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3 Big Areas to Watch at CES 2013

For decades, The Consumer Electronics Show (CES) has been the stage where the year’s consumer electronics trends are unveiled. For those looking to read the tea leaves to try to determine where the industry is going and where the big battles will be fought, the keynotes often provide hints.

For one, computers appear to be taking a backseat this year. Microsoft (NASDAQ:MSFT) ended its run of 14 straight CES keynotes last year and won’t even be displaying at CES this year in Las Vegas. Emphasizing the growing influence of mobile as the PC industry cools, Qualcomm (NASDAQ:QCOM) CEO Paul Jacobs will be delivering the pre-show keynote. And reflecting just how critical consumer reaction to the new TVs being displayed at CES 2013 will be, Panasonic (NYSE:PC) President Kazuhiro Tsuga will be delivering the opening keynote.

I’ll be providing daily updates on CES news and developments, but based on the early buzz, here are a few key areas where I’m expecting to see some interesting developments:

4K Ultra High Definition Televisions

The TV business has become brutally competitive. Consumers shopping for a 40-inch LCD flatscreen were willing to fork over $9,000 for one 10 years ago (because it represented a tremendous leap over the bulky CRT TV it replaced). On Black Friday 2012, Amazon (NASDAQ:AMZN) was selling a 40-inch Toshiba (PINK:TOSYY) LCD TV for $179.

While this market has been great for consumers, it has wreaked havoc on manufacturers. Sony (NYSE:SNE) is the classic example, bleeding red ink from its TV division every year for the better part of the past decade.

Manufacturers have tried everything from 3D support to “smart,” Internet-connected sets in an effort to kickstart the TV replacement cycle, but consumers have been reluctant to upgrade their existing flatscreens … and when they do, they tend to look at these features as standard ones, not worth paying a big premium for.

4K Ultra High Definition is the latest attempt to convince you to spend big bucks in upgrading the TV in your family room. With four times the pixels you’d find in a 1080p high-definition set, there’s no disputing that 4K screens look incredible. They also look much better on larger display sizes, where even 1080p can appear pixelated.

Sony introduced an 84-inch model in 2012 that retailed for a stunning $25k. Look for more manufacturers to pile on the 4K bandwagon at CES 2013 and for prices to begin creeping down, though these TVs will remain premium upgrades.

Whether consumers bite or pass will mean a lot to the hoped-for turnaround of Sony, and a new cycle of upgrades would be beneficial to any company still in the TV business. However, 4K TV makers face a bundle of challenges:

  1. Convincing consumers that their existing TV isn’t good enough.
  2. Avoiding a race to the bottom (again) and holding the line on 4K UltraHD TVs as premium models, not money-losing commodity sets.
  3. Convincing consumers not to hold off for another year in anticipation of a long-rumored Apple (NASDAQ:AAPL) television set.
  4. Lack of 4K content. Even Blu-ray maxes out at 1080p, and although 4K sets can upscale high-definition movies, for best results you need ultra-high-definition content (which currently is only available online). If streaming HD causes households to bump into data caps, imagine what UltraHD streaming is going to do.

Set-Top Streaming TV Boxes

The other half of the TV equation is content. Streaming video really hit the big time in 2012, with services like Netflix (NASDAQ:NFLX), Hulu Plus, iTunes and Amazon Prime signing deals with content providers, and some announcing their own content production plans.

Streaming went mainstream thanks to smart TVs, enabled video game consoles, set-top boxes like the Apple TV and bargain-basement “all-you-can-eat” pricing.

As a result, there’s increasing pressure on cable providers like Comcast (NASDAQ:CMCSA) from consumers who are tiring of rising cable TV bills and eying those cheap, on-demand streaming services as an alternative. Both Sony and Intel (NASDAQ:INTC) are making noise about set-top boxes to be revealed at CES; if they’ve managed to strike a content deal, this could be bad news for the cable providers.

On the other hand, with the exception of limited efforts by Google (NASDAQ:GOOG), those cable providers control households’ web access. Get rid of cable TV and they can boost Internet fees to make up for it, not to mention setting download caps at levels that make any streaming video service too expensive to gain traction.

Bluetooth Wireless Speaker Systems

One of the competitive advantages Apple has enjoyed is the massive ecosystem that grew around the “Made for iOS” standard. Electronics manufacturers released accessories — especially speaker docks — that incorporated the 30-pin connector Apple made standard for iPhones, iPads and most iPods going back to 2003. The huge selection of Apple-compatible accessories gave Apple products a boost against Android alternatives, which mostly had to make do with plugging into stereo systems using an analog cable — an inelegant solution that results in poorer-quality sound.

When Apple dumped the 30-pin connector in 2012 (starting with the iPhone 5), the move rocked the smartphone and tablet accessory market. Many consumers felt burned by Apple and are reluctant to invest in proprietary gear this round. Sensing this shift, manufacturers have been slow to release speaker docks that use Apple’s new Lightning connector, and Bluetooth has received a huge boost as a result. The wireless standard works with practically anything (iOS, Android, Windows Phone 8 and even BlackBerry), it’s wireless (which is sexy), and it means accessory makers no longer have to target just Apple owners.

Fully half of the CES 2013 press releases in my inbox are for Bluetooth speaker systems. Not only do accessory makers like Logitech (NASDAQ:LOGI) stand to gain from a standardized market, but Apple is in danger of losing its “Made for iOS” advantage over Android.

There are plenty of other trends to watch for at CES: auto integration of mobile devices, new display technology for smartphones, more big-screen “phablet” smartphone/tablet hybrids trying to capitalize on Samsung’s (PINK:SSNLF) surprising Galaxy Note success, 3D printers, connected gadgets (like wrist watches) and laptop/tablet hybrids are high on the list.

The one thing that won’t be seen — although it will be the elephant in the room that has the potential to disrupt pretty much everything — is that elusive Apple television.

Stay tuned for daily updates.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media, https://investorplace.com/2013/01/3-big-areas-to-watch-at-ces-2013/.

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