The big business of Consumer Electronics

Consumer electronics is a big business in the US. How big? According to an analyst with the Consumer Electronics Association (CEA), in 2004, consumer electronics accounted for $113 billion in wholesale sales in the US. That number was closer to $200 billion at retail. And it is growing at about 11% a year.

This year's 2,400 CES exhibitors occupy about 1.5 million square feet of exhibit space here. There will be about 50,000 product announcements at this show over the next six days, making it the tyranny of too much personified. But there are already some trends evident from the CEA sales data that was released here today:

• LCD flat television will overtake Plasma TVs this year. This happened already in 2004 and the trend will accelerate in 2005. While many consumers call any flat TV "Plasma", LCD flat panels already outsell Plasma TVs in terms of number of units, and will outsell them in dollar value this year as well. While there will be other new technologies to complete, LCD will be the trend to beat in flat TV.


• HDTV isn't the end of the improving TV quality. This year we are already seeing the next step in high definition television called Ultra HD or 1080p. Sharp already makes an LCD TV that can display 1080p, and other manufacturers are following suit; it's only a matter of time before that becomes a new high-water mark for quality.


• The megapixel race in digital cameras is coming to an end. This past Christmas, five megapixel cameras were already below $300. For consumer snapshots and family pictures, more megapixels are starting to matter less than compact size and weight, good optics, well-developed user interfaces, and intelligent imagers that avoid common errors. There will always be a high end in digital photography, but the sales data says that that isn't going to be the mainstream market.


• Digital cameras are driving other new product purchases. Anyone who has bought a digital camera rapidly discovers that 1) they want ways to print their photos easily, and 2) they want a place to store their photos with or without their computer. As a result, consumers are starting to buy photo printers that don't require computers to print photos, and consumers are buying more flash and hard disk storage. While the an ever-increasing thirst for storage has been a trend in corporate American for years, a consumer storage boom will manifest itself in a variety of new product categories. Need an example? Think of the iPod Photo.


• Music is more important than you think. The iPod ecosystem is rampant here at the show with over 200 accessory products just for that platform. But the sales data has further surprises. For example, multi-room audio systems are starting to edge past home theatre systems. Why? Because while it takes an avid movie watcher to want to use their home theatre system more than once or twice a day, nearly everyone is interested in listening to the music they like whereever they happen to be.

Tomorrow begins the onslaught of press events and product announcements at the show. Look for photos and commentary by mid-afternoon Pacific time.