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ith sales driven primarily by the new-home market and replacement purchases, the appliance industry has historically lacked a key ingredient when it comes to cooking up sales based on more than necessity. That missing component has been innovation. Conversely, the consumer electronics industry has traditionally worked off the premise that the best way to convince customers to buy a new product is to offer something new. Maytag decided to test the theory on appliance consumers with the introduction of Neptune, a high-priced super-efficient washing machine introduced in 1997. The world's top appliance makers: AB Electrolux, GE Consumer & Industrial, Haier, Whirlpool, and Maytag itself were shocked with the new appliance's success. Neptune's booming sales showed the old-school appliance makers that the industry could move beyond a needs-based market and appeal to consumers who follow trends and seek luxury. Many appliance makers hope the modernization of their products will soon alleviate the repercussions of static appliance production. The dullness of the past two decades filled the market with appliances that have been more similar than different, forcing the industry into stiff pricing competition. That competition drove down profits, sinking company stocks and pushing away retailers. (The #2 US consumer electronics retailer, Circuit City, dropped appliances in favor of home office equipment in 2000.) Although it is subject to many of the same hurdles most industries face (such as market saturation and economic downturns), the consumer electronics industry has fared better than most in times of flux. Technological advances and ever-changing product lines have helped the industry avoid major saturation problems by making existing products appear outdated. The success of digital products such as video players, TVs, phones, and sound systems has proven that consumers will often succumb to the urge to own the latest and greatest electronic gadgets. The digital craze and the consumer electronics industry surged ahead in recent years, with all-time records for consumer electronics sales led by DVD players, one of the fastest-selling electronics products ever, but the global economic slowdown of late has dulled retail sales. Japan is a production powerhouse, boasting several of the companies that dominate the consumer electronics industry. The combined sales of #1 consumer electronics maker Sony Corporation and #2 Matsushita Electric Industrial

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