Market Saturation Impedes Sales In Category
All those electronic devices that consumers have been buying over the past few years are beginning to have an effect on the category’s overall growth.
According to The NPD Group, overall sales for the U.S. consumer technology industry were down 2% in 2012 to just about $143 billion. That decline follows a 1% drop in sales in 2011. Overall, consumer technology sales have declined $4 billion since 2010, according to NPD.
“It’s a combination of things,” Stephen Baker, vice president of industry analysis at NPD, tells Marketing Daily. “There’s declining units and/or sales prices in some of the categories, [while] in much of the rest of the market there’s weak demand.”
Single-use devices such as cameras and music players are seeing weak demand in favor of more sophisticated devices that can do multiple tasks (e.g., camera phones and GPS services in smartphones), Baker says. At the same time, consumers who have upgraded devices in recent years (such as buying flat-screen televisions) are still getting use out of those items, and are not in the market.
“People had a lot of these devices to begin with, and almost by definition, replacement markets are smaller,” Baker says.
Meanwhile, the top five categories in consumer technology (notebook computers, flat-panel TVs, smartphones, tablets and desktop computers) accounted for 53% of all category sales in 2012, up from 49% in 2011. Not surprisingly, smartphones and tablets accounted for all of that share increase, while revenue for desktops and notebooks declined as tablets cannibalized some of the sales. Declining prices continued to hurt TV sales as well, according to NPD.
Among consumer electronics brands, the top five (Apple, Samsung, HP, Sony and Dell) accounted for 45% of sales (up from 42% in 2011), with Apple and Samsung accounting for $6.5 billion in increased sales in 2012; the remainder of the industry declined by almost $9.5 billion.