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VERSACE: An insider’s take on the future of consumer electronics

- - Thursday, January 3, 2013

With 2012 behind us and the "fiscal cliff" narrowly averted for now, investors can get back to investing, and that means keeping up on the latest new thing and disruptive technologies. One of the best ways to do that is to keep tabs on the annual International Consumer Electronics Show (CES) held each January. I recently spent some time with Gary Shapiro, president and CEO of the Consumer Electronics Association, the industry's biggest trade groups.

Q: What is the Consumer Electronics Association and its role for consumers?

A: The Consumer Electronics Association is the pre-eminent trade association promoting growth in the $206 billion U.S. consumer electronics industry. More than 2,000 companies — large and small — enjoy the benefits of CEA membership, including legislative advocacy, market research, technical training and education, industry promotion, standards development and the fostering of business and strategic relationships. CEA also owns and produces the International CES — The Global Stage for Innovation. All profits from [the trade show] are reinvested into CEA's industry services.

At CEA, we focus on fostering innovation, as a national strategy and as part of our mission, all year long. For consumers, this means we promote the development of exciting new technologies, products and services.

Q: How did the industry fare this holiday shopping season, which seemed to start off strong in late November but fizzled before too long?

A: CEA research suggests the holiday sale season began slowly — likely as a result of the elections pulling consumer attention. Spending, however, began to accelerate into November. The Black Friday week was the strongest in history.

Overall, we expect retail sales this holiday season to grow 3.4 percent — slightly below last year's results but above the 10-year trend. CEA expects electronics and appliance holiday retail sales to grow 2.2 percent — slightly above last year and above the 10-year trend.

Q: It seems PCs and e-readers are losing out to tablets. Any noteworthy products this year?

A: Tablet ownership has increased from 1 in 5 households at the beginning of the year to 1 in 3. We are seeing a tremendous number of devices launch around these "hub devices," including health and fitness products and new technologies to stream audio from tablets to higher-quality speakers and audio systems.

2012 brought the launch of the next generation of TV — ultra HD. Ultra HD features a picture with four times more detail than on high-definition sets, creating an incredibly immersive viewing experience.

We also are excited about the next generation of laptops and computing devices, which take advantage of Windows 8, and new e-readers that offer more features and connectivity at a wide range of price points.

Q: Looking into 2013, the annual International CES is on tap. What's the background on the show and what can we expect to hear this year?

A: The International CES is the world's largest annual innovation event. It is the launching pad for next-generation technologies that consumers will be coveting in the years ahead.

The 2013 CES will feature a record 1.87 million net square feet of exhibit space, with more than 3,000 exhibitors. Some 20,000 new products will launch at the show, with major product trends including cloud-based services, advancements in digital health, gesture and sensing technologies, apps, the latest smartphone and tablet innovations, connected car technologies and Ultra HDTV.

The 2013 CES conference program features 300 robust sessions and 800 speakers, including keynotes from the leaders of Qualcomm, Panasonic, Samsung and Verizon, and a panel with executives from American Express, AT&T, Coca-Cola, Salesforce.com, Samsung and Unilever.

Q: Lastly, you have a new book coming out "Ninja Innovation: The Ten Killer Strategies of the World's Most Successful Businesses." How important is innovation in the consumer electronics industry and in American business?

A: Innovation is America's "secret sauce." It is a critical component of our history and our success as a country.

We coined the term "ninja innovation" to underscore that the same qualities that made Japanese ninjas so effective make today's "ninja innovators" so effective: discipline, determination, passion.

Ninja innovation looks at setting goals, building a team, taking risks, dealing with failure, following a moral compass, challenging the status quo, stealth and adaptability, among other important factors through the lens of the [consumer electronics] industry. The book includes examples from IBM, Amazon, eBay, Ford, HealthSpot, and Bill Gates, Steve Jobs and Jeff Bezos, among others.

Our own International CES is a microcosm of the whole philosophy laid out in Ninja Innovation, and the book draws heavily on our show as an example of ninja innovation at its best.

Chris Versace is the editor of the PowerTrend Profits newsletter and ETF PowerTrader, as well as the host of PowerTalk. Visit them at ChrisVersace.com or follow him on Twitter at @_ChrisVersace. At the time of publication, Mr. Versace had no positions in companies mentioned; however, positions can change.