The trend towards mobility and connectivity as outlined in Q2 continues to drive growth in the tech sector in Q3. Both consumers and businesses are investing in new hardware that enables them to be more productive and to access a diverse and exciting mix of services and software. This unquenchable thirst for advanced technology has resulted in 2.2% year-on-year growth (value of EUR 44.0 billion) for the Western Europe technology sector. The technology industry is showing great resilience to the recession as total revenue is expected to reach the same level of Q3 2008, just a year on after the economic crisis. Sales of notebooks and smartphones are all driving factors of growth in Q3 2010, which is highly likely to continue into 2011.

Information Technology (IT) overtakes Consumer Electronics (CE) as the number one sector in Western Europe
The IT sector emerged from Q3 2010 as the largest sector in Western Europe after finally overtaking the consumer electronics sector. With a year-on-year increase of +10% it seems as though the financial situation in Europe has not dampened demand for IT Technology.
One side of this growth has stemmed from the replacement cycle in the B2B Market. With the release of Windows 7 and new office software, businesses have been pushed into replacing their software, hardware and even accessories and peripherals to ensure that their businesses stay competitive and improve efficiencies.

The other side of the growth is being driven by consumer demand for netbooks, tablets, notebooks and peripherals. With greater exposure to online services, consumers place more reliance upon them in their day-to-day lives, and their desire becomes stronger to own supporting hardware connectivity solutions. This demand is being met by hardware, software and chip manufacturers, who continue to innovate and keep us wanting the next best thing. However 2011 maybe slightly more unpredictable as we see the growth of cloud computing.

As the cloud becomes more important to our everyday lives, how we access the internet and online services will become even more important. Smartphones, tablets and gaming consoles are rapidly becoming vital in our access to the cloud, and the shift to the cloud will have a huge impact on the IT sector. Another interesting development in the market will be Google’s cloud based Chrome OS, which is due to launch in 2011. You can be sure that GfK Techtalk will keep you updated.

Telecommunication (TC) sector slowdown but smartphones dominating
The third quarter of 2010 saw a slowdown in the Telecommunication market of Western Europe, with the sales value decreasing by -2.9%. The market is being held together by the upsurge in smartphones, with one in three handsets sold belonging to this category and accounting for an astonishing 68% of sales value. This increases to 80% for the UK, Sweden and Denmark (see image below).

The hunger for larger screens has increased this year, with sales of three inch plus displays jumping from 50% in 2009 to 67% this year. With the popular HTC Desire HD boasting a whopping 4.3 inch display we may start to see a rise in the four inch category in 2011.

Consumer Electronics (CE) sector slowdown after FIFA World Cup
The CE sector surrendered its number one position to the IT sector due to a -4.2% decrease in sales value. This decline can be accounted for by the drop in demand of TVs after the FIFA World Cup period. The football spectacle contributed to growth in the first two quarters of 2010, with consumers purchasing flat televisions to enhance their viewing experience, but in Q3 this fell away.

Television manufacturers will be hoping that 3D technology can drive the market in the same way that plasma and LCD did, and with over 200,000 3D TV sets already sold in Western Europe it’s the innovators who are currently driving the market. If this technology can capture the imagination of the mass market in 2011 then the Consumer Electronics sector will be a driving force in the technology sector once again.
It will also be a big year for Web TV and will see a number of players such as Youview, D-Link Boxee Box, Apple TV and Google TV compete to give us on-demand access to television content via the internet. It is too early to see who will lead this trend but GfK will be closely monitoring developments here and publishing new data in early 2011.

Sources:
This data comes from both GfK NOP and GfK TEMAX

GfK TEMAX
GfK TEMAX® is an index developed by GfK Retail and Technology to track the Technical Consumer Goods markets. The findings are based on regular surveys carried out by the retail panel of GfK Retail and Technology. The retail panel comprises data from over 340,000 retailers around the world.
Since February 2009, GfK Retail and Technology has also collected data for the GfK TEMAX® internationally in more than 30 countries, including extensive overall markets for Technical Consumer Goods in different countries for the first time. All reports and press releases are available at www.gfktemax.com.
If quoting information from this press release or on www.gfktemax.com, please explicitly refer to GfK TEMAX® as the source.

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1. Innovation and hyper-connectivity are driving Tech sector growth

Tags: 3DTV, Connectivity, Consumer Electronics, GfK TEMAX, Information Technology, IPTV, LCD TVs, Mobility, Smartphones, Trends, Windows 7