CES 2008 Overall Thoughts

I've just returned from spending several days in Las Vegas on the annual CES press and analyst schedule, and thought I'd post my high-level observations. To give some context, CES for press and analysts began this year on Tuesday afternoon with CEA presentations on the industry, and then continued with three nights of sneak-peak shows (Tuesday through Thursday), and a whole day of tier-one consumer electronics vendor press conferences on Wednesday. I also spent all day Thursday walking the show floor which span roughly 5 enormous buildings.

So what's the take-away? I'd say the high-level take-away is that everyone realizes the economic downturn has hurt the industry, and they're all hoping that 2009 won't hurt so much that they're not around to see 2010. In fact, there were several spots on the floor that looked vacant (see picture above) as if companies had decided to cut their losses and just not show up even though they've probably already paid for the space. Though the Consumer Electronics Association (host of the CES) always tends to be bullish, even they acknowledged that 2009 will probably be flat to a slight decline in consumer electronics sales worldwide. It wasn't a surprise then that there were fewer dramatic innovations at this year's show, and Sharp didn't introduce a new mega-sized LCD as they've done in years past (108" last year). In fact, the companies that looked best poised to capitalize on the economic realities were the companies that were emphasizing value, solid basic performance, and traditional products (Toshiba TVs for example).

There was innovation however, and beyond incremental improvements, the most dramatic steps related to services. Internet video has finally gone from a niche techno-geek feature to a burgeoning mainstream opportunity, and Netflix has shown the way. Until the introduction of the Netflix direct-to-TV Instant Streaming solutions in the Roku box, LG and Samsung Blu-ray DVD players, most thought that it wasn't ready for prime time. What the Netflix Instant Streaming service showed though, was that the Internet was ready to deliver a high-quality experience with the right approach to developing a content library, and a simple approach to accessing it on the TV. Nearly every major CE company made a point of describing how they will deliver Internet video services from Hulu to YouTube and Netflix at this year's CES. It seems we've finally reached the turning point for over-the-top Internet video services.

The other innovation that got considerable mention from a wide range of CE industry leaders was 3D. Some of the demos are compelling, and it's tempting to say that 3D may finally catch on, but I fear that this may also be another case of "the emperor not having any clothes." Most systems still rely on viewers wearing glasses, and there's still the risk that the effect will get in the way of the story-telling. I think the jury is still out on this one, but the industry is clearly grasping for ways to make content that is meaningfully better than DVD and HDTV so consumers will pay to upgrade yet again. If 3D doesn't pan out, I'm sure they'll be trying something else.