The computer peripheral equipment, not elsewhere classified, industry includes establishments that manufacture miscellaneous computer accessories supporting the activities of a computer's central processing unit (CPU). Companies in this industry manufacture a variety of products, including printers, input devices, plotters, graphic displays (monitors), and optical scanners. Not included in this industry segment are computer terminals, storage devices, modems and other communications devices, or computer-driven office machines. For information on computer peripheral equipment classified elsewhere, see SIC 3571: Electronic Computers, SIC 3572: Computer Storage Devices, SIC 3575: Computer Terminals, and SIC 3579: Office Machines, Not Elsewhere Classified.
334119 (Other Computer Peripheral Equipment Manufacturing)
Amid difficult economic times, computer peripherals suffered overall declines in the early 2000s, along with the rest of the computer industry. While overall shipment values fell slightly from $12.9 billion in 1999 to $12.4 billion in 2000, they dropped sharply to $10.6 billion in 2001. Historically, competition in the markets for mainstream or lower-end technology has been tight. At the same time, leading peripherals manufacturers look to high-end and emerging technologies to provide comfortable profit margins, and if they're lucky, give them market supremacy if the technology becomes mainstream.
Demand for peripheral equipment thrived in the late 1990s, as new computer sales remained strong, and as users replaced their older devices. However, by the early 2000s, demand waned as the economy weakened, and both companies and consumers reduced technology spending. In recent years certain product segments, especially printers, have fared better than others. In the printer segment, color ink-jet printers have enjoyed robust sales, aided by performance improvements in newer models and by intense price competition between ink-jet vendors. Color laser printers also continue to gain in popularity and affordability. Multifunction printers—those that can act as copy machines, scanners, or fax machines in addition to ordinary printing—were one of the fastest-growing categories in the early 2000s. Meanwhile, sales of standard monochrome laser printers have decelerated, as these other technologies diverted demand.
Although unit shipments and shipment values both decreased in the early 2000s, trends in the computer monitor segment have been toward larger viewing areas, higher resolutions, and thin display technology that takes up less space on a desk. Conventional cathode-ray tube (CRT) displays still made up the bulk of industry shipments—as much as 97 percent in 2001—but flatpanel LCD screens and flatter CRT models were expected to win a growing share of the market.
Optical scanners, the third major segment of the peripherals market, likewise achieved double-digit growth in recent years. Again, inexpensive, mass-oriented devices and improving technology, particularly with flatbed models, have fueled strong demand among both consumers and businesses. Along with other peripheral technologies, in the early 2000s scanners improved in quality while decreasing in price.
Performance in the industry's smaller segments, such as keyboards, pointing devices, and specialty input and output devices, has been mostly subdued. For standard mass-market devices, there have been few innovations, and thus upgrade and replacement sales are minimal; most of these commodity peripherals are sold bundled with new computer systems. New product lines like wireless keyboards and mice have so far failed to ignite significant new sales.
Facilitating communication with a computer's processor, peripheral equipment is used on nearly all types of computers, ranging from home PCs to supercomputers. The three largest categories of peripherals are graphic displays, printers, and scanners. In addition to the major peripheral categories, numerous miscellaneous products include computer input devices (keyboards and mice), computer sound systems, magnetic-ink recognition devices, graphic and technical plotters, graphics production equipment, and various multimedia devices.
Two main markets exist for peripherals: (1) devices shipped as part of original equipment manufacturers' (OEM) computer systems and (2) aftermarket upgrades, add-ons, and replacements that are bought separately from computer systems. Some peripherals manufacturers exclusively serve the OEM market, typically providing peripheral equipment on contract to a large computer maker like Compaq, Dell, or Gateway. OEM contractors often make customized versions of their products for specific customers. Peripheral manufacturers also serve the aftermarket. They can do so through several channels, including wholesalers and distributors, retailers, or direct sales. Some peripheral makers sell only to the aftermarket. This route can be more profitable, but depending on the kind of device, it can also be smaller than the OEM market, as well as more volatile.
Graphic Displays. The most popular types of graphic displays are traditional cathode-ray tube (CRT) monitors and flat-panel liquid crystal displays (LCDs). Although some displays are built into computer terminals, most are offered as peripheral devices that attach to a computer's video port. A video card interfaces between the monitor and the CPU, allowing compatibility for specific monitors and computer systems.
CRTs provide either monochrome or color graphics, and deliver varying degrees of flexibility, performance, resolution quality, and size. Low resolution monitors, for instance, display 640 × 480 pixels per inch, while higher resolution CRTs can deliver 1,280 × 1,024; 1,600 × 1,200; or more pixels per inch. Most CRTs measure between 15 inches and 19 inches diagonally. CRT prices ranged from $50 for monochrome displays to several thousand dollars for large, high-definition color monitors. As of 2001 CRTs accounted for around 97 percent of all monitor sales.
Liquid crystal displays (LCDs) are among the fastest growing and most dynamic segments of the graphic display market. Because LCD technology allows for much flatter displays than CRT devices, LCDs originally caught on as monitors for notebook computers. LCDs also tend to weigh less than CRTs, consume less power, and flicker less, potentially reducing eye strain. By the early 2000s, stand-alone flat-panel LCDs were being sold as high-end displays for desktop computers, although they had come down considerably in price. As such, LCDs have tended to be more profitable for manufacturers than CRTs. Originally most color LCDs sold were passive-matrix displays, also called super-twisted nematic (STN). Active-matrix displays, also called thinfilm transistors (TFTs), which provide higher graphic quality, grew quickly in the mid- and late 1990s to become the dominant format.
Input Devices. Common input devices for personal computers include keyboards, mice, joysticks, touch screens, microphones, and optical scanners. Specialized hardware for commercial applications includes magneticink reading devices, bar-code scanners, and magnetic card readers.
Printers. The three principal printer types are dot matrix, ink-jet, and laser. Dot-matrix printers were one of the first responses to demands by computer users for an output device that offered more flexibility than impact character printers. Dot-matrix devices dominated the printer market in the early 1990s, accounting for more than 50 percent of unit sales, but offered poor resolution, particularly for graphics. By the mid-1990s the dotmatrix printer was largely being replaced, since it offered smaller profit margins and appealed to consumers less than newer technology.
Ink-jet printers offer much higher resolution and flexibility than dot-matrix technology. Ink-jets in the early 2000s commonly offered resolution of 600 or more dots per inch (dpi) and allowed users to print text and graphics in color.
Laser printers are often seen as providing the highest quality printing short of professional printing machinery, although some of the better ink-jet models increasingly compete with lasers on quality. Laser printers typically offer 600 to 1,200 dpi resolution. Laser printers are likewise often faster than ink-jets and usually have a greater paper-handling capacity. Color laser machines are also an increasingly affordable option.
Multifunction printers, often based on laser technology, emerged in the second half of the 1990s as a popular and viable alternative. These models (which double as fax machines, scanners, or copiers) appeal particularly to small businesses and home workers, who tend to have occasional need for the various functions but don't use them enough to warrant buying separate machines.
Scanners. Peripheral scanners are used to translate images and text into electronic signals. Able to recognize characters, line art, gray-scale, and color images, scanners use photosensitive arrays that reflect light to digitize printed information. The three types of scanners common in the 2000s were handheld, flatbed, and drum. Drum scanners are not considered peripheral equipment, however, because they are high-end tools used primarily in the printing industry.
Flatbed, or desktop, scanners are the most common form. Using optical character recognition (OCR) technology, these scanners can be used to translate printed pages into a document that could be viewed, searched, and manipulated using a word processor. Particularly for home users, Web developers, and graphic artists, desktop scanners are also frequently used to input and manipulate photographs and other graphic images. Typical flatbed scanners have a resolution of 1,200 to 2,400 dpi, although some models offered levels of 2,400 to 4,800.
Handheld scanners are usually priced much lower than flatbeds and are more useful for scanning small graphics. They tend to deliver lower resolution than flatbeds and have limited OCR capability; as a result, sales for general-use markets have been sluggish, and far fewer models of handheld scanners were offered in the late 1990s than just a few years earlier. Handheld devices remain popular, though, for certain commercial and industrial applications like scanning bar codes. Moreover, a revival of small, reliable handheld devices called pen scanners (also digital highlighters) held promise in the early 2000s to expand handhelds' usefulness for general computing applications.
The peripherals industry emerged from the commercial computer industry in the 1970s. Not until the creation and subsequent widespread acceptance of desktop and personal computers (PCs) in the 1980s, however, did the industry capture a significant share of all computer-related expenditures. PCs extended the market for peripherals to the consumer market and generated demand for numerous add-on products.
Some of the early peripherals included card punching and sorting machines, microfilm output units, plotter controls, tabulators, tape cleaners, and tape print units. During the 1980s, however, scanners, printers, and displays that complemented PCs, workstations, and network systems grew to dominate the market. As the speed and memory storage capacity of desktop computers increased, so did the capabilities of peripherals. By the mid-1980s, peripherals accounted for 20 percent of all computer industry revenues.
Global computer equipment and services sales escalated from $243 billion in 1988 to about $280 billion in 1990. Despite an overall slowdown in computer industry growth in the early 1990s, revenues from peripherals continued their spiral to $290 billion in 1991, reaching nearly $320 billion in 1992. Throughout this period the market for peripherals, including storage devices as well as some other peripherals classified under other industries, maintained about a 20 percent share of the total market.
The rapid shift toward graphic user interfaces, multimedia computing, and Internet computing in the mid-1990s gave a solid boost to peripheral sales. However, net revenues and profits in some peripherals categories were sluggish, as prices fell faster than unit sales rose. As computer prices trended downward, and many PCs were selling at or below $1,000, peripherals makers felt pressure to lower prices. In some OEM arrangements, large computer manufacturers required their peripherals vendors to cut costs by a target percentage. In order to reach the goal, peripheral makers sometimes had to skimp on quality and sacrifice their own profitability. Manufacturing was done increasingly outside the United States, where it was cheaper.
Nonetheless, new computer shipments in the United States and worldwide continued to boom into the late 1990s, with unit sales rising more than 20 percent a year. Peripheral sales rose in tandem. Economic crises in Asia and Latin America, however, deflated sales in those regions.
Worldwide, according to Lyra Research of Newton, Massachusetts, 75 million printers of all types were shipped in 1999, a better than 13 percent increase in volume. Global printer revenue, however, was flat with the year before, at $32 billion, due to lower prices. Manufacturers located in the United States produced less than 20 percent of the world's printers, although that percentage doesn't include output by foreign factories owned by U.S. firms.
By printer type, ink-jets dominated two-thirds of world volume in the late 1990s, driven by their popularity as low-cost consumer devices. Monochrome laser and multifunction printers weighed in with 13 percent each. The rest of the market consisted of impact printers, thermal printers, and the fast-growing color laser segment.
In 1999 peripheral manufacturers shipped about 100 million graphic displays, according to various estimates. Most—up to 96 percent—used cathode-ray tube (CRT) technology; the remainder employed LCD screens. The United States manufactured less than 3 percent of the world's monitors and thus depended dearly on imports for as much as 94 percent of all new monitors purchased that year. The value of world monitor shipments in 1999 was estimated at $20 billion, although International Data Corp. (IDC) reckoned monitor revenues at closer to $33 billion.
Taiwanese firms were the biggest in the monitor segment based on volume, according to statistics released by the Taiwanese government. Although only about 11 percent of the world's monitors in 1999 were assembled on Taiwan's soil, Taiwanese companies such as Acer and Mitac laid claim to a startling 59 percent stake in global unit production. Taiwanese affiliates in China supplied the largest share, equal to about a quarter of the world market.
LCD displays in the late 1990s remained on average several hundred dollars more than a typical CRT display—many flat-panel LCDs cost more than the popular sub-$1,000 PCs. Indeed, LCD prices actually rose somewhat because of new features. As prices ease, LCD flat-panel monitors are expected to continue to steal market share from traditional CRT devices, through both the OEM and replacement channels. According to a Display Search market report, a third of LCDs in 1999 were shipped with new computer systems; the rest were sold in the aftermarket. Within the LCD category, thin-film transistor (TFT) devices were expected to continue to edge out competing technologies, making up 70 percent of the product mix by 2002.
In 1998 manufacturers around the world shipped 13.9 million scanners of all types, according to estimates by IDC. With color depth pushing 36 bits and prices slipping below $100 in some models, color flatbeds have been the most widely sought, displacing drum scanners in the high-end market, as well as usurping share from the low end. The introduction of contact image sensor (CIS) technology in the late 1990s to replace the older chargedcoupled device (CCD) standard also significantly deflated prices of CCD-based machines. Assuming more of the same, IDC projected global shipments of color flatbeds to approach 39 million units in 2003. Handheld units, particularly for bar-code reading and other specialized functions, weren't selling as well as expected in the late 1990s, but unit shipments were still growing at a low double-digit clip.
Although the major peripheral product segments experienced solid growth in the late 1990s, conditions changed during the early 2000s, as the economy worsened. Aside from premium products, downward pressure on prices was expected to continue for most classes of peripherals. The peripherals industry will likely recover along with a return to higher levels of technology spending. IDC predicted worldwide information technology (IT) spending to grow almost 6 percent in 2003, with growth of more than 4 percent occurring in the United States.
The peripherals business is, and will continue to be, highly internationalized. Asian firms, especially in China and Southeast Asia, are involved in a disproportionate share of the manufacturing and assembly work. It is therefore important to distinguish between what products are actually made in a country, say the United States, and what products are made elsewhere by affiliates or contractors to the company whose name goes on the products. In addition, a considerable share of the brand-name peripheral companies are headquartered in Asia, and some of these own factories in the United States.
Printers. Historically, the United States has been the world's largest printer market, representing almost half of global demand by volume, according to estimates based on census and trade data. Consequently, the United States imports nearly twice as many monitors as it produces domestically. Because of tightening profit margins on printers, though, some printer manufacturers are actually more dependent on sales of printer supplies like toner and ink cartridges for their profits than they are on the hardware that requires those supplies.
By printer type, ink-jets represented the majority of manufacturer shipments in 2001, totaling roughly 8.0 million units with a value of about $615.0 million. Laser printers were the next largest category, at 3.5 million units with a value of approximately $2.0 billion. In the first quarter of 2002, research firm Gartner Dataquest revealed that ink-jet printer shipments were falling, as end-users opted to purchase multifunction peripherals (MFPs) instead. Shipments of ink-jet printers fell almost 6 percent during that time period, while MFPs, also referred to as "all-in-ones," skyrocketed 98 percent. Because of their versatility, MFPs—which had increased in quality and decreased in price—represented a greater value for consumers and small business owners in tough economic times. According to Gartner, MFPs held the potential to reach sales levels of 5.0 million units during 2002.
By the third quarter of 2002, Gartner reported that overall printer sales were down 11 percent from the previous year, totaling $1.7 billion. At that time color printers remained the strongest printer segment, driven by consumers' adoption of digital photography. In addition, the corporate sector was buying an increasing number of color printers, although color printing was still regarded as a luxury in the business world overall, according to Gartner.
Graphic Displays. According to U.S. Census Bureau figures, U.S. manufacturers shipped approximately 2.2 million monitors in 2001. Of these, 97 percent were CRTs. In the CRT category, 60 percent of monitors had screens less than 19 inches, while CRTs with screens larger than 19 inches accounted for about 37 percent. Flat-panel displays accounted for approximately 3 percent of all monitor shipments. Unit shipments of CRTs fell from 2.7 million in 2000 to 2.1 million in 2001, while values fell from $933.9 million in 2000 to $719.1 million in 2001. Flat panel shipments fell from 74,096 in 2000 to 67,062 in 2001. Shipment values in that category also declined, dropping from $52.3 million in 2000 to $48.9 million in 2001. Computer Reseller News reported that flat-panel display sales were increasing at a strong pace in late 2002.
Scanners. Despite a weak economy, demand for optical scanners has remained relatively strong, especially in the small business market. A business spending survey conducted by Computer Reseller News and released in the publication's October 14, 2002, issue found that some 70 percent of executives in the small business sector cited the imaging category (which includes scanners) of the computer peripherals industry as a moderate-to-high spending priority. According to the survey, of all peripheral categories, respondents rated imaging/scanners the highest. Contributing to the demand for scanners in the early 2000s were sharply falling prices and rapid improvements in technology. For example, a decent high-resolution scanner could be found for $100-$150.
Because of the industry's diverse product segments, many of its estimated 1,000 U.S. companies specialize in a relatively narrow range of technologies, such as printers only or input devices only, although a few larger companies compete across several segments. A number of the top participants, both in the U.S. market and the world market, are based outside the United States—particularly in Asia, and to a lesser extent, in Europe.
In the printer segment, leaders include Hewlett-Packard (HP), Seiko Epson, Canon, Lexmark, NEC Corp., and Xerox. Hewlett-Packard has led the U.S. market in most of the mainstream printer categories, especially laser printers, but it faces a stiff challenge from Epson, Canon, and Lexmark in the low-cost ink-jet arena, which already caused HP to lose market share. Xerox entered the higher-end printer market in 1999 with its acquisition of the Tektronix printer line.
Leading display manufacturers include NEC, Sony, Fujitsu, Samsung, IBM, Acer, Mitsubishi, and Viewsonic. A large number of the monitors sold with new computers in the United States are branded under the names of computer makers like Dell and Gateway; many of these are actually produced by other companies, often abroad.
Important names in the comparatively small keyboard and input device market include Key Tronic, NMB Technologies, and Mitsumi Electronics.
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