Gadget megatrend: From one mobile market to many

For the longest time, mobile devices came in clear, separate categories: laptops, phones, handheld game players, and music players. But with the arrival of smartphones, tablets, and smarter everyday gadgets, the market is exploding, mixing together, and fragmenting into different subsectors.

That’s one of the things to expect at the Consumer Electronics Show, which opens this week in Las Vegas, according to the analysts who gave the show’s opening talk to the press. The trend is a sign that companies which focus on creating more specialized gadgets will likely find customers over time, as long as they solve a problem that can’t be solved by a universal device such as a smartphone.

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An Internet-connected meat-cooking thermometer? Don’t be surprised if you see one — least of all because one  already exists! The addition of connectivity, sensors,  computing power, and location information will make devices far more intelligent and useful, justifying the existence of a specialty product in the presence of a universal one, Dubravac said.

“People have referred to the smarter gadgets as the internet of things,” he said. “But we think about it as the intelligence of things.”

Sean Dubravac (pictured above, right) and Ben Arnold (left) said that each of the different mobile markets will likely give rise to specialized mobile devices, such as eBook readers. That’s contrary to past expectations since smartphones and tablet computers were expected to kill off eBook readers in 2010. In fact, Amazon sold more than 8 million Kindle eBook readers in 2010, and the market looks healthier than ever. About 20 million are expected to sell in 2011.

Tablet computers are also going to be huge at  the show. Dubravac said he wouldn’t be surprised to see more than 100 tablets on display among the 2,500 exhibitors. Just a year ago, before the iPad launched, lots of people were skeptical that you could sell a gadget to users with a screen that was somewhere between 5 inches and 15 inches. Now that category of device has become a big battleground, Dubravac said. Based on consumer surveys, the best price for tablets is $301 to $440. In 2011, tablet sales are expected to nearly double.

Other device markets are more stagnant. Digital cameras are expected to grow only 1 percent in 2010 in terms of U.S. sales. But the camera makers who are doing well are remaking their devices with global positioning system (GPS) capability and internet uploading.

Dubravac said that the increasing use of new kinds of control schemes will likely lead to a wave of renewal in different categories of products. Adding sensors and cameras to devices will open the way to make the devices more intelligent. A car such as the Nissan Leaf electric car can use sensors to measure driving efficiency and report back to the car owner, who can then work on improving his or her driving efficiency. And as the sales of Microsoft’s Kinect motion-control system suggest (it sold 2.5 million units in 25 days), gesture controls are going to be hot and will allow for more and more specialty gadgets.

Last year, 3D television sets created a lot of hype, but connected TVs got a better reception. In 2010, connected TVs were 9 percent of the market. That should grow to 15 percent in 2011 and 52 percent by 2014. Stereoscopic 3D, meanwhile, will likely come down in price and proliferate into portable gadgets such as phones and Nintendo’s upcoming 3DS game device.

One of the best ways to carve out a new niche in the market is to create a full-blown ecosystem. And these days, that means creating apps that make use of the gadgets. The new age of apps — triggered two years ago with the launch of Apple’s App Store for the iPhone — is transforming a lot of the devices.

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About 40 percent of consumers use apps for communication, 32 percent for checking weather, 32 percent for navigation or maps, 32 percent for music, 28 percent for news, and 25 percent for games.

Arnold believes that extending a mobile device so it can access data on your home network will grow over time as mobile devices usage goes up. He said there will be more remote control apps where the smartphone becomes the tool for controlling the gadgets in your home.