Gadgets Will Be Talk of Consumer Electronics Show
Monday January 6, 10:21 pm ET
By Mark Boslet
PALO ALTO, Calif. -- PCs are passe. Consumer gadgets are the rage.
Or so it will seem at the Consumer Electronics Show this week, where manufacturers will hawk their latest smart cellphones, recordable DVDs and massive plasma TVs -- and talk about even more futuristic devices to come.
The excitement of the computer revolution has seeped from the desktop PC into the digital living room. Innovation on the personal computer has stalled, but it is alive and well in the world of consumer electronics. Cheap, powerful chips and enormous hard drives selling at hard-to-pass-up prices are letting consumer electronics companies insert more features and capabilities into their products, even as they continue to cut prices.
DVDs, for instance, are beginning to come with internal hard disks for recording television shows and movies. By next Christmas, they and TVs should also sport wireless, instead of wired, connections to other appliances.
Televisions and printers have begun to include slots for the smart cards that digital cameras use to store photos. The pictures can be displayed or printed.
Cellphones, meanwhile, have begun to incorporate cameras, color screens, MP3 music players, games and, shortly, technology for playing short video clips. In 12 months, they will have the power to record longer clips, boast of screens with 3D graphics and continue to shrink in size.
"It's more of a technology show than Comdex is," says NPDTechworld analyst Tom Edwards, referring to the computer industry trade show that also descends on Las Vegas. "It's just gotten bigger (and) attracted a wider diversity" of companies.
In the past several years, "it's really become important for us," acknowledges Richard Kerstake, director of wireless computing for Texas Instruments Inc. (NYSE:TXN - News) . This year's show will attract 100,000 retailers, vendors and analysts, a slight increase from last year. And even though that is a decrease from the peak years of the Internet boom, consumer electronics sales did increase an estimated 3% to 4% last year while the world-wide sales of PCs measured in dollars likely slipped.
The Consumer Electronic Association projects consumer electronics sales will climb another 3% this year from 2002's $96 billion, even as prices fall.
Ken Soohoo, chief executive of DVD software maker Planetweb Inc., expects the show to bring about a first wave of price declines. He predicts DVDs with internal hard drives could dip below $600 at the show and reach $300 to $400 by Christmas, compared with today's typical $800 retail price. DVDs with a slot for a digital photo card and a USB, or universal serial bus, connector to a printer could drop to $129 at the show, he said.
Nevertheless, recordable DVDs will be shown by many big consumer electronic vendors, such as Panasonic, a unit of Matsushita Electric Industrial Co. , and could attract a lot of interest. "Everyone is going to be excited about them," says Mr. Soohoo.
Plasma-screen prices also will slip - but perhaps not enough to interest the mass market. A 50-inch model could see a 25% reduction to about $9,000, says Chris Fisher, vice president of marketing at XtremeSpectrum Inc. The show also will see the first 70-inch plasma screen, he said.
More mundane products, such as cordless phones, will see lower prices as well. Multi-handset models now sell at $149 to $169 for base units and $49 to $69 for extra handsets, says David Rose, executive sales manager at U.S. Electronics Inc. A base unit and extra handset could together cost $99 by April, he said.
Perhaps the biggest focus at the show will be wireless technology for the home, office and car. "I think it is the next big thing for the industry," says Intel Corp. (NasdaqNM:INTC - News) Executive Vice President Sean Maloney. Intel will show off Banias, a laptop chip that includes a wireless 802.11, or WiFi, network connection.
Other vendors will follow suit. Computer maker Hewlett-Packard Co. (NYSE:HPQ - News) will include wireless technology in a product designed to exchange music and video among computers, televisions and stereos.
Microsoft Corp.'s Smart Display products - hitting stores on Jan. 8 - use wireless links to keep a mobile screen tied to a desktop computer.
More futuristic technology will be on display, or at least discussed. One item will be a thin, flexible keyboard that can be rolled up when not in use. It is bright enough to be easily seen during the daylight because it uses organic light emitting diode, or OLED, technology.
Among the industry luminaries to address the show will be Microsoft Chairman Bill Gates, who will announced the first manufacturer of his SPOT, or smart personal objects technology, devices. The devices, such as alarm clocks and wrist watches, use wireless Internet connections to gather information.
Intel Chief Executive Craig Barrett will urge a resolution of the digital copyright issues that have been a point of friction between the technology industry and Hollywood.
But one question neither will be able to answer is whether consumers will want the latest the consumer-electronics industry has to offer, such as phones with cameras. The answer won't be clear until later this year, when the more powerful networks that permit sending photos, for instance, are widely available in the U.S.
Until then, conjecture is all that is available. "My personal opinion is 'yes, they will,'" says Mr. Kerstake at Texas Instruments. Cameras are as deeply rooted in American culture as phones. But of course product development is "one of the gambles" the industry makes.
By Mark Boslet, Dow Jones Newswires, 650-496-1366
mark.boslet@dowjones.com
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