Consumer Electronics Revenue Growth Slows; Lower Prices Are Blamed

Worldwide revenue growth in the consumer electronics market, which is on track to reach more than a third of a trillion dollars this year, is continuing to slow as prices fall and sales slow in some hot product categories, a market researcher said Wednesday.

The consumer electronics market, which includes hot items such as MP3 players and digital TVs and cameras, is expected to increase by 5.2% to $344 billion this year, compared with $327 billion in 2006. Last year, revenue was 9% higher than 2005 revenue, according to iSuppli.

"A good part of the slowing is in dropping ASPs [average selling prices], but the other reason is slower sales in segments such as digital TVs and digital cameras," iSuppli analyst Gary Grandbois told InformationWeek. Three or four years ago, for example, digital TV sales were increasing by a couple of hundred percent because they were still relatively new. Today, those numbers have fallen as more and more people already own them.

Revenue growth for the electronic equipment market as a whole also is expected to slow this year, to 6% over 2006, reaching $1.49 trillion dollars. Last year, sales rose 7.7%, to $1.4 trillion. The market, as defined by iSuppli, includes consumer electronics, as well as PCs, mobile handsets, and some equipment used in industries such as automotive, military/aerospace, medical, and semiconductor manufacturing.

The average selling price for PCs is expected to stay about the same, as it has for the last couple of years, Grandbois said. The reason: the shift in purchases from desktops to more expensive notebooks. The latter could reach a 28% growth in unit sales this year, which was the same as 2006, according to iSuppli.

Revenue from mobile handsets is expected to increase year-over-year by only 5% this year because of falling average selling prices, while unit sales are projected to rise by 10%.