Consumerscope: Lower Spending Doesn’t Mean Weakening Demand

Despite the recession, growing unemployment and tightening access to credit, ownership of consumer electronics products continues to increase, according to CEA’s 11th Annual Household CE Ownership and Market Potential.

While total U.S. consumer technology shipment revenues and household CE expenditures will decline in 2009, ownership of big ticket items such as HDTVs, laptop computers, and smartphones have shown some of the largest increases in ownership among the products CEA surveys.

The study shows HDTVs (owned by 52 percent of households), portable/handheld GPS devices (30 percent), and LCD flat panel TVs (36 percent) have experienced the largest increases in the last year. What accounts for higher levels of ownership in the face of lower household spending? Falling price points have certainly contributed.

Devices including HDTVs, GPS, and laptop computers are attracting a broader market of consumers due to lower average unit prices. Increased ownership of in-home technologies may also be the result of cocooning. With fewer consumers traveling and entertaining outside the home, households may be improving their home entertainment options by purchasing new products. Regardless of reported spending and sales data, increasing penetration levels during tough economic times demonstrates the tremendous consumer demand for technology.

A confluence of factors including a vast library of content and falling price points have given rise to the widespread and rapid adoption of HDTV, demonstrating how dynamic the consumer electronics industry can be. Penetration of high-definition televisions has doubled since 2007, and the sets are now owned by more than half (52 percent) of all households. Lower prices have certainly contributed to this growth.

According to the January 2009 U.S. Consumer Electronics Sales and Forecast, average wholesale unit prices are expected to fall to $849 in 2009, a 9 percent drop compared to 2007. Cable and satellite providers have played a part as well, offering an ever-expanding selection of HD programming and competitively priced service packages to consumers. We expect this growth to continue as 21 percent of households intend to purchase a high definition set in the next 12 months. Nearly half of these expectant buyers (48 percent) will be making a first-time purchase.

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