Global Technology Market Update

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  • A year ago we forecast 2013 at +4%. Actual was +3% so pretty close.Unit growth for tablets and smartphones is declining but we still fcst strong double digit growth at global level in 2014. This growth is increasingly dependent on shifts towards developing markets and the low end, so average selling price is declining steeply, bringing 2014 fcst spending down to single digits This coupled with continued reduction in spending on other products like mobile PCs and Digital Cameras contributes to overall decline in spending in 2014
  • Consumer enthusiasm for technology
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  • China dominates emerging market growth, and we forecast 2014 to show a marked slowing here
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  • Smartphones and Tablets account for over 40% of global spending on tech devices
  • Lower price broadly equates to smaller screen size tablets (<8”). GfK data shows that in certain markets, for example UK, sale of larger size tablets (>8”) have actually peaked during 2013, and are now contracting. Generally speaking we forecast this to be repeated in most developed markets in 2014, where it has not already happened. Growth will therefore come from sales of smaller size tablets
  • As stated for slide 1, smartphones unit growth is slowing but we still fcst strong double digit growth at global level in 2014. This growth is increasingly dependent on shifts towards developing markets and the low end, so average selling price is declining steeply, bringing 2014 fcst spending down to single digits. The importance of the low end in driving emerging markets growth is reflected in the fact that average smartphone selling pricing is declining faster in emerging markets than in developed markets Against this backdrop, main growth drivers in 2014 will be China, India, and Brazil:- China: Chinese brands models are cost-effective and fast penetrating into the rural areas- India: smartphone growth is driven by local brands as they provide cost effective solutions through white-box smartphones manufactured in China; Sales in open channel account 95% of total market in India, local brands take advantage of their strength in distribution channelBrazil: Government providing tax breaks to promote locally produced smartphones (excludes flagship devices), international vendors ramping up local production facilities and focussing on new smartphone releasesDeveloped Markets: LTE is fcst to see major growth in China and W. Europe in 2014. In W. Europe: Although overall market is flattish, smartphones fcst to continue to grow due to continued featurephone replacement especially at low-end where smartphone penetration slowed partially in 2013. LTE push from operators and large screen size devices to keep the mid-to-high-end bouyant especially in Germany and Great BritainDifferent topic – Large screen size smartphones (>5”). We forecast explosive growth in China to >100m units in 2014, thanks to aggressive pricing from Chinese brands. We also predict explosive growth in India for similar reasons, albeit at a much smaller scale.
  • As stated for slide 1, unit growth for tablets and smartphones is declining but we still fcst strong double digit growth at global level in 2014. This growth is increasingly dependent on shifts towards developing markets and the low end, so average selling price is declining steeply, bringing 2014 fcst spending down to single digits Positive impact of late 2013 Videogames Console launches to be more visible in 2014 than 2013 Spending in 2013 on mobile PCs has fallen in 2013 for the second year running. We fcst this to continue further in 2014, though to a lesser extent. The decline in netbooks is the most dramatic, but notebook PC sales contracted in most parts of the world in 2013, with WEU, developed APAC, and China seeing the biggest declines. Cannibalisation by tablets is the major factor here, with these regions being the regions that are the most penetrated by tablets. We do forecast notebook PC sales to return to low single digit unit growth in 2014, driven by small screen size PCs and convertibles, but sales value will continue to decline as the move to smaller screen size devices will bring down average selling pricesWe do actually forecast LCD TV to return to unit growth in 2014 (+5%), due to continuing emerging market growth and stabilization in developed markets after 2 consecutive years of decline. Continuing ASP decline means spending will still be negative- Biggest growth drive will be Latin America (+17% y/y in 2014 and reach 37m) - World Cup is held in Brazil next year so we expect the demand to be strong especially for BrazilThere is however downside risk coming from a continuation of the depreciation of local currency against USD that we have seen since 20111. Depending how the Fed tapers off QE, currencies in important countries such as Brazil, India, Indonesia may continue to depreciate against USD which could led to a higher retail ASP in emerging countries, with negative impact on end demand
  • Global spending on smartphones and tablets beginning to plateau as unit growth slows and average selling price declines due to shift to low end. 2010 = 28% for SPs, tabs, mobile PC
  • Global Technology Market Update

    1. 1. Around the World In 60 Minutes Global Technology Market Update Steve Koenig Director, Industry Analysis CEA
    2. 2. + = Digital World TCG Yearly Forecasts Retail CE sales tracking at more than 340,000 retail stores in 80 countries. Tracks U.S. factory to dealers shipments in more than 50 CE categories on a monthly and weekly basis.
    3. 3. Analysis Considerations: Geographical, Financial Mature • North America • Western Europe • Developed APAC Developing •Central /Eastern Europe •Latin America •Emerging APAC •Middle East/ Africa • Exchange Rates (FX) • Sales Tax • Tech Subsidies
    4. 4. GLOBAL MARKET: The Global Market for Technology Hit a New Peak in 2013
    5. 5. Global Tech Markets Back to Growth in 2013 2011 $1041bn Smartphone, tablet PC & emerging market strength offset sluggish developed markets 2010 $922bn Economic recovery +10% 2009 $836bn Global recession Global Tech Device Sales Revenue Source: GfK Digital World 2012 $1034bn $ value hit by currency weakness outside North America 2013 Fcst 2014 Fcst $1068bn $1055bn Smartphone & Smartphone & Tablet growth Tablet growth offset decline shifts further in other products to low end +3% +13% -1% -1%
    6. 6. Spending Growth in 2013 • Sales growth for Tablets and Smartphones slowing, but remains robust compared to other categories. • LCD TV still growing in low single digits. • Year-end push from next-gen game consoles. • Some spending momentum in North America.
    7. 7. Reasons for Spending Decline in 2014 $1.055 Trillion (-1%) Volumes • Unit growth in tablets and smartphones reliant on lowend devices. ASPs coming down fast. Product / Pricing Mix • Lower-end devices (and ASPs) required to penetrate lower consumer tiers of emerging markets. Impact to Tech Spending • Developing market spending growth curbed somewhat • Not enough to offset spending declines in developed markets and CE categories.
    8. 8. REGIONS: Regional Spending Growth Picture in 2014 Remains Mixed
    9. 9. Developing Markets Revenue Growth Momentum to Slow 2014 Fcst 2013 World Western Europe 3% -3% North America -6% 3% Developed Asia -11% 15% 2% Global Tech Device Retail Sales Revenue Growth Source: GfK Digital World 1% 2% 6% Middle East & Africa C&E Europe/CIS -1% -8% Emerging Asia Latin America -1% 2% 6% 0%
    10. 10. Global Tech Spending Finds Equilibrium $549bn Developing Markets $564bn $553bn $530bn Growth (2014 vs 2010) 60% 57% 55% 52% 50% -3% 2010 Mature Markets $$593bn 2011 2012 2013 Est. 2014 Fcst. 41% 40% 43% 45% 48% $373bn $447m $470bn $514bn Global Tech Device Retail Sales Revenue Mix Source: GfK Digital World 50% $525bn
    11. 11. Emerging Asia Now Leads Tech Spending $1041bn $1034bn 52 68 72 67 89 95 76 78 246 282 286 121 107 66 84 86 74 131 181 126 $1055bn 67 64 76 221 $922bn $1068bn C&E Europe/CIS Middle East & Africa Latin America Emerging Asia 99 Developed Asia 223 250 250 257 254 North America 200 212 194 189 177 2010 2011 2012 2013 Fcst 2014 Fcst Western Europe
    12. 12. Has North America’s Share Peaked? $922bn $1041bn $1034bn $1068bn $1055bn 6% 6% 6% 6% 6% 7% 7% 8% 8% 9% 8% 8% 7% 7% 7% Middle East & Africa 20% 21% 24% 26% 27% Latin America 13% 12% 10% 14% 24% C&E Europe/CIS Emerging Asia 9% Developed Asia 24% 24% 24% 24% North America 22% 20% 19% 18% 17% 2010 2011 2012 2013 Fcst 2014 Fcst Western Europe
    13. 13. DEVICES: Mobile, Connected Devices Continue to Drive Tech Spending
    14. 14. Smartphone & Tablet Revenue Growth offsetting contraction elsewhere, for now Smartphones and Tablets 43% Other Tech Devices 2009 2010 2011 Global Tech Device Sales Revenue Source: GfK Digital World 2012 2013 Provisional 2014 Forecast
    15. 15. Tablets: Lower-Priced Models Boosting Adoption in Emerging Markets 2012 40% 31% 29% Global Tablet PC Unit Sales Mix Source: GfK Digital World 2014 33% 25% 42% Other Developed Markets Emerging Markets North America
    16. 16. Smartphones: Emerging Markets Take The Lead As Lower-Priced Devices Open Up The Mass Market 2011 52% Source: GfK Digital World 30% Developed Markets 48% Global Smartphone Unit Sales Mix 2014 Emerging Markets 70%
    17. 17. Smartphones - Global ASP Trend 2010 $444 2013 $ 345 2014 $297 Global Smartphone Average Unsubsidized Selling Price in USD Source: GfK Demand Projector Dec 2013
    18. 18. Spending (Revenue) on Smartphones & Tablets Slowing As Unit Growth Shifts Further To Low-End 2014 Fcst 2013 Prov TABLET PC SMARTPHONE LCD TV LASER PRINTER & MFD HOME AUDIO INKJET CARTRIDGE LASER CARTRIDGE INKJET PRINTER & MFD CAMCORDER VIDEO GAMES CONSOLE MONITOR MOBILE PC DESKTOP PC DIGITAL STILL CAMERA CAR NAVIGATION DVD PLAYER/RECORDER inc HD & Blu-ray PORTABLE MEDIA PLAYER PLASMA TV MOBILE PHONE 30% 27% 21% -10% -39% Year on Year Change in Global Tech Device Sales Revenue ($) Source: GfK Digital World 9% 6% -44% -34%
    19. 19. Spending Shift to Mobile Computing Devices Slowing 90% Digital Still Camera 80% Desk PC 70% LCD TV Feature Phone 60% Mobile PC 50% Tablet PC 40% Smartphone 30% 79% of Spending 20% 10% 0% 2010 2011 2012 2013 Prov 2014 Fcst Global Tech Device Sales Revenue Mix - Top Tier Products Source: GfK Digital World
    20. 20. Global TV Sales Trends • Avg. Screen Size Continues to Grow • 3DTV growth tapering off. Top vendors not pressing • Smart TV: popular as well in China • New Tech Ushers in Next Wave of Innovation – UHD: Expect global shipments of 8.7 million in 2014. – Curved displays – OLED (<500k units in 2014) Source: GfK Boutique Research, CEA
    21. 21. Around the World In 60 Minutes Steve Koenig Director, Industry Analysis CEA @KoenigSteve skoenig@CE.org

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