http://www2.ocregister.com/ocrweb/ocr/article.do?id=19727&section=BUSINESS&year=2003&month=1&day=9

PC maker's storage division in Irvine will focus on its hard drives for gadgets like MP3 players at Las Vegas show.

LAS VEGAS - Toshiba America's storage division in Irvine is trying its luck on something new this week.

For the first time, its top executives are in Las Vegas to exhibit the division's products at the annual Consumer Electronics Show, which opens officially today.

Until two years ago, the division, which designs hard drives and CD/DVD drives, focused on computer trade shows such as Comdex. But today, hard drives for consumer electronics such as MP3 players, car stereos and GPS systems account for nearly 25 percent of the division's revenue.

"We're evolving out of the Comdex mentality," said Scott J. Maccabe, vice president and general manager for Toshiba's storage-device division. "There's a convergence coming."

The shift toward consumer electronics is a change in emphasis that many computer companies are making to spur sales.

The change is evident on the showroom floor at CES, which is twice the size of last fall's Comdex. For the first time, Michael Dell, chief executive of Dell Computer Corp., will be a guest speaker at CES.

The Austin, Texas-based computer company is also promoting a "digital lifestyle" mix of music and video on its PCs. Another computer company, Gateway Inc., based near San Diego, has added a plasma TV to its product line and began offering MP3 music downloads on its Web site last year.

"It took awhile, but the computer industry finally woke up to the fact that extending their digital dominance to the consumer was key to their long-term fortunes," said Tim Bajarin, president of Creative Strategies Inc., a consulting firm that tracks consumer technology trends. "Toshiba, Gateway, Dell ... and most of the other PC companies see an opportunity to extend their reach into the living room and want to focus on this space and the digital home in a big way."

Another impetus for the new focus on consumer electronics is the recent downturn in the computer industry, said Alan Promisel, an analyst specializing in computer sales for market researcher International Data Corp.

After years of double-digit percentage growth, the overall information-technology industry had its largest decline last year - at 2.3 percent, according to IDC.

"It's an important trend, given the state of the economy and really, the lack of growth that's going on in the enterprise market," Promisel said. "Consumers, however, despite the poor economy, continue to buy consumer electronics, digital cameras, TVs and, to some extent, computers."

Even Toshiba's notebook-computer division, based in Irvine, will exhibit products at CES that target video gamers and audiophiles.

"The interesting thing is that in the last few years, the distinction between (CES and Comdex) has blurred," said Oscar Koenders, vice president of worldwide product planning for Toshiba Computer Systems Group. "Toshiba will be able to show its other face in a show that used to be just consumer electronics products.

"The products are changing," Koenders added. "Consumer electronic products are getting more computers inside themselves, and computers are becoming more like consumer electronic products."

The latest Toshiba Satellite notebook, for example, includes Harman/Kardon speakers and subwoofer, wireless networking, nVidia GeForce4 graphic chips that gamers salivate for and a DVD burner with a remote control.

At the show, Toshiba's storage and computer groups join the consumer electronics side of Toshiba America, the New Jersey-based groups that develop DVD players, televisions and other home-entertainment products.

Although Toshiba is showcasing consumer products, it's less interested in finding new retailers than it is in attracting product developers.

"As far as this division at CES," said Maciek Brzeski, vice president of marketing for the storage division, "the resellers aren't the target. It's the integrators. The people looking to develop the next big thing."

Toshiba has already teamed up with several product makers. Its tiny 1.8-inch hard drives offering up to 20 GB have infiltrated consumer electronic products from Apple's iPod to PhatNoise's automobile MP3 player. Future uses for the tiny hard drives could be DVD players, high-end audio players and digital video cameras.

"This is really our transition year," Maccabe said. "We plan to have an even greater presence at the next CES."

O.C. divisions

These are the divisions of Toshiba America Information Systems in Irvine that are exhibiting at the Consumer Electronics Show in Las Vegas:

• Computer Systems Group - notebook computersLeadership:
  Rod C. Keller, executive vice president
  Employees: 700
   
• Toshiba America Storage Device Division - CD/DVD drives, hard drives
  Leadership: Scott J. Maccabe, vice president and general manager
  Employees: 65

These are the other divisions of Toshiba America Information Systems in Irvine:

• Imaging Systems Group - digital cameras, LCD projectors
• Communication Information Group - telecom, cable modems
• Telecom Systems Division - telephones

Toshiba also has these other local divisions:

• Toshiba America Medical Systems in Tustin - diagnostic imaging, other medical tools
• Toshiba America Business Solutions in Irvine - copiers, printers