September 29, 2011, SINGAPOREC Rapidly advancing technology has brought about increasing popularity of mobile tech gadgets; handy especially for today s busy consumers constantly on the move. Along with the rise of portable devices like tablets, smart phones, MP3 players, etc, demand for accessories such as headsets and headphones have risen correspondingly. Leading global market research company GfK Asia who conducts retail audit of headphones, earphones and headsets reports key trends in these segments across major Southeast Asian markets. Headphones, earphones and headsets are almost essential when it comes to using portable technology and nowadays, they do not just come with only basic features just to cater to the primary functions, commented Mr. Stanley Kee, Regional Commercial Director of GfK Asia. The headphones, earphones and headsets available in the market nowadays are equipped with various level of sophistication that offers over and beyond their primary function. Headphones and Earphones Total headphone and earphone sales across the four Southeast Asian markets of Singapore, Malaysia, Thailand and Indonesia in the first half of this year grew by 7 percent over the same period in 2010. Some 724,000 units were sold during this period of time, increasing the value of the industry by 22 percent to hit USD 15 million. With rising affluence and spending power, consumers these days are also more willing to indulge in better quality brands and products, and this is basically the driving force behind the growth of the region s headphone/ear phones industry, observed Mr Kee. GfK insights reveal upgrading patterns as consumer buying trends in headphones/earphones shift towards the more expensive range, and this is especially apparent in Singapore, Malaysia and Indonesia. (Chart 1) Singapore is the fastest growing market, registering a value growth of 37 percent, followed by Malaysia s 29 percent. Latest findings for Singapore showed that headphones/earphones from the over USD20 categories have increased in popularity and in the first six months, took up an additional 14 percent of the overall unit sales pie, while those from the below USD20 categories have declined correspondingly. (Chart 1) When it comes to headphone/earphone models, consumers generally prefer the micro types a more than 7 in 10 units sold belong in this segment.

Malaysia, Thailand and Indonesia have also shown some growth in the mini/lightweight category. Meanwhile, the high-end traditional models which are bulky but provide greater sound quality are rising in popularity amongst consumers in Singapore and Indonesia. (Chart 2) In Singapore, the traditional segment grew considerably by 27 percent in value and 16 percent in volume in the first six months of the year, Mr. Kee said. With the multi functionality of headphones from being used for listening to music to watching movies and in gaming devices, some consumers these days are even willing to splurge over USD500 for a set of high performance quality headphone! It is a sure sign that headphones are no longer looked upon as just an accessory. Headsets Some 868,000 units of headsets valued at over USD16.7 million were sold in five key Southeast Asian countries a Singapore, Malaysia, Indonesia, Vietnam and Philippines in January to June this year. Although overall market size of headsets in the region have shrunk slightly when compared to the first half of last year, demand for non-Bluetooth headsets showed an 8 percent growth in volume and make up over 7 in 10 headsets sold in the first six months of the year. In terms of value, however, it is the Bluetooth category that is contributing a larger proportion of 62 percent to the overall pie. (Charts 3-4) Bluetooth headsets are comparatively more expensive than non-Bluetooth ones and this is a key reason for its slower sales in most of the markets, especially in markets where smart phone penetration level is low as such headsets are designed largely to complement the more advanced technology of these phones, commented Mr. Kee. For instance, in Malaysia, where smart phone penetration is highest in Southeast Asia, volume sales of Bluetooth headsets alone make up almost half the total quantity of sales across the five markets! The rise of smart phones have greatly improved functionality of headsets so as to cater to specific consumer needs that have evolved alongside smart phone capabilities, such as gaming and watching videos.

A feature that is growing in popularity is dual earpieces that allow consumers to enjoy stereo sound. In the last six months, over three in five (64%) headsets sold are of this type, a 12 percent jump from the same period last year. These days, consumers are availed many options of brands and models of headsets, from those offering technologically advanced features such as noise-cancelling and LCD screens, to those which have been developed with physical comfort in mind, such as headband, in or over the ear, as well as ear clip variants, noted Mr. Kee. Ultimately, headsets, headphones and earphones are personal devices, and in order to win the consumer dollar, it is essential that manufacturers are able to come up with offerings that provide not only comfort, but is also able to fit nicely into the consumers lifestyle, he concluded. The GfK Group The GfK Group offers the fundamental knowledge that industry, retailers, services companies and the media need to make market decisions. It delivers a comprehensive range of information and consultancy services in the three business sectors Custom Research, Retail and Technology and Media. The No. 4 market research organization worldwide operates in more than 100 countries and employs over 10,000 staff. In 2010, the GfK Groups sales amounted to EUR 1.29 billion. For further information, visit our websites: www.gfk.com or www.gfkrt.com/asia. Follow us on Twitter: www.twitter.com/gfk_group or www.twitter.com/gfkrt. Notes: - Survey period: Jan C Jun 2011 - Year on year comparison: Jan-Jun 2011 VS Jan-Jun 2010 - Headphones/earphones retail audit is conducted in Singapore, Malaysia, Thailand and Indonesia - Headsets retail audit is conducted in Singapore, Malaysia, Indonesia, Thailand and Vietnam.