Surprisingly, NBC will not be broadcasting the Super Bowl in 3D, one of the few large sporting events of late that will be viewed in just two dimensions. Whether this hinders 3DTV sales this year prior to the game remains to be seen, but at first glance, it appears to be a lost opportunity for TV manufacturers and content providers who have invested substantially in the technology. Along with movies and video games, many consumers want to watch sports in 3D. The NPD Group’s 3D 360 Monitor Wave 5 study reports 60 percent of sports fans are interested in watching 3D sporting events with professional football the sport consumers most want to experience.

Despite robust sales (NPD’s Retail Tracking Service shows nearly 2 million native 3D sets were sold in 2011) consumer interest in 3D remains fragile and objections to increased set costs and wearing 3D glasses lead the list of reasons not to buy. A significant third obstacle to adoption, however, is the availability of enough content to justify the investment. That the highest profile sporting event of the year will not be broadcast in 3D is a blow in that respect. Whether or not millions of viewers planned to watch the Super Bowl in 3D is debatable, but it’s safe to say many assumed it would be.

First, if anyone walked into Central Hall you would have thought you were in Korea. The two dominant brands on the floor were Samsung and LG. Not just because they had among the biggest, splashiest booths but because they seemed to contain pretty much every product in the CE world and beyond, from PCs to freezers, from digital speaker docks, to TVs and sound systems. They had the most futuristic displays and the most eye-popping presentations of new technologies, although in fairness they do choose to display all this technology, other companies may have equally cool stuff but keep it under wraps. NPD’s data has tracked the growth of these two companies for many years and both, especially Samsung, have accelerated their share gains across a host of categories in the past year. It is easy to see why when one sees their demonstrations of today’s technology and tomorrow’s innovations they appear poised to continue to grow.

The second revelation is that while brands are obviously important, this year it felt like most of the noise and excitement at CES came from the supply chain and not the brand owners. Intel and ultrabooks, Android phones powered by Google, Windows Phones, Windows 8, amazing new screen technology from Samsung and LG’s display technology companies, and giant screens from Sharp’s fabs were all the rage and generated most of the interest.

That is why it is more interesting as to why Microsoft gave up its starring slot at CES, just as the power in the industry appears to be moving back towards the supply chain and away from the customer facing brands. It appears to me that next year’s keynote could just as likely come from Intel or Google as it could from any consumer brand. The torch has definitely been passed and the CE business is changing and, as always, CES provides a great reflection of where the next generation of technology elite will come from.

TV. I’ve long said that 3D and connectivity were in some ways sideshows that TV manufacturers were trotting out until they could get to that terra firma of marketing better picture quality, and CES 2012 marked the beginning of the journey home with LG and Samsung showing off 55” OLED TVs and Sony unveiling plans to use a competitive technology dubbed Crystal LED. Of course, these new display technologies aren’t mutually exclusive to either 3D (which the offerings from LG and Samsung support) or connectivity. Indeed, one of the big TV focal points for Samsung was the idea of Smart TV Evolution, in which the “computing” part of the set, including components such as the processor, can be swapped out every year to keep up with the latest advances. This essentially borrows from the old idea of desktop CPU and RAM upgrades, but in the connected AV space.

Ultrabooks. The TV was not the only high-grossing holiday favorite to receive a push forward. Intel drove ultrabooks hard at the show amid several promising debuts from Acer (the S5), HP (the Spectre), Dell (XPS 13), Samsung (the revamped Series 9) and the 360-degree rotating Lenovo Yoga, which was a finalist at the Last Gadget Standing competition for which I served as a judge. Intel vowed to justify its heavy investment in the ultrabook name – which it says will account for it largest marketing push since Centrino – by making ultrabooks stronger competitors to tablets using movement sensors, touch screens, speech, and Kinect-like gesture input. In what stands to be its last CES appearance for the foreseeable future, Microsoft was also showing off Windows 8. And while it didn’t have much news on that front, Intel’s push for touch on ultrabooks certainly provides stronger alignment between the two PC giants.

The Crossovers. One of the greater bits of evidence that the attention was on incumbent categories at this CES was the big crossover moves by Lenovo and Vizio. The former announced its first television (for China only, to start), an Android 4.0-infused dual core 55” IPS display with a motion controller, and an integrated Lenovo app store. Vizio, coming over from the TV side, showed off several ultra-thin notebooks and desktops. The desktops will include a wireless keyboard, trackpad, and even a remote control in the box. Curiously, the notebooks, while qualifying as ultrabooks under Intel’s definition won’t be marketed as such, as Vizio stakes its claims.

Imaging Products. This year looks like it will finally be the year of the connected camera (and camcorder!). Of course, over the years, we’ve seen Sony and Kodak experiment with Wi-Fi in their cameras but, following Samsung’s expansion of its Wi-Fi camera line, both venerable brands were back with Kodak bowing the EasyShare M750 and Sony realizing what was to be the next step for the Flip camcorder line with the Bloggie live Wi-Fi-enabled camcorder. The hot segment of POV action cameras also got in on the Wi-Fi excitement with GoPro showing off a new Wi-Fi add-on for its Hero 2 and GoBandit showing off a Wi-Fi action camcorder.

Home Networking. With so much emphasis on higher-speed networking devices, particularly TVs, in the home, it’s no surprise that home networking standards are being elevated as well. The next version of Wi-Fi, 802.11ac, should double throughput in the 5 GHz band while a new standard, 802.11ad, which brings forward the work of the WiGig Alliance, will allow for multi-gigabyte transfer of data over same-room distances as well as displaying uncompressed HD video from a tablet or smartphone up to an HDTV. Meanwhile, the standards battle for new “no new wires” technology continues, with HomePlug AV 2 citing the benefits of its field experience against the HomeGrid/G.hn camp.

Health and Fitness. Not everything was a step up for the familiar. CES continued to show that we are moving toward a future that can include self-monitoring of nearly every vital sign. No fewer than three connected scales were on display with pioneer Withings showing off a connected baby scale. Two of the more intriguing products were from Basis, which can measure a wide array of inputs such as perspiration levels and pulse to determine the kind of exercise one is engaging in, and Striiv, which combines several motivation techniques and challenges to keep its owners on the move. Striiv includes its own miniature touchscreen, further bucking the trend of using the smartphone as the input and output for a range of “appcessories.”

Cellular Enablement. While nearly all of the major “screens” at CES included Wi-Fi, there were also signs of cellular access seeping into older and newer categories. These included the PlayStation Vita, for which AT&T will be the carrier in its HSPA+ configuration due to ship next month. Seagate also showed off an LTE-enabled version of its GoFlex Satellite, which could help its cause as a Wi-Fi mobile hotspot and server for the vehicle. And Voxx International, steward of the Audiovox and a stable of other accessory brands, maintained the time is right to launch products that include monthly fees for cellular access. These include monitoring products for people (Care Connection) and vehicles (Car Connection) as well as the Tagg pet tracker, with which it is working with Qualcomm. Sprint is the Voxx’ carrier partner for its new connected products.

Of course, even with all this activity among established and emerging device categories, this should still be a year that sees many impressive smartphone introductions. Here, though, CES must compete with two other debut stages, including CTIA, which has been pushed back to allow a bit more breathing room for handset companies, and Mobile World Congress, coming up next month in Barcelona. These two shows’ focus should provide help complete the picture of what the major consumer device lineup looks like for the year.

NPD’s Imaging Confluence study found more than one third of consumers said it would be “very” or “extremely important” for their next digital camera to have the capability both to upload wirelessly to the Internet to share photos, as well as to wirelessly transmit to other devices. The loudest voices for wireless capability in a digital camera were those of Moms, as well as those who are above average photo printers. Nearly half of these consumers stated that wireless capability would be “very” or “extremely” important in their next camera.

And it’s clear, even in a world where smartphones have become a quick, convenient way to snap photos on the go, there are still plenty of consumers who demand features which are just not accessible on their smartphones. According to NPD’s Weekly Tracking Service during the five weeks ending December 24th 2011, point-and-shoot cameras with less than 10x optical zoom declined by 37 percent in units, but those 10x or greater increased by 46 percent, marking a solid dichotomy in the market. At the same time, detachable lens cameras rose by 17 percent.

The market for compact cameras isn’t dying, it’s just evolving. Imaging hardware manufacturers have heard the consumers’ call and are finally answering it.

Leading up to the show, ultrabooks were by far the biggest story (eclipsing the buzz on tablets in my opinion) and PC makers like Acer and Toshiba had offerings ready to display. Vizio’s surprising announcement they would be offering a line of PCs (both thin and light ultrabook style notebooks and all-in-ones) could be interesting if they use a pricing strategy similar to their approach for TVs. Vizio’s PCs are nicely designed, and with the fervor at CES around ultrabooks their announcement is well timed. (My colleague, Stephen Baker takes a further look at Vizio’s move into the PC world.)

The company formerly known as Monster Cable (now just Monster) hosted a lively press conference today, however, new headphones wasn’t the biggest news. While they did announce six new lines of headphones, their Green Power Bar and Power Center, products designed for energy monitoring and control, showed they’re looking beyond audio and cables. It remains to be seen if this will be a real opportunity for Monster though– the home energy and control market is becoming crowded with more consumer friendly lower-priced options.

Lenovo’s new Android powered TV looks, at first, like a big all-in-one PC. With a built in webcam featuring facial recognition and a game pad style remote, it’s an intriguing interpretation of connected TV. The set runs Android 4.0 ICS so I would expect some incorporation of other Android devices like smartphones and tablets. It’s not yet clear if the 55” displays will have access to the Android Marketplace, but this seems like a move away from the fragmentation that has defined connected TV platforms thus far.

Why would a company jump into a category that is not exactly a margin machine, where sales have been flat to slightly on the decline for most of 2011, where price competition is cutthroat and two retailers do nearly 50 percent of all the 3rd party consumer sales in the U.S.? Vizio says it likes to disrupt markets, and they feel this one is ripe for disruption. Most of us, however, who have followed the PC market for any length of time, would probably argue that this market is pretty disrupted already considering the near profitless volume for most of the brands and retailers. With pricing for Windows notebooks hovering below $500 there just aren’t a lot of price points not covered and regardless of the great value in an advanced feature set demand plummets at retail pretty quick once you hit about $600 for a notebook.

Vizio, however, brings with it some strong brand equity, which it has built up in very different demographics over the years by being a leading TV brand at Walmart, Costco, and Sam’s Club. Vizio promised a tablet and a smartphone at last year’s CES, and while the tablet arrived (and disappeared like most Android tablets) the smartphone has not been heard from again, a market much more in need of price disruption than the PC market.

The majority of Vizio’s distribution for its products, even the non-TV ones such as Blu-ray players, soundbars, a network router, and a line of cables, has occurred through that very narrow retail demographic of Walmrt, Sam’s, and Costco. It is likely that its PC distribution strategy would be focused on its traditional partners as well. However, even in those stores the shelves are crowded, and since the emergence of Samsung and Lenovo this holiday season, there are plenty of brands to solve almost any type of product need or price point a retailer might ask for.

As we look for industry bright spots after a gloomy 2011, headphones, especially premium models (priced above $100) certainly stand out. Beyond increases in sales or share, the story this year has been their growing appeal among young consumers.

While still fairly small, the market share in units of premium headphones has doubled this year to 6 percent, equaling more than $342 million in sales (through November 2011) according to The NPD Group’s Retail Tracking Service. Driving much of this growth are buyers under the age of 24 who accounted for a quarter of all $100+ headphone purchases in 2011, up from 13 percent in 2010. The shift is noteworthy for a couple reasons. First, young people tend to be less affluent than older consumers. Getting them to spend $100 or more on a pair of headphones when much cheaper alternatives exist is no small feat.

Second, and most importantly, premium headphones introduce these younger consumers to better sound quality, something the audio industry has been trying to do for a long time. Somewhere in the emergence of the MP3 player, digital content, and earbuds, consumers lost an appreciation for audio quality. Sounding “good enough” has sufficed. Combining the cool factor with superior sound has so far been effective in turning on young listeners.

1-Retail Relevance. While NPD clearly believes that consumers will acquire their technology hardware predominately at brick and mortar store-based retail for the foreseeable future, the challenges of retail, tough in any period, seemed to ratchet up in 2011.

The shifting tides of consumer hardware preferences, aggressive industry price declines, new category growth opportunities bypassing brick and mortar, the growing importance of service (and services), and the ongoing struggle to incorporate multi-channel retailing into the physical store experience (not to mention the economic challenges and the tidal wave of consumer empowerment) all washed over the retail marketplace. While many of these aren’t new, the combination of so many threats to the health of the retail channel created doubts throughout the industry about the relevancy and future growth opportunities in 3rd party retail.

While 3rd party retailers struggled to cope with these ongoing changes to the traditional retail model, new hybrid models emerged combining some level of content, services, retailing strategy, and hardware leveraging the growing demand for ecosystem buying among consumers that is being driven by the products being delivered today. The coming year doesn’t promise to be any easier but it will benefit from the hindsight of the 2011 strategies that retail took to cope with the avalanche of change.

2-Survival of the fittest. As we mentioned earlier, category change is a given in technology but never before have we seen so many traditionally strong categories fade as fast as we did in 2011. To exacerbate this problem, the new products that rose up to replace them have very different go-to-market models and supply chain valuations, creating significant hardship for the channel and many brands in 2011. In 2012 we don’t expect this trend to slow down; in fact the rapid decline in formerly robust product segments will represent a tremendous roadblock for the industry to deliver improved results in the coming year.

3-Disappointment-While 3D was clearly the biggest disappointment of 2011 other product segments delivered their own sad stories. Android tablets (along with other operating systems) not only didn’t meet sales expectations but were nearly invisible to the mass consumer market. As we mentioned above, the decline of once core categories like MP3, point-and-shoot cameras, and camcorders was much steeper than anyone expected. While PCs didn’t underperform they certainly didn’t exceed anyone’s expectations either. Stagnant TV sales too helped to make 2011 one of the most challenging years for CE. With these disappointments, more self-inflicted than usual, we have some hopes that 2012’s opportunities will be based on emerging product segments such as Ultrabooks, large screen flat-panel, and tablets that offer considerable growth potential and much less opportunity for industry missteps.

And while 2011 feels like a millstone around our neck, like the Phoenix, the tech business always believes something new will arise from the ashes. Whether what arises in 2012 looks anything like retail, or even consumer technology as we have come to view it and whether 2011’s challenges become more manageable in 2012 looks pretty unlikely.

Breaking Through the Walled Garden. According to NPD’s Retail Tracking Service, sales of connected TVs have grown 61 percent compared to 2010 (through the month of November) making connected TV a big story in 2011. As I perused the hundred or so connected TVs at last year’s CES, however, I began to question how all these platforms would work with other products. Many stream content from ubiquitous services like Netflix and Pandora, but others offer downloads of video content and apps. Making the TV a hub for different types of content certainly makes sense, but how that downloaded content interacts with other devices (and other brands of devices) is less apparent. Is content purchased on one product viewable on another? Consumers are moving towards more portable and pocketable CE devices with the expectation that much of the content they own (particularly music and video) can go with them. As I walk the show floor again this year, I’ll be looking to see if the next iterations of connected TVs will fit in better with other devices consumers own.

The Year of Living Digitally. I’ll echo some of my colleagues in identifying digital health as one of the bigger stories at this year’s Consumer Electronics Show. While CES has featured companies in this space in prior years, 2011 has definitely seemed like the year traditional CE companies took this category seriously. With the focus in the news on health and healthcare, an aging boomer population, and advances in sensors and connectivity, the market conditions seem right for both manufacturers and application developers to introduce some interesting products. Heart rate monitors, sleep monitors, and fitness products have broad appeal, but smartphones and tablets have the potential to add to the functionality and connectivity of these existing health devices.

A Focus on Voice and Motion Controls. With the success of the Microsoft Kinect and Apple’s Siri, new ways to interface with CE devices have suddenly become top of mind. Gaming seems like a no-brainer for these technologies, but I wonder if motion control could be incorporated effectively into more products—for instance home appliances, lighting, or climate controls. From an accessibility standpoint, voice and motion control could also help disabled consumers use a wider range of products. I expect several companies to exhibit products using some of these new interface methods in an effort to differentiate themselves.

Sales results for the first three weeks were $5.5 billion, down 6.3 percent from last year. Sales for the second week of the holiday, reflecting the strength of the Cyber Monday events, showed the smallest decline from last year, while sales for the third week of the holiday (week ending Dec 10th) which is traditionally the slowest week of the period, showed the sharpest decline. These numbers are very much in line with our expectations as aggressive pricing and a dramatically shifting sales mix has combined to drive sales dollars down from prior years.
Four big highlights:
1-The PC is not dead. Overall computer sales, both desktop and notebooks combined, fell by about 5 percent from last year in both units and dollars, given the challenges in the market this year that is certainly a tolerable performance. Desktop sales have surprisingly been up with low single digit increases while notebook unit sales fell slightly on an overall flat ASP.
2-The bigger the better. Large screen TV sales have exploded. Unit volumes for 55 inch and above TVs are up 85 percent over last year while the rest of the market is flat. Large TVs accounted for 12 percent of sales this year compared to just 7 percent last year. Of course this growth came at a cost, as selling prices for the largest TVs, despite the aggressive Black Friday pricing on 32 inch and 40 inch screens, has fallen faster than any other segment. ASPs for 55 inch and above dropped 21 percent since last year compared to 18 percent for 40 to 55 inch and 15 percent for under 40 inch screens.

3-Old technology is just old. The great volume categories of yesteryear, products like GPS, point-and-shoot cameras, and camcorders imploded this holiday. Unit volumes fell 38 percent, 22 percent, and 41 percent, respectively. In fact, in recognition of their decline in star power ASPs in all three of these categories increased this holiday season compared to last year.

4-Ring in the New. While there may not be a lot to celebrate this year three product categories standout. Headphones, which have outperformed the industry all year, have seen revenue increase 68 percent from last holiday, and in the first three weeks of this holiday season generated as many dollars as the audio speakers, receivers, and home theater system categories combined. Streaming boxes and music systems saw sales jump 51 percent in revenue over last year. Speaker systems for portable devices like cell phones and MP3 players saw sales increase 5 percent over last year, impressive when you consider that MP3 player sales have experienced double digit declines.

With sales in older technologies and product segments showing their age it will be an uphill struggle to show any overall sales dollar growth for this holiday. Looking out into 2012 these same problems will surely continue to exist and the need to find a solution to the product changes roiling the industry will be paramount.