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CE Products That Defined A Quarter-Century

8/08/2011 12:01:00 AM Eastern

NEW YORK — HDTVs, cellphones/smartphones, and
personal computing devices, including tablets, have
influenced the fortunes of the consumer electronics
industry more than any other CE products launched in
the past 25 years.

That’s the consensus of CE retailers, executives and
other industry participants surveyed via the web by
TWICE in June.

These influential product
categories have had a largely
positive impact on retailers
and CE suppliers, generating
consumer excitement,
driving traffic into stores and
driving up dollar volume for
some years.

But, of course, it could be
argued that some of these
products created a lot of collateral
damage in their wake.
The negative impact of music/
video-playing cellphones
and smartphones on sales
of stand-alone MP3/video
players, for instance, comes
immediately to mind. With
cellular carriers accounting
for a majority of cellphone
sell-through, retailers have
missed out on a lot of
potential MP3/video-player
business.

But I digress.

For our survey, respondents
were asked to choose
no more than three of 10
product categories, including “other,” as
the categories they believe
have been most important to
the CE industry since TWICE’s founding in 1986.

HDTV/flat-panel TV was picked by 63 percent of respondents
as one of their top-three choices, followed
by 52 percent who cited smartphones/cellphones
as one of their top three choices. Forty-six percent
cited PCs/laptops/tablets. After that, the percentages
dropped off dramatically, with DVD/Blu-ray players/
burners being the next most-often-cited technology at
only 23 percent.

Almost half — or 46 percent — of the 424 respondents
were retailers, while 17 percent were suppliers
and 10 percent were distributors.

These respondents had an insiders’ view of the three
technologies’ impact on their industry and bottom
lines.

HDTV/flat-panel TVs: These insiders must recall
the excitement that HDTV generated among consumers.
With the 1998 launch of the first CRT-based
projection HDTVs, the products almost sold themselves
— at least to well-heeled consumers — once they
were demonstrated. The excitement grew further when
flat-panel HDTVs later entered the market. Consumers
were able to make room for a big-screen TV without
overwhelming their living rooms with a huge box.

The form factor of flat-panel HDTVs dazzled consumers
almost as much as the picture quality, attracting
consumers who might not otherwise have been
interested in a new TV.

As a result, HDTV sales rose dramatically, and 13
years later, HDTVs were found in 72 percent of U.S. households as of January 2011, up from 26 percent
in January 2007, Consumer Electronics Association
(CEA) consumer surveys show.

Yet there is still plenty of potential in the HDTV
business. In its 13th Annual Household CE Ownership
survey released earlier this year, CEA found that a
minority — or 40 percent — of TVs in U.S. households
are HDTVs.

In addition, the influence
of flat-panel HDTV has
extended beyond the display
industry. Flat-panel HDTVs
created the potential for a
high-definition successor to
the DVD player. HDTVs also
influenced the home audio
industry, although not always
in a good way.

Though they drove people
back into stores, high-priced
HDTVs sucked disposable
income away from highperformance
audio components
(until flat-panel prices
fell sharply). HDTV’s dazzling
displays also blinded retailers
for awhile to the potential
for audio attachments.

With HDTV prices down,
however, money is left
on the table to purchase
audio equipment to create
a complete home theater
experience. And with display
margins down sharply, retailers
are looking to attach
higher margin audio products
to an HDTV sale.

Those audio products
include amplified soundbars,
which represent a new
category, developed in direct response to demand for
high-quality sound in a package as appealing as a flatpanel
display.

Cellular’s influence: What started in 1983 as a
product installed in the car quickly moved into people’s
pockets, launching a communications revolution that
went mass market sooner than analysts expected.

By the end of 2010, the number of wireless voice
and data subscriptions hit 302.9 million, for a penetration
rate of 96 percent of the U.S. population, CTIA
statistics show.

Smartphones, once a niche product, are now used
by 38 percent of cellular users, according to a May
survey by Nielsen. Fifty-five percent of consumers who
purchased a new handset in the three months before
the survey said they bought a smartphone, up from a
year-ago 34 percent, the survey shows.

On the downside, smartphones threaten to do to
handheld video games what they have done to portable
MP3/video players and, to some extent, portable
navigation devices (PNDs), whose declining sales
can be blamed somewhat on smartphone apps — and
Google’s free Android app — that deliver turn-by-turn
driving instructions.

PC/tablet influence: Desktop PCs, laptops and
netbooks created new CE categories, made the home
office more productive, and turned into entertainment
devices that compete with TVs and home audio equipment
for the attention of younger consumers.

The products also drove the rise of home-networking technology, which would eventually be embedded
in traditional CE products to give them the ability to
stream content from a PC, from the Internet or wirelessly
from smartphones.

PCs also had a profound impact on the music and
home audio industries, turning PCs into home jukeboxes
that eroded sales of traditional audio shelf systems
and sparking the rapid decline of physical CD sales.

The tablet, popularized by the launch of the first iPad
in 2010, is taking the portable computing experience
to another level. Positioned mainly as an entertainment
and media-consumption device, the iPad has
energized a moribund tablet market, driving up sales
sharply and attracting multiple new competitors. CEA
forecasts that 2011 tablet shipments to U.S. dealers
will grow 157 percent to more than 26.5 million units,
generated factory-level sales of $14 billion.

Those are sales in a market that before 2010 largely
didn’t exist.

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