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Batteries/Markets/CES04 Batteries 060826
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Adobe Photoshop ImageThe CE (Consumer Electronics ) industry nearing the $100 billion mark in sales holds it key to success in innovation.  Studying consumer buying habits and life styles, CEA has determined that people want to be connected as they are “on the go.”   This fact creates a perfect market for growth in the battery industry which currently holds the key to portable, mobile and wireless power for electronic devices.

The products on the CES floor are displayed in 1.38 million net  square feet of exhibit space.  One exhibitor, Jon Melamut, V.P. of Business Development and Sales for Pepper Computer, Inc.,  displays his Pepper Pad which is no larger than a standard piece of notebook paper  and less than an inch thick. Yet, its software supports a photo album, a journal, scrapbooks, greeting cards, class notebooks, a music library,  a web browser, Email and a people directory.
If one wanted the maximum  visual and audio stimulation, then the CES (Consumers Electronic Show) was the place to be this January.   Approximately 2,400 booths showcased new, ‘must have’ consumer electronics with  multicolored  flashing plasma and LED screens, blinking buttons, brilliant colored  cell phones with choices of ringtones and  music at decibel levels which one usually expects at a rock concert. The show was definitely geared toward the younger generation.  Research from the Consumer Electronic’s Association  (CEA) shows that teenagers represent an incredibly lucrative market for this industry.  CEA has found that teens are active consumer electronics buyers - 91 percent of them made a new consumer electronics purchase in the past 12 months, which is a significantly higher rate than adults (82 percent). CES notes that in reviewing  the consumer technology landscape, only America’s teenagers may truly consider these (electronic) products as a ‘necessity’. (“Consumers to Watch,” CEA, 12/03, p.5)  
Adobe Photoshop ImageThe CES  glitzy, gigantic robot - complete with all the bells, whistles and charm  of a dazzling host -  greeted each press member at the  Press/Analyst Reception which  highlighted the “Innovations 2004 Design and Engineering Showcase.”  The products displayed and demonstrated at this reception received awards for outstanding achievement in product design.   (Photo is by Tim Georgi) +
The average American household purchased an average of $2,000 worth of electronics this past year.  In 2003, the CE industry is expected to manage a 2.3 percent growth in factory revenues which would bring the total sales to $96.3 billion.   Growth in 2004 should hit a rise of 4 percent with total shipments valued at just over $100 billion. The biggest challenge in reaching this figure is beating the cycle of deflation.  

Portables, portables and more portables

So, what are the “hot” items?  The fastest growing technologies, defined as the percentage of the market that plans to purchase a unit in the next 12 months (either for the first time or as a replacement),  include cellular phones -31% , desktop PCs - 19% and digital cameras - 18%.  Note that two out of the top three are portable, thus requiring batteries. If one includes battery backup for desk top PCs, batteries are indispensable.  This year, for the first time, notebook PCs are accounting for over half of the consumer PC market and the increase in   portability in PCs is expected to continue on into next year.

The wireless handset market is also coming back.  CEA market research says that consumers’ desire to upgrade to new color screens and built in digital cameras have boosted shipment revenues in 2003 by 13% to $9.2 billion.  Continued demand for the new handset technologies along with the new wireless number portability should help raise average wholesale prices and drive growth into 2004.  Revenue forecasts place the handset market at $11.5 billion during the next year. (“U.S. Consumer Electronics Sales & Forecasts 1999-2004,” CEA Market Research, issued 01/04, p. ii and  v)
Microsoft Excel ChartFactory Sales of Primary Batteries: The figures for 2003 are estimates and for 2004 are  projections and include primary batteries for consumer use.  CEA Market Research does not publish factory sales of rechargeables.  (Information for this chart is from Consumer Electronics Association, Market Research, 01/04, p. 29.) +
Batteries  - Vital to industry but a “back seat” rider at CES

Battery presence was as follows:

¨ Two (Duracell and Energizer)   of the  “Big 3” primary battery manufacturers for the retail market, participated in CES; Rayvoac was not present.  

¨ Forty-two companies touted their capabilities to supply battery packs for wireless phones.

¨ Only five companies emphasized  their sales of cordless battery packs for cordless telephones with a listing in the CES trade show directory.

¨ Twenty-one companies stressed  recognition at their booth as a battery suppliers for personal electronics.

¨ In reviewing the three largest battery cell/pack manufactures of rechargeables, Sanyo (Sanyo Energy) profiled  its offerings highlighting its highest capacity 2300 mAh Nickel-metal hydride batteries for digital cameras.    Sony (Sony Electronics, Inc. and Sony Ericsson Mobile) had a large presence at the show, but did not highlight  battery offerings.  BYD, currently the third largest global supplier of Lithium-ion, promoted its rechargeables for OEMs.

¨ If one looked for the visibility of the  word, battery, Compact Power Systems Inc. had banners, press releases, and a page ad in the CES Daily purporting their CellboostTM  battery,  weighing just over one ounce, which  can  boost talk time on any cell phone for an hour and deliver 60 hours of standby time. The company says that the unique charging means of the Disposable Cellboost battery  has a patented method of providing instant talktime and recharging  cellular phones.  The energy is transferred via “quick charge” means, allowing Cellboost’s full power to be sent to the phone’s battery in a short period of time.  This allows instant re-connection for the phone.  
Microsoft Excel ChartUnit Sales of Portables: Note that all portables are  counted as sales to dealers  except digital cameras where numbers are based in  terms of factory orders.  (Data is from  “U.S. Consumer Electronics Sales & Forecasts 1999-2004,” CEA Market Research, issued 01/04) +
¨ On a positive note, recycling did not take a back seat.  President Michael Dell of Dell  in his keynote dedicated a significant portion of his presentation to the issue of electronics recycling.  He announced a community grant program through which Dell will be awarding funds to communities interested in implementing local recycling programs.  This is good news for the environment!

A study competed by Inform Inc. estimates that by 2005, American consumers will be tossing out 100 million cell phones every year, complete with batteries. The organization currently most actively involved in trying to get rechargeable batteries recycled rather than tossed is the RBRC (Rechargeable Battery Recycling Corporation). Their presence at CES hopefully inspired manufacturers and retailers to take more interest recycling.  In 2003, they collected more than 4 million pounds of rechargeable batteries, an increase of 22 percent  over 2002.  Their help in collecting came from about 30,000 retailers, businesses and communities which served as collection points for the material.          

¨ The only Lead-acid manufacturer BD could find was OPTIMA Batteries Inc. With telematics increasing in popularity, OPTIMA promoted its Spiralcell Technology having a dual purpose in autos - first, for cranking power but also for using its  deep cycle capacity feature to power today’s advanced audio and audio/visual systems.
Adobe Photoshop ImageMicrosoft Chairman Bill Gates in discussing Microsoft’s vast software offerings said, “All the places where software can run, we want to make sure that we do the best we can to make that connect up and to make it seamless.” +
Rechargeable batteries

- Batteries in some of the wireless devices using Lithium-ion and Lithium-ion/polymer technologies are no longer going to be replaceable.  For example, both Palm and Sony, the two largest companies who hold market share in personal digital assistants (PDAs), are manufacturing their new units with battery packs that can only be replaced by returning the entire unit to the company for replacement.  Off -the-shelf batteries will not be sold.  This practice allows the company to control when they will support and stop supporting a particular model with a certain battery pack;  thus, if the company tells a customer that the battery is no longer replaceable, the customer, even if he likes his ‘old’ PDA,  will have to buy a new unit with more features (perhaps he/she may or may nor want) and with more $$$. Buyers who dislike the nonreplaceable offerings of Palm  have alternatives from suppliers such as Dell which does have  replaceable batteries in the Windows CE driven PDAs.    

On a positive note, the practice of not allowing consumers to replace batteries  can help reduce “knock off” batteries being sold. The average consumer is not always aware  which batteries  meet the standards for safety  and thus  make selection on cheap prices.  

King Microsoft of Wireless

Microsoft’s Director of Consumer Strategy John O’Rourke called CES “the crown jewel” of consumer products shows.  In addition to having Bill Gates as a opening speaker the night before the official show opening, Microsoft built  a 15,000 square foot  exhibition space for CES visitors. In the opening address by Bill Gates, Microsoft’s chairman, told a packed audience that Microsoft was developing software for the car, in the phone,  in a plethora of  PC offerings, in the the set-top box, and for the watch, in addition to enhancing MSN Email/Internet service.  His two key words were “seamless connectivity” as all software would be “working together.”  (BD: This is a little difficult to appreciate  in all practicality because even using the PC as a stand alone item, crashes do occur daily and seamless connectivity does not seem to be apparent, at least when conisdering reliability.)
Adobe Photoshop ImagePepper Pad I was selected as a Battery Powered Innovations 2004 Product highlight in the CES Design and Engineering  Showcase. Pepper Pad I by Pepper Computer Inc. is a lightweight Linux+Java, Wi-Fi computing device for consumers, with an 8-inch color screen for creating and communicating everything digital - photos, music, words - via instant messaging or e-mail.  The Pepper Pad runs Pepper Computer’s instant sharing and collaboration software which runs with Windows, Macintosh and Linux computers.

The 2.3 pound unit is 8.5 inches x 10.0 inches  and is only  0.8 inch thick.  It has  2 Lithium-polymer batteries and a 3400mAh and a 9 Volt AC power adapter.  +
Microsoft’s “kingdom” was supported by keynote speakers Carly Fiorina of Hewlett Packard and President Michael Dell.  Hewlett Packard enjoys the number one spot for the largest 2003 market share of consumer electronics when considering all categories and Dell holds the third ranking.  Both companies utilize Microsoft’s software in their computers and  other products such as PDAs. (Information on ranking is from “NPDTechworldTM   2003 Market Share Reports by Category,” Twice This Week in Consumer Electronics, 01/08/03.  All  information is based on retail point-of-sale data for the periods January through September 2003.)

The last time BD editors attended CES, both Palm and SUN Microsystems had keynote speakers and display booths.  This variety of thinking  about different operating systems was positive in that it gave consumers a choice.  However, BD could find no evidence of SUN  at the show, and Palm, which currently holds top marketshare for PDAs, did not even have a booth, opting only for a  meeting room for special appointments.  

The editors mention this because in almost all  commercial markets,  there is competition among large suppliers.  For example, in the area of Lithium-ion batteries, Sony and Sanyo of Japan, BYD of China and LG Chem of Korea and others are all competing to gain marketshare on a global scale.  

This huge dominance by any one large company,  controlling so much of the software world of operating systems, does not provide the average consumer with much choice. What would it be like if all technical areas had only one dominant player?  For example, I doubt of the American public would like to have only one automobile manufacturer control all engineering  decisions and markets for vehicular operation.  
Adobe Photoshop ImageConsumers do not know what is important about batteries for their products but color tones are  the selling sizzle!  The petite, slim and sleek cellphones are available  in a variety of colors  to dazzle the consumer. One cellphone offered by  Sprint even has  the colorful rainbow LED with 7 assignable colors, all seven colors alternately appear  during use.  Some vendors displayed  an  entire booth of flashing colored cases and LEDs on cellphones ; it was definitely eye-catching to the passerby.  

The sense of auditory tone has also been enhanced.  Now  synchronized ringers with internal phone book entries are available so that  certain ringer sounds are tailored  for special  incoming calls. Now caller ID can be heard with only the cell phone owner knowing who is calling.
Standardization

Each cell phone and  PDA continues to have its unique battery pack designed especially for a particular model.  As stated earlier, many batteries  can no longer be replaced and must be  exclusively sent back to the manufacturer for replacement or scrapped.

Chargers also are deemed specialty items.  Every device has its own charger and connector.  Thus, each time one travels, he/she has to pack a special charger for the cell phone, PDA, computer, digital camera and any other wireless device that he/she owns.  It would  be convenient for the consumer  if the electronic manufacturers would use a standard bus for connectivity for these devices so that there might be some interchangeability, but it will likely  never occur because such practices would certainly not bring in additional revenues.  So, when one’s cell phone no longer has a battery replacement that can be purchased, the  phone must be discarded, the household outlet battery charger needs to be  tossed out, and the car charger has to be trashed.  These auxiliary items have no further application.

We are living in a “throw away society.”  Even if a person really likes his PDA and/or cell phone after owning the model for two years, he/she is told at the retail outlet that  the item is obsolete.  New features must be purchased on the next model whether one wants them or not.  For example, if one asks why  a model isn’t made with a black and white screen, the individual is told that manufacturers don’t make the model because no one wants it.  The whole idea centralizes on the  importance of  valuing the newest model, and the message is loud and clear that “color is in!” .  Subtly, the person asking the question feels that he/she is not a tech-optimist: not a member of the true tech-elite.
SAdobe Photoshop ImageANYO had presence inside  and outside of the exhibit hall at CES.  The overhead Blimp continuously  reminded attendees to look for  its products.  One of Sanyo’s  companies, the Sanyo Fisher Company, received six innovation design and engineering awards.

One of the products BD editors viewed was the SANYO SCP-5400 which was designed for use with  dual band/tri-mode Sprint phone PCS Ready LinkSM  and PCS VisionSM . With the option of Sanyo’s Extended 1650 mAh Lithium-ion battery, digital talktime is 5.3 hours and  standby time is 7 days.  Analog talktime is 2.3 hours and standby time is 23 hours.  Estimated charge time is 5.5 hours.  
But, the band (show) plays on

Whether one agrees philosophically with all the money spent on the “in crowd’s” next electronic glitz, the show does get the attention of the international community.  This year there  were 129,328 technology executives visiting 2,491 companies in 1.38 million net square feet of exhibit space.  From the international community, there were 18,050 individuals  representing 110 countries.  More than 130 leaders from the U.S. federal  government and foreign governments attended.  From the U.S., government officials included those representing the Federal Communications Commission and  the Federal Trade Commission as well as delegates from the Senate and House of Representatives.  The future of digital life-style looks bright,  and  battery sales will definitely escalate with more and more portability and wireless in devices.  

As CEA states, new electronic technology does bring mobility,  information and connectivity, but the most important factor relates to how  individuals and businesses  implement these devices into their personal (or corporate) life. In making purchases and in using new devices, the consumer must decide if  true value really outweighs perceived  value. Is each new device  making a big difference in improving the quality of life for a better world, or does it just add glitz and pizazz to allow the owners membership in the ‘trendy’ crowd?

BD