CES 2023 and the Future of CES

As if trapped in a terrible relationship, we keep going back to the Consumer Electronics Show (CES). The show covers too much territory for anyone to provide a comprehensive (or comprehensible) grasp of the entire event. So instead of trying to pick out a single theme or major announcement, we are instead going to just dip our toe into some of the highlights. Maybe next year we will live stream walking around the show floor.

Here, we want to talk a little bit about what the show is becoming, or at least seems to headed.

If we had to extract one theme from this year’s show the picture above lays it out pretty clearly – a large empty space. CES had gotten so large that it covered pretty much every piece of available space in Las Vegas – the sprawling Las Vegas Convention Center (LVCC), and all the conference rooms/ballrooms at the adjacent Westgate Hotel, the Sands exhibition spaces, meeting spaces at Mandalay Bay and City Center, and hundreds of hotel rooms converted into meeting spaces at a dozen hotels around the city. At least that is what CES used to be in 2019. After three years of pandemic CES was much smaller this year. The organizers ‘estimate’ that 100,000 people attended, down from 182,000 in 2019. While that 2022 figure is still large, it is clear this year things were different this year.

For example, the exhibition floor was greatly reduced. The Westgate rooms pictured above used to be filled with hundreds of exhibitors from China showing off a range of electronic gadgets. In 2019, those vendors got an entire building to themselves, an annex to the LVCC. That new building was not open this year, in fact the LVCC closed off both floors of their South Building entirely. This used to be the heart of the show, but now is reportedly set to be converted into office space.

To be clear, there were still a lot of attendees – 100,000 people makes CES one of the largest shows in the world, but the aisles felt much less crowded – fewer people and a new floor plan which sacrificed conference-floor meeting rooms for wider aisles.

All of this made the show feel much more manageable and far less hectic, which is not necessarily better. We spent a lot of time trying to figure out who did not exhibit this year. At first, it was hard to pin down. The usual vendors all showed up – Microsoft, Qualcomm, HP, Razer, Sony, Samsung, LG and many other stalwarts were there. In the past, the show offered 2.9 million square feet of space, but this year the figure looks like it was down to 2.0 million. A million square feet missing means a lot of attendees did not show up.

An obvious piece of the puzzle is China – all those hundreds of factories in Shenzhen and South China did not have time to book space after China suddenly lifted quarantine restrictions a couple weeks before the show. Many of them did attend, but instead of thirty booths displaying near identical Bluetooth speakers, “smart” mirrors and phone cables, this year there was only a handful for each category.

Another major change was the shifting of conference halls. Historically, the LVCC’s North Hall was dedicated to automotive companies – which used to mean distributors of after-market car enhancements – stereos, lights and the rest. This year, the auto hall was shifted to the newly opened West Hall. The West Hall is a sparkling facility with great ventilation, but it is also much smaller than the old North Hall. And this year, most of the exhibitors there were chip and software companies competing on autonomy and digital dashboards. The after market parts vendors were pushed to the edges or left the show entirely.

But ultimately, we think the bulk of the companies who did not show up were the companies which we denizens of the Valley think of the least often. As much as many of us think of CES as a show highlighting high technology, it is really a show meant for retailers to make their electronic purchase decisions for the coming year. That is why it is held right after the holidays – everyone knows what sold well, informing their decisions on what to buy next. And so the bread and butter exhibitors for decades at CES were not Big Tech, they were instead the small vendors (i.e. largely from South China) and the many, many distributors and assorted Middlepeople of the industry. The South Hall used to be filled with booths carrying backpacks, portable speakers, movie-branded phone cases and all the other accessories. If you are not a retail buyer, you probably had no idea who those companies are, but they were once the backbone of the show, and this year their numbers were radically diminished.

To be clear, much of this reduction is likely a function of the pandemic. Next year, we expect the China vendors to be back in force. And no one we asked really seemed to know what the organizers have planned for floor space next year – with some people saying there will be a big addition to floor space next year, others saying little change from this year. (On a side note, the organizers did announce new data, pushing the show back a week, for which we are very grateful.)

That being said, as we walked the aisles of the show, with far less jostling and mad energy, we had to wonder if the show is not permanently changed. Most people we speak to agree that CES has lost much of its original purpose. It has gotten too broad, they say, noting that there are better shows for each specialized topic. More concerning would be changes in the way in which retailers make their purchasing decisions. Have Amazon and online channels become so important, that the idea of holding a physical conference in a single location no longer makes sense? We have heard this refrain for a decade and the show only grew. But the absence of that key group of distributors and small vendors brings new resonance to that refrain. And so while we were grateful for a far less frazzling experience at CES, we admit it is possible that the world may have changed, and maybe future CES will become something very different.

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