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Market analysis

Smartphones have the highest near-term purchase intent of any portable connected device category. These results are from CEA’s tracking study.1 Purchase and upgrade intent are a clear indication that this category still has steam left in it for growth. The average smartphone is only a year old, which indicates a frequent replacement cycle for these devices, a positive indicator for this segment.

Consumer electronics devices are starting to play an important role in monitoring and improving health and fitness of individuals. Technology innovations now offer unprecedented opportunities for consumers to take control of their health and engage in their personal fitness. Major consumer electronics companies in this segment have shifted their focus toward health and fitness devices which are easy to use and operate. Companies like Royal Philips, Toshiba and Sony have also started investing in the medical equipment category.

Consumer confidence toward technology spending reached its highest level in seven years for the month of March and sentiment toward the overall economy also saw increases that month, according to the latest figures released by the Consumer Electronics Association (CEA).1 The CEA Index known as the Index of Consumer Technology Expectations (ICTE), measures consumer expectations about technology spending, increased by 6.2 points in March to reach 90.4. YoY, the ICTE jumped 11.2 points from last March’s measurement, reaching the highest level for the month since CEA began tracking index data in 2007. The jump in confidence might point to an ensuing lift driven by some pent up demand. The CEA Index of Consumer Expectations (ICE), which measures consumer expectations about the broader economy, increased by 2.5 points from last month to reach 170.2 in March.1

Sony’s sales for Q1’14 increased 8.1% YoY to ¥1,870.9bn. This increase was due to the favorable impact of foreign exchange rates, the launch of the PS4 and a significant increase in sales in the Pictures segment, partially offset by a significant decrease in financial services revenue. In the Mobile Products & Communications segment, sales increased due to foreign exchange rates and a significant increase in unit sales of smartphones. In the Devices segment, sales increased due to an increase in sales of image sensors. Operating loss of ¥111.8bn was recorded for the current quarter, compared to operating income of ¥145.4bn in the same quarter of the previous fiscal year. The loss was due to an impairment charge in the current quarter in the disc manufacturing business.

In the Game segment, Sony’s sales increased from the launch of the PS4 and the favorable impact of foreign exchange rates. Operating loss of ¥ 8.1bn (US$78mn) was recorded, compared to operating income of ¥1.7bn in the previous fiscal year. This loss was due to an increase in costs related to the launch of the PS4 as well as the recording of a ¥6.2bn (US$60mn) write-off of certain PC game software titles sold by Sony Online Entertainment LLC.

Toshiba Group’s net sales for Q1’14 increased by 13.3% sequentially by ¥230.9bn to ¥1970.5bn, but on a YoY basis it grew by 2.3%. The increase in sales was led by growth in US, South East Asia and China. All five segments reported higher sales led by Electronic Devices & Component segment. The Energy & Infrastructure segment saw an overall increase in sales reflecting a higher demand in Thermal & Hydro Power Systems and Electric Power Distribution Systems. The Memory segment also showed improved sales led by demand for Discretes. However, net income decreased by 27.7% sequentially due to negative impact from nuclear power plant asset value reassessment, discontinuation of the Optic Disk Drive business and expiration of a special corporation tax for reconstruction.

  1. Consumer Electronics Association, May 2014
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