CES 2010 preview shows gloom, but not doom

The new frugality takes hold, but consumers still want electronics

"Green" is the new "black, "flat" is the new "up" and the watchword for 2010 is "apps".

That's the state of the consumer electronics market now — and where it's headed in 2010 — according to Consumer Electronics Association (CEA) officials at Tuesday's New York preview of the 2010 International Consumer Electronics Show in Las Vegas.

While the economic forecast offered by CEA CEO Gary Shapiro and others was not a sunny one, there were some breaks in the clouds for rising technologies like 3D television and e-book readers. What was clear is that consumers are becoming more conscious of eco-friendly "green" technologies, apps are driving innovation in cell phones and other devices, and that while many parts of the consumer electronics market are "flat" and not growing, at least they're not shrinking like they were in 2008.

"We believe that July will mark the bottom of the recession," says the CEA's Sean Wargo. "The new 'up' is 'flat'. ''

Wargo noted that while unit sales of consumer electronics were down 6.3 percent in the fourth quarter of 2007 when compared to the year before, the CEA expects an increase of 6 percent in unit sales for the fourth quarter of 2009. The forecast for revenues from these sales, however, are down: The CEA expects a 7.5 percent drop is expected in the fourth quarter of 2009, which is greater than the 6.4 percent drop in the same time period in 2008.

"Green continues to be the new black," says Wargo, who added that consumers seemed willing to spend a few extra dollars for eco-friendly gear. However, he also noted that consumers were leaning toward spending less this holiday season, a trend which will probably continue into next year. He noted that 60 percent of 8,000 consumer-electronics executives polled for the CEA's study "believe that this frugality is here to stay."

While general spending on gifts this holiday season is expected to grow by 4 percent, spending on technology gifts is expected to grow by 8 percent, noted Steve Koenig, director, industry analysis, at the CEA.

"Apps in a word are omnipresent," says Koenig, who noted that the more than 100,000 apps available for the iPhone have already been downloaded more than two billion times. "Apps," he added, would be "the most frequently spoken word at the 2010 CES."

He noted that apps for things like store-coupon and movie-ticket printing would expand to devices other than cell phones — like PCs and printers. Content providers like ESPN have discovered the value of creating apps for multiple platforms, he says.

Making its first appearance on the CEA's most-wanted-gift list is the e-book reader in sixth place, with Amazon's Kindle leading the market. However, this market is clearly still in its infancy, with only 6 percent of technology enthusiasts and 4 percent of the general public owning an e-book reader so far, according to Wargo.

Just behind the Kindle on the most-wanted list was the iPhone in seventh place and Blu-ray players in eighth. Topping the most-wanted list was notebook PCs, with MP3 players in second and flat-panel TVs in third. And netbooks made their first appearance on any of the CEA's lists, this time in ninth-place on the list of most-wanted gifts for teens. Where do consumers want to shop? "We see mass merchants really eclipsing the electronics stores," says Steve Koenig, director, industry analysis, at the US Consumer Electronics Association. "Convenience is a big part of the dynamic this holiday.... People are thinking ahead on return policies when they're making their purchases."

The International Consumer Electronics Show will run from January 7 to 10, 2010 in Las Vegas.

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