] and not so good for the folks who paid for booth space.”

An increasing number of companies and manufacturers attending CES are opting for less-expensive hotel suites, rather than booths, to showcase new products. That’s a perennial problem for show organizers, which Dunion indicated had become more acute this year.

“Unfortunately, it does go against trade show policy and it is not something we support or encourage,” she said.

Richard Doherty, research analyst with The Envisioneering Group in Long Island, N.Y., said he had heard that show heavyweights Cisco Systems and Motorola significantly reduced the size of their booths.

“This is the bleakest CES in 30 years going in,” Doherty said. “[Some exhibitors] will be spending more of their time off the show floor. We may now be able to get between the Venetian and the convention in less than an hour.”

Based on pre-show analyst briefings, Doherty said exhibitors would be displaying smaller product lines but with enhanced technology. Expect to see user-friendly HDTV models synched with Blu-ray players and digital audio “so you don’t have to have a PC controlling them or home theater expert installing them,” he said.

Doherty cited LG Electronics’ announcement of improved network connectivity with its Blu-ray player as an example of pending BD players that work seamlessly with the Internet.

“They don’t just treat the Internet as a data port or upgrade, but rather now deliver YouTube videos in HD instead of grainy images,” he said. “The consumers have demanded it.”

Enderle said CES would showcase solutions for more-efficient media delivery (video and audio) around the home.

“Look for TVs that get high-speed Internet connections and units with built-in Internet connections,” he said.

Enderle said many of the most attractive products previewed included iPhone-like devices and accessories (second-generation Android phones and Palm’s Nova platform), Microsoft’s Windows 7 coming-out party (“Getting nice early reviews,” he said), and an overall focus on more energy-efficient gadgets that are particularly frugal when not in use.   

“Backstory at CES will be the companies that won’t make it to 2010 and the massive ramp-up in low-cost PC-like Netbooks driven by economic trends,” Enderle said. “Main messages will be design, wireless connectivity, value, and energy efficiency.”
 


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