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CE Sales At Record $125.9B In ’05

Las Vegas — Consumer electronics retailers should be whistling happy songs as they stroll the aisles at this International CES, as industry factory sales hit a record $125.9 billion in 2005, up by 11.3 percent, or a whopping $12.8 billion from 2004, according to the estimate announced here today by the Consumer Electronics Association (CEA), the show’s producer.

That growth total is based on a consensus of the numbers provided by CEA members participating in its statistical programs. The consensus also looks for a solid, if somewhat more modest, growth for 2006, with sales rising by 7.5 percent, or by $9.49 billion, to $135.4 billion.

Over the next three years CEA forecasters are expecting a conservative average industry sales increase of just 6 percent, with sales coming in at 143.5 billion in 2007, $152.1 billion in 2008 and $161.3 billion in 2009.

Home audio was the surprising sales growth leader last year, as sales jumped 28.1 percent to $7.27 billion. But all that increase was credited to the surge in demand for MP3 players, and sales of all other major product areas declined. For one area, audio rack systems, sales were so low that the category has been dropped from CEA’s sales report. The outlook for 2006 is more of the same, with MP3 sales providing all the growth as sales are seen rising 6 percent to just under $7.7 billion.

Cellular phones and high-tech set the growth pace for mobile electronics last year, as sales posted a 17.8 percent rise to $22.4 billion. The phones provided most of the increase, but the industry also received a boost from higher sales of car video and navigation gear. For this year CEA’s forecasters see mobile products enjoying another double-digit gain, with sales up 12.4 percent to $25.1 billion.

In video, continued strong demand for direct-view and flat digital TVs, along with TV/DVD combos, provided most of the market strength for a 7.4 percent 2005 sales rise to $22.6 billion, according to CEA. The growth was held back by the expected drop in the value of sales of analog color and VCRs. At the same time the availability of ever-larger flat LCD and plasma sets reduced the demand for digital projection models. Digital TVs again will lead the video sales pace in 2006, and CEA is looking for sales to come in at $25.2 billion, up a solid 11.6 percent.

The industry’s other major product category, home information, had estimated sales of just over $45 billion last year, up 7.8 percent, as high demand for digital cameras and computer peripherals offset lackluster performances for most other products. That continued overall sluggishness is seen by CEA as resulting in a slight sales decline to $44.8 billion in 2006.

The year-end arrival of the first Sony PS2 games and the launch of Microsoft’s Xbox helped sales of electronic games achieve a 10.7 percent sales rise in 2005 to $11.6 billion. With new Sony and Nintendo entries joining the fray this year, CEA is forecasting a rousing 22.8 percent sales increase to $14.3 billion.

Here is the 2005 performance and 2006 outlook for other categories:

•Blank media sales were up 16.8 percent last year to $6.37 billion and are seen rising 6.9 percent to $6.81 billion in 2005, with memory devices supplying the growth.

•Accessories and battery sales rose and estimated 11.8 percent to $8.44 billion in 2005 and are looked to for a 7.3 percent increase to $9.05 billion this year.

• Home security sales of $2.25 billion rose 4.7 percent last year, and are targeted for a 2006 increase of 5 percent to $2.36 billion.

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