Search is on for next cool retail gadget

BY STEPHEN WILLIAMS
STAFF CORRESPONDENT

January 7, 2005

LAS VEGAS – Schizophrenia, in its most benign form, historically lies at the heart of the consumer electronics industry. You want big? Check out the 102-inch plasma TV from Samsung. You want small? Here’s a micro-sized disc drive from Lexar, a bit bigger than a thumbnail.

If it’s products in the extreme that catch the biggest buzz at the annual electronics show, which formally opened yesterday in this city of magic, there’s one result that seems to swell each year: industry revenues. Factory sales exceeded $115 billion last year, and the financial barometers at the Consumer Electronics Association forecast similar growth – about 12 percent – for 2005.

Although some big-box retailers haven’t been swept along in the digital audio/video/PC wave – Circuit City reported a slump in sales during the December holiday shopping period – most capitalized on customer traffic generated by the appeal of wide screen flat-panel monitors to show off the latest in high-definition TV content. The CEA reported spending in December surged to $6.4 billion.

“It’s cool products, price and functionality that drives the retail market now,” said Gary Arlen, an industry consultant based in Maryland.

Not much was cooler last year than the Apple iPod, which, along with dozens of competitors in the portable digital audio category, strengthened the overall audio sector.

In the big-ticket arena, though, television rules. Almost every major manufacturer of sets had new and supposedly improved units, with some new, developing video technologies hinted at as well, including SED, a flat-screen project in development from Canon and Toshiba that one Toshiba exec called “the Ferrari of home entertainment.”

Nearly 11 million high-definition-capable sets were sold in 2004. This year, prices are expected to drop further as screen sizes inch up.

TiVo chief executive Mike Ramsay outlined plans for the unrolling this year of “TiVoToGo,” a broadband networking concept that allows viewers to shift recorded TV content from their hard-disc recorders to their laptops or desktop PCs. TiVo will also debut a box with a CableCARD connection, eliminating need for a cable set-top box.

A bubbling undercurrent at this year’s show is the not quite ready for prime time high-definition DVD, on sale in Japan now but being held up in the United States because of competing formats. The battle pits the Blu-ray disc, developed by Sony, against the HD-DVD, created by Toshiba and NEC. Most Hollywood studios have so far kept open with options to go with either format.

“I expect to see a full-fledged format war, but ultimately the film studios will decide,” said Myra Moore, analyst with Digital Tech Consulting in Dallas. “So let the war begin.”