CE Industry Facing Less Robust 2011 Sales

Even with strong sales expected this Black Friday, the global consumer-electronics industry will grow revenue a meager 1.5% for the full year versus 2010, according to a revised forecast from research firm IHS, which cited particularly weak LCD TV and MP3 player shipments.

CE revenue in 2011 will amount to $357.3 billion, compared with $351.9 billion last year, according to the IHS iSuppli Consumer Platforms Market Tracker report published this week. That's off 77% from IHS's previous forecast of 6.4% growth for the year.

The firm attributed the slowdown in CE spending to ongoing economic woes around the world. "While market conditions are improving in the fourth quarter because of Black Friday and the rest of the holiday-selling season, this three-month respite won't be sufficient to salvage the entire year," IHS principal analyst for consumer platforms Jordan Selburn said.

A major factor contributed to the IHS's lower forecast is the slowing of the LCD TV space, which accounts for nearly 30% of CE sales. The firm anticipates LCD TV revenue in 2011 to reach $104 billion instead of $110 billion, although it added that the segment "retains solid momentum going forward."

Many TV manufacturers cut back on shipment plans for 2011 and cut panel orders in the third quarter, resulting in larger price declines for those core panels, according to NPD Group's DisplaySearch. That indicates retail price points for the holiday season will be lower, and could mean some product shortages in the category, the firm said.

According DisplaySearch's quarterly global TV shipment and forecast report issued Monday, total TV market shipments were up 3.7% year-over-year in the third quarter of 2011 to 62 million units -- a rebound from a 1% decline in Q2 and a 1% increase in Q1.

"End-market demand has been weak in North America during most of 2011," DisplaySearch director of North America TV research Paul Gagnon said. "However, consumers, still quite sensitive to pricing, may be delaying purchases until the holidays when they expect to see the best deals. Consumers have learned this practice from observing previous holiday-selling periods."

For the first nine months of 2011, 3DTVs in North America accounted for only about 8.5% of total unit shipments, according to DisplaySearch. The firm cited consumers' unwillingness to pay any significant premium for 3D, and expects U.S. retailers to not heavily promote 3DTVs during the upcoming holiday-selling season. Rather, retailers will focus on larger screens sizes and "strong value pricing."

According to IHS, the lowered overall 2011 consumer-electronics forecast comes after a relatively strong 2010, during which the CE market grew 7.9% to $351.9 billion. IHS expects the industry to see moderate growth of about 4% during the next two years before slowing down in 2014 to $396.6 billion and then declining slightly in 2015 to $395.7 billion.

Meanwhile, in July, the Consumer Electronics Association raised its expectations for 2011 U.S. sales. The trade group forecast industry revenue to increase 5.6% year over year, compared with its January projection of 3.5% growth. The CEA's figures, based on estimates from manufacturers, projected $190 billion in U.S. sales for the year, growing to $197 billion in 2012.