Staying steady amid the storm

It's no secret that the global consumer electronics industry is slumping, what with the protracted downturn engulfing the United States and much of Europe, and dampening demand in once-resilient emerging markets.

Faced with waning sales of flat-screen TVs and digital cameras for instance, which drove the sector's expansion in recent years, technology firms are bracing themselves for a painful 2009 with no star products to fall back on.

In the midst of the gloom, one Los Angeles-headquartered company specialising in "luxury" computer accessories and networking solutions says it's moving full steam ahead – at least in the region – and that the distressed global scenario has not had any adverse effect on its growth rate.

"We've had good growth over the last couple of quarters. In fact, sales went up by 200 per cent between last year and this year," says Patrick Hayati, the Regional Director for Belkin Middle East.

"The Middle East and Africa have been a growth region for our type of business and there's continued growth at the moment. That is why we are on expansion mode and we don't have any indication that this will change any time soon.

"As far as our products are concerned, consumer spending has gone up and we are doubling our investment in marketing," he adds.

A privately held company founded in 1983, Belkin has, over the years, made a name for itself in connectivity solutions. Today, with a product mix that includes funky gadgets and computer accessories, the company has a vested interest in the regional market, says Hayati.

"We decided to increase our investments in the region six months ago because this was obviously a region of opportunity. We knew the return was going to be high," he says. "Today, we are growing faster than the market, which means we are gaining market share and our investments will continue to increase, at least over the next six months."

The strategy now, he adds, is to get closer to retailers and understand their needs.

"We are in the process of developing more programmes specific to the region. We are transforming ourselves into a lifestyle brand, which means design is a very important component and so a lot of investments have been made into that and to characterise that brand.

"We have more than 3,500 products ranging from networking to iPod accessories and wireless hubs and most of our line-up are lifetime warranty products while our target audience is everyone. Most of our competitors have a niche target and cannot serve a very diverse population," says Hayati.

While no official numbers exist for the region's consumer electronics industry, worldwide players are bracing themselves for a very tough year and having to contend with sweeping job cuts and downscaled investment plans.

The latest victim this week was Dutch electronics giant Philips, which announced 6,000 job cuts as it posted a bigger-than-expected $1.9 billion (Dh6.9bn) loss, its first quarterly loss since 2003. Meanwhile Panasonic Corp, the world's largest plasma TV maker, said earlier this month it would cut its capital spending on its new plasma and LCD panel plants by 23 per cent to 445 billion yen (Dh18bn).

According to Ryosuke Katsura, an analyst at Mizuho Securities, a Japan-based financial holding company that provides financial services, more drastic measures than shutting factories or postponing expansion plans may be needed to cope with current oversupply. "In the medium term, like 2010 or 2011, there's going to be some room for growth. But in 2009, we have got this supply/demand imbalance. Only after consolidation among manufacturers the industry will be ready to start growing again," says Katsura.

At the last major tech gathering, the Consumer Electronics Show (CES), held earlier this month in Las Vegas, there was a lot of buzz around economically priced netbooks and high-definition Blu-ray players and recorders. But analysts were quick to point out that demand for such "star products" and equipment is nowhere near strong enough to ignite a broad-based tech turnaround.

"I don't think there is any one product that is going to help everybody pull out of this situation," said analyst Chris Crotty from DisplaySearch, a provider for display-related research at the CES.

Belkin's Middle Eastern representative is however not worried, reiterating that his company's expanding product portfolio and its range of innovative products and competitive price points will see it through.

"We had a slight decrease overall, but not as big as some of our competitors," he says. "When you are doubling in size, it's very difficult to talk about slowdown. The market is still growing and we are growing." (With agency inputs)

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