According to IHS iSuppli's consumer platform market research report, the economic turmoil has caused an unexpected slowdown in the consumer market, which will drag down the growth rate of the global consumer electronics market operating income this year by more than 75% from the expected level.
In 2011, consumer electronics revenue will reach US$357.3 billion, an increase of only 1.5% from US$351.9 billion in 2010, a growth rate 77% lower than the previous forecast of 6.4% by IHS iSuppli.
The growth rate of consumer electronics revenue in 2011 was relatively low, which was a significant slowdown compared to 2010. Last year, the market grew by 7.9%. However, consumer electronics revenue will resume moderate growth in the next two years, then slow down in 2014 and remain flat in 2015. By then, overall consumer electronics revenue will be close to US$400 billion.
The consumer electronics market covers a wide range of devices including LCD TVs, DVD and Blu-ray players as well as recorders, digital cameras and portable media players. Other important product categories include game controllers and handheld game consoles, e-book readers, digital set-top boxes and battery chargers. IHS iSuppli Corporation revised its forecast for most product categories to reflect the current economic downturn in many regions of the world, resulting in a downward revision of operating income forecasts.
The consumer electronics market started well this year, but then declined. In the first quarter of 2011, consumer electronics revenue grew by 3% year-on-year, but the market slowed down significantly in the middle of the year due to the weak global economy. The employment situation in the United States is sluggish. The European sovereign debt crisis has caused financial market turmoil, which has prompted consumers in Europe and the United States to reduce purchasing activities. Europe and the United States are the worldâ€™s largest consumer electronics markets.
The main factor that led to the downward adjustment of the consumer electronics market forecast this year was the slowdown in the LCD TV sector, which accounted for nearly 30% of the overall consumer electronics revenue. It is now expected that LCD TV revenue in 2011 will be US$104 billion, instead of the previous forecast of US$110 billion, but this area will maintain a steady growth momentum in the future.
IHS believes that the situation of portable media players and MP3 players in the consumer electronics market is even worse. Although the growth rate of LCD TVs has declined, the prospects for the MP3 market are accelerating. This once-very popular product is now being left out. Consumers prefer high-end devices such as smart phones and tablet computers. Even the best-selling Apple iPod was not spared: iPod shipments fell to 7.5 million in the second quarter, compared to 9.4 million in the same period last year.
But not all negative news. Although consumer electronics revenues in the second and third quarters were lower than those of the same period of last year, as the holiday sales of TVs and Blu-ray players are higher than the 2010 level, the above trend will be reversed from the fourth quarter. IHS believes that growth rates in 2012 and 2013 are expected to exceed 4%, compared to the current downturn, when most of the consumer electronics sector will be rejuvenated.
Unit shipments will also remain strong, and the growth in shipments is expected to offset the impact of price declines. By 2015, LCD TV shipments will reach 300 million units, while Blu-ray players will reach 80 million. Even relatively dull markets such as set-top boxes and digital cameras will perform well. Shipments will reach tens of millions.
The most pressing issue is still price, which is expected to face this problem around 2015. Although consumer enthusiasm for consumer electronics devices is still high, manufacturers will face increasing pressure to launch products at competitive prices. Ultimately, price pressures will offset the effect of the growth in shipments of consumer electronics devices, thereby suppressing consumer electronics market operating revenues and reducing the market's growth rate to a very low level.