The Next Big Thing in Consumer Electronics is Already Here
Smartphones and tablets have dominated the headlines of consumer electronics for the past few years and will continue to be the key growth driver for both retail volume and value sales over the forecast period. At the same time, manufacturers and retailers are also on the search for the next big thing, like wearable electronics. Beyond looking at new products, there are still opportunities aplenty in “old” product categories like laptops and LCD TVs, as the latest Euromonitor International’s Consumer Electronics research can attest.
Retail Sales of Key Electronic Products: 2013-2018
Source: Euromonitor International
Wearable Electronics – The Next Big Thing?
Manufacturers are banking on wearable electronics in a bid to arrest declining revenues. Wearable electronics are still relatively unknown to most mainstream consumers, but this is rapidly changing. Retail sales of wearable electronics are expected to grow from a small 22 million units in 2014 to 258 million units in 2018; a whopping 1,080% increase. Passive wearable electronics like Nike’s FuelBand, which need to be paired with a smartphone, will continue to dominate in the short term, but by 2018, autonomous wearable electronics such as Samsung’s Galaxy Gear are likely to be popular.
Smartphones – Continued Growth
2014 will be a landmark year for smartphones, and sales are projected to exceed 1 billion units. No other consumer electronics product has ever crossed this figure and it is highly unlikely that any product will in the near future. Consumers in both developed and emerging markets are embracing smartphones and sales are forecast to hit some 1.7 billion units in 2018. Much of the growth will be driven by consumers moving from feature phones to smartphones. However, the popularity of smartphones does not translate into strong revenues for mobile network operators, as these consumers will not spend as much time (and hence, bandwidth) online.
Tablets – Hampered by Smartphones
Sales of tablets will approach 220 million units in 2014, a short five years after Apple Inc’s iPad sparked the portable computer craze. While consumers in emerging markets are very much into tablets for media consumption like their developed markets counterparts, the lack of access to wireless internet network in emerging markets means that consumers will prefer to spend on lager screen smartphones, like Samsung’s Galaxy Note, and even the soon-to-be launched iPhone 6 (which is expected to sport a screen size of slightly less than 5”).
LCD TVs – Still a Key Source of Entertainment
While the recently concluded World Cup 2014 had minimum impact on the overall sales of LCD TVs, consumers in emerging markets are still snapping up LCD TVs, as falling prices and an increasingly affluent consumer base drive sales. Sales of LCD TVs will grow by a further 9% between 2013 and 2018, reaching 238 million units by the end of the forecast period. The popularity of Smart TVs and Ultra HD resolution, along with the desire for larger screens, are expected to cushion the downward trend on unit prices.
Laptops – Not Being Replaced by Tablets
While there is no denying the global popularity of tablets, there is little adverse impact on retail sales of laptops. Sales of laptops are expected to remain relatively flat with annual volume sales of just above 124 million units over the forecast period. The decline of laptop sales in developed markets will be offset by the accompanying increase in sales in the emerging markets. Consumers in emerging markets will rather save up and purchase a laptop, as compared to tablets, due to the lack of wireless connectivity (WiFi hotspots), making laptops a necessity.
Old but Gold
In the relentless world of technology, there is an obsession to identify and be at the forefront of the next big thing. As retailers and manufacturers struggle with razor-thin profit margins due to the highly competitive operating environment, new products with their higher margins offer respite. However, existing products which are mature (and thus, cost effective to manufacture) offer stable demand and revenues for established manufacturers. Prices have dropped significantly and the cost gap between established manufacturers and local brands is minimal. Old favourites like laptops and LCD TVs are not being dumped by consumers, and retailers and manufacturers cannot afford to ignore these products. As it stands, existing products are still the big thing.