Wed, Dec 26, 2001 page21

• Consumer electronics about to morph

  TECHNOLOGY Some products that appeared this year have already vanished and have become collectors' items. They're likely to be back next year, but in another form

  • AP
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  Portable MP3 players will shrink in size but hold more music. Mobile phones will double as handheld computers. And televisions will be bigger, sharper -- and cheaper.

  These are some of the new -- well, really just mostly improved -- consumer electronic gadgets that will debut next year, a year that also promises some modest strides toward the wirelessly connected world that was overpromised a year ago.

  Devices such as personal digital assistants, cellphones and combinations of the two will increasingly come with built-in wireless Web access. Laptop-toters seeking to surf the Web through wireless hubs, their options currently limited, will likely see many more places offer the service as this technology proliferates.

  

  Casio's MP3 Audio Wrist Watch became a collectors' item this year, but insiders say the same technology will re-appear in a different form next year.

  PHOTO: AP

  Now that tech jargon such as MP3, DVD and PDA have entered the vernacular, the consumer electronics industry is concentrating on next-generation devices, learning from the mistakes and building on the successes of the past few years.

  "Expect to see more evolutionary, rather than revolutionary devices," said Andrew Johnson, a market researcher with Gartner Dataquest.

  It's a good time for a breather, analysts say -- the industry is at a crossroads, switching from analog to digital technologies, and consumers need time to fully grasp the advantages of the fancy new devices now available.

  Some companies are moving cautiously after the bruising economic slowdown this year depressed sales, even of popular mobile phones and handheld computers. Consumers now tend to buy products that fill real needs -- rather than dumping cash on the latest cool gadget, analysts say.

  Multifunction electronic devices laden with features have not necessarily been hit products, though many high-tech companies remain optimistic that the future lies with powerful, converged devices such as refrigerators with built-in Internet access or handheld computers that also serve as a cell phone, pager, digital camera, MP3 audio player and TV remote control. But until consumers -- and not just gearheads -- show a liking to these technologies, and their prices become affordable, some companies are focusing on devices that serve one function well.

  The TV/VCR combination wasn't a blockbuster and is now headed in the same direction as VCRs, which have been losing ground to DVD players.

  Home media servers arrived this year, but didn't fare well either. They digitally store songs on hard disks and have Internet and home network connectivity. But many consumers found them expensive and difficult to use.

  "Consumers don't want to figure out hardware or software. They're so jaded by how hard it is to set up a computer that anything that smells like it scares them to death," said Rob Enderle, analyst with the Giga Information Group.

  Some watches that were also portable music players, such as Casio's MP3 Audio Wrist Watch, became collectors items this year. Internet appliances, such as Sony's eVilla or 3Com's Audrey, also vanished.

  Digital camera makers raced to improve the resolution of a picture this year. Now that consumer models have broken the 4 and 5-megapixel barriers, the focus will be on making cameras more affordable.

  Of course that won't stop companies from introducing in coming months bleeding-edge digital cameras and camcorders that also allow Web-surfing and e-mail.

  And plenty more consumer products will add features formerly found only in separate devices.

  More DVD players will be able to play audio DVDs or the CDs that people burn themselves. The DVD-VCR combinations that were runaway successes this year for companies like Samsung or SONICblue will see more competition.

  DVD players had the Midas touch even during this year's slump, proving Americans still have a love affair with home entertainment -- if the price is right.

  Sales of digital televisions and home theater systems also grew sharply this year and should rise again in 2002, driven by consumer desires to take advantage of the better picture and sound quality DVDs offer.

  And with the arrival of Microsoft's Xbox and Nintendo's Game Cube this holiday season, analysts predict game consoles sell well in the coming year.

  "Consumers will pay for entertainment, and more and more people are looking for entertainment at home," said PJ McNealy, an industry analyst at Gartner G2.

  High-tech innovations that have met with limited acceptance -- Web tablets, interactive TV, personal digital video recorders -- will try again next year.

  Tablets will be slimmer and lighter. Interactive TV features will increasingly be built into cable or satellite set-top boxes.

  The same integrated approach is expected for DVRs, the TiVo or ReplayTV-like devices that allow television viewers to record shows onto a hard disk and pause live programming.

  In other words, even Internet appliances that had short shelf lives this year will likely reappear in other forms.

  "They just morph," said Michelle Abraham, senior analyst at Cahners In-Stat Group market research firm.

  "The technology doesn't go away. It just gets recast in another type of product."
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