2010 CE Spending To Drop 17%: IDC Report

By Editors of TWICE -- TWICE, 10/4/2010

FRAMINGHAM, MASS. — U.S. consumers will spend 17 percent less on CE this year than last, a new report projects.

But despite the decline – the largest among 20 large, industrialized nations – important opportunities still exist within key product categories like netbooks, smartphones and HDTV, and across specific consumer segments.

And even though U.S. consumers are spending less on CE, they tend to buy higher-end devices with more features and functions than consumers in other markets, according to the report’s author, International Data Corp. (IDC).

“The survey found U.S. consumers to be extremely price sensitive, a clear sign that the economic downturn has had an impact not only on spending habits, but also on consumer psychology,” observed IDC consumer primary research director Michael DeHart. “At the same time, U.S. consumers are far less likely to buy simple, basic devices, which is indicative of the population’s strong affinity for consumer electronics.”

IDC believes long-term growth opportunities exist in netbooks and peripherals as PCs become increasingly viewed as personal CE devices. In addition, with smartphone penetration at only 28 percent of U.S. households, category growth is a “sure thing,” the research group said, along with a range of features, data plans and apps to suit different budgets.

Similarly, HDTV ownership has only now crossed the 50-percent mark among U.S. households, promising a continuation of the category’s “dramatic growth trajectory,” IDC said.

The report, U.S. Consumer Insights – Beyond Early Adopters, the second in a series from the group’s ConsumerScape 360 service, further divides the U.S marketplace into six distinct consumer segments:
• Engaged Hipsters (young and trendy, likely to buy the latest and coolest devices);
• Tech Evangelists (the most adept and influential technology users);
• Savvy Sale Shoppers (moderate interest levels but will buy if the price is right);
• Impulse Buyers (high income buyers that purchase whatever new products catch their eye);
• Socially Conscious Basic Buyers (family- and environmentally- focused, unlikely to buy what they don’t need), and;
• Disengaged Functionalists (low income buyers with little interest in CE).

IDC found that more than half of the U.S. population can be characterized as basic buyers (disengaged functionalists and savvy sale shoppers), reflecting the current state of the U.S. economy. Moreover, the number of disengaged functionalists is significantly higher in the U.S. (34 percent) than in the other countries surveyed (16 percent worldwide).