Consumer electronics: Multiple New Products Cycles Offer Growth but Beware of Rapid Commoditization and Pricing Deterioration

12/1/2014 - Report
ic_blogtagEconomic OutlookUnited StatesInformation & Communication TechnologiesEmploymentManufacturingSector Risk
An Innovative and Highly Competitive Industry: The consumer electronics (CE) category of products includes smartphones, computers, televisions, video game consoles, automotive technology, and many other home products as well as emerging product categories such as wearables and 3D printers.

It is a rapidly changing, dynamic industry that is highly competitive and influenced by technological developments. Manufacturers are under enormous pressure to bring unique and differentiated products to market. Any successful product quickly attracts copycat products from competitors, resulting in rapid commoditization and falling prices.

The Age of Convergence and Connectivity: Recently the two prevailing trends have been convergence � combining the functionality of many products into one � and the shift toward mobile, connected devices such as smartphones and tablets. Rapid adoption of tablets disrupted and severely cannibalized demand for notebooks, but the decline in demand appears to have bottomed as tablets still cannot perform all functions of the computer. While flat panel TVs have reached saturation, new developments such as internet connectivity have made TVs smarter with the ability

to surf the web, download video and watch live streaming content.

From a distribution perspective, online retailing has been a major trend and has become much more prevalent within the industry. With the rise of the smartphone, comparison shopping apps and access to direct retailer sites, pricing has also become much more transparent and comparison shopping much easier. Purchasing power is in the hands of the consumer.

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Consumer electronics: Multiple New Products Cycles Offer Growth but Beware of Rapid Commoditization and Pricing Deterioration - Report