Significant drop in US consumer electronics spending – more than any other large industrialized country

FRAMINGHAM, USA: The US consumer electronics (CE) market has been hit disproportionately hard by the economic downturn, with US households projected to spend 17 percent less on CE in 2010 than the previous year.

This is the largest projected decline in CE spending among the 20 countries surveyed by the International Data Corp. (IDC) in a recent ConsumerScape 3600 study. Among these countries, the emerging BRIC markets (Brazil, Russia, India, and China) are expected to lead the CE recovery with household CE spending gains of more than 20 percent year over year.

Despite the decline in US CE spending, IDC found that important opportunities still exist within key product categories and across specific consumer market segments. Even though US consumers are spending less on CE, they still own more devices (an average of 15.4 major devices per household) than in other geographies. Moreover, US consumers still tend to buy higher-end devices with more features and functions than consumers in other markets.

IDC believes that there are six distinct consumer segments in the CE marketplace: Engaged Hipsters (young and trendy, likely to buy the latest and coolest devices); Tech Evangelists (the most adept, and influential, technology users); Savvy Sale Shoppers (moderate interest levels but will buy if the price is right); Impulse Buyers (high income buyers that purchase whatever new products catch their eye); Socially Conscious Basic Buyers (family and environmentally focused, unlikely to buy what they don't need); and Disengaged Functionalists (low income buyers with little interest in CE).

IDC found that more than half of the US population can be characterized as basic buyers (Disengaged Functionalists and Savvy Sale Shoppers), reflecting the current state of the US economy. Moreover, the number of Disengaged Functionalists is significantly higher in the US (34 percent) than in the other countries surveyed (16 percent worldwide).

"The survey found US consumers to be extremely price sensitive, a clear sign that the economic downturn has had an impact not only on spending habits, but also on consumer psychology," said Michael DeHart, director of IDC's ConsumerScape 3600 and Consumer Primary Research. "At the same time, US consumers are far less likely to buy simple, basic devices, which is indicative of the population's strong affinity for consumer electronics."

The US markets where IDC believes important opportunities exist for CE manufacturers include:

* As US households shift toward notebooks, PCs will increasingly be viewed as personal CE devices, fueling long-term growth in notebook PCs as well as PC peripherals.
* With only 28 percent of US households owning a smartphone, growth in this category is a sure thing, to be accompanied by a range of features, data plans, and apps to suit different budgets.
* Although HDTV ownership has already crossed the 50 percent mark among US households, the market is expected to continue its dramatic growth trajectory.