Consumer demand for tablet computers will explode

The technology sector may have been overlooked by the market but consumers are still expected to spend on selected categories under the said sector.

Kim Eng Securities expects 2011 growth for the technology sector to be more muted than 2010 although positive growth is still likely to be forthcoming.

Their report stated that guidance from major US technology companies such as HP, Intel, IBM, etc suggests they expect corporate spending to remain robust in 2011. This could offset weakness in the consumer PC market, brought about by uncertain Western economies and cannibalisation of the PC market by tablet computers. Most of the growth is likely to come from economies in Asia and emerging markets.

This expectation is in-line with economic forecasts made by the International Monetary Fund. According to the IMF, the outlook for the global economy in 2011 is a stable 4.4%, albeit slower than 2010’s 5%. Growth remains slow in the advanced economies but strong growth is expected in emerging economies, particularly Asia, underpinned by domestic demand and recovery in world trade. The IMF also does not see an imminent danger of a double-dip recession or sharp slowdown, barring a worsening of the MENA and Japan crises.

Consumers are still expected to spend on selected categories. Looking at current trends eg recent consumer electronics trade shows, the following general trends were widely reported to be expected to prevail. One, everything will become Internet-enabled. Two, tablet computers will explode. Three, 3D will rule.

Kim Eng Securities is not so sure 2011 is the year for 3D TVs, at least not until the viewing hardware is streamlined and more content is available from Hollywood or broadcast by TV networks. Nevertheless, this should not stop consumers from buying other devices.

Against this backdrop, Kim Eng Securities expects the hot spots of consumer demand to focus on categories such as smart phones, tablet computers and the so-called “smart TVs”. TV manufacturers are even bypassing the cable service providers, inking deals to stream content directly from content owners such as CBS (with Samsung) or Time Warner (with Sony).