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Digital Driving 2006-07 Sales

Hot digital audio, video, mobile and home office products featuring the newest and most advanced technologies drove the consumer electronics market to a record high last year and will provide the fuel for further growth this year, according to figures compiled by the Consumer Electronics Association’s (CEA) marketing services department.

But at the same time, the report shows the increased demand for new digital products is being offset in part by significantly declining sales of their analog counterparts which, until recently, formed the industry’s sales backbone.

As previously reported, CEA currently estimates total industry factory sales had a dealer cost value of $145.7 billion in 2006, up 13.7 percent for the year, and its preliminary forecast for 2007 is for a 6.5 percent sales growth to $155.2 billion.

In its in-home technology products group, the video sector’s 2006 sales were bolstered by triple-digit percent gains in flat-screen color and DVD recorders, while sales of analog TVs and VCRs took a nosedive. In projection TV the market takeover by digital models was so complete that CEA is discontinuing tracking analog models this year. The same products, along with personal video recorders, are seen repeating as digital stars this year.

In the audio sector, virtually all the significant growth for last year and this year is being credited to MP3 players, a product that has taken much of the sales steam out of analog recorders and players.

Computers and peripherals were solid sellers in 2006, and should continue that performance in 2007, with demand possibly bolstered by Microsoft’s new operating system and Windows-capable Macs. Tight availability of new video game consoles and software held down sales growth in 2006.

The sales story for communications products for last year and 2007 can be wrapped up in a single word: cellular. Cellphones, with a wide variety of features, were the phone equipment market driver in 2006, and should repeat again this year. CEA is now packaging together sales results for cellphones and personal digital assistants.

Video and navigation devices, along with satellite radios, are making significant strides in the mobile market, CEA’s data shows. But at the same time the retail growth potential for those products is being hindered by the increased inclusion of those products as original equipment by major automobile manufacturers.

CEA 2005-07 Sales And Outlook

(Units in 1,000s, $ value in millions)