Up until now, the ultimate CE consumer has been the young 20-something male with money to burn and something to prove. With the credit market drying up, that fellow has to prove something else now.

Now that the carnage of the Christmas shopping season is over -- whether you're thinking of the pile of non-recyclable wrapping paper and bows under the tree or the success (or failure) of retail sites -- Consumer Electronics Show manufacturer attendees are bracing themselves and figuring out how to restructure themselves to make it through the rest of the recession.

"Vendors are always good at selling consumers the things they want to buy, and bringing to market things consumers are interested in having," Shawn Dubravac, economist for the Consumer Electronics Association, in Arlington, Va., said encouragingly.

However, a number of major consumer electronics manufacturers have been cutting back in recent months. Computer and peripheral manufacturer Hewlett-Packard declined to speak to Betanews, but the company announced in September that it would impose job cuts of almost 25,000 over the next three years - half of which were slated to occur by the end of 2009 - and largely in the US.

LG Display Co. Ltd., the second-biggest maker of LCD screens, released dismal news in December, saying it would reduce its production to 80% of capacity during the October-December quarter in the wake of expectations that the average selling prices of its LCD panels would fall by more than 20% between the third and fourth quarter, and a general softening of demand.

Dubravac noted that sales of LCD screens showed that consumers were going for smaller screens, rather than the increasingly behemoth ones of past CES exhibits. "Consumers still love the flat panel, but they want to enjoy it at a lower price point," he said. Last year, more than 50% of flat screens sold were over 40 inches in size, while this year only 36% of those sold are over 40 inches, he said.

Another factor is that the early consumer adopters have already gotten their big flat-screen TVs, and now the demographics have changed, Dubravac added. Now, those people who are shopping for a flat-screen are looking for one for a second or third room, or they weren't planning to buy a big flat-screen television in the first place, he said.

Dubravac said he'd also seen cutbacks across the board, both on the retail and manufacturing level, on capital expenditures. "If [vendors] are getting squeezed on their ability to sell things, and being encouraged to sell at compelling price points, you're going to see them making cutbacks where they can," such as asking themselves, "'Is this really the environment where we want to add capacity? Can we put it to work?"' he said. "There's an effort to control costs in an environment where your next sale could be difficult."

One example is Sony Ericsson Inc., which had its big restructuring early on, laying off 2,000 employees in August, said Karen Morris, vice president of marketing for North America, based in Research Triangle Park, N.C. But that early decision puts the company in a better position now, she said. "By consolidating some factories and some research and development centers, we've been able to consolidate some key capital expenditure factors," she said. "We'll start the new year in a really good position, having already done that work."

The company is also re-examining its retail pricing strategy, trying to keep products in the "sweet spot" between $49 and $99, Morris said. "Anything over $99 now, after rebate, is a tricky price point to be in," she said. "We're very conscious of the retail end of this, how we price products to carriers."

Consumers will also be looking for lower-cost, less feature-rich versions of products to save money, Dubravac said. "We see a subtle shift that consumers are interested in cutting back their budgets, looking for areas in which they can be more selective -- enjoy the same experience, but at a lower price," he said. For example, instead of pricey laptops, he sees more consumers buying "netbooks" -- smaller, less feature-rich laptops -- and manufacturers are responding by offering more of those, he said.

Morris concurred with this viewpoint, noting that consumers are "going back to the basics as far as simplicity -- not a ton of different accessories, but one that you can use for many things," she said, such as Bluetooth stereo headphones that can be used for listening to music as well as for making hands-free telephone calls in the car.

From Sony Ericsson's perspective, the same trend is also being seen as more of a interest from consumers in consolidated devices, such as its C905 Cybershot 3G mobile phone with an integrated 8 megapixel camera, which was launched in Q4 in the rest of the world and will now be sold in the US., Morris said.

"The convergence of entertainment devices is starting to come to fruition," she said. "Consumers can see, 'I can have one device,"' where in the past they would have had a separate high-end digital camera, music player, device to surf the Internet, cellular phone, and so on. Because this type of consolidated product is starting to be what consumers are purchasing, manufacturers are starting to look at how to merge multiple devices into one true entertainment device, she said.

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