ZDNet published a special report written by George Bailey, IBM Global Electronics leader for IBM Business Consulting Services.

The Christmas before the storm

Commentary–Take a good look at the business environment around the consumer electronics industry this year because it will be the last time you see it in this form. Change is coming and what happens this holiday season will cause some consumer electronics companies to rethink their existing business models.

A recent survey by IBM showed that 55 percent of consumers planned on purchasing consumer electronics devices this holiday shopping season, proving that consumer electronics are the hottest items in market today. The Consumer Electronics Association (CEA) estimates that consumer electronics will top $130 billion in the United States in 2006 and grow more than twice the current rate of GDP growth in the United States over the next four years.

Despite this, consumer electronic companies have not been able to capture the profit margins of a hot growth industry. What’s more, the revenue is still spurred by those “technology hungry customers” and not by the “smart shopper” who is expected to dominate the future market. How can the consumer electronics industry adapt itself to take advantage not only of a renaissance period of growth and rapid adoption of innovative technology but also generate real profits?

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