Slower Growth for Consumer Electronics

TOUGH SALES PITCH

MAKERS of electronic goods hope to turn the recession into a selling point. They are trying to convince consumers that discretionary income might best be spent on gadgets and gizmos that will increase their productivity or enhance at-home entertainment as a cheaper alternative to going out. That was a major theme at the International Winter Consumer Electronics Show (CES), which ended in Las Vegas Sunday.

Some much-discussed items included digital compact cassettes (DCC), desktop multimedia videomakers (so-called ``video toasters''), instant video ``fax,'' and educational adaptations for video games (see box).

Besides thousands of evolutionary refinements and operating simplifications in televisions, microwave appliances, calculators, and computers - to answer complaints that such items need to become more user-friendly - there were four areas of major growth: home theater, home office, cellular products, and mobile electronics.

In a keynote address, Richard Kraft, president of Matsushita Electric Corporation of America, told attendees not to despair over the present economic downturn that has left sales flat in many sectors.

He reminded them that the industry burst out of the 1981-82 recession to register an average annual growth of 12 percent in the decade, while the national economy grew at an average rate of 7 percent.

Frank Myers, chairman of the Electronics Industry Association (EIA), projected total 1990 sales at $280 billion, a 4.2 percent improvement over 1989 and an all-time record. The association predicts only a 3.2 percent growth for the coming year, far below the huge gains of the late 1970s, and down from headier predictions at Chicago's June CES. The twice-yearly ritual of the EIA continues to grow. About 1,600 exhibits overflowed the mammoth convention center here into several hotels and temporary pavilions erected in the parking lot.

The fastest growing product sector in 1990 was also the industry's smallest, home security, which registered a 15 percent rise to $1.2 billion.

Home office equipment is expected to lead growth in the coming year but the rate of increase is slipping sharply. After increasing sales by 18.3 percent to just under $7.1 billion in 1989, the growth rate fell in 1990 to 9.2 percent, with sales of $7.75 billion.

``Despite the discouraging news we are hearing,'' said Mr. Kraft, ``the level of confidence in the long-term prospects for our economy is ... a lot stronger here than it is in Washington.''

``It's been a very difficult year for consumer electronics,'' says David Bulatsky, an analyst with Goldman, Sachs & Co. ``With the prospects of recession, manufacturers must convince consumers that their products fill a compelling need, not just a want.''

Among the products and technologies that will be driving the industry through the 1990s, Kraft and Mr. Myers listed high-definition TV, multimedia systems (mixing TV and computer technology), automotive electronics, computers, facsimile machines, word processors, and digitalization of products like video cameras and videocassette recorders.