SIC 3577 Computer Peripheral Equipment, Not Elsewhere Classified

SIC 3577

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.

NAICS CODE(S)

334119

Other Computer Peripheral Equipment Manufacturing

INDUSTRY SNAPSHOT

Computer peripherals suffered overall declines in the early 2000s, along with the rest of the computer industry. Overall shipment values fell from $12.9 billion in 1999 to $10.6 billion in 2001. After leveling off during 2002, shipment values again dropped significantly in 2003 to $9.4 billion, representing a 27 percent decline for the five-year period. The decline in value is due primarily to an ongoing drop in prices that continues to sweep through the industry. 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.

The printer segment has continued to fair well, compared to other, weaker segments of the industry. Color ink-jet printers have been the mainstay of the industry, with Hewlett-Packard wielding a hefty 58 percent of the market in 2003. Intense price competition among ink-jet vendors, as well as continued improvements in performance and features, has kept color ink-jet prints at the forefront of the market. Color laser printers continue to gain in popularity but will remain secondary to their ink-jet cousins until manufacturers can bring down the price sufficiently to entice a larger range of consumer buyers. 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 mid-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), which have historically made up the bulk of the market, saw a sharp decline in sales during the early 2000s, dropping from 33 million units in 2001 to 24.3 units in 2002. Additionally, due to continuing price declines, the CRT market declined 37.9 percent in value over the same period. While the CRT market declines, the demand for flat-panel liquid crystal displays (LCDs) increased substantially by the midway point of the 2000s. During 2002 alone sales of LCDs more than doubled.

Optical scanners, the third major segment of the peripherals market, likewise expected to continue to grow through the mid-2000s. Again, inexpensive, mass-oriented devices and improving technology, particularly with flatbed models, have fueled strong demand among both consumers and businesses. In 2002, revenues from scanners sales increased over 10 percent to exceed $1 billion, based primarily on consumers replacing equipment. Average unit price also increased.

Performance in the industry's smaller segments, such as keyboards, pointing devices, and specialty input and output devices, has been mostly subdued. Because many of these items are produced for the original equipment manufacturers (OEMs), this segments' production is tied closely to the sales of computer systems. For standard aftermarket devices, there have been few innovations, and thus upgrade and replacement sales are minimal. There is promise for this segment as the use of wireless and handheld technology becomes commonplace among consumers, which should expand the sales of wireless devices and peripherals, such keyboard, mice, digitizers, and light pen tablets.

ORGANIZATION AND STRUCTURE

Facilitating communication with a computer's processor, peripheral equipment is used on nearly all types of computers, ranging from home personal computers (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 such as 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

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