Cool Factor

Forty-three years in, the Consumer Electronics Show (CES) is still going strong. The show has certainly come a long way since the VCR was launched at it in 1970. This year there were 3-D televisions, miniature iPhone-connectable projectors, and eBooks galore. Consumer Electronics, of course, is known as one of the great money-pits of venture investing, chewing up lots of dollars with little to show for it.

So for a venture investor, a visit to a show like CES is good for three things.

First, it is a great reminder that it takes a ton of capital and brand-building, not to mention the ability to deliver products that millions of consumers can’t live without to be successful in the consumer space.

Second, it’s a chance to see what all the “others” are doing. By that I mean, everyone but Apple. Because Apple didn’t participate in the CES show this year, and never has. Yet by any measure, Apple is the undisputed consumer leader. The iPhone, as I wrote way back in 2007, changed everything.

Companies like Microsoft (my employer until 2000) have tried repeatedly to get the sort of cool factor that Apple has. Sony – which has some really nice looking televisions – once had it. Those companies have the huge booths, the flashy displays, and the marketing programs. Many of their products are more feature-rich, earlier to market, and in many cases, cheaper, than competing offerings. Yet when it comes to making consumers fall in love, the only one who has come close is Amazon – by delivering a best of breed online retail experience, and now, an addictive electronic reading experience that is potentially threatened by, you guessed it, Apple.

Finally, it’s an opportunity to step outside, albeit, briefly, my life of digital media and customer facing software and services. Amazingly, even in 2010, not everything is connected to the Internet. And when it is, it still takes a lot of hardware to move all those bits around and to display them to that fickle but ultimate determiner of mass success: the consumer.