Research: Digital hotting up

Separate research studies conducted by analyst groups GfK and Connection Research Services (CRS) show strong growth in sales and future demand for digital media devices.

According to GfK, Australians spent more than $2 billion in the six months to July 2006 on digital lifestyle products. This was up more than $500 million on the same period last year.

Digital media products represent a larger proportion of total consumer spending - up from 0.8 per cent to 1.5 per cent, GfK analyst and author of the report, Angus Macaskill, said.

"It appears some spending is being re-directed to digital media products from other parts of the economy," he said. "Consumers are becoming more likely to invest in entertainment infrastructure in the home than, for example, go to the movies."

Consumers are also increasingly recognising their local retailer as the brand name behind purchasing decisions.

In a separate report compiled by Connection Research Services (CRS), consumers were asked who their preferred supplier was for such devices as digital media players, personal computers, games consoles and digital cameras. While direct vendor, Dell, featured prominently - branded retailers such as Harvey Norman, K-Mart, Big W, Officeworks and local computer retailers often fared better in terms of consumer awareness than major brand names such as HP and Apple.

"We didn't make a distinction between vendor and reseller when we asked for preferred suppliers," editorial director for CRS, Graeme Philipson, said. "The major retailers, particularly Harvey Norman, are doing far better this year in terms of consumer awareness."

The GfK survey found close to half of consumer spending on digital lifestyle products in the first half of 2006 was plasma and LCD screens - which accounted for $486.7 million (25 per cent of all spending) and $409.9 million (21 per cent) respectively.

By contrast, personal digital media devices like mobile phones, portable music players and digital still cameras have just about reached saturation point. The CRS research showed that 60 per cent of households own a portable digital music player - up from 25 per cent in 2005, while penetration of digital cameras reached 83 per cent.

While sales growth for these products is now expected to drop, both analysts suggest the replacement cycle is more than healthy.

"The mobile phone, for example, has nearly reached 100 per cent penetration," Philipson said. "Anybody who is ever likely to own one already has one. Yet this is still the category for which the largest number of people is planning to make another purchase in the coming year - 25 per cent will definitely be replacing their phone, and 25 per cent say they probably will.

While the device market is steamrolling along, consumers are yet to make much of an investment in home networking or home automation, Philipson said. Several factors are coming together, however, that are likely to spur growth in this market. About a third of Australian homes now have more than one PC, while two-thirds plan to invest in home theatre systems in the next 12 months.

Philipson said the reseller channel should view this as a big opportunity to provide network services into the home and show consumers how to make these products work together.