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A matter of scale

Devices add and subtract size, power

It can be tough to keep up with the trends coming out of CES each year, with this year’s confab boasting 1.8 million square feet of exhibit space.

But Shawn DuBravac, the Consumer Electronic Assn’s chief economist, is giving trendwatchers a little help.

He expects this year’s CES to feature a tension between two trends: pulling computing power out of some devices, such as PCs, (Google’s Chromebook, for example) and adding computing power to others, including devices that haven’t had any intelligence in the past (citing so-called smart ski goggles that record data on ski runs).

DuBravac said sensors have now become so cheap they can be “wasted” in consumer electronics devices. Microsoft’s Kinect is a box full of sensors,” he said, so he expects the continued “sensor-ification” of CE devices moving forward.

The next big drive in computing, he said, would be making more devices interconnected, not more powerful.

Apple’s Airplay, which lets users wirelessly stream what’s on an iPhone, iPad, or iPod touch to an HDTV and speakers via Apple TV, or mirror an iPad 2 or iPhone 4S screen on an HDTV, will be one part of that drive, DuBravac noted, but not the only part. By the end of 2012, he said, “we expect nearly half of all TVs shipping will be able to hook up to the Internet.”

DuBravac said many of the devices at CES this year will try to scale some existing feature on established devices: bigger or smaller tablets, enhancements to the iPhone 4S camera.

“To me the key is what feature is it scaling, and is there a market for that?” DuBravac asked.

He also predicted a continuing trend toward personalization, where hardware and software are customizable. 2012 will be the “Year of the Interface,” he said, as hardware makers, who haven’t been very good at interface design, try to improve the end-user experience.

He also expects both gesture and voice control to begin to play a role in TV interfaces through devices to be unveiled at this year’s show.

Just hours before the start of CES, DuBravac presented data showing what retail buyers are interested in seeing at CES, and that paralleled what’s been moving the most out of stores: apps, tablets, devices for streaming, Internet-connected TVs and devices for sharing content. At the bottom were 3D TVs, e-readers and netbooks. Spending on consumer electronics devices worldwide is expected to top $1 trillion in 2012, driven in large part by tablets and smartphones, the CEA said.

Televisions, long a robust category, are losing momentum. Sales of TVs were up 2% in 2011, and are expected to be up another 1% in 2012, to 262 million units. However that growth is concentrated in emerging markets, as the developed markets of North America, Western Europe and developed Asia-Pacific (mainly Japan and Korea) are nearly saturated.

Tablet sales, however, are gearing up for explosive growth: at least 96 million units worldwide, and perhaps 100 million this year. That’s a growth rate of 65% year-on-year, representing 5% of the worldwide CE market.

“Because (tablet sales) have grown so rapidly in North America, it’s practically peaked already,” said Steve Bambridge, Global Business Director GfK Boutique Research, which worked with CEA to compile the data. “But there’s a lot of other growth to come in other markets.”

The driver of the consumer electronics market in 2012 is expected to be the smartphone, with a sales gain of 22% expected this year, up from 18% in 2011. In fact, most other product categories are leveling off or actually beginning to contract. Home audio, digital still camera and LCD TV sales showed small increases in 2011, but the energy is all in smartphones and tablets. Western Europe in particular is a strong market for high-end smartphones.

In fact, said Bambridge, “The rush into smartphones has squeezed other portable device categories: car navigation, camcorders, portable media players … All of these are losing their relevance as the smartphone takes over their functionalities.”

In the camera market, he noted, compact cameras are declining, but high-end digital SLRs are holding their ground.

Overall consumer spending on electronics products was up 8% in 2011 worldwide, and was up in every region: In developed markets North America 10%, Western Europe 2%, and developed APAC 2%. In emerging markets, Central/Eastern Europe was up 18%, emerging APAC 17%, Latin America 11%, Mideast/Africa 8%.While sales rebounded from the 2008-2009 economic crash, Western European figures continue to be depressed as several economies there remain shaky. Meanwhile the emerging markets — Central and Eastern Europe, developing Asia Pacific (including India & China), Latin America and Middle East/Africa — have grown to represent 46% of the world market and are the most important center of growth. Demand for LCD TVs is especially strong in the emerging markets.

The CEA described emerging markets roaring ahead while developed markets are plateauing. The BRIC markets (Brazil, Russia, India, China) are leading this trend, with growth rates around 50%.

“2012 is the first year we’re projecting emerging markets to be larger in consumer spending than North America or Western Europe,” said Steve Koenig, director of industry analysis for CEA. “These emerging economies really are the locus and focus of growth.”

LCD TV purchases grew 5% in 2011, but were down 3% in Western Europe. Koenig and Bambridge identified some areas with growth potential: LED televisions (considered part of LCD), which saw sales grow 33% last year; connected TVs, which were up 56%, and 3D TV, up 122%. (TV categories in decline include plasma, down 15%, and CRT, down a precipitous 40%.)

“Eventually we’ll get to OLED,” said Koenig. “That’s a storyline for the second half of this decade. But it’s going to take some time for those prices to come down.”

3D TV is doing better than some reports have indicated, Koenig and Bambridge said, with steady growth in the U.S. market. To date, they said, that growth is linear, instead of the usual “S” curve of slow initial sales to early adopters, rapid adoption as prices fall, and then a leveling off as the market becomes saturated. That, according to the presenters, makes them extremely price-sensitive.

The market with the greatest 3D TV penetration, they said, is China, where passive glasses were applied to inexpensive sets.

“This begs the question: What are they doing with those 3D TVs?” asked Bambridge, “because there’s not a lot of 3D content in China — which goes to show if you drive the price low enough people will take the product.”

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