If you're tired of opening the newspaper's business pages and finding yet another dire prediction for the overall U.S. economy, perhaps a narrower vantage point will help. Factory sales of U.S. consumer electronics will grow by better than 5% annually over the next four years, according to a study presented at last month's Consumer Electronics Show in Las Vegas (see the figure). Topping $90 billion last year, sales are expected to reach $116 billion by 2004.
Growth will stem from the fact that the PC is no longer an island. Keynote speaker Craig R. Barrett, president of Intel Corp., Santa Clara, Calif., pointed out that some 400 million of today's estimated 500 million to 600 million PCs are connected to the Internet.
"It's a big, digital universe. And if you look at the center of that digital universe, the focal point for the big bang is the core of the PC," he said.
It's no secret that PC sales have slowed. But like a freight train, the development and introduction of all manner of peripherals are barreling ahead. Such sales are in no way daunted by negative signals from other sectors of the U.S. economy.
"What we are seeing today is more and more devices attached to the PC, extending its influence," Barrett added. Cameras and other commercial devices are going digital. With the likes of USB and the imminent arrival of Bluetooth, both wired and wireless interfaces are becoming a reality. Add to that multimedia—like movies, audio, and games. Once downloaded into the computer, they can be stored, edited, and shared, either at home or via the Internet.
Barrett cited Metcalf's Law, which says that the value of a network equals the square of the number of nodes on that network. He also introduced the notion of what he calls "peer-to-peer" computing. Instead of putting information on a Web site, content stays on the user's PC, under the user's control. And, only the PC user decides who gets to see it. No intermediate server is necessary to store the data, either.
According to Barrett, the PC will become the central nervous system for home entertainment capability. For instance, movies can be extended wirelessly via Bluetooth and delivered to any room in the house.
And, faster processing speeds are coming. This higher performance will let PCs handle complex multimedia like voice recognition, animation, and gaming, which have taken up permanent residency in the PC/Internet world.
True, there is a disparity between the current prognosis of the economy at large and the health of the consumer electronic sector. But the mix of an expanding Internet, greater processing power (which has yet to signal that it has an upper bound), and greater storage capability comprise a powerful springboard that should drive the continued growth of the consumer electronic marketplace.