Confab may be cool to hot new gadgets

With recession in the air and fewer people in attendance, techies started gathering Wednesday at the Consumer Electronics Show with an eye as much on how the industry will cope as what the hottest new products are.

Among the companies with lots to prove at this year’s confab are Microsoft, which will kick things off with its traditional pre-show keynote; Sony, whose CEO Howard Stringer will speak Thursday morning; and backers of Blu-ray hi-def discs, who have won the format war but need to demonstrate that consumers care.

Many attendees will be looking for signs of how the biggest tech companies plan to weather the economic downturn and generate sales for products announced last year, let alone launch others. Sony, in particular, has been beset by rumors of impending layoffs amid poor sales for key products, especially the PlayStation 3. Japanese conglom announced several new hi-def Internet-connected TVs, cameras and other products at a Wednesday afternoon press conference. But many of the biggest announcements, as well as an overall strategic vision, was being held for Stringer’s keynote Thursday.

On Wednesday night, Microsoft CEO Steve Ballmer — replacing departed founder Bill Gates for the first time — was expected to unveil details and announce immediate beta testing for Windows 7, the highly anticipated new operating system that the tech giant needs to do well after last year’s poorly received Windows Vista.

According to a pre-show briefing, Microsoft was set to announce a key — and rare — victory over competitor Google in the search space, landing a deal with Verizon to be the search provider on all phones from the nation’s largest wireless carrier. It’s likely a pricey deal for Microsoft, but one that could give its Live online service a major boost in the fast growing mobile space.

Prexy of entertainment and devices Robbie Bach was also on hand to talk about a number of the company’s media initiatives, including the struggling Zune portable music and video player, which has sold 3 million units since its launch two years ago. That’s only a small fraction of the number of iPods Apple sells each quarter, but still strong enough for Microsoft to keep backing the product.

Bach had much more to brag about with the Xbox 360 videogame console, which sold 28 million units worldwide by the end of 2008, putting it well ahead of Sony’s PlayStation 3, but far behind Nintendo’s Wii.

In addition to previewing two previously announced “Halo” titles, Bach unveiled a downloadable Xbox 360 application dubbed “Kodu” that allows users to design their own videogame levels. Similar to Sony’s hugely hyped but modestly selling “LittleBigPlanet,” “Kodu” provides a simple interface letting novices create games and share them with friends online. It’s expected to launch in the spring.

Bach also discussed the success Microsoft has had with a Netflix partnership that allows Xbox 360 owners to stream movies from the DVD-by-mail company’s on-demand Internet streaming service.

Others have apparently taken note, since several companies unveiled products with built-in Internet connections that allow users to stream Netflix movies. Both LG and Vizio on Wednesday showed TV sets with that feature built in, and LG also unveiled a Blu-ray player that does the same.

Such devices are expected to be more popular than separate boxes, such as those offered by Roku, Vudu and Apple, that connect to the Internet and then plug into a TV.

Sony unveiled a line of TVs with Internet connections last year, but the devices didn’t connect to Netflix or any other feature film providers, lessening their potential appeal.

Also showing off ways to bring Internet content into the living room at CES is TiVo, which Wednesday announced a new Google-like search engine that includes TV shows, shortform Web video and on-demand movies in one directory for owners of the digital video recorder. It’s the first example of what’s expected to be the growing presence of video search on TV sets, which could pressure and eventually eliminate network scheduling.

Key events for Hollywood as CES continues throughout the weekend include an afternoon press conference Thursday by the Blu-ray Disc Assn., where both player manufacturers and studio reps will no doubt tout huge growth figures from 2008 but be questioned whether hi-def sales in 2009 can make up for continued drops in standard DVD sales. Despite the end of the format war at last year’s CES when Warner Bros. abandoned HD DVD, 2008’s quadrupling of Blu-ray sales wasn’t enough to prevent a 5% erosion in overall homevid revenue.

In addition, Disney TV topper Anne Sweeney is scheduled to speak Thursday, videogame publisher Activision Blizzard prexy Michael Griffith speaks Friday and there’s a Variety-sponsored panel about tech and media featuring execs from Sony Pictures, Marvel, Ascent and Habbo on Friday morning.

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