Germany: 2009 CE Market and 2010 Forecast

Wednesday, July 14th, 2010

GfK Retail and Technology (GfK RT) has more than 30 years experience monitoring the technical consumer goods market. GfK RT works with gfu throughout the year, monitoring the Consumer Electronics (CE) industry. Every quarter we release figures on the CE market (CEMIX) and this report summarises 2009. Due to the interconnectivity between the CE, IT and Telecommunication industries, we will focus on all three markets. The full report is available to download.

Information Technology (private purchase only)

Turnover in the German IT market for private consumers in 2009 has seen a 20% increase over 2008. This increase is predominantly due to sales of PC desktops and Notebooks, the latter being purchased in increasingly high numbers (demand increased 43% in 2009) due to improved performance and attractive prices.

Telecommunication (private purchase only)

The telecommunication market in 2009 saw a double-digit decline on 2008 (-24.3%). The major factor here being the change in consumer behaviour – tariffs are now the main focus, resulting in less frequent handset purchases. In 2009 both turnover and sales volume fell (by -27% and -21% respectively). This could indicate a possible increase in 2010 in line with mobile phone contract patterns.

Consumer Electronics

Despite the crisis, the German Consumer Electronics market has seen minimal decline (-0.2%); the main reason being the introduction and expansion of HDTV, leading to increased sales of LCD TV’s and Digital Set-Top-Boxes. TV sales make up the largest share of overall CE turnover at 40%, with Flat Screens driving the 3% increase on last year. The only other segment to have increased its share in overall CE turnover is Home Audio, supporting the idea of ‘cocooning’ (people staying at home) during the crisis.

TV (40% of total CE turnover)

At the end of 2009 approximately 20 million German households were HD-ready; 6.4 million of those with an integrated HD tuner or a stand alone HDTV Set-Top-Box. Due to the low penetration of Flat Screen TV’s in Germany (according to international standard) and the increasing variety of HDTV channels coming from broadcasters, we would expect to see this trend continue into 2010.

Car Audio/ Navigation (7% of total CE turnover)

There has been a clear shift in car media, going from the classic means of entertainment (the car radio) to a useful driver-tool (the navigation system). Navigation counts for 74% of the total car audio/navigation market. Portable navigation on the other hand has seen market saturation with an influx of suppliers. This increased competition has in turn let to improved features at ever falling prices.

Home Audio (6% of total CE turnover)

The Home Theatre System is the main reason for the 6.4% increase in turnover on last year. The market has recognised the complementary purchase habits of consumers, leading to matching Flat TV and Home Theatre System Design. Further innovations like Dolby 2.1 and Blu-ray has also led to increased interest in this segment.

Portable Audio and DVD (5% of total CE turnover)

The integration of mp4 as a standard feature has been adopted quickly; representing 53% share of overall turnover in 2009, compared to 2008’s 47%, and just 26% in 2007. Overall the mp3 and mp4 player market is showing signs of saturation and lack of innovation. It is imminent that with ever improving battery life mobile phones will be used more frequently for music playback, especially amongst the younger demographic.

Recording Media (5% of total CE turnover)

This segment shows continued popularity among consumers, with blank CD and DVD’s selling by the millions. The recording capacities are improving and the prices are declining making the market more and more attractive. Data indicates a new trend for HD recording media where 500,000 units were sold in 2009.

Video (3% of total CE turnover)

Despite the recent steadying of this segment in 2009, turnover has fallen by more than half since 2006 (833 Mn to 455 Mn Euro). This steadying is a result of the Blu-ray market becoming more established, offering more attractive pricing for hardware and content. We expect this downward trend to continue, especially with the replacement of DVD players with Set-Top-Boxes with built-in hard disc drives for recording.

Set-Top-Boxes (3% of total CE turnover)

Set-Top-Box turnover has seen a 17.5% increase on last year and at 471 Euro is at the highest rate since 2005. HD Set-Top-Boxes counted for almost half of the turnover for 2009 and we expect this to rise in 2010. 860,000 of the 1,000,000 HD Set-Top-Boxes sold last year were for satellite reception alone.

Camcorder (2% of total CE turnover)

The camcorder segment is seeing a similar trend to that of the TV segment. In this segment High Definition Camcorders reached a share of 57% in 2009; up 20% on 2008. The share of SD Chips and flash memory increased by 9% this year, indicating a change in consumer behaviour, as we see more and more people uploading their content online.

2010 Forecast

Researchers at GfK, gfu and ZVEI are optimistic for 2010, seeing the ongoing trend for TV’s as the main driver. They are also expecting to see the record 8.6 million units sold in 2009 beaten in 2010 and the share of HD-ready devices climbing to 70% of the total TV market. Dr. Rainer Hecker, chairman of the supervisory board for gfu shares his opinion on the situation: “HDTV has duly arrived, which is good reason to invest in top-quality products for top-quality television. By the end of 2010, more than 29 million high-resolution TV’s will be found in German households; 16.5 million of those with an integrated HD Tuner, or combined HDTV Set-Top-Box. TV’s with integrated HD Tuners will triple in 2010.”

The prediction on bestsellers for 2010 indicates the desire for mobility, including products such as portable digital video players, digital cameras, navigation systems, smartphones and notebooks.

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