Consumer electronics sales ‘set to jump’

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Holiday spending on consumer electronics is expected to jump 9 per cent this year, with digital music players and flat-panel TVs high on many shopping lists, according to industry research.

But tumbling retail prices and wafer-thin margins mean manufacturers may not have much to celebrate, say IBM and the US-based Consumer Electronics Association in separate research reports.

Revenues from sales of consumer electronics in the US are expected to increase 9 per cent during the holiday shopping season, according to the CEA.

“Despite concern about the overall economy, consumers intend to purchase, as well as hope to receive, a plethora of consumer electronics gifts this holiday season,” said Sean Wargo, director of industry analysis at the CEA.

The CEA’s annual Holiday Spending Survey tracks the consumer electronics devices consumers intend to give as gifts, as well as those they hope to receive. Digital music players topped both lists this year displacing the digital camera at the top of last year’s gift list and the plasma TV at the top of last year’s wish list. The survey showed consumer interest in buying a portable digital music player has risen eight percentage points from 2004, to 28 per cent.

Revenues from sales of digital music players including the hugely popular iPod players from Apple Computer, are up 105 per cent so far this year, according to CEA Market Research.

The CEA’s findings are supported by two studies published this week by IBM which found 55 per cent of US consumers plan to spend some of their holiday budget on consumer electronics and more than half plan to spend at least $500 on consumer electronics products.

Still, tight margins plague the electronics industry with profit margins averaging about 3 per cent. As a result, IBM says many manufacturers are exploring new
markets and business models, including after-sales services.

Significantly, two-thirds of people who plan to buy electronic gadgets say they are looking for multi-function or “convergence” products – for example, mobile phones that also function as digital cameras or digital music players.

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