Shrinking Comdex has plenty of excitement left

Just three years ago, Comdex officials predicted attendance to grow from around 225,000 in 1996 to nearly 500,000 by 2003. But attendance was well below the expected 200,000 and the number of exhibitors was down by several hundred companies. One of the two giant exhibit halls at the Sands Convention Center, which traditionally houses hundreds of mostly smaller exhibitors, was completely empty. Other signs included unusually short taxi and food lines and the availability of hotel rooms for people who arrived without any reservation.

The declining attendance from visitors and exhibitors is the result of a number of factors. Comdex itself has cloned itself in smaller events held in many cities around the world year round. In addition, the enormous expense associated with Comdex, coupled with the lower overall profitability in the computer hardware industry, had made it more difficult for companies to justify spending hundreds of thousands of dollars on the show. Hotel rooms rates alone average $250-400 per night with most exhibitors requiring a

7-night stay. In addition, many small companies are now buying a small exhibit space in the "partner pavilions" of companies like Microsoft, Cisco, and others. Besides, being located in a prime location, the overall cost of the small booth is a fraction of setting up an elaborate exhibit. And finally, the Internet is now delivering high-quality up-to-date information on the latest products and technologies, giving visitors less opportunity to "discover" hot new products. Retailers, therefore are sending fewer and fewer representatives to the show that started in 1979 with a total attendance of 4,000.

In a move to change the character of Comdex, this year's show featured a number of vertical pavilions featuring a specific class of products or technology. By far the most successful and heavily attended pavilion was that of Linux Business, where some 100 companies displayed hardware, software and networking products built around the Linux operating system. An estimated 75,000 people visited the Linux Pavillion.

The apparent success of the pavilions already showed in the number of companies quickly signing up for pavilion space at next year's show. The Linux pavilion at the 2000 Comdex will double in size from this year's exhibit.

Comdex certainly got of to a blast when Bill Gates, as he has for the past four years, opened Comdex with a 90-minute Sunday evening keynote speech that was watched by a record crowd of 15,000 people stuffed in several giant ballrooms at the just-completed Venetia Hotel that is surrounded by water and tourist-ferrying gondolas.

While many had expected Gates to comment on the recent court ruling that his company is a monopoly and has engaged in using that market force to protect itself from potential challengers, Gates said little or nothing about the case beyond asking the audience; "Has anyone heard any good lawyer jokes lately? It's great to know that all over America, there are entrepreneurs, working in their garages, and lawyers working in their 20th floor offices, both working at what they do best."

The centerpiece of Gates speed was the demonstration of a new Microsoft Web appliance just for accessing the Internet. The device is part of a new class of "Web companion" systems. The Microsoft device is code-named "Mariner." It is a textbook-size device that runs Microsoft's Windows CE software, and connects instantly to the Internet, using Microsoft's MSN Internet service.

The device may include a keyboard and jump users directly to Microsoft's MSN site. It is expected that Internet Service providers will end up giving the device away free to customers who agree to sign up for one or more years of Internet access. The device will let users surf the Internet, send and receive e-mail and faxes, and keep an electronic calendar and address book. "It's a new class of devices that will be a key component of our Web strategy, Gates said. The Web Companion is among a new generation of personal digital assistants (PDA), a class of products that, with the exception of the Palm Pilot from 3Com, has had a hard time gaining acceptance. But with the added wireless Internet and Web access the new PDAs are expected to quickly spread and proliferate. The MSN-based Web companion is expected to be available in the second half of 2000 and cost around $200. They will be produced and sold by Acer, Philips Electronics, and Thomson Consumer Electronics. America Online is expected to launch a similar device in the coming months.

Analysts said that if anything, the Web Companion will give a big boost to the MSN Network, which has remained a slow-moving Internet service provider with about three million subscribers, against more than 20 million AOL users. The other major feature in Gates' speech was an impressive demonstration of the new capabilities of Windows 2000, especially in the critical area of building Web servers around the Windows networking operating system. Gates showed how in a rack of five server nodes, the Web site will not go down if one of the servers fails. In such instance, the remaining four servers automatically divide the workload until a replacement node has been plugged in. Even if the failure happens in the middle of an online transaction, all of the data is retained and the end users will have no knowledge of anything having gone wrong on the other side of his Web connection.

Gates also showed a humorous video, in which he was dressed as Austin Powers, in a blue velvet suit and lacy shirt, as the "International Man of Technology," with president Steve Ballmer appearing as Dr Evil. Gates also stressed Microsoft's support for a new Internet programming language, XML, that enables information to be easily exchanged between a wide variety of networked computers. XML is expected to give Web users new freedom to find and retrieve information. In his speech, Gates also talked about how the Internet will move from a static model to a more interactive, personalized one, where users can access favorite Web sites to get exactly the information they need, on a wide range

of devices.

While Gates' speech was fairly light-hearted, Hewlett-Packard's new Chief Executive Carly Fiorina arrived in Las Vegas on a mission to light a fire under the company which has seen market opportunities go by because it has been too slow to respond. Fiorina made it clear she intends to "rock the boat" as she wants HP to transform itself from being re-active to pro-active and leveraging HP's tradition of invention and innovation. "We will be preserving the best and reinventing the rest. This is a company founded by two men who are pretty radical thinkers. Somehow, along the way, we stopped talking about invention.

We're going to start talking about it again.''

One of the first major inventions, she said will be a joint venture with Switzerland's Swatch company to develop a Buck Rogers-like wristwatch that can access the Web. Fiorina would not say when that product would be launched. At the core of HP's new strategy is the Internet and Fiorina's belief that unless the Internet changes from being "cold and impersonal to become pervasive, friendly, warm and personal," it will not live up to its potential of creating an entire new global economy in the next decade. "We are at a critical juncture in the Net. Just a few years, when the Net really got going, you were either a Young Turk or part of the Old Guard. Now there has to be a balance between these two. HP will drive inventiveness for the new economy.

Fiorina unveiled a new $200 million marketing and advertising campaign that will emphasize the Palo Alto garage in which founders Bill Hewlett and Dave Packard turned out their first product, an electronic instrument used to test sound. Its new logo will be ``HP: Invent.'' Key to success in the future for HP and other companies will be the ability to deliver good services, along with good products. "Products become much more valuable when they are supported by services. This is the end of the product-only era. We have to think how to make profits with e-services."

In a major set-back for Microsoft and its Windows CE operating system, Sony chairman Nobuyuki Idei announced at Comdex his company was adopting 3Com's Palm operating system to power a new generation of wireless handheld computing devices. Last month, Nokia also said it was adopting the Palm OS instead of Windows CE for a next generation of smart phones that give people access to the Internet.

"It's an announcement we have to pay attention to,'' said Rogers Weed, director of marketing for Microsoft's productivity appliances division. ``But it doesn't change what we need to do with Windows CE.''

As part of the Sony deal, Palm agreed to adapt its operating system to Sony's Memory Stick removable storage medium. Getting its Memory Stick, which can store copyrighted music and videos downloaded from Web sites, is a critical part of Sony's long-term consumer product strategy. Several dozen other manufacturers announced as Comdex they have agreed to adapt their products to Sony's Memory Stick.

Idei also said Sony will work towards providing consumers with broadband Internet access products such as digital TVs, set-top boxes and other devices linked within home networks, mobile computing and imaging devices, and the PlayStation 2 videogame entertainment system. "Sony will be a driving force

in this new broadband era. We have the dynamic digital content the network demands and the key hardware platforms or gateways to manage it. Today, the world is moving toward a broadband and networked environment. Digital content is what will drive people to the network, and new digital hardware will enable consumers to manipulate it for their personal enjoyment."

"Sony has been called a media company and a hardware company," Idei concluded. "What we are really becoming is a broadband entertainment and electronics company dedicated to bringing greater joy, prosperity and connection between all peoples of the world."