Podcast transcript: Home Energy Use and the Proliferation of Consumer Electronics Products

September 10, 2006

ANDREW FANARA: An MP3 player, a flatscreen television, a mobile phone, a DVD player, or a computer. You name it, you probably have it. That’s because the typical American owns 25 consumer electronics products and spends more than $1,200 a year buying them, according to the Consumer Electronics Association. What you may not know is that the more electronic gadgets you have, the more energy you use. And the more energy that’s used, the bigger the impact on the environment.

Welcome to the EPA’s ENERGY STAR Consumer Electronics Podcast, our series that looks at ways to satisfy our growing fascination with the latest in technology while protecting the environment. I’m Andrew Fanara, and we’re here to share insights on the growing trend of proliferating consumer electronics used in homes and businesses, their impact in the environment, and simple steps you can take to reduce that impact.

Today we start by looking at first the climbing sales of home electronics, not just here in the U.S., but throughout the world. And I’ve got two great guests joining me. First up is Paul O’Donovan, joining us from London, actually. He is the principle analyst with the Gartner Group, a leading technology research firm. And Jeremy Kaplan, coming from New York. He’s the executive editor of PC Magazine, and each brings a unique perspective. And so I want to thank both of you for being with us.

JEREMY KAPLAN: A pleasure.

ANDREW FANARA: Great.

PAUL O’DONOVAN: My pleasure.

ANDREW FANARA: Well, let’s dive in, fellows. Let’s talk about the vast proliferation of consumer electronics devices in the American home, and in businesses to some degree, and how they’re changing the way we live and work and entertain ourselves. And then, of course, we’ll discuss what this means for the environment. Paul, why don’t you start by telling us what you see from the Gartner perspective.

PAUL O’DONOVAN: Well, the interesting thing is that this is a phenomenon that really has only started over the last ten years, this proliferation of digital equipment in our homes. And that’s been very much driven by two real factors. One is the semiconductor industry, that has developed ever more efficient and faster processing devices and multimedia processors and so forth. On the other side are codecs, video codecs that can compress both video and audio. And you need very fast processors to be able to look at these algorithms and work them out. And the two have come in almost at the same time, enabling lower and cheaper cost equipment. Now, on the other side of that, you know, you have China developing a huge manufacturing warehouse for the whole of the world. So the three things combined together have produced a sort of vast quantity of new equipment that really the whole world is buying into. And there is, of course, a limit to just how many things we are going to buy and keep in our pockets because there is a lot of competition amongst all these manufacturers out there at the moment.

ANDREW FANARA: Jeremy, from your perspective, you focus, I guess to some degree, on the computer as sort of the central device in the home, to some degree. We typically think of consumer electronics as not including the computer. But how do you sort of feel about the computer as being sort of part of that whole mix of products that are changing our lives and might, frankly, be considered home electronics, if you will.

JEREMY KAPLAN: Home electronics, interesting. Yeah, we come from a very different perspective here because when you’re talking about consumer electronics you’re expanding - you’re talking about this gigantic field of products here. And as you point out, we don’t think about computers as being part of that. But playing off of what Paul said, the development of codecs and the vast proliferation of the semiconductor industry, those have been fueling the growth of the PC. So you could even say that it’s the PC that’s been fueling the explosion of consumer electronics.

And that’s actually one thing that we’ve really been looking at lot at at PC Magazine. You think about PC Magazine, you think we review computers. But we’ve really expanded our coverage to cover all of this kind of stuff because it really is this gigantic market that people really want information about. And I think that this podcast is a very interesting one because, when we think about all these things that everybody wants to buy — you want to buy cell phones. You want to buy, you know, you’ve got microwave ovens, you’ve got computers, you’ve got all of this stuff at your house. But people think more about let me just go out and buy it, but they don’t think about what it’s going to do to things like your power bill, your energy consumption, and the overall environment. So I think you guys are doing some really good stuff here.

ANDREW FANARA: Yeah, you know, speaking of the amount of energy you consume by what we term at the EPA our “miscellaneous” devices — and this includes consumer electronics or home electronics broadly — if you go back to 1980, and we’ve got data even further back than that, but if you go back about 25 years, about 5 percent of the energy used by your home was consumer electronics. And that has more than doubled, almost tripled, actually, to current rates of about 13, 14 percent. And I suppose that, if this trend were to remain, I mean, we would — we’re estimating right now we’d probably be somewhere closer to 20 percent of the home energy bill in probably 2015 being related to consumer electronics devices. And however, there’s a lot of good opportunities to reduce that energy consumption and not let it grow unabated, while not dampening our desire or the performance or functionality of all these devices. But…

JEREMY KAPLAN: Sure. Well, 20 years ago we had a — you had a TV at home, and a radio, and that was it.

ANDREW FANARA: Sure. Sure. Absolutely.

JEREMY KAPLAN: And now you’ve got this miscellaneous category with cell phones and computers. And a lot of people have multiple computers. And if you have multiple computers, you’ve got networking devices, both routers and wireless. And you’ve got your cable modem, and you’ve got your cable box on your TV, and just a vast amount more stuff in your house these days.

ANDREW FANARA: Yeah, it seems like there’s a real constellation of devices which are associated with both the television and with the computer. And Paul, maybe you could speak to probably some of the big product trends. I would imagine televisions are undergoing a real sea change in terms of what we’re seeing in terms of new models and technologies. What are you seeing?

PAUL O’DONOVAN: Yeah, I mean, there are new technologies coming along. Some of them are very wasteful of electricity, of course. Products like plasma TVs, even LCD TVs consume quite a bit more electricity than the old CRT TV. And the major thing that I think is happening in consumer electronics, which has been born almost out of the PC market, as well, in the PC world, is the “always on” society, where you leave your PC on and - because it’s in a network, it’s part of a network, there may be some connection to broadband or the printers or sharing resources and things like that. And this is happening in the consumer electronics industry in terms of TVs and set-top boxes and DVD players that are always ready to be turned on, and there’s no need to warm them up or anything like that.

And the basic design of the power supply is appalling for most of this equipment because it’s mainly designed on cheap, low-cost linear power supplies instead of more efficient power, switch-mode power supplies. And the primary reason for that is because to get those retail prices as low as possible, they’re designed with the cheapest possible components in there, and cheapest possible design. So we, as consumers, we demand ever lower prices. And at the same time, that is driving the increase in electricity because of poor design of these pieces of equipment.

ANDREW FANARA: Right, I…

JEREMY KAPLAN: Well, it’s poor design, but a lot of these products are also designed to remain on permanently.

PAUL O’DONOVAN: Yeah.

JEREMY KAPLAN: Like, for example, here’s — this is the one that kills me. To use my DVR properly, I need to leave my cable box in a permanent state of on. Which is - it’s not ultimately designed to run like that, but my DVR forces that to occur. So that’s — and that’s the same thing with the average TV. In effect, it’s running full time. Even if you turn it off, it still is drawing a lot of power to maintain a sort of semi-on state so that you can turn it on really quickly. So we have a lot of stuff in our house that just runs all the time and is designed not particularly effectively, as you were pointing out.

ANDREW FANARA: Right. We’re seeing some of the cable companies and satellite companies here in the U.S. offer free boxes, up to four boxes in some cases, for different rooms of your home, in return, obviously, for a subscription. And obviously I think it means that the number of hours of television being watched potentially increases, I would imagine, in the home. Paul, what do you see in terms of just usage patterns? I mean, do you really see the typical home, not just in the U.S., but in other parts of the world, watching increasing amounts of television?

PAUL O’DONOVAN: I actually don’t, no. I think human beings, there’s a limit just to how much television time we have to ask. I had a client ask me, then, do sales of TVs go up in the summertime? And in fact they don’t, of course, they go down because, you know, longer hours, we tend to spend time outside doing other things. And that will continue. By nature we want to be entertained. But there are plenty of things to entertain us in our life. So I don’t see that the proliferation of set-top boxes actually increases the amount of television. You just move from one room to another and watch the same program. It’s more a convenience thing.

And that is what’s driving all of this, of course. The always-on society is all about convenience. The portable society — portable phones, PDAs, MP3 players, taking your whole record collection, that really is very convenient. And but the interesting thing, of course, is this proliferation of portable devices all need to be charged up. So we’re plugging in more and more portable devices, battery-operated products, in our homes, consuming more electricity than we have ever done before. And, you know, some people have two or three different MP3 players, iPod and Nano and all this kind of stuff. So there are, you know, it’s all based around this idea of convenience, instant-on, always there. And, I mean, to some extent will the PC - and I’d like to ask Jeremy this, actually. Do you think the PC’s going to dominate in the living room, or do you think it’s going to be consumer electronics?

JEREMY KAPLAN: Well, a lot of the living room consumer electronics are, in effect, PCs. We don’t think about it, but the set-top box, particularly the ones that have DVRs embedded, it’s got a hard drive, it has a processor, it has memory, it has an operating system. It is effectively a PC. Likewise, the iPod that everyone carries around runs an operating system. It is, in effect, a PC. It’s an embedded operating system, but still.

PAUL O’DONOVAN: That’s a pretty wide description of a PC, though, isn’t it.

JEREMY KAPLAN: I don’t know. A processor, memory, a hard disk, it’s got a motherboard, it has all the same components. They’re just designed slightly differently.

ANDREW FANARA: And I would imagine they’re probably not used all that differently in some ways, compared to, I mean, if it is just exchanging or providing you information, it’s not unlike, I suppose, your DVR, to some degree. And…

JEREMY KAPLAN: Here’s proof of the operating system being — may define the computer. I saw the other day somebody had hacked their digital camera and had it running Linux. The digital camera. And they were playing Doom on that little tiny viewfinder screen on the camera. Which is ultimately…

ANDREW FANARA: Why anyone…

JEREMY KAPLAN: That’s pretty stupid.

ANDREW FANARA: Well, yeah, why anyone would want to do that is beyond me, but…

JEREMY KAPLAN: But that’s pretty darn neat…

ANDREW FANARA: Sure.

JEREMY KAPLAN: …that you can do that. So that is, in effect, it’s got to be a computer if it’s running Linux.

ANDREW FANARA: Right. Well, speaking of games, I would imagine that has also been another reason to introduce, not just increased hours, but I would imagine a new type of box into the home environment. Jeremy, I would imagine you’ve tested quite a few of these in your day?

JEREMY KAPLAN: Oh, yeah.

ANDREW FANARA: And what…

JEREMY KAPLAN: That’s the hardest testing we have to do.

ANDREW FANARA: Why is it so hard?

JEREMY KAPLAN: I’m just joking. Testing the games?

ANDREW FANARA: Oh, I see, I see. Well, what — I guess we currently have the Xbox, I guess, which has sold fairly well, the new version. The new PlayStation is coming out soon. I think the sales of these are quite staggering on a worldwide basis. Anything in partic- is there any reason to think…

JEREMY KAPLAN: It’s a $20 billion market.

ANDREW FANARA: Yeah, and is there any reason to think that it’s just not another computer? I mean, it — you can watch DVDs on it. I guess you can surf the Internet. You can do some of those things. And I would imagine Sony and Microsoft are sort of aiming for some of that piece of the pie.

JEREMY KAPLAN: Sure. And it costs about as much as a computer these days, too, right?

ANDREW FANARA: Yeah, sure, sure, absolutely.

PAUL O’DONOVAN: If not more.

ANDREW FANARA: Yeah, absolutely, yeah.

PAUL O’DONOVAN: It costs more.

ANDREW FANARA: Exactly. You know, going back to...

JEREMY KAPLAN: When you and I were talking about the Xbox 360 the other day, the power converter on that thing is ridiculous. And also the noise and the fans that are running inside of an Xbox 360. You don’t think about that when you’re buying it, or when you’re in the store. But it has just an absurdly large power supply.

ANDREW FANARA: Yeah, and I guess it’s — they would have had to have made the chassis much larger to fit the power supply inside of it. But…

JEREMY KAPLAN: Right.

ANDREW FANARA: …it being external, I mean, there are some advantages to that. One, it should be able to keep itself a bit cooler because it probably is a fairly inefficient power supply and probably runs quite hot.

Well, tell me, I would imagine that all of this is in part driven by consumer wants and needs. And is there any reason to think that the growth of consumer electronics sales, and computer sales for that matter, will slow at all in the near future? I mean, I know you’ve got a — obviously Microsoft’s new OS is coming out soon, and that’s going to be huge. And of course lots of things being driven by the advent of new televisions. Any abatement, or do you guys think sales continue growing?

JEREMY KAPLAN: I sure think sales are going to keep growing. I think Vista’s — Microsoft’s Vista is really going to fuel PC growth. And because Vista’s going to come with the Media Center functionality built into it — at least some of the flavors. I think they’re coming out with six different versions of Media Center, just to confuse us all. But with that functionality embedded, I think we’ll have more people that are using their computers as DVRs, connecting them into their televisions. And I think that’s just going to fuel a lot of interesting things as far as consumer electronics in the living room.

ANDREW FANARA: And, you know, it’s interest — I’m sorry. Please go ahead, Paul.

PAUL O’DONOVAN: I was going to say, yeah, we — our research would tend to show that there will be growth. But overall it’ll probably be single-digit growth in some of these large areas because most of these areas are now replacement markets. So Vista comes along, but it’s just going to replace what’s already in your home, you know, if you’re using XP. So the actual hardware may be changed. But, you know, consumers are becoming weary of some of these products having to change frequently. So your average computer, I think, in the home probably will start to extend its life to three, four, five years if it’s doing the function that it was designed to. Just like TVs. TVs last on average seven to ten years. So very much a replacement cycle. The real equipment that tends to be fashionable and replaceable is most of the portable equipment like mobile phones. But even there, penetration rates are very high now, and globally we’re looking at a slowdown in growth. Very, very big numbers, you know, huge numbers. But the growth, annual growth per year is going to slow.

JEREMY KAPLAN: But and regardless of whether it’s a growth market or a — a small or large growth market, one of the issues we have here in the U.S. is people buy everything based on price. You get the cheapest of whatever, within a certain quality level, that you can afford. And when you’re getting one of the cheaper ones, as we had said earlier on, you’re getting something that’s cheap. There’s some cheap components somewhere in it. And one of the things that they always skimp on is the power supply, and get the cheapest switching power supply we can possibly get.

ANDREW FANARA: Yeah, and that is one of the things that ENERGY STAR has focused on quite considerably in the last couple of years. We’ve been struggling to find ways to get manufacturers to compete on efficiency because obviously efficiency is not very high on the list of factors that come to consumers’ minds when they’re purchasing products. Number one is obviously price, and two is functionality, and the list goes on and on. And energy is way down the list, if at all. But we’re beginning to see now the advent of manufacturers who are developing new platforms and new types of form factors for different products. And as these products get more powerful, it gets harder and harder to displace the heat from the box. In some cases you might do what Microsoft has done, which is pulled the power supply out of the Xbox. But if you’re a computer, you really don’t have that — most of the options that face manufacturers is including the power supply inside of the product. And displacing that heat has been a real, real challenge.

And so focusing on power supplies has been a big issue for us at ENERGY STAR. In fact, next year, on July 1 of 2007, every new ENERGY STAR computer will come with a power supply that is 80 percent efficient across its entire sort of load profile. So it will be more efficient when it’s in a low utilization phase, or in its sleep mode, or when it’s actually having to do some significant surfing of the web or crunching some numbers or something to that degree. So that, for the first time, manufacturers will be able to — manufacturers of power supplies will be able to compete on a sort of a standard way and hopefully sell their better products to both the consumer electronics guys and the computer guys. So, big change there.

JEREMY KAPLAN: That’s great stuff. That’s really excellent.

ANDREW FANARA: Yeah, definitely. And I would have to say from the government’s perspective, there are lots of governments — my peers throughout the world who are very interested in trying to encourage smarter design and sale of more efficient products because they see what is happening in the U.S. and some other developed markets where consumer electronics and IT equipment, etcetera, have really grown as a piece of the home energy budget. And they’re trying to make sure that we - that they don’t repeat our mistakes as far as letting those things get out of control.

But, you know, speaking of sort of the environmental impact, I would imagine it is rare, if impossible, to hear about whether or not consumers associate their use of consumer electronics with an impact on the environment. Do you guys ever hear of anything? I mean, it’s not the sort of product you typically think of as having a big or substantial impact on the environment.

JEREMY KAPLAN: I think a lot of Americans don’t care. Which is unfortunate. But I think - in fact, I’d say most Americans don’t care.

ANDREW FANARA: And do you think it’s because the energy that they use to power these devices, they don’t pay for it at the time they use it, like you do when you pull up to a gas pump?

JEREMY KAPLAN: Well, here - one interesting point. When you and I were talking a few months back, we discussed the power supplies that you use for your cell phone, the charger, the cell phone charger. Which I’m sure 90 percent of the U.S. uses the exact same way that I use, which is I leave it plugged into the wall at all times. And every day or two I take my cell phone home, and I plug it in. But the charger itself, the plug that goes into the wall with a cord coming off of it, that’s the thing that’s drawing all the power. And even when your cell phone’s not plugged into it, it’s still sucking off a lot of power.

Now, here’s what I find fascinating. If you yourself were to unplug your cell phone charger — stop me if I’m wrong here, Andrew. If you were to unplug your cell phone charger, you probably wouldn’t see a dent in your own energy bill. But if everyone in the U.S. did so, we would see a nice large dent in the U.S.’s overall energy consumption.

ANDREW FANARA: You’re absolutely right. There’s been a real proliferation of these devices because the devices that they power - the mobile phones, the Blackberries, etcetera - all come with these sorts of external adapters.

JEREMY KAPLAN: So it’s…

ANDREW FANARA: And there’s about almost two billion of these adapters that are sold every year worldwide with an assortment of consumer electronics. And you’re right, many of them are quite efficient. That market, I think, is changing. And we’ve done some things for that to try to spur that on. And numerous governments are, again, trying to make these slightly more efficient. But you’re right, you would only — the amount of impact would be quite small on a per-device basis. But given that the average home has five to ten of these — I know I’ve got five of them at my office plugged into my power strip. And I’ve got two power strips at home that are stuffed full of power supplies. And you’re right, they’re on 24/7 for the life of the product.

JEREMY KAPLAN: So as far as improving Americans’ energy IQ, that’s a really tough sell, to say you need to go out of your way to take the effort to unplug this thing every day or two. And it’s not going to affect your bill in any way. In fact, you won’t see any savings whatsoever, it’ll just be sort of a hassle for you, but the environment will thank you. That’s a mentality that I think, unfortunately, people in the U.S. don’t have.

PAUL O’DONOVAN: No, but in Europe we do have that, that mentality. And it’s being driven by global warming and talk of, you know, the amount of energy consumption that’s going on and the carbon dioxide created by power stations. This is very much in the news and focus at the moment throughout the media — newspapers, TV and everything, radio - where people are looking at their home energy consumption and saying, it’s not only just how much energy I consume and how much I have to pay for that, it’s how much is actually — how much carbon dioxide is being generated in my country and in the world to produce the power to provide that? And that there is an awful lot that we can talk about — turning TVs off, turning things — unplugging things from the wall so that, you know, if you don’t need them, you don’t need them on. So there’s - throughout Europe there’s a lot more focus on that driven by global warming.

ANDREW FANARA: I think you’re absolutely right, Paul and Jeremy. And I think as we come to a close here, for our policymakers it certainly will be an issue, that is, we need to turn over every stone possible to find savings that can reduce our sort of our emissions of gases which contribute to climate change. And also we get the side benefit of reducing utility bills for consumers. So I think there is a possibility of having better consumer electronics, have them not sacrifice their performance or functionality because consumers certainly can’t stand for that. And at the same time I think longer term we can, even spite of the fact that we have tremendous proliferation of these devices which have made all of our lives a lot richer, to say the least, we can still have our cake and eat it, too. So if we design the right things and work with manufacturers, I’m certain we’ll be on the right path.

So I’d like to wrap it up there, fellas. I certainly do appreciate your taking time to catch up with us today. I have enjoyed the insights, and there’s certainly much more that we’ll be able to discuss in the future. And we look forward to talking to you again. Thank you very much.

JEREMY KAPLAN: It was a pleasure, thank you.

PAUL O’DONOVAN: Thank you.

ANDREW FANARA: Great. In the second and third part of our series we’ll talk more about what this increased energy use means to consumers and businesses, why you should care, and what can be done.

To comment on this podcast or for more information on consumer electronics and the energy they use, visit the ENERGY STAR website at www.energystar.gov.