Electronics Manufacturers Hope for a Revolution

Last year's 1 percent sales hike was one of the lowest ever for the electronics industry

ON paper, the consumer electronics industry is coming out of its worst single-year downturn since the 1930s - a 1 percent sales increase in 1991 to $35.5 billion. But factoring in the huge gains of recent years, the general economic slump, and pent-up demand for new digital formats and multimedia combinations, several analysts say the poor figures will be a minor blip on the steep upward curve that began with the first radio sales in 1920.

"It's been a terrible situation all year because everyone's holding onto their money," says Jerry Joseph, director of the Society of Audio/Video consultants, a countrywide association of manufacturing and sales personnel. Led by personal-entertainment devices and videocassette recorders (VCRs), consumer electronics sales had tripled since 1980, enjoying 4 to 6 percent increases for several years.

"But considering the unexpected turnout and excitement at this year's Consumer Electronics Show, those gains should resume as soon as the national economy recovers," Mr. Joseph says. Waiting for a recovery

Some major companies were not among the 1,533 exhibitors at the industry's largest trade show, Sony among them, but several of those present posted double-digit gains, including Panasonic and Pioneer.

And though interest was generated by new technologies such as digital compact cassettes and interactive compact disc players, some say the industry is failing to capture the consumer's imagination. "We have passed the era of revolutionary products," says Rick Warren, a syndicated audiovisual columnist. He disputes industry predictions that innovations such as the digital compact cassettes will generate the same interest as did the debuts of VCRs (1972), micro-mini headphones (1981), and compact disc play ers (1983). Technical innovations

Several firms such as Technics, Philips, and Panasonic have announced plans to sell digital compact cassette machines by September along with 500 prerecorded titles. Philips officials say the $700 cost and the machines' ability to play regular cassettes will slowly win converts by avoiding the forced obsolescence of existing tape formats.

"Now the ordinary consumer doesn't have to get rid of everything he already has to embrace the better technology," says Philips spokesman Jon Kasle. "[Digital compact cassettes] will become the world standard."

"I doubt it," says Mr. Warren. "You'll never see another product take the public by storm the way Sony Walkmans did."

To combat consumer apathy, the Electronic Industries Association (EIA) announced plans to admit general consumers to its summer trade fair in Chicago. "Consumer electronics manufacturers and retailers can no longer bang and slash away at each other secure in the knowledge that even second or third place in any market will guarantee ... greater profits," said Gary Shapiro, of the EIA. "We need ... to further whet the public's appetite."

And in a keynote address at the recent Winter Consumer Electronics Show here, John Sculley, chief executive officer of Apple Computer Inc., pinned hopes for recovery on the development of digital technologies that tie together entertainment, publishing, and communications.

"Digital technologies will be as important to creating a new industry of personal digital assistants in the 1990s as the integrated circuit was in launching the personal computer industry in the late 1970s," Mr. Sculley said. Examples include electronic books and note takers, multimedia players, display telephones, and personal communicators. Frank Myers, CEO of Wells-Gardner Electronics Corporation, looked forward to high- definition television (HDTV), though no United States standard yet exists. "[HDTV ] holds the promise of a staggering rebirth in color TV and home video hardware sales," he said.

Both video and audio categories declined in 1991 (video down 1.7 percent to $12.2 billion; audio down 1.9 percent to $9.3 billion). But bright spots in sales of specific products include large color TV sets - which grew 62 percent - and sales of laser disc players, which grew 22 percent. Other bestsellers included home computers and compact/mini audio systems. The home security segment was up 8.7 percent to $1.25 billion from $1.15 billion. Home office-equipment sales rose 6.7 percent to $8.81 billion fr om $8.25 billion.

"When you hold up our modest gains next to the double-digit losses of American car companies, we are still looking pretty good," says the EIA's Cynthia Upson.