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CEA Sees CE Demand Steady In Tough Economy

NEW YORK — The post-recession macroeconomic
recovery is proceeding at
a glacial pace, according to Consumer
Electronics Association (CEA) chief
economist Shawn DuBravac, but consumer
spending on CE products remains
relatively strong compared with
other sectors.

DuBravac presented CEA’s “Consumer
Technology Reality Check ’10” at a
recent press briefing, here, painted a
picture of a challenging second half at

Calling the overall economic climate
“mediocre at best,” DuBravac said he
remains wary of “the delicate handoff
the economy faces, from a government
stimulus-driven surge to one that must
be moved forward by private industry.”

As a whole, compared with past recessions,
this recovery is slower, wage and
salary growth have been minimal, and
consumers’ willingness to spend is less,
DuBravac said. However, there are some
good signs on the horizon for CE.

For one, overall consumption has held
up relatively well, though at the expense of
saving, and consumer spending on technology
as a percentage of their spending
on all durable goods is steadily climbing,
continuing a decades-long trend.

“Technology has held up well. We saw
unit volume of flat-screen TVs rise 19
percent last year. That’s incredible in
this climate. Look at some other consumer
sectors: major appliances, home
furnishings, housing … they got absolutely
decimated. Tourism and hospitality
suffered. Part of it, I think, is that technology
is being perceived as more of a necessity, as opposed to a luxury.”

DuBravac identified several categories
that he expects will see strong
sales in the second half and into Q1
2011. One of them, higher-ticket LED
TVs, saw strong unit and dollar sales
in March and April and should continue
to gain share. “One in three households
is expected to buy a new TV this
year. That’s showing a willingness on
the part of consumers to invest in their
homes since the average American
home already has 2.6 TVs.”

3D TV sales should also gain some
critical mass in the second half, with CEA
expecting sales in the 2 million to 2.5 million
units range. “That’s solid for a new
technology,” DuBravac said. “Interest is
growing rapidly for 3D,” he added, citing
results of a survey of 257 CE salespeople
conducted in stores by CEA and partner
ChannelForce. Eighty percent of salespeople
said consumer interest in 3D has
increased in the previous few months.

There is still work to do on behalf of
the industry, though, as sales associates
on average said that half of all consumers
are confused about 3D technology.

CEA expects that, mirroring the
launches of past new technologies, 3D
TV sales for this year should spike in
the fourth quarter, with anywhere from
50 percent to 70 percent of sales occurring
during the holiday selling season.

Another hot segment will be tablet computing
and DuBravac expects this year’s
holiday sales for tablets to unfold much
like the e-reader market did last year, with 6
million to 8 million tablets moving through
the market between Q4 and Q1 2011.

DuBravac also cited gaming as a continually
strong segment for Q4 sales, with
console sales expected to pick up a bit and
accessories and software accounting for
the bulk of sales. “Expect a lot of bundling
of accessories this year,” he said.