Don't believe the hype: The CE biz was a dud this year

The industry saw revenue rise only slightly, well below expectations, as the economy took its toll on consumer demand. Black Friday still looks promising though.

Flat-panel televisions such as ones made from LG haven't sold well this year, although many have high hopes for holiday season. LG

When 2011 is wrapped up, the consumer electronics industry, despite all the marketing and highly-touted gadgets, will have had a disappointing year.

That's according to market research firm IHS iSuppli, which estimates that revenue this year will total $357.3 billion, up only 1.5 percent from a year ago, and well off of the 6.4 percent growth the firm had previously expected.

It seems that despite the bluster and hype, the consumer electronics industry was just as susceptible to the downturn in consumer spending as every other industry. While the holiday season often makes up a bulk of the industry's sales, the firm said even that won't be enough to offset the weakness from earlier this year. The anemic growth contrasts with the more than 7 percent growth the industry saw in 2010.

"As the year draws to a close, it's becoming apparent that sales in 2011 will fall well short of expectations, as economic issues take their toll," said Jordan Selburn, an analyst at IHS. "While market conditions are improving in the fourth quarter because of Black Friday and the rest of the holiday selling season, this three-month respite won't be sufficient to salvage the entire year."

IHS is pulling back on its forecast for many of the gadgets in the industry, the firm said.

The firm pointed to the second and third quarters as the biggest sources of weakness, which isn't a surprise given the sputtering global economy.

In particular, the firm said it saw weakness with the LCD television business, which makes up nearly a third of the industry's revenue. IHS cut its estimate by $6 billion to $104 billion in revenue for the year. Several major companies, including LG, had complained of weaker sales. The firm did note that recent momentum could make for strong year-end sales.

In addition, the portable MP3 player market is in even worse condition as consumer eschew the players in favor of more all-in-one gadgets such as smartphones and tablets. IHS notes iPod shipments in the third quarter fell to 6.6 million units from 9.1 million a year ago.

The firm did add, however, that sales appear to be picking up in the fourth quarter, especially with televisions and Blu-ray players. Further out, IHS said it expects revenue growth exceeding 4 percent over the next two years.

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About the author

Roger Cheng is the executive editor in charge of breaking news for CNET News. Prior to this, he was on the telecommunications beat and wrote for Dow Jones Newswires and The Wall Street Journal for nearly a decade. He's a devoted Trojan alum and Los Angeles Lakers fan.

 

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