Big Picture Big Sound

The 2011 Consumer Electronics Show (CES) is just around the corner and its host, the Consumer Electronics Association (CEA) invited us to a sneak preview last week in New York of what we should expect to see in Las Vegas in January. CEA analysts and executives also shared year to date market stats as well as their projections for holiday sales figures.  CEA President and CEO Gary Shapiro gave a really frank assessment of the U.S. economy and how it has impacted the Consumer Electronics industry; contraction for the better part of two years.

Shapiro pointed out that the bitter partisanship that has gripped Capitol Hill, even before last week's massive gains by the Republicans in the House and Senate, has not helped the industry at all during these very tough economic conditions. Shapiro also pointed out that it was key for the U.S. to conclude new free trade agreements, especially with South Korea (something President Obama failed to do this past weekend at the G20 Summit in Seoul) in order to create a more level playing field for CE manufacturers. CEA economist Shawn DuBravac painted a rosier picture for the holiday season and beyond but he was quite blunt in his assesment of the overall economic conditions that we face; plumetting U.S. dollar, a broken bond market, high unemployment, less disposable income, and inflationary fears. While that doesn't sound like the recipe for a great holiday season, the CEA presented some interesting research that suggests that the American consumer is looking to spend more this year starting on Black Friday which is only two weeks away.

DuBravac pointed out that Black Friday shopping has already begun as retailers have been offering "uber-bundle" deals for the past few weeks, including great packages for 3D TVs.  In many cases, consumers are getting Blu-ray 3D players, 3D glasses and software thrown in, in an attempt by manufacturers to gain share of the 3D TV market, which itself is off to a fairly slow start.

The CEA's research suggests that consumers are going to spend an average of $230 this holiday season on consumer electronics which is the highest amount in history. According to the research, 74% of those planning to spend during the holiday season are seriously considering consumer electronics as a potential purchase. Most consumers are looking at CE even if they don't plan to buy. Where is that money going to be spent? Tablets, eReaders, MP3 players, video game consoles and accessories. Flat-panel televisions were the 7th most popular gift choice for this year; not a good sign for manufacturers of 3D sets that are currently more expensive than their 2D siblings. The CE industry expects to see modest growth of the overall CE market going forward; in the range of 3-4% year over year.

While the industry expects to sell almost 11 million flat-panel televisions in the fourth quarter of 2010 (50% of the total for the year), there were no projections for 3D TV sales for the same period. The CEA presented rather ambitious numbers for 3D TV sales earlier this year, and we left the event wondering if they have backed off on those projections and just didn't want to stir the point with disappointing numbers. While only in its infancy, the bundled 3D TV packages being offered by Panasonic, LG, Sony and Samsung this holiday season should be attractive to consumers looking for a state-of-the-art home theater system. The sets/glasses/3D Blu-ray players that we have reviewed so far have all been pretty impressive, so consumers would be making a mistake not at least taking a look at 3D.

According to the CEA's research, the two most critical issues for consumers when it comes to smaller electronic devices right now (aside from price) are: portability versus pocketability, as well as tertiary features.  Consumers do want small pocketable phones that can take pictures, do e-mail, browse the web and play music, but they're also willing to lug around slightly larger devices such as tablets if doing so can also satisfy multiple needs.  These prorioties play right into the hands of manufacturers such as Apple who have enjoyed tremendous success with the iPad.

Almost all of the research confirmed that the iPad, iPhone, iPod, and Apple's personal computers were near the top of the list for consumers this holiday season. Tablets have become a hot commodity this holiday season and it is expected that they will be the most sought after product in 2011. The launch of the Samsung Galaxy and the Playbook from RIM finally gives Apple some real competition in the tablet war, but the field is going to get very crowded with more than 80 tablets on the horizon.  CEA reps expect to see at least 50 tablets on display at CES 2011, including models from HP, who recently acquired Palm primarily for its WebOS platform. Consumers are clearly looking to the tablet as a sort of CE swiss army knife, with features such as email, internet access, media streaming, eBooks, gaming, and even home automation.

The eReader market is also getting more interesting. Amazon, Apple, and Barnes and Noble have sliced up the marketplace and it is expected that more than $1 billion worth of eBooks will be sold in 2010. Barnes and Noble is launching the new NOOKcolor this week, and the market has already responded positively to its tablet-like design. Amazon is unlikely to go another year without launching a new generaton of Kindles to compete with the NookColor and iPad. eReaders are making a real dent because the manufacturers have realized that they needed to do more than just offer eBooks.  Features such as games, web browsing and multimedia playback are becoming commonplace on so-called eReaders in an attempt to attract a media-hungry consumer.

We could spend an entire article discussing the explosive growth of the app market, but it was clear from the CEA's presentation that app development has become a major market segment and one that will only become increasingly important in 2011. The Android versus iOS fight has only just begun and hopefully, the consumer will be the ultimate winner when the smoke clears. CES 2011 is going to be a showcase for app developers and products; we're hoping to see some really inovative home theater apps this year including the next generation of universal remote and home automation apps.

CES 2011 is expected to be the biggest one yet with more than 2,500 (and still growing) exhibitors and even more products than before. Apple may not be an official exhibitor at CES, but its products are going to be everywhere; especially in the iLounge which is going to feature Apple-related products from 185 manufacturers. We expect to see a slew of products supporting all of the new tablets; not just the iPad.

Electric cars are going to be showcased at CES 2011, with models from Chevrolet, Ford, and Audi. The Chevy Volt is, without question, the most anticipated car of 2011 and the early press has been quite positive. Cars have become an important market for CE manufacturers as more and more consumers are demanding vehicles than can sync with their cell phone and tablets. GPS and Sirius/XM are considered the bare minimum at this point, with Bluetooth, internet access and media-friendly features becoming increasingly important to car buyers.

Another new segment at CES 2011 will be networked home appliances. Sears/Kenmore and GE are two of the largest exhibitors in the category, but we expect to see some really neat stuff in this category. Can controlling a popcorn machine with your iPhone or Droid be that far off? We doubt it.

The CEA also made a special announcement at the New York show directed at tech enthusiasts: the people who spend hours on CE-related discussion forums debating calibration settings, and who pull out their credit cards before anybody else to be early adopters of new technology. Interested in becoming a member of the CEA? Starting this week, there is a new catergory of membership for tech enthusiasts. The benefits include online discounts, insider information about new technology, and the chance to beta test new products. The annual fee is $49 per year, but if you sign up right now (and we mean right now!) the fee is discounted to $29 as an introductory price. The CEA is also running a contest on Facebook. Are you the ultimate tech enthusiast? Prove it to the folks at the CEA and you may win a free trip to CES 2011 with VIP treatment.

CES even has an official candy this year: Reese's Peanut Butter Cup. Hershey plans on making a major industry announcement at CES 2011, so I volunteer to cover that press event (I'm addicted to the PBCs and ate packages of them at the New York event to prove my loyalty...which were basically the only things I could eat at the event as the bacon-wrapped scallops and such were not exactly kosher).

Monster always does something special for CES and this year will be no exception. Head Monster Noel Lee almost ran me over with his Segway in one of the hallways, but I forgive him because he hired Earth Wind & Fire for the big Monster concert in Las Vegas.

For more information:

• www.ce.org