6 Endangered Tech Species

TheStreet.com

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Picking up an Apple (NasdaqGS: AAPL - News) iPad or clamoring for Amazon's(NasdaqGS: AMZN - News) Kindle? You may as well get a DVD player, too, as their combined usefulness is on the clock.

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The future of technology is integration, something Apple's iPhone and Google's (NasdaqGS: GOOG - News) Android products have a better grasp of than, say, Garmin's (NasdaqGS: GRMN - News) personal navigation devices or Acer's netbooks. Though there seems to be enough room for everyone -- with the Commerce Department finding last week that American spending on tech items increased 1.8% from 2007 through the first six months of this year while spending on appliances, furniture and clothing declined -- analysts agree that the only thing separating some gadgets from the grave is the size of their displays.

"Handsets aren't going to cannibalize televisions anytime soon, because users want a big-screen media-playback experience that can be accommodated in the home," says Ross Rubin, an analyst for NPD Group. "However, handsets may cannibalize Blu-ray players at some point because, as bandwidth improves and we see more media on demand and HDMI outputs or wireless features built into the phone, it could take on the functionality of a Roku device or Blu-ray player."

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With motion-control gaming, e-books, navigation, mid-range-megapixel cameras and myriad other computing options already included in smartphones, the market space and need for more screens is shrinking. While the iPad is among the devices shrugging it off with more than 14 million sales so far this year, the nearly 4 percentage point growth in the smartphone market so far in 2010 and the $6.2 billion Gartner predicts will be spent downloading 4.5 billion mobile applications in app stores this year has navigation devices, netbooks and even Nintendo starting to feel pressure in their numbers.

"One thing we said seven or eight years ago was that there would be functional convergence of products but physical diversion -- which means you'll have one device for everything," says Ken Dulaney, an analyst for Gartner. "There's no reason a camera can't make a phone call, and I'm sure it will, and there's no reason why you can't have a Nintendo device that makes a phone call, and I'm sure it will."

With an eye toward tech omnipotence, TheStreet looked at devices that face extinction in the near future and focused on these six endangered species:

Digital Cameras

With Android phones up to 8 megapixels and the iPhone 4 boasting pixel-free resolution at 5 megapixels, even the digital-camera industry sees the impending slowdown. The Camera and Imaging Products Association -- a consortium formed by Nikon, Olympus, Canon, Sony, Panasonic and other Japanese camera makers -- forecast only 2.9% for this year and 2011 after double-digit growth until 2008. The growth of standard point-and-shoot models is more modest at roughly 2.5%.

"We're just now starting to see handsets come on board with 5- to 8-megapixel cameras, and that's where we saw digital cameras really start to take off," Rubin says. "Unless the consumer has a need for optical zoom or some of the things that are more difficult to accommodate with software, we'll see more users take pictures with their handset."

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This suggests a widening schism between the average tourist shooter and the guy trying way too hard to take pictures of trees in his local park. Shipments of high-end interchangeable-lens SLR cameras are expected to be much more robust, growing 8.6% in 2010 and 7% in 2012. The large size of current SLR lenses will keep them from becoming just another smartphone snap-on, but their small market share may reduce cameras to the domain of die-hards.

"You have to look at what you want to do really well and where you want to just get by," Dulaney says. "If you just want to get by, then an iPhone's all you need, but if want to see an email on a large screen or take pictures of your dog in really high quality, you'll get an iPad and a camera as well."

Video-Game Consoles

Despite recent sales spikes for both Sony's PlayStation 3 and Microsoft's (NasdaqGS: MSFT - News) Xbox 360, it's been a tough market for games, for which strong app sales and increasingly game-friendly smartphones aren't helping. In 2009, NPD saw sales for the entire gaming industry drop 8%, with console sales slumping 14%.

That would be just fine, had Apple not announced the iPhone 4 with a new gyroscope aimed specifically at attracting gamers. Microsoft did its rival one better, offering Xbox games on its Windows Phone 7 through its Xbox Live service. With Sony, Microsoft and Nintendo increasingly turning to online content and motion-controlled gaming, moves by Apple and other smarphone makers could be cause for concern.

"If I have an iPhone vs. a dedicated game machine, I'm still going to have a Nintendo Wii in my house because I can't do those things on the iPhone," Dulaney says. "If it ever turned out that the iPhone could do all the gestures I needed, then the Wii is under pressure and would fade away."

A simple connection would help, as well. While a smartphone tethered to an HDMI cable isn't much fun for anyone, a wireless HD connection like that offered by the WiDi wireless display feature found in Intel (NasdaqGS: INTC - News) Core i5 and Core i7 processors would make a smartphone both a console and a controller.

"While a couple of devices have an HDMI output, you don't have it on those phones," Dulaney says. "In the next five years, you'll have wireless video output and people questioning whether a Wii is a necessary purchase."

Navigation Devices

The minute TomTom offered an iPhone application, the entire GPS device market took a turn for the worse. From 2006 to 2009, market-research firm iSuppli notes that personal navigation devices had a more than 2-to-1 advantage worldwide over GPS-equipped smartphones.

By the end of 2011, however, iSuppli predicts that personal navigation devices will only outnumber similarly capable smartphones 130 million to 117 million. By 2014, however, smartphones will have a nearly 160-million-unit edge on their competitors.

While NPD Group found last year that demand for in-dashboard GPD devices was nearly eight times that of their handheld counterparts, analysts note that the only separation between those devices and a smartphone is a docking-capable screen.

"Garmin has tried to make their own phone, which they weren't very successful at, so If I were Garmin, I'd be making nice, rich displays, putting my software on the iPhone and having a service behind it," Dulaney says. "If I'm [carmaker] BMW, I want a dedicated screen in the car that I want the iPhone to power."

Tablets

The iPad gets lots of love from critics and consumers alike, but is actually a step behind.

Apple CEO Steve Jobs said in June that the iPad was the company's media missing link: Developed before the iPhone, but released much later. The problem is that, as a giant iPod Touch, it's less functional than the iPhone that preceded it.

"The iPad is very much a media playback device with a focus on video due to this large screen and relative lack of portability compared to a handset or MP3 player," NPD's Rubin says. "In the case of media playback, there's not much that is outside the scope of handset design to accommodate that, so these players are particularly vulnerable to cannibalization by smartphones -- which is something Apple likely realized."

The iPad isn't alone, as perfectly functional Windows tablets face the same plight as users drift toward what Dulaney calls the "moveable experience" -- with wireless outputs enabling much smaller devices to display on much larger screens in airport lounges, classrooms and elsewhere. With Android tablets hitting the market, Research in Motion (NasdaqGS: RIMM - News) launching its BlackPad in the fall and even Best Buy (NYSE: BBY - News) hinting at a tablet, the platform is growing -- with Gartner predicting 10.5 million sold this year. Unless it slims down or integrates, however, excuses for its existence will shrink.

"What made the iPod so cool and so desirable are things that are done on other devices that do so much else as well," says Robert Thompson, a pop-culture professor at Syracuse University. "I imagine we're going to be making fun of the new iPad pretty soon, too."

Netbooks

Hey, remember netbooks? They're what all the tech geeks were talking about before the iPad. No? Let's jog your memory.

Netbooks were the little 10-inch, 1 GB mini-notebooks produced by Asus, Acer, HP (NYSE: HP - News) and others that sported double-digit-percentage sales growth last year, according to NPD, and were poised to be the world's fourth screen. Research firm Techasie actually predicted 36 million netbook sales worldwide this year.

Then came the iPad and 43% growth from 2009 to 2010 turned into a 13% decline in April, according to Morgan Stanley (NYSE: MS - News). Now, both Gartner and Forrester Research (NasdaqGS: FORR - News) predict that tablet sales will outstrip those of netbooks, with Forrester expecting a tablet takeover by 2012. Techasie hedged its 2010 prediction with a caveat that netbook sales would decline starting in 2011 through 2014. Techasie CEO Anurag Agrawal sealed the argument, saying "there is no compelling reason for a consumer or a business to buy a netbook as compared to a notebook." With tablets taking a chunk out of the netbook market and smartphones already performing some of their lighter duties, Agrawal may be right.

E-Readers

Let Amazon and Barnes & Noble (NYSE: BKS - News) have their Kindle/Nook price war -- they're both meeting the same fate.

According to analysis by RR Bowker, the Kindle takes up 61% of the e-book market, Barnes & Noble's Nook holds 20% and Sony has 5%. The problem: The Kindle and its ilk are as one-dimensional as the paper tomes they're replacing.

Despite all of those readers snapping up Kindles, Nooks and other e-readers, Amazon and Barnes & Noble seem to know how this story will end. Both have developed e-reader applications for smartphones and the iPad, though both seem to know relying solely on those apps takes away their control over sales terms and their cut of the revenue. Since Amazon doesn't release sales numbers, it's hard to tell where the Kindle and e-readers as a whole are headed, but that new $139 price point make it just a bit easier to justify adding another gadget to the mix.

"Maslow's needs hierarchy ought to be changed to breathing, food, water and phones," Dulaney says. "If people can have hundreds of pairs of shoes in their closet, they can have multiple devices and they'll be cheap enough that they can."

-- Reported by Jason Notte in Boston.

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