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Gadget Magazine bubble?

Given that most publications devoted thousands of inches of editorial space to the recently concluded Consumer Electronics Show, it is no surprise that we are seeing the early signs of a consumer electronics magazine bubble in the works. According to published reports and persistent rumors, there are at least five consumer titles in the works. Future Networks just launched a quasi-consumer electronics monthly, Mobile PC. Ziff Davis Media, IDG and PriMedia are considering their own titles. Conde Nast which already owns Wired is positioning Cargo as the next gadget thing. We have heard that even Economist might be looking to develop a Forbes ASAP style supplement. Of course there are relatively older titles such as Gear magazine. Fairchild Publications’ which is also owned by the Newhouse crew is coming out with a title called, Vitals, though it is more for guys-gone-shopping set. And then there is completely directionless Dig_IT. What they can offer me that Gizmodo doesn’t, I don’t understand.

“The consumer electronics field has sort of exploded,” Ariel Foxman, former InStyle and editor in chief of Cargo told Folio magazine and added, “Not only do you have diversification within categories, you also have a proliferation of new categories.” He points to Wi-Fi and low priced DVD recorders. (Editor’s Note: Proof # 100025 that Conde Nast and fashion rag crew don’t really understand biz basics. One exception to the rule, Chris Anderson of Wired, but then he came from The Economist.) Wi-Fi products, Cisco not withstanding have wafer thin margins, and once Intel’s Wi-Fi well runs dry, expect the ad dollars in this sector to dry-up. DVD players – well guys like Apex have forced Sony to come-up with $69 DVD players. Negative margins anyone?

Folio magazine notes that “margins in consumer electronics have been shrinking for years and budgets for trendy gizmos are notoriously volatile.” Most of these new titles are trying to cash in on the bone-headed moves by companies like HP and Dell and Gateway, who are getting into the consumer electronics business. According to Consumer Electronics Association, the spending on consumer electronics is going to increase to $97 billion, versus $85.5 billion five years ago. That’s 13.5 percent growth over five years. Not a good sign for anyone jumping into the CE business, but what do I know. I am just a lousy journalist. (Read my essay, Profitless Prosperity.)

Has any one noticed that today the average selling price of a tube TV is about $450 while a typical LCD TV (30 inch version) sell for around $3000. Unless these thin screens come down to $500 price point, the mass adoption is not going to happen. And as long as that does not happen, the ad dollars are going to remain thin. And with so many players in the market, well it looks like its 1999 again.

8 Responses to “Gadget Magazine bubble?”

  1. mr. mathew i take your point and would like to add some comments. well all i can say is that there is a huge difference between what early adopters will spend for a product and what the rest of the world will. i think many in silicon valley make that mistake. this observation is based on the retail data from one of the larger chains in the country.

  2. Mithran Mathew

    I’m not so sure about the last point, that “unless thin screens come down to $500, mass adoption is not going to happen. ” Ask your parents how much they had to spend for their first television. Ask yourself how much you spent for your first IBM PC (I spent $5k in 1982) . Just because a new technology is expensive does not mean it will not be adopted. On the contrary, many of the insiders in the display industry seem to think that at $3k, LCD’s are at the right price point both to compete against plasma on the upper end and to push people on the lower end to trade up. Also, from what I understand, the big LCD makers (Samsung, LG Phillips, Sharp) are making pots of money off of these things. There is plenty of money in consumer devices at that price-point.