Consumer Tech Spending Slowed Down in 2007

Market research firm NPD says that consumer technology spending increased during 2007, but slowed significantly in the second half of the year.

Market research firm NPD has released its analysis of consumer technology spending during 2007, and while 2007 was a growth year for the industry overall, a slowdown during the second half of the year and a lackluster holiday season may not bode well for growth during 2008—but that may not actually hurt company’s bottom lines.

NPD found that some 47 percent of consumer tech spending fell into just five categories: notebook computers, LCD TVs, desktop computers, digital point-and-shoot cameras, and MP3 players. In 2006, those categories accounted for 42 percent of U.S. consumer tech buys, and in 2005 they were just 36 percent of sales.

“Historically we have not seen an impact on electronics sales from the overall economy,” said NPD’s VP of industry analysis Stephen Baker, in a statement. “The overall decline is more related to market saturation in many of the highest unit volume categories, such as cameras and MP3 players. In addition we saw brands and retailers reduce their discounting levels to maintain higher pricing, a strategy that can lead to more profits even in the face of declining demand.”

LCD televisions represented 60 percent of all TV sales, and saw a 74 percent increase in sales revenue over 2006, along with an 83 percent increase in the number of units sold. Notebook computers saw a 23 percent gain over 2006, with MP3 player posting 7 percent growth and desktop computers a 2 percent increase. Sales totals for digital point-and-shoot cameras actually declined by 3 percent compared to 2006. Mobile navigation devices also scored big gains, with more than 1.7 million units sold, and a 170 percent increase in revenue over 2006, to $338 million for the year.