By Jon Swartz
‘Tech is facing a couple of tough years, but history has shown that it eventually rebounds, and companies need to be ready for when it does,’ says tech analyst
The CES trade show symbolically kicks off the new year for tech, providing a blueprint for what to expect over the next 12 months and beyond.
The 2023 event, however, may be defined by what has happened in the months leading up to it: A spate of layoffs, hiring freezes, consolidation of real estate and all-around hand-wringing in Silicon Valley and beyond. The industry did evade the threat of an antitrust vote (or two) from the U.S. Congress in the days leading up to the conference, which runs Jan. 5-8 in Las Vegas.
With the annual extravaganza less than a week away, CES organizers have set a goal of 100,000 attendees, compared with 44,000 a year ago, and they are planning for 2.1 million net square feet of floor space, compared with 1.3 million last year. (Prepandemic, show attendance was in the range of 150,000 to 182,000.)
The confirmed companies participating include: Facebook parent company Meta Platforms Inc. (META), Advanced Micro Devices Inc. (AMD), Intel Corp. (INTC), General Motors Co. (GM), Microsoft Corp. (MSFT), Amazon.com Inc. (AMZN), Alphabet Inc.’s (GOOGL) (GOOGL) Google with a big outdoor facility, Qualcomm Inc. (QCOM), Samsung Electronics Co. Ltd. , Verizon Communications Inc. (VZ), Nvidia Corp. (NVDA), Cisco Systems Inc. (CSCO), Adobe Inc. (ADBE), Delta Air Lines Inc. (DAL), TikTok and Roku Inc. (ROKU).
“Major companies want the physical connection. They want deeper discussions over a coffee or a meal. They are seeking serendipity,” Gary Shapiro, chief executive of the Consumer Technology Association, which runs CES, told MarketWatch.
“It is a good place to kick off the year, because a lot of our customers, like LG Electronics , AMD and BMW, are there,” said Walt Hearn, vice president of worldwide sales and customer excellence at Ansys Inc. (ANSS), a simulation-engineering company with a market cap of $21 billion. Hearn has made a point of attending CES every year, even during the pandemic.
What brings Hearn and others to CES is a glimpse of the immediate future — in this case, around the themes of the metaverse, sustainability, digital health, electric vehicles and autonomous vehicles.
The metaverse holds the most tantalizing possibilities — Meta, Apple, Microsoft and nearly every other tech company all have designs on the market — though it has been fraught with delays because the technology is pricey and the experience difficult to explain.
“If you ask five people about metaverse, you get six definitions,” Todd Richmond, a member of the professional engineers association IEEE, told MarketWatch. “It is a platform for ways to communicate, but what is changing are the on-ramps to it. I was at CES in 2016 and we were talking about it being the breakthrough year for VR [virtual reality]. It wasn’t. Will 2023 be that year? Probably not.”
Still, global spending on augmented reality and virtual reality is expected to reach $13.8 billion this year and $50.9 billion by 2026, according to market researcher IDC.
Tech’s year(s) of living dangerously?
Layoffs, CEO firings and looming antitrust legislation could make 2023 among the most unpredictable and treacherous years for tech. Historians go back to the dot-com implosion of the early 2000s for a comparable stretch of chaos and uncertainty.
“We’ve gone from overstaffing and growth at all costs to a mind-set now where cash conservation is king,” Andy Stinnes, general partner at venture-capital firm Cloud Apps Capital Partners, told MarketWatch. “We came off this crazy cycle and now are shifting hard to caution for the next year to 18 months. Funds are sitting on dry powder, with public markets down 50% and IPOs dead.
“We are in a new cycle, just as we were in 2000 and 2008,” Stinnes added. “Now is a good time to make investments [that] are investor-friendly and not founder-friendly. We essentially sat out in 2021. Now we are active.”
Silicon Valley is currently being roiled by the precarious status of Twitter Inc. under its combustible new leader, Elon Musk. Meanwhile, Meta is slashing 11,000 jobs as its grandiose plans for the metaverse appear to be at least a year or two away. HP Inc. (HPQ), Cisco and DoorDash Inc. (DASH) are also among the tech players shedding thousands of jobs. The CEO tenures of Amazon.com Inc.’s Andy Jassy and HP’s Enrique Lores seem shaky after Walt Disney Co. (DIS) jettisoned Bob Chapek only two years after he was promoted to the company’s top spot, and Salesforce Inc. (CRM) co-CEO Bret Taylor is departing after a little over a year in the job. And the acceleration of layoffs and real-estate consolidation at Meta and HP has renewed tensions between employees who want to continue to work from home and employers who want them on-site.
More than 50,000 tech workers lost their jobs in November, raising the year’s total to more than 150,000, according to data collected by the website Layoffs.fyi. The San Francisco Bay Area, the home of Silicon Valley, was particularly hard hit: Some 47,000 people were let go from 252 tech companies so far this year.
For more: ‘It was not sustainable or real’: Tech layoffs approach Great Recession levels
It is hard to gauge the influence of CES — or any tech show, for that matter — at a time when COVID is still a threat and the economy is unpredictable, according to executives who plan to attend next month.
While some may question the need for old-fashioned face time in Las Vegas in an era of Zoom meetings and streaming seminars, the four-day gathering still generates excitement among international companies looking for exposure in the U.S., extensive media coverage and deals.
“It is a time of big change,” Cullen Jennings, chief technology officer of security and collaboration at Cisco, who last attended CES in 2020, told MarketWatch. Cisco plans to show Webex Hologram with Magic Leap 2 headsets.
“It is always useful to see products demonstrated in person,” Jennings said. “It takes a lot of time and energy to attend a show, especially one as big as CES. The work-from-home principle also applies to trade shows: There are certain things people can do remotely, or in person.”
While the tech industry was spared antitrust legislation during the lame-duck session, regulators appear intent on reining in the powers of Apple, Google and others.
Earlier this month, the Federal Trade Commission sued Microsoft to block its $69 billion deal to buy Activision Blizzard Inc. (ATVI), and it went to court in San Jose, Calif., in an attempt to block Meta’s approximately $400 million acquisition of VR fitness app maker Within.
Perhaps no one knows the ups and downs of the annual tech show in Las Vegas better than Tim Bajarin, president of Creative Strategies Inc. The tech consultant and analyst has attended 47 variations of the January show, stretching back to 1975. He’ll be in Vegas next month.
“The show is realistic about any tough times ahead but is always forward-looking,” Bajarin told MarketWatch. “Yes, tech is facing a couple of tough years, but history has shown that it eventually rebounds, and companies need to be ready for when it does.
“I expect the show to still be upbeat and looking forward even knowing that the next few years in tech will be difficult,” he added. “Its optimistic outlook is what makes this show interesting even in bad times.”
(END) Dow Jones Newswires
Copyright (c) 2022 Dow Jones & Company, Inc.