US Handsets Sales to Reach US$16 Billion

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Factory sales of consumer electronics will reach a new high of US$135.4 billion in 2006, according to the Consumer Electronics Association’s (CEA) annual industry forecast. The 2006 projections, 2005 year-end figures and more are included in CEA’s bi-annual U.S. Consumer Electronics Sales and Forecasts report, which is released every year at the International CES and updated mid-year. According to the report, 2005 year-end totals exceeded CEA’s initial projection of $122 billion, increasing by 11 percent over 2004. CEA attributes much of the growth in 2005 to next-generation product lines and innovations to wireless devices, flat panel displays, MP3 devices and gaming consoles and software.

“The numbers say it all - the consumer electronics industry is hot,” said Gary Shapiro, CEA’s president and CEO. “Sales exceeded our expectations in 2005, totaling $125.9 billion and we’re forecasting 8 percent growth in 2006. Consumer electronics sales are consistently growing, breaking records every year, because our industry is constantly changing to provide products that consumers love and can’t live without. I cannot wait to see the thousands of new products unveiled this week at the International CES that will continue to grow this amazing industry.”

Of the total, the CEA is predicting that total wireless handset sales will exceed US$16 billion in factory-to-dealer sales this year. Wireless communications devices such as telephones drove the CE industry in 2005, largely in part to the introduction of phones that have multiple features and functions. Some 104 million wireless handsets were sold in 2005 for a total of US$13.5 billion.

CEA also forecasts a continued strong market for MP3 players as devices with video playback capability grab the attention of consumers.

“We are projecting an increase in sales of MP3 players to $4.5 billion in 2006, with 30 percent of all MP3 players sold having video playback capability,” said CEA Director of Industry Analysis Sean Wargo. “MP3 technology helped boost the audio and accessories markets in 2005. With the introduction of video playback capability, MP3 player sales surged 200 percent in 2005 to $3 billion. Trends in 2006 should be no different.”

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