November 20, 2008 5:33 PM PST

Economy takes bite out of CES

by Stephen Shankland

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The Consumer Electronics Show has become a mammoth event every January in Las Vegas, but the down economy is paring it back as Cisco Systems, Yahoo, and other companies scale back their presence.

CES remains a useful way for technology companies to meet with retailers, press, and the media. But for some in the current economic climate, it's not useful enough to pay $35 per square foot for a sprawling booth on the Las Vegas Convention Center's cavernous interior.

"This was to have been Cisco's first time as a formal exhibitor," said spokesman Jim Brady. "Given (Cisco's) focus on reducing costs, the company has decided to scale down its participation in CES in Las Vegas in January 2009." Instead, the networking giant is sticking with a more modest space rented at the Venetian Hotel supplemented with videoconferencing technology.

Cisco isn't the only one to scale back. Also on the list are Yahoo, Seagate, Logitech, and Belkin, company representatives confirmed. Philips won't have a space on the CES show floor, either, though Funai, which has taken over manufacturing and selling TVs under the Philips brand in the United States, will pick up some of the slack.

The Consumer Electronics Association, which runs the show, said the show will be the third largest in terms of floor space, shrinking from its size the peak years of 2007 and 2008.

"The economy is causing some companies that may have had booths to say, 'Maybe we want to be in a meeting room instead,'" said association spokeswoman Tara Dunion. Despite it, the total number of exhibitors is level from 2008's show at about 2,700. "We're also seeing companies on the show floor for first time," including Verizon Wireless, T-Mobile, Iomega, and Mattel, she said.

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And there's a silver lining, too. "Vegas hotel rates are coming down because tourism travel to Vegas is slower than it's been in years. That provides an opportunity for business professionals," she said.

Incentives to show
But the organizers are working hard to keep the show as lively as possible. One promotion is aimed at technology buyers--the middlemen who buy all those TVs, gadgets, cameras, and other devices before selling them to ordinary folks.

"To increase buyer attendance at the show, we have put significant emphasis on promoting to Consumer Electronics Association retailer/integrator members," according to one association e-mail sent to show exhibitors. "We developed a special package of incentives and discounts to help with their travel costs, making their decision to attend the show even easier."

The package includes free registration, a $100 airfare discount, two free nights of hotel rooms, hospitality suits for some groups, and discounted meeting room rates.

CES organizers also can take heart they aren't wedded to the auto industry, which in the United States is trying to ward off bankruptcy. General Motors canceled its media events at the Los Angeles Auto Show, which took place this week.

The Comdex collapse
The tech show cautionary tale is the once-mighty Las Vegas computer show Comdex, which collapsed in 2004.

Few doubt that CES still has critical mass. None of the companies that have canceled their booth plans is avoiding the show altogether.

But hotel suites and trade-show meeting rooms are cheaper than floor space, especially when factoring in the price of electricity, display setup, and extra staffing. That means that the show organizers miss out on the revenue even if the show goes on.

Several companies are moving to the periphery. "Yahoo is taking a lower profile at CES 2009 than we have in the past," said Yahoo spokeswoman May Petry. "We are not going to have a booth, but we have a ton of speaking engagements, a lot of presence in partner booths, and press conferences."

In 2008, Yahoo rented a large tent in the CES parking lot, she said.

Belkin, which makes a wide variety of electronic accessories, came to a similar conclusion in the last couple months.

"In the past we have exhibited at CES with a pretty nice booth. This year we will still have a presence at CES, but will be holding private meetings in our suite with our channel partners," said spokeswoman Melody Chalaban. And the company's new product announcements won't come until after the show, she added.

Along with that means fewer employees on the road. "We will be sending less staff to CES. Hotel suites take up less square footage," Chalaban said.

Hard drive maker Seagate is sending fewer people and forgoing its booth, said spokesman Michael Hall.

"I think it's the prudent thing to do in this environment," he said. "We are still sending executives down there, still meeting with press, still announcing products. But the scale is down from last year."

Westinghouse has rejiggered its CES plans, too, opting for a nearby homey environment to tout its flat-panel TV wares, said spokesman Michael Ingalls, though the change came before the economic troubles became apparent. "Do we really need to be on the show floor with 5,000 other vendors?" he asked.

Still going
Many companies aren't changing their plans, including the granddady of consumer electronics companies.

"Sony has not cut booth size or staffing. Everything will be the same as the previous CES," the company said in a statement. And Intel will have a major presence, including a keynote by Chairman Craig Barrett and a party. "Companies make long-term commitments to the show," said Intel spokeswoman Connie Brown.

It can be tough to respond if arrangements were made before the economy took its nosedive starting in September.

"A lot of the CES plans are set well ahead of time," said Bill Heuer, head of the digital camera division at Casio, which plans a large booth. "You can't just quickly dial back something."

Stephen Shankland writes about a wide range of technology and products, but has a particular focus on browsers and digital photography. He joined CNET News in 1998 and since then also has covered Google, Yahoo, servers, supercomputing, Linux and open-source software, and science. E-mail Stephen, or follow him on Twitter at http://www.twitter.com/stshank.