By Lisa Johnston
New products on display at the American International Toy Fair, held in N
The global CE market won't achieve annual revenue growth this year, according to a new iSuppli report.
Although the global consumer electronics market returned to sequential revenue growth in the second quarter, the industry this year will not achieve an annual expansion that would signal a true recovery, the research firm said.
Global CE equipment revenue rose to $71.1 billion in the second quarter, up 4.2 percent from $68.3 billion in the first quarter, based on a preliminary iSuppli estimate. This represents a major improvement from the first quarter, when revenue fell by 25.8 percent compared with the fourth quarter of 2008.
While consumer electronics revenue typically declines on a sequential basis in the first quarter following the fourth-quarter holiday selling season, this represented a particularly sharp decline.
“Following the dismal first quarter, conditions are starting to improve in the consumer electronics business,” said Sheri Greenspan, consumer electronics senior analyst for iSuppli. “Revenue will continue increasing on a sequential basis in the third and fourth quarters, rising by 12.5 percent and 10.2 percent. While this growth is encouraging, 2009 will still be a down year for the industry.”
iSuppli predicted global consumer electronics equipment revenue will decline to $307.6 billion in 2009, down 8.2 percent from $335.2 billion in 2008, due to the impact of the worldwide economic downturn as well as sharply declining prices for key products.
These factors caused revenue to decline by 10 percent in the first quarter, compared with the same period in 2008, and by 11.3 percent in the second quarter. Revenue will decline by 8 percent and 4.2 percent in the third and fourth quarters, respectively, on an annual basis.
“With the recession having eaten into consumers' disposable incomes, the consumer electronics industry has responded by cutting prices on popular products,” Greenspan said. “In diverse areas from digital still cameras, to video game consoles to LCD TVs, manufacturers are offering price cuts to help move product.”
To a degree, this appears to be working, with aggregate consumer electronics product unit shipments set to rise sequentially by 5 percent, 16.1 percent and 14.1 percent in the second, third and fourth quarters.
However, following a 29.9 percent plunge in the first quarter, these sequential increases won't be enough to prevent a 4.8 percent decline for all of 2009.
Although all 19 consumer electronics product segments tracked by iSuppli experienced a sequential decline in unit shipments in the seasonally weak first quarter, the second quarter saw a rebound, with most products returning to growth. The only products to see a decline in unit shipments in the second quarter were handheld video games, video game consoles, camcorders and the moribund segment of rear-projection televisions.
In the third quarter, the only major segments set to experience sequential unit shipment declines will be digital set-top boxes and rear-projection televisions.
As the economy continues to recover, overall consumer electronics product revenue in 2010 will rise 2 percent to reach $313.7 billion, iSuppli predicted.
This TWICE webinar, hosted by senior editor Alan Wolf, will take a look at what may be the hottest CE products at retail that will be sold during the all-important fourth quarter. Top technologies, market strategies and industry trends will be discussed with industry analysts and executives.