Mid-Year Transitions

As you take a look at this special issue of TWICE, called "State Of The Industry," we are two weeks into the second half of the year, an election year, which is usually a time of a real or imagined revival in the economy. No matter which party is controlling the White House, a positive spin is always applied.

This year it is also a time of war, higher than normal gasoline prices and, for the first time in years, higher interest rates. Still, there is job growth and a general feeling among consumers, as well as industry executives, that economic indicators are slightly more positive than negative.

Aside from external economic forces, the general consensus of opinion in all the coverage in this issue is that the fundamentals for a good second half are in place. The products are still exciting and business has generally improved in recent weeks.

But there are concerns. Will HDTV pricing really plummet as more first-time vendors begin shipping product? Will consumers accept or understand the CableCARD feature in HDTVs? Will there be good enough inventories to meet demand? Those were just some of the concerns attendees heard at the annual Consumer Electronics Association CEO Summit, which was held in Huntington Beach, Calif. in late June, during a panel yours truly moderated on second-half sales. (My thanks to Jay Buchanan of Nebraska Furniture Mart, Buy.com's Jarod Smith, Eddie Maloney of Cowboy Maloney's Electric City and John Flanner of Flanner's Audio Video for being on the panel.)

If you look category by category, video and digital imaging should have a good second half, and home audio, which has been beat up at retail during the last couple of years, is making a modest comeback. Cellphones should continue to experience strong growth. There are concerns for the mobile electronics market, but satellite radio is still hot. Notebook PC sales are leading the way in the computer business. And accessories sales should be as varied as the categories they support.

But as always this industry is in constant transition, and the news of the past two weeks is just a small indication of that. For instance, Philips has bought a long-time leader in the accessories business, Gemini Industries. (See story on p. 5.) That's a year after Gemini was beaten by Thomson to buy parts of former archrival Recoton.

Everyone is talking about the convergence of the CE and IT industries this year. What it meant to Comdex, once one of the largest trade shows in the world, is that it will not held in 2004. (See p. 6.) Thanks to the changing fortunes, tastes and technologies, the 2005 International CES will probably be even larger than this year, if that's possible.

Closer to home, new retail formats are all the rage. During the spring Best Buy and Tweeter both announced departures from their current format. On June 30 Office Depot rolled out a new format, Millenium2, which emphasizes ease of shopping, and keeping women customers, as well as technology and furniture products in mind. (See p. 5.)

This business never stays the same, which as many of you know is both a curse ... and a real blessing.

Have a good second half.