#DigitalSkeptic: What to Look for at CES in 2014

NEW YORK (TheStreet) -- It looks like the loonies are loose yet again in consumer electronics.

Is it me, or has this barest of bull equity markets and the tepid demand for initial public offerings brought out the lunatic fringe in consumer tech? It seems like forever ago, but it was just last month that real upside loomed in the consumer gadget. There were legit, value-creating advancements in major platforms such as the Sony PlayStation 4 and Microsoft's Xbox One. And clever startups were making progress. I liked Carvana's new spin on selling used cars and Medium Machinery's fresh take on desktop manufacturing.

Sadly, that Indian summer of good new ideas is over. At least based on my pre-trip discussions and reading ahead of the 2014 International CES in Las Vegas next week, the rare respite of common tech sense has been lost in a frenzy of dubious new ideas. Beneath the hype for mega-trends such as the connected car, wearable devices and cheaper high-resolution TVs lie some out-there ideas -- including appliances that send text messages and robots that fly paper airplanes.

And it's not like this past holiday shopping season was truly huge. "The final online shopping week saw considerably softer sales than anticipated, including zero billion-dollar spending days," said Gian Fulgoni, chairman at comScore, the Reston, Va. digital data tracking service.

That means the truly dubious trends lurking at the 2014 International CES will have plenty of weakness to fester in. Here's what to watch for -- and plan for -- so investors can make it to 2015.

1. The smart home stays dumb

Hip startups such as Palo Alto, Calif.-based Nest Labs and Brooklyn's own Canary have without question brought much-needed fresh blood into one of great zombie zones of tech: the so-called smart home. Though the kiddies won't remember this, we tech geezers saw firsthand how giants such as Westinghouse, GE and Microsoft got lit up over the past 40 years trying to connect home thermostats, control systems and video cameras over various networks. So it is with real cringing that we watch the similarly monstrous Cisco, Samsung and Lowe's jump into these dangerous waters without a clear sense of the upside. Even scarier, the smart-home market is now populated with several race-to-the-bottom startups such as Alarm.com and Pie Network. And low-cost, global gadget makers such as Archos have effectively commoditized still-undeveloped products such as dirt-cheap connected thermostats, video controllers and tablet interfaces. What's I found truly telling was that two Nest representatives flatly refused to comment on the actual number of homes their devices serve -- implying to me that most homes remain very much dumb ones.

What to plan for: The Smart Home in 2014 will be like the 3D TV way back in the year 2000: a great idea that goes nowhere.

2. The crowdsourced gadget

This will be the first year the consumer electronics world feels the full shockwaves of crowdsourced gadgets. Tellingly, funding platform Indiegogo will hold a sold-out event at Jimmy Buffet's Margaritaville during this year's CES. And no question, some of the coolest products at this show will come not from big companies, but from small entrepreneurs with big social funding followings. The absolute pet rock of this hip, indie-produced gadget set is the PowerUp 3.0, a smartphone-controlled motor that can retrofit on -- get ready for this -- self-made paper airplanes. Yes, it sounds nutty. But there is no denying the business power. What started out for founder Shai Goitein as a neat way to teach kids about aerodynamics has become a legit business. This New Yorker raised a cool $840,000 in just five days on Kickstarter. And Goitein is not alone. Palo Alto-based Reveal Labs raised $2.6 million on funding platform Selfstarter for what is nothing more than a device that remotely finds your phone and handbag.

What to plan for: Crowd-backed products will atomize the already fractionalized consumer electronics market, making this the hardest year yet for investors to pick a gadget winner.


3. TV will be everywhere but profits will be nowhere

You know a sector is in for it when there is not one silly buzzword to track, but a half dozen. And next-gen television is stuffed with buzzwords: "TV Everywhere," "Social TV," "Over the Top Content" (or OTT) and "Multiscreen" and the old classic "Interactive Television." I've been breaking these trends down for about a month now, and I still have no idea how they differ from the TV, game platform video and Web clips we already have. Even if these ideas work, none stand a chance. Why? Google has come to market with its category-killing device: the Chromecast $35 TV Web adapter. Merely plug this sucker into any old set and, poof, it becomes a fairly sophisticated interactive digital TV experience featuring content on demand, Web channels and lots and lots of ads. Is Chromecast the utter top end for next-gen television experience? Of course not. Apple TV, for example, is far more elegant. And sometimes Google TV can be weird with its Web-only focus. But for the money and ease of use, there will be no room for competitors.

What to plan for: Interactive TV will be Google's game to lose this year.

4. The Bluetooth speaker ... and other bizarre niches

Here is the dirty secret about the 2014 CES: After attending two decades of consumer electronics trade shows in Las Vegas, the truth is that the vast majority -- and I mean the vast majority -- of vendors and products at these shows never, ever get even a glance from major media. The world's product lines are simply too vast, complex and overwhelming for even massive media teams to cover. Traditionally, this kind of product overload has been the kiss of death for any given small-run gadget. But no more. At least based on what I am seeing in new products at this year's shows, that hard and fast line of small-item obscurity will be deeply blurred. Now, seemingly every maker is coming to market with fascinating new ideas that target specific niches with real success. To wit: Take a look at the NYNE $129 Aqua Floating speaker. This device, from Oxnard, Calif.-based Boss Group, gives your iPhone a set of speakers that can work just about any environment. With products such as these out there, it will be that much harder for major consumer product makers to own vast swaths of any market.

What to plan for: Bull market or not, coming to market with an idea in 2014 will be tougher than ever.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

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