Consumer Electronics Players Now Include PC, Chinese Firms
BY PATRICK SEITZ
INVESTOR'S BUSINESS DAILY
Amid the aisles of flat-panel TVs, digital radios, smart phones and personal video recorders, the talk at this year's Consumer Electronics Show is likely to focus on increased competition from PC makers and low-cost Chinese manufacturers.
The annual CES officially gets under way Thursday in Las Vegas. Already the nation's largest technology trade show, this year's event is the biggest yet.
The four-day show will feature more than 2,300 exhibitors sprawled over 1.3 million square feet of convention space. Last year's show drew 2,230 exhibitors and used 1.2 million square feet.
The Consumer Electronics Association, the show's organizer, expects more than 110,000 attendees from 110 countries. CEA spokeswoman Lisa Fasold says this show should beat last year's attendance of 117,000, based on a record number of people who have preregistered.
The 2004 CES will see the launch of HD Radio, the digital upgrade to analog AM and FM local broadcasts. HD Radio claims to greatly improve audio quality, and it will enable stations to broadcast text to in-dash displays. JVC, Kenwood, Panasonic and Philips are among the companies making the digital radio receivers. (See related story, A4.)
Fasold says four product areas are getting the most preshow buzz: digital TVs, including flat-panel plasma and LCD TVs; mobile electronics, such as the latest portable entertainment systems; home networking; and wireless technologies.
Rapid sales growth and consumer excitement over flat digital TVs are drawing new competitors into the market. Many have familiar names from other areas. PC makers Dell Inc. (DELL) and Gateway Inc. (GTW) are making waves with lower-cost sets. Hewlett-Packard Co. (HPQ) is expected to announce its entry into the TV market at the show.
Plus, you can soon expect to see TVs bearing such well-known brands as Epson, Motorola, NEC and Westinghouse.
Chinese manufacturers are boosting efforts to take a big chunk of the TV market as consumers upgrade from analog to digital sets. Thomson SA, (TMS) the French company that sells RCA brand products in the U.S., entered into a joint venture with China's TCL International Holdings Ltd. in November to make TVs and DVD players. The combination of RCA and TCL makes them the world's largest TV maker.
In October, Motorola Inc. (MOT) linked with China's Proview International Holdings Ltd. to make TVs.
PC makers and the Chinese manufacturers threaten to cut into profit margins for traditional consumer electronics companies such as Sony Corp. (SNE) and Panasonic products maker Matsushita Electric Industrial Co., (MC) says Marge Costello, editor and publisher of Consumer Electronics Online News.
The PC makers pose the most immediate threat, she says.
"There's a great deal of concern that computer companies are going to destroy the margins in the consumer electronics industry. There's a lot of fear," she said. "The concern is they will use these categories as loss leaders."
Direct sellers Dell and Gateway have undercut consumer electronics firms on flat-panel TV prices.
Computer companies have tried to make inroads into the consumer electronics industry before, but now they have a new strategy that's likely to take them further, Costello says.
"In the past, they tried to sell people on using computers in their living rooms and watching TV on 15-inch screens," she said. "What's different now is that the computer industry is going into traditional consumer electronics categories rather than imposing computerlike categories on the consumer electronics industry."
The PC industry's presence at the show includes speeches by Microsoft Corp. (MSFT) Chairman Bill Gates, Intel Corp. (INTC) President Paul Otellini, Dell CEO Michael Dell and HP CEO Carly Fiorina.
Intel is expected to announce its entry into the "liquid crystal on silicon" chip category, Costello says. LCOS technology is used for high-resolution TV displays.
Intel's new thrust would provide competition for Texas Instruments Inc. (TXN) which builds chips for a competing technology for making high-res displays. It's called DLP, or digital light processing.,
Companies use the CES to introduce new products and technologies and to raise their profiles.
Three companies that fit the latter category include Cobra Electronics Inc., (COBR) Daewoo Electronics Corp. and Epson America Inc. (Epson) Cobra, Daewoo and Epson each has leased prime exhibit space for large booths off the main entrance to the convention hall.
Chicago-based Cobra, best known for its radar detectors and two-way family radios, is expanding into GPS satellite navigation products. That's a market dominated by Garmin Ltd. (GRMN)
Last year, Cobra introduced its first GPS products -- handheld devices for hikers, hunters and other outdoor enthusiasts. Now, Cobra is jumping into the auto and marine markets for GPS products, where Garmin leads.
Cobra's big presence at the show is designed to send a message that Cobra is expanding into new areas, says James Bazet, the firm's chief executive. "We've got some showcase products and we're expecting a lot of traffic in our booth," Bazet said.
South Korea's Daewoo has a large exhibit at the show to let the industry know that it intends to be a major force in the digital display market by 2007.
"This is a very good opportunity to show all of our technologies to the customers," said Chul Lee, chief executive of Daewoo's U.S. unit. Daewoo will be showing off a full line of LCD, plasma and rear-projection TVs, he says.
Epson also intends to make a splash at the show with a large booth in prime real estate. The Japanese company best known for printers and digital cameras is pushing into the digital TV market. It will unveil two categories at the show: rear-projection TV sets and home cinema projectors.
Epson wants to extend its brand into the home entertainment market, says Rajeev Mishra, director of Epson America's home entertainment division. He says the new products aren't a stretch for Epson because it already sells business projectors and makes microdisplay LCD panels for other projection TV makers.
