The Art of Business: Consumer Electronics Steal the Show

Eric J. Adams

Can you say “CE”?

Comdex used to be the biggest trade show in America, but these days the heavyweight is the International Consumer Electronics Show (CES), which closed its doors in Las Vegas earlier this month after a record run: 129,328 attendees and 2,491 vendors in 1.38 million square feet of exhibit space.

If any industry is poised to topple us from recession, it’s consumer electronics (CE)– making it a worthy contender for the attention of creative professionals in pursuit of new markets to conquer.

CE is a great space to work: New products are continually introduced; competition is fierce so companies can’t expect consumers to find them; the demand for product is high (remember optimism?); and the market includes companies of all colors, from OEM behemoths like Sony and Canon, to a hundred channels of retailers, to small firms engineering the next ingenious contribution. That means demand for advertising design, marketing collateral, and public relations services will be high.

Here’s a round up of the key trends, according to the Consumer Electronics Association (CEA), the industry’s trade organization.

Big Screens Get Bigger
Display technology is hotter than the sun. Thin, flat, bigger LCD and plasma displays dominated hundreds of booths of not only traditional display manufacturers, but also an increasing number of IT companies such as Dell and Epson. Epson showcased its Livingstation 57-inch widescreen high-definition television, Samsung touted the world’s largest LCD HDTV offering full 1920-x-1080 progressive scan resolution, and Philips made a splash with its Mirror TV featuring a video display that turns into a mirror when not in use.

One of the most dramatic product advances has been in flat screen TVs. Many attendees at the International CES were struck by the proliferation of plasma and LCD screens in virtually every exhibit, along with the advance guard of new technologies like OEL and OLED. A TV that can hang on the wall has been a holy grail of the industry for half a century, and we’re finally seeing them approach mass market prices. The average unit price of plasma displays dipped below $5,000 in 2003 and will drop by another 20 percent or more this year. LCD displays are getting bigger too, so that in the coming months, consumers will have a choice of technologies in 40-inch and larger flat-screen displays.

Wireless Goes Wider
Portability, connectivity, and wireless technology were among the significant trends of the show. The capability of thousands of products across the show floor to interoperate with each other via wireless technology created one digital world under the roof of the convention center.

Wireless phones, PDAs, and other data products were on display embedded with video displays, cameras, and a proliferation of services such as e-mail capabilities, Web browsing, instant messaging, gaming, and streaming video. Nokia debuted its Nokia 3660 capable of capturing and sending still and video images.

Archos launched the AV300 Cinema-to-Go, the industry’s first personal, portable video player that can record and play back movies with stereo MP3 audio while also operating as a digital audio recorder and player, photo player and storage device. Panasonic showed its D-Snap camcorder, the world’s smallest camcorder with no moving parts. Sony Ericsson showcased its Bluetooth music player HBM-30, a combination Bluetooth headset and MP3 player that lets users listen to digital audio while connected to a phone.

Networking Comes Home
The networked home figured prominently at CES this year as more homeowners demand access to content- and home-control features anywhere and at any time. Content now can be stored in the home PC or other products such as media servers and controlled by wireless or Web-enabled remotes.

CES showcased this trend with a number of products such as CorAccess Systems’ Amego handheld home remote that allows consumers to view and control all aspects of the home, including lighting, theater, security, and heating, ventilation and air conditioning (HVAC). Salton’s Beyond Connected Home “Home Hub and Coffee Maker” provides instant weather, traffic, and news on demand. And Rockford/Omnifi showed its AV Digital Media Streamer enabling consumers to stream high-quality video files stored on a PC to a home entertainment system.

The Power of Imaging
Digital imaging technology, including cameras, printers, software, and accessories, had its largest presence on the show floor in history.

It’s no secret that digital technology is rapidly becoming the preferred means of photography. Spurred by a plethora of innovative new models and lower prices, digital camera sales passed nine million units in 2003, a 60 percent increase over the previous year. Advances include must better picture quality, tiny key-ring models, and full-size cameras with all the lens flexibility and other capabilities of film cameras.

Cameras also are taking advantage of digital technology by being combined with other digital devices, most notably handheld computers and wireless phones, in multi-purpose units that can snap a picture and send it instantly to another handheld device or to a desktop computer anywhere in the world in a matter of minutes. These devices represent some of the most dramatic benefits of digital technology: speedy connections, mobility, and convergence.

HP displayed its Scanjet 4670, an ultra-thin printer about the width of the spiral notebook. And Panasonic showed its Lumix camera, the industry’s first 4-megapixel digital camera with 12x optical zoom.

DTV meets the Simpsons
HDTV, digital high-definition television, represents the most dramatic analog-to-digital transition, and 2003 saw a number of events that really began building momentum. For instance, in mid-year for the first time digital TV (DTV) revenues for the month exceeded those of analog sets. Digital projection sets are outselling analog models by more than two to one — a precursor of things to come for all TVs.

Programs designed to take advantage of HDTV’s superior visuals — the “content” that is always key to success of new consumer electronics products — are becoming more prevalent. Even more promising was the “plug-and-play” agreement between TV set makers and cable operators — an accord that will ease the way for the two-thirds of Americans who receive their TV via cable to enjoy HDTV.

DVD players are the fastest growing new consumer technology product with 39 percent growth, representing more than 17 million units. CEA is forecasting additional growth of 14 percent this year. Many of these DVD players are connected easily to a home-theater-in-a-box (HTIB), a category that marries audio and video and continues to provide growth to traditional audio-centric companies. HTIB inched above $1 billion in sales in 2002 and is expected to exceed that mark again this year despite dramatically lower wholesale and retail prices.

Consumers now are buying more than twice as many DVD players as VCRs as they choose digital technology to watch Hollywood movies in home theaters. Digital camcorders make up more than half of all units sold as consumers embrace the better picture quality, smaller size and editing ability that the technology offers.

Mobile Minions
Staying connected — to work and family — represents one of the singular most popular uses of digital technology. From the newest generation of wireless phone to Web-enabled Pocket PCs and Palm devices, to tiny dedicated text messagers, products to keep us in touch with our home and office have become “must-have” appliances for many Americans. Wireless phones continue to sell at a staggering pace with more than 57 million sold in 2002, a seven percent increase over the previous year. This year promises to see a similar unit increase with dollar value again exceeding $8.8 billion.

As third-generation wireless networks become more established and the 3G phones that can take advantage of them proliferate, the wireless Internet will bring much faster connections with vastly richer content – including streaming video – to users on the go.

Unwired connections closer to home have become a way of life too. The convenience of taking and making calls wherever you like around the house continues to spur sales of cordless phones with more than 43 million units sold, about twice as many as corded models. And look around the mall, ski slopes, or the neighborhood playground to see how many folks have embraced family radio service (FRS) walkie-talkies as an inexpensive means of staying in touch over short distances. FRS devices have gotten smaller and less expensive; there’s even a wristwatch model.

And Don’t Forget the Batteries
The batteries that power our digital products have gotten more powerful and longer lasting even as they have gotten smaller. Battery sales for CE products last year approached $5 billion and were forecast to exceed that mark in 2003.

And speaking of batteries, consumer electronics are poised to fuel the next recovery, so dial in your marketing efforts now to get the best reception.