There were many disconcerting things on the floor of the Consumer Electronics Show. From an enormous half phone/half tablet that uses a stylus to Justin Bieber, there were plenty of things that would make almost anyone do a double take. But beyond that, there were plenty of disconcerting things for investors, too. Beyond the flash and excitement of new were important investment themes that could drive the tech industry for years. Here are five, somewhat troubling, takeaways from last week's conference.
No Upgrade Cycle for PCs
One thing that hardware manufactures used to be able to count on was that a new version of Microsoft's (MSFT) Windows would spur a wave of purchases from consumers and enterprise costumers alike. That trend does not appear to be playing out ahead of Microsoft's planned launch of Windows 8. There just isn't much buzz or excitement to get the new operating system in the hands of users. Considering that every machine that can run Windows 7 can run Windows 8, there is no fear that buying a machine today will mean you can never upgrade. This means there isn't a huge line of people who were holding off a purchase until the new OS was ready.
The relative lack of excitement is not because Windows 8 is a bad product. It builds on the success of Windows 7, and it isn't facing the delays and concerns of other recent releases like Vista. However, many of the new features are more geared towards making Windows more relevant to the mobile world, not to improving the core desktop experience. Being able to run windows on ARM processors that are popular in tablets and smartphones and a new Metro overlay that makes the OS more touch-friendly are important steps for Microsoft. However, people won't be lining up at the door at midnight to get these features.
PC manufactures, therefore, are going to have to rely on new designs, marketing, and a more confident consumer and business owner in order to move more units. Just riding the wave of an incremental improvement to Windows isn't going to do it.
RIM Keeps Falling Behind
Research in Motion's (RIMM) big announcement at CES was that the second generation of its PlayBook tablet would have native email. So it only took a year for RIM to get email (its core competency!) on to a device that, at launch, management touted as being an important growth driver for the company in the years ahead. This does not bode well for the development of the firm's next generation of devices that will likely determine if the BlackBerry will remain a major player in the smartphone market.
RIM still hasn't launched its new devices running the next iteration of its software, BlackBerry 10. And the firm's new devices aren't even excepted to launch until deep until 2012. As other manufactures were showing off phones with shiny new screens, amazing cameras, 4G network capabilities, and increasingly powerful processors, RIM's corporate customers are going to think twice about recommitting to the BlackBerry ecosystem. Even if somehow the firm is able to pull it together and launch a killer device, it might just be too late to regain traction in the marketplace.
Nokia's Last Ditch Effort
Nokia (NOK1V) is another formerly grand mobile phone maker that has fallen on hard times recently. Its smartphones have been losing ground for years as the firm's software failed to keep up with its consistently strong hardware. The situation looked so bleak that new CEO Stephen Elop referred to the firm's strategy as a "burning platform" and that the firm needed to jump into the abyss in order to save itself. The abyss the company jumped into was Windows Phone 7. Nokia likely made the right move in ditching its Symbian and MeeGo platforms. Those platforms didn't have much developer support and were very quickly losing ground to Google's (GOOG) Android and Apple's (AAPL) iOS.
However, Windows Phone hasn't exactly taken the world by storm either. Microsoft is very committed to it and will continue to sink resources into development, but consumer adoption has been anaemic so far. Nokia made a big push at the show with new Windows phones for the U.S. market. The hardware on the high-end handsets in beautiful, but can the firm convince people to choose Windows Phone as an ecosystem over equally beautiful phones from the likes of Samsung and HTC? I really don't know. It's going to be a tough sell, and Nokia's future is now in the hands of Microsoft's ability to attract more attention to its OS and of a marketing push to convince carriers and consumers to give Nokia a second look.
Kodak's Last Gasp?
That Eastman Kodak (EK) is in dire straights is not news. If the firm can't pull off some kind of amazing deal for its patent portfolio, it is headed for Chapter 11 bankruptcy protection in the near future. A great new product now likely wouldn't be able to keep the firm out of bankruptcy, but Kodak will need to innovate if it ever wants to re-emerge as a profitable company again. The most obvious place for this to happen is in digital imaging.
Unfortunately for Kodak, mainstream stand-alone digital cameras and peripherals are hardly a major growth area any more. On the low and mid-end, consumers are using their phones instead of point-and-shoot cameras. This makes perfect sense. Mobile phone makers keep improving the quality of their cameras, the phones are already connected devices making it easy to share photos online, and a phone is something most people carry around with them anyway. On the higher end, consumers are expecting pro-DSLR features and are willing to pay for them. Kodak is going to need to figure out exactly where the firm fits in this new ecosystem, and it is going to have to do it fast. Nothing Kodak showed off at CES indicated that the firm has cracked the code yet.
Netflix vs. Cable
Last year was a wild one for Netflix (NFLX). An ill-advised plan to split its streaming and DVD businesses was scuttled, and a large price increase cut into its subscriber ranks. But at its core, Netflix remained a compelling product. Unlike cable, which was tied to a few cable boxes at your house, Netflix let you stream movies and TV programmes on your phone, tablet, laptop, video game console, or set-top box, and you could watch your content wherever you have an Internet connection. Even if the lineup of content sometimes wasn't great, there was almost always something intriguing to watch. At this year's CES, we saw the beginnings of how cable is really going to compete with the offering and try to make Netflix obsolete. Comcast (CMCSA) (CMCSK), Verizon Communications (VZ), and others showed off new ways to deliver content to consumers via the Internet instead of through a traditional cable box.
To be sure, these are tentative steps. Not all programming will be available, and most customers will still need to go the traditional route, as well. But the cable companies don't want to get left out in the cold by Netflix or other steaming companies. They are going to other continues to expand their offerings, and unlike Netflix, cable companies already have very strong relationships with traditional content providers. In the face of cable trying to expand its presence beyond the cable box, Netflix might find it hard to ink content deals that are needed to continue fuelling its growth.
