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Electronics Industry Gets Less Traditional

Posted on: Friday, 4 January 2008, 06:00 CST

By Michelle Kessler

SAN FRANCISCO -- The consumer electronic industry's white-hot growth is slowing, but that's not stopping some companies from plunging into the market.

About 140,000 people are expected to converge on Las Vegas this weekend for the giant Consumer Electronics Show, the industry's biggest annual U.S. gathering. That's down slightly from 143,695 last year. It's likely to be the second year in a row that attendance has slipped.

Other indicators also point to a cooling industry. Holiday electronics sales (including large appliances such as refrigerators) rose just 2.7%, says MasterCard Advisors, the consulting arm of the credit card firm. Smaller electronics sales rose about 6%, compared with more than about 12% the previous two years, early numbers from researcher NPD suggest.

But many companies are embracing electronics anyway. Only one of the five coveted main speaker slots at CES is occupied by a traditional electronics maker, Panasonic. The others are chipmaker Intel, cable firm Comcast, automaker General Motors and software giant Microsoft. Other outsiders are among the 2,700 exhibitors, including IBM and Cisco Systems. Why they're interested in the industry:

*Pockets of growth. Some types of electronics are still growing fast. Sales of digital televisions rose 11% in 2007 from the previous year, says the Consumer Electronics Association, the trade group behind CES. About $403 million worth of next-generation DVD players sold last year, even though they're a very new technology, CEA says.

IBM, best known for big-business computers, recently scored a surprise hit by providing the processing chip for Nintendo's Wii, which has sold more than 6 million units in the USA.

*Easy entry. A stereo, a TV and a PC used to be very different technologically. But today's digital devices all look like computers inside. That makes it simpler for companies such as Intel to move into the market. "The cellphone is becoming a computer," so Intel is touting chips for feature-packed phones, Intel CEO Paul Otellini says.

*Complementary businesses. An electronics push can boost brand recognition and help sell other products. Cisco's specialty is pricey networking equipment for telephone companies and big businesses. But Cisco will be at CES for the second time, hawking relatively inexpensive home-networking gear. Cisco wants more people to stream video and other content in their home, which will then increase demand for back-end networks, says Vice President Ken Wirt. (c) Copyright 2005 USA TODAY, a division of Gannett Co. Inc.

Source: USA TODAY

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