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CES and my 2H prediction

Posted: 01.21.09

Figure 1: CES attendance and DJIA correlation.
(Source: Jon Peddie Research)

The correlation I identified between CES attendance and the Dow-Jones Industrial Average (DJIA) in 1999 continues to hold true and CES continues to be a leading indicator, as shown in Figure 1.

Furthermore, since I am predicting an upturn in Q3 of this year, I also expect to see CES attendance pick up in 2010, so secure your hotels now and lock in the low prices.

And what am I basing my optimism on?

Six reasons why Q3 & 4 will be great.

  • Seasonally the best quarters.
  • New designs from ATI & Nvidia.
  • GPUs will be based on 40nm which will be exciting and performance enhancing.
  • Inventories depleted need to restock for back-to-school, and the holiday madness.
  • Pent up demand—I’m tired of this recession already, let’s party.
  • Obama’s stimulant programs will produce a new a sense of optimism.

In other words, the cleaning out of old inventory, both in the electronics, automotive, and real-estate markets should be pretty well completed by the end of the summer (and some amazing deals will be available if you are happy with 2008 technology).

A step function in functionality and features

This recession and inventory dumping will have a positive effect. It will stimulate and accelerate the introduction of new technologies, features and capabilities; that will work together with other systems and infrastructures. As companies drive for differentiation to capture as much of a diminishing market as they can, you, the consumer, will benefit.

A setback for closed systems

One of the effects will be that closed systems that do well with an ignorant and affluent society will now be seriously challenged. More innovative, open, scalable, and functionally operational devices, networks, and systems will drive costs down as suppliers are forced to be more competitive. And they will also drive up features and performance as consumers make more intelligent and less impulse-based purchases.

Services will improve—will movies?

When consumers start cutting back, the first things to go are discretionary items. Things that are not essential like going to the movies, eating out, fancy cappuccinos, premium cable/satellite services. Sirius radio, emergency road service subscriptions, club memberships, and visits to the mall will be terminated or at the least cut back. The smart service providers will modify their offerings, and give more value for the dollar. Hopefully, the network programmers and movie producers will try harder at picking shows we are willing to pay for.

The consumer suffers, the consumer wins

The recession is, has been, and will be really hard on a lot of consumers worldwide. But the irony of it is that the consumers decision to pull back (from buying products and services) will cause the smart suppliers to offer better products and services, so when the consumers come back, there’ll be something to come back for. The improvement in services and products will create the pent-up demand to fuel the rebound I’m predicting for Q3-4.

Jon’s not a Pollyanna

Nor am I a cynic or pessimist. I don’t see the glass half full or half empty; I just wonder if I can have what’s left. I’m practical. And I’ve been through a couple of recessions. They never last as long as anyone thinks they will, and we always come out better on the other side—smarter, richer, stronger. That’s not cheerleader talk, it’s hard-won experience. There were more than 20,000 products from 2,700 vendors at CES, so it wasn’t all bad. Sales may be down, but they’re not going to zero. Adjustments may have to be made, that’s called management.

More importantly, plans have to be made—that’s called leadership. So if you’re whining, stop it. And if you’re worried, stop that. Neither is productive, this is the time to plan, invest and be ready for the recession to end.