“The overall CE market growth has dried up as the smartphone boom has flattened, as convergence takes its toll and competition squeezes prices in the mature product sectors,” commented Simon Bryant, Associate Director Consumer Electronics of Futuresource Consulting. “However, on a more positive note, the wearables sector is looking extremely hot and is predicted to grow by 50% in value this year and by an average of 22% in the five years to 2020.”Building on over 25 years of continuous worldwide research in CE and related entertainment sectors, the report segments the market into eight key categories and provides volume and value forecasts for each through to 2020: Wearables, Home AV, Television, Mobile, Infotainment, Cameras & Camcorders, Automotive and Gaming.
Futuresource goes onto highlight other growth opportunities in the automotive infotainment sector which is expected to continue to grow at about 5%, subject to the world economy, and is linked to global vehicle production and increasing technology value embedded into cars.
“Other areas of growth include wireless speakers and headphones, which continue to be driven by the adoption of mobile music and streaming services in addition to product innovation,” asserts Jack Wetherill, Senior Market Analyst: Home Electronics at Futuresource, who co-authored the report.
The forecast for global CE trade value is 1.2% CAGR to 2020 and even this modest outlook may depend on the world economy. This recent analysis found that emerging markets, which have driven growth in recent years, saw a slowdown in 2015. Whilst the UK leaving the EU, may be an additional negative factor in terms of economic growth and CE demand.
As the CE market slows, Futuresource Consulting believes the battle for growth will shift to market share and hence price competition. Apple and Huawei grew strongly in FY 2015, although Apple has flattened in 2016. Most other major CE brands continue to struggle to find growth and profitability in a flat market environment.
Wetherill states that, “We will continue to see a changing landscape of market exits, mergers and acquisitions. In 2016, we’ve seen Microsoft exit the phone business and China’s Hisense take over Sharp America - highlighting how a market dominance strategy is seen to be the safest bet. On the other hand, growth segments like wearables will be won by established brands that are able to innovate either internally or through acquisition, eg. wearables with the Fossil Fitbit or the Nokia Withings deal.”
Futuresource predicts that barriers to entry will continue to fall, allowing new entrants with low overheads to gain market share using available, system on a chip (SoC) technology and contract manufacturers in China. Some sustained success stories are also highlighted in the report with specialist CE players like Harman maintaining position in the automotive and audio sectors. However, mobile convergence and competition is making life tough for the pioneers of growth categories such as Sonos in multi-room audio and GoPro in the action camera segment.
www.futuresource-consulting.com
