Technology

The World’s Biggest Gadget Show Matters Again

Thank new hardware categories for bringing CES back to life.

The 2017 Consumer Electronics Show in Las Vegas on Jan. 4, 2017.

Photographer: Patrick T. Fallon/Bloomberg

The last time CES mattered to the masses may have been as far back as 2001, when Bill Gates appeared at the consumer electronics show to promote Microsoft Corp.’s first Xbox. Dwayne “the Rock” Johnson, then best known as a wrestler for what was still called the WWF, exchanged catchphrases with Gates for a few minutes onstage in Las Vegas before they demoed the video game console’s top-of-the-line visuals. A year later, the first entry in the Xbox Halo franchise would become the fastest-selling console game released to that point. It probably would’ve done just fine without CES, but the trade show was considered a key stop on its road to commercial success.

Things changed. The focus of the consumer technology industry swung from hardware to smartphone apps and social media. Companies such as Apple, Samsung, and Google began holding their own, separate product demo days, usually a bit closer to the next holiday shopping season than January. The Vegas show became largely the province of automakers hunting for new gear lower down in their supply chain. This year, however, the biggest internet companies are pouring money into a growing range of consumer gadgets, many in competition with one another. CES is relevant again.

At the 4,000-exhibitor show kicking off on Jan. 9, Google is setting up a booth for the first time in years, and Amazon.com, Apple, Facebook, and other companies are expected to prowl the Vegas showrooms in much greater earnest than usual. The companies are racing to differentiate themselves in the emerging market for smart speakers and the shaky market for virtual-reality headsets, and to beat their rivals to store shelves with augmented-reality glasses that can overlay information or goofy characters on a wearer’s view of the real world. There won’t be much for consumers to play with, but sales reps pitching advanced chips and other components have a shot at career-making deals, and the sales made in the meeting rooms off the show floors will likely help shape the design of groundbreaking products for the next couple of years.

“Hardware, specifically component hardware, is hot at CES because that is what’s keeping VR, AR, and AI from reaching their pinnacle,” says Patrick Moorhead, president of consulting firm Moor Insights & Strategy. The competitors, he says, all need markedly better performance at low power than their current parts can provide. Facebook didn’t respond to a request for comment. Apple and Amazon declined to comment, and Google declined to comment beyond saying it will have a booth.

Although Amazon won’t have its own booth, people familiar with its plans say executives overseeing Alexa, the company’s artificial intelligence software, will be keeping a close eye on the generic smart speakers flooding the halls from China and elsewhere. Alexa operates a new line of smart speakers from Sonos Inc., and three times as many households use an Amazon Echo than use the second-place Google Home, according to analysis firm Consumer Intelligence Research Partners. Apple Inc.’s similar HomePod is loosely slated for release in the early months of 2018.

The smart-speaker market is well-established, but this is a make-or-break year for VR. The major headset makers, including Facebook Inc.’s Oculus, haven’t been able to shrink their hardware or prices enough to attract interest from non-diehards. Facebook aims to change that early in the year with a budget model, the $200 Oculus Go. Headset makers attending the show will be eager to negotiate for more powerful chips, better lenses, and other components.

Augmented reality is a priority for even more of the big tech companies, which are investing in AR glasses they hope will fare better than Google Glass. Microsoft is refining its bulky and decidedly uncool-looking HoloLens; Amazon and Google are rumored to be experimenting with their own headsets; and Apple is planning on a 2020-ish release for the glasses it’s betting will be the next iPhone. These efforts will require even more specialized lenses and other components than VR headsets. Paul Travers, chief executive officer of Vuzix Corp., which makes AR glasses and components, says his schedule for CES week is packed with meetings focused on both developing and distributing his glasses and putting his optics in other companies’ systems.

Electric and driverless cars will remain a big part of this year’s CES, as makers of high-tech cameras, batteries, and AI software vie to climb into automakers’ dashboards. There probably won’t be any mind-blowing announcements from Las Vegas this January, and the show’s history is littered with more duds than hits. (3D TVs, anyone?) But as the leaders of the app, search, and social media worlds edge out of their comfort zones in search of more precious data, CES is becoming something it hasn’t been in a while: a stop companies think they can’t afford to miss.

    BOTTOM LINE - CES, known for the past few years mostly as the “Car Electronics Show,” will be a more important destination for Silicon Valley’s biggest names this year.
    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE