Even with income decline, consumers boost electronics spending in 2009
Global sales of hot electronic products increased last year, even though consumers experienced declines in income.
By Ann Steffora Mutschler, Contributing Editor -- EDN, March 19, 2010
Reflecting a fundamental shift in how consumers are prioritizing their spending, global revenue for hot electronic products still increased for 2009, even with an extraordinarily severe decline in global per capita income, according to market researchers at iSuppli Corp.
Marking the first annual decrease during the post-World War II era, worldwide per capita income in 2009 declined by 2% to $10,500, according to U.S. government data. By comparison, global revenue from shipments of smart phones rose by 9.6% for the year, while LCD-TVs experienced a 14% rise and netbook PCs surged by a stunning 90%, iSuppli estimated.
The figure below presents iSuppli’s 2009 annual percentage growth for global per capita income and for revenue from shipments of LCD-TVs, smart phones and netbooks.
“There’s been a measurable shift in how consumers are spending their disposable income. In a time of great economic distress, when people had less money and spending on essentials like food and rent declined, consumers surprisingly used a disproportionate amount of their money to purchase new consumer electronics products,” said Derek Lidow, president and CEO of iSuppli, in a statement.
In terms of worldwide unit shipments, LCD-TVs rose by 42% in 2009, while smart-phone shipments increased by 13.2% in 2009 and netbooks rose by 100.8%.
“For global consumers, the latest electronic products have become top-priority spend items. They are willing to spend on these products at the expense of other desirables, such as jewelry, vacations and dining out. This trend will continue as the economic recovery gains momentum, causing global revenue for consumer electronic products to rise in 2010 and beyond,” Lidow continued.
In terms of global factory revenue from shipments of consumer electronics devices, which includes LCD-TVs, this category is expected to rise by 3.2% this year, and will grow by another 7.8% next year. In the wireless communications segment, which is led by smart phones, global factory revenue will rise 10.8% this year, and 13.1% next year, iSuppli projected. Partly driven by sales of popular netbook PCs, the computer segment is expected to rise by 7.8% this year and 7.9% next year.
One major factor allowing consumers to increase their spending on certain electronic products is decreased expenditures on vacations, iSuppli pointed out.
“Rather than spending on travel, people are opting to take ‘staycations,’ where they stay home during their vacation time. To make their staycations more enjoyable, consumers are buying products to entertain themselves in their homes, including LCD-TVs,” Lidow said.
Other factors that augmented the strong spending on certain consumer electronics products in 2009 included China’s stimulus efforts that helped promote spending on various consumer products in the nation, most notably on LCD-TVs.
Another trend that the global economy could not deter is consumer connectedness, iSuppli said, noting that consumers around the world have been increasing their spend, in spite of the economy, on devices that allow them to be connected to the Internet as they move from place to place as evidenced by consumers in the developing world spending a larger share of their income to become first-time cell-phone subscribers.
“The importance that consumers are placing on these electronic products when it comes to spending is very positive development for the global technology industry and should be a cause of optimism in the years to come,” Lidow concluded.
