Consumer Electronics Field Gets Crowded

Thursday, January 8th 2004, 12:00 am

By: News On 6

LAS VEGAS (AP) _ Just as digital entertainment starts to hit its stride, consumer electronics giants like Sony, Panasonic, Sharp and Toshiba are facing an intensifying challenge _ and not just from each other.

Microsoft, Intel, Dell and Hewlett-Packard, the stalwarts of computing, have all stepped out of the office and are trying to get comfortable in the living room.

Their Johnny-come-lately status makes them, for now, underdogs in the $95 billion industry highlighted at the International Consumer Electronics Show. But their efforts _ from Dell and HP's entry into the flat-screen TV market to Microsoft's foray into portable media players _ are far from mere toe-dipping, analysts say.

The greater intelligence and Internet connectivity being added to such gadgets as watches, digital cameras and DVD players favors the PC titans, whose arsenal has been evolving to meet precisely these challenges.

This year's CES show is the largest ever with a record 2,300 exhibitors occupying 1.35 million square feet of floor space, and more than 110,000 attendees expected.

Exactly the audience Microsoft craves for the latest from its Windows Media Center platform, which takes aim squarely at the family entertainment room.

The Microsoft platform, which allows users to link the digital photos, music and video stored on their PCs to living room entertainment systems, was a highlight of the software behemoth's presence at the four-day show, which begins Thursday.

It is the basis, for one, of a paperback book-sized portable media center that can play digital video and audio content.

The devices will feature hard drives and 4-inch color screens, allowing users to transfer music, video, photos, and even recorded television from their PCs to the portable device for playback anywhere.

``It's the next-generation media players,'' said John O'Rourke, Microsoft's senior director of consumer strategy.

Similar products already are available from companies like Archos, but the Microsoft-based devices are designed to work easily with Windows software.

On Wednesday, Microsoft chairman Bill Gates was to announce more manufacturers joining Creative Labs to make portable media players based on Microsoft's technology formerly known as Media2Go _ all of which are expected to hit store shelves in time for the holidays.

Intel, meanwhile, announced plans Wednesday to invest $200 million in companies making digital consumer products. The idea is to encourage development of products that get digital content anywhere at any time, hopefully with some Intel technology inside.

Dell and HP, the world's two largest PC makers, were both touting their widening selection of consumer gadgets, including music players, handheld computers and televisions.

Gateway was among the first PC makers to make headway into consumer electronics, with its late 2002 debut of a relatively low-priced $3,000 42-inch plasma television. By mid-2003, Gateway had already clinched the No. 2 spot in the United States of unit sales of plasma televisions, showing that consumers are willing to accept a new brand name in their living rooms, according to analyst Bob O'Donnell of market research firm IDC.

But it's not just the PC giants seeking the fatter profit margins in the fast-growing market of flat-panel televisions and other pricey consumer gadgets. Companies whose brands are known for other niches are also out in force in Las Vegas.

Newcomer Westinghouse Digital Electronics, which licensed the Westinghouse name and logo from media giant Viacom, will show off new liquid crystal display TVs. Motorola lends its brand to a line of plasma and LCD TVs to be unveiled by Moxell Technologies, a subsidiary of computer-monitor maker Proview International Holdings Ltd.

Planar Systems, which specializes in industrial and medical displays, will be showing off its new plasma TV in booth space shared with Dell.

JBL, maker of speakers, will debut its first ever audio and video home theater systems, complete with a DVD changer and high-definition 50-inch plasma display.

Epson, a leading printer manufacturer, also is expanding into home theaters while Gibson Guitar's newly formed consumer electronics division will showcase a digital music jukebox that can store up to 1,000 CDs worth of music, access its Gibson-branded online music service and download songs _ all without the need for a computer.

All are trying to stake a claim in an industry that grew 2.3 percent in factory revenues from $94.2 billion in 2002 to about $96.4 billion in 2003 _ despite a 5 percent deflation of wholesale prices across the industry.

With a greater variety of consumer gadgets expected to hit the market, the Consumer Electronics Association forecasts that industry revenues could grow by 4 percent this year to exceed $100 billion.

The industry fervor and unstoppable convergence of PC technology with slick gadgets has helped make the CES show the marquis consumer electronics event at the expense of other once-hot technology trade shows such as Comdex and TechXNY.

Convergence cuts both ways, of course, and the traditional consumer electronics companies are borrowing ideas from the PC makers as well.

And so Sharp will debut LCD TVs with PC-card slots that enable the addition of digital video recording functionality or a wireless connection to a home computer network.

In the end, it's all about linking together devices that previously didn't talk to one another.

The Taiwanese-based chipset maker VIA Technologies, along with Apex Digital, was introducing a gaming console for the living room that will be able to link to a user's home computer network to play PC-based games as well as videos, photos and music.

``Everyone is trying to make this magic box that will unlock digital media for the living room,'' said Richard Brown, VIA Technologies' associate vice president.