Despite continuing climb in production, falling prices will eventually exact their toll
The rise in factory production during the next two years of consumer electronic (CE) goods such as flat- panel TVs and video game consoles won’t be enough to keep overall CE manufacturing revenue from finally reaching a plateau by 2015, due largely to the continuous freefall of CE equipment prices, according to an IHS iSuppli Consumer Platforms market tracker report from information and analysis provider IHS.
While both factory production and industry sales will climb steadily for the next three years, growth will slow perceptibly on the revenue end of the equation for the CE industry between 2014 and 2015.
CE revenue in 2015 will amount to $294.5 billion, up a scant 0.1 percent from a projected $294.2 billion in 2014.Such marked stagnation is in contrast to the relatively vibrant 8.4 percent increase enjoyed by the industry during 2010, when revenue reached $271.4 billion, up from $250.3 billion in 2009.
Despite the foreshadowing of a slowdown in a few years’ time, the CE market today continues to enjoy a measure of success and laudable growth, especially in fast-growing categories.
For instance, factory production this year of liquid crystal display televisions (LCD TVs) is set to grow 7 percent, to 227.6 million units. Blu-ray players will top 43.0 million units, essentially coming into parity with DVD players. Ebook readers, notwithstanding their near-nonexistent margins, will still grow
40 percent to more than 28.0 million systems.
Set-top boxes will remain comfortably above the 100 mil- lion-unit level. And if one went beyond the traditional fields of consumer spending above and extended the categories to include smartphones, mobile PCs and media tablets, those devices can be expected to also drive the more broadly defined CE markets to higher levels of growth.
Among CE semiconductor manufacturers, the potential for disruptions in the supply chain because of shortages in raw material appears to have finally abated. Meanwhile, the quest by consumers for ever- expanding functionality in their CE gear is likely to translate into continued growth in demand for CE semiconductors.
Semiconductor revenue for the CE space is anticipated this year at $30.3 billion, up 1.6 percent from $29.8 billion in 2011.
Source: IHS iSuppli
http://www.isuppli.com/Home-and-Consumer-Electronics/MarketWatch/Pages/Consumer-Electronics-Revenue-Growth-to-Start-Slowing-by-2015.aspx
The rise in factory production during the next two years of consumer electronic (CE) goods such as flat- panel TVs and video game consoles won’t be enough to keep overall CE manufacturing revenue from finally reaching a plateau by 2015, due largely to the continuous freefall of CE equipment prices, according to an IHS iSuppli Consumer Platforms market tracker report from information and analysis provider IHS.
While both factory production and industry sales will climb steadily for the next three years, growth will slow perceptibly on the revenue end of the equation for the CE industry between 2014 and 2015.
CE revenue in 2015 will amount to $294.5 billion, up a scant 0.1 percent from a projected $294.2 billion in 2014.Such marked stagnation is in contrast to the relatively vibrant 8.4 percent increase enjoyed by the industry during 2010, when revenue reached $271.4 billion, up from $250.3 billion in 2009.
This year, CE revenue is forecast to hit $283.9 billion, up 1.4 percent from $280.1 billion in 2011. This means that growth for 2012 will be less than half the 3.2 percent expansion rate seen last year.
CE factory production, meanwhile, will grow from 1.13 billion units this year to 1.18 billion units by 2015. The rate of increase for CE factory production between 2014 and 2015 is approximately 1 percent—small by any accounting, but still much better than the negligible uptick in CE revenue during the equivalent period.
The eventual flattening of CE revenue by 2015 is because of the enormous price pressure constantly brought to bear on consumer electronics gear and equipment. Although CE unit volumes are increasing at the moment so as to outweigh the deleterious effect of price declines, the continuous reduction of CE prices in the marketplace will ultimately take its toll in a few years.
An example is the Apple TV digital media adapter that allows consumers to access over-the-top con- tent from the Internet, such as that provided by Netflix or Hulu Plus, for viewing at home. Initially priced at $299 when it was introduced a few years back, the price of the second version of Apple TV, which debuted in 2010, dropped to a much more consumer-friendly $99.
Other types of CE equipment have also seen dramatic declines cut into their pricing and reduce margins in the process, even as functionalities for the devices continue to improve. Ebook readers, for instance, are sold at almost their bill-of-materials cost, or even less as suppliers such as Amazon look to media sales for their profit. Digital picture frames, digital still cameras, MP3 players, video game consoles and handheld game players have likewise become increasingly affordable.
CE factory production, meanwhile, will grow from 1.13 billion units this year to 1.18 billion units by 2015. The rate of increase for CE factory production between 2014 and 2015 is approximately 1 percent—small by any accounting, but still much better than the negligible uptick in CE revenue during the equivalent period.
The eventual flattening of CE revenue by 2015 is because of the enormous price pressure constantly brought to bear on consumer electronics gear and equipment. Although CE unit volumes are increasing at the moment so as to outweigh the deleterious effect of price declines, the continuous reduction of CE prices in the marketplace will ultimately take its toll in a few years.
An example is the Apple TV digital media adapter that allows consumers to access over-the-top con- tent from the Internet, such as that provided by Netflix or Hulu Plus, for viewing at home. Initially priced at $299 when it was introduced a few years back, the price of the second version of Apple TV, which debuted in 2010, dropped to a much more consumer-friendly $99.
Other types of CE equipment have also seen dramatic declines cut into their pricing and reduce margins in the process, even as functionalities for the devices continue to improve. Ebook readers, for instance, are sold at almost their bill-of-materials cost, or even less as suppliers such as Amazon look to media sales for their profit. Digital picture frames, digital still cameras, MP3 players, video game consoles and handheld game players have likewise become increasingly affordable.
Despite the foreshadowing of a slowdown in a few years’ time, the CE market today continues to enjoy a measure of success and laudable growth, especially in fast-growing categories.
For instance, factory production this year of liquid crystal display televisions (LCD TVs) is set to grow 7 percent, to 227.6 million units. Blu-ray players will top 43.0 million units, essentially coming into parity with DVD players. Ebook readers, notwithstanding their near-nonexistent margins, will still grow
40 percent to more than 28.0 million systems.
Set-top boxes will remain comfortably above the 100 mil- lion-unit level. And if one went beyond the traditional fields of consumer spending above and extended the categories to include smartphones, mobile PCs and media tablets, those devices can be expected to also drive the more broadly defined CE markets to higher levels of growth.
Among CE semiconductor manufacturers, the potential for disruptions in the supply chain because of shortages in raw material appears to have finally abated. Meanwhile, the quest by consumers for ever- expanding functionality in their CE gear is likely to translate into continued growth in demand for CE semiconductors.
Semiconductor revenue for the CE space is anticipated this year at $30.3 billion, up 1.6 percent from $29.8 billion in 2011.
Source: IHS iSuppli
http://www.isuppli.com/Home-and-Consumer-Electronics/MarketWatch/Pages/Consumer-Electronics-Revenue-Growth-to-Start-Slowing-by-2015.aspx
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