Gadget Makers Report Lower Profit Margins in Spite of Gadget Boom
If you're thinking of getting a new TV or cellphone, you might want to do so in the next three to five years – according to LG Electronics USA CEO Mark Ahn, quoted in this Reuters article, that's when the volatile gadgets market will level out.
The problem: despite the enormous demand for gadgets (sales went up thirteen percent in the US in 2006 and eighteen percent in Western Europe in the first half of 2006), the high amount of available devices and the fleet of manufacturers means that the average profit margin is about six percent. While this situation is great for consumers like you and me (oversupply = price war and lower prices all around), it's not so good for the gadget companies, which means that eventually some of them will fail or get out of the consumer electronics game. When that happens, prices will go back up, profit margins will increase and – possibly – the amount of innovation in the market will decrease. Like I said, it sounds like you'll want to go looking at TVs before consolidation becomes a major factor in the price you'll pay.
