A new research report has been released by Bishop & Associates that provides a comprehensive analysis of connector usage in the appliance, HVAC security, imaging and audio systems, TV/video, video games/toys, consumer automotive, and other segments of the world consumer electronics market.
Driven by strong demand for digital audio, video and home information products, consumer electrical and electronics equipment sales in 2004 grew to an all time high of $143 bn in the US, and $286 bn worldwide. This total includes both consumer electronics and consumer electrical equipment, (home appliances and HVAC), which have increasing electronic content.
According to the research group, recent developments have been significant, with both heightened global competition and new opportunities - a market that had lost its lustre for many manufacturers is now a rising star for others.
Industry transformers
The report, The World Connector Market for Consumer Electronics, reveals that the following industry segments are being transformed by a number of powerful forces:
Digital convergence and its attendant technical challenges: This means the convergence of digital silicon technology (and firmware) with consumer products, resulting in many new products and features not possible with traditional analog circuitry eg, PDAs, smartphones, HDTV, satellite radio, and the iPod.
New products and applications, including luxury goods: Partly resulting from the computer revolution, but also from government dual use and massive innovation made possible by digital circuitry. The list of new products is staggering and increases daily.
Product miniaturisation, mobility and wireless technology: Much of the growth in consumer electronics is in handheld devices, enabled through years of perfecting small form factor packaging and system-in-package techniques.
Crossbreeding with other industry segments (computers, telecom, etc): Convergence with computer and peripherals spawned inkjet printers, wireless LANs and digital cameras; telco-developed mobile phones; the military GPS technology. Large segments of computer/peripheral and telecom are now consumer.
Globalisation of manufacturing with significant industry consolidation: Outsourcing and the emergence of China as a manufacturing powerhouse has accelerated the development of low cost production in a wide range of products. This has helped increase demand for consumer electronics products. At the same time, there is significant industry consolidation on one side, and numerous start-ups in high growth areas on the other.
Globalisation of demand with emerging Third World: Western countries are still the largest markets, particularly for upscale consumer products. However, other areas are beginning to grow at a rapid pace, and do most of the manufacturing (eg, China, India and Eastern Europe).
Implications for connectors
Historical perspective: Many connector manufacturers downgraded the consumer electronics market long ago because they generally could not produce acceptable returns. Suppliers focused on other markets where the financial demographics were more attractive - consumer automotive and home appliances being two major examples. At the same time, the computer and telecom markets were growing, and used more sophisticated designs with higher ASPs.
The downgrading of the consumer electronics market resulted from early waves of radio and TV assembly offshore to the US, coupled with low-cost foreign competition and the rise of an Asian manufacturing infrastructure in consumer products. Some companies who had a major Asian presence also shunned the consumer market due to the pullback of their Western parent companies. Others, particularly in Japan and later in the Asia Pacific region, jumped in with both feet.
These Asia sources learned and eventually prospered, becoming low cost producers with varying degrees of diversification in this highly competitive arena. This is an interesting dynamic for the connector industry, because in retrospect, being able to succeed from a low cost/high volume base in consumer, produced an economy of scale that allowed the extension of this capability into the automotive, computer and telecom markets as they too developed consumer characteristics.
Present and future: Many companies, recognising the link between consumer, computer-peripheral and telecom, have merged marketing and engineering activities and undergone significant restructuring that will enhance their ability to compete in the consumer electronics market. This includes segment headquarters in Taiwan, Singapore, or Japan, with extensive manufacturing facilities and outsourcing in China, and strong relationships with Asian ODM and CEM customers. At the same time, many consumer electronics products, notably LCD and Plasma TVs, set-top boxes, DVRs and other products, have developed characteristics that are more compelling for connector suppliers.
Some of these characteristics are: higher ticket items; higher design complexity than historically true in CE; rapid growth scenarios in applications such as flat panel displays; somewhat less standardisation, more mass-customisation to achieve 'engineered' cost targets, and thus a greater ability to succeed with new product designs and 'designs-for-assembly'; cross-selling standards - typically I/O connectors (USB, IEEE-1394, pin headers); cross-selling special-application connectors (appliance wire-to-board, FEC, ribbon); cross-linkage between electronic and electrical connector designs and opportunities; leverage other capabilities in sockets, PCB, FEC, stacking, wire-to-board and I/O.
For more information about the report contact Bishop & Associates, [email protected], www.connectorindustry.com
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