MENLO PARK, Calif.--The practice of playing up a company's green policies for show was the new black for the past few years. But now actually making and selling green products is what's hot because of its potential to put a business in the black.
At the 2008 Consumer Electronics Emerging Technologies Summit held here in Silicon Valley, venture capitalists, business consultants, entrepreneurs, and representatives of some of the largest consumer electronics companies in the world discussed the new wave of innovation in a rapidly commoditizing industry. It basically comes down to two words: energy efficiency.
And the reason it's important? Because it can make a product stand out. And if consumers can see a real benefit to using products that are environmentally conscious, they'll buy it. And that's potential profit for vendors and manufacturers.
"Before it was something (consumer electronics companies) just said to make themselves look good. Now it's a business imperative," said George Bailey, general manager of IBM Microelectronics.
That's because flashy, visible new breakthroughs in technology in the CE space aren't providing the same profitable bump for as long as it used to. High-definition televisions are a prime example.
"TV manufacturers are troubled in terms of profit," said Bailey. "They're asking, 'How can I add value, recapture profit?' Before it was larger format LCD screen. If yours was bigger you'd make more money. Now we know that's not true."
When the big TV manufacturers come to his division of IBM he says they are all looking for greener, more energy-efficient chips that will make their TVs consume less power because that's a way they can differentiate their product from others on the shelf. New technologies include High-K Metal Gate chips that IBM is working on that "leak" less power and can power smaller devices for longer.
But green-friendly products can be more expensive, which can deter certain types of consumers. A representative from Samsung in the audience said the company has yet to see that consumers are willing to pay for products just because they are "green."
That's why you have to give them a real benefit, not an imagined one that makes them feel good, said Steve Westly, who runs the clean tech venture capital firm The Westly Group.
"You have to give customers a real value proposition. A 'green' truck that gets 16 miles per gallon? Consumers will see through that," he said. A green product "has to have an added benefit."
Even if energy efficiency doesn't attract consumers in the numbers that these manufacturers and investors hope, businesses will be forced to green their products one way or another, Westly said.
"You'll see (environmental standards) dialed up in a government-mandated way," he said. "Government regulations and mandates are only going to increase. Not just here, but globally."