United States Consumer Electronics Report Q4 2013 - New Study Released

We project US consumer electronics spending will grow by about 5.8% in US dollar terms in 2013, to reach a total value of US$247.2bn. Although the market is mature, with high penetration rates in a number of device categories, opportunities remain. Growth areas include large-size HD TV sets, smartphones, Microsoft Windows 8 tablets and convertibles/hybrids, Ultrabooks, and smart TV sets. BMI has downwardly revised its forecasts following negative growth in several key product categories during H113 - and questions remain about the sustainability of consumption in the absence of strong wage growth.

Headline Expenditure Projections

Computer hardware sales: US$131.7bn in 2012 to US$137.9bn in 2013, +4.7% in US dollar terms. Forecast downwardly revised as shipments of desktops and notebooks decline and consumers shift spending to lower-cost tablets.

Full Report Details at
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AV sales: US$70bn in 2012 to US$75bn in 2013, +7% in US dollar terms. There is evidence that US consumers are willing to pay more for features such as 3D and large-screens, however sales of mid-range flat-screens remain under pressure amid economic uncertainty.

Handset sales: US$32.4bn in 2012 to US$34.7bn in 2013, +7.1% in US dollar terms. Forecast unchanged, with Samsung's Galaxy S4 providing a stiff challenge to Apple in H113, and the latter's new iPhone devices released in September 2013.

Key Trends & Developments

* The handset market continues to be the most dynamic segment of the US consumer electronics market. Smartphone penetration has risen rapidly, with BMI estimating it increased to 60% by mid-2013, up by around 15 percentage points (pps) year-on-year (y-o-y). This increase has been facilitated by declining prices, particularly with the increasing availability of devices from Android partner vendors at affordable price points. We believe that smartphone penetration will continue to rise rapidly into 2014, but sales will then increasingly depend on upgrades and replacements. Vendors will have to increase innovation to offer new features that users are willing to spend on in order to acquire a new handset.

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