http://www.businessweek.com/technology/content/sep2009/tc2009092_803429.htm

Consumer Electronics

Consumers to Spend Big on TVs, Smartphones


Even a global recession can't come between Americans and the high-tech gadgets they love. Consumers of all ages and family situations are purchasing high-definition TVs, network gear, and smartphones at a breakneck pace, according to a study released on Sept. 2.

Already, half of U.S. adults are gamers; almost three-quarters of American households have a broadband Internet connection; and nearly half of those households own an HDTV, with 10 million units sold in 2008, according to the report by Forrester (FORR). Over the next five years, nearly 39 million additional U.S. households are expected to be in the market for their first high-definition set, and more than 30 million homes will add network connectivity, Forrester says, based on mail-in surveys from nearly 48,000 U.S. and Canadian households.

The findings underscore North America's unwavering fascination with all things tech despite the tightening credit standards and job losses associated with the worst economic crisis since the Great Depression. Expectations for ongoing demand for consumer electronics bode well for a wide swath of tech companies specializing in TVs, smartphones, and other gear.

rosier holidays for retailers?The report also augurs healthy holiday sales for retailers such as Best Buy (BBY) and Wal-Mart (WMT), and suggests that broadband service providers will benefit as families seek faster connections to the Internet. That could help carriers such as Time Warner Cable (TWC), Verizon Communications (VZ), Comcast (CMCSA), and AT&T (T), which are locked in a race to provide the fastest broadband connections across home and mobile devices. Cisco Systems (CSCO), Netgear (NTGR), and other sellers of networking gear also stand to benefit.

While Forrester found differences in buying and consumption patterns among traditional demographic lines, researcher Charles Golvin said the unifying factor over time will be increasing reliance on the Internet for entertainment, business, and social interaction. "In the next several years consumers will increasingly rely on a ubiquitous Net that is instantaneously accessible on a wide variety of devices, from mobile phones to laptops to new form factors such as e-readers," Golvin says.

Consumer-electronics manufacturers have gotten the message and are incorporating Web access into their products. Amazon (AMZN) and Sony (SNE) both manufacture devices that let users read digital books that can be downloaded from the Internet. Many HDTV makers have begun rolling out new models that let consumers connect to the Internet to stream additional content such as Netflix (NFLX) movies to their set.

Forrester's findings square with other measures of demand for electronics. The Consumer Electronics Assn., an industry trade group, says its monthly survey measuring consumer expectations about the broader economy is up six and a half points from a year earlier and has climbed in three of the past four months. "Improved confidence in job security should buoy purchase decisions moving forward," says Shawn DuBravac, CEA's economist and director of research.

Blu-ray Hasn't Won HeartsBut the benefits of consumers' affection for high-tech gizmos aren't felt evenly. More than a year after Blu-ray won the high-definition DVD format war, only 5% of American households regularly use one. The players offer Web access to grab the latest movie trailers and more information on the discs themselves than traditional DVDs. But with 93% of young families owning at least one DVD player, the relative expense of owning both a Blu-ray player as well as the content it plays appears to be holding back widespread adoption.

Researchers also found consumers below the age of 40 are more likely to adopt digital technologies such as music players and cameras. Younger users read more product reviews, and are more open to advertising pitches. People with children tend to look for devices that offer shared entertainment, including game consoles and video camcorders.

Forrester's findings were mixed even for Apple (AAPL), one of the more successful makers of electronics in recent years. Apple's computer market share has remained largely the same over the past year. Some 4% of consumers recently purchased a Mac desktop, while 7% purchased one of the company's laptops. At the same time, Apple's wares appeal widely to a demographic many companies love: young, single people more willing to part with their cash. Young singles and couples without children are 25% more likely to buy Apple laptops and 15% more likely to purchase an Apple desktop than other groups.
Cliff_edwards
Edwards is a reporter for Bloomberg News and Bloomberg Businessweek in San Francisco.

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