Malaysia Consumer Electronics Report Q1 2014
Sales of many categories of digital lifestyle products including digital TV sets, smartphones and tablets are growing rapidly and extending Malaysia's run as one of the region's high-growth consumer electronics markets. Continued growth in private consumption, mainly due to the positive effects of cash handouts and increased welfare spending by the government, will be supportive of market expansion. A further growth driver will be the falling price of devices, particularly as Chinese vendors increase competition in the smartphone, tablet and flat-screen TV markets. However, there is downside risk as uncertainties remain over the export market and the outlook for employment could also weigh down consumer confidence and spending on discretionary lifestyle products such as TV sets.
Headline Expenditure Projections
Computer Hardware Sales: US$2.7bn in 2012 to US$3.0bn in 2013; +10% in US dollar terms. Tablet sales are driving unit growth, but with preference for low-cost devices, growth in market value is failing to keep pace.
AV Sales: US$3.3bn in 2011 to US$3.5bn in 2013; +8% in US dollar terms. HD, smart TV sets and digital cameras providing strong growth areas but AV will remain the slowest growth segment of the consumer electronics market.
Handset Sales: US$1.6bn in 2012 to US$1.8bn in 2013; +11% in US dollar terms. Smartphone penetration is rising rapidly as device prices decline, and the launch of 4G mobile services will act as a push factor for upgrades at the high end of the market.
Key Trends And Developments
The PC market is in the midst of a major transition as sales of traditional PC form factors (desktops and notebooks) decline as consumers shift towards tablets. Falling prices in the tablet market will drive growth in sales, while Malaysia's improved wireless broadband infrastructure, with an increase in the number of hotspots available, will also boost sales. However, the desktop and notebook market is not in as steep a decline as in more developed market, with the lower PC penetration meaning there is still demand for productivity oriented device sales. This gap could be filled by hybrid/convertible notebook/tablet designs if vendors can offer attractive design at mass market price points.
Smartphone sales are the fastest growing segment of the Malaysian consumer electronics market. Affordable Android-based devices have been the key driver of sales growth, and with prices expected to continue declining as vendors battle for market share, BMI expects growth to remain strong through 2014. As well as consumer demand for devices, another driver is the provision of operator subsidies in order to reclaim investments in 3G and 4G LTE network infrastructure.
A combination of new technologies such as 3D, LED and internet-enabled TV, along with more competitive pricing, should help support AV demand. Smart TV sets proved a strong growth area in Malaysia in 2012, with vendor estimates that this category accounted for around 35% of total TV set sales, making Malaysia a regional leader. Overall, TV net sales growth has been declining in volume terms over the past few years because of increasing competition from other multimedia devices such as computers and mobile phones. The growing popularity of LED backlit TVs and pay-per-view will drive revenue growth due to the greater proportion of sales accounted for by high-end and large-screen models.