Wednesday, July 24, 2013

Electronics sales flat, but tablet and smartphones soar

Consumers are expected to spend about the same this year on smart phones, tablets and other gadgets as in 2012. And that's not all bad.

It seems counterintuitive, but the nation's continuing economic recovery may result in total consumer spending on electronics being flat this year.
The reason: Upbeat buyers have their sights set on bigger-ticket items, including vehicles and homes.
Still, electronics makers have plenty of highlights, with double-digit revenue increases for smartphones, tablets and smart TVs expected this year, according to economic forecasts out today from the Consumer Electronics Association.
Total wholesale sales of smartphones, tablets, TVs and other gadgets will generate an estimated $202.6 billion in 2013, a 0.2% increase over $202.3 billion last year, the CEA forecasts. But a wave of new gee-whiz TVs and the expected arrival of new video game consoles is expected to boost revenue 4.5% in 2014, to $211.7 billion.

"The brakes have been applied to growth for the time being," says Steve Koenig, CEA's director of industry analysis. "As we look ahead to next year, we anticipate the next wave of growth to manifest."
Among the factors that may lead to flat sales are the effects of the government sequestration and lower-than-expected growth in U.S. gross domestic product. More tangible, Koenig says, is the possibility of the tentative labor market calming and consumers spending on more expensive durable goods, including vehicles and homes.
"The car market is doing well, and the housing market continues to impress with housing starts up," Koenig says. "We think there's some pent-up demand for other durables at work here."
Driving this year's electronics sales — and last year's 3.7% rise — has been consumer interest in mobility and constant connectivity. "The industry is really dominated by smartphones and tablets, these mobile connected devices," he says.
Smartphones remain the largest revenue generator, up 14% to $37.9 billion, with unit sales also up 14%. Meanwhile, tablet revenues and unit sales are rising even faster: up 18% to $27.3 billion (unit sales up 45%). Household penetration of tablets is expected to rise from about 22% of homes having at least one tablet to 44% of homes, the CEA says.
New car sales are expected to drive revenue from automotive installed electronics — such as in-vehicle entertainment systems and security and remote-start systems — to $9.2 billion in 2013, up 17% from 2012.
While overall TV and video sales remain flat, there's expected growth in smart TVs — up 34% to $12.4 billion — as well as bigger TVs and new Ultra HDTVs. "They say 60 (inches) is the new 50," Koenig says. "We see even more momentum through Ultra-high-definition and OLED (Organic Light-Emitting Diode) technology; 2014 will be the first year where we really have a full year of of sales for these next-generation technologies."
Headphones, soundbars and portable speakers also are all showing growth in audio. Headphone sales are expected to rise 13% to $1.4 billion in 2013; meanwhile, soundbars will generate $493 million (up 43%), and portable speakers, $302 million (up 35%).
The video game segment is projected to be down 2% in 2013, with spending on home and portable systems at about $2.7 billion. But the category should nearly double in 2014 to $5.3 billion, with Microsoft's Xbox One and Sony's PlayStation 4 expected to have a full year in stores.
"In 2014 is when we also start to see other categories resurgent," Koenig says. "We have a lot of optimism there."


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