CES 2012: The perils of ubiquity

January 8, 2012

Tucked among the 2,700 exhibitors at the International Consumer Electronics Show in Las Vegas this week will be nearly 100 fledgling start-ups that represent a first for the 45-year-old trade event: Many don’t yet have products to sell.

The experiment, called Eureka Park, occupies just a tiny portion of the 1.8 million square feet of exhibit space, but it’s the latest attempt by the Consumer Electronics Association to keep the show and its membership relevant in a rapidly changing industry.

“We want to make sure we’re around for another 45 or 50 years, and what better way to do that than help promote new companies,” said Karen Chupka, senior vice president of events and conferences.

The Arlington-based association has made an aggressive effort to broaden its appeal and roster of members in recent years, expanding the categories of companies it represents to include automakers, major retailers and medical device manufacturers, among others.

That approach is most evident at CES, where the gamut of gizmos — if you can even call them all that — is staggering. Tech enthusiasts will find no shortage of traditional consumer electronics, including tablets, smartphones, televisions and game consoles. But there also will be dishwashers. And electric vehicles. Heart monitors, too.

In many ways, consumer technology has become so ubiquitous that it ceases to become its own industry, raising questions about its future. Indeed, though this year’s gadget pageant is shaping up to be the second or third largest in history, one longtime mainstay, Microsoft, is scaling back. This will be the last year the software giant will deliver a major keynote or maintain a substantial presence.

Amassing members

Gary Shapiro took the helm of what would eventually be renamed the Consumer Electronics Association in 1991 when the organization counted just 60 member companies. With 2,200 on its roster today, it ranks among the country’s largest trade groups.

“There has been phenomenal convergence,” Shapiro said. “A telephone is also a camera. A TV is also connected to the Internet. That convergence is something we knew would happen, and we positioned the show for it and our association.”

That diverse membership produces a loud chorus of voices on policy matters here in Washington, where CEA weighs in on topics from Internet piracy to free trade. The association compiles market research and plays an influential role in debates over industry standards.

But size isn’t always an asset, said John Graham, president and chief executive of ASAE, formerly known as the American Society for Association Executives.

“You can become too big and fail as an association,” Graham said, not referring to CEA in particular. Members’ conflicting priorities can leave an organization tongue-tied or at risk of divisions that force leadership to choose a side, he said.

“I could see where having a larger tent would make more sense,” Graham said of CES, saying more participants might broaden a trade show’s appeal. “If you’re trying to govern within that model, I would think the interests between a Ford Motor Co. and a Sony would be very different.”


Microsoft CEO Steve Ballmer speaks at the 2011 International Consumer Electronics Show. The company is scaling back its presence there. (Justin Sullivan/Getty Images)

“I don’t know that it can’t work,” he said. “I just don’t know how it would work.”

Not all of the organization’s recruitment efforts have proven successful. Last month CEA abandoned an attempt to convert technology consumers and enthusiasts into dues-paying members because the initiative was too costly and not received well.

Shapiro contends that the association’s members are aligned on most major policy initiatives despite the diversity of industries it represents. Many of its biggest members, such as Comcast or Microsoft, also hire lobbyists to pursue their own unique concerns.

Still, there have been conflicts.

CEA chose to remain silent on AT&T’s attempted merger with T-Mobile, for example. Leaders also changed their years-old stance on a nationwide Internet sales tax, opting to support the measure in part because the group’s members now include retailers.

“That was a big change, and there still is a little bit of a split there,” Shapiro said. But “no one, including some people who I thought would, has said they’re pulling out of the association over it.”

An innovation strategy

If CEA has a unified agenda, it is in the pursuit of policies that favor innovation.

Shapiro prides himself on being more vocal than most in his criticism of the Obama administration and what he said CEA leaders consider to be one of the most anti-business presidencies in recent history.

“It’s been such a horrible three years, frankly, for business generally,” Shapiro said. “It’s not just the economy. It’s the fact that we’re viewed as the enemy, and I can give you thousands of examples of that.”

He said current laws and regulations hinder the retention of highly educated immigrants, prevent government officials from attending trade show mixers, create tax uncertainties for companies and don’t provide incentives to create jobs. Some of those policies were in place before Obama took office.

“It used to be that the purpose of government was to help create jobs and support business, now the purpose of government is to stop and block business from doing its job,” Shapiro said. “We’ve gone off the deep end as a country in my view.”

Administration officials take a different view. They touted their economic policies in media reports Friday after it was announced that unemployment had fallen to 8.5 percent in December — its lowest level in nearly three years — as employers added 200,000 jobs. Obama also has started several federal initiatives in the past year that, like CEA, target small businesses and entrepreneurs as drivers of the economy.

Though CEA counts many of the biggest names in business among its members, including Apple, Ford and Wal-Mart, Shapiro said its annual trade show and recent focus on innovation are really aimed at small business.

Peter Corbett, co-organizer of Washington’s Digital Capital Week, said his digital marketing firm, iStrategyLabs, did some early work with CEA on its efforts to reach start-ups. The organization could benefit entrepreneurs, what with its lobbying might and annual gadet showcase, he said.

“CEA certainly has the heft and reputation to actually do that,” Corbett said. “I think you’d have to drill down on what their policy points are and are they really aligned with what the interests of a small business are or are they aligned with the big companies.”

Future of technology

Though CEA has aggressively redefined what qualifies as a consumer electronics company, in many ways its membership is indicative of a broader transformation taking place in the industry.

More products than ever tout an Internet connection that allows them to collect and share information. The result is a society in which home thermostats can sync with smartphones, cars can cull traffic updates and fitness monitors log workouts.

“This paints a picture of a world where we’re interacting with all of this stuff constantly without knowing it and the computation becomes more like a service,” said Patrick Tucker, deputy editor of The Futurist, a magazine published by the World Future Society.

Like the name suggests, WFS takes modern-day trends and extrapolates how they might shape society in the coming decades. Tucker predicts nearly all consumer products will soon transmit information back and forth without the need for direct human involvement.

“In the year 2020 or 2030, computation is more like a utility,” he said. “Like water that comes into your house, it’s there and we just expect it to be there.”

A stroll along the show floor at CES suggests we’re well on our way, Chupka said. Devices that are portable and wired for the Web once stood out. Now that’s deemed a standard feature.

“All products in a sense are connecting or talking or being able to share something in some way,” Chupka said. “Very seldom do you see a product anymore that’s going to stand alone and do one thing.”

In other words, gadgets are becoming commodities, something consumers can’t live without but which they don’t necessarily want to pay a premium for. Traditional electronics retailers have felt the squeeze as online competitors and big-box discounters have entered the market.

“You’ve got to compete with price and service, and you’ve got to pay rent, so that’s a tough combo,” said David Schick, a managing director at Stifel, Nicolaus & Co.

Danielle Levitas, a consumer technology analyst with IDC, has made the annual trek to Las Vegas for years and watched the wealth of products on display at the show balloon.

For her, the definition of a consumer electronic has not necessarily changed, but the CES name no longer fits a convention that now represents a broad swath of industries that have seen their products transformed by technology.

“It is the Consumer Technology Show. No doubt about it. That’s probably a lot more appropriate,” she said. “I don’t see expansion being a bad thing. There’s something there for everybody as all of these devices become more connected.”

Steven Overly covers the business of technology, biotechnology and venture capital in the Washington region for The Washington Post and its weekly Capital Business publication. In that capacity, he has written about start-up struggles, investment trends and major drug discoveries.
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