Bleak YoY growth seen for CE market

The global consumer electronics industry is forecast to grow revenue of 1.5 percent YoY, a 77 percent adjustment from a previous estimate of 6.4 percent. This is according to IHS Inc. that also mentioned poor LCD TV and MP3 player shipments.

CE revenue for the year will amount to $357.3 billion, compared with $351.9 billion last year, based on the IHS iSuppli Consumer Platforms Market Tracker report. The firm attributed the slowdown in CE spending to the relentless economic woes around the world. "While market conditions are improving in Q4 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," stated Jordan Selburn, IHS principal analyst for consumer platforms.

A major factor that contributed to the IHS' lower forecast is the slowing of the LCD TV space that accounts for nearly 30 percent of CE sales. The firm anticipates LCD TV revenue this year 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 the year and cut panel orders in Q3, 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 added.

According DisplaySearch's quarterly global TV shipment and forecast report issued Monday, total TV market shipments were up 3.7 percent YoY in 3Q11 to 62 million units—a rebound from a one percent decline in Q2 and a one percent increase in Q1.

"End-market demand has been weak in North America during most of 2011," reckoned Paul Gagnon, DisplaySearch director of North America TV research. "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 the year, 3DTVs in North America accounted for only about 8.5 percent 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 CE forecast comes after a relatively strong 2010, during which the CE market grew 7.9 percent to $351.9 billion. IHS expects the industry to see moderate growth of about four percent during the next two years before slowing down in 2014 to $396.6 billion and then declining slightly in 2015 to $395.7 billion.