The gaming industry is seeing a potential shakeup as Sony and Microsoft are poised to challenge Nintendo in the world of console gaming, according to iSuppli. Although the best-selling Wii gave Nintendo the momentum to nab 43% of the unit-shipment market in 2009, Sony and Microsoft are ready to provide fierce competition later this year. On the cell-phone front, the top 10 contract manufacturers are expected to face a difficult 2010 following a year that upended their longstanding business models. In the automotive market, there’s bright news as car rear-seat entertainment shipments will nearly double by 2015.
New technology from Sony (Fig. 1) and Microsoft will put pressure on game-console frontrunner Nintendo this year. “Sony’s Move motion-sensing controller and Microsoft’s Project Natal will breathe new life into the console market,” says Pamela Tufegdzic, analyst for consumer electronics at iSuppli. “Both companies hope to broaden the gaming audience by targeting the larger casual market, which will give Sony and Microsoft a stake in the ground toward this highly sought-after area.”
The growth in the game console market is expected to be slight during 2010 and 2011. Since motion technologies will work with the current generations of Sony’s PlayStation 3 and Microsoft’s Xbox 360, users will not need to buy new consoles to take advantage of these technology features.
As a result, iSuppli expects the overall console market in 2010 to experience only slight growth in unit shipments, with a 2.2% increase. Overall shipments will rise by only 4.4% in 2011. However, the long-term impact of Move and Project Natal on the game-console market will elongate the lifespan of current-generation consoles while giving gamers something more to chew on as they wait for the next-generation models to hit the market in late 2011 and 2012.
A DIFFICULT 2010 FOR CELL-PHONE CMS
Overall cell-phone shipments (Fig. 2) for the top 10 original design manufacturers (ODMs) and electronic manufacturing services (EMS) providers will rise by 3.4% to 204.2 million units in 2010, up from 197.5 million in 2009. However, viewed from the perspective of an industry accustomed to double-digit growth, the slight increase is no cause for celebration. “The relatively flat growth anticipated in 2010 by the top contract manufacturers for wireless handsets is unimpressive when juxtaposed against the steep 30% plunge recorded by the group last year,” says Jeffrey Wu, senior analyst for EMS and ODM at iSuppli. At that time, shipment levels fell from 280.9 million units in 2008.
The persistent challenge for the wireless handset contract manufacturers (CMs) represents a carryover of the upheavals in 2009 when a collapse in the global wireless handset market forced key strategic shifts throughout the industry supply chain. Responding to reduced demand, many mobile handset firms adjusted their overall manufacturing and outsourcing strategies, which impacted the ODMs and EMS providers. OEMs presently remain cautious about reengaging contract manufacturers in case the market does not recover as quickly as expected.
Nonetheless, the overall wireless handset market will bounce back this year, not only growing 12.8% to 1.5 billion units, but also expanding at an annual growth rate of 6.8% from 2009 through 2014. That suggests recovery could be around the corner even for the top 10 contract manufacturers.
RSE ON A TEAR
The popularity of rear-seat entertainment (RSE) systems is growing with worldwide sales expected to nearly double during the next five years, according to iSuppli. In 2015, in-vehicle and aftermarket RSE sales will reach 5.6 million units, up from 3.1 million in 2009. The United States accounted for nearly half of the total in 2009 and will continue to do so in the future.
RSE systems are morphing into comprehensive infotainment systems (Fig. 3), notes Ruthie Bloch, researcher for iSuppli’s North American Automotive Service. “In the past, an RSE system was usually found in a minivan and referred to, often dismissively, as the ‘rear-seat babysitter.’ Not anymore,” says Bloch. “In fact, RSE systems are showing up in all sorts of vehicles beyond just minivans.” New options include gaming systems, branded radio, HD radio, USB, MP3, mobile TV, and Wi-Fi.