Retrenchments at electronics show reflect economic woes.
The Pink Taco at the Hard Rock Hotel & Casino had 15 empty bar stools and six empty tables at 10 o'clock on a Saturday night. There were empty spaces in the parking lots, streets were devoid of pedestrians, and seats at the blackjack tables were unoccupied. Slot machines stood like sentinels, waiting for someone—anyone—to try their luck.
The Consumer Electronics Show was in town again, but for once, there was plenty of elbow room. Attendees compared their negotiated room rates unfavorably to discounts created by oversupply. At the Las Vegas Convention Center, the carpets were wider and there were big empty spots (especially in the South Hall) and big "conversation areas."
While the Consumer Electronics Association, the consortium behind CES, reported over 2, 700 global exhibitors (including 300 first-timers), which unveiled 20, 000 new products across 1. 7 million sf of exhibit space, the number of exhibitors was still down from last year's 3, 000. Attendance was off even further; CEA estimated attendance at "more than 110, 000," a 20-percent drop from the 141, 150 who attended the 2008 CES.
Looming beyond the attendance figures is the fallout from the poor holiday shopping season. The CEA is forecasting a sales decrease in electronics from $172. 1 billion in 2008 to $171.9 billion in 2009, yet cutbacks at most electronics industry companies—along with the demise of national retailer Circuit City and its layoff of 35, 000 employees—suggest a darker picture.
But sanguine exhibitors, attendees, and speakers acknowledged the obvious and moved on.
Product launches and parties at CES continued despite slower traffic. On Jan. 8, an event featured a martini ice bar with a Lenovo sponsorship logo cut into it. (That same day, the computer maker slashed its payroll by 11 percent, or 2, 500 people.)
Said Chris O'Malley, a partner in Pepcom Inc. (one of the producers and owners of Digital Experience!, a popular press and exhibitor event at CES, as well as other tech shows such as PMA, E3, and CTIA): "We were down about 10 percent on attendance, down 25 percent on the exhibitor side. But if the entire economy is down 25 percent and we are too, we won't get too worried. We have to be smart and careful for six months, but the sun will come up again."
On a more positive note, O'Malley is finding that this year, hotels are more flexible, actually offering flat pricing. "For the hotels, we're a good one-night stand—an incredible food and bar tab, but not a big block of hotel rooms," he said. "They would shamelessly raise prices 15 to 20 percent each year; those days are clearly over. In Vegas, you have leverage you haven't had in a long time."
One exhibitor, who did not wish to be named, said suppliers were getting realistic amid the grim economy. At her site selection for next year, she got a $2-per-sf discount, and her preferred hotel chain was offering her more for less.
For his fellow meeting planners, O'Malley advised, "Partner with your suppliers. And make sure that the meeting you're planning in this environment is essential; non-essential falls under the budget ax."
In his keynote address, Microsoft CEO Steve Ballmer said, "The impact of the economy will be with us for a while. It feels like we've entered an era of reduced expectations. But our digital lives will continue to get richer. Companies that continue to pursue innovation will achieve a competitive advantage." He pointedly added, "Over five billion people have never used a PC."
While many delegates stayed home, the stars still came out. Celebrity appearances included Tom Hanks, Alex Trebek, Jimmy Fallon, Counting Crows' Adam Duritz, Usher, and Ludacris.
Stevie Wonder appeared at a National Federation of the Blind press conference during CES to urge the making of tech products, from iPods to talking thermostats, more accessible. (Unemployment among the vision-impaired is at 70 percent.)
"It's my joy to encourage all of the various manufacturers to be a part of making technology more accessible," said Wonder, "so we can experience excitement, pleasure, and freedom. This technology can be great not only for people who are blind, but great for people in general."
But with a sour economy, an electronics sales slowdown, high travel costs, and the instant availability of the Internet, could CES (and an Apple-less Macworld) go the way of extinct giant tech trade shows like COMDEX?
"I don't think it could happen to CES," said Pepcom's O'Malley. "There are simply too many products and essentials to go away. It's also a reasonably well-managed trade show, by a group that's intensely interested."
The CEA estimated that each CES attendee has an average of 12 meetings and that there are approximately 1. 7 million meetings conducted in all during the show. And, it claims the Internet as a partner rather than a competitor; CES updates are posted on Flickr, Twitter, YouTube, Facebook, and even in a blog by the trade group.
"The trade show serves so many constituencies, building inter-company relationships and [bonds] with distributors, retailers, press, and suppliers," added O'Malley. "At the end of the day, a face-to-face is still a desirable thing."
Randy Fry, president of retailer Fry's Electronics, took it further: "If you are not here at CES, you are not in this industry."
Originally published Feb. 2, 2009