Reflections on CES. (Consumer Electronics Show) Ken Uston.
"Overwhelming." "Awesome." "Hard-to-believe." "Confusing." These are the words we're getting accustomed to hearing when Consumer Electronics Shows are described. The June 1983 CES was all of this--in spades It was the biggest CES ever--over 3/4 million square feet of floor space, approximately 1000 exhibitors, and thousands of new products. One show daily, obviously overwhelmed, stated that the show had become so complex that they found it difficult to understand what it all meant.
After walking the floor for all four days and spending several more reading the literature and reflecting on the implications of the show, I have drawn five main conclusions.
* CES has now graduated to a national media event with important Wall Street overtones. Up until now, CES has been covered predominantly by industry publications. Yes, there have been reporters from Time, Newsweek, The Wall Street Journal, and other national media, but most show news was reported in the consumer electronics press. This has changed. It all started on the Friday preceding this year's CES, when the Wall Street Journal published a lengthy article about Coleco's Adam on the first page of its second section. (Coleco states that this was the first time the media was shown Adam, although some of their key accounts, such as Sears, were given previews.)
During the show, there was prominent coverage by important national media. In addition to almost daily reports in The Wall Street Journal, the highly successful new newspaper, USA Today, had first page CES articles. Time magazine devoted two full pages to what they called "The Software Hard Sell," a piece replete with information gleaned from CES. Press badges were in evidence everywhere; I even spotted a reporter from San Francisco Magazine.
Beyond just press coverage, however, CES product introductions had an effect on Wall Street stock prices. On the Friday preceding the show, Coleco's stock rose five points in anticipation of the introduction of Adam. On the following Monday, the first trading day during which CES was open, Coleco's stock went up another nine points.
This trend is probably a mixed blessing for us, the consumers. The management of most companies is evaluated primarily on the price of the company's stock, the principal measure of performance. Further, the value of company stock hits many stock-holding executives right in the pocketbook (can you imagine how much the net worth of arnold Greenberg, Coleco's president, increased over the two days the stock rose 14 points?).
Thus company executives are going to keep a keen eye on the effect of their product introductions on Wall Street analysts at future CES's. This may mean that we'll see more "phenomenal" prototypes promoted with exaggerated claims, many of which may never get to market. As it is, many products introduced at CES never see the light of day (for example, Intellivision III, Odyssey.sup.3., Ultravision, and the TI 99/2 are just four of the products heralded at the January 1983 CES which have been quietly withdrawn). If this trend continues, widespread confusion will result. How will distributors and retailers separate the wheat from the chaff and know what products to handle?
* Computer systems are being bundled. In recent months, the strategy of most hardware manufacturers has been to sell their basic computer as cheaply as possible to maximize their installed base; they hoped to make money on peripherals and/or software. Coleco's Adam computer system, the undisputed star of CES, includes a computer, printer, mass storage device, and software for word processing and programming, all sold as a single product, in a single bos. Mattel's yet-to-be-proven Aquarius system was shown selling as a single package, called COM/PAC (computer, printer, data recorder, and hand controllers).
This trend is good news for consumers, who can now put together a complete computer system with a single purchase, and at new lower prices. The 80K Adam with all accessories was announced at "under $600" ("under $400" if the user owns a Coleco Vision). Not only does Adam reflect a new price breakthrough, but I suspect that by the time the system hits the market, it will sell for even less. (One week after CES, a precedent-setting ad was placed--no doubt in response to Adam--which offered "The Complete Commodore Computer System" at a new low price: $799 for the Commodore 64, disk drive, datasette recorder, and 17" color monitor).
Watch for this bundling trend to continue.
* Software price cutting has started in earnest. Up until this CES, most cut-throat discounting had been restricted to hardware, especially the basic computer. At CES, however, software price-cutting started to surface. to illustrate:
Datamost introduced a low-priced line of programs, called Gentry, for Apple and Atari computers, selling from $14.95 to $19.95.
Synapse Software announced a $19.95 line of Showcase Software for the Vic 20.
Emerald Valley Publishing Company, publishers of 99'er Home Computer Magazine for TI 99/4A users, introduced a line of 99/4A cassettes called 99'er Ware that will retail for under $10.
Commodore introduced 70 new titles and a policy of mass marketing through lower prices. They offered a word processing program, Easy Script 64, for under $50, and they announced a version of Microsoft's popular Multiplan for the Commodore 64. At the start of the show, its price was quoted as "under $100"; by the last day of the show, the cost of Multiplan had dropped to "around $50." (Commodore's main thrust in 1983 is apparently going to be software. Their full-page ads at the show announced: "Last year we said we were going to be number 1 in computers. And we were. This year we're going to be number 1 in software." Might we read between the lines and conclude that profits from discounted Vic 20s and 64s have been seriously eroding?)
* Everybody's trying to make everything. Game software production to date has developed in four stages:
Stage 1--1980 and earlier: Atari made Atari games; Mattell made Intellivision games; and Odyssey made Odyssey games, and that was that.
Stage 2--1981: Activision, Imagic, and a handful of other manufacturers started making games for the Atari VCS.
Stage 3--1982: Over 30 companies made Atari VCS games. Some overlap was developing, with Mattel producing Atari VCS games and Activision announcing (but not showing) Atari computer games. The computer software houses (such as Broderbund) were making only computer software.
Stage 4--1983: Everybody is getting into the act. Atari is making software for the Vic. 20, Commodore 64, TI 99/4A, Radio Shack Color Computer, Apple Ile, and IBM PC. Mattel is making games for the Atari VCS, Apple Ile, and IBM PC. Imagic is producing software for the Atari VCS, Coleco Vision, Odyssey 2, TI 99/4A, Atari computers, Vic 20, and Intellivision. Spectravideo, Activision, Fox Video Games, and Parker Brothers are making Atari computer games. But the big news is that computer software and coin-op manufacturers are expanding "in reverse" and producing software for video game systems. Borderbund and Sega announced that they will produce Atari VCS games.
The good news is that our selection of software will be vastly expanded. The bad news is that this product clutter will require us to do far more homework (reading reviews, watching the game charts, testing the software) to ensure we make rational buying decisions.
* Subtle signs of the shake-out are surfacing. Many have been wondering how long NAP would continue to try to force their Odyssey systems on an unreceptive public. Well, they seem finally to have abandoned their ill-fated Odyssey.sup.sup.3 system, which was publicized amidst great hoopla at the January show. I predict that the Odyssey.sup.2 game system will also quietly slip from view, although it will go down fighting because of better software from third party manufacturers. (Imagic has produced an Odyssey version of their mega-hit, Demon Attack. They deserve plaudits because the games they have made for the Odyssey.sup.2 are, in my opinion, superior to anything else available for that system.)
It was sad to stroll through the NAP booth. It reminded me of the glum, depressing Astrovision booth at the January show. (Astrovision did not show at this CES and has apparently thrown in the towel.) There were far more Coleco-Visions at the NAP booth than there were Odyssey systems. Obviously NAP is stressing software development for Coleco-Vision. Prediction: by January 1984 CES, NAP will be primarily a software house.
More evidence of the shake-out: for the first time, the show had a discounted game booth, where games from bankrupt companies were offered to retailers at huge discounts. Also available were unsuccessful titles abandoned by companies that are still in business.
Mattel has apparently given up on Intellivision III. The system was displayed in January in a private room to a select group of attendees. It was impressive with its remote controllers, stereo sound effects, and fabulous simulated 3-D graphics. The only problem: Intellivision III, not due out until late 1983, was made obsolete only one month later, by Coleco-Vision's 128K Microwafer, introduced at the February, 1983 Toy Fair in New York (this chip was subsequently abandoned, made obsolete by Coleco's own Super Games and by Adam). Mattel saw the handwriting on the wall and quietly withdrew Intellivision III.
Mattel has corrected the unacceptable rubbery Aquarius keyboard, replacing it with an improved Aquarius II version. although the new product is much better, it may be a case of too little, too late. On a more optimistic note, Mattel has licensed some impressive titles, notably the addictive coin-op game, Burgertime. They are making home renditions of this game for Intellivision, Atari VCS, Coleco-Vision, Apple IIe, and IBM PC. I wouldn't be surprised if Mattel, too, eventually evolves into predominantly a maer of software.
As I wandered about the show, attended receptions and parties, and talked with company representatives, public relations people and reporters covering the show, I was struck by a number of interesting, humorous, pathetic, or ironic items, deserving of awards.
Most Notable Hardware Introduction
Coleco's Adam and the Atari XL line of computers. I won't dwell on these; they are covered extensively elsewhere in this issue.
Alan Alda. At a "special" press conference, Atari announced that Alan Alda hs been signed as Atari's spokesperson for five years (despite Alda's association with the TV show, M.A.S.H., which was licensed as a video game by Fox Video Games). When asked by a reporter how much he was being paid, Alda responded, tongue-in-check, that he was so thrilled at the association that he is doing it for nothing. I was told by the same reliable source that tipped me off in advance about the secret Alda announcement, that it's a $10 million deal. Move over, Bill Cosby.
Most Interesting Celebrity (To Me)
Barbi Benton. Barbi signed autographs at the show. In previous years, when she was Hugh Hefner's girlfriend, we might have expected her at the Playboy booth.
But tmes change, and Barbi appared for Omicron Industries, and maker of protective covers for video and home computer systems.
Other celebrities included Bruce Jenner, winner of the 1976 Decathlon Olympic Gold Medal, who appeared at the Activision booth, playing one of their new games (Decathlon, of course) and signing autographs. There were some real macho men there, too. Chuck Norris, movie star and karate expert, signed autographs at the Xonox booth, and super muscleman Arnold Schwarzenegger also appeared. Spectravideo announced that Roger Moore would be their spokesperson. Moore apparently was too busy with his James Bond responsibilities to appear in person.
Finally, a brand new celebrity was born. F.R.E.D. (for Friendly Robot Education Device) appeared at the Androbot booth. F.R.E.D. supersedes his somewhat less sophisticated predecessor, B.O.B., a robot who made guest appearances at the January CES.
Best Party (Despite the Crowd)
Activision. Chicago hotels and taxicabs really made out during CES. As for restaurants, that's another story. They had to compete with the dozens of parties which have free-flowing alcohol and fancy hors d'oeuvres, usually capped off with a huge baron of beef--all complimentary, of course.
It's about time somebody told you about the Showstopping Party, The Event of the Year, The King of the Blasts--the Activision Chicago CES Party. First, a word about last year's party, to establish a basis of comparison. I have probably attended over 1000 company parties and receptions. Never have I attended a party as lavish, as well thought-out, and as carefully planned as Activision's 1982 Chicago CES festival. The gala was entitled "Rumble In The Jungle" to promote Pitfall, a game with a safari theme.
Activision was later awarded Billboard Magazine's Marketing Effort of the Year award for its Pitfall promotion; it is obvious, in my opinion, that the CES party was solely responsible for that award. Well-stocked bars and food stations lined the entire periphery of the huge Ritz Carlton grand ballroom. There were carnival games (with a jungle theme, naturally) in a large anteroom. The linens covering the dozens of tables were made of custom-made simulated lion skin. There were tropical birds and live monkeys, a steel band greeting guests in the reception foyer, and two rotating bands (from Chicago's Bob Young orchestra) who swung so well that the most indolent of guests couldn't help but try the frug.
This year we all expected another Cecil B. DeMille effort. Several days prior to CES, Activision sent out little red jogging bags announcing the party. The theme: the Olympic Decathlon, to promote Activision's new game of the same name. The jogging bag was filled with aids for the athlete: Theragran-M vitamins, sun screen, salt tablets, a head band, and an ace bandage. A map of Chicago was considerately included as well.
Barbara Rose, the planner of Activision parties, has become the Perle Mesta of CES. Barbara did her normal fabulous job in organizing this year's party. The walls of the ballroom shimmered with Olympic bronze, silver, and gold metallic streamers. The game room was filled with humorous pseudo-decathlon events, including turtle races and slinky contests. The same rotating bands played the same swinging music. There were 18 bars, and the food was varied and creative.
Now the bad news: 3000 guests were expected; about 5000 showed up. Guests were heard muttering words like "zoo" and "mob scene,c as they elbowed their way through the jammed ballroom. Despite the hordes, nearly everyone stayed to teh bitter end. to Activision's credit, there were so many bartenders and food-servers that they stood idly by, waiting to serve the thousands of guests.
The Activision people are in a quandary. If they tighten up on admission for next year's party, they may insult some of their "friends." If they don't, another crush will result.
My advice: No, it's not to rent Wrigley Field. Instead tighten up on admissions security and check invitations. A party enjoyed enormously by 3000 is far preferable to a party not enjoyed by 5000 (bruised egos among the unadmitted uninvitees not withstanding).
Best Carrying Bags
Epyx. The big, black Epyx bags were the largest and most convenient of the many bags handed out at CES. This fact did not go unnoticed. Even though Epyx brought 10,000 bags to the show (and feared they'd return home with boxes full), they ran out on the second day. (United Airlines stewardesses, seeing all the big black bags on flights departing Chicago on the last day, no doubt concluded that there was an Epyx convention in town.)
The Data most Stickettes (their name, not mine). Dave Gordon, Datamost's founder and the leading maverick in the industry, managed to hire the most attractive models at the show. They are from Chicago, and Dave promises that they will be flown to Vegas for the January, 1984 CES. Dave also rented an army half-track and invited selected friend for a ride in it, prior to his megaparty at Chicago's Playboy Club.
Most Optimistic Statement
Timex. It was reported that Timex expects its 2000 series to be more popular than its 1000 computer (about 1-1/2 million sold). What with price cutting, improved hardware introductions, and limited 2000 software, I'll eat my hat if that comes true.
Most Wishful Thinking
Sloughing off Videotex. Industry analysts were quoted as saying that Videotex will not hurt software sales. Videotex services, the transmission of video games and other software via telephone lines into consumer homes, are growing rapidly. Mattel, Times Mirror Corporation, and Control Video Corporation (Game-Line), to nane just a few, are aggressively entering this field. soon we should be able to turn on our TVs, make a selection from a menu of dozens of the newest games, and play away--for a small fee, of course. How can this not hurt the sales of software?
Worst News Release
Frank Barth, Inc. Barth would have us believe that "challanges," "emphasizeng," and "discoteque" are legitimate words, that commas should separate sentences, and that the correct spelling of one of their client's names can be either Data-most or DataMost.
Best New Games
Activision, Atari, Vectrex (GCE). Activision's River Raid for the Atari computers is even more fun to play than the enormously addictive Atari VCS version. Atari's Dig Dug (for the 5200) and Vectrex's Star Castle are, in my opinion, the first home games that are every bit as good as their coin-op counteparts.
Most Infuriating Policy Statement
Texas Instruments. Texas Instruments took out full-page ads announcing that it will use its patents to prevent unauthorized third party vendors from selling 99/4A software. Several companies, including Datamost and Sirius, have expressed dissatisfaction (and that's putting it mildly) with this policy, which many view as shortsighted.
Some industry analysts simply conclude that TI planners have disregarded the industry axiom that "software drives hardware." I think it goes beyond this. More likely, discounting has dried up profits on the sale of 99/4As (remember when it came out for over $1000 with a color monitor; now the machine is available, without monitor, for under $100). I would guess the reaction of TI officials is, "If we can't make money on the 99/4A, let's get it from peripherals and software. We can't make money on software unless we get a piece of the action on all sales." Hence their restrictive software policy. Now TI is stuck. They are probably not making a dime on 99/4A sales, and
* if they restrict software development, their computer will fall behind as tons of software is produced for the Vic 20, the Atari computers, and the Commodore 64 (as I said before, everybody's making everything).
* if they don't restrict software development, they will probably lose money as they try to compete with outfits like 99'er Software who are selling packages for under $10.
I wish I could say I had the insight to have written this before TI's stock plummeted 50 points in two days (after an announcement of $100 million or so loss for the second quarter). I dindn't. But I will predict this: TI is caught between a rock and a hard place. No matter what they do, things look glum. I would guess that:
* Not many third party vendors sent telegrams of condolence to TI when their stock dropped.
* TI's troubles have only just begun.
One final prediction: January 1984 CES will be even more "overwhelming," "awesome," "hard-to-believe," and "confusing." And just as much fun.