||Improving Economy Bodes Well for Consumer Electronics Industry
Like other industries, consumer electronics in 2013 is slogging through an "uneven" economy, with drags on it such as the effects of the Q2 sequester and a slow unemployment decline.
But there are marketplace positives, too: "measured improvements" like easing of consumer credit, rising home prices, and pent-up demand for products that consumers are satisfying by increasing their purchases, as the broader economy improves.
However, technology is having to compete harder than ever for consumer dollars against the appeal of durable goods like cars and appliances.
As a percentage of durable goods purchases, tech has been on a slight down trend since it peaked at 17.6 percent in 2010; in 2012, it was 16.5 percent and year to date is currently trending at 16.1 percent, said Shawn DuBravac, Consumer Electronics Association chief economist and senior director of research, during the recent CEA Research Summit.
He said tablets and smartphones continue to be the tech category drivers of 2013; without them in the CE mix, revenue growth projections, up 2.7 percent when the stats were last revised in January, would have declined 3.5 percent over 2012.
Smartphone revenues are growing at a 20 percent pace this year over 2012, and tablets, at a 45 percent pace. Tablets are owned by 40 percent of all U.S. households, and 30 percent who don't own them intend to buy them in the next 24 months, meaning that there is still a large addressable market for them.
Flat-panel TVs, while overshadowed in the spotlight by tablets and smartphones, are seeing "good growth," said DuBravac. Up just .6 percent in unit sales in 2012, they are up 12 percent year to date from January through March 2013, with revenues for that period up 10 percent for the same stretch.
"It's a large-screen market," DuBravac said. In 2011, just 11 percent of TVs sold were 50 inches or larger, but that is expected to leap to 34 percent by 2016 -- and the shift to larger screens is occurring more rapidly than anticipated, fueled by both very low prices and replacement buys happening as the first waves of HD flat panels sold in the middle of the last decade reach maturity.
Internet-connected TVs are also gaining some traction among buyers, with 36 percent of all sets sold this year expected to carry "smart" capabilities.
Sales expectations for Ultra HD/4K (UHD) sets are a modest 23,000 units for 2013, but could reach 1.4 million in 2016, accounting for five percent of overall unit volume then, DuBravac said. OLED TV unit sales might track slightly below UHD in 2013 at 20,000, and next year, UHD unit volume could be 212,000, versus 190,000 for OLED.
Steve Koenig, CEA director of industry analysis, delved more deeply in a separate presentation during the Research Summit into the state of the TV industry, saying that TV has been redefined by a "second-screen dynamic" -- that is, the market presence of the tablet. "There is more content on more screens, and multitasking on multiple screens," he said, pointing out that two-thirds of consumers use a companion screen when while watching TV.
For traditionally defined TVs, Koenig observed that keeping unit sales elevated over the past three or four years has been achieved with "a cost to keep these boxes moving" -- namely, lower revenues. Peak revenues for flat panels came in 2008, when U.S. shipments reached $26 billion, and even though consumers are buying ever-larger screen sizes year after year, revenue has dipped to below $20 billion, where it is expected to hover through 2016, even with the market deployment of UHD and OLED sets.
LCD TVs are continuing in their dominant position, accounting for nine of 10 displays shipped, while plasma panels are in retraction mode; Koenig said OLED could gain a foothold in the middle of this decade, depending on supply-side manufacturing efficiency advances. OLED "could be more of a 2015 story," he said, also noting that with just three major manufacturers remaining as players in the consumer plasma TV business, "I don't see a lot of legs left in this market."
Ultra HD, which garnered the most attention at January's CES conference, is destined to be a "second half 2013 story" in the marketplace. But he added that "it will be some years before we see meaningful volume...UHD holds promise, but that promise is somewhat distant at the moment."
On the subject of 3D, Koenig observed sales "have been somewhat one-dimensional," with the pace of 2013 3D unit shipment increases for January through March (just one percent) far off from the 2013 unit shipment forecasts offered at the beginning of the year for 3D-outfitted TVs (28 percent).
What has kept overall TV sales momentum up, he averred, has been lower prices, and not necessarily features like connectivity and 3D. He said it would likely be improvements in searchability within connected TVs, and not the addition of "me too" apps, that would be a powerful purchase stimulus for future sales.
Overall, Koenig noted that TVs have become "cheaper, bigger, and provide more real estate for less money. How long can this trend continue. Is it a race to zero?"
DuBravac, in his presentation segment, also provided a brief overview of the Blu-ray category -- another addressable market opportunity, as one in three households currently own a player and 18 percent who don't say they will buy one within two years.
He reported that home audio revenue has been another bright spot thus far in 2013, up about 4.8 percent, and U.S. soundbar revenue is up an estimated 60 percent year to date.
Another area CEA is tracking is "wearables," including smartwatches and health-related wearables such as pedometers and blood pressure monitors. While many factors could affect the growth of the smartwatch category, the group is tracking pedometers as the most popular health wearable, with 31 percent of adults polled saying they owned one, and many using them and other health wearables in conjunction with fitness apps for personal health data tracking purposes, said DuBravac.
(Source: Dealerscope, 06/25/13)