Consumer optimism, new technology boost CES - consumer electronics industry

Discount Store News, Jan 4, 1993 by Pete Hisey

LAS VEGAS - The consumer electronics industry is gearing up for its strongest trade show since the decline of the VCR and the onset of the recession.

In a year that was supposed to be a total disaster, many consumer electronics retailers instead outperformed former sales records (Best Buy is on track to double its 1991 sales on a 50% store count increase) and the industry as a whole surged 4.3% to $36.9 billion in factory shipments.

The difference, of course, came from personal computers, which sold so well during the second half that retailers were reporting shortages of popular models before Christmas. Video systems grew sharply, and even staples like VCRs and televisions showed renewed vigor (sales of VCRs, for instance, shot up 18%).

And as consumers seem to be loosening their purse strings, 1993 looks like it will be even better, as new technologies like Sony's Mini Disc (MD) and Philips' Digital Compact Cassette (DCC) come on the market, multimedia (particularly CD-ROM) applications continue to expand, and the booming computer market really takes off.

It's appropriate that the keynote speaker this year is IBM president Jack Kuehler. IBM is the most visible symbol of the computer as a business-to-business product; that Kuehler is now addressing the consumer electronics retail community in its most visible gathering speaks volumes about the change in the marketplace.

Computing and entertainment continue to merge as never before. Is a home office user who tries out a new desk-top publishing system working or playing? Is the Apple Newton a business tool or a really terrific toy for business people? Is Turbo Technologies' TurboGraphx system a video game system or a CD-ROM productivity tool? Is the child learning the piano by playing a video game engaged in high culture or just playing?

The answer in all the above situations is "both." Advanced technology has blurred, perhaps forever, the distinction between our work lives and our recreation. Stealth computers, like Franklin's line of digital books and reference devices, are now common-place in the American home - and true computers are getting there fast, with some 30 million households already owning one.

This should be an exceptional show for new products, although some of the most exciting technologies (like HDTV) are still a few years away.

In audio, MD and DCC are the big news. Because viewings of each product have been scattered and incomplete, the public at large is confused about whether or not these are truly advances. Recent article have pointed out that each reduces the amount of information processed compared to the standard CD, with about a tenth of the bit rate per disc or tape. Sony has responded that although there is, in fact, less information, the information deleted is in the inaudible ran. In other words, only highly perceptive dogs are likely to notice much of a difference. But reviewers have not had the time to adequately test the product; this show should settle the argument.

Sharp will show its version of an MD personal stereo, while Sony should have both recording and play-only versions, with a prototype of a car unit

In video, the rise of VHS-C and the success of Panasonic's Palmcorder C-format camcorder will probably mean a lot more product at this show. Similarly, the ongoing success of 8mm, while cooling somewhat, may have finally prompted one company, Samsung, to put an affordable 8mm VCR on the market. Samsung will also show an ultracompact 8mm camcorder, weighing in at 1.6 lbs., and is sponsoring a series of 8mm seminars around the country in 1993 to raise 8mm's public perception.

Sharp will show a home fax machine, as well as the updated, touch-screen pen-based version of its Wizard electronic organizer, which debuted at Comdex. The company may also show a wide-vision television with built-in satellite reception, a product already on the market in Japan.

Wide vision televisions appear to be a growth industry, if still a tiny fraction of all sets sold. RCA has supported the concept, which allows viewers to see the same picture they would in a movie theater, and will probably expand its line in 1993.

But the major news will come out of the computing arena. According to the EIA, which sponsors the show, this show will see another huge jump in computer manufacturers exhibiting, and even larger increases in multimedia publishers and computer software publishers.

Apple's Newton was down-played at Comdex, perhaps so that it could have more impact here in front of the retailers who will be selling the product. There are reports that the pen-based technology is still too sticky to be really useful, a question that Apple will have to clear up before the first units go on the market. At Comdex, only a prototype and an explanatory video were available, which tends to confirm various reports that the product is not yet ready.

In video games, Segals CD (at about $299) should be the big news. Last year, the company had a demo available; this year, the real software should be ready. The unit is already selling well at retail, but the quality of new software will determine its long-term potential once the early adopters already have theirs.