2009 CE Sales Should Fall 0.6% To $170.9 Billion

By Steve Smith On Jan 19 2009 - 8:00am

The Consumer Electronics Association (CEA) is forecasting a drop in full-year factory sales to dealers for the first time in recent memory, a 0.6 percent decrease to $170.9 billion for 2009.

According to a report being released here at International CES, the prediction of almost flat sales is not surprising, given the weak holiday selling season at retail for CE and all home goods, plus the troubled prognosis for the general economy in the new year.

While the industry should get a bounce in sales due to the digital TV transition set for Feb. 17, if that deadline holds, economic conditions are expected to put a drag on even the normally resilient CE industry.

Digital TV continues to be the largest industry category, representing 15 percent of total industry shipment dollars, CEA said. As the transition to digital television nears, unit shipments of DTVs will approach 35 million in 2009, an increase of nearly 6 percent over 2008 shipments. LCD displays remain the top choice among consumers, representing 77 percent of total DTV units.

Blu-ray players are expected to see major growth in 2009. With more content, new products and lower prices, Blu-ray revenues are projected to surpass $1.2 billion.

The gaming category also remains a bright spot in the CE industry and an increasing component of consumer spending. The overall video game market should grow 11 percent, generating nearly $22 billion in revenue this year, a new high mark for the category. Software continues to drive the gaming market, helped by a growing installed base of next-generation consoles. Gaming software revenues are expected to grow 18 percent to nearly $15 billion.

"Consumers continue to seek the best picture, sound and entertainment experience available," said Steve Koenig, CEA's industry analysis director. "With a majority of U.S. homes owning an HDTV, consumers are looking to add high-definition content through Blu-ray players, gaming devices and home-audio systems."

The updated sales and forecast report also shows consumers are turning to smartphones as their mobile phone of choice. Smartphone revenues will continue to grow this year, increasing nearly 20 percent this year, to $13.6 billion. As carriers increase the speed of their networks and offer new services in addition to communication, smartphones will account for more than 60 percent of total handset revenues.

CEA is estimating that when all the sales reports are in that 2008 CE sales will reach $172.08 billion, a 5.4 percent gain, which is surprising given the stormy fourth quarter at retail and would represent the first time industry sales crossed the $170 billion barrier.

For 2007 actual CE sales were $163.2 billion, a healthy 7.4 percent increase over 2006.

The CEA report's data is based on actual sales totals and estimates provided by member companies that participate in its statistical programs.

Based on CEA reports over the years, CE sales have been on a steady climb for more than a decade. In 1995 the industry had $64.5 billion in sales; it crossed $90 billion in 2000 with $93.4 billion, and then dropped slightly to $92.8 billion in 2001, due to the end of the Internet investment bubble and the aftermath of the 9/11 attacks. By 2005 CE sales had more than doubled the '95 performance, with $133.3 billion in sales.