A less electrifying electronics expo

The Consumer Electronics Show in Las Vegas -- known in years past for its outsized booths, wall-to-wall crowds and lobster dinners -- is going to be a lot tamer next month.

The show's producers are expecting an 8% drop in attendance to about 130,000 people, down from 141,000 in January 2008.

Companies such as Cisco Systems Inc., Panasonic Corp., Belkin International Inc. and Sony Corp. are sending fewer people, eliminating floor booths in favor of less expensive hotel suites or retooling their marketing message to fit the somber economic times. Hotels, normally booked solid months in advance, recently offered promotions and discounts to fill empty rooms just weeks before the show, which runs Jan. 8 to 11.

Though some attendees are looking forward to shorter taxi lines and cheaper accommodations, the shift in the tenor of the show indicates how the recession is affecting the $173-billion global consumer electronics industry, which has enjoyed uninterrupted annual sales growth for the last decade.

The Consumer Electronics Assn., the trade group that has staged CES for the last 42 years, this month revised its forecast for the industry's U.S. sales in the fourth quarter, from 3.5% growth to just 0.1%. Though U.S. sales of devices are still expected to grow 7% overall this year, consumers have shifted how they spend their money in recent weeks, said Jason Oxman, CEA's senior vice president of industry affairs.

"Although unit volume largely held up so far this quarter, price declines were steeper than we had anticipated, particularly over Black Friday weekend," Oxman said. "Consumers were switching to smaller, less expensive products."

In January, half of all flat-panel television sets sold in the U.S. were 32 inches or bigger, according to CEA. But in November, that declined to 36%. The trade group expected some products to do well this holiday, including game consoles, GPS devices, mobile phones and digital cameras. But the industry's biggest category, which includes TVs and stereos, is expected to drop 5% this quarter.

That spells tough times for a sector that gets nearly one-fifth of its revenue from TV sales.

Consumer electronics retailers are feeling the pain. Circuit City Stores Inc. filed for Chapter 11 bankruptcy in November and said it would close 155 of its 700 stores by the end of the year. Tweeter, an electronics retailer based in Canton, Mass., liquidated its 94 stores in November. Even Best Buy, the healthiest of the retailers, posted a 5% slump in same-store sales and a 77% drop in profit during its third quarter ended Nov. 29. Last week it offered voluntary severance packages to almost all of its 4,000 corporate employees.