Industry Vision – Hans-Joachim Kamp – Supervisory Board Chairman – gfu

Following is an unofficial transcript of the presentation given by Hans Joachim Kamp at the IFA Global Press Conference: 

Yesterday you already obtained a lot of information about what’s going on in the markets of consumer electronics and home appliances. In the next minutes, I will give you an overview of the global market for consumer electronics. In this context, firstly many thanks to Mr. Boyny and our long-term partner GfK in supporting us with lots of detailed figures for this press conference. Looking at the global turnover of consumer electronic products and the digital world, we can see increasing figures for 2017 – US$976 billion. That is a plus of more than 3% compared to the year before. For this year, we estimate a growth of almost 4% – up to over US$1 trillion – a very positive forecast.

Let’s now have a look how the sales are spread out through the regions. Three major regions – Europe, North America and China, are doing close to 70% of the consumer electronics revenue. There have been no significant changes in the last years. The second information from this chart is a forecast for the growth throughout the regions this year. Latin America leads with 9% followed by emerging Asia, with China, and in the third-place, Europe.

Let’s look at product categories now. Three categories: smartphones, mobile PCs and TVs, are doing close to 3/4 of the turnover for consumer electronic products. Please keep in mind that the figure for smart phone sales is based on real prices. Nevertheless, in reality, consumers are paying less for the devices due to discounts from the mobile phone providers. The three important product groups – smartphones, PCs and TVs, have developed differently in the past years. The sales for smartphones increased 4% from 2016 to 2017. This year, we expect a growth of more than 3% up to 1,527 million units. PC sales, with an estimated 283 million units, should show a drop of 4% from 2017 to 2018, which is a smaller decrease than in the year before which was nearly 7% down. For TVs, we expect an increase of 6% in 2018, up to 236 million units. That’s one of the highest growth rates of recent years.

Kamp GPC_1What to expect in terms of technical trends for these products this year, and what is the reason for the success? In general, there is no change to the past in that innovation continues to be the driver of our business. The smart phone segment is an ongoing battlefield of innovation, with, for example, new cameras with highly increased performance, brighter and bigger displays, face recognition, faster processors and much more. Another reason for the success is that smartphones continue to be lifestyle products that people replace frequently, often within two years or less. PCs offer more compact bodies – often the so-called convertibles. Furthermore, they have increased computing and battery performance. Nevertheless, smartphones are more and more replacing PC use cases. Just take social media for example. For the TV segment, we see that customers will continue to buy bigger TV sets with more high-performance features. TV features such as better picture quality due to higher dynamic range and higher frame rate and of course 8K resolution, with, in addition, new designs like wallpaper TV and flexible displays offering a lot of new possibilities in using and placing the TVs, not only in the consumer market, but also in B2B solutions. The success of the TV market has two more reasons. There are high replacement rates for older TVs like the first generation of flat TVs or the old CRT sets. Besides that, more and more households want to own a second or third TV.

Let’s now have a look at the split of the regions for these products in 2017. The ranking of the turnover for smartphones shows China as number one with a share of 30% or nearly 2 times as many units sold as in emerging Asia, Europe and North America, with 16%, 15% and 14%. Looking at PC sales, North America is leading with 29% of sold. Europe is in number two position with 23%, and China ranks number three. For TVs, China, North America and Europe are showing mostly the same percentage and ranking from place number 1 to 3.

Some more figures about TVs: the sales of ultra HD TVs are growing continuously. For 2018, we expect nearly 100,000,000 UHD TV sets sold. This means a turnover close to US$80 billion and a growth of 38% in units, or 35% in value. This growth is far bigger than the year before. More than 40% of all TVs sold in 2018 will be Ultra HD TV sets. UHD TV sets are very popular in the Asia-Pacific region, where about 46% of UHD TV sets were sold, followed by North America with 21% and Europe with 20%.

Kamp Voice Control.jpgWe have always said that innovation drives the market. The next figure is evidence of these words. 66% of TV sales in 2017 were based on new TV models. One major trend in general is voice control. I am quite sure you agree. It is very difficult to get reliable figures in this field. The first problem for the market research people is the fact that the main players are not classic manufacturers as we know, and secondly a lot of sales are online and neither the sales organisations nor online shops share the results with market research organisations. Nevertheless, we have tried to make a forecast. After big growth last year with more than 300%, the success continues this year. Another growing segment is wearables. After more than 160 million units sold in 2017, the forecast of sales in 2018 will be 211 million units. Our expectation for this year is the growth of 32% in units and 35% in value.

Kamp Wearables.jpgHow is the split up of wearables over regions? The biggest markets for wearables are China and North America. Only 17% of wearables are sold in Europe. That’s significantly less than Europe’s 20% share of the global market of consumer electronic products. This means that wearables do not perform as strongly as TV sets do in Europe. With 10% of global wearable sales, Developed Asia is matching its global CE products sales share. In Emerging Asia, Latin America, and Middle East & Africa, there is much room for improvement.

Let me summarise. We expect a positive market development in 2018 with 4% growth. Smartphones and TV sales will continue to show increasing figures. Innovation continues to be the key driver of all markets, and last but not least IFA is always at the edge of markets and technology development, the place to be!