The holiday quarter wasnt everything it could have been for the consumer
electronics industry. Apple (NASDAQ: AAPL ) sold a lot of iPhones and Amazon
(NASDAQ: AMZN ) sold plenty of Kindle Fires, but even those popular gadgets
didnt prevent overall electronics sales falling to $9.5 billion, 5.9%
year-on-year. It was all a mixed bag. Smartphones and tablets did big business,
according to industry tracker NPD, but low sales of once-popular items like DVDs
and camcorders dragged down the industry. No segment of the electronics industry
better highlights the challenges of these middling times than televisions. On
the one hand, sales revenue from big-screen TVs (50-inches and bigger) grew 32%
year-on-year this holiday. Cheaper sets with 32-inch screens, traditionally the
best-selling range of TVs, saw revenue drop 9%. 3DTVs, the struggling models
pumped out by flagging industry giants like Sony (NYSE: SNE ), saw sales jump
100%, accounting for $1 in every $5 made on televisions this holiday. With more
and more models from Korean manufacturers like Samsung (PINK: SSNLF ) including
3D as a basic function, though, the boost may not reflect any broad change in
consumer tastes. Overall, television sales fell 4%. One step forward, another
step back This is precisely the dilemma that forced the aforementioned Sony and
competitor Panasonic (NYSE: PC ) to announce in November the downscaling of
television production. Sony halved its LCD TV sales projections, from 40 million
per year to 20 million. Panasonic decided to cut its TV screen production to
just 7.2 million per year, a restructuring move that will ultimately cost the
company around $3.45 billion. Korean manufacturers like LG and Samsung are
faring better in the market, but as demonstrated by holiday sales, theres simply
less money to be made from televisions across the board. Whats the way forward?
How will the television market actually start growing again? Consider this
statistic from the NPD Groups report on holiday electronics sales: Standalone
streaming devices, meaning set-top boxes like those made by Roku , Apple,
Logitech (NASDAQ: LOGI ) and others, saw revenue from sales grow 65% over the
holiday. These devices, which give access to Internet-based television options
like Netflix (NASDAQ: NFLX ), tend to be cheap, between $50 and $300, so
troubled TV manufacturers wont exactly find safe haven in making new standalone
streaming devices. What that boost demonstrates, though, is a willingness by
consumers to spend on streaming products. The industry responds It looks like
the television industry is already paying attention, considering whats on
display at this years Consumer Electronics Show . Google (NASDAQ: GOOG ) is
pushing its revamped Google TV platform hard, growing its stable of device
partners from two to six. Samsung, Vizio, and Sony are all showing off new
television sets with Google TV streaming services built in. In fact, all of
Sonys new Bravia television models (relatively few compared to past years)
emphasize access to streaming services not just Google TV but the companys own
Sony Entertainment Network media stores. Samsung is pushing its line of ES8000
Smart TVs, with streaming content and game apps like Rovios Angry Birds . Sharp
(PINK: SHCAY ), meanwhile, announced 20 new HDTVs at CES on Monday , all of
which feature built in WiFi and SmartCentral streaming services. Consumers didnt
spend more on TVs during the 2011 holiday season, but they spent significantly
more on streaming devices. The industry is banking heavily on consumers spending
more on TVs when those streaming devices are built right in. Time will tell if
that means new growth opportunities for longtime players in the market. Of
course, there will be new players as well. And time will tell if Samsung, Sony,
and all the rest can compete with Apple when it delivers its Apple HDTV later
this year. As of this writing, Anthony John Agnello did not own a position in
any of the stocks named here. Follow him on Twitter at
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