CES '08: Gadgets, Buzz And Profits

Never mind that the general public isn't allowed inside the Consumer Electronics Association's International CES show: Thousands of venture capitalist firms, manufacturers, distributors and retailers will be on hand Jan. 7-10 — and their reasons for visiting are usually a lot bigger than just the chance of playing with nifty electronic toys.

For Don Rainey, general partner at venture capital firm Grotech Capital Group, going to CES is about more than seeing "the latest thing."

WowWee Roboquad

"Success in our business is not just predicting the new, new thing, but predicting the new, new thing's timing," Rainey says.

Rainey has walked every aisle of CES each of the last three years. Venture capitalists' attendance at the show has grown in recent years, he says—CES was more of a novelty for Rainey until about three years ago, and he's watched the VC presence grow since then.

VCs don't need a show floor to teach them what's hot, Rainey says. Regular meetings with startups during the year answer that question. But a huge convergence of the latest consumer electronics products does help confirm the progression—or failure—of technological trends' move into the mainstream.

The 2008 show will give Rainey and others insight into what he calls "the third year of the year of the smart phone." In particular, Rainey plans to monitor smaller manufacturing firms that for years have made components for larger OEMs, but are slowly beginning to make their own devices. CES has allowed him to monitor the that progress from year to year.

"They used to be there marketing memory sticks," he says. "Then a year ago, they were selling VoIP handsets. Those hallways are one of the areas we're prowling. What are they selling this year?"

WowWee, a consumer robotics maker, has made CES a de facto part of its product development cycle. The company, acquired by Optimal Group in November, will introduce its 2008 product line at CES. WowWee begins shipping those goods at roughly the same time each year, and then tries to gain traction with buyers for the rest of the year leading up to the holiday season.

January marks WowWee's fourth CES. The company uses the show to appear to three major constiuencies, says Amy Weltman, WowWee's vice president of marekting: the news media, existing retail customers, and new merchants who may be tempted by displays of the company's flying and walking remote-control robots.

Among the retailers making their first appearance at CES this year is startup merchant The Simple Stores. The retailer sells TV stands, audio racks, speaker stands and the like through its Web site, and plans to launch related sites that will market other niche products.

Simple Stores hopes to get an idea of exactly which niches are best to target next.

"We want to know, what are the next ten, 20 sites we should launch?" says Simple Stores chief technology officer Brad Busino. CES is "one place to go where we can hit a hundred consumer electronics companies and minimize travel."

As a new, unknown firm trying to get attention, Simple Stores needs to press flesh rather than try to market itself through relatively anonymous phone calls. That's one thing CES is good for, Busino says.

"In contacting a lot of manufacturers and distributors, you do get calls back, but sometimes it takes one, two, three calls in a month—a lot of emails," Busino says. "But when they know who you are, they'll get back to you."

WowWee Flytech Dragonfly

Changes in the technology market are certainly no less slippery for a company that's been around for a while. Fourteen-year-old C&A Marketing, a distributor of cameras and related equipment, uses CES to keep a finger on the pulse of the industry. As the imaging business has gone digital, it's taken on more and more characteristics of the computer industry, with quick shifts in pricing and fast technological advances.

Most of that information can be tracked online, says C&A principal Chaim Pikarski, but reinforcing relationships with existing customers and forging relationships with new ones requires face-to-face contact.

"There's so much information on the Internet today, that when companies show something at CES, there are no real surprises," he says. "It's not about playing with the product. It's about building relationships with people."

"That," Pikarski says, "is something you don't get on the Internet."

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