Consumer electronics


Market analysis

Revenues for the Consumer Electronics (CE) industry are projected to grow 2.4% in 2014, reaching a new record high of US$208bn. The new, emerging product categories (3D printers, Bluetooth wireless speakers, convertible PCs, health and fitness devices, wearables and Ultra HD television displays) will grow by 107% YoY in 2014. These new technology categories are cumulatively expected to contribute more than US$6bn to the overall CE industry in 2014. While these emerging product categories represent less than 3% of the entire CE industry today, they drive 65% of total industry revenue growth in absolute terms.1,2

In terms of the Q4'13 results, average revenue grew by 20% QoQ (for companies in this analysis) led by higher holiday orders in the last quarter. Apple led the way with QoQ revenue growth of 53.7%, followed by Sony Corp (27%) and Philips (25.5%). On a sequential basis, margins improved for Apple and Philips while Toshiba experienced a 115bp drop in margin.

Worldwide combined shipments of devices (PCs, tablets, ultra-mobiles and mobile phones) are projected to reach 2.5 billion units in 2014, a 7.6% increase from 2013. The device market continues to evolve, with buyers deciding which combination of devices is required to meet their wants and needs. Mobile phones are a must have but the new demand is focused on mid- to lower range smartphones. Users continued to move away from traditional PCs (laptops and desk-based), preferring the greater flexibility of tablets, hybrids and lighter notebooks that address users' increasingly different needs.3

Apple’s financial results for its Q1’14 ending December 2013 were quite positive with revenue of US$57.6bn and quarterly net profit of US$13.1bn. These results compare to revenue of US$54.5bn and net profit of US$13.1bn in the year-ago quarter. Gross margin declined to 37.9% compared to 38.6% YoY. International sales accounted for 63% of the quarter’s revenue. This shift towards international sales was led by stronger demand in Europe and China. Sales in China and other emerging markets are adversely impacting Apple’s margins and they are expected to continue to do so in the near term. The company sold 51 million iPhones, an all-time quarterly record, compared to 47.8 million in the year-ago quarter. Apple also sold 26 million iPads during the quarter, also an all-time quarterly record, compared to 22.9 million in the year-ago quarter. The company sold 4.8 million Macs, compared to 4.1 million in the year-ago quarter.

Toshiba Group’s net sales increased by ¥192.5bn to ¥1549.6bn in Q4’13, with all five major segments recording higher sales. The Electronic Devices & Components segment, which benefited from demand for memory products, posted the highest sales. Consolidated operating income increased by ¥18.1bn to ¥47.7bn. But net income decreased by ¥12.2bn to ¥17.2bn due to higher income tax.

  1. Consumer Electronics Association, January 2014
  2. There is widespread anticipation that potential launch of key products by major players will finally inject life in wearable products.
  3. Gartner January 2014
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Scott Adams
Global leader
Computers & networking
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