CES Show Offers Glimpse Of Future Home Entertainment

PALO ALTO, Calif. -(Dow Jones)- The Consumer Electronics Show next week will provide a glimpse of the future in home entertainment, but the new offerings aren't likely to solve the industry's age-old problem: making them easy to set up and use.

Products designed to beam movies about the house, download video to cell phones and handheld computers, or dazzle viewers with bright, clear displays will be exhibited in abundance at the four-day trade show in Las Vegas, among the largest in the country.

The show will feature mobile devices like portable video players, satellite radios, personal navigation systems and cell phones with a host of converged features, from playing digital music and games to using global positioning satellites.

For the living room, manufacturers will unveil high-definition DVDs, larger flat-panel televisions, storage devices to hold movies and music, and connectors to let TVs and personal computers share music and video. Autos will boast of speakers built into their roofs and antennas designed to pick up satellite TV signals while on the go.

All will be more capable. But rather than revolutionary progress at becoming more consumer friendly, this year's steps will likely be evolutionary. "There should be more advances for the connected living room," says Richard Doherty, research director at the Envisioneering Group. But "there's still a bit of a credibility gap between the keynoters (claims) and the retailers," who need the devices to work simply.

Wireless devices will continue to be too difficult to set up, media servers too complex to link with televisions and stereos, and networks too slow to push around full-featured movies. On top of that, a battle for the next generation high-definition DVD format is slowing the adoption of these high-resolution players.

The already gargantuan show will be slightly larger than last year. Exhibits will cover 1.6 million square feet of space, up from 1.5 million, and products from 2,500 companies will be on display. During the Thursday to Sunday event, 130,000 people are expected to attend, similar to last year when expectations were for a similar sized audience but the final tally brought the crowd up to 145,000.

More Interest In Consumer Electronics

The broad interest is no surprise given the rapidly changing $123 billion consumer-electronics marketplace. Consumer-electronics and personal-computer companies jockey so hard for position because the market they see for digital entertainment has huge potential.

By 2009, the accumulated sales of high-definition televisions in the U.S. could reach $65 billion, according to researchers at Parks Associates. The same year, the market for premium video-on-demand services, including downloads of movies and other content, will bring in $530 million, says Parks, and, by a year later, 13 million portable video players will have been sold.

This year alone, nearly 300 million camera-equipped cell phones reached the worldwide market, says Gartner Inc., a research firm.

Among the hottest markets is the one for digital, flat-screen televisions with sales close to an estimated $18 billion this year. Price declines that helped fuel the growth could moderate, executives say, leading to a slightly slower expansion in 2006.

Yet the products continue to go mainstream. James Sanduski, vice president of marketing at Samsung, says he sees LCD TV sales doubling in the U.S. to between 7.5 million units and 8 million next year, up from between 3.9 million and 4 million units this year.

"It's going to be a fabulous year for LCDs," he says.

Sales of plasma models could rise to 2.7 million units next year from about 1.8 million this year, according to some industry projections, though price declines that averaged 40% for digital TVs in 2005 could be closer to 15% or 20% in 2006. Most major manufacturers, including Samsung and Panasonic, are expected to unveil new models at the show.

Television screens, meanwhile, will continue to offer improved color, says Steve Tirado, chief executive of Silicon Image, a Sunnyvale, Calif., chip maker. "We're gong to move from millions of colors on the screen to zillions," says Tirado. Demonstration should be available this year with products to come in 2007.

Another major theme at the show will be wireless equipment. "We'll finally, maybe, start to see the extinction of wires in the home entertainment network," says John Hull, a partner at the venture capital firm OVP Venture Partners. For several years, manufacturers have been promising their disappearance.

Freescale Semiconductor says it will introduce its Cable Free USB, which will allow appliances to operate without wires using a technology called ultra-wideband.

Jason Kridorian, chief financial officer of Sling Media Inc., a private San Mateo, Calif., company, says wireless networks are behind a product he will unveil that delivers television broadcasts to cell phones and handheld computers. The new software will work with the company's Slingbox, which uses a broadband connection to deliver television programming from the homes to laptops.

Wireless technology also will find its way into stereo headsets and into portable music players, specifically an iPod from Apple Computer Inc. (AAPL) that analysts expect will be introduced at Macworld in San Francisco starting Jan. 9.

At CES, Intel Chief Executive Paul Otellini, who will give a keynote address in addition to Microsoft Chairman Bill Gates, is expected to unveil new details about the company's new Viiv brand of entertainment PCs for the living room, which come with remote controls and features such as surround sound. The show will see the first Viiv machines from computer makers, such as Gateway.

Cisco Systems will push further into the consumer marketplace with the introduction of its first high-definition DVD player, under its Linksys brand and targeted for Europe.

Linksys Vice President Chris Stevens says the Kiss Network DVD Player will use a Microsoft high-definition format now being used in Europe. But he says the war over rival high definition formats - HD-DVD and Blu-ray - is slowing down the use of this high-resolution technology.

"It will absolutely chill adoption," he says. "There's a lot of royalties for the successful party." Still, the show will see prototypes of laptops with high-definition DVD players, including from Toshiba. The products should reach the market during 2006.

Another emerging product category making an appearance at the show is satellite receivers for cars - enabling them to pick up television signals. It's just getting started, but "I think that's fairly big," says Mel Caraballo, chief executive of Motia Inc. of Pasadena, Calif., which makes chips for antennas.

Other products that should create a splash include Swissbit Group's Swiss army knife with a built-in music player. Eleksen Ltd. of London will introduce a flexible keyboard laid out on a piece of nylon fabric. The fabric rolls up to the size of a large cigar and uses two AAA batteries and a wireless Bluetooth connection to permit 10 hours of typing, says Chief Executive Robin Shephard.

It should sell for between $99 and $129 and work with cell phones and handheld computers from the likes of Motorola, Hewlett-Packard, Palm Inc. and Dell.

-By Mark Boslet, Dow Jones Newswires; 650-496-1366; mark.boslet@dowjones.com

(END) Dow Jones Newswires "

Posted to the site on 30th December 2005