Jefferies’ TMT analysts have published a final recap of the presentations at CES this week. The note, and links to each company report mentioned, is available below. While this year CES was as hectic as ever and full of companies demonstrating evolutionary improvements, there was a clear focus around wearables, 3D printing, and Ultra HD smart TVs as exhibitors and attendees tried to find the newest/greatest tech trend. We met with management from 3D Systems Corporation (NYSE:DDD), Hewlett-Packard Company (NYSE:HPQ), Stratasys, Ltd. (NASDAQ:SSYS), Qualcomm, Inc. (NASDAQ:QCOM), and others.
CES reveals wearables were in force
CES 2014 showcased new and existing smart watches from Pebble, Qualcomm, Inc. (NASDAQ:QCOM), Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930), Sony Corporation (NYSE:SNE) (TYO:6758), etc. Additionally, Intel Corporation (NASDAQ:INTC) announced the “Edison,” its next-gen embedded processor for wearables. While the wearables demonstrated thus far are neat, we feel they remain well away from a mainstream inflection point. The killer use cases and price points both need to be solved.
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CES: 3D printing was a major section
The crowds were bigger at CES than we expected, as was the surprise from attendees. We found the product announcements from 3D Systems Corporation (NYSE:DDD) to be particularly interesting. Stratasys, Ltd. (NASDAQ:SSYS) also made several announcements, but we feel they were not as broad or potentially impactful; however, it is clear the race in consumer 3D printing between the two larger caps in the space is on.
3D Systems (DDD) discussed continued acquisitions at CES
3D Systems Corporation (NYSE:DDD)’s management said that the pace of acquisitions is dependent on market factors and that the company does not have a set requirement on price. The company also highlighted its reseller network, which includes Amazon.com, Inc. (NASDAQ:AMZN), Wal-Mart Stores, Inc. (NYSE:WMT), and Staples, Inc. (NASDAQ:SPLS).
CES: MakerBot opportunity in professional market
Management highlighted that ~25% of the TAM is in education, ~60% is in professional, and the rest is hobbyists/entrepreneurs. Stratasys, Ltd. (NASDAQ:SSYS) believes its focus on patents give it a long-term competitive advantage.
CES: TVs become smarter
4K content has grown and we find that the upgrade cycle from 2K HD to 4K HD could be as compelling as SD to HD; however, we believe the key to adoption will be pricing and content. Also, we remain unsure of how sensitive the average consumer is to picture quality and a UI overhaul might be needed to drive the next large TV upgrade cycle.
CES: Cloud less prominent
There were few cloud services exhibits on a standalone basis but they were clearly woven into all the major presenters’ products and announcements. We saw Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930), Sony Corporation (NYSE:SNE) (TYO:6758), LG Electronics Inc. (KRX:066570) (OTCMKTS:LGEAF), etc. making major efforts to differentiate with cloud services. We believe Sony’s PlayStation cloud service has improved significantly with PlayStation Now. We believe Samsung has big designs but unifying its parts around a common platform, thread, and brand still seems to be an issue. At the moment, we view these services as lagging Apple Inc. (NASDAQ:AAPL)’s iOS ecosystem.
CES: Qualcomm focused more on ancillary opportunities
Qualcomm, Inc. (NASDAQ:QCOM) highlighted opportunities in wearables, TVs (Snapdragon 802), set-top boxes, in-car infotainment systems (Snapdragon 602A), and the connected home (Smart Gateway Platform). We think these are interesting opportunities but continue to see 2014 upside to be mainly driven by the core mobile business.
CES: Hewlett-Packard introduced several all-in-one desktops
The company discussed the progress of its different business lines but made no major announcements. Hewlett-Packard Company (NYSE:HPQ) is still cautious on the PC market, but is more upbeat on ink, networking, and storage. 3D printing entry would focus on the commercial market. HP still feels comfortable with $6B to $6.5B FCF in FY14, which will ramp throughout the year and be skewed to H2.