Press Centre

China's Projector Market, Driven by Market Segmentation and Increased Demand from Enterprise and Consumer in 2007, is Expected to Grow by 25.1% this year, Says IDC

Source: IDC中国  Date: 2008-03-05

Beijing, 5 March, 2008--According to IDC’s China Quarterly Projector Tracker (4Q2007), total shipments of China’s projector market was 548,180 units in 2007 with a revenue of RMB6.14 billion. This represents an increase of 30.4% in shipments and 14.5% increase in revenue from 2006. In line with this rapid growth, IDC expects total China projector shipments will reach 686,000 units in 2008, which is a 25.1% increase from 2007.

“While overall demand in the education sector dropped in 2007, large-scale purchasing by various colleges and schools during the summer vacation continued to fuel the market. Procurement by the enterprise market and government sector also picked up speed towards the end of the year,” said Amy Chen, Analyst for IDC’s China Computing Systems Research.

Vendors continued to launch new products to meet the demand from enterprises, at the same time as the home entertainment market was taking off. Mainstream household entertainment projector products saw steady sales and were drawing more and more attention from consumers.

IDC predicts the following drivers and challenges in 2008 for the China projector market:

Drivers:

1. Procurement by the education sector is stabilizing amidst strong demand.
The long-distance education segment has been a major force in the procurement of projectors. Although 2007 is the final year of the "Five-year Rural Remote Education Project”, some users in the education sector still showed strong purchasing power towards the end of the year. As educational institutes continue to modernize, the "Five-year Rural Remote Education Project" will drive demand as the education sector extends and increases its scale of procurement in 2008 using surplus budget.

In addition, the government was investing heavily in such programs as “Village Link Projects” and “School Link Projects”, even though the primary and secondary education market was hampered by capital shortage and insufficient purchasing power. IDC expects that the university education market, which is growing steadily, will become an important growth segment in the education sector.

2. The enterprise market is growing rapidly with diversified user demand and fierce competition.
In addition to the education sector, the enterprise market has become a new area of competition for projector vendors. According to Fiona Wu, Analyst for IDC’s China Computing Systems Research, projectors bought for commercial use are entering into a period of rapid growth. This is driven by more extensive application of IT in large-scale enterprises and the higher demand for projectors as a result of increased competition in the SMB market. Enterprise users that are rapidly maturing have posed new challenges to vendors, who launched more diversified products in 2007 such as “wide screen” and “short focal distance” projectors in an effort to differentiate themselves from other competitors. At the same time, leading vendors implemented pricing and business channel development strategies to seize market share. IDC expects intense competition in the commercial projector market in 2008.

3. Outstanding performance by domestic vendors.
Domestic vendors, such as Lenovo and ACTO, in the “Five-year Rural Remote Education Project “ dominated the entire projector market in 2007. Besides the education market, domestic brands strived to achieve success in the government and enterprise sectors. Lenovo also obtained a share in the “digital movie” project, which drew a lot of attention to its commercial products from various enterprise users. In addition to leveraging their brand names, domestic vendors also placed great importance on developing their sales channel networks. In terms of service, they spared no effort building all-inclusive service solutions. IDC believes that domestic brands, given their strong momentum, will gradually become key players in China’s projector market.

4. Home entertainment market is set to accelerate.
In 2007, low-end household entertainment projectors, defined as products priced at RMB4,999 and below, attracted the attention of consumers with increasing home entertainment needs who watch movies or play games using large-screen display devices. 720P products saw steady sales, largely due to the declining price of mid-end household devices, increased promotional efforts of vendors, and improved market acceptance. In comparison, the high-resolution projector segment remained flat despite large-scale promotional activities. While price may be a factor, the demand in the household projector market is still expanding gradually. The Olympic Games 2008 in Beijing is regarded by many vendors as a golden opportunity for the development of the home entertainment market.

Challenges:

1. Macroeconomic regulations are unfavorable.
Influenced by such factors as soaring commodity prices, China has started to adopt tighter economic policies since the second half of 2007. The large-scale macroeconomic control has affected some government procurement plans to a certain extent. At the same time, some enterprises have postponed their procurement plans, or adopted a “wait and see” attitude due to a shortage of funds. IDC believes that the tight fiscal policies will remain a challenging factor for the projector market in the long run.

2. Market competition remains severe.
Price war between vendors became increasingly intense in the second half of 2007, as well as more drastic competition for channels. Many vendors were willing to sacrifice profits in order to win projects from the education sector. Interestingly, this trend also emerged in the enterprise market at the end of 2007. As China’s projector market gradually matures, price competition is inevitable. As such, it is important for vendors and channels to work together to develop sustainable marketing strategies, particularly in a matured market.

For more information about IDC, please visit www.idc.com.cn. To purchase this report, please contact IDC China Sales Department at +86-10-83913610 or send email to fwang@idc.com.