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Consumer Technology Industry Trends to Watch in 2008

Industry analysts Ross Rubin and Stephen Baker weigh in on what’s in store (and in stores) for the coming year

According to consumer technology industry analysts from The NPD Group, a leading consumer and retail information provider, 2008 could be a year of transition for the industry. The impending analog television shut-off, the drive toward connectivity, and the growing penetration of broadband Internet access in American homes will more actively shape the kinds of consumer technology products and services consumers can expect to see and buy in the coming year. Stephen Baker and Ross Rubin, industry analysts at NPD, believe the consumer tech market’s moves might not be driven by one specific product or set of products, but instead will be dictated by larger sea changes in the industry.

“As many of the fastest growing electronics categories mature in 2008 overall electronics sale growth is likely to plateau,” said Stephen Baker, vice president, information technology industry analysis, The NPD Group. “Retailers and brands will increasingly look to beyond-the-box services and other offerings to drive continued growth.”

“We are entering the third generation of digital products in many categories, as more consumers have embraced the high-definition experience,” said Ross Rubin, director, consumer technology industry analysis, The NPD Group. “The growth of broadband at home — and the emergence of wireless broadband — are reshaping how the industry thinks about content and capabilities.”

Following are eight of Baker’s and Rubin’s trends to watch for key products, services, and trends we can expect to see more of in 2008:

  1. Analog TV shutoff — Television broadcasters will end transmission of analog programming over the air in February 2009. While there will be a rush for low-cost subsidized converter boxes, manufacturers and retailers will also try to entice consumers to upgrade to digital televisions.
  2. Connected portable devices — The greater flexibility and content opportunities afforded by wireless connectivity will drive further experimentation, as we see more products embrace the ability to connect on-the-go. Manufacturers of PCs, portable navigation devices, MP3 players and digital cameras are among those industry segments that are building wireless links into their products.
  3. Broadband video — Faster broadband access speeds and partnerships among Internet content providers and device manufacturers are bringing new entertainment options into the home. Manufacturers will attempt to capitalize on the value of this differentiation, but must position such capabilities against existing on-demand entertainment sources.
  4. High definition DVD format war — Lower prices, greater HDTV penetration, and more content availability will spur the growth of high-definition optical disk players in 2008; however, the current split among Hollywood studios is sure to slow adoption among consumers who have been waiting for a resolution for the conflict before purchasing a player.
  5. Service and support — A greater accent on service will be a key industry strategy in 2008. Retailers and OEMs will more actively emphasize service as a key part of product strategies in the coming year.
  6. Retail bundles — Marketing messages will talk up the benefits of product and service integration, while sales will be focused more on breadth of offer than on price.
  7. Retail channel inflection point — As the rapidly changing technology product landscape creates new consumer segments, retailers and manufacturers are transforming their businesses to better align with today’s customers needs, desires and purchase preferences. This transformation is breaking apart the old channel structures and giving rise to new “micro-channels” that strive to deliver a retail experience that mirrors these evolving customer segments.
  8. New products need new selling paradigms — From broadband video to connected devices, the products consumers use are changing, so the methods retailers and OEMs use to merchandise and market these products will need to change along with them.

About The NPD Group, Inc.
The NPD Group is the leading provider of reliable and comprehensive consumer and retail information for a wide range of industries. Today, more than 1,600 manufacturers, retailers, and service companies rely on NPD to help them drive critical business decisions at the global, national, and local market levels. NPD helps our clients to identify new business opportunities and guide product development, marketing, sales, merchandising, and other functions. Information is available for the following industry sectors: automotive, beauty, commercial technology, consumer technology, entertainment, fashion, food and beverage, foodservice, home, office supplies, software, sports, toys, and wireless. For more information, contact us or visit http://www.npd.com/.

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