Analyst Opinion – I spent last week at the press event for IFA, which is the European version of CES and began 85 years ago with an Albert Einstein keynote. This was the first time for me that I was looking at this show and while the two shows don’t really compete, given they are focused on different markets, the IFA show appears to bring in 20% additional sales to participants while CES may actually be a 10% or better drag on sales for those who go to the show. The reason? Focus and timing.
In following CES for the better part of a decade and watching Comdex fail, the problem of these shows often seems to be one of focus. Most shows seem to focus more on revenue than on content and, when successful, don’t realize that an excessive focus on revenue will eventually kill the content and the show. At a certain point, the sheer size of a tradeshow results in declining returns for attendees, who simply can’t close business deals and eventually find other places to go. This killed Comdex and I am convinced CES is on the same path.
IFA was a refreshing change from the viewpoint that a substantial portion of the effort seems to be focused on creating demand. IFA actually markets out to end-buyers as well as distributors and retailers to help create and drive demand. Its tag line is “Inspire People. Move Markets.”
While a lot of the coverage at CES highlights future products that won’t show up for months or even years, IFA tends to focus on products you can buy at the time of the show. They have a “market ready” requirement.
You see, the problem with showcasing a lot of products people can’t buy is that the coverage results in people deferring purchases until a future date. Rather than increasing vendor revenue, therefore, CES actually creates a drag on revenue because of its excessive future focus. IFA, on the other hand, gets people excited about things they can buy at the moment and boosts sales as a result.
Timing
A lot of this has to do with timing. For instance, if you wanted to sell someone pizza, you would advertise during times your customers are likely to be hungry. You wouldn’t place large ads at times or places where people would see them only after they had overstuffed themselves for dinner. This is because when folks are hungry, they are likely to be motivated to eat. When they are stuffed, the same picture might make them slightly ill and motivate them to actually avoid your product. This is primarily why you don’t want to go shopping for food when you are hungry (particularly if you are at a Costco.)
CES comes at what is likely the absolute worst time to try to sell technology. In January, right after the Christmas holidays when people are receiving their credit card bills and are reminded they have overspent once again, they are certainly not interested in buying again. In addition, early leaks about what may be announced at CES convince people to delay purchases, which creates an additional drag on sales in the fourth quarter. Finally, the vendor representatives have to give up their holiday to be able to prepare for the event and their new products aren’t ready to be shown yet. If we were to rank the times to have a show like CES or IFA, early January would be last on that list and yet that is when CES is held.
IFA comes in September or right at the start of the consumer feeding frenzy. As noted above, this is also the time when vendors are bringing out their new lines and where the vendor representatives are ramped up to talk about and demonstrate them. Even if the products are running a little late they will still ramp into the market at a time when people actually want to buy them and any leaks surrounding the products increase the anticipation for them increasing the possibility for iPhone like lines to any truly great ones. If you were to rank times for a show like CES you would likely rank September at the top of that list.
Wrapping up
We are in a very difficult year for most consumer vendors. There is a growing mound of evidence that the technology market, particularly the consumer electronics part of it, could lead the other markets out of the recessionary market we are in. But, to do that, the major events need to contribute positively to the effort and certainly not create a drag on it. Right now, IFA is a positive contributor to the recovery while CES is a drag on it.
I think that last one should be changed.
Rob Enderle is one of the last Inquiry Analysts. Inquiry Analysts are paid to stay up to date on current events and identify trends and either explain the trends or make suggestions, tactical and strategic, on how to best take advantage of them. Currently he provides his services to most of the major technology and media companies.
The opinions expressed in this commentary are solely those of the writer.
