Desire drives away rainy day blues
01 September 2008
So apparently the slow down in the world’s economy, and in particular the soaring cost of fuel, is good for the consumer electronics industry. I suspect that wishful thinking is coming in to play.
There have been various reports that the consumer electronics industry is actually weathering the global economic storm fairly robustly. Some of this has been put down to innovation and a desire to own the latest gadgets, which in part prompted my article last week ‘I’ll be back!’ - the Sci-fi inspiration’. Actually, before I go on, thank you for those who responded to that piece. I think the general thrust of comments received was that just because someone is an engineer does not mean that they do not have the ability to think imaginatively for themselves. I do agree, of course, but sci-fi writers do have the advantage that all they have to do is come up with imaginative thoughts and these thoughts can be unrestrained by technology or even reality. They are completely unaccountable – a bit like journalists really!
But back to the plot, the role of innovation in keeping the consumer electronics on the boil is obviously critical. A report we are covering this week from industry analysts iSuppli also suggests that the downturn in the global economy is actually beneficial to the consumer electronics industry. (‘Is the consumer electronics market immune to economic pressures?’) An over-simplification of iSuppli’s argument is that people cannot go on holiday because of the mushrooming cost of holidays (on account of the price of oil) and so people are staying at home and investing in electronic gadgets instead.
First of all, if any parent previously believed that a month spent killing aliens on a gaming console would be good for their offspring’s ability to think like a human being needs only to have been in the UK this summer. This has been a summer that never was – grey and wet skies being a constant feature throughout – and the ‘easy option’ of computer gaming as an alternative to doing something more productive has become the accepted norm. Maybe its my generation or maybe my own children are particularly susceptible to the negative side of spending too long at a computer, but despite what ever research the gaming companies might come up with – too much time playing computer games is not good for a child’s mental health. I think if a parent thought that buying the latest game console as a replacement for a summer holiday this year would be a good idea, they may be reluctant to do so again.
Computer games is just one aspect of consumer electronics and iSuppli’s research looked most closely at the evolving TV market. This is a particular area where innovation (and the requirement to go digital) is an important factor in driving sales and I am sure that this is one area where the sales cycle is revolving far more rapidly than a replacement cycle.
The ‘desire-driven’ sales cycle also probably moves fairly quickly for cell phones, MP3 players and digital cameras, while purchasers of a microwave oven or vacuum cleaner might be able to ignore their racing pulses and wait until their existing equipment needed replacing. Even then, the lure of buying something new might encourage people to have less tolerance of equipment that is not working quite as well as it should, or be repaired rather than replaced.
But to not go on holiday? I don’t think so. I really can’t imagine telling my children that their fortnight in the sun has been sacrificed for a new digital camera for their father. It would take a lot of megapixels to make that equation balance!
I suspect the relative buoyancy in consumer electronics is purely down to the delay between knowing everything is going to get tougher, and the reality of it really biting. Maybe there is an element of spending that extra bit of cash knowing that it may be harder to justify in a few months time. But while we are already feeling the difference in fuel and food, it is when current mortgage deals need to be renewed that most families will feel a big hit. And that is when digital televisions and MP3s might shift more towards the replacement life cycle rather than the desire-driven cycle.
As a sobering reminder of what is really important in life, my good friend and Asian Correspondent for this newsletter Gordon Wong suffered from a major illness last week. I sincerely hope he makes a full and swift recovery. Our thoughts are with him and his family.
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