At Electronics Show in Vegas, There Were No Sure Bets

As thousands came here last week for the annual Consumer Electronics show, there wasn’t much to celebrate.

Sales of video and home audio products--which account for about a third of the consumer electronic industry’s annual revenues of about $65 billion--actually declined in 1996 for the first time in five years. And even the crew of dancers, aging actors and boxers shipped in to help bring attention to product displays couldn’t cover up the absence of potential hit products.

Electronics companies are taking their chances with a selection of devices that mix and match computer, communications, imaging and other capabilities with intriguing possibilities, but most appear years away from having broad consumer applications.

Jim Meyer, the top marketing executive at Thompson Consumer Electronics, which manufactures RCA and GE brand consumer electronics products, put it best when he compared the company’s strategy with his approach to gambling: “I like to bet on a lot of stuff.”

Anybody who has spent any time in Las Vegas knows that spreading your bets is no formula for success. But on the floor of the sprawling convention floor were a lot of bets on such “convergence” products as TVs and telephones that turn into Web browsers, digital cameras for loading images onto computers and video telephones.

The only product with a chance of making a large impact on the industry is the digital versatile disc player, capable of playing full-length feature movies with quality sound and pictures, or playing multimedia CD-ROMs that hold seven times the data of current CDs.

But a full year after consumer electronics giants announced aggressive plans for DVD players, Hollywood has yet to fully back the product. Major studios such as Universal Studios and Disney haven’t disclosed plans to offer films on DVDs.

Without a library of films, electronics manufacturers admit the product won’t even sell half the 1 million units initially expected this year. But 39% of those recently surveyed suggested they would buy a DVD player if enough software is available.

Those numbers suggest brighter prospects than for most of the other convergence products shown here. For example, televisions capable of browsing the Internet were a major new category of products at the show, yet a recent Dataquest survey found 92% of all consumers have no intention of buying an Internet television.

Yet, consumer electronics makers need a steady stream of new revenue-producing products if they are going to survive. “They have to find new sources of revenues,” said Dale Ford, an analyst at San Jose-based Dataquest who attended the show. “Their core product categories are shrinking.

Thomson Consumer Electronics, Zenith and Akai all announced they will offer Internet boxes for their televisions using technology from Net Computer Inc., a subsidiary of Oracle. Sony and Philips showed products using technology from Web TV, a more sophisticated offering.

RCA announced its product would come with an Internet service provided by NetChannel, a South San Francisco start-up company that will offer a personalized Internet service designed for use on a TV monitor.

The company expects viewers who have finished watching a program like “Seinfeld” will switch to the Internet and exchange messages with other viewers.

Steve Perlman, chief executive of Web TV in the Silicon Valley, admits that the Internet still lacks the full array of sound and graphics content required to attract the average television viewer. But he argues that will start to change with his company’s new capability to show quality video clips stored on the Net.

Another category of product widely shown this year is a new generation of digital cameras that let you take pictures that are stored in digital form on optical discs or chips so they can be easily loaded into a computer or sent over the Web.

But the cameras are still $500 to $2,500. And you still need a computer, some ability to use Windows software and a good printer. And the special glossy paper can cost $1 a sheet.

The convergence phenomenon has also hit the world of telephones.

Most leading manufacturers from Panasonic to Philips were selling telephones for $400 and more that let you read and write e-mail without owning a computer. Come down to the kitchen and you could have a blinking light letting you know you have e-mail waiting.