Cable's consumer electronics makeover

NEW YORK (Fortune) -- Comcast CEO Brian Roberts says he remembers walking around the Consumer Electronics Show five years ago with Time Warner Cable CEO Glenn Britt. He recalls seeing a big presence from his rivals in the satellite-television business. His own industry, by contrast, was nowhere to be found.

"So we met with the board of [industry research arm] CableLabs and decided to go to Japan and Korea to visit the CEOs of the major [consumer electronics] companies," Roberts told me in a conversation over the weekend. "And we asked them, 'What do we need to do to work better with your industry'?"

This week, at CES 2008 in Las Vegas, Roberts is unveiling some of the fruits of those discussions - and, in so doing, he hopes to generate some much-needed positive buzz for the cable industry. In a joint announcement Monday with electronics maker Panasonic (MC), Roberts presented a cable-ready plasma television set (i.e., no set-top box) and a portable Digital Video Recorder that lets consumers take their stored cable programs with them on the go.

Both products are powered by technology called "tru2way," which cable companies are adopting; Roberts describes it as an open platform that will allow developers and electronics companies to write applications that can be widely deployed across the entire footprint of cable companies supporting tru2way. The biggest consumer benefit of tru2way is that it can be built into television sets, eliminating the need for discreet set-top boxes - an aesthetic benefit to consumers trying to avoid clutter as they upgrade to sleek flat-panel sets.

Roberts, who also will give his first-ever CES keynote address on Tuesday (and will reveal a few more new products at that time), says of his CES appearance: "I think it is a way for us to tell our employees and our customers how excited we are about what is happening at Comcast."

He says his speech Tuesday won't be aimed at investors, but it wouldn't hurt to get Wall Street excited about the sector. Cable stocks performed miserably in 2007: Comcast (CMCSA) shares, trading at about $17, were down about 40% last year. Shares of Time Warner Cable (TWC), which is controlled by FORTUNE and CNN/Money parent Time Warner (TWX, Fortune 500), were also down 40%. Investors are concerned about fresh competition from telephone companies such as Verizon (VZ, Fortune 500) and AT&T (T, Fortune 500) now offering video services, and stepped-up pressure from DirecTV and Echostar, which boast broad high-definition lineups.

And indeed, the satellite industry has done a good job of partnering with the consumer electronics industry. In recent years, DirecTV, for example, has worked with some electronics makers and retailers to encourage consumers to switch to satellite from cable when buying a new plasma television. TV makers had found some consumers returning their sets complaining of poor picture quality; the buyers didn't realize they needed a new cable box in order to get channels in high-definition.

The cable industry's new open platform should solve some of those problems. Now a cable operator can remotely upgrade a customer's channel line-up, say, or deliver new applications, without the customer needing to acquire a new in-home device.

Roberts says he hopes 2008 marks the start of an important partnership with the likes of Panasonic, LG, Samsung and others. "Our presence at CES is a chance to tell CE companies and software applications developers that we are here, we are open and we need your innovation to help us win," he says.

Roberts, 48, talks a lot about winning these days. The competitive playing field, which once seemed stacked in cable's favor (it was first with broadband Internet access and first with the "triple play" of voice, video and data), now looks remarkably level. To beat back phone and satellite insurgents, the historically insular cable industry is going to need help. "We have to innovate, have an open architecture and interoperate between cable companies, and our customer service has got to continue to reach new levels of excellence," Roberts says. "We also have to have the most content, which we clearly do. Put together, we have a winning strategy."

Comcast customers, employees, and certainly its investors, hope he's right.