China suppliers of portable digital devices are optimistic that strong demand for mobile entertainment and communication products willsustain the line despite the economic slow down. In anticipation of weak sales, however, many are projecting moderate growth, especially in the US, which is a key market for most makers.
Suppliers are developing high-value products with expanded functionality to stimulate demand and penetrate new markets. As the convergence trend yields more devices with similar features and functions, many companies are strengthening core competency in their main product lines to differentiate themselves. Makers of digital voice recorders, for instance, focus on comparative advantage in recording and playback technologies to position products against MP3 players, portable media players or PMPs and even digital cameras with recorders.
In the video segment, the worldwide switch to digital broadcasting is expected to spur demand for digital handheld TVs and DVB receivers. Continued reductions in LCD panel cost will drive portable DVD player production. At the same time, makers are preparing for a rise in production outlay because of high licensing fees. Many are negotiating for lower charges and strengthening core R&D capability to develop key technologies.
The following are some of the key trends we see in China’s portable digital device industry:
• Makers across the different product segments are planning to reduce prices to increase demand and sales. Some suppliers of digital photo frames, especially small companies, are reducing quotes almost to cost levels.
• Continued decline in the cost of key components such as NAND flash memory and LCD panels will help reduce production outlay and price. Suppliers of digital voice recorders project up to a 10 percent price slide in coming months due mainly to cost reduction for NAND flash memory. Quotes for digital photo frames are projected to dip by 5 to 10 percent.
• Product differentiation remains a top priority, especially in highly competitive lines such as PMPs. Trends for converged, multifunction devices are flooding the market with new releases featuring the same designs and functions, thereby exerting pressure on suppliers to develop models that stand out.
• Increased focus on high-value products will fuel the development of portable digital devices with multiple functions. Upcoming models will have touch screens, mobile TV, GPS, Bluetooth and Wi-Fi.
• Suppliers project that sales growth will be driven by rising demand in newmarkets in the Middle East, the Asia-Pacific region and Africa.
The above is extracted from the Executive Summary of China Sourcing Report: Portable Digital Devices
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