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Future Growth Facing the Consumer Electronics Industry

Electronics manufacturing is shifting in a direction that responds to the latest trends in purchasing and using consumer electronics. Entertainment, health, and fitness are some of most popular uses of consumer electronics today, one of the largest segments in the manufacturing industry, particularly in emerging markets.

Consumer electronics growth
The consumer electronics that show high growth and are expected to hold immense potential in the future include smartphones, tablets, digital radios, 3D TVs, smart TVs, and HD DVD players/recorders.

In today's mobile world, smartphones have the highest near-term purchase intent in 2014 in the mobile connected device category, with 27 percent of consumers' preference, according to a Consumers Electronics Association (CEA) tracking study conducted in May 2014. The CEA researches and explores what the future holds for the consumer tech industry. The second place in near-term purchase intent goes to TVs with 20 percent of consumers, followed by laptops with 18 percent, and tablets with 16 percent. The smartwatch industry will triple by 2015, and fitness and tracking devices are estimated to grow by 60 percent.

According to the CEA, 85 percent of the purchases are conducted in-store. This reveals a preference for testing, touching, and playing with the device before buying. The study also revealed that the three main reasons for consumers to buy electronics are:

  • To be entertained
  • To make life more enjoyable
  • To stay connected to the Internet

In the following video, the CEA explains what the future holds for the consumer tech industry:

{youtubenew|/embed/XW2NszX8yUM|315|560}

Smartphones are consumers' preferred near-term purchase because they are easy to operate and ultra-portable for everyone. Even if the goal of carrying a smartphone is as a medical device, as is the case for an increasing number of patients, it's the mobile device of choice by the majority, so far.

What this means to electronics manufacturers
The current increase in the use of electronic devices in industries such as healthcare and the use of health and fitness applications by consumers are making electronics manufacturers shift their products' focus, adapting their production to better cater to health and fitness monitoring of individuals.

According to a PwC consumer electronics global technology scorecard, consumer electronics manufacturers like Royal Philips, Toshiba, and Sony have joined other companies in the consumer electronics segment and have started investing in the medical equipment category. The chart below shows the companies' revenue in millions of dollars from Q2 2010 to Q1 2014.

Source: PwC

Source: PwC

A glimpse into the future
According to “Global Consumer Electronics Market Outlook 2015” from RNCOS Market Research Reports, the global consumer electronics market is expected to grow at a CAGR of more than 10 percent from 2012 to 2015. According to the report, China is currently dominating in many segments of the global consumers electronics industry and is expected to surpass the US in total market by 2014. The report also shows that India is now the fastest growing consumer electronics market.

Taken together, the data above shows that the consumer electronics market is growing at an amazing rate, and everyone in the electronics business ecosystem should be prepared for what that means for his or her company.

40 comments on “Future Growth Facing the Consumer Electronics Industry

  1. Ariella
    August 21, 2014

    85% of purchases made in store. I wouldn't have thought it was that high. But I'm very into shopping online myself.  If I can get it online and spare myself a trip to the store with no added cost, I'd always opt for the online convenience so long as I can wait for the item to get to me.

  2. Daniel
    August 22, 2014

    “85% of purchases made in store. I wouldn't have thought it was that high. But I'm very into shopping online myself.  If I can get it online and spare myself a trip to the store with no added cost, I'd always opt for the online convenience so long as I can wait for the item to get to me.”

    Ariella, I think its going to change because most of the customers prefer online trading due to various reasons. The first reason is convenience of trade from home/office through some clicks. Second is cost advantages and offers.

  3. Daniel
    August 22, 2014

    “According to the report, China is currently dominating in many segments of the global consumers electronics industry and is expected to surpass the US in total market by 2014. The report also shows that India is now the fastest growing consumer electronics market.”

    Susan, you are right about India and China. These two have the world's largest population and hence domestic market is huge.

  4. Susan Fourtané
    August 22, 2014

    Jacob, 

    Yes, indeed. And they are centers of great developement in many areas, which explains the huge growth. 

    -Susan

  5. Susan Fourtané
    August 22, 2014

    Ariella, 

    Don't forget we are talking only about electronics purchases here.

    In the case of electronics many people prefer testing and playing with the device before buying it, especially in the case of a new product.

    When switching brands, or to compare devices before making a decision many people also prefer to see and test the devices, especially if they are not familiar with the products and would like to ask something about them, or to get a demo. In many cases buying a new device implies a little investment.

    Do you also buy all your electronics online?  

    -Susan

  6. Susan Fourtané
    August 22, 2014

    Jacob, 

    “I think its going to change because most of the customers prefer online trading due to various reasons.”

    Do you think it is going to change drastically for the electronics purchases to modify that 85 percent from the recent report? 

    -Susan

     

  7. Ariella
    August 22, 2014

    @Susan yes, I do. I like to read the information and reviews online. Looking over the products online also makes it easier to compare prices at various retailers. Many years ago we went to computer stores for our first computer, but I think that all the others were ordered.

  8. Susan Fourtané
    August 24, 2014

    Ariella, 

    Yes, there are many advantages to comparing products online and lotsof information and reviews available that help. However, some people still want to go and see the product in person. 

    The results showing that 85 percent of people prefer to get their electronics from a shop is recent from just a few months ago, from May to be precise. 

    -Susan

  9. Susan Fourtané
    August 24, 2014

    Another interesting fact is that emerging product categories will grow by 107 percent year-over-year in 2014 including 3D printers, Bluetooth wireless speakers, convertible PCs, health and fitness devices, smartwatches, and Ultra HD TV displays.

    All together, they are expected to contribute more than $6 billion to the overall consumer electronics industry in 2014 driving 65 percent of total industry revenue growth despite representing less than three percent of the entire consumer electronics industry. 

    -Susan

     

  10. Daniel
    August 25, 2014

    “Do you think it is going to change drastically for the electronics purchases to modify that 85 percent from the recent report? “

    Susan, not drastically, gradually.

  11. Daniel
    August 25, 2014

    “Yes, indeed. And they are centers of great developement in many areas, which explains the huge growth. “

    Susan, right. availability of manpower, skilled labors and supporting by huge internal markets are the supporting factors.

  12. Houngbo_Hospice
    August 25, 2014

    @Ariella: Nowadays, it is common sense to read users reviews about a product before committing to buying it. That is what I usually do.

  13. Ariella
    August 25, 2014

    @Hospice_houngbo Great minds think alike, don't we?

  14. Susan Fourtané
    August 25, 2014

    HH, 

    You're back. 🙂 How nice. 

    Yes, it's always useful to read reviews. Where do you usually get your electronics, online or from a store? 

    -Susan

  15. Susan Fourtané
    August 25, 2014

    Jacob, 

    Where do you usually get your electronics, online or from a store?  

    -Susan

     

  16. Daniel
    August 26, 2014

    “Where do you usually get your electronics, online or from a store?  “

    Susan, most of the time online.

  17. Susan Fourtané
    August 26, 2014

    Jacob, 

    I suppose most of us here get pretty much of everything online. probably that 85 percent who prefer purchasing their electronics in a store are less tech people.

    So yes, as you say, it will gradually be changing. It would be nice to conduct a poll about this. 

    -Susan 

  18. Himanshugupta
    August 27, 2014

    I think that India and China are potential market because the penetration of the high end consumer device is still quite low as compared to the developed market. Also the income levels in India and China is increasing so people have more spare money to spend on consumer electronics.

  19. Daniel
    August 27, 2014

    “I suppose most of us here get pretty much of everything online. probably that 85 percent who prefer purchasing their electronics in a store are less tech people. So yes, as you say, it will gradually be changing. It would be nice to conduct a poll about this. “

    Susan, you are right. Only mid segment and below peoples prefer to walk to store for a purchase.

  20. Susan Fourtané
    August 28, 2014

    Jacob, 

    I think it has more to do with how much involved people are with technology, how knowledgable they are, how comfortable they feel with making an important purchase online, how much they can understand by themselves the tech specifications, etc.

    There are many things that can influence a person to decide to make an eletcronics purchase online or in a store.

    I would like to see stats about the reasons the 85 percent had to make an in-store purchase. 

    -Susan

  21. Susan Fourtané
    August 28, 2014

    Himanshu, 

    Yay! You're back. 😀 

    The income level is an important point to mention. And yes, all that region is seeing rapid advancement in many sectors. 

    -Susan

  22. Daniel
    August 28, 2014

    “I think it has more to do with how much involved people are with technology, how knowledgable they are, how comfortable they feel with making an important purchase online, how much they can understand by themselves the tech specifications, etc. There are many things that can influence a person to decide to make an eletcronics purchase online or in a store.”

    Susan, I think fear for online fraud may be a major reason. Eventhough they are good with e commerce sites; fear about payment systems, after sale services etc may be the reasons.

  23. Daniel
    August 28, 2014

    “I think that India and China are potential market because the penetration of the high end consumer device is still quite low as compared to the developed market. Also the income levels in India and China is increasing so people have more spare money to spend on consumer electronics.”

    Himanshu, I think the primary reason is huge domestic market and increased purchasing power.

  24. Susan Fourtané
    August 28, 2014

    Jacob, 

    True. After sales customer service may be one big reason. Major eCommerce sites are safe, but maybe local payment systems you mean?

    -Susan   

  25. ahdand
    August 28, 2014

    @susan: Yes after sale customer service is vital but still if its eCommerce how do you go for the local payment method ? 

  26. ahdand
    August 28, 2014

    @susan: Well that's a good sign indeed. A positive sign for other parts and regions as well. 

  27. Susan Fourtané
    August 28, 2014

    Nimantha,

    “if its eCommerce how do you go for the local payment method ?”

    What do you mean? :/ I was talking about ebanking before. 

    -Susan

  28. Himanshugupta
    August 31, 2014

    Another problem with most of the e-commerce sites is managing supply chain and mode of payment. Large number of e-commerce sites now a day are not profitable and are mainly in fight to gain as much market shares as possible. 

  29. ahdand
    August 31, 2014

    @himanshugupta: You should encourage users more to go online and pay. Must be transparent on the transactions. Then the users will feel confident. 

  30. Susan Fourtané
    August 31, 2014

    Himanshu, 

    What kind of ecommerce sites are you referring to? Of course there will always will non-profitable ecommerce sites which lack good management, as there are also non-profitable businesses out of the e-world.

    That doesn't mean that there are not other very successful ecommerce sites. There are plenty of them. 

    What is the problem with payment that you say? Customers pay at the time of the order, so where is the problem with the business getting the payment? 

    -Susan

  31. Daniel
    September 1, 2014

    “True. After sales customer service may be one big reason. Major eCommerce sites are safe, but maybe local payment systems you mean?”

    Susan, about online payment system

  32. Daniel
    September 1, 2014

    “Another problem with most of the e-commerce sites is managing supply chain and mode of payment. Large number of e-commerce sites now a day are not profitable and are mainly in fight to gain as much market shares as possible. “

    Himanshu, most of the ecommerce sites work just like as a platform provider on commission basis. They may not have a common ware house or shipping facility. They maintain only the online site and payment system. So individual companies can list their products for selling and once the order is placed; they use to courier directly from their own facility.

  33. Susan Fourtané
    September 1, 2014

    Jacob,

    What about online payment? 

    -Susan

  34. Daniel
    September 2, 2014

    “What about online payment? “

    Susan, it's a part of platform provider obligations.

  35. Susan Fourtané
    September 2, 2014

    Jacob, 

    What I am asking is why you said online payment is a problem. How do you expect to pay when you purchase a product online? Could you explain why you say it is a problem? 

    -Susan

  36. Daniel
    September 3, 2014

    “What I am asking is why you said online payment is a problem. How do you expect to pay when you purchase a product online? Could you explain why you say it is a problem? “

    Susan, COD (Cash on Delivery). Most of the non technical peoples are worried and scared to use their accounts online because of hacking and fraudulent activities. They prefer to swipe the card on POS terminals while delivery or COD.

  37. Susan Fourtané
    September 3, 2014

    Jacob, 

    “Most of the non technical peoples are worried and scared to use their accounts online because of hacking and fraudulent activities. They prefer to swipe the card on POS terminals while delivery or COD.”

    Well, that brings us to the initial point of discussion about why still today 85 percent of electronics purchases are in-store rather than online. 😀 You just got now the perfect answer.

    Now, about the other 15 percent, most likely comes from places where online shopping is safe, fast, reliable, and it let's you shop from anything between pizza to a broadband connection (I ordered a mobile broadband connection online yesterday).

    So, I purchase everything online if there is the online option, but I do understand that some people prefer to take the time to travel to the store in question, talk to a human being, touch the product before making a decision, and walk out from the story with a physical bag with the new product having chosen a method of payment in which they trust.

    But, as you said, things will change. 

     

    -Susan    

  38. Daniel
    September 4, 2014

    Most of the non technical peoples are worried and scared to use their accounts online because of hacking and fraudulent activities. They prefer to swipe the card on POS terminals while delivery or COD.”

    Well, that brings us to the initial point of discussion about why still today 85 percent of electronics purchases are in-store rather than online. 😀 You just got now the perfect answer.”

    Susan, so mean that 85% peoples are coming to this category (non technical peoples )?

  39. Susan Fourtané
    September 4, 2014

    Jacob, 

    No. I didn't mean that. You are saying they are non-technical people. I just say the 85% just prefer to buy their electronics in a store instead of online. Being technical, or not has nothing to do with this. It's just a matter of shopping preference and shopping experience. 

    I talk about this: 

    In today's mobile world, smartphones have the highest near-term purchase intent in 2014 in the mobile connected device category, with 27 percent of consumers' preference, according to a Consumers Electronics Association (CEA) tracking studyconducted in May 2014. The CEA researches and explores what the future holds for the consumer tech industry. The second place in near-term purchase intent goes to TVs with 20 percent of consumers, followed by laptops with 18 percent, and tablets with 16 percent. The smartwatch industry will triple by 2015, and fitness and tracking devices are estimated to grow by 60 percent.

    According to the CEA, 85 percent of the purchases are conducted in-store. This reveals a preference for testing, touching, and playing with the device before buying. 

    -Susan

  40. Daniel
    September 5, 2014

    “No. I didn't mean that. You are saying they are non-technical people. I just say the 85% just prefer to buy their electronics in a store instead of online. Being technical, or not has nothing to do with this. It's just a matter of shopping preference and shopping experience. “

    Susan, thanks for the clarification. This 85% statistic is global trend or specific to certain regions.

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