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CEA Says ’05 Sales To Grow 11.6%

1/03/2005 01:38:00 PM Eastern

Las Vegas — Driven by demand for digital audio, video and home information products, consumer electronics factory sales soared by 12.5 percent last year to an all-time record $115.4 billion, and an equally strong growth is in store for 2005, with sales climbing 11.6 percent to $128.8 billion, according to figures being released here today at the International Consumer Electronics Show by the Consumer Electronics Association (CEA).

As developed by CEA’s Market Research Department from data collected from participating member companies, the figures show factory sales grew by a steep $12.8 billion in 2004, and the forecast for this year is for an even sharper rise of $13.4 billion. For the longer term, the outlook is for the growth pace to level off at an average 5 percent annually, and climbing to $149.1 billion in 2008.

In hardware, the previously sluggish audio category was the sales growth leader in 2004, posting a record 31.3 percent factory level rise to $6.27 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 result in an overall slippage of 1.7 percent to $6.17 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 a 10.2 percent revenue jump to $42.2 billion in 2004, mainly on the strength of rising demand for home computers, printers and monitors.

For 2005 the CEA outlook is for a 9 percent factory sales increase to nearly $46 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.

While demand for magnetic audio, video and computer media continued to fade last year, 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 $7.51 billion in 2004, up 6.7 percent, and CEA is forecasting a rise of 10.7 percent this year to $8.32 billion.

Thanks in total to rising software demand, the video game category rebounded from a sales drop in 2003 to a 7 percent increase last year to just under $11 billion. But growth is seen slowing to just 1.4 percent this year to $11.1 billion. Home security products sales (excluding installation) enjoyed a 23.l percent improvement to $2.53 billion in 2004. It is expected to almost match that this year with a 20.4 percent gain to $3.05 billion.

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