Consumer electronics market was valued at over US$ 1.7 trillion in 2016, is expected to cross 3.8 trillion by 2024. Product categories under the industry include smartphones, tablets, computers, televisions, game consoles, digital cameras, automotive technologies, wearable technologies, 3D printers, and other home products
Increasing urbanization has led to increase in average income per individual of middle class population across the globe. As per stats provided in the Global Economy & Development Working Paper by Brookings Institution in February 2017, global middle class population was pegged at over 3 billion in 2015 and is projected to surpass 5 billion by 2030. This has led to substantial increase in discretionary income and large potential consumer base, resulting in increased spending on automated home products and electronics. Growing multi-channel retailing has provided easy access to the major international and domestic brands for consumers worldwide. These factors will prominently fuel the consumer electronics market growth.
Advent of IoT and next generation connectivity technologies such as 3G, 4G, 4G LTE and 5G creates a conducive environment for proliferation of smart connected devices. Plummeting costs of bandwidth and sensors further supports growth of smart devices and in turn provides impetus to the overall consumer electronics industry. According to Golman Sachs, as of 2014, cost of bandwidth decreased 40X, while that of sensors decreased 50% over the last decade. Increasing purchasing power and rampant decline in prices of consumer electronic devices places the consumer electronics industry on high-growth trajectory.
Smartphones accounted for around half of the consumer electronic product sales revenue. An estimated 2.1 billion smartphone users were reported worldwide in 2016. However, growth of the segment is expected to be largely stagnant due to maturing of the smartphones industry. The recent past has witnessed the emergence of various cost-effective smartphones from various new brands, offering good processing power and security features. This has resulted in a paradigm shift in the industry, with consumers from extreme ends of the spectrum, namely feature phone users and high-end smartphone users increasingly inclined towards such cost-effective smartphones. China holds the mantle of being the largest market for smartphones, while India is projected to be the fastest growing market, with growth pegged at 5X that of the market leader. Apple and Samsung are two of the largest smartphone manufacturers.
Increasing functionality of the smartphones has led to significant surge in power demands for these consumer electronics. Conventional batteries have proved insufficient in terms of space and power backup, leading to major reason for consumer dissatisfaction. Innovative methodologies to solve these problems are surfacing, that include concepts like wireless charging, li-imide batteries, Quick Charge 2.0 (by Qualcomm), super capacitors, battery packs (Trontium Reactor can charge an iPhone 50 times), and ultra-fast charging (such as StoreDot). Major of these technologies are still in their nascent stages, but players are likely to increasingly invest for improving the operation time of their devices. For instance, in February 2016, Intelligent Energy partnered with an emerging smartphone manufacturing, to develop an embedded hydrogen fuel cell for smartphones that can power the smartphones for a week. This joint development agreement (JDA) was valued around US$ 7.5 million.
Personal consumer applications
TFT LCD, IPS-LCD, resistive touchscreen LCD, capacitive touchscreen LCD, OLED, AMOLED, and Super AMOLED are the common types of smartphone displays. 720p, 1080p, 2K and 4K Ultra HD are few of the standard resolutions offered by these mobile display technologies. AMOLED are gaining substantial popularity in high end phones owing to better color reproduction, low power consumption, better battery life, higher brightness, lightweight designs and display sharpness. Super AMOLED, developed by Samsung, is integrated with touch sensors on the screen itself, making it the leanest display technology in the industry. Increased damage resistance, economical availability and better user experience are the factors that may influence the smartphone sales over the next few years.
Television sales were over US$ 116 billion in 2016, is anticipated witness decline to around 11% in 2017. This is owing to the declining consumer inclinations towards televisions due to proliferation of content streaming and video on-demand services such as Netflix. Burgeoning growth of ease of access to contents from internet sources and better user experiences through means such as mobile, laptops, tablets, etc. Inadvertently, quality video content accessibility through television service providers have gained considerable demands. HD, 4K and HDR options have witnessed increased adoption rates surpassing double digit growth rates year on year. 4K TV sales were almost over US$ 43 billion, with 6.8% by value comprising of HDR counterparts. Europe witnessed notable adoption of HDR TVs in relative to other regions.
High initial costs of the products offering smart and high resolution TVs are expected to hinder the large scale adoption over the coming years. Moreover, low cost alternatives available in the form of LCD TVs will continue to dominate the industry in terms of volumes. Along with high end products, economical alternatives are projected to be part of the product offerings to maintain their foothold in the price sensitive regional segments.
Electronic paper (or e-paper) and foldable displays are expected to gain significant momentum over the next few years. e-Paper is display technology that imitates the appearance of ink on paper. Additionally, these displays can show image in absence of light and are featured to consume little or no power in displaying still image. This property has made it preferable for devices such as e-readers and other forms of promotional devices. Next generation trend is expected to witness large scale adoption of foldable displays. Wearable technologies find considerable potential in medical purposes, recreational activity tracking and infotainment. The segment portfolio includes fitness trackers, smart watches, and headphones. In consumer electronics, wearable technologies are expected to present the highest growth trend over the near future. However, the wearables segment would account for relatively small share of the market.
All kinds of domestic appliances such as refrigerators, washing machines, air conditioners, microwave, induction cooktops, food processors, dishwashers and dryers are included under the white goods. These will present considerable growth opportunity in the coming years owing to the advent of smart connectivity integration into these technologies. Increased energy efficiency offered by the next generation products and improving living standards will add on to the featured market growth prospects.
Smart thermostats, connected security cameras, and VR/AR headsets are some other industry segments that will present potential growth opportunity over the forecast timeframe. However, consumer electronics market size is expecting substantial decline in the overall revenues owing to maturing smartphones market and their considerably large contribution to the segment.
Chief contributors to the industry include Samsung Electronics, LG Electronics, Apple, Hitachi, Koninklijke Philips, Sony Corporation, HP Inc., Toshiba Corp., and Panasonic among a few others. Industry presence can be largely attributed to established brands across the international industry scope along with few regional brands holding significant industry shares.
Consumer electronic market is prominently characterized by innovation and development to increase their product appeal. Providing attractive product designs, along with extra feature additions to the provide value for money to the consumers, are expected to be part of their key strategies to strengthen their industry presence. Strategic alliances to enhance the portfolio/ regional presence and M&A will also define the global competitive scenario. Moreover, government bodies of several major economies are focusing on digitization, will also provide considerable opportunities for the industry participants in smartphones and other portable devices market. Singapore, Finland, Sweden, Norway, and U.S. are among the major economies harnessing digitization, are projected to be a part of every emerging economy across the globe.
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