US Prepares for New Age Of Consumer Electronics

Companies change focus from business customer to mass market

IS it time the United States got back into consumer electronics?

Consumer electronics? What about the Asian juggernaut that conquered the US market a decade ago?

Despite that, several American technology authorities say, "Yes."

For example, Gordon Bell, a longtime research director at Digital Equipment Corporation and now an author and consultant, says, "It's a good point to get back in. The world is going digital."

"In my opinion, there's a very good chance that the US could be a dominant player in the new age of consumer electronics," says George Fisher, chairman of Motorola Inc.

The reason for the newfound optimism? Computer and communications technology - traditional American strengths - are transforming the consumer electronics industry. This week's Consumer Electronics Show in Chicago is a case in point.

"What you found 10 years ago [at the show] was ... audio and video equipment," says Cynthia Upson, a spokeswoman for the Electronic Industries Association. Today, computer companies, telecommunications giants, and software houses are sporting their wares at the annual event.

"There are a lot of mature markets that I'm not sure an American company would take a look at," she says. "But there are growth areas that do represent great opportunities for American companies."

Apple Computer Inc., for example, is formally introducing its new personal communicator, the Newton, during the Consumer Electronics Show. Hewlett-Packard Company is showing its new OmniBook 300.

Personal communicators - a blend of portable computing and wireless telecommunications - are a natural market opportunity that US companies can exploit, analysts agree. But to be successful, computer and telecommunications companies will have to make the transition from business customers to consumers.

"It's a big change from being a high-tech business-oriented company to one that is selling like Sharp does," says Paris Burstyn, vice president of telecommunications research at Business Research Group in Newton, Mass. Japanese competitors like Sharp Electronics excel at selling high-volume, low-margin gadgets.

Several American companies are optimistic they can make the change. "The mass market? Absolutely," says Chuck Berman, product line manager for Eo Inc., a Mountain View, Calif., start-up that is creating its own personal communicator. Prices will drop and consumers will latch onto the technology. "I see that happening in the next three to five years," Mr. Berman adds.

Motorola is trying to make a similar transition with its pagers. The Schaumburg, Ill., manufacturer introduced the Bravo Express pager a few years ago. On April 26, it launched a multimillion-dollar advertising campaign to point out that consumers can use pagers. The idea seems to be catching on. Telocator Magazine has dubbed 1993 "The Year of Consumer Paging."

Even if they pioneer the new consumer electronics, American companies will not necessarily be able to hold onto it. The last time the US industry faced foreign competitors, it lost.

Between 1975 and 1985, the imports' share zoomed from one-third of the US consumer electronics market to two-thirds. Longtime US companies folded or sold their consumer electronics divisions.

"When we lost the consumer electronics industry, we lost a lot of the electrical engineering talent," says Ed Sack, chief executive officer of Zilog Inc., a small computer chip maker in Campbell, Calif. "We can process all of the digital information.... [But] when it comes to squirting it out of an antenna, our engineering strengths in this country are weak."

This time around, though, the US companies appear more focused and ready to compete.

"A lot of electronics manufacturers in the US have gone for the easy money, which is the defense market," says John Farrell, economist with Cahners Economics, a forecasting division of the Massachusetts publishing company. "We neglected some of the consumer markets.... [Now] the end of the cold war is here and we know that the new front of the war is on the economic front. Consumer spending is going to be the real power."

US companies are girding for that new reality.

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