Boston, MA -- (ReleaseWire) -- 04/11/2014 -- We expect a boost in certain consumer electronics spending in 2014, as the hosting of the FIFA World Cup should provide additional demand for digital cameras, TV sets and smartphones. It will also grow as incomes rise and device prices decline, deepening the market. However, in 2013 the market was hit by currency weakness and high household indebtedness, and this is expected to continue in 2014, but with some improvement. Growth areas will include 4G smartphones as operators expand the reach of networks and promote services, low-cost Android tablets, Wi-Fi-enabled cameras and HD TV sets. These sectors have already seen positive return, such as smartphone sales outpacing featurephones in the second half of 2013. The boost to local production saw mobile phone imports fall by 35%. We expect prices to continue to fall, particularly as lower end devices from Huawei and Firefox enter the market.
Headline Expenditure Projections
Computer hardware sales: US$10.285bn in 2013 to US$10.319bn in 2014. The slowdown in desktop and notebook sales growth as consumers opt for lower cost tablets means value growth will fail to keep pace with unit growth in the PC market.
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AV sales: US$11.600bn in 2013 to US$12.625bn in 2014, +9.8% in US dollar terms. Forecast in US dollar term unchanged, with the 2014 FIFA World Cup expected to boost demand for flat-panel TV sets.
Mobile handset sales: US$15.1bn in 2013 to US$18.8bn in 2014, +24.9% in US dollar terms. The passing of tax incentives encouraging local production of lower prices smartphones in 2013-2014 has seen them surpass featurephone sales and will add to what was already the most dynamic segment of the consumer electronics market.
Key Trends and Developments
- The smartphone market in Brazil is booming, having got off to a relatively slow start due to the import taxes imposed by the government that pushed up the prices of devices. However, with local production now dramatically increasing, and a wider availability of cheaper devices running Google's Android OS, penetration is rising sharply. A further boost has come from the decree in April 2013 to remove the PIS/ Cofins welfare tax on smartphones made in Brazil. The tax waiver excludes higher end models such as the latest Apple iPhones and Samsung Galaxy, but applies to those that retail at less than BRL1,500 (US $750). The government expects the price of smartphones produced locally will fall as much as 30%, compared to those which are imported. By implementing tax incentives, the Brazilian government also hopes to curb the black market for smuggled electronic devices, which emerged due to the high prices of imported smartphones. Huawei and Sony have been quick to take advantage of these incentives, by establishing local manufacturing bases in H213, which should boost sales and lower the average price of handsets.
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