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Largest consumer electronics fair to open

The world's oldest consumer electronics show opens its doors in Berlin on Thursday to showcase an industry bursting with confidence as demand surges for flat TVs, MP3 players, set top boxes and phones.
A technician places a screen at the exhibition stand of the South Korean Samsung company at the IFA 2006 consumer electronics fair in Berlin
A technician places a screen at Samsung's exhibition stand at the IFA consumer electronics fair in Berlin, August 30, 2006. Arnd Wiegmann / Reuters
/ Source: Reuters

The world's oldest consumer electronics show opens its doors in Berlin on Thursday to showcase an industry bursting with confidence as demand surges for flat TVs, MP3 players, set top boxes and phones.

Sending a strong signal that consumers are now driving advances in technology, the IFA trade show has this year evolved into an annual event from the biennial show that has for decades been the stage for innovations such as the DVD in 1995.

But the focus will likely be on battles between proven products rather than new inventions.

A format war continues to rage over the next DVD standard, which may hamper wider industry growth by confusing consumers and delaying purchases.  At the same time mobile phone makers are striving to break the dominance of Apple's iPod by integrating music players into handsets.

"The industry will continue on the road to digital convergence, but I don't expect major new products," said Jurgen Smit, sales manager at Dutch electronics retailer Polectro.

IFA has become an annual show in a fast-paced industry where products can pass their sell-by date less than two years after being conceived.

It expects about a quarter of a million visitors and more than 1,000 exhibitors from 40 countries. At the show itself retailers buy up to 2.5 billion euros ($3.21 billion) of goods.

"The decision to hold the IFA annually has boosted the international standing of this trade fair venue," said Chief Operating Officer of the Berlin fairground Christian Goeke.

But with the Consumer Electronics Show in Las Vegas coming up in early January, not everyone is happy with two major consumer electronics shows only four months apart.

"From the workload point of view I think it's too much. But I think a platform in this energetic and fast-moving market is essential," the European president of Sharp, Hans Kleis, told Reuters.

IFA has in the past been a political stage as well as a technology showcase, with Albert Einstein promoting radio as a tool for creating democracy before World War Two, and Nazi propaganda minister Joseph Goebbels calling for German supremacy in the 1930s.

But these days the talk is strictly commercial.

"Holding the event annually benefits not only Berlin, it is a boost to the economy that extends far beyond the local region," Berlin mayor Klaus Wowereit said.

Among the novelties on show this year will be light-emitting jackets by Philips Electronics, which is looking for customers to weave displays into textiles for advertising.

And case modders -- modifiers of computer cases -- will bring in 20 of their most remarkable adaptations of gray computer boxes, including one resembling a chrome plated V8 engine, to show that even computers can express their owners' personality.

Room for growth
The global consumer electronics industry has grown by an average 9 percent a year between 2001 and 2005 and factory revenues will total $311.6 billion this year, according to market research group iSuppli.  And the market is far from saturated.

Although over 100 million households in Europe and the United States have moved to digital television, that is still less than half of homes on both sides of the Atlantic except Britain, according to research group Datamonitor.

Flat TVs, the icon of modern living, make up less than three out of every 10 televisions currently sold worldwide, said research group DisplaySearch, meaning that growth can continue unabated for many years.

ISuppli analyst Chris Crotty says: "Consumers are more likely to buy a second television or DVD player for the bedroom or perhaps a second MP3 player for the gym bag."

However, an extra boost that was expected for liquid crystal display (LCD) television sales from the soccer World Cup in Germany in June and July failed to materialize.

"The whole industry had expected more," said Sharp's Kleis.

One explanation is a shortage of digital TV set top boxes, which are crucial for a clearer picture. Another is that consumers have come to anticipate gradual price declines and are waiting for LCD to become cheaper.

Nevertheless, LCD and plasma TV unit sales increased 135 percent to 9.4 million units and 95 percent to 2.2 million units respectively in the second quarter.

Sharp and others now plan to introduce new flat televisions, many of which will now be full-High Definition (HD), as opposed to the intermediate HD television sets launched last year.

But these sets will cost many thousands of euros, which will be too much for most consumers who are still waiting for Standard Definition flat TVs to become affordable.

"I'm happy with my normal TV.  Flat screens are just money down the drain," said one 38-year-old Frankfurt woman, declining to give her name.