The Consumer Tech Industry Beats to a Different Economic Drummer

July 31st, 2008

By Stephen Baker, Vice President of Industry Analysis, NPD Group

The consumer technology industry seems to be holding its own in a time when other industries are feeling the sting of a weakening economy. NPD’s U.S. retail tracking service data showed a 3% dollar increase over June 2007. Granted, it’s not the 8-10% increase the industry has seen in the past in the U.S., but it’s the second consecutive month of positive growth, in a year when revenue has been down or flat.

PCs and TVs, the two biggest electronics categories (with over $1 billion in sales each) delivered solid revenue growth in June. It was the first time in a while where both desktop and notebook PCs saw double-digit revenue increases. LCD TV, as the star of the retail technology markets, continues to show only minor stresses from the current economic conditions. Total LCD TV unit volume rose 34%. Unit sales of 40”+ , LCD TVs rocketed up 87% in June and have more than doubled over the first six months of 2008. And while ASPs for the largest LCD TVs have fallen about 20% since last year, retail pricing this year, as a result of very robust sales in the 52” class of products, has only varied within a very narrow $100 range for 40”+ LCD TVs.

The rebate checks helped keep consumer technology sales afloat, but it also says a lot about why people are buying. Instead of putting the money towards clothes, food, or even a mortgage—things most consider necessities—consumers went out and bought electronics. At one point, people considered electronics discretionary spending; now it’s become more of a necessity. And these are not inexpensive investments: the average consumer spent between $800 and $1000 to take home their new purchase, certainly not an impulse purchase, but a conscious one consumers made even in the current economic situation.

  1. One Response to “The Consumer Tech Industry Beats to a Different Economic Drummer”

  2. By William on Jul 31, 2008 | Reply

    It doesn’t seem like a necessity to purchase a $1000 TV. What this data says to me is that the push to get a TV (peer presure / disinformation about the TV transition / or just the attractiveness of the HDTV) overides the “rational” decision to cut back in terms of spending. I see this in California customers. Just because their 3 months behind on house payments and the house is being forclosed on doesn’t prevent them from purchasing an new plasma. In fact, given the inventory already on the market, people are living for 12 months or more “rent free” before the banks kick them out. The free cash from not paying a mortgage ($2000+/mo) is going to electronics.
    Personally, I think the US consumer still has alot of hurting to do. Until that happens, we will not bottom out on this recession.

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