BMI View : The US consumer electronics market is a global leader in terms of market size and adoption of the latest technology - with high penetration rates in most device categories. This makes the market lucrative for vendors, but h igh penetration also results in diminished growth opportunities in some of the key markets such as tablets, smartphones and digital cameras. Despite the maturity of the market BMI believes significant opportunities remain in emerging product categories, as well as the result of a high replacement rate in key categories such as smartphones. However, over the medium term we believe questions still remain about the sustainability of consumption in the absence of strong wage growth and the fact that most sales will be upgrades rather than new consumers.
Headline Expenditure Projections
Computer Hardware Sales: USD195.3bn in 2014 to USD201.3bn in 2015, +3.1% in US dollar terms. Tablet volumes continue to be squeezed by a diminished pool of first-time buyers and lengthening replacement cycles, but traditional form factor markets performing far better.
AV Sales: USD54.9bn in 2014 to USD54.8bn in 2015, -0.2% in US dollar terms. The growth of TV and audio revenues will be offset by the continued contraction of the digital camera market, although performance will be stronger than in 2011-2014.
Handset Sales: USD58.5bn in 2014 to USD58.7bn in 2015, +0.3% in US dollar terms. Smartphone market maturity and price pressures in the Android ecosystem will see handset market value growth continue to decelerate in 2015.
Key Trends & Developments
Retailers and distributors in the US market have been squeezed in recent years by the challenge from e-commerce rivals, and most recently the decline in the tablet market. The connected home is however expected to offer increased opportunity for traditional retailers to capture growth. BMI therefore considers the Dixons Carphone and Sprint collaboration positively, due to the former's existing strong relationships with many of the world's largest consumer electronics brands, while Carphone Warehouse's experiences in operating as a mobile service provider in several European markets gives it unique insight into how best to serve consumers' changing connected lifestyles. The partnership will come into effect in September 2015 and include the opening of 20 new retail stores, through which co-branded products, services and after-sales support will be provided. If this initial collaboration proves successful, Dixons Carphone will invest USD32mn for a 50% stake in a new joint venture that will open 500 new high-street stores.
In September 2014 Apple entered a new product line, introducing its first pulse-reading smartwatch device known as 'Apple Watch', alongside the launch of its iPhone 6 range (including Apple's first phablet - the iPhone 6plus). The smartwatch has been designed to perform many functions and provides its user with 'an intelligent health and fitness companion'. As well as measuring pulse rate, the Apple Watch will provide a complete picture of the entire day's physical activity by recording the quality, quantity and frequency of movement. The Apple Watch is scheduled for launch in early 2015 and has been priced from USD349. BMI believes the wearables market presents upside potential to our forecast, but we caution that consumer uptake of the new devices has been limited so far, although Apple could yet again drive the development of a new device category as it did with the iPod, iPhone and iPad.