Saving the Consumer Electronics Business

In preparation for my week-long boondoogle business trip to the 2007 Consumer Electronics Show with two of my buddies staffers, I’ve been reading TWICE, the publication of record for the consumer electronics industry. If you’ve been to CES, you’ve seen their show daily, but the company actually produces a very good weekly newsmagazine that talks a lot about the retail side of the industry, rather than the consumer side.
The latest issue includes an extremely interesting column by William Matthies, partner at retail market analyst Coyote Insight, wherein he talks about what he believes ails the consumer electronics industry and how to fix it.
Why is this interesting? Because I believe that his set of identified problems are exactly what also limits both the online world as a whole and the blogosphere as a market and business communications tool…

William starts out by quoting former Sony CEO Nobuyuki Idei in saying that Japan’s consumer electronics industry is dying. Of course, Sony is certainly feeling great pain, between its laptop battery fiasco, its digital camera CCD recall (which I wouldn’t have known about if not for TWICE), its inability to meet consumer demand for the Playstation 3, and on and on, but the entire Japanese industry?
That’s just the jumping off point, however, and the main suggestions in the article about how to fix the problems in the consumer electronics industry are thus:
Focus on the Message: “The CE industry already has more technology than it knows what to do with. What we don’t do well is explain the value of that technology to consumers. Most consumers ask themselves ‘Why do I need or want this product?’ The industry must answer that question.”
Sell integrated solutions: “While the industry segments itself into vehicle, home, office, and personal product ‘silos’, consumers want their ‘digital lives’ to be with them at all times, moving seamlessly as they move from home to vehicle to office.”
Merchandise as they live as opposed to how you want to sell: “Most retailers organizer their stores in departments with printers here and PCs there. Exactly the opposite of what the consumer will do if they decide to buy. Put it together as they will.”
Address product complexity: “Let’s face it, CE products are not easy to use, and regardless of how good a product may actually be, consumers won’t buy it if they think they won’t be able to make it work.”
Market benefits, not price: “Lower prices are not always a good thing. If a consumer expects a certain level of performance from a product that he purchased, but that performance is only available in a higher-priced product, he will not be happy.”
Interesting, isn’t it? How many products came to mind as you read those descriptions? Products like the new Microsoft Zune, or the ultra-cheap [read “garbage”] mp3 players from China, or even specific un-integrated blogging and software tools. And how about Microsoft Windows Vista? Is Microsoft really making a case why we must upgrade so we can gain access to all those splendid features and capabilities?
Next time you contemplate the state of our marketplace and industry, you’d do well to consider the prescription Matthies offers up. He’s focused on consumer electronics, but his key ideas are far more widely applicable.

One comment on “Saving the Consumer Electronics Business

  1. Dave, some of those comments about selling consumer electronics could have been written about furniture retailing before giant stores started selling via room arrangements.
    For myself, I’m much less interested in seeing printers and computers together; I just want to be sure they work together without having to be locked into a manufacturer specific interface or peripheral (the way Sony sometimes operates, by the way).

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