Euromonitor - Consumer Electronics Global Trends and Analysis - Sep 2012

CONSUMER ELECTRONICS GLOBAL TRENDS AND ANALYSIS
September 2012
INTRODUCTION
GLOBAL TRENDS
COMPUTERS AND PERIPHERALS IN-CAR ENTERTAINMENT
IN-HOME CONSUMER ELECTRONICS

PORTABLE CONSUMER ELECTRONICS RETAIL CHANNEL DISTRIBUTION
INTRODUCTION
Scope
Disclaimer Much of the information in this briefing is of a statistical nature and, while every attempt has been made to ensure accuracy and reliability, Euromonitor International cannot be held responsible for omissions or errors. Figures in tables and analyses are calculated from unrounded data and may not sum. Analyses found in the briefings may not totally reflect the companies opinions, reader discretion is advised.
Consumer Electronics
Computers and Peripherals
In-Car Entertainment
In-Home Consumer Electronics
Portable Consumer Electronics
LCD TVs, smartphones and tablets are expected to continue to enjoy dynamic growth in the forecast period despite global sales of consumer electronics remaining stagnant, due to economic uncertainty, in particular in Western Europe. Laptops remain the productivity tool of choice for businesses, with improvements in terms of cost, battery life and weight leading to greater rivalry with the increasingly popular tablets.
Euromonitor International
CONSUMER ELECTRONICS: TRENDS AND ANALYSIS
PASSPORT 3
INTRODUCTION
Key findings
Slowing growth in consumer Global volume and value sales continued to post positive growth in 2011, but electronics at a slower pace than in 2010. Recovery in business 2010 and 2011 were years of recovery for business computer demand after demand stalls in computers the global recession; however, continued macro-economic instability will stifle further growth over the forecast period. Increasing smartphone sales expected to drive service revenue Competition intensifies in tablets Diverging trends in in-car entertainment in developed and emerging markets LCD TVs stagnate despite continued growth in emerging markets Lack of technological innovations Mobile telecommunications providers in many emerging markets have experienced difficulties generating profits, despite rapidly growing subscriber bases. This is likely to change with the proliferation of smartphones and through the services-driven revenues. With an increasing number of competitively priced Android-based tablets entering the market in 2012 and with Windows 8 expected to be launched at the end of 2012, Apple Inc will face increasing competition and shares erosion. Sales of in-car entertainment are expected to grow in emerging markets while declining in developed ones. Growing differences in the composition of the automotive markets in terms of pre-installed features is behind this divergence. As the digital switchover in much of the world is close to completion, the demand for LCD TVs has been shifting to that as a smaller secondary TVs in the home. Therefore, there is unlikely to be significant further global volume growth after 2012. Unit prices of Consumer Electronics is expected to fall over the forecast period, with stronger volume growth over value growth performance due to a lack of critical new technological innovations to drive price premiums.
PASSPORT 4
INTRODUCTION
GLOBAL TRENDS

GLOBAL TRENDS
Consumer electronics growth stagnates

After a robust 2010 when consumer electronics was recovering from the 2009 recession, sales in 2011 continued rising but at a slower pace. The market drivers remained relatively unchanged, with global sales of LCD TVs, smartphones, and portable computers driving both volume and value growth. Global Consumer Electronics Retail Sales 2009-2016
4,500 4,000 Retail volume (mn units) 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2009 2010 2011 2012 2013 2014 2015 2016 900 800 700 600 500 400 300 200 100 0
Retail volume (mn units)
Retail RSP (US$ bn, fixed 2011 exchange rates)
PASSPORT 6
Retail value (US$ bn)
GLOBAL TRENDS
Regional composition continues to shift

Regional Distribution of Global Consumer Electronics Value Sales 2012/2016
900
800
Western Europe
700 US$ billion RSP
The growing importance of emerging countries in the global consumer electronics market will make generating value sales growth a challenge, as volume sales growth will come from pricesensitive consumers, primarily in Asia Pacific and Latin America. While global value will remain largely stagnant over the long run, sales are expected to rise dynamically in Asia Pacific and Latin America, where economic growth is likely to be strongest. Flat volume sales and declining unit prices will drive down revenues in North America and Western Europe. Economic instability in Western Europe will hamper economic growth in the Middle East and Africa and Eastern Europe. Consequently, growth in emerging markets in those regions is expected to lag behind Asian and Latin American markets.
North America
600 Middle East and Africa 500 Latin America 400 Eastern Europe 300 Australasia 200 Asia Pacific 100
0 2012 2016
PASSPORT 7
GLOBAL TRENDS
Telecommunication services gaining importance

The global consumer electronics market in 2011 and 2012 was driven largely by emerging markets like Brazil, India, Philippines, Indonesia and China. With large populations, growing purchasing power and improving communication infrastructure, consumers in emerging markets are increasingly able to purchase mobile devices and services. This, in turn, has been driving growth in mobile telecommunications services and internet user numbers, a trend that is likely to continue to drive sales of mobile devices for the foreseeable future. Global Performance of Key Socio-economic Drivers 2008-2016
20 18 16 % y-o-y growth 14 12 10 Annual disposable income (US$, constant 2011 prices) Consumer expenditure on telecommunications services (US$, constant 2011 prices)
8
6 4 2 Mobile telephone subscriptions 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 Internet users
PASSPORT 8
GLOBAL TRENDS
Recovery in business demand stalls

There was strong growth in computer sales to businesses in 2010, with volume sales exceeding predownturn level as companies that held off hardware upgrades in 2008 and 2009 in the face of economic uncertainty finally proceeded with their refresh cycle of computers. Value sales of computers (business) declined in 2011, despite volume growth. This was largely due to the need to continue upgrading PCs meeting tightening IT budgets in the face of economic uncertainty. Moving forward, expenditure on computer upgrades for businesses is expected to remain relatively flat, with the upcoming Windows 8 launch providing a minor uplift in volume growth in 2014. Global Computer (Business) Sales 2008-2016
15 10 % y-o-y growth 5 0 -5 -10 -15 -20 2008 2009 2010 2011 2012 2013 2014 2015 2016 Volume
MSP (US$, constant 2011 prices)
PASSPORT 9
GLOBAL TRENDS
Low income not a deterrent on smartphones sales

Over the review period, the proliferation of mobile phones in emerging markets was one of the major driving forces in the global consumer electronics market. However, spending on services remained closely tied to disposable incomes. This has resulted in low margins and earnings for mobile operators in emerging markets, despite growing numbers of mobile phone subscribers. This is set to change as smartphones become an increasingly large part of the global mobile phones market. Growth in telecom revenues was largely driven by a rise in subscriber numbers, which increased in line with incomes until 2010; however, growing demand for mobile data has led to spending on telecommunication services rising more quickly than disposable income. Smartphones to Drive Spending on Services 2008-2016
7 6 % y-o-y growth 5 4 3 2 1 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 90 80 70 60 50 40 30 20 10 0 % of mobile phones Consumer expenditure on telecommunications services (US$, constant 2011 prices)
Annual disposable income (US$, constant 2011 prices)
Smartphones as a % of mobile phone volume sales
PASSPORT 10
GLOBAL TRENDS
Emerging markets driving in-car entertainment growth

While sales of in-car entertainment is predicted to decline in developed markets over the forecast period, positive growth is expected across many emerging markets. This divergence is a product of an increasing disparity in passenger fleet composition in the two market types: Developed markets slowdown in vehicle sales due to economical uncertainty, combined with the rising popularity of mobile connected devices, has driven car manufacturers to offer sophisticated factory-installed (OEM) entertainment systems even in entry and midpriced vehicles. Thus, reducing the need for car owners to upgrade to aftermarket in-car entertainment products. In emerging markets, an increasing number of households are able to afford their first car, and these usually come with no or are fitted with basic entertainment equipment, creating a significant opportunity for aftermarket products. In view of the current economical climate, drivers are holding on to their existing cars, which also fuels sales of aftermarket products.
In-Car Entertainment: Retail Volume Sales Growth by Region 2011-2016

Western Europe
North America
Eastern Europe
Australasia
Middle East and Africa
Asia Pacific
Latin America -10 -5 0 2011-2016 CARG (%) 5 10
PASSPORT 11
GLOBAL TRENDS
3D fails to lift LCD TVs revenue growth

With a large part of global households having migrated to digital televisions by 2012, growth in LCD TVs volume sales is reliant on low-income consumers in emerging markets and replacement purchases by lowmiddle class consumers in developed markets. Despite their early promise, 3Denabled TVs are not gaining traction due to the lack of compelling content. Nonetheless, manufacturers are still pushing out 3D functionality in high- to midrange digital TVs in a bid to revive flagging revenues.
% y-o-y growth
Global Growth in LCD TVs 2009-2016

35%
30%
25%
20%
15%
10%
5%
0%
Despite continued volume growth, LCD TV revenues are likely to remain flat over the forecast period as 3D is relegated to being yet another feature, rather than a selling point.
-5%
-10% 2009 2010 2011 2012 2013 2014 2015 Retail volume 2016
Retail RSP (US$, constant 2011 price)
PASSPORT 12
GLOBAL TRENDS
Asia Pacific overtook Western Europe in Internet retailing

While the overall consumer electronics market is becoming increasingly reliant on emerging markets in Latin America and Asia Pacific, internet retailing of consumer electronics in these markets will continue to lag behind that of North America. That said, the growing number of internet users has and will continue to drive growth in internet retailing sales in Asia Pacific (primarily by China). This has seen Asia Pacific overtake Western Europe in 2011. For the other emerging markets like Latin America and Africa, poor broadband infrastructure, low banked populations, lack of delivery routes to rural areas and security concerns will compromise the expansion of internet adoption. This will be particularly true of high value products like televisions.
Internet Retailing Sales of Consumer Electronics 2006-2011

350
300
250
200
150
100
50
0 2006
2007
2008
2009
2010
2011
North America
Asia Pacific
Western Europe
Rest of the world
PASSPORT 13
INTRODUCTION
GLOBAL TRENDS

COMPUTER AND PERIPHERALS
Desktops (Business) still popular for corporations

Desktops lower prices and ease of upgrade and repair makes them the preferred computing device among companies and this is expected to remain so right up to 2016. Desktops are also less prone to theft than laptops. With the replacement cycle of desktops being typically longer than laptops, their use can help companies trim IT expenditure in times of austerity. While sales of laptops are significantly lower than desktops for businesses, small-medium enterprises (SMEs) are also purchasing their laptops in the retail market rather than directly from PC manufacturers or through their business partners catering to corporations. Despite the growing popularity of tablets such as the iPad, companies have been slow to offer tablets to their employees. However, as companies are increasingly moving to web-based applications like email and even online data storage and investing in virtual desktop infrastructure, this will allow employees to use their personal mobile devices like tablets and smartphones for work purposes. Thus, companies do not need to invest extensively in hardware or pay for mobile or wireless services for their employees. Global Business Volume 2011-2016
200 180 160 140 120 100 80 60 40 20
0 2011
2012
2013
2014
2015
2016
Tablets and other portable computers Netbooks Laptops Desktops
PASSPORT 15
Changes expected in tablets in 2013

Tablets is another key product that is driving demand for mobile data services. The market has been one largely dominated by Apple Inc, with competitors like AsusTek Computer Inc and Samsung Corp now contesting strongly with Android-based products. For instance, despite the dominance of Apple Inc in US with a 67% volume share, Amazon Inc's attractively priced Kindle Fire managed to carve out a 14% volume share in 2011. The is due to subsidising the cost of tablets via content sales, also found within selected Western Europe markets, like the UK and France. This is however not common in other markets due to the lack of legitimate content. Tablets popularity is generally limited to developed markets, with consumers preferring smartphones in emerging markets. The lack of wireless access limits the success of tablets in emerging markets, as tablets require wireless connections for app installations. That said, along with the growing popularity of Android-based products, the release of Windows 8 at the end of 2012 will stir up more competition, as hardware manufacturers are eager to ship Windows 8 tablets, which are expected to be higher priced than Android tablets.
Tablets by OS 2011-2013
120
100
80
60
40
20
0 2011 iOS Android 2012 Windows 2013 Others
PASSPORT 16
iPad propels Apple to computers market leadership in 2011

Apple Inc has successfully ascended into computers market leadership position in 2011, by volume terms. With every generation of iPad, Apple has upped the ante in processing power and screen resolution, while maintaining its price and battery performance. The brand equity that Apple commands also means that consumers expect other manufacturers to price their tablets lower than the iPad. Apples dominance in smartphones and tablets and having a single OEM (original equipment manufacturer) gives the company a strong position in price negotiations for key components and the finished products. As such, other major manufacturers have been unable to compete on prices. The popularity of Apple Incs brand and ecosystem has been a major contributing factor to declining sales of brands like HP, Acer and Dell, which have had little success in tablets. Top Five Computer Manufacturers by Retail Volume 2008-2011
20 18 % volume share 16 14 12 10 8 6 4 2 0 2008 2009 2010 2011 Lenovo Group Ltd Dell Inc Hewlett-Packard Development Co LP Acer Inc Apple Inc Retail volume (mn units) 50 45 40 Tablets Laptops Desktops
Apple Inc Product Mix in Computers 2008-2011
35
30 25 20 15 10 5 0 2008 2009 2010 2011
PASSPORT 17
Peripherals affected by tablets and cloud computing

Cloud computing and the increasing availability of mobile and fixed lined internet access across the world have fuelled demand for portable computers and diminished the need for external storage, as well as output devices like printers and monitors. With an increasing number of affordable cloudbased storage services for media and documents, this trend is expected to accelerate in the forecast period. The proliferation of tablets is likely to further diminish the need for storage and output peripherals, as these devices will be built to be reliant on cloud services and compatible with televisions for homebound use. Furthermore, tablets are built around a touchscreen interface which will diminish the need for input peripherals. Therefore, sales of monitors, printers and other computer peripherals will continue to fall.
Retail Attachment Rates in Peripherals (World) 2008-2016

300 Units per 100 computers sold 250 200 Printers 150 100 Monitors
50
0 2008 2012 2016
Other computer peripherals
PASSPORT 18
INTRODUCTION
GLOBAL TRENDS

IN-CAR ENTERTAINMENT
Automotive market megatrends

The global in-car entertainment market is growing in emerging markets while declining across developed markets. This divergence is due to differences in how the automotive market is emerging in those market groups: In the emerging markets, many households are able to afford a car for the first time, due to recent income growth. This is driving sales of late-model, entry-level vehicles with basic, if any, factory installed entertainment equipment. In developed markets, the 2008-2009 recession caused a severe decline in new car sales, as consumers had restricted access to financing. This caused sales of used vehicles to rise sharply, and with fleet service lives extended, the overall fleet size in those markets remained largely stable. The on-going recession, combined with a slow recovery, particularly in Japan and the UK, resulted in car manufacturers turning to factory installed incar entertainment to spur sales. An increasing number of brands are offering advanced entertainment systems, with an increasing focus on smartphone compatibility.
Passenger Cars in Use in Key Markets 2006-2011

China Indonesia Vietnam India Mexico Russia Brazil US
Japan
United Kingdom -5 0 5 10 15 20 25 30
2006-2011 CARG (%)
PASSPORT 20
Focus on developed markets

In-car entertainment in developed markets faces competition from smartphones and factory-installed entertainment systems. The proliferation of GPS-enabled smartphones has been driving down demand for in-car navigation. The pressure may ease as mobile data network crowding brought on by this proliferation leads to slow speeds and discontinuation of unlimited use data plans, thereby making navigation and other cloud services less popular. Forecast Volume Growth 2011-2016
Japan 0 -10 -20 % -30 -40 -50 In-dash media players In-car navigation In-car speakers North America Western Europe
However, competition from factory-installed units in cars will continue depressing demand for aftermarket electronics, as factory entertainment systems are increasingly becoming the focal point of many marketing campaigns. Car manufacturers are using the popularity of smartphones and other connected devices to drive sales of new cars with enhanced connectivity features. While there is a number of car manufacturer-proprietary smartphone interface standards, as well as an emerging open standard, MirrorLink, the theme remains the same: integrating key features of smartphones into the vehicles entertainment system. The focus is on allowing users to connect their smartphones and navigate the content on their smartphones using on-wheel console buttons and touchscreens on the indash media players. However, this type of system also transmits vehicle performance and maintenance data back to the user and/or the smartphone. This level of integration into critical vehicle systems makes newer factory-installed entertainment systems hard to replace. Therefore, sales of aftermarket in-car entertainment are expected to fall in all developed markets, with declines in Western Europe exacerbated by macro-economic difficulties.
PASSPORT 21
Focus on emerging markets

The automotive markets of emerging economies have provided fertile ground for aftermarket in-car entertainment. These markets are seeing high sales of late-model economy class vehicles. Upgraded speakers, in-dash media players and, especially, in-car navigation units give consumers a way to upgrade their vehicles post-purchase at a relatively low cost compared to factory-installed options.
China is the main emerging market, with the largest and fastest growing passenger fleet. Within China, growth is expected in all categories except in-dash audio players, sales of which are expected to decline due to rising competition from increasingly affordable in-dash video players. New Registration of Passenger Cars 2007-2011
15 Passenger cars (mn units) 2007 12 2008 2009 2010 2011
0 China USA Eastern Europe Mercosur India
Note: Mercosur: Includes Argentina, Brazil, Chile, Uruguay and Paraguay
PASSPORT 22
INTRODUCTION
GLOBAL TRENDS

Televisions still critical to manufacturers

Globally, televisions are the main volume and value driver for in-home electronics, and are likely to continue dominating sales over the forecast period. Televisions remain in demand, despite growing presence of online video, as much of the broadcast programming is not readily available online. The emergence of the internet as the preferred distribution channel, be it legal or otherwise, for video content is making video players an increasingly niche category, as more people choose to download or stream videos online. The availability and popularity of portable media players and mobile phones with audio playback capabilities is also affecting utilisation rates and replacement cycles. Global Volume Sales 2012-2016
450 200 180
400
350 Retail volume (mn units) Video Players 300 250 200 150 Televisions 100 50 Home Audio and Cinema Retail RSP (US$ bn, constant 2011 prices)
160
140 120
100
80 60 40 20 0
0
2012 2014 2016
2012
2014
2016
PASSPORT 24
New lease of life for televisions

In 2010, sales of digital TVs exceeded 199 million units, more than analogue TVs peak of 195 million units in 2004, as the talk of cordcutting affecting TV sales failed to materialise. Sales of digital TVs will continue to rise as the slimness of TV sets allows for their installation in bedrooms. In addition, there is strong demand in emerging markets like Brazil, India and China, driven by rising incomes and an increasing number of households. In a global Euromonitor survey, consumers ranked TV commercials (56%) as the most influential mode of marketing, ahead of new medias like the Internet (43%) and social media (34%). Further, consumers desire to be constantly connected is creating significant growth opportunities for Internet-enabled TVs. Global Retail Sales of Televisions 2003-2016
300 250 Retail volume (mn units) 200 150 100 50 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Digital TVs Analogue TVs
Digital Televisions by Network Connectivity 2011-2016

100% Retail volume (%)
80%
60% 40% 20% 0% 2011 2012 2013 2014 2015 2016
Internet-enabled TVs
Non internetenabled TVs
Note: Data based on researched markets
PASSPORT 25
New features like 3D features fail to raise television prices

As unit prices of LCD TVs started to decline especially since the 2009 recession, manufacturers looked to offering new features to drive value sales. However, consumers have proven largely unwilling to pay a price premium for either 3D or internet-enabled TVs, thus generating a situation where prices continue to drop.
3D TV was a focal point of various marketing campaigns in 2010 and 2011, but have met with little enthusiasm from consumers due largely to complexity of use and the lack of compelling content. By 2012, this feature became a standard feature on most high-priced models and is likely to spill over to lower price segments over the forecast period. Internet-enabled TV was a more promising technology feature and met with greater consumer enthusiasm. However, the industry largely failed to convey the benefits of internet-enabled TVs to consumers in order to capitalise on the initial interest. A message that might have resonated with consumers would be one centred on internet-enabled TV as a more efficient content distribution platform, especially for 3D content. Global Average Unit Prices 2011-2016
US$ (constant 2011 prices) 1,200 Retail volume (%) 100% 75% 50% 25% 0% 0 2011 2012 LCD TVs 2013 2014 Plasma TVs 2015 2016 China US Russia Non 3D-enabled UK Germany 3D-enabled
TV Sales by Type 2012
1,000
800 600 400 200
Note: Data based on researched markets
PASSPORT 26
Samsung leads in digital TVs while LG and Sony falters

Samsung Corps close relationships with retailers, especially in emerging markets, have allowed the company to strengthen its market leadership in digital TVs, with 20% of volume sales in 2011. Retailers play a critical role in influencing the customers in emerging markets, with front line sales personnel doing brand marketing. Samsungs marketing efforts are thus playing a critical role in gaining share. Samsung is expected to retain its leadership in 2012 and 2013, but may struggle to maintain its profit margins. This is because in Western Europe and the US, markets that contribute significantly to Samsungs profits, are experiencing demand fall. Company Retail Volume Sales 2009-2011
45 40 35 Million units 30 25 20 15 10 5 0 2009 2010 2011
20 15 % volume 10 5 0
Company Retail Volume Shares (%) 2009-2011
Sony Corp lost nearly two percentage points in market share in 2011 as the electronics giant struggled with profitability and embarked on a company-wide restructuring. The new direction set by Sonys new CEO to focus on margins will further affect Sonys market share in 2012 and 2013, with LG and Samsung standing to benefit from Sonys troubles.
2009 Samsung Corp
2010 LG Corp
2011 Sony Corp
PASSPORT 27
BD players struggle to compete with internet video

Global Sales of Video Players 2003-2016
120 Retail volume (mn units) BD Players
90
60 30 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
DVD Players
The popularity of the internet as a video distribution channel, and the rising availability of the internet in emerging markets have shrunk the potential market for video players. This makes it unlikely that BD players will ever have the same appeal that DVD players enjoyed over the review period. While DVD player sales will decline, they will not disappear entirely. Low-cost DVD players and discs will retain their appeal in emerging markets, where broadband access remains expensive. BD players will continue replacing DVD players in developed markets as many consumers have extensive DVD and BD disc collections.
Internet Users 2012 and 2016

3,500 3,000 Million 2,500
2,000
1,500 1,000 500 0 2012 Developed markets 2016 Developing markets
PASSPORT 28
Home cinema and speaker systems provide a ray of hope

Global Volume Sales by Category 2012-2016
25
22 Retail volume (mn units)
19
16
Simplicity and connectivity Digital media player docks have benefited from the proliferation of portable media players and smartphones. Global sales are predicted to grow until 2014, before flattening out. The simplicity of home cinema and speaker systems has made the product one of the most popular low-cost home audio solutions. global sales are expected to continue rising.
WINNERS 2012 2013 2014 2015 2016 LOSERS
13
10
Audio separates and speakers

Digital media player docks Hi-fi systems Home cinema and speaker systems Other home audio and cinema
Small audio systems Hi-fi systems and other home audio and cinema products, like portable radios, will continue to decline over the forecast period, as portable media players and smartphones becomes the audio source of choice for consumers, even at home. Audio separates remain a niche, despite integrating connectivity features, as consumers prefer the simplicity of home cinema and speaker systems.
PASSPORT 29
INTRODUCTION
GLOBAL TRENDS

PORTABLE CONSUMER ELECTRONICS
Smartphones driving demand

Growth in portable consumer electronics has been driven by smartphones, which has negatively affected portable players and, to a lesser extent, imaging devices. Smartphones have integrated many features previously performed by single function devices. Growth in smartphones has negatively impacted sales of cameras, camcorders, portable media players and in-car navigation. The deepest decline is expected in portable players, as smartphones increasingly offer large amounts of storage for music, and mobile network data connectivity enables consumers to access online music and video streaming services. Imaging devices have fared better, as camera manufacturers have introduced increasingly pricecompetitive interchangeable lens cameras as demand for low cost point-and-shoot models waned. However, the proliferation of video capture capabilities in cameras has been driving down sales of camcorders, sales of which are expected to continue declining over the forecast period. Global Sales of Portable Consumer Electronics 2012-2016
2,500
2,000 Retail volume (mn units)
1,500
1,000
500
0 2012 Smartphones Imaging Devices 2013 2014 2015 Feature Phones Portable Players 2016
PASSPORT 31
DSLRs and mirrorless interchangeable lens cameras drive value

As camera phones started to become more advanced, camera manufacturers turned to reducing prices of DSLR and mirrorless interchangeable lens cameras. which helped arrest the sharp unit price decline in the historical period. There is growing interest in photography, partially fuelled by the growth of social media sites and an increasingly awareness of the limitation of low cost cameras and smartphones inbuilt cameras under low light conditions. New families, particularly in emerging markets, are critical to digital cameras growth. Emerging markets with high birth rates are also the fastest growing camera markets in terms of volume sales, as parents are eager to capture high quality images of their growing children. Chinas new birth is low as compared to other emerging markets but the sheer number of its vast population propels the sales of digital cameras.
Increasing sales of cameras with advanced features have also hampered sales of camcorders, relegating camcorders to a niche category for video enthusiasts.
30 Per 000 inhabitants 25 20
Birth Rates 2011
15
10 5 0 India Indonesia China Philippines Brazil Malaysia Colombia Morocco Egypt Western Europe
PASSPORT 32
Portable players face challenging prospects

Global Volume Sales of Portable Players 2011-2016
80 Retail volume (mn units) 70 60 50 40 30 20 10 2011 2012 2013 2014 2015 2016 Portable MP3 Players Portable Multimedia Players Other Portable Media Players E-Readers
Sales of portable players face competition from smartphones and tablets. The threat from smartphones is greater as the retail prices are usually subsidised by telcos, making portable players expensive in comparison. Tablet users can also easily download media players and codecs online. E-readers is the only category with positive global growth potential, till 2014. North America remains the largest ereader market due to the good availability of e-book content. Consumers in Asia Pacific would rather spend on smartphones apps like games rather than e-books.
E-Reader Sales by Region 2011-2014

30 Retail volume (mn units) 25 20 15 10 Asia Pacific 5 0 2011 2012 2013 2014 North America Rest of the world
Western Europe
Eastern Europe
PASSPORT 33
Asia Pacific fuels smartphone growth

Of the 1.8 billion mobile phones predicted to be sold in 2016, more than 1.4 million units are expected to be smartphones. This translates to smartphones accounting for 80% of total mobile phone volume sales, as compared to 42% projected for 2012. Consumers switching over from feature phones to smartphones will be the main driving force in the market over the forecast period, primarily in emerging markets in Asia Pacific. Growth in global subscriber numbers is expected to continue, which will sustain demand for both feature phones and smartphones. Subscribers number are predicted to grow by over 1.3 billion in emerging markets between 2011 and 2016, driving global mobile phone volume sales to over 1.8 billion units in 2016. These new consumers are likely first to buy a feature phone, but as smartphones become increasingly affordable, the vast majority of even the poorest markets will migrate to low-cost smartphones by 2016. Global Volume Sales of Smartphones 2012-2016
1,600 Western Europe 1,400 North America 1,200 Middle East and Africa
Retail volume sales (mn units)
1,000
800
Latin America
600
Eastern Europe
400
Australasia
200
Asia Pacific
0 2012
2013
2014
2015
2016
PASSPORT 34
Android taking over the world

The race to cater to the next billion consumers who currently do not have mobile phones will see Android extending and consolidating its lead over other smartphone OS in the forecast period. The appeal of Android lies in the wide array of products, from ultra-low cost smartphones to super phones with processors as powerful as laptop computers, and its ability to allow manufacturers to create their own specific software layers. iOS being limited to the iPhone will hinder its growth in the burgeoning smartphone market, even though Apple is expected to retain its loyal followers and gain new customers in emerging markets, fuelled by a growing middle class. Smartphones by OS in the 10 Largest Markets in 2013
South Korea Japan China India Italy Russia France Germany USA Brazil 0% 20% 40% 60% 80% 100%
By 2013, the Windows Phone OS is expected to gain a foothold in many emerging markets, where many consumers will be buying a smartphone for the first time. The OS is user-friendly and available on a growing range of Nokia-branded smartphones. Windows Phone is expected to be very popular in Brazil and Egypt, where Nokia phones have historically been particularly popular.
Retail volume sales (%) Android iOS other
PASSPORT 35
iPhone under intense pressure from Samsung

Apple Inc (19% of global volume in 2011) fought off an aggressive challenge by Samsung Corp (18%) in 2011 and remained the market leader in smartphones. Samsung showed its determination to unseat Apple in 2012, when it launched its flagship product, Galaxy S III, months ahead of iPhone 4Ss successor, which remains unavailable as of July 2012. The early launch date will help Samsung gain a competitive advantage, and Samsung is predicted to overtake Apple in 2012. Nokia Corp, despite its transition to Windows OS, managed to retain 16% of smartphone sales, as the Finnish company cleared its inventory of Symbian-powered smartphones. Nokia is expected to continue to lose market share in 2012 as the company completes its transition to support Windows OS and focuses on profit margins rather than market share. Smartphones Volume Share (%) 2011
One in 10 smartphones sold in 2011 was a Blackberry, even though Research in Motion (RIM) Ltds profit margins are declining every quarter. The Canadian firms sales are primarily driven by the US and emerging markets like Indonesia, but it continues to lose share in other major markets. RIM is expected to lose significant market share in 2012 as it struggles to roll out its delayed Blackberry 10 OS.
HTC Corp has risen from being an unknown in 2008 to garnering a significant 9% market share in 2011, overtaking LG Corp.
Apple Inc Samsung Corp Nokia Corp Research in Motion Ltd
HTC Corp
Others
PASSPORT 36
INTRODUCTION
GLOBAL TRENDS

RETAIL CHANNEL DISTRIBUTION
Electronics and appliance specialists still growing

Store-based retailing in consumer electronics remained strong across most markets in 2011, and showed significant growth potential in emerging markets. emerging markets provide a good operating environment for electronics and appliance specialist retailers. These markets have dynamically growing demand for electronics, coupled with low penetration of internet retailing compared to developed markets. In developed markets, electronics and appliance specialist retailers are facing difficulties in competing against online retailers. In the US, internet retailing goes largely untaxed, while consumers shopping in stores are subject to local sales taxes. In Western Europe and Japan, continuing macro-economic difficulties are likely to cause an overall drop in demand and value sales, something bricks-and-mortar stores are less able to handle due to their higher fixed operating costs compared to internet retailers. Best and Worst Prospects for Specialist Retailers 2012-2016
60 50 % rsp growth 40 30 20 10 0 -10 -20 Saudi Arabia China Vietnam Turkey Russia Ireland Italy Australia Netherlands Greece
PASSPORT 38
RETAIL CHANNEL DISTRIBUTION
The mobile phones increasing importance as a purchase influencer

How often do you use your mobile phone for the following?
China
India
Brazil
US
Buy items or service Compare prices in-store Read reviews
The proliferation of Internetenabled mobile phones suits consumers on-the-go lifestyles and desire for immediate consumption. In fact, online consumers, especially in emerging markets, are increasingly accessing shopping websites via their mobile phones rather than computers. In emerging markets, companies are circumventing the lack of online payment options by offering cash-on-delivery (COD) options and full refund guarantee to entice online purchases. However, online purchases in emerging markets are largely restricted to consumers in cities and urban residences, as the poor infrastructure in rural areas make delivery difficult and uneconomical.
UK
Germany
France
Japan 0 10 20 30 40 50
Respondents answering 1-2 times per week or almost every day Source: Euromonitor International Annual Study 2011 Note: Approximately 2,000 responses per country
PASSPORT 39
REPORT DEFINITIONS
Data parameters and report definitions

2012 figures are provisional and based on part-year estimates. The forecast period under review subsumes the years 2012 through to 2016, inclusive. All forecast retail value data cited in this report are expressed in constant terms unless otherwise stated; inflationary effects are discounted. All historical data, country-specific, regional and global, through to 2011 are also expressed in constant value terms, with any inflationary effects discounted. All US dollar data cited in this report, historical and forecast, at national, regional and global level are shown at fixed 2011 exchange rates. Desktops Personal computers (PCs) meant for use in a fixed location. Desktops can refer to a standalone unit as well as a complete system including a monitor and keyboard. Laptops Personal computers (PCs) meant for mobile use and incorporating an external power source, usually a rechargeable battery pack. Netbooks Netbooks are portable computers with keyboard and screen size less than 12". Tablets and Other Portable Computers Portable computers primarily using touchscreen interfaces. Monitors Stand-alone display devices connected to computers. Includes LCD and CRT monitors sold separately from desktops. Printers Computer peripherals capable of producing a paper copy of text and/or graphics. Other Computer Peripherals Includes all hardware devices connected to a computer but sold separately. Examples include external keyboards, PC speakers, CD/DVD drives, iPod docks and cables, USB cables and headsets for VOIP.
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REPORT DEFINITIONS
Data parameters and report definitions (continued)

In-Dash Audio Players In-Dash Audio Players includes all media players capable of reproducing sound on the cars speakers from a variety of sources and designed to be installed in the dashboard of the vehicle. In-Dash Video Players Includes all aftermarket in-car media players capable of video playback. In-Car Navigation Includes all aftermarket electronic systems designed to provide a map, the vehicle's current location as well as step-by-step directions to a programmed destination. In-Car Speakers Permanently-mounted aftermarket speakers designed for automotive use. Home Audio and Cinema Consist of Audio Separates, Home Cinema and Speaker Systems, Hi-fi Systems and Other Home Audio and Cinema. Audio Separates Consists of Amplifiers/Tuners/Receivers, Speakers and Other Audio Separates. Digital Media Player Docks Stand-alone devices with a docking station or cradle and speakers. Hi-fi Systems Bookshelf speaker system with built-in audio amplification, audio and/or video playback. Home Cinema and Speaker Systems Also known as Home Theatre System (HTS) or Home Theatre in a Box (HTiB). These products consist of a DVD/BD player, amplifier and speakers which are bundled or integrated and sold as a complete system. Speakers Stand-alone speakers without built-in amplification or video/audio inputs. Other Home Audio and Cinema Includes audio products designed for in-home use that do not fall into the above categories of Audio Separates, Home Cinema and Speaker Systems and Hi-fi Systems. Examples include clock radios (with or without docks), DAB radios, CD and cassette players. Analogue TVs Televisions (CRT TV) that accept modulated VHF or UHF carrier frequencies and decode this signal into TV images. LCD TVs TVs which use Liquid Crystal Display (LCD) panels with backlighting. Backlighting technology can be via conventional fluorescent light or LED.
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REPORT DEFINITIONS
Data parameters and report definitions (continued)

OLED TVs New display technology which uses self light-emitting technology composed of a thin, multilayered organic film placed between an anode and cathode. Plasma TVs Display technology that applies electricity to a mixture of xenon and neon gases in small cells between two glass panels, turning it into plasma to illuminate adjacent phosphors in different colours. BD Players Stand-alone video players that can play Blu-ray and other disc formats. DVD Players Stand-alone products that can playback DVDs and other disc formats. Digital Cameras Cameras that store images in digital format. Digital Camcorders Camcorders that use Digital8, MiniDV, DVD, Hard Disk and solid-state (flash) semiconductor memory cards or a combination of these storage media. The videos recorded are in digital format but not in High Definition. HD Camcorders Digital camcorders capable of recording videos in high definition (at least 720p). E-Readers This is a single function device that is specially designed for reading text. E-book readers have a specific screen optimised for text. Portable MP3 Players Portable digital audio players that can play back digital audio. Portable Multimedia Players A portable multimedia player is an audio player with video playback capabilities. Feature Phones Any device capable of voice communication over a cellular network that does not fit the definition of smartphones. Smartphones Any device capable of voice communication over a cellular network. A smartphone must have an identifiable operating system, allows installation of software applications (apps), and screen size of <6 (15cm).
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Euromonitor International CONSUMER ELECTRONICS: TRENDS AND ANALYSIS
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Euromonitor - Consumer Electronics Global Trends and Analysis - Sep 2012

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Euromonitor - Consumer Electronics Global Trends and Analysis - Sep 2012

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CONSUMER ELECTRONICS GLOBAL TRENDS AND ANALYSIS

IN-HOME CONSUMER ELECTRONICS

Computers and Peripherals

In-Home Consumer Electronics

Portable Consumer Electronics

CONSUMER ELECTRONICS: TRENDS AND ANALYSIS

CONSUMER ELECTRONICS: TRENDS AND ANALYSIS

IN-HOME CONSUMER ELECTRONICS

Consumer electronics growth stagnates

Retail volume (mn units)

Retail RSP (US$ bn, fixed 2011 exchange rates)

CONSUMER ELECTRONICS: TRENDS AND ANALYSIS

Retail value (US$ bn)

Regional composition continues to shift

700 US$ billion RSP

CONSUMER ELECTRONICS: TRENDS AND ANALYSIS

Telecommunication services gaining importance

CONSUMER ELECTRONICS: TRENDS AND ANALYSIS

Recovery in business demand stalls

MSP (US$, constant 2011 prices)

CONSUMER ELECTRONICS: TRENDS AND ANALYSIS

Low income not a deterrent on smartphones sales

Annual disposable income (US$, constant 2011 prices)

Smartphones as a % of mobile phone volume sales

CONSUMER ELECTRONICS: TRENDS AND ANALYSIS

Emerging markets driving in-car entertainment growth

In-Car Entertainment: Retail Volume Sales Growth by Region 2011-2016

Middle East and Africa

Latin America -10 -5 0 2011-2016 CARG (%) 5 10

CONSUMER ELECTRONICS: TRENDS AND ANALYSIS

3D fails to lift LCD TVs revenue growth

Global Growth in LCD TVs 2009-2016

Retail RSP (US$, constant 2011 price)

CONSUMER ELECTRONICS: TRENDS AND ANALYSIS

Asia Pacific overtook Western Europe in Internet retailing

Internet Retailing Sales of Consumer Electronics 2006-2011

Retail volume (mn units)

Rest of the world

CONSUMER ELECTRONICS: TRENDS AND ANALYSIS

IN-HOME CONSUMER ELECTRONICS

COMPUTER AND PERIPHERALS

Desktops (Business) still popular for corporations

Retail volume (mn units)

Tablets and other portable computers Netbooks Laptops Desktops

CONSUMER ELECTRONICS: TRENDS AND ANALYSIS

COMPUTER AND PERIPHERALS

Changes expected in tablets in 2013

Retail volume (mn units)

0 2011 iOS Android 2012 Windows 2013 Others

CONSUMER ELECTRONICS: TRENDS AND ANALYSIS

COMPUTER AND PERIPHERALS

iPad propels Apple to computers market leadership in 2011

Apple Inc Product Mix in Computers 2008-2011

CONSUMER ELECTRONICS: TRENDS AND ANALYSIS

COMPUTER AND PERIPHERALS

Peripherals affected by tablets and cloud computing

Retail Attachment Rates in Peripherals (World) 2008-2016

Other computer peripherals

CONSUMER ELECTRONICS: TRENDS AND ANALYSIS

IN-HOME CONSUMER ELECTRONICS

Automotive market megatrends

Passenger Cars in Use in Key Markets 2006-2011

2006-2011 CARG (%)