Year in review: iPod goads gadget gains

In many ways, 2004 was the year of the gadget.

A consolidating PC market--along with the Apple iPod's status as pop-culture icon and the growing popularity of flat-panel TVs--led major names such as Dell, Gateway and Hewlett-Packard to enter the consumer electronics market starting with gadgets. Tried and true electronics players such as Panasonic, Royal Philips Electronics and Sony Electronics braced for the onslaught as standardized components and ongoing relationships with Chinese contract manufacturers made players out of the new entrants. Most recently, Web portal giant Yahoo joined the fray.

Largely because of the iPod's success, most companies entering the consumer electronics market started with a hard drive-based digital audio player. The iPod is so popular that hotels are now using it to lure guests.

Dell tried to convert iPod loyalists to Dell music devices with a $100 rebate. PC rival HP took a different tack, teaming with Apple to sell an HP-branded iPod. Left out of the category it helped start with its Walkman, Sony Electronics said it would natively support the MP3 format on its digital-audio devices in hopes of reigniting interest in its players.

Others looked beyond the hard drive-based audio players to what they see as the next step for digital media players--video. With the help of Microsoft, manufacturers such as Creative and Samsung Electronics developed hard drive-based digital video players in hopes that buyers take to video on portable devices as enthusiastically as they did to audio.

The handheld market saw Sony exit the United States, and others are considering a similar pullback. However, market leader PalmOne continued to innovate and pump out winners; its Treo line successfully pulled together an organizer/phone combination and its second Treo device, the 650, was an initial hit with reviewers. Still, as handheld shipments dip, some are wondering if the PDA is dead.

DVD players, while still the fastest-growing technology in consumer electronics history, saw margins fall, as did profits. Manufacturers developed higher-capacity video disc formats such as HD DVD and Blu-ray, and are working to add new features like interactive content and scratch-resistant coatings to them in hopes of attracting studio partners and consumers.

TiVo, the leading maker of digital video recorders, made changes to its lineup. Its usefulness was fully realized after Janet Jackson's wardrobe malfunction, and interest in TiVo didn't wane following the Super Bowl halftime episode. The company's development partnership with Netflix grabbed attention, but the fruits of that labor are likely years away.

For more immediate gratification, pranksters can turn to a keychain remote control that discreetly turns off televisions. That may not be something TiVo would like, but gadgets are all a matter of personal taste.

--Richard Shim