There will be no shortage of high-definition flat-screen televisions, media centre PCs, wireless devices and home networking gear on display at the 2005 Consumer Electronics Show in Las Vegas this week.

CES is where the biggest names in consumer electronics and computing come together to show off their newest products and set the agenda for the new year. Some 2,400 companies and 130,000 attendees are expected to cram into the 1.5m sq ft exhibition built to inspire, excite and impress.

And yet the consumer electronics market remains confusing and frustrating for many prospective buyers, overwhelmed by thousands of gadgets built around different technologies that operate on incompatible standards.

This year's CES arrives at an important juncture for consumer electronics and computer manufacturers, which are preparing to battle for supremacy in the digitally "connected" home. The prize is worthy: US shipments of consumer electronics goods rose by 11 per cent to $114bn in 2004, according to the Consumer Electronics Association.

Shipments are expected to rise by a further 11 per cent this year, but the industry's ability to capitalise on this opportunity will depend largely on whether it can successfully demonstrate to consumers how all these technologies fit together.

"We can't just sell the gadgets any more. We have to sell convergence," says Stephen Baker, analyst at NPD, a market research group.

Convergence, a notion loosely bandied around for years, is starting to become a reality - at least in the digital living room. Competing technologies and different standards governing digital rights management (DRM) remain impediments to fully interoperable products, but there are signs as CES formally kicks off tomorrow that hardware manufacturers, software makers and service providers are starting to look more closely at ways to simplify their products and make them work smoothly with other devices.

Some, such as Sony and Apple, are taking a proprietary approach by making sure their own hardware, software and gadgets all work well together. Others such as Hewlett-Packard, Samsung and Matsushita's Panasonic are encouraging the formation of alliances or industry-wide standards bodies. Industry leaders must also develop merchandising plans that showcase how these gadgets will work together and why consumers would want to buy them.

"These companies will do well to educate consumers and communicate very clearly what is the value proposition of these new technologies," says Timothy Deal, analyst at Technology Business Research.

Mr Baker says a number of companies have suggested they will work more closely this year to develop standards and a unified merchandising plan. And while CES in the past has showcased revolutionary gadgets, the theme this year will be more evolutionary.

Intel, for example, will host what the semiconductor giant describes as "eight experience zones, a digital home arcade and a theatre" where visitors will sample the latest digital home products and technologies.

Bill Gates's eve-of-show keynote speech is also expected to focus heavily on demonstrating how Microsoft and other technologies can be used to integrate devices and services in the home. One of his on-stage props will be the 2005 Denali Edition Media Center developed by Niveus Media. It runs the latest Windows XP Media Center Edition 2005 software, which supports high definition television.

CES will also feature scores of new products that can be connected to other devices with wi-fi or Bluetooth short-range wireless technology. These technologies, embedded into a wide array of TVs, stereo receivers, car electronics and set-top boxes, will let consumers broadcast music from a home PC to stereo speakers, or beam high-definition video from one room to another.

Wireless technologies will also be used to connect components outside the home via third-generation mobile telephony. Most of the leading US telephony groups will be on hand to discuss new 3G data services and plans to build super high-speed fibre-optic networks to consumers' doorsteps.

Other companies are busy developing products that will let people take their content with them when they leave home. Orb Networks, a Silicon Valley start-up, has developed software that enables someone using a portable device to access a website where all the media on their home PC is available for viewing, from music to digital pictures to video.

Meanwhile, TiVo, the company that developed the personal video recorder, took a step in that direction this week with its new TiVoToGo feature that lets subscribers easily transfer recorded TV shows or movies to their computers. The technology, which will enable subscribers to watch recorded shows on the go, is legal when used for personal, non-commercial viewing.

But if a fully integrated collection of standards, products and services remains the industry's goal, significant hurdles remain. Digital rights software, which is crucial to protecting digitised content, remains split between several camps, including Microsoft, RealNetworks and Apple Computer. Efforts by hardware makers to convince these companies to harmonise their DRM software have fallen short and there is little to suggest this impediment will soon be overcome.

CES will become ground zero for another format war between rival factions promoting competing technologies for the next generation of DVDs. The Blu-ray camp, which includes Sony, Hewlett-Packard and Panasonic, will square off against the HD DVD standard touted by Toshiba, NEC and Sanyo. The stakes are high - the losing faction will have squandered millions of dollars on research and development while the winner will gain control of the $20bn DVD hardware industry.

Industry observers fear that such a standards war will inevitably slow the adoption of next generation technologies. On the other hand, they note that such battles are likely to become less common as the industry moves to develop technologies that are simpler, compatible and easier for consumers to use.

"We're seeing more simplification in the industry. Vendors are starting to get a grasp on what people want from the integration of home consumer products," says Mr Deal.


If it makes it here, it does not mean it can make it anywhere. That is the lesson from Consumer Electronics Shows of years past. CES may be billed as the event that sets the agenda for the digital consumer market every year, but it has seen its share of spectacular flops.

Take Intel’s much-ballyhooed announcement last year that it would produce a chip for the television display market. Intel predicted that the new technology would “change large-screen television economics” by halving production costs by the end of 2004.

The technology is known as liquid crystal on silicon, or LCOS. A thin layer of liquid crystal silicon is applied to a number of transistors, which manipulate reflected light into an image.

Intel’s initiative was central to its efforts to challenge rival chipmaker Texas Instruments in making the core components for large-scale projection televisions. But LCOS has proved difficult to master and in October last year Intel was forced to revise its plans. It said it would hold back from launching the technology until it could be sure of “clear product differentiation” from rival technologies.

And let us not forget Microsoft’s SPOT Watch, which keeps popping up at Las Vegas trade shows - but few other places.

In addition to displaying the time, Smart Personal Objects Technology watches can be programmed to receive news, sports information, stock prices, weather updates, cinema listings, horoscopes and other diversions. People can receive short text messages on their SPOT watches, as well as reminders of appointments from their Microsoft Outlook calendars.

Swatch and Suunto, the Finnish sports watch company, produce SPOT watches with far more processing power and memory than the original IBM desktop computers. But while the watches are clearly technological marvels, sales have been hampered by bulky designs, a limited choice of information feeds, high prices and a monthly service fee.

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