"Companies are refining their strategies, aiming to position themselves favorably to maximize opportunities in developing business around connected CE products," says Simon Forrest, Principal Technology Analyst at Futuresource Consulting. "Difficulties include mitigating limited growth across traditional products, adapting to the steady commoditization of hardware and, more importantly, offsetting the competitive threat from software-only platforms and online services that are attracting consumers away from traditional CE business. There is a clear move towards companies presenting a portfolio of connected products, each of which are designed to work together and attract consumers to invest in vendor-specific ecosystems."
Notably, product support is now an expanding problem that vendors must grapple with. "Connected CE products are no longer ‘sell and forget’," reminds Forrest; "there are challenges in maintaining software upgrades and ensuring lifetime value for products already in the market. Finding the optimum moment to discontinue support without alienating customers or weakening brand value is a delicate proposition."
Across the product categories, headphones, wearables and smart home posted the strongest growth in value throughout 2019. All other categories contracted in value, with imaging/cameras and video games showing double-digit percentage declines. Meanwhile, the brand landscape changed very little in 2019, with the majority of the top three brands in each product category maintaining strong market share.
While 2019 was a strong year for the Consumer Electronics industry, the COVID-19 pandemic in 2020 has altered the outlook significantly. "Some categories such as TVs and laptops performed well in H1 2020 as a result of consumers’ response to lockdown," says Forrest. "However, in many cases, this is expected to have drawn sales forward from H2, which is likely to be impacted by the economic repercussions." COVID-19 has contributed to $88 billion being wiped from the overall forecast CE trade value in 2020, in comparison to our pre-COVID-19 forecasts issued last December. The pandemic has dented consumer confidence and disrupted global supply chains. Turbulence across the CE market will persist for several months, with analysis showing a further $66 billion deficit globally in 2021 trade value compared to previous forecasts. "Nevertheless, the market shows resilience and we expect it to rebound reasonably quickly, returning to growth next year and with value largely restored to pre-COVID levels by Q4 2022," explains Forrest.
Despite the uncertainty and imminent recession across regional economies, the long-term outlook for the Consumer Electronics market remains positive. The market is expected to increase 20% in volume to total 5.2 billion-unit shipments annually worldwide in 2024, with these products contributing an additional $121 billion of trade value globally.
Futuresource's Worldwide Consumer Electronics Report was published in August 2020.
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