Modest Hopes for High Tech

Consumers have cooled on electronic gadgets. But executives of the world’s largest consumer electronics producers say it’s just a matter of time before they start buying again.

How much time it will take, though, is up for debate. Predictions for improvements in the demand for electronic gadgets for the home ranged from three months away to two years.

But most agreed that any early recovery will be modest and hinges on the success of a new range of digital products such as big flat-screen TVs, DVD recorders, MP3 players and digital camcorders.

“The market will be better at the end of the year, but it doesn’t mean it’s a recovery,” said Pierre Mureau, vice president of consumer worldwide marketing at France’s Thomson Multimedia, the world’s fourth-largest consumer electronics producer, which owns the RCA brand in the United States.

“We do not expect any kind of V-curve recovery. It may be a long recovery, a two-year recovery. So don’t expect a beautiful rebound,” he told Reuters.

The consumer electronics industry has been struggling as consumer purchases dried up in the first six months of the year, as the economic slowdown in the U.S. spilled over into Europe and Asia.

The slowdown already has hurt profit and sales.

“If the economy falters, consumers first cut spending on cars, and next in line are TVs,” one London-based analyst said.

This sensitivity to economic cycles is illustrated by the fact that for every percentage-point increase or decrease in consumer spending, consumer electronics expenditure rises or falls by 2.7%, compared with just 0.4% for food.

Even Japan’s Sony, the world’s largest consumer electronics company, reported 1% lower European sales in the first six months after 27% growth a year earlier.