CEA Says '05 Sales Will Grow 10.7%

By Bob Gerson -- TWICE, 1/24/2005

LAS VEGAS — Driven by demand for digital audio, video and home information products, consumer electronics factory sales soared by 10.7 percent last year to an all-time record $113.5 billion, and an equally strong growth is in store for 2005, with sales also climbing 10.7 percent to $125.7 billion, according to updated figures released at the International CES by the Consumer Electronics Association (CEA).

The figures show factory sales grew by a steep $10.9 billion in 2004, and the forecast for this year is for an even sharper rise of $12.2 billion. For the longer term, the outlook is for the growth pace to level off at an average of about 8 percent annually, and climbing to $158.4 billion in 2008.

In hardware, the previously sluggish audio category was the sales growth leader in 2004, posting a record 15.7 percent factory level rise to $5.53 billion on solid gains for digital and home theater products.

But while digital audio sales are seen rising again this year, a continued decline in demand for conventional hi-fi and portable audio is expected to hold the growth rate down to just 2.2 percent to $5.65 billion this year.

Video, too, was a major contributor to industry growth last year, as sales rose 12.4 percent to just under $21.7 billion. The credit for that rise is given to digital and flat-screen TVs and displays, as analog color demand declined and sales of non-stereo VCRs all but dried up. Digital again is seen as the key to video sales this year, with volume surging 20.5 percent to $26.1 billion.

In other traditional hardware categories, home information products enjoyed an 8.2 percent revenue jump to $41.4 billion in 2004, mainly on the strength of rising demand for home computers, printers and monitors.

For 2005, the CEA outlook is for a 6.8 percent factory sales increase to nearly $44.2 billion. In mobile electronics, the rise in cellphone sales, presumably reflecting in part the introduction of new features, plus growth in aftermarket audio, video and navigation products, produced 2004 factory sales of $19 billion, which, while up 10.6 percent, amounted to a dollar rise of less than $2 billion. Total mobile sales for this year are expected to be up 6 percent to $20.2 billion.

Sales of solid state memory devices soared, producing a solid 40.1 percent jump for the blank media category to $5.3 billion. Memory devices are expected to star again this year, with sales coming in at $7.95 billion, up a solid 51.2 percent. Combined sales of accessories and batteries came in at $7.55 billion in 2004, up 7.2 percent, and CEA is forecasting a rise of 9.7 percent this year to $8.28 billion.

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