Australia’s $4.5 billion digital gizmo obsession

By Matthew Henry

SYDNEY: Australian consumers boosted their spending on digital lifestyle products including digital cameras, LCD televisions and mp3 players by 22 per cent in 2006 as the total value of the market soared to $4.5 billion, according to the Canon Digital Lifestyle Index released today by Canon and GfK.

The CDLI report shows consumers are spending twice as much on digital goods annually at retail than they were in 2003, with LCD TV capturing the largest chunk of their 2006 spend, generating $584 million or 23 per cent of total spending covered b y the CDLI.

According to the report’s author, GfK’s Angus Macaskill, Australians are obsessed with digital gizmos and are diverting a growing portion of their annual income to buying into the digital lifestyle.

“What is very interesting about this report is the extent of our incomes we are actually allocating to these products,” Macaskill told Current.com.au.

“From May 2004 to May 2006 – and this is ABS data – the weekly earnings on average increased 12.6 per cent, and yet if you look at the increase in the CDLI product categories in those two years the increase has been 67.5 per cent, so about five times more than income growth. So it is obvious that we are moving our money away from other areas to spend more on digital products.”

Macaskill was surprised at the growth in annual sales value over 2005 given the continued drop in average prices, which have been slashed 43.4 per cent across CDLI categories since the first quarter of 2003.

“As prices keep coming down more people can buy to get in at the bottom so even people who don’t have a lot of cash washing around are able to participate. If we think about markets going back 20 years ago, I don’t think we have ever seen technological products where as they get more sophisticated and more capable the price actually goes down rather than up,” he said.

Almost 2.5 million digital media players, two million DVD players and the best part of two million digital still cameras were sold during the second half of 2006.

Plasma TV was the second highest grossing category for the period with $462 million or 18.2 per cent of total spending, followed by digital still cameras with $412 million or 16.6 per cent.

Digital still cameras now enjoy one of the highest penetration rates among CDLI products, second only to DVD players, with one DSC sold per 2.6 Australian adults since 2003.

However, the report shows that sales of digital still cameras have flattened out, adding to the mounting evidence that the DSC market has matured.

“This is the first time that we haven’t seen significant growth year on year when we compare one half-year to another for the digital camera category,” said Macaskill.

“It has still increased a little bit, by about a per cent, but not by very much. So is there some sense that there might be a saturation going on in the market? It is probably getting close to that, I guess the question now will be, will the product features or product replacement cycle restart that market?”

The penetration of digital media players such as the iPod and other mp3 players has reached one per 3.6 adults, which as the report points out is astonishing considering how recent their introduction.

Macaskill believes the next CDLI for the first half of 2007 will show continued sales growth over the same period in 2006, with games consoles such as the PlayStation 3 contributing a more significant portion to overall CDLI sales.

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