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Consumer Electronics & Appliances Industry Profile
Spin cycle

When an industry boasts no-frost refrigeration as its most recent technological breakthrough, it is clearly time to spice things up.

With sales driven primarily by the new-home market (25% of sales) and replacement purchases, the appliance industry has historically lacked a key ingredient when it comes to cooking up sales based on more than necessity. That missing component has been innovation.

Conversely, the consumer electronics industry has traditionally worked off the premise that the best way to convince customers to buy a new product is to offer something new. Maytag decided to test the theory on appliance consumers with the introduction of Neptune, a high-priced super-efficient washing machine introduced in 1997. The world's top appliance makers (AB Electrolux, General Electric's GE Consumer Products, Merloni, Samsung Electronics, Whirlpool) and Maytag itself were shocked with the new appliance's success. Neptune's booming sales showed the old-school appliance makers that the industry could move beyond a needs-based market and appeal to consumers who follow trends and seek luxury (much like those who purchase DVD players and big-screen TVs).

Although the main avenue of appliance innovation has developed along the lines of faster, quieter, and more efficient, computers and the Internet also offer a realm of possible innovations (i.e., refrigerators that keep a food inventory or an oven that automatically calls police in case of fire).

Many appliance makers hope the modernization of their products will soon alleviate the repercussions of static appliance production. The dullness of the past two decades filled the market with appliances that have been more similar than different, forcing the industry into stiff pricing competition. That competition drove down profits, sinking company stocks and pushing away retailers. (The #2 US consumer electronics retailer, Circuit City, dropped appliances in favor of home office equipment in 2000.)

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Although it is subject to many of the same hurdles most industries face (such as market saturation and economic downturns), the consumer electronics industry has fared better than most in times of flux. Technological advances and ever-changing product lines have helped the industry avoid major saturation problems by making existing products appear outdated.

The success of digital products -- video players, TVs, phones, and sound systems -- has proven that consumers will often succumb to the urge to own the latest and greatest electronic gadgets. The digital craze and the consumer electronics industry surged ahead in recent years (with all-time records for consumer electronics sales -- led by DVD players, one of the fastest-selling electronics products ever), but the global economic slowdown of late has blunted retail sales.

Japan is a production powerhouse, boasting several of the companies that dominate the consumer electronics industry. The combined sales of #1 consumer electronics maker Matsushita Electric Industrial and #2 Sony Corporation surpass the sales of the next 10 largest consumer electronics companies. Philips Electronics is the only non-Japanese company among the top 10.

Only two US consumer electronics manufacturers have more than $1 billion in annual sales -- Bose Corporation, the world's top speaker manufacturer, and audio equipment specialist Harman International. The appliance industry's key players are more varied in their nationalities (AB Electrolux, Sweden; Merloni, Italy; Whirlpool, US). But no matter the origin of the consumer electronic or home appliance, the consumer demand for high-tech development in both sectors knows no national boundaries.

Top Appliance Manufacturers by Sales
1. AB Electrolux
2. Whirlpool Corporation (WHR)
3. Toshiba Corporation (TOSBF.PK)
4. GE Consumer Products
5. Maytag Corporation
6. Best Buy Co., Inc. (BBY)
7. METRO AG
8. Dixons Group plc
9. RadioShack Corporation (RSH)
10. Matsushita Electric Industrial Co., Ltd. (MC)
Key People
Ralph Hake - Chairman and CEO of Maytag. A former executive at competitor Whirlpool, Hake is charged with rescuing Maytag from slumping sales and a shrinking stock price amidst a sluggish economy.
Nobuyuki Idei - CEO of Sony Corporation. Mr. Idei, who has been with Sony since 1960, has helped the company become an international force in consumer electronics. He has also played a key role in Sony's expansion into the digital age.
Richard M. Schulze - Chairman of Best Buy, the largest US consumer electronics specialty retailer. Schulze has kept the company in a healthy expansion mode.
Jerry Levin - Chairman and CEO of American Household (formerly Sunbeam). Hoping not to follow in the footsteps of "Chainsaw" Al Dunlap, Levin is determined to put up his best fight and return this company to its glory days.
Glossaries
Appliance411 Glossary
TechHome Guide Glossary
Associations & Organizations
Association of Home Appliance Manufacturers
Consumer Electronics Association
Electronic Retailing Association
Gas Appliance Manufacturers Association
Home Automation & Networking Association
National Electronics Service Dealers Association
Professional AudioVideo Retailers Association
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