Consumer electronics sector expecting its first annual revenue drop since 2001
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Samsung Electronics Booth at CES 2009. Credit: Alex Pham / Los Angeles Times.
It’s bad all over. A day after the video game sector posted its worst year-over-year decline in nearly nine years, the consumer electronics industry today said it was expecting its first annual revenue drop since 2001.
Shipments to U.S. retailers and consumers are projected to fall 7.7% this year to $165 billion, according to a report released today by the Consumer Electronics Assn. Contributing to the drop is a rapid decline in the prices of all electronics. Americans are also saturated with gadgets such as digital cameras, music players, the report suggested, and perhaps even large-screen TVs, which have been a driver of industry growth for the last several years.
Although shoppers are expected to snap up more flat-screen TVs, leading to an increase in the total number of TVs shipped to stores, total revenue for the category is expected to decline. That’s because prices are projected to plummet, and more consumers are likely to opt for smaller-size sets.
One bright spot: Blu-ray DVD players are expected to post a jump, both in unit sales and in revenue, the report said. Manufacturers will ship 6 million Blu-ray players, up 112% from 2008, while revenue is expected to top $1 billion, a 48% increase over last year.
Revenue from smart phones such as Apple’s iPhone is also expected to increase to nearly $14 billion, up 3% despite heavy price discounts. CEA predicted smart phones will account for 1 in 4 total handsets sold this year as consumers use their phones for Internet access, navigation and media playback.
Sales of netbooks -- those lightweight, low-cost laptops -- are forecast to jump 85% this year to 8.5 million units. But don’t let the smaller price tag lull you into thinking it’s an insignificant category -- netbooks are set to hit $3.4 billion in revenue in 2009, CEA said.
In the it-could-be-worse department, the trade group said the industry’s 7.7% revenue decline compared favorably with car sales (down 40% in since the fourth quarter of 2007) and sales of existing homes (down 34% from its peak in August 2005).
“The CE industry is not impervious to the economic downturn but remains resilient compared to other industries,” CEA President Gary Shapiro said in a statement.
Sales are expected to improve in 2010, but not by much. CEA said it projects an increase of less than 1%.
-- Alex Pham
Follow my random thoughts on games, gear and technology on Twitter @AlexPham.