Electronics makers considering the strain on the U.S. economy are hoping consumers will cut other expenses first, but many see some worrying signs ahead.
Gathered in Las Vegas this week for the Consumer Electronics Show, gadget, cell phone and television makers are placing their bets on whether U.S. economic troubles from rising unemployment to mortgage market problems will stop consumer spending.
We need to watch just how cold sentiment is getting, Toshihiko Fujimoto, chief executive of Sharp Corp's Sharp Electronics, said on Sunday. We can't say business is especially good.
Sony Corp's Sony Electronics President Stan Glasgow, who oversees the U.S. electronics business, told Reuters the company had strong sales in recent months, boosted by demand for its Bravia line of televisions.
But Glasgow noted that any slowdown would likely appear first in items such as high-end digital video cameras, as opposed to big screen TVs.
On the horizon I see that things are getting tougher, he said.
Television and cell-phone makers see their products as must-haves -- or perhaps indulgences to ease larger pains.
Cell phones are a necessity, Muzib Khan, vice president of product management for Samsung Electronics Co Ltd's U.S. telecom business told Reuters in an interview.
Bill Ogle, chief marketing officer for Samsung Telecommunications America, said fourth-quarter sales had risen strongly -- but he noted weakness at the end of the quarter among U.S. carriers.
We know our carriers have said that toward the end of the selling season business was slowing, Ogle said, adding it was not clear if slowing sales related to the timing of customer contract expirations or for other reasons such as the economy.
LG Electronics Inc U.S. Vice-President of Marketing Allan Jason said consumer electronics was to some extent recession-free since travel was often a first cut in discretionary spending.
If they are spending more time at home, sometimes it means that they are upgrading their consumer electronics product, he said, although he allowed that a very soft economy could slow sales growth in LCD panels, which the company expects to double in the United States over the next year.
But Jason also said LG would bend on price if the market is not moving quick enough.
Riddhi Patel, principal television analyst at research firm iSuppli, said she sees North American LCD unit shipments falling 29 percent in the first quarter of 2008 from the last quarter of 2007 -- a much steeper decline than the 5 percent drop seen in the first quarter of last year.
That cannot be all cylicality, she said.
Overall for 2008, however, she sees 29 percent growth.
North America is a brutally competitive market. That's particularly true of TVs, Philips Consumer Lifestyle strategy chief Kevin Lewis told Reuters in an interview.
This industry continues to be wonderful in some ways and a tragedy in others. It's a train wreck in many ways, he added.
Michael Troetti, president of Sharp Electronics Marketing Company of America, also said there was not a lot of room to substantially cut prices -- and he believes his target consumers can afford to buy.
There is not much money left in TVs to take out. You are not going to sell any more TVs by taking another 50 bucks out, he said.
Sharp in particular is shipping a 108-inch LCD television it introduced last year, one example that companies are not changing plans, said Ross Rubin, consumer technology analysis director at NPD Group.
There's some concern about the economy. But I haven't seen it really have an impact on the kinds of products companies are introducing, he said.
(Reporting by Franklin Paul, Mayumi Negishi, Sinead Carew, Marie-France Han, Scott Hillis and Nicole Maestri in Las Vegas)