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DVD, cameras help drive gadget growth

High-tech gear is leading the way in growing sales of consumer electronics, which grew 2 percent to $93.2 billion in 2001, despite the bleak economy.

Sales of consumer electronics are expected to continue to stay afloat despite overall economic trends, according to a new report from the Consumer Electronics Association, with high-tech goods such as DVD players and digital camcorders leading the way.

U.S. sales of consumer electronics grew 2 percent to $93.2 billion in 2001, despite the bleak economy, and should grow another 3 percent to reach $95.7 billion this year, according to the group's "Digital America" report.

Top drivers will include digital cameras, digital video products such as DVD players and HDTV sets, and digital audio devices.

Specific forecasts in the report include:

• DVD players began outselling videocassette recorders last September, and growth is expected to remain strong. U.S. sales totaled 13 million units worth $2.15 billion last year and should climb to 16.25 million units worth $2.5 billion this year. Movie studios are also benefiting: The average DVD-equipped household bought 15 discs in 2001, according to the report, "indicating a growing desire to own favorite movies, rather than merely rent them."

• Digital cameras will continue to post solid growth, from U.S. sales of 5.5 million units last year to 7.5 million this year. Cameras in the $300 to $400 range showed the strongest growth last year, as falling prices for cameras with a resolution of 2 megapixels or more gave consumers more bang for the buck. Cameras in the same price range will likely continue to drive sales but emphasize other features in addition to resolution.

"Many say the megapixel war is over, as prices for 2-megapixel models have fallen below $300," according to the report. "Instead, camera manufacturers will focus on ease-of-use features to drive sales in 2002. Manufacturers are going to great lengths to usher the digital camera into the mass market by making the process of capturing, uploading, printing and sharing images easier for those who might be intimidated by the technology."

• Digital video recorders are staging a modest comeback. U.S. sales of devices such as the TiVo recorder fell from 249,000 units and $77 million in revenue in 2000 to 125,000 units and $38 million in revenue last year. Unit sales will likely rebound modestly this year from last to 150,000 units, while declining prices will keep revenue flat.

Monthly subscription fees to access programming guides have deterred consumers, according to the report, and pending litigation challenging the use of DVRs poses a new challenge. "Some content providers seem intent on killing the golden goose that home recording devices have provided over the past quarter century, " CEA President Gary Shapiro said in a statement. "Requiring payment for every bit of information in the information age, and hobbling new products with expensive, unwanted and unnecessary 'pay buttons' would be bad for consumers, bad for equipment manufacturers, and ultimately bad for content providers."

• Sales of portable audio players using hard drives or Flash memory rose 23 percent to 723,724 units, spurred chiefly by the debut of hard drive-based units with vastly greater capacity. Hard-drive models and CD players that can play audio files in MP3 and other condensed formats will drive growth in the category, according to the report.