Highlights from CES

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Meanwhile, Philips displayed a home theater TV screen (the HTS9800W) that is as spare and angular as the monolith in 2001. And Sharp was showing off a proof-of-concept TV with a million-to-one contrast ratio, about a thousand times more contrast than a high-end LCD TV. The visual effect was like a glossy photograph with the black areas deeply black.

In his traditional opening keynote speech on January 4, Bill Gates gave glimpses of Vista, Microsoft's next-generation PC operating system, which is slated for release late this year. Chairman Bill said Vista will be more virus-proof than previous versions of Windows, and include a number of user-interface improvements. For instance, while the windows in Windows XP look like pieces of variable-sized paper stacked on a two-dimensional surface, Vista will have a third dimension, and also let users lift windows apart and tilt them at an angle, to better follow what's happening on each one.

Will consumers shell out for the new, more powerful computers that will be required to run Vista efficiently? And, as importantly for all CES exhibitors, will sales of computers and other items leave them with any profits? Given that growth in consumer spending on electronics is looking increasingly anemic, the answers are unclear.

Sean Wargo, the Consumer Electronics Association's director of industry analysis, told journalists and pundits that the industry has been growing at around 10 percent annually for the last several years. Last year, sales reached $126 billion, in part driven by customers upgrading to more expensive products in the same category, for example, from $50 portable CD players to $299 iPods, and $250 tube-based 27-inch TV sets to $799 27-inch LCD TVs.

But price deflation is now setting in; the price of a flat-panel TV, for instance, is falling by 30 percent a year, Wargo said. Consequently, the overall rate of growth for the industry is expected to slow year, to around 7.5 percent.

But CES vendors can always dream that their own products will succeed like portable music players did last year. A year ago, Wargo says he predicted that sales of music players in 2005 would increase by 100 percent over 2004, when a total of 7.1 million units were sold. In fact, they rose by 224 percent.