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Consumers Lead Tech Market Comeback

If the economy isn't coming back, you couldn't tell it by the Consumer Electronics Show in Las Vegas last week. Mountains of product releases, a near-electric buzz among attendees, and cab lines. Cab lines like you haven't seen at a technology tradeshow in recent years. In fact, if the length of the taxi queue were an economic indicator, this market is coming back strong.

There were other indicators at CES, however. Ones more reliable than the wait for a hackney.

Less than a decade ago, CES was dominated by the A/V industry. Monster trucks with monster speakers deafened convention goers at every turn. Televisions, stereo components, home theater systems. These were the stuff of CES. Then, it was tough to find a computer company amid the noise and hoopla, and when you did they were showing first-generation PDAs and racks and racks of CD-ROM titles.

Now, the tables are turned. Whole halls are dedicated to the consumer application of mainstream technology. Giant booths put up by the likes of Intel and Microsoft overshadow the sellers of "classic" consumer electronics. The fight over which device - TV or PC - would dominate home entertainment is won. The TV is becoming a peripheral of the computer. Whereas a decade ago the home PC was an extension of the work PC, today it is the center of the digital lifestyle, controlling the television and streaming audio to stereo systems. Certainly, the market here is still young, but the future is clear and the market opportunity is tremendous.

While other convention goers were oohing and ahing over the latest plasma TVs, I slipped into the SanDisk booth to take the pulse of another indicator. SanDisk leads the way in flash memory technology, and last week they dropped 1 gigabyte of storage into the palm of my hand. Now, this is impressive for the sheer feat of having that much data - a music library, a photo archive, a movie - in a matchbox-sized device. But even more impressive is the progress this company has made in the past year. It's battled its stock price up from $14 a year ago to the $68 per share it trades at today, and it expects to announce robust revenue growth for the year past and forecast continued growth in the year ahead.
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All of this good news if you are a SanDisk investor, but as important, it is a leading indicator of another key trend - the wholesale shift to digital media by the consumer marketplace. Consumers are creating and consuming digital media in tremendous volume. They are using flash memory cards in digital cameras like the film of old. (And sources near to SanDisk hint that the company will be bringing out a product next month that leverages that trend.) As consumers make the leap to digital media, technology companies are presented with a great opportunity to build products and services that give consumers useful things to do with that new media. (Hint: We'll see some of these at DEMO 2004.)

Technology companies will also get plenty of competition from the old-guard CE companies who are not about to seed their business to the technology vanguard. So expect a year ahead filled with innovation and experimentation where the consumer is the judge of market suitability. Early adopters will be kept busy, while mainstream consumers drive volume and pricing. Somehow, the promise of what's to come makes that 2-hour cab line worthwhile.

END NOTES

Kubi Software is aiming to go vertical. The start-up received $8 million in series C financing that it says it will use to push into financial services, professional services, and pharmaceuticals. Coming onboard as a first-time backer of the collaborative email software maker is North Bridge Venture Partners, and General Partner Michael Skok will join Kubi's board of directors. Previous backers also returned, including Lazard Technology Partners and VIMAC Ventures, LLC. This round of financing brings Kubi Software's total to $16.3 million, which it plans to use to improve its Kubi Client and Kubi Server . . . IBM and RealNetworks are joining forces to help companies manage their digital assets. Announced at the Consumer Electronics Show, the partnership will marry IBM's middleware with RealNetworks' digital media technologies. Together the two technologies will let organizations offer digital media services such as online television programming and mobile music services. Products based on these technologies are expected to be available in the first half of this year . . . Spending on radio frequency identification, better known as RFID, is set to skyrocket over the next four years, according to a recent report by IDC. The wireless tagging technology is seen as a boon for supply chain management because it lets companies closely track inventory from shipments to pallets to individual packages. IDC says that by 2008, this market will grow from $91.5 million to nearly $1.3 billion. The initial investment will be in the hardware, or the tags themselves. Eventually, IDC predicts more money will be spent on the applications attached to those tags. For more on this, visit .

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Chris Shipley is the executive producer of NetworkWorld's DEMO Conferences, Editor of DEMOletter and a technology industry analyst for nearly 20 years. She can be reached at chris@demo.com. Shipley, has covered the personal technology business since 1984 and is regarded as one of the top analysts covering the technology industry today. Shipley has worked as a writer and editor for variety of technology consumer magazines, including PC Week, PC Magazine, PC/Computing, and InfoWorld, US Magazine and Working Woman. She has written two books on communications and Internet technology, has won numerous awards for journalistic excellence, and was named the #1 newsletter editor by Marketing Computers for two years in a row. To subscribe to DEMOletter please visit: http://www.idgexecforums.com/demoletter/index.html.

This column was reprinted with permission of Network World Inc. All registered trademarks are owned by IDG. More information can be found at http://www.idgef.com.

© IDG. All rights Reserved

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The opinions expressed herein or statements made in the above column are solely those of the author, & do not necessarily reflect the views of The Wisconsin Technology Network, LLC. (WTN). WTN, LLC accepts no legal liability or responsibility for any claims made or opinions expressed herein.
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