Global consumer electronics market revenue is set to expand by a scant 1.3 percent in 2012 as brands focus on low pricing during the holiday season to lure buyers impacted by weak global economic conditions.
Global consumer electronics original equipment manufacturer (OEM) factory revenue this year will rise to $361 billion, up from $356 billion in 2011, according to the IHS iSuppli Home & Consumer Electronics Service at information and analytics provider IHS (NYSE: IHS). Revenue during the fourth quarter, encompassing the peak holiday sales season that starts with Black Friday, will amount to $99 billion, up 2.2 percent from $96 billion during the same period in 2011.
The figure below presents the IHS forecast of quarterly consumer electronics revenue in 2011 and 2012.
“Amid weak economic conditions, along with a lack of compelling new products, electronics brands have little choice but to slash prices to gain the attention of buyers,” said Jordan Selburn, senior principal analyst, consumer platforms, for IHS. “While consumer electronics brands and retailers always offer bargains for Black Friday, this year is likely to bring extremely steep price declines. The result is marginal growth in revenue for consumer electronics manufacturers in 2012.”
Optimization Rules the Day
“In a down economy people want bargains,” Selburn added. “Because of this, the consumer electronics industry in 2012 in general is focusing on optimization, rather than innovation. Instead of delivering totally new products or major new features, consumer electronics makers are improving their current offerings by making them smaller, more power efficient and—most importantly—cheaper.”
Consumer electronics makers are offering a small number of innovative, new products, such as large-sized 4K and organic light-emitting diode (OLED) television sets. However, due to their high prices, these products will not generate significant sales this year.
Blowout Pricing to Entice Shoppers
Notable U.S. Black Friday deals could include 42-inch 1080p liquid crystal display televisions (LCD TV) priced at less than $200, down from less than $500 currently for name-brand sets. LCD TVs 55-inches in size with 3-D capability might break the $800 barrier, well down from the $1,400 range. Blu-ray players could even drop under $40, a discount from the $65 range now.
“At those price points, Blu-ray players and even 42-inch televisions almost fall into impulse-buy territory for some consumers,” Selburn noted. “These are the kinds of deals that will get shoppers out on Black Friday.”
Where Growth will Occur
While overall consumer electronics revenue is set to increase in 2012, much of that growth will be driven by just a few product categories, with most areas declining for the year.
Products set to contract in 2012 include plasma TVs, rear-projection TVs, analog cathode ray tube (CRT) TVs, video game consoles, digital still cameras, DVD and Blu-ray Video recorders, portable media players and MP3 players, personal & portable stereos, home audio system components, camcorders and e-book readers.
The majority of revenue growth will be driven by the LCD TV segment, which will see an increase in revenue, despite an expected decrease in unit shipments for the year. Higher average selling prices for feature-rich sets sold earlier in 2012 models will allow revenue to rise for the year.
Other areas also expected to expand significantly this year include digital set-top boxes and consumer appliances.
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