The CTA Index of Consumer Technology Expectations (ICTE), which measures consumer expectations about technology spending, decreased by 0.5 points in September to 85.8. There were many a new product launches before the close of the quarter as well as consumer anticipation of holiday shopping deals. Holiday season tech spending is projected to increase 3.1% over last year—driven mostly by increases in online and mobile spending. A key change is that emerging tech such as virtual reality, wearables and smart home devices are now a favored choice for holiday gifting. The CTA Index of Consumer Expectations (ICE), which measures consumer sentiment about the US economy as a whole, decreased by 4.4 points in September to reach 171.9. Uncertainty of the outcome of the US presidential election likely tempered consumer sentiment.1
In line with the overall trends, revenues of the consumer electronics companies declined by 4.5% year over year, but improved by 7.7% sequentially. Net income was also down by 20% year over year but showed a growth of 5.4% quarter over quarter. The sharp decline in net income was led by Sony and Canon which declined by 45% and 83% year over year, respectively.
Three Chinese smartphone vendors—Huawei, Oppoand BBK Communication Equipment—together accounted for 21% of the smartphones sold to end users worldwide in the third quarter. They were the only smartphone vendors in the global top five to increase their sales and market share during the quarter. China led the growth in Q3 smartphone sales, growing by 12.4%. Global sales of smartphones to end users totaled 373 million units in Q3, a 5.4% increase over 2015. However, overall sales of mobile phones, fell by 1.3 percent, largely due to the declining popularity of feature phones.2
Apple's iPhone sales continued their fall in Q3, with a 6.6% decline and accounting for just 11.5% of the global smartphone market, Apple’s lowest share since Q1 2009. Apple's sales fell by 8.5% in the US and by 31% in China, two of its biggest markets. In the smartphone operating system market, Google's Android presently has a market share of close to 88%.2
Sony Corp’s revenues increased by 6% year over year to US$16.7 billion. The Mobile Communications segment sales fell, reflecting a significant decrease in smartphone unit sales, substantially offset by an increase in revenues in the Financial Services segment due to an improvement in investment performance in the separate account at Sony Life, as well as an increase in sales in the Pictures segment. Net income decreased by 83% year over year to US$48 million. During Q3, Sony reported US$232 million of income tax expense, resulting in an effective tax rate of 58.0%. It was much higher than the effective tax rate of 33.1% in Q3 2015. This higher effective tax rate was due to valuation allowances for deferred tax assets.
Philips’ comparable sales were driven by a 5% growth in the HealthTechsegment, partially offset by a 3% decline in Lighting. There was double-digit growth in the Connected Care & Health Informatics businesses and low-single-digit growth in the Diagnosis & Treatment businesses. The improvement was due to cost productivity, positive currency impacts and improvements at the Cleveland site. Restructuring and acquisition-related charges amounted to US$63.7 million, compared to US$55 million in Q3 2015. Net financial expenses increased by US$110.2 million year over year, due mainly to a charge related to the notes redeemed in October 2016. Net income increased by US$45.0 million compared to Q3 2015, driven by improved income from operations.
1.Consumer Technology Association, Sept 2016
2.Gartner, Oct 2016