Consumer Electronics Show: Are Price Cuts the Wave of the Future?

Despite all the amazing gadgets launched at the Consumer Electronics Show -- the smart TVs, 3-D technology, larger touch screens, and tablet PCs -- the bigger news in Las Vegas this week may be about price cuts.

Sprint-Nextel (S) has introduced a low-price WiMax-enabled handset for $149. Several wireless carriers will start a price fight based on what they charge for the Samsung Galaxy tablet. Prices of tablet PCs in general are expected to drop as much as 40% in the next two years.

Samsung may also bring out a Google (GOOG) Android-powered TV at CES. It will need to compete with what is likely to be a line of TVs powered by Microsoft's (MSFT) Windows 7. AMD (AMD) and Intel (INTC) have just introduced new chips to power many of these devices. One of the benefits of these chips is that they are relatively inexpensive because they will be the brains of small electronic devices that cost less than most PCs.



CES will have 2,700 exhibitors this year. A small fraction of them will introduce products that become mass-market successes. The balance of the products launched at the show will become niche products or will simply disappear. There is only so much room on top of the living room TV, in the car, or in people's pockets.

Electronics companies may find that price is the best leverage they have as they compete for consumer adoption. Large LCD TVs have already come down in price, to some extent because there are so many Asian manufacturers going after the same market.

How much will this price-cutting affect the industry? Price cuts mean that consumer electronics companies face two waves of competition -- for market share and to be the low-price provider in any given sector of an electronics market. When those are the requirements for gaining customers, a lot of companies will lose money on their new offerings.


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wwhq9

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January 05 2011 at 8:22 PM Report abuse +1 rate up rate down Reply
ectullis

Anything made in the USA at the show?

January 05 2011 at 12:56 PM Report abuse +4 rate up rate down Reply
sal8110

Of course prices go down. Every new product has developement costs involved. When it first hits the market, those costs are figured into the pricing. If the product is a hit, other companies will copy(at lower developement costs) and will lower the price to gain market share. The more these products sell, the lower the cost will go, and they will become a commodity, where the lowest cost vendor wins...

January 05 2011 at 12:04 PM Report abuse rate up rate down Reply
palyzuc

Are price cuts the wave of the future....we are talking about consumer electronics here correct? Since I got to spend all of my 38 year career in sales and marketing, and since 28 of the 38 were in consumer electronics, the answer would be, YES, the same way its been in the industry....FOREVER ! We used to muse in the office how many of our young we would eat that week as we took products in our bag to the next 'lowest' price. The cause, too many brands sold by too many outlets equals too much competition. The story hasn't changed, in fact, with the proliferation of web sites it has taken the profit picture to a new low dynamic. Consumer electronics are the best value out there for the average consumer and always have been. Not so much for the manufacturers. Remember a name like SONY? Who doesn't right. In the early 70's we could sell a 12" color tv day in and day out by the hundreds to the dealer structure we served....and their cost was over $400....for a non-remote mechanically tuned tv ! We owned the color tv business much to the dismay of names like Zenith, RCA, Magnavox, etc. Then along came names like JVC, Toshiba, Sharp, Panasonic, etc., and as they entrenched their position in the color tv business the super high margins at Sony started to slip and the American brands disppeared. Fast forward the tape to the 90's and you start to see the influx of Korean brands like LG, Samsung, Daewoo, etc. Now the Japanese brands are being undercut by the Koreans. And next it will be the Chinese reinventing ever lower price points and commensurately ever lower margins.

January 05 2011 at 9:48 AM Report abuse +2 rate up rate down Reply
frank1946

SOS............the customer waits for a sale ! Got a Pandigital 7 for $ 90
after rebates from Kohls..............LED TV's, desktop computers,etc.
So why is Food so expensive these days ?

Be careful out there, Boys !

January 05 2011 at 7:24 AM Report abuse rate up rate down Reply