Editor's note:TheStreet.com's Troy Wolverton attended the International Consumer Electronics Show last week in Las Vegas. The following are some of his impressions and observations.LAS VEGAS -- The geeks are invading your living room -- or at least they'd like to. At the International CES here, companies from the PC industry -- computer makers such as Dell ( DELL) and Hewlett-Packard ( HPQ), network equipment manufacturers such as D-Link and Cisco's ( CSCO) Linksys unit, and software publishers from Microsoft ( MSFT) on down -- touted all the ways they are trying to connect consumers' televisions and stereo systems to the digital photographs, music and videos they've created and stored on their computers. This, of course, has been the vision for some time now. But as Microsoft founder Bill Gates put it in his
What's spurring the drive toward digital convergence is the consistent and strong growth in consumer electronics sales. The wholesale market for such products -- which consist of everything from stereo receivers to big-screen TVs to PCs -- grew 10.7% in 2004 to $113.5 billion, according to an industry estimate. CEA projects that consumer electronics sales will grow another 10.7% in 2005 and will reach $158.4 billion in wholesale exchanges in 2008. In contrast, CEA expects wholesale PC sales to grow less than 7% this year and wholesale sales of nonvideo game software to grow by just 1%.
Of course, just because a product is digital, that doesn't mean it has a long-term future. Sales of personal digital assistants, such as those made by palmOne ( PLMO), have been declining for years. Other products headed for sales declines include DVD players and blank DVD and CD discs, as those products are replaced by other technologies, according to CEA.
Speaking of DVDs, perhaps the best exhibit of new technology at CES was one by Sony ( SNE) showcasing the new high-definition Blu-ray DVD discs. One of two competing formats for the next generation of DVDs, Blu-ray discs will store about five times as much data as current DVDs.
Despite the digital invasion, an interesting thing about CES this year was the degree to which more traditional consumer electronics products still held sway. One of the three main halls at the Las Vegas Convention Center was devoted largely to car audio products, for instance. Another pavilion was dominated by home audio systems, including speakers and tuners. And that's not to mention that CEA reserved an entire off-site location for high-performance audio products. Even Hewlett-Packard used its main exhibit space to tout seemingly everything but its personal computers. Compared with the company's projection displays, LCD TVs, customizable iPods and digital cameras and photo printers, H-P's laptops and desktops seemed merely incidental, used largely just to register guests to the company's booth.
Not everything at CES was geared to the couch potato. In fact, another big theme was portability. As part of the grand vision, not only will consumers be able to view their digital photographs on their jumbo LCD flat-screen televisions, but they'll also be able to take them on the road via their cell phones or other devices. Along those lines, Sony
As exhibitors are want to do, companies tried any number of gimmicks to draw people to their booths. Many used the tried and true method of handing out tchotchkes, particularly T-shirts. Creative, for instance, had a line of dozens of people hoping to get a chance for one of its T-shirts.
For a conference with the largest gathering of geeks since the heyday of Comdex, the number of glitches was notable. Most glaring were the repeated problems during Microsoft co-founder Bill Gates' pre-show keynote. First, Gates and host Conan O'Brien couldn't show off some digital pictures that O'Brien had taken. Then Shaun Alexander, Microsoft's group product manager for Windows, couldn't tap into the Internet to show off the ability to program a DVR remotely. Next, Garrett Young, lead program manager for the company's Xbox game system, had trouble showing off the customization features on the company's new Forza Motorsport game. Not exactly the best way to convince people it's a good idea that the PC folks are heading to the living room.