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KN31032
KEY NOTE Household Appliances (Brown Goods) : August 2002

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This report covers: video cassette recorders, VCR's, DVD Players, camcorders, cable and satellite systems, portable audio products, audio systems, audio separates, audio receivers, personal computers, televisions, TV's,

Companies covered include: Aiwa, Grundig, Hitachi Home Electronics (Europe),LG Electronics, Matsushita Electric UK, Pace Micro Technology,Panasonic UK, Pioneer GB, Phillips Electronics UK, Samsung, Sharp, SOny,Toshiba,

EXECUTIVE SUMMARY

In contrast to the global market, the household appliances (brown goods) market has achieved steady growth over the past 5 years in the UK. In 2001, Key Note estimates the total market was worth £3.8bn, an increase of 23.3% since 1997. Televisions, satellite systems and digital versatile disc (DVD) players were the sectors showing strongest growth. The subject of this report is 'brown goods', which is the term used to describe a range of electronic entertainment products that include televisions (TVs), video cassette recorders (VCRs), DVD players, camcorders, cable and satellite systems, portable audio products, audio systems, and audio separates. Processes of technological innovation and diffusion are beginning to blur the distinctions between brown goods and other sectors of the electronics industry. Televisions can now be communications devices, mobile phones can also be personal audio receivers and the personal computer (PC) can also be a television.

The brown goods industry is going through fundamental structural changes, as a result of the developments in digital technology. Consumer electronics, information technology (IT) and telecommunications are converging rapidly. Companies may retain hardware- and component-manufacturing capabilities, but are spreading their activities into content and service provision and the management of networks. There has also been increased rationalisation within the industry, such as mergers and acquisitions, joint partnerships and a much greater degree of co-operation. The strength of sterling in the past 3 years has been a serious cause for concern for UK-based manufacturers of brown goods. Export markets are more difficult to penetrate with sterling at such high levels, and competition in domestic markets is intensified by foreign competitors taking advantage of the relative weakness of their own currencies.

The development of digital television and radio is expected to drive growth in the brown goods sector forward over the next 5 years, as consumers upgrade televisions, radios and other receiving and recording equipment. However, it is important to recognise that around 40% of the UK population will choose not to subscribe to `Pay TV' and will have to be persuaded to change to digital television. By the year 2006, Key Note forecasts that the value of the UK brown goods market will have grown steadily to just over £4.53bn. This represents a 16.6% increase between 2002 and 2006.

TABLE OF CONTENTS

1. Market Definition 7
REPORT COVERAGE 7
MARKET SECTORS 7
Televisions 7
Video Cassette Recorders 7
Digital Versatile Disc Players 8
Camcorders 8
Cable and Satellite-Receiving Equipment 8
Portable Audio Products 8
Audio Systems 8
Audio Separates 9
MARKET TRENDS 9
MARKET POSITION 10
Table 1: Value of Total Products/Services in the UK Electronics Industry (£bn and %), 1995, 1999 and 2000 10
2. Market Size 12
THE TOTAL MARKET 12
Table 2: The UK Market for Household Appliances (Brown Goods) by Value (£m), 1997-2001 12
BY MARKET SECTOR 13
Televisions 13
Video Cassette Recorders 13
Digital Versatile Disc Players 13
Camcorders 13
Cable and Satellite-Receiving Equipment 13
Portable Audio Products 13
Audio Systems 14
Audio Separates 14
Figure 1: The UK Market for Household Appliances (Brown Goods) by Value (%), 2001 14
3. Industry Background 15
RECENT HISTORY 15
INDUSTRY CONCENTRATION 16
Table 3: Number of VAT-Based Enterprises Engaged in the Manufacture of Electrical Domestic Appliances by Turnover Sizeband (£000), 2001 16
Table 4: Number of VAT-Based Enterprises Engaged in the Manufacture of Televisions, Radio Receivers, Sound or Video Recording or Playback Appliances and Associated Goods by Turnover Sizeband (£000), 2001 17
EMPLOYMENT 17
REGIONAL VARIATIONS IN THE MARKETPLACE 17
DISTRIBUTION 17
HOW ROBUST IS THE MARKET? 18
KEY TRADE ASSOCIATIONS 18
British Federation of Audio 18
British Radio and Electronic Equipment Manufacturers Association 18
Federation of the Electronics Industry 19
The Institution of Electrical Engineers 20
4. Competitor Analysis 21
THE MARKETPLACE 21
MARKET LEADERS 21
Table 5: Selected Leading Companies in the UK Household Appliances (Brown Goods) Market by Turnover (£m), 2000/2001 21
Aiwa UK Ltd 22
Company Structure 22
Current and Future Developments 22
Financial Results 22
Grundig UK Ltd 23
Company Structure 23
Current and Future Developments 23
Financial Results 23
Hitachi Home Electronics (Europe) Ltd 23
Company Structure 23
Current and Future Developments 23
Financial Results 24
LG Electronics UK Ltd 24
Company Structure 24
Current and Future Developments 24
Financial Results 24
Matsushita Electric UK Ltd 24
Company Structure 24
Current and Future Developments 25
Financial Results 25
Pace Micro Technology PLC 25
Company Structure 25
Current and Future Developments 25
Financial Results 26
Panasonic (UK) Ltd 26
Company Structure 26
Current and Future Developments 26
Financial Results 26
Pioneer GB Ltd 26
Company Structure 26
Current and Future Developments 26
Financial Results 26
Philips Electronics UK Ltd 27
Company Structure 27
Current and Future Developments 27
Financial Results 27
Samsung Electronics (UK) Ltd 27
Company Structure 27
Current and Future Developments 28
Financial Results 28
Sharp Electronics (UK) Ltd 28
Company Structure 28
Current and Future Developments 28
Financial Results 28
Sony UK Ltd 28
Company Structure 28
Current and Future Developments 29
Financial Results 29
Toshiba Electronics (UK) Ltd 29
Company Structure 29
Current and Future Developments 30
Financial Results 30
OUTSIDE SUPPLIERS 30
The Chemical Industry 30
Electronic Component Manufacturers 30
Advertising and Promotion 31
Table 6: Main Media Advertising Expenditure on Brown Goods by Product Sector (£000), December 2000 and 2001 31
Table 7: Main Media Advertising Expenditure on Loudspeakers (£000), December 2000 and 2001 33
Table 8: Main Media Advertising Expenditure on Stereo/Hi-Fi Systems (£000), December 2000 and 2001 33
Table 9: Main Media Advertising Expenditure on TV Sets and Satellite Systems (£000), December 2000 and 2001 34
5. Strengths, Weaknesses, Opportunities and Threats 36
STRENGTHS 36
WEAKNESSES 36
OPPORTUNITIES 36
THREATS 37
6. Buying Behaviour 39
CONSUMER PENETRATION 39
Television Set Ownership 39
Table 10: Number of Televisions Owned per Household (000 adults and %), 2001 39
Table 11: Penetration of Televisions (000 adults and %), 2001 40
Video Recorders/DVD Players 42
Table 12: Number of Video Recorders/DVD Players per Household (000 adults and %), 2001 42
Table 13: Penetration of Video Recorders/DVD Players (000 adults and %), 2001 43
Video Usage 44
Table 14: Use of Video Recorders (000 adults and %), 2001 44
Satellite/Cable/Digital TV 45
Table 15: Penetration of Satellite/Cable/DVD Players (000 adults and %), 2001 45
7. Current Issues 46
OFCOM (OFFICE OF COMMUNICATIONS) 46
DIGITAL TELEVISION 47
ITV Digital Disaster 47
DIGITAL RADIO 49
INWARD DIRECT INVESTMENT 50
RESEARCH AND DEVELOPMENT 51
INDUSTRIAL AND TECHNOLOGICAL CONVERGENCE 52
Table 16: Total Internet Users in the UK (million), 1999-2001 52
8. The Global Market 55
THE TOTAl market 55
GLOBAL TRENDS 55
9. Forecasts 57
FUTURE TRENDS 57
FORECASTS 2002 TO 2006 58
Table 17: The Forecast UK Market for Household Appliances (Brown Goods) by Value (£000), 2002-2006 58
10. Company Profiles 59
Grundig UK Ltd 60
Hitachi Home Electronics (Europe) Ltd 62
Pace Micro Technology PLC 64
Pioneer Gb Ltd 66
Toshiba Electronics (UK) Ltd 68
11. Further Sources 70
Associations 70
Publications 71
Directories 73
General Sources 73
Bonnier Information Sources 74
Government Publications 75
Other Sources 76

Text © 2002 Key Note

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