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2005: Looking Back To Move Ahead

It is unusual to begin a new job — particularly a job at a news organization — by looking back. However, on my first day as TWICE’s new assistant editor, I was assigned the task of summing up 2005 for this issue. Unlike my colleagues, I have not had extensive experience in tracking the consumer electronics field over a long period of time. So my perspective of last year for this assignment will be one of the casual consumer.

Looking at TWICE’s 2005 back issues I couldn’t believe how many of the topics broached in these pages were subjects that I recall encountering while reading my daily newspaper. The constant presence of consumer electronics products and issues in the mainstream media, I believe, is a testament to how far this industry has come in the past 20 years in its quest to become a part of everyday life.

The industry has been affected significantly by all of the major events that take place. For example, one of the biggest ongoing news topics of 2005 was Hurricane Katrina, a catastrophe, that along with everything else, wreaked havoc on retailers and suppliers in that region.

Indeed, 2005 saw a lot of ups and downs depending on what part of the consumer electronics industry you represent. Among the ‘ups’ were record-breaking attendance numbers at January’s International CES, testament to the sheer growth of an industry taking the world by storm.

Speaking of taking the world by storm, if the constant stream of telltale white headphones dangling from the ears of subway riders and city side-walkers is any indication, it is probably safe to say 2005 could be considered the point on the timeline where our society officially entered the “Age of the iPod” in mass numbers.

Apple’s sales skyrocketed well beyond expectations quarter after quarter last year, largely due to iPod sales. The company appeared to make a concentrated effort to disband its traditional image as an exclusivity-based brand by concentrating on expanding its successful iPod line so its numerous versions might potentially appeal to a wider variety of customers. As a result, 2005 saw the launch of the relatively low-priced iPod Shuffle (suggested retail of $99), as well as the reconfiguration of the portable media player mold with the introduction of the video-capable iPod which featured screens for viewing digital media. Convergence was also the name of the game when the company teamed up with Motorola to launch the first cellular phone with MP3 capabilities.

On the retail end, hundreds of CE dealers in the Gulf States were affected by Hurricanes Katrina and Rita. Many were forced to deal with a variety of problems in the aftermath of the storm including flooding, looting and poor communications. Our managing editor John Laposky reported that a study by TWICE research partner The Stevenson Company found the devastation caused by Hurricane Katrina had the potential to cost CE and majap retailers about $300 million in lost fourth-quarter sales.

In January, Ultimate Electronics filed for Chapter 11 bankruptcy protection in a deal that gave Mark Wattles, founder/CEO of Hollywood Entertainment, control of the chain. In April, the company failed to meet a final deadline to work out a plan to pay back debts and fund a way out of bankruptcy so the chain was forced to put its assets on the auction block after announcing the impending close of at least half of its stores.

Two other household names moved towards a merger in 2005 as well. Starting in the fall, Whirlpool began to show interest in buying its rival majap manufacturer, Maytag, although the deal would not be finalized until early 2006.

On the subject of household names, TWICE did a bit of brand expansion itself in 2005 with a new sister publication: TWICE China. Launched in April, TWICE reported that the Beijing-published Chinese edition was “developed in response to China’s rise as one of the key players in the international consumer electronics industry.”

In Washington, Congress agreed on a 2009 hard cutoff date to bring an end to analog TV broadcasts, despite concerns from organizations like the Consumers Union about lower-income residents who currently rely on free over-the-air broadcast signals.

And the U.S. Supreme Court attempted to settle a debate between the entertainment industries and developers of peer-to-peer (P2P) file-sharing software regarding whether or not P2P developers should be held responsible if users employ the technology to violate federal laws by illegally sharing copyrighted materials.

The arguments in MGM v. Grokster were somewhat reminiscent of the landmark Betamax case of the 1980s. In this latest debacle in the ongoing struggle between developing communication technologies and industries that have traditionally profited by the general lack of means of production (or reproduction, as it were), the courts appear to have ruled in favor of the old guard. More specifically, the courts found that P2P developers could be sued and shut down if they deliberately encourage copyright infringement. However, the question regarding how one might prove such deliberate intentions in court is another battle for another day.