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issue: January 2006 APPLIANCE Magazine

54th Annual Appliance Industry Forecasts
CE Innovation Continues

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by Gary Shapiro, president, Consumer Electronics Association (CEA)

The consumer technology industry is booming. With sales forecast to reach U.S. $132 billion in 2006, our products resonate with consumers who use CE devices to stay informed, entertained and connected to their work and families.

Gary Shapiro, president, Consumer Electronics Association (CEA)

Although we are best known as the producers of the International CES, the world’s largest annual technology show, the Consumer Electronics Association (CEA) works to grow the industry all year. We are proud that our members’ technologies are changing the world, creating better, smaller and faster products with new services and features. CEA represents 2,000 companies in all consumer technology, from manufacturing to retailing, from audio and video to wireless and portable. CEA sets standards, creates market research, focuses on public policy, and educates and promotes the consumer electronics (CE) industry. Our mission is simple: to grow the consumer technology industry.

Look Inside a Home

Today’s average U.S. home contains 25 CE products according to CEA’s CE Ownership and Market Potential survey, with each household spending more than $1,250 each year. The study reveals that Americans are enthusiastic about content, with each household owning on average 100 music CDs, more than 40 DVD movies and 16 video games. Americans spend heavily on CE products because of the value these products deliver. Few industries provide products where prices consistently fall while features and performance continue to rise.
As the transition from analog to digital technology continues to power market growth, the average home now has 3.1 TV sets, up from 2.4 sets in 2004. Today, digital high-definition televisions (HDTVs) can be found in roughly 13 percent of households with flat-panel televisions and digital video recorders (DVRs) in about 10 percent of homes. DVD player penetration rates soon will eclipse those of the VCR.

The transition is more than just a move to digital technology; it also is a move away from products that use physical media (i.e., CDs) and a move toward hard drive-based products (i.e., MP3 players). The MP3 player category shattered all expectations last year by more than doubling unit shipment volumes and nearly tripling revenues to $1.2 billion. These devices now are in about 15 percent of homes.

Hard Work Ahead

Although the industry continues to grow, we face challenges—tough economic news, gasoline prices, record federal budget deficits fueled by the recent hurricanes, Iraq, and tax cuts, as well as issues unique to the CE industry, such as content protection, product recycling and broadband availability. Our industry also relies heavily on new technology launches to sustain growth. Further, consolidation, confusion in the market and commoditization challenge the industry.

New business models can help to boost profits as competition intensifies and we must create products that simplify consumer’s lives, not complicate them further. We also are challenged by the need to strike a balance between protecting intellectual property while preserving fair use and home recording rights. To preserve that balance, CEA works with the Home Recording Rights Coalition (HRRC) to ensure that the shift to digital content does not take away consumers’ established fair use rights.

Consumers want to buy digital products to take their information, entertainment and communications with them anywhere—whether that is from room to room at home or on the road. As broadband penetration increases, our products will proliferate, leading to even more innovation in the market. For example, broadband, digital imaging, gaming, memory stick, smart appliances, Wi-Fi, and an ever-growing array of flat HDTV and large LCD, plasma and new display technologies with paper-thin visual displays and corresponding audio products that produce amazing sound.

The International CES is a huge technology extravaganza with 2,500 exhibitors. Products cover more than 30 areas from wireless and mobile entertainment, digital imaging, computing and networking to audio, video, gaming and accessories for the home, office and road. With more than 100 conference sessions and 250 expert speakers, attendees learn about the latest products and technologies. The International CES conference program also offers installer certification and training in mobile electronics, home theater, home networking and satellite, and retailer certification and training in wireless. CES attracts top-tier leaders from federal, state and local U.S. government and more than 4,500 media that relay news and information that impact global consumers. In addition, more than 44,000 industry and corporate buyers come to the show to compare and evaluate new products.

A Promising Future

Our industry makes and sells the innovative products that help us stay connected, informed and entertained. The future continues to be bright as we move ever closer to the $132 billion marker. What’s more, our industry continues to think outside the box.


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