2006 Was Tech And Gadget Boom Year

Author Chinavasion Marketing 10.1.2007. | 12:33

Will consumer demand for household electronics and entertainment gadgets stay high during 2007? This is the question electronics manufacturers are pondering, and our view would be that with ever falling prices and ever shorter design generations, things are only just starting to heat up!

LCD TV sales grew 160 percent in 2006 in the U.S., as consumers continue to buy more and more technology devices for their homes. Despite concerns of a general slowdown in sales of consumer electronics products, sales were up just over 13 percent last year, bringing in $145.7 billion wholesale for manufacturers.

Homes in the U.S. now have 25 pieces of consumer electronics products, compared to just 1.3 in 1975. And people are setting more money aside to buy devices than ever before. Households were on average spending $1,500 in 2006 on new gadgets, and this is expected to rise to $2,000 this year.

“Consumers are adopting new technology faster than ever,” said Wargo. This in part is down to cost reductions. The price for DVD players last year fell 54 percent, 50-in. plasma TVs dropped 32 percent and sub-four-megapixel cameras fell by 40 percent.

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A news article at ZDnet is less upbeat:

Sales of U.S. consumer electronics rose 13 percent in 2006 to $145 billion, the Consumer Electronics Association said, while Western Europeans spent 18 percent more on consumer electronics in the first half of 2006 according to GfK, a market research group.

But operating profit margins at many major vendors remain below savings interest rates, despite soaring demand for flat TVs, mobile phones, music players, navigation systems and other gadgets.

Profit margins as a percentage of full-year revenue at Sony, Samsung , Panasonic, Sharp, Philips and LG Electronics have not been above 6 percent for the last few years, according to data compiled from company earnings releases by Reuters.

The average profit margins those six companies derive from consumer electronics products hovered around 2 percent over the 3 to 10 years for which data is available.

“There’s a tremendous amount of supply and competition,” said Jon Erensen, a sector analyst at market research group Gartner.

By supply and competition they are probably referring to non-brand electronics from China. Chinavasion wholesale electronics are proud to be part of the competition!

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Author Chinavasion Marketing 10.1.2007. | 12:33
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