LONDON Driven by demand for flat-screen TVs and game consoles, the European market for consumer electronics is expected to grow by a healthy 9.2 percent this year, but show a more modest 2.4 percent increase in 2007, according to the European Information Technology Observatory (EITO) organization.
According to Bruno Lamborghini, chairman of EITO, growth for digital products will be 18 percent, the same rate as in 2005, according to the latest survey by EITO, conducted for it by market research group GfK.
Turnover in the ten most important Western European markets in consumer electronics will reach a total of 60 billion Euros in 2006, said Lamborghini. "The industry is scoring a hit with customers with the very latest digital equipment", he added.
Growth leaders are flat-screen TV, with a 57 percent increase, followed by game consoles (38 percent) and MP3 players (17 percent).
Worth 18.5 billion Euros, flat-screen TV sets will account for nearly a third of the entire market this year, the market research suggests.
Meanwhile, demand for video cassette recorders, cathode ray tube televisions and conventional stereo systems are in sharp decline. In 2006 turnover in analogue equipment is contracting in double digits in Western Europe.
The researchers are predicting slower growth next year because of an even faster decline in sales of analog equipment, and a slowdown in sales of digital gear following this year's boom.
"Many households have already updated their equipment to the latest standard", says Lamborghini. He adds the football World Cup this year largely contributed to this.
EITO the fastest growing segment next year will be set-top boxes to receive digital TV, with a projected increase of 18 percent, followed by demand for flat-screen TVs, which is estimated to be 17 percent. Games consoles are also expected to boom, with sales of the Play Station 3 from Sony and Nintendo's Wii boosting demand.
In terms of geographic markets, the U.K. is said to be the largest in Europe, with an annual value of 14.8 billion Euros. Then come Germany with 13.1 billion and France with 10 billion Euros.