Futuresource Sees CE Sales Growing 4.5% This Year, Cites 'Difficult Ride'

an “unprecedented boom” in smartphone sales, Futuresource said. For the first time, in 2014 China's share of worldwide CE spending matched that of North America, at 22 percent, it said. China's tech giants are starting to challenge at the world level, “leveraging a domestic market which is now the world's largest, with increasingly broad access to leading edge technologies and Western brand acquisitions like Motorola and Philips,” Futuresource said. Although a weaker yen has provided some economic relief to Japanese CE makers, “most are still losing money in consumer electronics and widespread restructuring and industry consolidation continues,” it said. Emerging markets now are more than half of worldwide CE demand due to growth in smartphones and tablets, Futuresource said. While Latin America has shown growth for three straight years, Russia “has skidded to a halt,” Futuresource said, citing sanctions and dropping oil prices. Futuresource predicts the smartphone segment will peak at $343 billion in 2017 due to shrinking average selling prices. The trend is being fed by Chinese vendors such as Huawei, Lenovo and Xiaomi that are driving volume growth with sales of low-end handsets, which are “eating into the profits of more established brands,” including market leaders Apple and Samsung, Futuresource said. The rapid emergence of low-cost Chinese vendors has marginalized other non-Chinese mobile vendors, including Blackberry, HTC, Motorola, Nokia and Sony, it said. The smartphone market is now the largest segment of the total CE market, followed by infotainment devices (PCs, tablets, e-readers, networking devices and peripherals) and TVs. Total CE sales by 2018 will touch $733 billion, Futuresource said. Among emerging markets, strong growth is seen in the Internet of Things market, with wearables providing particularly strong growth in 2014 at an estimated $8 billion. But “questions remain” about the long-term viability of the wearables market because the usage model and applications of wearable devices are “still unclear to consumers,” it said. The smart home will be a key driver of growth for CE, although some of the biggest opportunities in the space are “service-driven,” with opportunities for CE vendors less clear, it said.