Consumer Electronics Market in Poland-Dissertation Writing Help
Executive Summary
Smartphones Threat
With the growing
popularity of smart phones, sales of other consumer electronics products such
as cameras, camcorders and in-car device could be negatively affected. However,
even though an increasing number of Polish consumers are familiar and
comfortable with all manner of electronic goods, the appetite and sales of
traditional consumer electronics are characteristically buoyant.
Gps Becomes Ubiquitous
GPS, Global
Positioning System, is widespread. Once the jealously guarded domain of the
military, it now can be found in almost every car. GPS promises to be even more
pervasive in the future due to its convenience of use and falling unit price.
With the huge reduction in size, nowadays one may find GPS in wristwatches and
cell phones – both for timekeeping accuracy and positioning purposes. However,
as GPS also broadcasts the users’ location, it might, of course, also lead to
concerns of personal privacy. Nevertheless, the fact remains the GPS sector is
expected to continue growth in the forecast period.
Sales Go Online
Internet
retailing is gaining in popularity. The phenomenon is directly associated with
the popularisation and accessibility of the internet and an increase in
consumers trust in websites and non-cash transactions.
His Name Is Netbook - Mr Netbook
The uptake of
the netbook has proliferated swiftly in a year. Most manufacturers are showing
interest in manufacturing their own version of the netbook as a new breed of
diminutive portables. Polish consumers have immediately responded to the
netbook, a small computer powered by Intel's new Atom processor and optimised
for internet access and core computing functions, which has become the direct
rival of the more established notebook.
Desktop on Top
In 2007, sales
of notebooks nearly equalled sales of desktops. As a result, 2008 was supposed
to be a year where sales of laptops grew rapidly to finally defeat PCs.
However, the beginning of 2008 clearly showed that the Polish market can
surprise. In the first half of that year, sales of desktops exceeded all
expectations and the PC market demonstrated its unquestioned dominance over
notebooks.
End of the Harvest? Not Yet.
In 2007 and
2008, Poles discovered that their purchasing power had increased and therefore
continued buying electronic equipment on a large scale. The fact that living
standards in Poland have risen dramatically is in fact the main factor
contributing to the growth sales of consumer electronics in Poland. According
to GUS (Central Statistics Office in Poland), the number of Polish households
equipped with modern electronics has soared by several dozen percent with
continued growth in the forecast period.
Key Trends and Developments
Wireless 2008
There was once a
time when the purchasing choices of the average Pole were dictated almost
exclusively by price. With the standard of living continuing to increase in
Poland, Polish consumers' choices are no longer based only on price but equally
on quality and user-friendliness. Poles no longer want low quality TV sets if
they can buy a wireless plasma set instead. As a result, interest in
user-friendly and comfortable devices in Poland has been visibly increasing
over the last two years. Manufacturers have immediately responded to consumer
demand by producing various devices with wireless technology, an example being
built-in memory cards (SD) or pendrives (USB). With yearly sales of laptops
continuing to grow throughout Poland and the high-level of mobility of wireless
products, this issue has become one of the major trends of 2008.
Outlook (of the trend)
It is highly
likely that the interest in wireless electronics products will not regress in
years to come due to increases in disposable incomes and more sophisticated
consumer demands and requirements. On the contrary, it is likely to grow as
Poles replace and upgrade to more comfortable and user-friendly wireless
products. As a result, sales of non-wireless equipment are likely to see a
slowdown in growth. However, even though
interest in wireless devices is high in Poland, sales figures do not
necessarily reflect this. It is estimated that wireless devices do not exceed
10% to 15% of the total computer devices sold. This situation is both cost and energy
consumption-driven with consumers being price sensitive to the higher prices
demanded of wireless products.
Current Impact
Even though
wireless devices are still less popular than ones with cables, both producers
and distributors claim that once consumers purchase a wireless device, they are
no longer willing to go back to non-wireless equipment. This is why producers
believe that wireless electronics have a bright future and is likely to
continue attracting customers when launched onto the market.
For instance,
Panasonic has just launched its Lumix TZ50 digital camera that carries WiFi
connectivity which is the most interesting addition in a long list of other
features. On the other hand, Nokia has recently created the BH-903, a stylish
wireless headset that enables control of calls and ability to listen to music
through a built-in radio in stereo sound. The purCushion is a pillow that
integrates a microphone and Bluetooth connectivity, meaning that users only
have to rest their head on the pillow before they can chat. The built-in
battery provides up to eight hours of continuous chat and it can snooze in
standby for up to 300 hours.
Future impact
Both producers
and distributors are unanimous in the certainty that the wireless device will
start to displace non-wireless equipment in the near future. Demand for
wireless consumer electronic products on the Polish market will grow with the
popularity of 2,4 GHz transmission which will improve the working comfort. The
Ultra wideband (also known as UWB or digital pulse wireless) is a wireless
technology for transmitting large amounts of digital data over a wide spectrum
of frequency bands with very low power over a short distance. It is expected
that by 2013 consumers will purchase 400 million devices involving the
currently debuting standard. These devices will undoubtedly be embedded in
Lenovo, Toshiba and Dell notebooks and with time this technology will be
applied to other manufacturers as well.
Wireless devices
will not only become more and more popular in regard to their user-friendliness
but also in relation to the wider public’s interest in multimedia products.
Rather than in a study, computers will increasingly appear in a living room and
play the role of a domestic entertainment centre. At the same time, consumers
will choose willingly such multimedia wireless sets as the wireless mouse that
allows not only control of a PC from anywhere in the room with no cables but
also to surf the web/receive e-mail by pushing one button, while simultaneously
controlling a TV/VCR/DVD by pushing another button and controlling the lights
and appliances by pushing yet another button.
There is still a
long road ahead however as most multinationals are only progressively
restructuring their manufacturing operations in favour of wireless products.
This is why those subsectors that are introducing wireless technology, for
example projectors, mobile phones, palmtops, laptops, printers and cameras are
expected to increase their market share in the near future.
the Gps Fever
Recently,
navigation systems have succeeded in conquering the Polish market by being
affordable, more detailed maps and better functionality. GPS devices first came
on the market with poor functionality - black and white display, poor graphics,
limited voice commands, poorly detailed maps and high prices. However, during
the last ten months, navigation systems in Poland have undergone a complete
metamorphosis. Not only has the functionality risen but also prices have
fallen. In December 2006 the average price of a navigation device fluctuated
around PLN1500 while a year later it dropped to only PLN900. At the end of
December 2007 the cheapest models were available for only PLN600. Nowadays, a
GPS device can be purchased for PLN400 making them accessible to all.
Outlook
The popularity
of navigation system devices in Poland is unquestionably one of the main trends
of 2008. It can be safely assumed that in the years to come the Polish in-car
electronics market, in the context of global trends, will grow intensively but
stably at the same time. However, the biggest attracting feature will not be
brought about by the 3D visualisation but by the online functions. Documenting
a real-time situation on a road is a great challenge for navigation systems' manufacturers.
It will help motorists to avoid traffic jams caused by car accidents, failures
of sewerage systems and many other impediments.
Current Impact
One of the main
symptoms of the Polish GPS market maturation is undoubtedly the availability of
navigation devices. Before 2007, navigation systems could be found only in
specialised PND (Personal Navigation Device) stores, in some computer stores as
a supplement to palmtop offers and only in the biggest consumer electronics
shops. Nowadays navigation device has become so ubiquitous that it is available
in almost each and every consumer electronics store, hyper and supermarkets.
The GPS market in Poland has been growing at such a breakneck pace that it is
almost impossible to find out about the product offers of all of the
manufacturers.
However, there
are some commonly-known factors that help differentiate one group of products
being more popular than the others, the most important among them being
availability, simplicity of use and price. In general there are two types of
GPS device available: PND and PDA (also called smartphones). As long as the
sole navigation facility is required, PND is proving to be the most comfortable
solution. However it is not free of defects, the most important being the lack
of full functionality of its operational system in the cheaper models, which
results in the impossibility to install more than 1 map. These problems do not
concern smartphones as they are embedded with the full version of operational
systems that enables the user to install several maps at the same time and
switch from one to another depending on the customer's needs. However, what
classifies palmtops on a lower position than PNDs is smaller display, for some
users too small and not clear enough during driving.
Future Impact
Navigation
systems will become more and more complicated to operate as they will support
different functions. Knowing that newer technologies are generally more
distracting, producers will also need to pose themselves a question when a
moment of inattention becomes a hazard to the driver and others on the road.
The safe operation of the equipment may begin to impact on future technology
developments of the product.
It is likely
that smartphones may threaten both PDAs and PNDs. These mobile phones offering
advanced capabilities beyond a typical mobile phone and especially embedded
with GPS have been very successful in Western Europe and the same pattern is
expected in the Polish market. So far
smartphones are still something of a novelty and their price is relatively
high. However once these cell phones become ubiquitous and their price becomes
more affordable, the producers of PNDs might find themselves with slowing
demand due to increased competition from related subsectors.
Pay-through-the-nose Consumer Electronics in Poland
The fact remains
that consumer electronics in Poland are still much more expensive than in
Western Europe. However, despite the fact that even though prices of
electronics products in Western Europe are much more affordable, the US remains
unrivalled in this field with products costing even half the price of products
on sale in Europe. The disproportion between prices in favour of the US and
Western European countries might be astonishing especially seeing that the
average wages of an American or British worker are vastly superior to the
salaries earned by a Pole in both nominal value and real terms. A fall in
electronics prices in Poland might only be possible should everyday consumers
begin to use more affordable and price-friendly online websites.
Outlook
Premium priced
consumer electronics in Poland are unlikely to become cheaper in the near
future. This is why more and more Polish consumers are interested in looking
ahead to save money elsewhere. They are aware of the price difference between
premium and basic products and are unwilling to pay the higher price for a
similar product.
With online
shopping gaining in popularity the consumer behaviour of Polish consumers is
changing. This phenomenon is directly associated with the popularity and
accessibility of the internet and an increase of consumers' trust in websites
and non-cash transactions. Thus, the internet as a retail channel is likely to
become one of the most popular distribution channels as it saves not only
customers' money but also, in most cases, their time as well.
Current Impact
Theoretically
the strong Polish Zloty (PLN) should be an ally of Polish customers since the
price of consumer electronics should fall. However, even though the price of
audio-video and computer devices has dropped by 35% since Poland joined the EU,
consumer electronic products in Poland still remain more expensive than in
Western Europe. This situation might be partially brought about by the fact
that some Polish consumers accept prices as they are and therefore demand
remains high. Retail sales in Poland have increased by 10% to 20% over the last
few months while the RTV/AGD sales have fluctuated around 30%. The VAT tax in
Poland also has a significant impact seeing that it is the highest in Europe.
The uptake of
online shopping in Poland is likely to change this situation though. A
mushrooming of online shops breeds competition and, thus, causes prices to
fall. In Poland the number of online shops is still not very considerable
(around 4000 only). Only 17.5% of resellers have an online facility and
actively sell their products via the internet, the next 15% do not have their
own online shops but put their electronic devices up for auction on Allegro
while 10% declare to be willing to set up their own online facility in the near
future.
The online
distribution channel is more profitable for those resellers that operate in big
cities where the interest in consumer electronics is much higher and where
clients have the possibility to collect ordered products by themselves without
having to pay shipping fees. Needless to say, this saves time for both
customers and resellers. In smaller cities and villages the situation is
different as running an online shop for local use only is not viable unless a
reseller becomes popular and broadens the activity scope out of the city or
region's borders.
Future Impact
Economists claim
that the price of consumer electronics in Poland is likely to fall in the long
term. However, it will be a drop in demand and not the strong state of the
Polish zloty which is likely to bring about this new situation. Resellers will
need to adjust their prices to market requirements as the Polish economy begins
to slow down and so will profit margins.
Polish consumers
will become more interested in online shopping which will allow them to save
acquire the most competitively priced products but will save them time.
Customers will also continue purchasing products via foreign websites as long
as a reseller is shipping products to Poland. Even though shipping fees and
customs duties on bigger orders will need to be paid as well, importing goods
from other countries, especially from the US, will remain more profitable.
Poland As Technology Research and Development Hub
Recently Poland
has emerged not only as a TV manufacturing giant but also as the technology
research and development hub for Central and Eastern Europe in spite of the low
labour costs, unsaturated markets and steady economic recovery which have made
the Asia Pacific region especially attractive for manufacturers.
For foreign
investors, a highly qualified labour force, the presence of strong universities
and support of governmental authorities combined with the largest market in
Central Europe and one of the lowest labour costs on the continent make Poland
an attractive investment destination. However, in setting up R&D in Poland
investors are not only interested in lowering costs, they are looking to
increase efficiency, improve quality and diversify from their basic activities.
This is why the list of investments being carried out in Poland by the world's
biggest technological giants continues to expand.
Outlook
Poland will
continue to be considered Central and Eastern Europe’s technology research and
development hub in the future while the production of LCD TVs in Polish
factories continues to grow. As a result, more new jobs will be offered to
Polish citizens. Poles will also continue to replace their old TV sets with new
ones as their income levels increase. It is estimated that large multinationals
will not cease to compete for a share of the Polish market, with Samsung and LG
continuing to be the market’s main players.
Current Impact
The electronic
industry in Poland has been developing very fast in recent years due to foreign
investments. Since the automation and electronics industry is one of the
leading manufacturing sectors in all industrialised and newly industrialising
countries of the world, growth and development in this industry affects other
end-user industries such as consumer electronics and computers. Several
multinational corporations like Samsung Electronics or Motorola have chosen
Poland as a location for their R&D centres. In fact, the number of R&D
centres in Poland has already reached 40 and employ over 4,500 people. Most top
multinationals in the industry have sales, marketing and support centres in
Poland while the presence of production facilities is minimal. This shows that
Poles are not only considered a low cost labour force when it comes to the
manufacturing of TV sets but also as a kind of
'think tank' to resolve the most complicated IT problems.
It is safe to
say that R&D centres are one of the major factors contributing to economic
growth in Poland. Newly formed centres are designed to invent and commercialise
inventions that increase overall demand thereby causing economic growth,
destroying the existing market structures, and redistributing wealth among the
remaining firms in the market. Therefore, as R&D centres are very important
in producing new products and innovations to be commercialised, this is done
with the hope that the innovation will yield a competitive advantage and, thus,
CE market and related companies' growth.
Future Impact
The R&D
centres have proved successful and it is highly likely that companies will
continue to expand their presence in Poland. The continuous growth in the LCD
TV manufacturing industry as well as R&D centres will is expected to help
improve the Polish economy and create a large number of new jobs in the sector.
Even though
labour costs in Poland are still rising, foreign investors are not likely to
seek more attractive locations for their plants in the near future. Multinationals
will surely invest abroad and open new factories but leave existing ones in
Poland as well. This trend will be additionally reinforced by the fact that the
sales of televisions, mainly LCD sets, will continue to grow throughout Poland
especially in the period under review as companies have already started to
prepare strategies for the Euro 2012 Football Championships in Poland. Seeing
as large international sporting events have always attracted a mass of sport
fans, LCD/HD TV distributors will undoubtedly be under siege prior to the
Football Championships. The situation from Euro 2008, when the sales of
television increased by 300%, is likely to be repeated in 2012.
Upcoming End of Bumper Harvest?
In the review
period, Polish consumers exercised stronger purchasing power with the uptake of
electronic equipment. The fact that living standards in Poland have risen
dramatically is in fact the main factor contributing to the high sales of
consumer electronics in Poland. In April 2008, the average wage in the business
sector increased by 12.6% compared to the same month last year and reaching PLN
3138 gross. The employment rate is constantly rising while the level of
unemployment is falling. According to GUS (Central Statistics Office in Poland)
and its research on the economic activity of the population (BAEL), at the end
of the first quarter of 2008, the number of Poles in regular full-time
employment amounted to 15.5 million which represents nearly 670,000 persons
more than a year ago and 1.4 million more than in 2006.
Generally
speaking, even though the number of Polish households equipped with modern
electronics has increased by several dozen percent, there is still enough room
for the introduction of new devices with no evidence of saturation in most of
the electronics goods markets.
Outlook
Demand for
consumer electronics is likely to continue displaying strong growth in 2008 as
consumers take advantage of the strong PLN and drop in prices in Europe and
especially in the US. Furthermore, with the number of internet users still on
the rise compared to 2007, the number of PCs automatically increases as well.
Seeing that equipment's mobility and user-friendliness are increasingly
determining Polish consumers' purchasing choices, replacement cycles are likely
to shorten.
Current Impact
Mid-year sales
of consumer electronics in Poland increased by 20%. Sales of MP3 players
increased by 70% last year while the number of households equipped with PCs,
camcorder, DVD players and home audio and cinema products grew by 20% to 30%.
It is estimated that by the end of 2008 Poles will spend more than PLN13
billion for this purpose.
Even though
prices in Poland are still very high in comparison to other European countries,
electronic equipment is becoming cheaper. Only four years ago consumers had to
pay PLN18.000 to buy a plasma TV.
Nowadays they can buy a 32'' LCD television for only PLN2.000. It is for
this reason that Poles have started to replace their old electronic devices.
With increased disposable incomes and better access to online shops all over
the world, the Polish consumer has become less price sensitive.
Future Impact
It is expected
that the consumer electronics market will continue to grow and mature from 2008
to 2013 should the country’s overall economic growth remain strong. However,
rising consumption and the rapid increase of wages are threatened due to a
relatively high inflation rate. In August 2008 Poland's Central Bank (NBP) left
its benchmark interest rate unchanged for a second month as it assessed whether
eight increases in the past 16 months have been enough to keep inflation within
the limits it requires. The NBP kept its seven-day reference rate unchanged at
6%, although it did stress that further monetary tightening may be needed to
bring inflation down to acceptable levels. Slowing industrial output and retail
sales are an indication that economic growth is itself slowing, and the bank
takes the view that this, and the recent decline in global oil prices, should
reduce pressure on inflation after consumer prices rose at a rate of 4.8% in
July, the highest level in eight years.
Even though
Poland’s housing price boom from 2004 to 2007 is now under control due to
tightening monetary conditions, higher inflation and lower economic growth,
Poles will continue equipping their new houses and apartments with electronic
products.
There will also
be an increase in the number of foreign investors opening offices in the
biggest Polish cities which will undoubtedly result in higher sales of products
like projectors, computers, printers and other office devices. However, the
real sales increase is expected to take place before 2012 when Poland and
Ukraine are set to co-host the 2012 European Football Championships that will
attract a mass of football fans.
Mp3 Players in Dire Straits
Within a home
and while travelling, consumers want to stay connected. Historically, they used
their laptops for accessing emails and the internet. However, with terrestrial
and mobile broadcast services for handheld devices becoming common and
broadband wireless connectivity (WiFi and WiMAX) becoming widespread, mobile
devices such as mobile phones, PDAs and portable media players are being used
to access data, audio and video. Providers of these mobile devices are
constantly improving their technology features to keep up with customer demand.
Traditionally, there were data-centric devices such as PCs and PDAs and
media-centric devices such as TVs and portable media players. However, with the
passing of time, the line between them has started to blur as customers demand
products that can handle both. The new generation of consumer gadgets must
handle both media and data on the same platform. It seems that MP3 players are
becoming less desirable than mobile phones that can couple telecommunication
services with audio and video facilities.
Outlook
Single function
products will in fact start to gradually lose popularity in the near future. At
the same time, sales of “all-in-one” devices such as mobile phones is expected
to continue to increase year on year in Poland due to their feature of
convenience. As an added incentive, producers will keep on lowering prices
while improving the quality of their products. This will be especially visible
with cell phones that are nowadays becoming more than just a phone and are also
used as cameras, dictaphones, camcorders, MP3 players.
Current Impact
Phones are
getting smarter and increasingly user-friendly as devices enable consumers to
listen to great audio content and serve as a mobile phone at the same time
often eliminating the need for two devices such as an iPod or MP3. For example,
the cell phone industry has repeatedly tried to get customers to use data
entertainment services on their phones; the internet has become Mobile
Internet. Television has become Mobile TV. Although there are those who claim
that a mobile phone is not a media device and will never replace real portable
media players, it seems that multifunctional cell phones are rapidly gaining in
popularity.
Both producers
and distributors have immediately responded to the trend by launching more
innovative products designed to meet the requirements of the most demanding
consumers. To give an example, Nokia has just launched the Nokia 5230
XpressMusic model that offers a lot of the same features as its little brother
the Nokia 5230 Xpressmusic, but adds 3G and more memory capacity. Key features
include dedicated music and N-Gage gaming keys, FM radio with RDS, stereo
Bluetooth and HSP. The model is almost entirely dedicated to music fans and has
numerous features enabling them to play music.
Future Impact
Since the
consumer electronics market is in a rapid growth phase, manufacturers will be
under more competitive pressure to be first-to-market with unique and
differentiated products. However, they will also need to stay alert knowing
that a successful product in the consumer market quickly attracts copycat
products from the competition. This is why they will be forced to constantly
enhance their products or support emerging technologies. For this reason, the
consumer product life cycle will also shorten as consumers wish to upgrade to
the latest model.
Mobile phones
will be more broadly used while portable media player producers will need to
find a way to hold on to their existing customers while gaining new ones. Even
though some people believe that the phone is simply not a media device and
convergence is overrated, experts say that customers will keep on using their
phones for media consumption. It is estimated that in 2011 almost 30% of music
will be dispatched via mobile phones. The days when the phone world and the PC
world were separated are over. That is not to suggest, however, that consumers
will stop buying and using their PCs and their mobile phones separately, the
difference being that mobile phones and PCs will increasingly be used together
in more creative ways.
