Someone seems to have hit the “pause” button this week at CES, the annual Las Vegas gathering where 176,000 people trudged through 2.4 million square feet of exhibit space to gawk at the latest consumer electronics gadgets.
Of course the convention halls were filled with interesting stuff. Gorgeous 4K TV sets and new lines of 4K Blu-ray players. There was also a lot of buzz about virtual reality goggles, Web-connected watches and fitness bands, 3D printers, driverless cars, and drones.
So what stood out? Strange as it sounds, it was updated versions of analog technologies.
Kodak got a lot of PR mileage out of its revival of the Super 8 video film camera, something it hasn’t made since 1982.
The most obvious change, though, was the abundance of new – or is it old? — music products: especially turntables and audiophile speakers.
“The latest and greatest wasn’t audio for years,” says Gibson Guitars CEO Henry Juszkiewicz – whose company has become a power in the business with recent acquisitions of Philips’ audio-visual products, TEAC, and Onkyo. “It was drones and smartphones, And everybody’s getting sick of it. Consumers are saying, ‘I just want to listen to music.’”
Some also want to listen with other people, not just through earphones. “Music is a social medium,” he says. “Listening to music on a good system is much different than putting earbuds on.”
The turntable boom was especially striking at CES 2016. The old devices are back, but usually with a digital twist.
For example, Sony heavily promoted a new model, available this Spring, that can covert vinyl recordings into high-resolution digital audio files – another technology it’s evangelizing. Panasonic’s Technics brand said it will bring back two of its “Grand Class” turntables – once a favorite with DJs — this time using microprocessors to control the drive. Audio-Technica introduced models with built-in Bluetooth to transmit music to as many as eight devices simultaneously.
Manufacturers are responding to the growing demand for vinyl records. Sales of old-fashioned LPs increased 29.3% to nearly 12 million units in 2015 – its 10th consecutive year of growth – while music sales generally declined 6.1%, Nielsen reported this week.
“Since 2013 there’s been an exponential increase” in demand for vinyl, Audio-Technica Consumer Division Product Manager Kurt Van Scoy says.
Although record stores are hard to find, chains carrying LPs now include Barnes & Noble, Target, WalMart, Best Buy, Books A Million, and Urban Outfitters.
To be sure, vinyl is a small, niche product. It accounted for about 5% of last year’s music sales, well behind CDs at 52%, and digital at 42.8%.
Still, manufacturers are eager to take advantage of any market that’s growing at a time when the consumer electronics business is losing some of its mojo.
With the strong dollar, and weakening economies in several countries including China, global spending on technology declined about 8% to $969 billion in 2015, and could fall another 2% this year, according to the Consumer Technology Association.
Adding to the industry woes, some of the biggest selling products including TV sets, tablets, and mobile phones are mature: For example, the CTA anticipates U.S. revenues from TV set sales will be flat in 2016 even with a 65% increase in 4K Ultra High-Definition models.
Ordinarily you’d expect to see growth come from new inventions. But the most interesting ones still aren’t ready, at least not for mass sales.
Manufacturers find it hard to take full advantage of consumers’ growing interest in Web video services such as Netflix, Amazon, and Hulu. The pay TV industry continues to throw roadblocks in front of electronics companies that want to replace the cable-provided set top box – for example by offering a device that can blend all video that comes into the home. Most subscribers who want to watch Internet content must switch the TV to an input not connected to the cable box.
Samsung just announced a deal with Time Warner Cable to simplify the process for its TV sets, but that’s just a one-off. Some analysts expected FCC Chairman Tom Wheeler use his appearance at CES to announce an initiative to loosen cable’s grip on set top boxes, but that didn’t happen.
Virtual reality goggles were easy to find, but the content still isn’t. Fox was a presence at CES showing off The Martian VR Experience, which it plans to release later this year. But most studios are still just dabbling in VR, leaving the medium mostly in the hands of gamers.
“Content guys are always behind,” TiVo CEO Tom Rogers says. “What VR presents is an opportunity. It’s not about resolution and clarity, It begins to change the notion of how one engages with entertainment. You go from viewer to participant. …I haven’t seen the content emerge to bring it to the fore.”
At the same time, makers of other much discussed new products are grappling with specialized concerns. We still don’t have a clear sense of the legal limits, and liabilities, for drones and driverless cars. Those offering web connected wearable devices also are figuring out at what point consumers who are fascinated by the ability to gather and share data will start to become fearful about their loss of privacy.
No wonder simple analog audio is so attractive.
Some believe that consumers want a better entertainment experience than their smartphones offer.
“Whenever anything is that big, there’s a reaction to it,” says Kodak CEO Jeff Clarke. The renewed interest in analog “is not a digital backlash. It’s a compliment to digital.” He likens it to other back-to-basics movements including ones promoting environmentalism and organic food.
“People want the tones of audio and the grains of video,” he says.
Which people? In the case of vinyl, interest seems to be divided between young consumers who see it as a cool alternative to digital – and boomers who have spare cash and want to relive the pleasure they felt by dropping a needle on Led Zeppelin II or The James Gamg Rides Again and hearing the warm analog sound fill their living rooms.
Older millennials and boomers are “willing to pay for that nostalgia,” says Matthew Lieberman [no relation], a director at research and consulting firm PWC. “It means so much to them to have physical media. It often was more important than the content itself.”
You can see signs of the split generational interest in Nielsen’s tally of last year’s top selling vinyl LPs. As you’d expect, the year’s monster hits — Adele’s 25 and Taylor Swift’s 1989 – led the list. But right after them were boomer favorites: Pink Floyd’s Dark Side Of The Moon, The Beatles’ Abbey Road, and Miles Davis’ Kind Of Blue.
The measurement company says that vinyl accounted for nearly 18% of all physical album sales for Rock last year, up from 13.4% in 2014.
In addition to turntables, CES was filled with companies hyping speaker systems.
“The great thing about speakers is that once you get it right, they continue on,” says Sony North America’s J.P. Torres. “Speaker technology doesn’t change as quickly.”
What has changed, though, is the technology to connect speakers and home theater systems. Many consumers have settled for under-the-TV soundbars as an alternative to stringing wires to the back of their living rooms for surround sound speakers.
Although the concept of wireless speakers isn’t new, Sony and others including Samsung, Harman Kardon, Klipsch, LG and Paradigm were aggressively promoting the concept at CES. For example, Sony says it will sell speakers that use WiFi to fill out a home theater setup. Klipsch has a wireless home theater speakers that can connect directly to an entertainment source without a separate amplifier.
How long will the analog revival last?
“I wish I had that answer,” says Audio-Technica’s Van Scoy. “My feeling is it still has a few years.”
Gibson’s Juszkiewicz is more optimistic, saying the analog revival at CES 2016 reminds him of the guitar business in 1986.
“Everybody was predicting the death of guitars,” he says. “There was a new keyboard every three months. It was digital all the way. At the end of the day it’s about music.’
And for now, that’s a welcome melody for consumer electronics manufacturers waiting for their next hit.
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