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Low Prices, Convergence Devices Dominate CES 2009

sony-webbie-mhs-pm1The poor economy dominated the scene at CES this year, and it led highly anxious exhibitors to highlight lower prices for gadgets like netbooks, cell phones, and A/V devices. The jittery economy is pushing consumers to look for value, and aggressive price points are the best way to coax them into spending their limited stash of cash. That said, lower prices don’t mean less interesting features. Almost all the relevant devices unveiled this year offer efficient, web-convergent services.

Take Sony’s (s SNE) new $180 HD camcorder and Kodak’s (s EK) Flip Mino-killer HD camcorder, the Zx1 — both are being heavily marketed more as YouTube accessories than standalone devices. A study last year revealed that camcorders are vulnerable in this economy because they have only one function (video). As a result, even premium companies like Canon unveiled budget DVD and Flash camcorders at the show.

Netbooks also wouldn’t have been as huge as they are at CES, if they weren’t cheap. “Business netbooks” sounded like an impossible product category a few months ago, but HP and others are seriously pushing consumers towards these simpler PCs. Netbooks reflect the new need for appropriately modest computing power with versatile features, like 3G connections and GPS receivers. According to the Wall Street Journal, 46 percent of businesses are cutting heavy computer upgrades, and the word around Vegas is that netbooks could be the cheaper IT upgrade, with the optimistic idea that their portability will make workers more efficient.

And netbooks also use the web-based convergent principle: If workers can use services like Google Docs or Zoho for office productivity docs, employers don’t have to spend on expensive separate software suites. The fact that the keyboards of these laptops finally offer human-hand-sized proportions and improved batteries also works in their favor.

itv2000_product_remoteWireless streaming speakers, TVs, and set-top boxes are also big this year. Netgear unveiled a $200 player that receives Net content wirelessly, and many are showing simple but full-featured iPod docks for less than $100.

The CES floor is also littered with cheap(er) Blu-ray players. In 2008, I could count on one hand the number of affordable Blu-ray players from big-name companies. In 2009, Sharp is unveiling two sleek Blu-ray players that will be available for less than $300 and come with a cool new “Quick Start” feature that improves disc-loading.

Despite all this, the most telling product trend associated with low prices is that many companies are refusing to give out prices for their higher-end gadgets. Samsung’s new HZ10W camera, Panasonic’s 47-inch wireless TVs, and Sony’s 3-D TV prototypes were not given price estimates. That’s forced consumers, their advocates and analysts to focus on the cheap gadgets. You might see this as a cynical ploy to bait consumers into turning over the little cash stash, but I see it as a good opportunity to invest in a good product if you do your research and make smart decisions.

Jose Fermoso is a staff writer for

14 Responses to “Low Prices, Convergence Devices Dominate CES 2009”

  1. I like the idea of more value based products, I use to buy top of the line, fancy stuff, but rarely if ever used any of the “high technology” I could get by just as well on a $500 laptop vs a $1200 laptop. So i like the idea of getting more for less, than getting the best.

  2. Quick PS.

    Convergence — the concept of “any device, anywhere, anytime” — carries its own imperative. There is an inexorable dynamic compelling convergence — it is already largely widespread in both Asia and Europe — and to a not inconsiderable degree the US is playing “catch up” in this arena. That said, the US does have the advantage of determining what “works” and what doesn’t by examining Asian and European markets (i.e., as they say the “pioneers are often the ones with the arrows in their backs”) — but in any regard convergence of devices, content, & services is a reality and will only continue to become more tightly integrated.

  3. Let’s see what is really going on here. From an economists perspective as well as that of someone in the IT field, a few trends leap out — none of which are surprising when examined more closely. Simply put — the frop in prices at CES and the ability to still deliver quality products is in fact both reasonable — and to be expected.

    First of all, no brand name provider can “afford” to make available inferior products irrespective of the price or drop in consumer demand and discretionary buying power. Therefore, when consumer demand drops, prices are forced to drop usually proportionally or otherwise loss of market share is usually the result.

    Typically there are always one or more parties from among multiple providers for similar products that will “take the hit”, cut their prices to the bone or even below cost, in order to retain market share. This is understandable given both the high cost of securing market share in the first place coupled with the expectation that market conditions, at some point, will indeed improve and prices will rise to better reflect the value / quality of the products being offered — thereby avoiding the immensely more costly prospect of having to rebuild market share (and/or a tarnished brand as the result of delivering inferior products due to dropping prices).

    Simply put, in this instance price does not reflect the quality or inherent value of the product — quality which must remain high due to competitive forces and market dynamics or suffer the risk of loss of market share and a possibly tarnished brand — but rather prices simply reflect the fact that demand and discretionary spending has taken a “nose dive” and providers have made a business and financial decision that they must make all necessary adjustments accordingly.

    The real “dynamics” here — hidden or otherwise — is the need to always deliver a quality / superior product or someone else will and any failure to do so will result in loss of market share — and extremely expensive proposition as noted — or a tarnished brand resulting from a low quality product (with similarly branding being an enormously expensive proposition).

    As such, all told, low prices is the “least expensive” route for tech providers to take — namely given that these products have already been in development for some time — hence r&d expenditure is already largely a “sunk” cost — and sheer daunting expense of loss of market share and risk of tarnished brand are significantly more important and cost-driven considerations.

    Lastly, as for high end products — similar to many “luxury” categories across market segments — they tend to target consumers that will continue to make the expenditures required for the products they want / desire most. That is not to say that luxury products are “recession proof” per se — rather that given their generally limited supply to begin with, there are usually enough deep-pocketed consumers who will continue to pay asking prices for top end products often irrespective of market conditions (unless they too have directly suffered dire consequences of market crises).

    In summary, price does not always equate with quality — the underlying dynamics are the need to retain market share and brand image — and simply “ride out the storm”.

  4. Leslie Curtis

    Andy get for real dude. Most business users don’t require any more than access to email and maybe I do mean maybe some power point presentation which work perfectly well with netbooks. I am so tired of hearing that businesses need such high powered machines to function. I am a I.T. guy and every time an employee would turn in his or her laptop it would have a bunch of personal crap on it and there children homework assignments. I don’t believe that requires a Dual Core processor or 2 gig of RAM. What where we using 3 years ago? Netbooks are perfect for business especially now that keyboards are larger and more ergonomic for the users. So lets stop discounting the use capabilities of the netbook because they can do everything and then some of a larger more expensive laptops.