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Consumer electronics revenue hit by economic slowdown

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Global revenue growth in the consumer electronics market will fall short of forecasts by more than 75% this year, according a report from IHS iSuppli.

The market analyst cites an unexpected slowing due to continuing economic chaos as the reason for the drop. According to IHS, revenue will amount to $357.3billion which, while up 1.5% from $351.9bn in 2010, represents a 77% reduction when compared with the analyst's growth forecast of 6.4%. The lower growth is significantly slower than 2010, when the market achieved a much quicker 7.9% annual rate. Nevertheless, IHS forecasts that consumer electronics revenue will resume moderate growth during the next two years before slowing down in 2014 and flattening in 2015. By then, says IHS, overall revenue will approach the $400bn level. A large factor in this years' forecast reduction is the slowing of the lcd tv space, IHS believes. The market accounts for nearly 30% of consumer electronics revenues and the original 2011 forecast of $110bn has been reduced to $104bn. The portable media and MP3 player segment is also suffering due to the success of smartphones and tablets – the iPod, for example shipped 7.5million units in Q2 2011, down 1.9m on the same time last year. The most pressing issue, warns the analyst, is that of pricing. IHS forecasts that in 2015 consumer appetite will remain strong, but manufacturers will be under increasing pressure to offer their products at competitive prices. Eventually, the report states, price pressure will outweigh the growing number of pieces of consumer electronics equipment, capping the market revenue in the process and slowing growth to 'a trickle'.