Las Vegas (NV) – Two days before the official opening of the 2009 Consumer Electronics Show (CES), the Consumer Electronics Association (CEA) kicked off the event with product previews and its traditional “State of the Industry” session. And who would have really expected good news?
This year’s CES is a bit different from the shows in the past. The show organizers try to hide the recession mood as good as they can, but the setting itself can‘t. The first day leaves no doubt that CES is still a Disneyland for adults – lots of toys and rides, happy faces everywhere, ridiculously overpriced food and long lines (almost) everywhere – but Las Vegas may be one of the most revealing locations for the current state of the economy. The city is one big construction site, but all construction is halted. Most hotels have rooms available for prices not seen in years and we hear that some hotels have actually closed entire floors because of slow demand. Cab drivers complain that they have to wait 45 minutes or longer for customers.
So, what do the CES organizers have to say about the state of their industry? Steve Koenig, director of industry analysis at the CEA and Shawn duBravac, economist at the CEA, confirmed that the times for consumer electronics companies are tough, even if technology is generally expected to fare better during a recession than most other industries. “Technology has become a necessity. It is not a luxury anymore,” Koenig said. As a result, consumers are expected to keep spending their money on new technologies.
In general, the two analysts believe that consumer spending will be down about 0.3% in 2009 and they noted that 2009 may actually be the worst year for the economy since the early 1980s. Since consumer spending is down, the general economy will take a big hit, as consumer spending accounts for about 70% of the U.S. economy. Koenig believes that the current may turn into the longest recession since WWII and may see a slight lift when the government stimulus package kicks in, which could happen in the second quarter of this year. CEA expects that employment will trail the general economy trend and we might see high unemployment rates of 8-9% “well into 2010.”
Both analysts dodged questions from journalists which consumer electronics categories may be especially affected by this recession and which retailers are in danger of going out of business. Instead, they said there is a new trend of all kinds of retailers selling technology. Since technology is still doing somewhat well, stores like Home Depot have begun selling technology products to soften the impact on other products.
Despite the deep recession, the CEA still expects strong shipment growth for some product categories. OLED displays are expected to gain 149% in 2009, E-readers 110% and HD flash camcorders 106%. However, the growth will be much lower in more traditional and broader product categories. Digital displays will gain about 5.8%, cellphones 2.6%, PCs 5.1% and game consoles 2.8%, the CEA estimates.
“Green” is evolving into a major purchase decision criteria with 34% of men and 45% of women willing to pay an average premium of up to 7.4% for a “sustainable” product. However, the CEA noted that 38% of consumers are confused by green product claims, 59% want to know more specifics when they purchase a “green” product and 65% believe companies generally overstate “green” credentials.