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Plethora Of Flat Panels, Portable DVDs Stirs Angst At CES

Another opening, another show, CES that is, which had its 63rd running (including the old Summer shows) at the Las Vegas Convention Center, and was similar to the 62nd version in that for the second straight year, television was a prime focus.

For one thing, this year’s show marked what appears to be the beginning of the end of the cathode-ray tube in all but leader model color sets. In fact, on the show floor, traditional color models using conventional CRTs were hard to find, with LCD and plasma displays of varying sizes being the dominating formats for direct-view models. And of course, there were those playing the “mine is bigger than yours” game, with Samsung showing the “largest ever” (102W-inch) plasma display and LG Electronics countering with the “largest now available” (71W-inch) plasma, while Sharp and others were breaking ground with super-sized LCDs.

A first-time visitor to CES would never imagine that, according to CEA estimates, conventional analog direct-view color sets, including combos, accounted for a whopping 76 percent of last year’s 30.8 million color TV sales to dealers. CEA is predicting a near reversal of that market-share picture for this year.

While from a reasonable viewing distance the biggest plasma and DLP projection pictures were impressive, up close the story was somewhat different. They all showed a significant amount of background noise that’s not as evident in the smaller versions. Whether this stemmed from the source material or the TVs themselves, I don’t know, but it indicates to me that bigger is not necessarily always better.

As a possible reflection of the town where the show was held, many of the majors were making bets on which formats will dominate. The big money is on DLP technology grabbing the lion’s share of the high-end digital projection TV market, and while most of the makers in the flat-panel business are hedging, featuring both plasma and LCD, Panasonic seems to be betting the farm on plasma.

As I predicted years ago (us columnists always like to throw a line like that in to show that we get our predictions right at least some of the time), the shift in market emphasis from analog to digital and from CRT to flat panel has scrambled the business as far as brand names are concerned. With LCD panels in particular being freely offered in the Far East, new brands are springing up like weeds with the encouragement of large retailers looking for exclusives as a way to dodge head-to-head competition.

Nowhere is this more evident than in the mini-LCD/DVD portable sector. While it probably is an exaggeration, one got the impression that there were enough portable units on display at CES alone to fill the entire anticipated 2005 market demand. The situation, I think, is similar to that of the CB business in 1976 or the video game market in 1982. In both cases, too many new companies had jumped in as the initial surge in demand caused the industry to over-estimate the market potential. That led to severe price competition that forced all but the strongest few out of the market, and many out of business.

While the portable business has, I believe, a bright future, I suspect that before the end of this year we will see some steep price cuts to keep demand high. And while I’m spreading this gloom and doom, it seemed like every auto after-market company at CES was showing a mobile video system. I see no way the business will prove profitable for all those now jumping in.

The show also offered a glimpse of how life will be in the future. Now I really don’t believe my toaster will ever be interested in talking to the refrigerator or the microwave to the blender. But the industry is moving in a direction that will make wireless networking in the home a practical utility, and the day will come when consumers will have access via an Internet service to vast libraries of entertainment video programming. When? I personally started covering reports of hang-on-the-wall TV in 1961. You know, it really doesn’t seem to be that long ago.

More CES observations to come.