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 keynote address , 2005 is the year it "all comes together."

Distributors and retailers seem to be buying that vision, if CES is any indication. With the demise of Comdex, CES has become the biggest trade show in Las Vegas. A record 143,000 attendees packed into the Las Vegas Convention Center and other sites last week to see the wares on display from some 2,600 exhibitors, according to the Consumer Electronics Association, which sponsored the event.

The addresses at the conference were headlined by PC industry luminaries. In addition to Gates, Intel ( INTC) CEO Craig Barrett and H-P CEO Carly Fiorina gave keynote speeches.

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%.

In many ways, the digital invasion of consumer electronics has already established a strong beachhead. In 2004, the fastest-growing electronics products were nearly all digital-related in some form or fashion, according to CEA. In fact, the product with the top dollar growth in wholesale sales -- north of 200% year over year -- was blank DVD discs.

Other products with greater than 200% growth in sales were LCD TVs and digital video recorders, which are devices, such as those running TiVo's ( TIVO) software, that record television shows on a hard drive.

Products with greater than 100% sales growth included portable MP3 players, such as Apple's ( AAPL) iPod, satellite radio tuners and accessories, cordless phones -- typically digital ones that operate in the 5.8 Ghz range -- and flash media cards.

Many of these products were growing off of small bases. But in at least some cases, the numbers are starting to add up. For instance, manufacturers sold more than $2 billion worth of LCD TVs last year and more than $2.5 billion worth of plasma screen TVs, according to CEA. Both numbers are starting to approach sales of analog televisions.

Unit sales are a different story, though. The CEA expects manufacturers to sell 8.6 million analog televisions this year, compared with 3.8 million LCD TVs and only 1.4 million plasma screen ones.

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.

This will enable truly high-definition pictures on DVDs. The standard DVD format offers greater resolution than standard television sets can deliver -- which is why they look so good on them. But they offer far less resolution than that on an high-definition television. At least with current technology, there's not enough room on a standard DVD to store enough information to fill all the pixels on an HD screen.

That's where Blu-ray -- or the competing HD-DVD standard -- will come in. To demonstrate the difference, Sony showed a movie on a jumbo flat-screen TV with a split screen.

On the left half of the screen, the movie was in standard DVD resolution. On the right half, it was in high-definition resolution. As figures made their way across the screen, they would go from being sharp and distinct to being fuzzy and blurred -- and back again as they went the opposite way. On the right side of the screen, the images were sharp, even at a distance. You truly had to see it.

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.

To be sure, the impact of the PC and digital world was nearly ubiquitous. Dolby, for instance, showcased some of its new audio technology using a tuner equipped with Microsoft's Media Center PC operating system.

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 showed off its new PlayStation Portable at a press event. In addition to playing games, the PSP will play movies and music and display digital photographs.

During his address, Gates introduced a number of new portable media players, such as some by iRiver, that incorporate the company's Windows Mobile operating system and Windows Media player. Gates and Lea Ann Champion, a senior vice president at SBC Communications ( SBC), also held forth the promise of consumers being able to tap into their home computer networks with their wireless phones to view pictures stored on the network or to program their DVRs.

Other companies touting their portable media players included Creative, Vivitar and Archos.

The glaring hole in the portable media offerings was the original iPod. Although H-P showed off its own line of iPods, and a number of companies, including Belkin, showed off iPod accessories, Apple itself was nowhere to be found. Not to worry, though -- the iPod and Apple will be the focus at this week's Macworld in San Francisco.

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.

Others, however, tried more imaginative gambits. Real Networks ( RNWK), for example, had a "music challenge" game show, including a game host, three contestants and a sound-effects-playing sidekick.

One of the more fun booth draws was one at the H-P booth. The company set up a parlor where visitors could get colorful spray-on tattoos that included the company's logo, of course. The tattoos were meant to illustrate how customers can personalize their HP iPods with their own tattoos.

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.

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