Time to Kickstart(er) the Consumer Electronics Biz

The big news coming out of the CES show in Las Vegas this week was the lack of big news coming out of the CES show in Las Vegas this week. The biggest news, quite possibly, was the Booth Babes Controversy. Despite thousands of new product launches, more than 3,000 exhibitors and more than 150,000 attendees, the annual Consumer Electronics Show seems to have lost its innovation mojo. The sheer ubiquity of products coming out of CES is part of the problem – as is the fact that many of the products at the show are just "crappy gadgets." You can blame the economy, but consumers are no longer wowed by incremental changes to consumer electronics, many of which are just cheap junk and knockoffs from China.

There’s no doubt that the consumer electronics business is broken. Electronics retailer Circuit City went into bankruptcy in 2008 and now Best Buy, the nation’s best-known big box superstore for consumer electronics - the same company lauded in business strategy books for innovations like its Geek Squad - is rumored to be the verge of Chapter 11 bankruptcy. After years of constantly wooing customers with new gadgets and gizmos, big-box stores like Circuit City and Best Buy are being supplanted by faster, nimbler and cheaper Internet-based rivals like Amazon. Sound familiar? That’s the same storyline used to explain how book stores and music stores went the way of the dinosaurs.

However, there's something else at work here. The "Internet ate my lunch" story is too easy. The real story is that the way we bring new products to market is changing and, as a result, sites like Kickstarter are kicking CES's a**. By using crowdfunding to get products into market quickly, Kickstarter is turning the traditional process of how consumer gadgets get to market on its head. The wisdom of the crowd is bringing us the products we actually want, at a price we like. To top it off, some Kickstarter projects even give backers a chance to have a say in how the products are made as part of a DIY Manufacturing ethos. Kickstarter recently released its crowdfunding totals from 2011, and the figures are staggering: more than $100 million in pledged funding; more than 1.2 million different backers; and an average of 75 new projects on the site each day. Granted, not all of these products are electronics or even gadgets – but enough new products – like the TikTok iPad Nano watch – make it out of Kickstarter to give a hint of what’s to come.

The problems at CES have been well documented. Not only is this Microsoft’s final year at the event, but also tech innovators like Apple have long ago found other outlets for their major product launches. Big consumer tech shows like CES are a preview of the future fortunes of big box retailers like Best Buy, who rely on a constant stream of new products to draw in consumer foot traffic. The more cool "must-have" products in the pipeline – from tablets to ultrabooks to 3D TVs – the more likely it is that these big box stores can thrive. Many sellers of consumer electronics considered themselves safe from the digital Internet onslaught; after all, they were the ones selling razor blades, the media companies were the ones selling razors.

At some point, there needs to be greater understanding of how digital culture is eating itself from the inside out. Digital devices and digital content are together part of digital culture - one depends upon the other. As Robert Levine points out in Free Ride: How Digital Parasites Are Destroying the Culture Business, the problem is that media companies and technology companies often have two competing approaches to digital culture. To get their devices into as many hands as possible, tech manufacturers need unfettered access to as much free content as possible. To make as much money as possible, media and content creators need to created walled gardens and ecosystems. In short, tech manufacturers want to sell you ultrabooks, but consumers want tablets. So we get both.

Times, they are a-changing, though. People have finally tired of the annual update game, where incremental new improvements are pitched as a stimulus to buy the next iteration of the shiny gadget you already have. They are tired of being offered products – like 3D TVs and ultrabooks – that they may or may not need. (At least, not at current prices.) At the end of the day, the consumer electronics industry is a hit-driven business. Thousands of new products unveiled at CES, but the only ones that seem to matter these days are the blockbuster gadgets from companies like Apple and Amazon. By embracing trends like DIY Manufacturing, however, it might just be possible to kickstart the consumer electronics business.

Image: Las Vegas CES 2009 / Shutterstock

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