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CEA Sees Sales Up 8.8% In ’05, 7.3% In ’06

9/08/2005 10:13:00 AM Eastern

Arlington, Va. — The Consumer Electronics Association (CEA) has lowered its forecasting sights for overall consumer electronics factory sales this year from the predictions it presented at International CES in January.

The updated and revised data now includes final figures for 2004 sales and a first look at 2006.

An overly optimistic prediction for digital color TV sales and a shortfall in the anticipated sales of flash-memory products are primarily responsible for the lower anticipated 2005 total industry sales of $122.9 billion. That total, a new record and up 8.8 percent from the now-finalized 2004 sales figure of $112.9 billion, falls significantly short of the $128.8 billion CEA looked for at the start of the year. The preliminary outlook for 2006 is for total industry sales of $131.8 billion, up 7.3 percent.

The earlier forecast for 2005 unit sales of direct-view digital TV came in at 9.85 million, generating revenue of $6.26 billion. But the current outlook is for sales of only 4.3 million units with sales dollars at $2.56 billion. But that slack is being taken up for the most part by sales gains for digital combination receivers, set-top boxes and flat-screen color TVs. Total video sales for this year are expected to be up 16.1 percent to $24.4 billion. With digital TV sales picking up, the forecast for 2006 video sales is for a 16 percent rise to $28.3 billion.

In the industry’s largest sector, home information products, sales this year are seen edging up just 2.9 percent to $5.46 billion on a slipping performance by telephone products, computer printers and software, and modest growth in demand for PCs. A similar erosion is seen leading to essentially flat sales of $42.6 billion next year.

A sales decline in home audio this year is being more than counterbalanced by surging demand for MP3 players, and the overall category is seen ending 2005 with sales of $6.24 billion, up 10 percent. But with the growth rate for MP3 slowing, the outlook for 2005 is for audio sales to be up jut 3.2 percent to $6.44 billion.

Strong growth in wireless phones and navigation equipment is lifting 2005 sales to an expected rise of 14.9 percent to $21.8 billion. A lower growth of just 5.4 percent is anticipated for next year with volume seen coming in at just under $23 billion.

In blank media, sales of flash media enjoyed a healthy 13.2 percent rise in sales to $3.52 billion, but that was a far cry from the $5.98 billion forecast in January. Even so, it was high enough to offset sales declines for blank tape and computer media, and total segment sales are expected to be up 2.9 percent to $5.46 billion. For 2006, growth in computer media is expected to add to gains for flash memory and result in a 16.2 percent media jump to $6.35 billion.

CEA predicts new video game formats coming to market will lead to a sales growth recovery in 2005, with sales rising 10.3 percent this year to $11.6 billion, and another 18.2 percent next year to $13.7 billion in 2006. Accessories and battery sales are continuing to grow, with a rise of 10.7 percent to 8.36 billion seen for the year, and an increase of 8.3 percent to $9.05 billion the outlook for 2006. As for home security products, the category is producing 4.7 percent growth for 2005 and is looked to for a 5 percent rise next year, with sales coming in at $2.25 billion and $2.36 billion, respectively.