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Will Consumer Electronics Avoid a Downturn?

A new market study by Futuresource looked at the impacts of recession on the consumer electronics industry and delves into the core drivers behind continued consumer uptake, providing forecasts across the key industry segments.

Rather than going on vacation or dining out by candlelight, consumers see the purchase of hot new electronics items like Blu-ray players, flat panel TVs or smart phones as a far better value-for-money option.

The tangible benefits of these products can be enjoyed for a long time to come and are seen by many as essential items once consumers begin the retreat into their living rooms.

Futuresource research from the economic slump of 2001 reveals digital cameras and DVD players continued to grow sharply when the economy stagnated, giving a clear indication that home entertainment can ride the storm.

Stretching the timeline backwards further, during the economic downturn of the early 1980s, sales of VCRs in the UK rocketed, growing by 440 percent between 1980 and 1983.

New figures released by Futuresource show the markets for flat panel HDTVs and Blu-ray disc players will continue to expand in Europe and the U.S. this year, with the majority of consumers continuing to migrate up to more expensive products.

The U.S. flat panel market is on track to reach nearly 30 million shipments this year, with LCD screens experiencing a healthy 40 percent growth on 2007. However, although they're still seeking that HD fix, many consumers are shopping for smaller screen sizes, between 32 and 42 inches.

Subsequently, it's likely to be slower growth within the U.S. for the giant screen size segment (50 inch or more) of the market. By 2010, overall shipments will have grown to 36 million units.

In Western Europe the TV market is also holding up well, with overall volume growth of 6 percent predicted by Futuresource for this year. In addition, significant price reductions of up to 25 percent in the larger screen (42 inch+) categories are fueling interest amongst first time buyers.

Flat panel growth is expected to continue into 2009 and beyond, with panel suppliers expanding production and opening next generation plants, which will ultimately help to drive average prices down further and boost demand.

The pattern of growth is similar for the Blu-ray disc player market, with projections showing player shipments to Europe's top 5 markets (France, Germany, Italy, Spain and UK) more than tripling between 2008 and 2009, to reach in excess of 1.8 million units shipped in 2009, excluding PS3.

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