E-book readers, 3D TVs and tablet PCs compete to be top dog of 2010

HYPE and prototypes dominated the Consumer Electronics Show (CES) in Las Vegas last week. From the Ford car that lets you send Twitter messages while driving, to the scuba diving mask that can shoot high definition video at depths of 130 feet, the vast majority of products on display will not hit the mainstream.

The show’s thunder was also stolen by Google, which decided to launch its Nexus One phone five hundred miles away in San Francisco – just one day before the trade fair got going. And even when CES was in full swing, the delegates were more interested in the imminent launch of Apple’s tablet PC, slated for 27 January. Analyst Richard Holway from TechMarketView compared the product announcements at CES to the “tiny sorbets they give you in between courses in posh restaurants”, mere pallet cleansers that serve as a sideshow to the main dishes.

Like Google and Apple, many of the delegates from recent years stayed away; attendance was down 20 per cent to 110,000 compared to the glory days of 2008. That said, CES remains a seminal date on the tech sector’s calendar. It marks that time of year when firms start touting their wares, in the full knowledge that they have just nine months to turn their products into Christmas bestsellers.

High-end consumer electronics have held up remarkably well in the recession. Although global mobile phone sales in 2009 numbered some 8m less than the previous year – the first ever annual drop – luxury smartphones like Blackberrys are still in vogue. Gartner says smartphone sales were up around 24 per cent on 2008, and now account for some 14 per cent of total sales, a figure that will rise to 38 per cent by 2013.

Similarly, Apple boosted sales of its high-end MacBooks and iMacs by 17 per cent in its third quarter, even as global PC revenues for the year fell by around 11 per cent. Analysts also expect the firm to have shipped around 10m iPhones in the three months to the end of December, beating all previous records. The Kindle, Amazon’s e-book reader, was another Christmas hit, with sales said to be running at 2.5m by the end of 2009. Its chief executive Jeff Bezos says digital books outsold physical copies on in the festive period.

The trend is clear: demand for consumer electronics is shrinking overall, but the appetite for the next big thing is as voracious as ever. For that reason, CES is still important: it is the place where journalists, analysts and manufacturers get together and decide exactly what the next big thing will be. This year, everyone seems to be in agreement: the ones to watch are tablet PCs, the next generation of e-book readers and 3D TVs.

It’s amazing how much hype Apple can generate without lifting a finger. Simply by booking a large hall in a San Francisco conference centre at the end of January, it has sent the industry into a tailspin. The famously secretive firm has made no announcements and given no briefings to analysts or the press; apart from a handful of Apple execs. Noone knows what to expect. Still, most think the firm will unveil a new tablet PC, dubbed the “iSlate”.

Tablets are expected to bridge the gap between high-end smartphones and smaller laptops. Constantly connected to the internet, and probably sold with a mobile data subscription, the touch screen devices are designed to surf the web, watch movies and read e-books.

In an attempt to steal some of Apple’s thunder, Microsoft boss Steve Ballmer unveiled a new HP tablet that will run Microsoft Windows 7. His keynote speech was an unmitigated disaster: the PowerPoint point presentation didn’t work; Ballmer gave a lacklustre performance; and details were sketchy, with no release date or pricing information. Although a good strategist, Ballmer is like Gordon Brown – you get the feeling the organisation he leads would do so much better if he didn’t appear in public.

While Amazon’s Kindle has been a success in the digital book space, the next generation of devices are attracting interest because of their potential to rejuvenate newspapers and magazines. Unsurprisingly, print journalists have devoted acres of column inches to the topic, desperate for the slightest sign that the industry they work for is not in its death throes.

One glimmer of hope is the Skiff reader developed by Hearst, the publishing giant whose titles include Cosmopolitan, Good Housekeeping and Esquire. The device is impressive, but it’s the business model that is really interesting. Hearst is planning to subsidise the e-reader if buyers take out a digital subscription to one of its titles, probably for a minimum of two years. If they subscribe
to two or more publications, the subsidy will be greater.

Its competitors will be watching with interest: analysts say magazine advertising revenue fell 20 per cent in the US last year, with circulation falling by a similar amount.

There’s always one device where the hype gets the better of CES delegates, and this year it was the 3D TV. Although the likes of Panasonic and Samsung were waxing lyrical about the possibilities, analysts remain wary of the category – and they’re right to be. Most families have updated their TVs in recent years, as Western governments switch off analogue signals.

That has led to perfect conditions for HDTV, but if manufacturers think they can repeat the trick with 3D, they’re wrong. As Forrester analyst James McQuivey puts it, “Let’s get real: not even a million US homes will buy one in 2010”, equivalent to less than one per cent of the market. This is still one for the early adopter that wants to spruce up his bachelor pad.