2010 Spells Recovery For Consumer Electronics

Revenue for consumer electronics saw a turnaround in 2010, up 6.2 percent from the previous year according to a recent report.

The report, from research firm iSuppli, says original equipment manufacturer (OEM) revenue for consumer electronics in 2010 will reach $340.4 billion. In 2009, the number was $320.7 billion, which had been a 4.4 percent decline from 2008.

The numbers are stronger than we had expected, said Jordan Selburn, principal analyst for consumer platforms at iSuppli. We had expected an upturn given we were uncertain about the economy last year, but we didn't expect it to grow this much.

Selburn says one of the most prominent reasons for the better than expected upturn is the broad range of new stuff at affordable prices introduced into the market. For instance, while digital media adapters, such as Apple TV, aren't fundamentally new, they are finally being pushed at an affordable price.

E-readers are another one. They have been around and existed last year, but what we're seeing is they are transitioning from an enthusiast market to one where anyone can experiment and try it, Selburn said, adding it all comes down to price. For me, $100 is the significant barrier. Apple TV was $300 last year and now it is $100. That's a price point where I'll buy one and try it out, and if I don't like it, it doesn't feel like I'm burning money.

Along with newer devices such as e-readers and connected TVs, traditional product segments are also benefiting from a price drop Selburn says. Blu-ray player shipments will be at 16.4 million units this year, up 82.2 percent from 9.1 million units in 2009. Over the next four years, Selburn said Blu-ray player shipments will reach 68.9 million units. Again, the increase comes down to cost.

What you paid for a Blu-ray player on Black Friday a couple of years ago is the standard price now. You can get a name Blu-ray player for double digits. It's a compelling purchase for someone who doesn't have one, Selburn said.

However, the price reduction trend does is not entirely good news. Selburn says revenue growth has lagged behind unit shipments. In that regard, the recovery has been a bit slower for some consumer electronics manufacturers. He does note, this does not apply to every company.

Apple with their iPod has seen the opposite effect. Their units have dropped, since people can use their iPhones and smartphones as an mp3 player, but their revenue has stayed up because of price increases in iTunes, Selburn said.