Sales of Digital Devices Pass $7 Billion

US consumers spent $7.3 billion on personal digital devices in 1999, ranging from digital cellphones and smartphones through PDAs and portable computers to MP3 players and digital cameras, according to a study by Strategy Analytics. Digital phones and notebook PCs each took one-third of the market, and these two categories are expected to dominate over the next five years.

According to Strategy Analytics’ latest forecasts, sales of personal digital devices will grow by another 35 percent in 1999, to nearly $10 billion, and will continue to expand at an average growth rate of 22 percent each year, reaching $24.3 billion by 2005. In 1999, shipments reached 32.8 million units, of which 70 percent were digital cellphones. By 2005, the market is predicted to reach 136 million units, an average growth rate of 27 percent.

The study, entitled “The Future of Personal Digital Devices”, found that sales will be supported by improvements in display and interface technologies, further miniaturization, and wireless Internet support. It also concludes that the lines between today’s discrete application-specific devices are becoming increasingly blurred. The arrival of multi-function devices will eventually bring players from different market sectors, such as PC and cellphone manufacturers, into competition with each other.

“The holy grail for many manufacturers is the lightweight, intelligent device that attends to your every communication, information and entertainment need, what we might call our Personal Digital Butler,” says David Mercer, Senior Analyst with Strategy Analytics. “Such products are unlikely to meet consumer performance and price expectations until the second half of this decade. In the meantime, the boundaries between today’s devices will increasingly overlap.”

Other market segments investigated in the report include handheld games devices (estimated 1999 shipments: 5 million), digital cameras and camcorders (1.8 million) and personal digital audio players (0.7 million).

With consumers paying so much attention to personal digital devices, the effect on the PC market may be worth watching. According to PC Data, US desktop PC unit sales climbed just 12 percent in December of 1999, the slowest unit growth rate of any month of the year. For the full year of 1999, US retail PC sales were up 23.7 percent over 1998 to an estimated 10 million units sold.

The price for a Windows PC jumped to $846 in December from $808 in November, but prices still declined 15.5 percent from December of 1998.

“The higher retail price in December reflects the tendency for consumers to spend extra for the holidays as well as as the PC OEM’s (original equipment manufacturers) determination to deliver a more attractive price/value solutions for customers away from the lowest end of the market,” said Stephen Baker, Director of Hardware Analysis at PC Data.