Australia’s $3.6 billion digital lifestyle

By Craig Zammit

SYDNEY: A record $3.6 billion spend for calendar year 2005 highlighted the growth of Australia’s digital consumer electronic goods market after a report released today by GfK showed a 36.8 per cent increase in expenditure compared to last year.

GfK marketing services released the Canon Digital Lifestyle Index (CDLI) for the second half of 2005, with results showing that across the board the market appears healthy and is experiencing rapid growth in most categories.

Significant price reductions were exposed for various consumer electronic goods, such as photo printers which experienced a 52.8 per cent price drop, and plasma TVs, which fell 30.6 per cent, equating to an average price reduction of $1515.09.

CDLI project manager, Angus Macaskill, believes that the figures could actually represent an even stronger market than indicated.

“We must not forget that the $3.6 billion expenditure doesn’t cover every single product in the market. There’s no laptops, there’s no media centre PCs and the like. It also doesn’t include the games sold for consoles or additional media, so I feel it’s important to reflect on that,” he said.

In the fourth quarter of 2005 alone, Australian’s spent $1.3 billion, or 35 per cent of 2005’s total expenditure on digital products, with digital media (MP3) players experiencing 215 per cent growth during the second half of 2005, and a massive 870 per cent growth for the first half.

Despite the $3.6 billion spend, DVD player sales declined during 2005 as consumers increasingly switch to DVD recorders throughout the year. Nevertheless, over two million DVD players were still purchased in 2005, which equates to one DVD player for every 2.2 adult Australians.

LCD television sales grew 283 per cent in the first half of 2005, bettering its first half result of 187 per cent growth. Plasma TVs grew 132 per cent in the first half and 125 per cent in the second, while photo printers – on the back of the massive price reductions – grew 146 per cent in the first half of 2005 and 31 per cent in the second half.

Digital still cameras accounted for 22 per cent of total sales in the second half of 2005 with $471 million in sales, despite remarks from Stuart Poignand, marketing manager for Canon’s consumer imaging products group, who believes the market has reached maturity.

“While the digital still camera market has reached maturity, GfK figures suggest that in 2005 as much as 33 per cent of the market for digital still cameras were consumers purchasing their second household digital camera,” he said.

Angus Macaskill believes the digital still camera market is still showing strength.

“If you look at digital still cameras there is still enormous growth, up 40 per cent in first half and 17 per cent in second half of 2005. But newer products like widescreen TVs and digital media players have had such great growth that they can’t be ignored. They are new technology and people are constantly discovering them,” he said.

Interestingly camcorders have started to decline, dropping 8 per cent in sales compared to 2004, which Macaskill puts down to the increased functionality of digital still cameras and the premium pricing camcorders still attract.

Plasma TVs generated $440 million or 20 per cent of overall sales for the second half of 2005, while both digital media (MP3) players and LCD TVs accounted for 16 per cent of total second half sales each.

Game consoles also had a good 2005 with over 800,000 units being sold, a 7 per cent increase on 2004.

Console prices increased along with the price of DVD recorders – the only two categories to experience price increases in 2005. 2006 is now shaping up well for both categories, with the introduction of next generation gaming and the soccer World Cup looking to drive sales throughout the year.

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