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Going for gadgets

U.S. consumer electronics spending could hit $165 billion

Consumers are going to shell out a lot more money for gadgets this year.

At least that’s what the Consumer Electronics Assn. is predicting, expecting the overall consumer electronics biz to earn $165 billion in the U.S. alone, up slightly over 2009.Last year is one “none of us wish to repeat, and now we look forward to 2010,” said Gary Shapiro, prexy-CEO of the CEA, which produces the annual Consumer Electronics Show in Las Vegas. “There is light at the end of the tunnel, and it is the bright light of innovation.”

Last year, discounting by retailers on Blu-ray hardware and videogame consoles, among other highly sought-after devices, caused revenues to fall nearly 8% while overall unit sales rose nearly 10%.

The CEA predicts that smartphones and netbooks will dominate electronics sales this year, with smartpones earning nearly $17 billion this year and moving 52 million units. Smartphones already account for more than 30% of cellphone sales. More than 30 million netbooks will be sold, generating $14 billion.

Smartphones and netbooks are primed for strong growth as consumers continue to seek efficient, portable devices,” said Steve Koenig, CEA’s director of industry analysis. “With more consumers seeking content anywhere, anytime, the demand for products facilitating these experiences will drive purchases going forward.”

Blu-ray players are also expected to sell well — something Hollywood is looking forward to as consumers buy fewer DVDs and homevideo divisions suffer.

In 2009, Blu-ray unit sales rose 155%, with more than 7 million players sold, to total $1 billion. This year, more than 11.5 million players are expected to sell as retailers lower prices.

Studios have already benefitted from an uptick in Blu-ray player sales. During the holiday shopping season, consumers purchased a surprising number of Blu-ray movies, with shipments up 35% during the fourth quarter, typically the industry’s bestselling quarter. As a result, Blu-ray sales jumped 70%, while Blu-ray rental revenue increased 48%.

Studios shipped 38.6 million Blu-ray discs during that period, compared with 28.6 million in fourth-quarter 2008, according to the Digital Entertainment Group, which rolled out the figures at CES.

About 17 million homes in the U.S. have Blu-ray players, the DEG said.

For the full year, Blu-ray sales and rentals doubled to $1.5 billion in 2009. When including DVD, sales of which fell 11% to $19.2 billion for the year, total sales and rental revenue from home entertainment releases in all formats dipped 5% to $22.8 billion. Digital sales of movies and video-on-demand titles generated $2.1 billion, up 32% from 2008.

The home entertainment business is doing remarkably well given the overall economic environment,” said DEG and Warner Home Video president Ron Sanders. “We have seen tremendous growth in both Blu-ray hardware and software. Consumer transactions are up, and we are looking forward to seeing some stabilization in the packaged goods sell-through business in the coming year.”

Many of those Blu-rays will play on flat-panel TVs. Consumers are expected to buy more than 37 million of the TVs with year, with that sector of the biz earning $22 billion. And with 3D-cable TVs and Blu-ray players rolling out this year, the CEA expects 4 million 3D TVs to wind up in consumer homes by the end of the year.

The videogame industry is also hoping for a brighter 2010.

Microsoft chose CES to generate some pre-E3 news for its Xbox 360 console, announcing that its Natal system will hit stores shelves in time for the Christmas holidays. Pricing was not revealed.

The Natal, Microsoft’s answer to Nintendo’s Wii, eliminates the need for a traditional videogame controller in order to play the games.

Microsoft said that more than 70% of game developers are working on Natal versions of games.

The company also said that it has sold more than 39 million Xbox 360s since its introduction, and Microsoft has earned more than $20 billion from the sale of consoles, games, peripherals and downloads from Xbox Live since the first Xbox launched in late 2001.

Despite the success of Apple’s iPhone and the recent intorduction of the Goole Android phone, Microsoft said it had no intention of creating a cellphone based on its Zune mobile music and video player, according to Robbie Bach, president of Microsoft’s entertainment and devices division.

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