euromonitor - consumer electronics global trends and analysis - sep 2012

CONSUMER ELECTRONICS GLOBAL TRENDS AND ANALYSIS

September 2012

INTRODUCTION

GLOBAL TRENDS

COMPUTERS AND PERIPHERALS

IN-CAR ENTERTAINMENT

IN-HOME CONSUMER ELECTRONICS

PORTABLE CONSUMER ELECTRONICS

RETAIL CHANNEL DISTRIBUTION

© Euromonitor International PASSPORT 3 CONSUMER ELECTRONICS: TRENDS AND ANALYSIS

Disclaimer

Much of the information in this

briefing is of a statistical nature and,

while every attempt has been made

to ensure accuracy and reliability,

Euromonitor International cannot be

held responsible for omissions or

errors.

Figures in tables and analyses are

calculated from unrounded data and

may not sum. Analyses found in the

briefings may not totally reflect the

companies’ opinions, reader

discretion is advised.

LCD TVs, smartphones and

tablets are expected to continue

to enjoy dynamic growth in the

forecast period despite global

sales of consumer electronics

remaining stagnant, due to

economic uncertainty, in

particular in Western Europe.

Laptops remain the

productivity tool of choice for

businesses, with improvements

in terms of cost, battery life and

weight leading to greater rivalry

with the increasingly popular

tablets.

Scope

INTRODUCTION

Consumer Electronics

Computers and

Peripherals

In-Car Entertainment

In-Home Consumer Electronics

Portable Consumer Electronics

http://www.euromonitor.com/



INTRODUCTION

Key findings

Slowing growth in consumer electronics

Global volume and value sales continued to post positive growth in 2011, but at a slower pace than in 2010.

Recovery in business demand stalls in computers

2010 and 2011 were years of recovery for business computer demand after the global recession; however, continued macro-economic instability will stifle further growth over the forecast period.

Increasing smartphone sales expected to drive service revenue

Mobile telecommunications providers in many emerging markets have experienced difficulties generating profits, despite rapidly growing subscriber bases. This is likely to change with the proliferation of smartphones and through the services-driven revenues.

Competition intensifies in tablets

With an increasing number of competitively priced Android-based tablets entering the market in 2012 and with Windows 8 expected to be launched at the end of 2012, Apple Inc will face increasing competition and shares erosion.

Diverging trends in in-car entertainment in developed and emerging markets

Sales of in-car entertainment are expected to grow in emerging markets while declining in developed ones. Growing differences in the composition of the automotive markets in terms of pre-installed features is behind this divergence.

LCD TVs stagnate despite continued growth in emerging markets

As the digital switchover in much of the world is close to completion, the demand for LCD TVs has been shifting to that as a smaller secondary TVs in the home. Therefore, there is unlikely to be significant further global volume growth after 2012.

Lack of technological innovations

Unit prices of Consumer Electronics is expected to fall over the forecast period, with stronger volume growth over value growth performance due to a lack of critical new technological innovations to drive price premiums.



INTRODUCTION

GLOBAL TRENDS







After a robust 2010 when consumer electronics was recovering from the 2009 recession, sales in 2011

continued rising but at a slower pace. The market drivers remained relatively unchanged, with global sales

of LCD TVs, smartphones, and portable computers driving both volume and value growth.

Consumer electronics growth stagnates

GLOBAL TRENDS

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2009 2010 2011 2012 2013 2014 2015 2016

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Global Consumer Electronics Retail Sales 2009-2016

Retail volume (mn units) Retail RSP (US$ bn, fixed 2011 exchange rates)




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Regional Distribution of Global Consumer Electronics Value Sales 2012/2016

Western Europe

North America

Middle East and Africa

Latin America

Eastern Europe

Australasia

Asia Pacific

The growing importance of emerging

countries in the global consumer

electronics market will make generating

value sales growth a challenge, as

volume sales growth will come from price-

sensitive consumers, primarily in Asia

Pacific and Latin America.

While global value will remain largely

stagnant over the long run, sales are

expected to rise dynamically in Asia

Pacific and Latin America, where

economic growth is likely to be strongest.

Flat volume sales and declining unit

prices will drive down revenues in North

America and Western Europe.

Economic instability in Western Europe

will hamper economic growth in the

Middle East and Africa and Eastern

Europe. Consequently, growth in

emerging markets in those regions is

expected to lag behind Asian and Latin

American markets.

Regional composition continues to shift

GLOBAL TRENDS




The global consumer electronics market in 2011 and 2012 was driven largely by emerging markets like

Brazil, India, Philippines, Indonesia and China.

With large populations, growing purchasing power and improving communication infrastructure, consumers

in emerging markets are increasingly able to purchase mobile devices and services.

This, in turn, has been driving growth in mobile telecommunications services and internet user numbers, a

trend that is likely to continue to drive sales of mobile devices for the foreseeable future.

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2008 2009 2010 2011 2012 2013 2014 2015 2016

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Global Performance of Key Socio-economic Drivers 2008-2016

Consumer expenditure ontelecommunications services(US$, constant 2011 prices)

Annual disposable income (US$,constant 2011 prices)

Internet users

Mobile telephone subscriptions

Telecommunication services gaining importance

GLOBAL TRENDS




There was strong growth in computer sales to businesses in 2010, with volume sales exceeding pre-

downturn level as companies that held off hardware upgrades in 2008 and 2009 in the face of economic

uncertainty finally proceeded with their refresh cycle of computers.

Value sales of computers (business) declined in 2011, despite volume growth. This was largely due to the

need to continue upgrading PCs meeting tightening IT budgets in the face of economic uncertainty.

Moving forward, expenditure on computer upgrades for businesses is expected to remain relatively flat,

with the upcoming Windows 8 launch providing a minor uplift in volume growth in 2014.

-20

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2008 2009 2010 2011 2012 2013 2014 2015 2016

% y

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Global Computer (Business) Sales 2008-2016

Volume

MSP (US$, constant2011 prices)

Recovery in business demand stalls

GLOBAL TRENDS




Over the review period, the proliferation of mobile phones in emerging markets was one of the major driving

forces in the global consumer electronics market. However, spending on services remained closely tied to

disposable incomes. This has resulted in low margins and earnings for mobile operators in emerging

markets, despite growing numbers of mobile phone subscribers.

This is set to change as smartphones become an increasingly large part of the global mobile phones

market. Growth in telecom revenues was largely driven by a rise in subscriber numbers, which increased in

line with incomes until 2010; however, growing demand for mobile data has led to spending on

telecommunication services rising more quickly than disposable income.

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Smartphones to Drive Spending on Services 2008-2016

Consumer expenditure ontelecommunications services(US$, constant 2011 prices)

Annual disposable income(US$, constant 2011 prices)

Smartphones as a % ofmobile phone volume sales

Low income not a deterrent on smartphones sales

GLOBAL TRENDS




While sales of in-car entertainment is predicted to decline in developed markets over the forecast period, positive growth is expected across many emerging markets.

This divergence is a product of an increasing disparity in passenger fleet composition in the two market types:

Developed markets’ slowdown in vehicle sales due to economical uncertainty, combined with the rising popularity of mobile connected devices, has driven car manufacturers to offer sophisticated factory-installed (OEM) entertainment systems even in entry and mid-priced vehicles. Thus, reducing the need for car owners to upgrade to aftermarket in-car entertainment products.

In emerging markets, an increasing number of households are able to afford their first car, and these usually come with no or are fitted with basic entertainment equipment, creating a significant opportunity for aftermarket products.

In view of the current economical climate, drivers are holding on to their existing cars, which also fuels sales of aftermarket products.

Emerging markets driving in-car entertainment growth

GLOBAL TRENDS

-10 -5 0 5 10

Latin America

Asia Pacific

Middle East and Africa

Australasia

Eastern Europe

North America

Western Europe

2011-2016 CARG (%)

In-Car Entertainment: Retail Volume Sales Growth by Region 2011-2016




-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

2009 2010 2011 2012 2013 2014 2015 2016

% y

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Global Growth in LCD TVs 2009-2016

Retail RSP (US$, constant 2011 price) Retail volume

With a large part of global

households having migrated to

digital televisions by 2012, growth

in LCD TV’s volume sales is

reliant on low-income consumers

in emerging markets and

replacement purchases by low-

middle class consumers in

developed markets.

Despite their early promise, 3D-

enabled TVs are not gaining

traction due to the lack of

compelling content. Nonetheless,

manufacturers are still pushing out

3D functionality in high- to mid-

range digital TVs in a bid to revive

flagging revenues.

Despite continued volume growth,

LCD TV revenues are likely to

remain flat over the forecast

period as 3D is relegated to being

yet another feature, rather than a

selling point.

3D fails to lift LCD TVs revenue growth

GLOBAL TRENDS




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2006 2007 2008 2009 2010 2011

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Internet Retailing Sales of Consumer Electronics 2006-2011

North America Asia Pacific Western Europe Rest of the world

While the overall consumer

electronics market is becoming

increasingly reliant on emerging

markets in Latin America and Asia

Pacific, internet retailing of

consumer electronics in these

markets will continue to lag behind

that of North America.

That said, the growing number of

internet users has and will continue

to drive growth in internet retailing

sales in Asia Pacific (primarily by

China). This has seen Asia Pacific

overtake Western Europe in 2011.

For the other emerging markets

like Latin America and Africa, poor

broadband infrastructure, low

banked populations, lack of

delivery routes to rural areas and

security concerns will compromise

the expansion of internet adoption.

This will be particularly true of high

value products like televisions.

Asia Pacific overtook Western Europe in Internet retailing

GLOBAL TRENDS



INTRODUCTION

GLOBAL TRENDS







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Global Business Volume 2011-2016

Tablets and other portable computers

Netbooks

Laptops

Desktops

Desktops’ lower prices and ease of upgrade and repair makes them the preferred computing device among companies and this is expected to remain so right up to 2016. Desktops are also less prone to theft than laptops. With the replacement cycle of desktops being typically longer than laptops, their use can help companies trim IT expenditure in times of austerity.

While sales of laptops are significantly lower than desktops for businesses, small-medium enterprises (SMEs) are also purchasing their laptops in the retail market rather than directly from PC manufacturers or through their business partners catering to corporations.

Despite the growing popularity of tablets such as the iPad, companies have been slow to offer tablets to their employees. However, as companies are increasingly moving to web-based applications like email and even online data storage and investing in virtual desktop infrastructure, this will allow employees to use their personal mobile devices like tablets and smartphones for work purposes. Thus, companies do not need to invest extensively in hardware or pay for mobile or wireless services for their employees.

Desktops (Business) still popular for corporations

COMPUTER AND PERIPHERALS




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2011 2012 2013

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Tablets by OS 2011-2013

iOS Android Windows Others

Tablets is another key product that is driving demand for mobile data services. The market has been one largely dominated by Apple Inc, with competitors like AsusTek Computer Inc and Samsung Corp now contesting strongly with Android-based products.

For instance, despite the dominance of Apple Inc in US with a 67% volume share, Amazon Inc's attractively priced Kindle Fire managed to carve out a 14% volume share in 2011. The is due to subsidising the cost of tablets via content sales, also found within selected Western Europe markets, like the UK and France. This is however not common in other markets due to the lack of legitimate content.

Tablets’ popularity is generally limited to developed markets, with consumers preferring smartphones in emerging markets. The lack of wireless access limits the success of tablets in emerging markets, as tablets require wireless connections for app installations.

That said, along with the growing popularity of Android-based products, the release of Windows 8 at the end of 2012 will stir up more competition, as hardware manufacturers are eager to ship Windows 8 tablets, which are expected to be higher priced than Android tablets.

Changes expected in tablets in 2013





Apple Inc has successfully ascended into computers market leadership position in 2011, by volume terms.

With every generation of iPad, Apple has upped the ante in processing power and screen resolution, while maintaining its price and battery performance. The brand equity that Apple commands also means that consumers expect other manufacturers to price their tablets lower than the iPad. Apple’s dominance in smartphones and tablets and having a single OEM (original equipment manufacturer) gives the company a strong position in price negotiations for key components and the finished products. As such, other major manufacturers have been unable to compete on prices.

The popularity of Apple Inc’s brand and ecosystem has been a major contributing factor to declining sales of brands like HP, Acer and Dell, which have had little success in tablets.

iPad propels Apple to computers market leadership in 2011


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Top Five Computer Manufacturers by Retail Volume 2008-2011

Apple Inc

Hewlett-PackardDevelopment CoLP

Acer Inc

Dell Inc

Lenovo GroupLtd

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Apple Inc Product Mix in Computers 2008-2011

Tablets

Laptops

Desktops




Cloud computing and the increasing availability of

mobile and fixed lined internet access across the

world have fuelled demand for portable computers

and diminished the need for external storage, as

well as output devices like printers and monitors.

With an increasing number of affordable cloud-

based storage services for media and documents,

this trend is expected to accelerate in the forecast

period.

The proliferation of tablets is likely to further diminish

the need for storage and output peripherals, as

these devices will be built to be reliant on cloud

services and compatible with televisions for home-

bound use.

Furthermore, tablets are built around a touchscreen

interface which will diminish the need for input

peripherals. Therefore, sales of monitors, printers

and other computer peripherals will continue to fall.

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Retail Attachment Rates in Peripherals (World) 2008-2016

Monitors

Printers

Other computerperipherals

Peripherals affected by tablets and cloud computing




INTRODUCTION

GLOBAL TRENDS







The global in-car entertainment market is growing

in emerging markets while declining across

developed markets. This divergence is due to

differences in how the automotive market is

emerging in those market groups:

In the emerging markets, many households are

able to afford a car for the first time, due to recent

income growth. This is driving sales of late-model,

entry-level vehicles with basic, if any, factory

installed entertainment equipment.

In developed markets, the 2008-2009 recession

caused a severe decline in new car sales, as

consumers had restricted access to financing. This

caused sales of used vehicles to rise sharply, and

with fleet service lives extended, the overall fleet

size in those markets remained largely stable. The

on-going recession, combined with a slow

recovery, particularly in Japan and the UK, resulted

in car manufacturers turning to factory installed in-

car entertainment to spur sales. An increasing

number of brands are offering advanced

entertainment systems, with an increasing focus on

smartphone compatibility.

Automotive market megatrends


-5 0 5 10 15 20 25 30

United Kingdom

Japan

US

Brazil

Russia

Mexico

India

Vietnam

Indonesia

China

2006-2011 CARG (%)

Passenger Cars in Use in Key Markets 2006-2011




In-car entertainment in developed markets faces competition from smartphones and factory-installed entertainment systems. The proliferation of GPS-enabled smartphones has been driving down demand for in-car navigation. The pressure may ease as mobile data network crowding brought on by this proliferation leads to slow speeds and discontinuation of unlimited use data plans, thereby making navigation and other cloud services less popular.

However, competition from factory-installed units in cars will continue depressing demand for aftermarket electronics, as factory entertainment systems are increasingly becoming the focal point of many marketing campaigns. Car manufacturers are using the popularity of smartphones and other connected devices to drive sales of new cars with enhanced connectivity features.

While there is a number of car manufacturer-proprietary smartphone interface standards, as well as an emerging open standard, MirrorLink, the theme remains the same: integrating key features of smartphones into the vehicle’s entertainment system. The focus is on allowing users to connect their smartphones and navigate the content on their smartphones using on-wheel console buttons and touchscreens on the in-dash media players. However, this type of system also transmits vehicle performance and maintenance data back to the user and/or the smartphone. This level of integration into critical vehicle systems makes newer factory-installed entertainment systems hard to replace. Therefore, sales of aftermarket in-car entertainment are expected to fall in all developed markets, with declines in Western Europe exacerbated by macro-economic difficulties.

Focus on developed markets


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Japan North America Western Europe

%

Forecast Volume Growth 2011-2016

In-dash media players In-car navigation In-car speakers




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New Registration of Passenger Cars 2007-2011

2007 2008 2009 2010 2011

Focus on emerging markets


The automotive markets of emerging economies have provided fertile ground for aftermarket in-car

entertainment. These markets are seeing high sales of late-model economy class vehicles. Upgraded

speakers, in-dash media players and, especially, in-car navigation units give consumers a way to upgrade

their vehicles post-purchase at a relatively low cost compared to factory-installed options.

China is the main emerging market, with the largest and fastest growing passenger fleet. Within China,

growth is expected in all categories except in-dash audio players, sales of which are expected to decline

due to rising competition from increasingly affordable in-dash video players.

Note: Mercosur: Includes Argentina, Brazil, Chile, Uruguay and Paraguay



INTRODUCTION

GLOBAL TRENDS







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Video Players

Home Audio andCinema

Televisions

Globally, televisions are the main volume and value driver for in-home electronics, and are likely to

continue dominating sales over the forecast period. Televisions remain in demand, despite growing

presence of online video, as much of the broadcast programming is not readily available online.

The emergence of the internet as the preferred distribution channel, be it legal or otherwise, for video

content is making video players an increasingly niche category, as more people choose to download or

stream videos online. The availability and popularity of portable media players and mobile phones with

audio playback capabilities is also affecting utilisation rates and replacement cycles.

Televisions still critical to manufacturers


Global Volume Sales 2012-2016




New lease of life for televisions


In 2010, sales of digital TVs exceeded 199 million units, more than analogue TVs’ peak of 195 million units in 2004, as the talk of “cord-cutting” affecting TV sales failed to materialise.

Sales of digital TVs will continue to rise as the slimness of TV sets allows for their installation in bedrooms. In addition, there is strong demand in emerging markets like Brazil, India and China, driven by rising incomes and an increasing number of households.

In a global Euromonitor survey, consumers ranked TV commercials (56%) as the most influential mode of marketing, ahead of new medias like the Internet (43%) and social media (34%).

Further, consumers’ desire to be constantly connected is creating significant growth opportunities for Internet-enabled TVs.

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100%

2011 2012 2013 2014 2015 2016

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Digital Televisions by Network Connectivity 2011-2016

Internet-enabledTVs

Non internet-enabled TVs

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Global Retail Sales of Televisions 2003-2016

Digital TVs Analogue TVs

Note: Data based on researched markets




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Global Average Unit Prices 2011-2016

LCD TVs Plasma TVs

New features like 3D features fail to raise television prices


As unit prices of LCD TVs started to decline especially since the 2009 recession, manufacturers looked to

offering new features to drive value sales. However, consumers have proven largely unwilling to pay a price

premium for either 3D or internet-enabled TVs, thus generating a situation where prices continue to drop.

3D TV was a focal point of various marketing campaigns in 2010 and 2011, but have met with little

enthusiasm from consumers due largely to complexity of use and the lack of compelling content. By 2012,

this feature became a standard feature on most high-priced models and is likely to spill over to lower price

segments over the forecast period.

Internet-enabled TV was a more promising technology feature and met with greater consumer enthusiasm.

However, the industry largely failed to convey the benefits of internet-enabled TVs to consumers in order to

capitalise on the initial interest. A message that might have resonated with consumers would be one

centred on internet-enabled TV as a more efficient content distribution platform, especially for 3D content.

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China US Russia UK Germany

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TV Sales by Type 2012

Non 3D-enabled 3D-enabled

Note: Data based on researched markets




Samsung leads in digital TVs while LG and Sony falters


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Company Retail Volume Sales 2009-2011 Samsung Corp’s close relationships with retailers,

especially in emerging markets, have allowed the

company to strengthen its market leadership in

digital TVs, with 20% of volume sales in 2011.

Retailers play a critical role in influencing the

customers in emerging markets, with front line

sales personnel doing brand marketing. Samsung’s

marketing efforts are thus playing a critical role in

gaining share.

Samsung is expected to retain its leadership in

2012 and 2013, but may struggle to maintain its

profit margins. This is because in Western Europe

and the US, markets that contribute significantly to

Samsung’s profits, are experiencing demand fall.

Sony Corp lost nearly two percentage points in

market share in 2011 as the electronics giant

struggled with profitability and embarked on a

company-wide restructuring. The new direction set

by Sony’s new CEO to focus on margins will further

affect Sony’s market share in 2012 and 2013, with

LG and Samsung standing to benefit from Sony’s

troubles.

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Samsung Corp LG Corp Sony Corp




The popularity of the internet as a video distribution channel, and the rising availability of the internet in emerging markets have shrunk the potential market for video players. This makes it unlikely that BD players will ever have the same appeal that DVD players enjoyed over the review period.

While DVD player sales will decline, they will not disappear entirely. Low-cost DVD players and discs will retain their appeal in emerging markets, where broadband access remains expensive. BD players will continue replacing DVD players in developed markets as many consumers have extensive DVD and BD disc collections.

BD players struggle to compete with internet video


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Internet Users 2012 and 2016

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Global Sales of Video Players 2003-2016

BDPlayers

DVDPlayers




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Global Volume Sales by Category 2012-2016

Audio separates and speakers

Digital media player docks

Hi-fi systems

Home cinema and speaker systems

Other home audio and cinema

Simplicity and connectivity

Small audio systems

Digital media player docks have benefited from the proliferation of portable media players and smartphones. Global sales are predicted to grow until 2014, before flattening out.

The simplicity of home cinema and speaker systems has made the product one of the most popular low-cost home audio solutions. global sales are expected to continue rising.

Hi-fi systems and other home audio and cinema products, like portable radios, will continue to decline over the forecast period, as portable media players and smartphones becomes the audio source of choice for consumers, even at home.

Audio separates remain a niche, despite integrating connectivity features, as consumers prefer the simplicity of home cinema and speaker systems.

Home cinema and speaker systems provide a ray of hope




INTRODUCTION

GLOBAL TRENDS







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Global Sales of Portable Consumer Electronics 2012-2016

Smartphones Feature Phones

Imaging Devices Portable Players

Growth in portable consumer electronics has been

driven by smartphones, which has negatively

affected portable players and, to a lesser extent,

imaging devices.

Smartphones have integrated many features

previously performed by single function devices.

Growth in smartphones has negatively impacted

sales of cameras, camcorders, portable media

players and in-car navigation.

The deepest decline is expected in portable

players, as smartphones increasingly offer large

amounts of storage for music, and mobile network

data connectivity enables consumers to access

online music and video streaming services.

Imaging devices have fared better, as camera

manufacturers have introduced increasingly price-

competitive interchangeable lens cameras as

demand for low cost point-and-shoot models

waned. However, the proliferation of video capture

capabilities in cameras has been driving down

sales of camcorders, sales of which are expected

to continue declining over the forecast period.

Smartphones driving demand





As camera phones started to become more advanced, camera manufacturers turned to reducing prices of

DSLR and mirrorless interchangeable lens cameras. which helped arrest the sharp unit price decline in the

historical period.

There is growing interest in photography, partially fuelled by the growth of social media sites and an

increasingly awareness of the limitation of low cost cameras and smartphone’s inbuilt cameras under low

light conditions.

New families, particularly in emerging markets, are critical to digital cameras growth. Emerging markets

with high birth rates are also the fastest growing camera markets in terms of volume sales, as parents are

eager to capture high quality images of their growing children. China’s new birth is low as compared to

other emerging markets but the sheer number of its vast population propels the sales of digital cameras.

Increasing sales of cameras with advanced features have also hampered sales of camcorders, relegating

camcorders to a niche category for video enthusiasts.

DSLRs and mirrorless interchangeable lens cameras drive value


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Per

‘000 inhabitants

Birth Rates 2011




Portable players face challenging prospects


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Global Volume Sales of Portable Players 2011-2016

E-Readers

Portable MP3Players

PortableMultimediaPlayers

Other PortableMedia Players

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E-Reader Sales by Region 2011-2014

Rest of the world

Western Europe

Eastern Europe

Asia Pacific

North America

Sales of portable players face

competition from smartphones

and tablets. The threat from

smartphones is greater as the

retail prices are usually

subsidised by telcos, making

portable players expensive in

comparison.

Tablet users can also easily

download media players and

codecs online.

E-readers is the only category

with positive global growth

potential, till 2014. North

America remains the largest e-

reader market due to the good

availability of e-book content.

Consumers in Asia Pacific

would rather spend on

smartphones apps like games

rather than e-books.




Of the 1.8 billion mobile phones predicted to be sold in 2016, more than 1.4 million units are expected to be smartphones. This translates to smartphones accounting for 80% of total mobile phone volume sales, as compared to 42% projected for 2012.

Consumers switching over from feature phones to smartphones will be the main driving force in the market over the forecast period, primarily in emerging markets in Asia Pacific.

Growth in global subscriber numbers is expected to continue, which will sustain demand for both feature phones and smartphones. Subscribers number are predicted to grow by over 1.3 billion in emerging markets between 2011 and 2016, driving global mobile phone volume sales to over 1.8 billion units in 2016.

These new consumers are likely first to buy a feature phone, but as smartphones become increasingly affordable, the vast majority of even the poorest markets will migrate to low-cost smartphones by 2016.

0

200

400

600

800

1,000

1,200

1,400

1,600

2012 2013 2014 2015 2016

Reta

il vo

lum

e s

ale

s (

mn

un

its)

Global Volume Sales of Smartphones 2012-2016

WesternEurope

NorthAmerica

Middle Eastand Africa

LatinAmerica

EasternEurope

Australasia

Asia Pacific

Asia Pacific fuels smartphone growth





The race to cater to the “next billion” consumers

who currently do not have mobile phones will see

Android extending and consolidating its lead over

other smartphone OS in the forecast period. The

appeal of Android lies in the wide array of products,

from ultra-low cost smartphones to super phones

with processors as powerful as laptop computers,

and its ability to allow manufacturers to create their

own specific software layers.

iOS being limited to the iPhone will hinder its

growth in the burgeoning smartphone market, even

though Apple is expected to retain its loyal

followers and gain new customers in emerging

markets, fuelled by a growing middle class.

By 2013, the Windows Phone OS is expected to

gain a foothold in many emerging markets, where

many consumers will be buying a smartphone for

the first time. The OS is user-friendly and available

on a growing range of Nokia-branded

smartphones. Windows Phone is expected to be

very popular in Brazil and Egypt, where Nokia

phones have historically been particularly popular.

Android taking over the world


0% 20% 40% 60% 80% 100%

South Korea

Japan

China

India

Italy

Russia

France

Germany

USA

Brazil

Retail volume sales (%)

Smartphones by OS in the 10 Largest Markets in 2013

Android iOS other




iPhone under intense pressure from Samsung


Smartphones Volume Share (%) 2011

Apple Inc

Samsung Corp

Nokia Corp

Research in Motion Ltd

HTC Corp

Others

Apple Inc (19% of global volume in 2011) fought off an aggressive

challenge by Samsung Corp (18%) in 2011 and remained the market

leader in smartphones. Samsung showed its determination to unseat

Apple in 2012, when it launched its flagship product, Galaxy S III,

months ahead of iPhone 4S’s successor, which remains unavailable

as of July 2012. The early launch date will help Samsung gain a

competitive advantage, and Samsung is predicted to overtake Apple

in 2012.

Nokia Corp, despite its transition to Windows OS, managed to retain

16% of smartphone sales, as the Finnish company cleared its

inventory of Symbian-powered smartphones. Nokia is expected to

continue to lose market share in 2012 as the company completes its

transition to support Windows OS and focuses on profit margins

rather than market share.

One in 10 smartphones sold in 2011 was a Blackberry, even though

Research in Motion (RIM) Ltd’s profit margins are declining every

quarter. The Canadian firm’s sales are primarily driven by the US and

emerging markets like Indonesia, but it continues to lose share in

other major markets. RIM is expected to lose significant market share

in 2012 as it struggles to roll out its delayed Blackberry 10 OS.

HTC Corp has risen from being an unknown in 2008 to garnering a

significant 9% market share in 2011, overtaking LG Corp.



INTRODUCTION

GLOBAL TRENDS







Store-based retailing in consumer electronics remained strong across most markets in 2011, and showed

significant growth potential in emerging markets.

emerging markets provide a good operating environment for electronics and appliance specialist retailers.

These markets have dynamically growing demand for electronics, coupled with low penetration of internet

retailing compared to developed markets.

In developed markets, electronics and appliance specialist retailers are facing difficulties in competing

against online retailers. In the US, internet retailing goes largely untaxed, while consumers shopping in

stores are subject to local sales taxes. In Western Europe and Japan, continuing macro-economic

difficulties are likely to cause an overall drop in demand and value sales, something bricks-and-mortar

stores are less able to handle due to their higher fixed operating costs compared to internet retailers.

-20

-10

0

10

20

30

40

50

60

Saudi Arabia China Vietnam Turkey Russia Ireland Italy Australia Netherlands Greece

% r

sp

gro

wth

Best and Worst Prospects for Specialist Retailers 2012-2016

Electronics and appliance specialists still growing





0 10 20 30 40 50

Japan

France

Germany

UK

US

Brazil

India

China

Respondents answering “1-2 times per week” or “almost every day”

How often do you use your mobile phone for the following?

Buy items or service

Compare prices in-store

Read reviews

Source: Euromonitor International Annual Study 2011

Note: Approximately 2,000 responses per country

The proliferation of Internet-

enabled mobile phones suits

consumers’ on-the-go lifestyles

and desire for immediate

consumption. In fact, online

consumers, especially in

emerging markets, are

increasingly accessing shopping

websites via their mobile phones

rather than computers.

In emerging markets, companies

are circumventing the lack of

online payment options by offering

cash-on-delivery (COD) options

and full refund guarantee to entice

online purchases. However,

online purchases in emerging

markets are largely restricted to

consumers in cities and urban

residences, as the poor

infrastructure in rural areas make

delivery difficult and

uneconomical.

The mobile phone’s increasing importance as a purchase influencer





2012 figures are provisional and based on part-year estimates.

The forecast period under review subsumes the years 2012 through to 2016, inclusive.

All forecast retail value data cited in this report are expressed in constant terms unless otherwise stated;

inflationary effects are discounted. All historical data, country-specific, regional and global, through to 2011

are also expressed in constant value terms, with any inflationary effects discounted.

All US dollar data cited in this report, historical and forecast, at national, regional and global level are

shown at fixed 2011 exchange rates.

Desktops – Personal computers (PCs) meant for use in a fixed location. Desktops can refer to a stand-

alone unit as well as a complete system including a monitor and keyboard.

Laptops – Personal computers (PCs) meant for mobile use and incorporating an external power source,

usually a rechargeable battery pack.

Netbooks – Netbooks are portable computers with keyboard and screen size less than 12".

Tablets and Other Portable Computers – Portable computers primarily using touchscreen interfaces.

Monitors – Stand-alone display devices connected to computers. Includes LCD and CRT monitors sold

separately from desktops.

Printers – Computer peripherals capable of producing a paper copy of text and/or graphics.

Other Computer Peripherals – Includes all hardware devices connected to a computer but sold separately.

Examples include external keyboards, PC speakers, CD/DVD drives, iPod docks and cables, USB cables

and headsets for VOIP.

Data parameters and report definitions

REPORT DEFINITIONS




In-Dash Audio Players – In-Dash Audio Players includes all media players capable of reproducing sound on the car’s speakers from a variety of sources and designed to be installed in the dashboard of the vehicle.

In-Dash Video Players – Includes all aftermarket in-car media players capable of video playback.

In-Car Navigation – Includes all aftermarket electronic systems designed to provide a map, the vehicle's current location as well as step-by-step directions to a programmed destination.

In-Car Speakers – Permanently-mounted aftermarket speakers designed for automotive use.

Home Audio and Cinema – Consist of Audio Separates, Home Cinema and Speaker Systems, Hi-fi Systems and Other Home Audio and Cinema.

Audio Separates – Consists of Amplifiers/Tuners/Receivers, Speakers and Other Audio Separates.

Digital Media Player Docks – Stand-alone devices with a docking station or cradle and speakers.

Hi-fi Systems – Bookshelf speaker system with built-in audio amplification, audio and/or video playback.

Home Cinema and Speaker Systems – Also known as Home Theatre System (HTS) or Home Theatre in a Box (HTiB). These products consist of a DVD/BD player, amplifier and speakers which are bundled or integrated and sold as a complete system.

Speakers – Stand-alone speakers without built-in amplification or video/audio inputs.

Other Home Audio and Cinema – Includes audio products designed for in-home use that do not fall into the above categories of Audio Separates, Home Cinema and Speaker Systems and Hi-fi Systems. Examples include clock radios (with or without docks), DAB radios, CD and cassette players.

Analogue TVs – Televisions (CRT TV) that accept modulated VHF or UHF carrier frequencies and decode this signal into TV images.

LCD TVs – TVs which use Liquid Crystal Display (LCD) panels with backlighting. Backlighting technology can be via conventional fluorescent light or LED.

Data parameters and report definitions (continued)

REPORT DEFINITIONS




OLED TVs – New display technology which uses self light-emitting technology composed of a thin, multi-layered organic film placed between an anode and cathode.

Plasma TVs – Display technology that applies electricity to a mixture of xenon and neon gases in small cells between two glass panels, turning it into plasma to illuminate adjacent phosphors in different colours.

BD Players – Stand-alone video players that can play Blu-ray and other disc formats.

DVD Players – Stand-alone products that can playback DVDs and other disc formats.

Digital Cameras – Cameras that store images in digital format.

Digital Camcorders – Camcorders that use Digital8, MiniDV, DVD, Hard Disk and solid-state (flash) semiconductor memory cards or a combination of these storage media. The videos recorded are in digital format but not in High Definition.

HD Camcorders – Digital camcorders capable of recording videos in high definition (at least 720p).

E-Readers – This is a single function device that is specially designed for reading text. E-book readers have a specific screen optimised for text.

Portable MP3 Players – Portable digital audio players that can play back digital audio.

Portable Multimedia Players – A portable multimedia player is an audio player with video playback capabilities.

Feature Phones – Any device capable of voice communication over a cellular network that does not fit the definition of smartphones.

Smartphones – Any device capable of voice communication over a cellular network. A smartphone must have an identifiable operating system, allows installation of software applications (apps), and screen size of <6” (15cm).

Data parameters and report definitions (continued)

REPORT DEFINITIONS




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euromonitor - consumer electronics global trends and analysis - sep 2012

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