CE Opportunities Abound Despite High Household Penetration: NPD

By Alan Wolf -- TWICE, 9/4/2008 10:02:00 AM

Port Washington, N.Y. — Although CE penetration is reaching the saturation point in many U.S. households, growth opportunities still exist as consumers seek to replace their devices or upgrade them with new or improved technologies.

According to a new report by market research firm The NPD Group, U.S. households have an average of 21 CE devices, with DVD players, desktop computers and digital cameras among items with the highest penetration.

But while DVD players can be found in 85 percent of U.S. homes, and overall unit sales of have declined 25 percent in the first half of 2008, consumers are demonstrating interest in investing in players that take better advantage of their high-definition televisions, including up-converting units and Blu-ray Disc players, NPD said. Indeed, sales of up-converting DVD players rose 14 percent during the first six months of the year, while 50 percent of consumers reported replacing their DVD player between June 2007 and May 2008, according to NPD’s consumer tracking service.

The digital camera market is similarly approaching saturation with about 76 percent penetration, albeit mostly in point-and-shoot models (74 percent). In contrast, the d-SLR market is still growing, and not just among consumers with the highest incomes. While 17 percent of households with incomes over $100,000 report having a d-SLR in their home, 8 percent of households with incomes less than $100,000 also have a d-SLR, NPD said.

PCs, another rapidly maturing category, still have room for growth via notebook configurations. Notebooks have less than a 50 percent penetration rate, NPD said, with only a 53 percent incidence of first-time buyers and a 21 percent incidence of repeat buyers — creating an opportunity to turn what was once a family/household device into a more personal electronics item.

“Retail stores are stocked with many products that have high household penetration,” said Ross Rubin, NPD’s industry analysis director. “However, new technologies continue to refresh mature markets and spawn new categories. More capacity, higher resolution and increasing broadband connectivity are driving ascending categories,” including GPS, digital picture frames and flash-based camcorders.

Household penetration for GPS is only at 19 percent, with 81 percent of purchases being made by first-time buyers, while only 13 percent of consumers report owning a digital picture frame.

Newer technology camcorders have a low penetration (26 percent), a high incidence of first-time buyers (68 percent) and a push to elevate the market even more with flash-based camcorders, NPD said. The flash segment enjoyed 150 percent growth for the first half of 2008, moving from 13 percent of the camcorder market in the first half of 2007 to 42 percent in 2008, according to the firm’s retail-tracking service.

“Driving growth in mature categories can come from multiple sources,” said Rubin. “In the DVD player market, for example, consumers are moving toward technologies such as up-conversion and Blu-ray that take better advantage of HDTVs. In the PC market, though, the greater mobility enabled by more affordable notebook PCs is fueling growth that’s coming at the expense of desktops.”

For more information on the report, “Household Penetration Study: Ownership Landscape 2008,” contact NPD here or visit www.npd.com.