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On the Eve of CES: What to Expect

Sunday, 7 Jan 2007 | 12:44 PM ET

Here we are, on the eve of the huge Consumer Electronics Show in Las Vegas. We had pretty good anecdotal data from some of the industry's biggest names that 2006 was a strong year for the business, but now we have hard data, courtesy of the Consumer Electronics Association, the group hosting this week's event in Las Vegas.

And 2007 looks even stronger!

The CEA reports that factory-to-dealer sales of consumer electronics will exceed $155 billion in 2007, up 7% from 2006's $145 billion.

This past year was a blockbuster, thanks to dramatically falling flat-panel TV prices, digital cameras, and MP3 players like the iPod.

"We surpassed original projections for the second year in a row, and the industry outlook is proof positive that Americans can't do without their beloved consumer electronics" says CEA's Todd Thibodeaux. "2006 industry growth far exceeded CEA's conservative forecast at the beginning of the year.

"We originally forecast eight percent growth, but when all was said and done, we saw an impressive 13 percent growth for the year. Consumers started the year investing in innovative consumer electronics products and seemingly never stopped. With the 2007 forecast, we see the consumer love affair with technology continuing at a healthy clip."

From the CEA:

Display technologies will continue to be the star category in the industry and account for $22 billion in revenues for 2007. All television sets manufactured today with an analog tuner must also contain a digital tuner, which is largely responsible for the vast increase in digital television sales. Unprecedented price declines in plasma and LCD displays are also contributing to growth. For 2007, these flat panel displays are expected to ship a combined 19 million units. That's big news for Sony, LG, Matsushita, Sharp , and of course retailers like Best Buy , Circuit City , Costco and Wal-mart .

Next-generation consoles will make the video game market one to watch in 2007. An analysis of year-end game console sales reports for 2006 indicates that holiday sales will lift revenues in 2007 to $16 billion, a 23 percent increase. We've already seen far-better-than expected sales from Sony, Microsoft and Nintendo. And watch IBMtoo since its chips power all three platforms.

MP3 players continue to drive the audio market. CEA projects that MP3 players will account for 90 percent of the $6 billion in revenues for the portable entertainment market. Thirty-four million MP3 players shipped in 2006 and an additional 41 million are expected to ship in 2007. Apple, of course is the one to watch, but don't discount Microsoft and Zune, Sandisk , even Creative. And watch Samsung: its new K3 player appears to have beaten Apple to the punch with a very cool touch-screen controller!

Driving the mobile electronics market are portable navigation and GPS devices, evidence that consumers are continually looking for products that will keep them safe and make their automotive travel easier. Two million units shipped in 2006, a 66 percent increase over 2005, and 2007 shipment volumes will continue to propel the market with three million units projected to be shipped, generating $1 billion in revenues. And no question, Garmin has been riding this wave without looking back!

Other product categories that will see substantial growth in 2007 are PCs, accessories and digital imaging devices. In 2006, shipment volumes of laptops eclipsed their desktop counterparts. CE accessory sales also will grow in 2007, to the tune of $11 billion, in large part due to an overall consumer emphasis on portability. Total digital imaging shipments are expected to exceed 32 million units, with revenues projected to reach $8 billion, making 2006 and 2007 the best revenue years for this category.

Get ready! It's going to be a busy week! Join me live today on NBC Nightly News where I'll give you an exclusive first look at the highly anticipated Palm Treo 750! It's gorgeous! And Palm has finally done away with that annoying antennae at the top. This is a sweet-looking handset.

Questions? Comments? TechCheck@cnbc.com

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