CEA: No Slowdown in Consumer Electronics

Online Staff -- Electronic News, 1/3/2006

Factory sales of consumer electronics will reach a new high of $135.4 billion in 2006, according to the Consumer Electronics Association's (CEA) annual industry forecast, the trade group said today.

The CEA released the forecast to correspond with the annual International Consumer Electronics Show (CES), set to get underway this week in Las Vegas, Nev. "The numbers say it all. The consumer electronics industry is hot," Gary Shapiro, the CEA's president and CEO, said in a statement.

Sales in 2005 totaled $125.9 billion, according to the CEA, and it forecasts 8 percent growth this year.

"Sales exceeded our expectations in 2005, totaling $125.9 billion, and we're forecasting 8 per cent growth in 2006," Shapiro said. "Consumer electronics sales are consistently growing, breaking records every year, because our industry is constantly changing to provide products that consumers love and can't live without. I cannot wait to see the thousands of new products unveiled this week at the International CES that will continue to grow this amazing industry."

According to CEA's bi-annual U.S. Consumer Electronics Sales and Forecasts report, 2005 year-end totals exceeded CEA's initial projection of $122 billion, increasing by 11 percent over 2004. CEA attributes much of the growth to next-generation product lines and innovations to wireless devices, flat panel displays, MP3 devices and gaming consoles and software.

CEA projects that sales of digital television (DTV) will continue to drive industry sales to new heights in 2006, forecasting total sales to surpass $23 billion and 18 million units. DTV sales in 2005 grew 60 percent to $17 billion. This growth is attributable to the growing popularity and competitive price declines of flat panel displays such as LCD and plasma, the trade group said.

Combined, these displays accounted for 40 per cent of all DTV sales. Analog and digital LCD TVs combined for $3 billion and four million units. Plasma TVs sold nearly two million units for a total of $4 billion in dollar sales. High-definition television (HDTV) continues to claim 85 percent of the total DTV market.

Launches of next-generation gaming consoles will continue throughout early 2006, pushing the gaming market to $14 billion, the CEA said. The gaming category experienced healthy growth in 2005 with total shipment revenues of $12 billion as the first releases of next-generation gaming consoles and compatible software titles hit dealer shelves.

CEA also forecasts a continued strong market for MP3 players as devices with video playback capability grab the attention of consumers. "We are projecting an increase in sales of MP3 players to $4.5 billion in 2006, with 30 percent of all MP3 players sold having video playback capability," Sean Wargo, CEA director of industry analysis, said in a statement.

"MP3 technology helped boost the audio and accessories markets in 2005," Wargo continued. "With the introduction of video playback capability, MP3 player sales surged 200 percent in 2005 to $3 billion. Trends in 2006 should be no different."

Meanwhile, the CEA is also predicting that total wireless handset sales will exceed $16 billion in factory-to-dealer sales this year. Wireless communications devices such as telephones drove the CE industry in 2005, largely in part to the introduction of phones that have multiple features and functions, according to the trade group.

Many phones in today's wireless market come equipped with digital cameras and camcorders, MP3 players, GPS navigation, live TV capability and even serve as portable modem connections. Some 104 million wireless handsets were sold in 2005 for a total of $13.5 billion, the CEA stated.

All this consumer activity is good news for the chip industry, as demand for consumer device-related chips spurns record sales, according to the Semiconductor Industry Association.