Vision - November/December 2008 - (Page 7)

Discretionary Spending 20% 15% 10% 5% 0% -5% 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2008 The DTV transition will be a muted event not unlike Y2K—our last major technology calendar event. Like Y2K, there are sure to be some bumps in the transition. Inevitably some households among the 114 million in the U.S. will not have heard about the transition prior to February. Not unlike Hiroo Onoda, a Japanese solider who fought in the Philippine jungle during World War II. Not realizing the war had ended, Hiroo did not surrender until the spring of 1974—the last soldier to give up. The number of households missing the news will be minimal and any inconvenience will be quickly rectified. The transition from analog to digital broadcast television will open new, yet to be offered, services. Recession Discretionary Spending (Y/Y % Change) Source: BEA, CEA Technology Taking a Bigger Share 18% 16% 14% 12% 10% 8% 6% 4% 2% 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 0% 4) Consumers cut back on discretionary spending while allocating more to technology. In a challenging economic environment, households retrench. They cut back spending on discretionary items as the chart illustrates. Today, discretionary spending is growing at about half the year-over-year growth rate experienced since 2000. But despite this, consumers continue to spend on technology. While overall discretionary spending is slowing, technology is garnering a bigger slice of total spending. Perhaps households are simply reallocating spending from those categories that have been hard hit—e.g. home furnishings, building materials and new vehicles—to technology-related categories. Perhaps technology is less “discretionary” than it once was. Roughly 80 percent of consumers buy at least one technology product each year— suggesting very strong diversification across regional and socioeconomic backgrounds. Regardless of the drivers, technology has shown strong staying power in a difficult environment. This trend should continue through 2009. Early indications suggest 2009 could be a tough year. As consumers continue to look for signs of a brighter tomorrow, they’ll spend cautiously. I expect technology to continue to show resilience and “steal” wallet share from other industries. Reflect on the past year and take stock of everything you’ve seen and experienced this year. Drop me a line letting me know your predictions for the year ahead at sdubravac@CE.org. • November/December 2008 Recession Consumer Spending on Technology/Durable Goods Source: BEA, CEA fragile nature of the economy, pressure will increase to do anything to spur long-term economic growth. A free-trade agreement with Colombia is a no-brainer. Other FTAs will follow. 3) The DTV transition will be reminiscent of Y2K. We are several years into the broader analog to digital transition. Today consumers enjoy a plethora of digital devices. Nearly 90 percent of households own a DVD player, 74 percent own a digital camera and nearly half own a digital music player. More than half of U.S. households own a digital television with a near majority owning a digital television capable of rendering an HD image. www.ce.org On a single day in February, broadcast television officially will turn digital. CEA’s last consumer survey found nearly everyone is aware of the digital television transition. Most households are already prepared, however households relying on over-the-air television reception and using an analog television will need to either upgrade their television to a digital set or purchase a digital-to-analog converter box. CEA has been forecasting issues related to this transition for several years. In the beginning, our forecast for the number of households impacted or the number of converter boxes needed was well below consensus. Our forecast is little changed over the last few years, but today, as we approach the transition date, we find most forecasts converging to our own. 7 http://www.ce.org

Table of Contents Feed for the Digital Edition of Vision - November/December 2008

Vision - November/December 2008 Contents Shapiro's Spectrum In this Issue The Economist C4 Trends Going Global Visionary CES Unveiled Eco-Intelligence Is Vital in a Sustainable Global Market XGP— A Game Changer Enhancing the Tech Experience High-Definition Decade Public-Private Partnerships CEA Newsline Tech Speak Tech Policy Eye on Business Market Insider Just the Stats

Vision - November/December 2008

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