According to the Consumer Electronics Association (CEA), consumer confidence toward technology spending jumped to the highest level in October since 2007, while sentiment toward the overall economy slightly increased in October. The CEA Index of Consumer Technology Expectations (ICTE), which measures consumer expectations about technology spending, jumped 9.5 points in October to reach 90.2. Consumer increased interest in tech is likely due to the approaching holiday season. Furthermore, exciting product announcements coupled with early retailer promotions and advertisements are likely behind the jump in sentiment toward tech spending.1
According to the CEA’s Holiday Purchase Patterns study, 74% of consumers planning to purchase gifts this holiday season intend to buy consumer electronics (CE). They plan on allocating 33% of their overall holiday gift budgets to CE. CE spending is expected to rise 2.6% this holiday season—down from 4% growth in 2012.1
Global shipments of TVs are expected to decline to 226.7mn units in 2013, down from 238.2mn in the previous year. Every type of television will suffer a decline, including the major categories of liquid-crystal display (LCD), plasma, cathode-ray tube (CRT) and rear projection. This follows a 7% decline in 2012, when shipments fell from 255.2mn in 2011.2
For the first time ever, global factory revenue for smartphones and tablets will rise to become larger than revenue for the entire CE market. Worldwide original equipment manufacturer (OEM) factory revenue for media and PC tablets and for 3G/4G cellphones—a category dominated by smartphones—will amount to US$354.3bn in 2013. This will be 3% higher than the US$344.4bn for CE market OEM factory revenue. The fact that these two product categories are on their own able to generate more OEM factory revenue than the entire CE market illustrates the overwhelming popularity of smartphones and tablets. The presence of mobile devices has single-handedly reduced the value of each product within the CE category. Smartphones and tablets now all carry a quality substitute for almost every product in the CE category: TV (mobile video, YouTube), audio equipment (iTunes, Pandora), cameras and camcorders (a standard on mobile device hardware) and video game consoles (mobile games and apps). 2
Apple launched a series of new products this quarter including the iPhone 5c and 5s, iOS 7, the new iPad mini with Retina Display, the iPad Air, the new MacBook Pros, the new Mac Pro, OS X Mavericks and the iWork and iLife apps for OS X and iOS. With the new iPhone 5c and 5s leading the way for quarterly revenue, Apple should report huge profits when it announces its December quarter. Just as sales of the more expensive iPhone 5s are outweighing the cheaper iPhone 5c, the cheaper iPad models will likely be less popular than the newer, more expensive models, which should again result in strong profits.
Consumer Electronics companies in the analysis reported a decline in revenues compared to Q3’12 except for Apple which registered 4.2% growth. The sector also reported lower profits with the exception of Philips which reported better operating results across all sectors.