Perspectives on the Scale and Trends of the IT Market in Japan through 2011(1) -- Flat-Screen TV, Mobile Handset and DVR Markets to Continue Growing; Terrestrial Digital Broadcasting Market to Exceed ¥2 Trillion --

Shipments of flat-screen TVs will amount to 130 million units, with mobile handsets reaching 1.2 billion units
Most hardware markets, such as mobile handsets that have grown explosively since the latter half of the 1990s, and flat-screen TVs, digital cameras and digital video recorders(DVR), which are referred to as the "new three sacred treasures," will continue to grow through 2011 in terms of the number of units shipped. However, due to continued reductions of product prices, we consider that these markets have reached maturity on a monetary basis.

While shipments of flat-screen TVs will continue to grow through 2010, they are expected to level off after reaching 130 million units in 2011. On a monetary basis, the market scale will shift into a decline after reaching a peak around 2010.

The mobile handset market is expected to continue growing with BRICs users serving as a driving force, and is projected to expand to more than 1.2 billion units in fiscal 2011.

Shipments of digital cameras will cease to grow after reaching a peak of 91.40 million units around 2008. On a monetary basis, this market may shift into a decline starting in 2007 if product prices drop at a faster pace.

NRI believes that to deal with these environmental changes such as slowdown of sales and/or declining trends, Japan's comprehensive electric and electronics manufacturers face a need to strengthen their global brand management and operations in addition to the selection and concentration of business operations.

Digital broadcasting markets will steadily expand in both terrestrial and BS systems
Spurred on by an increasing demand for replacing conventional TVs with flat-screen TVs, broadcasting markets are expected to attain stable growth in both terrestrial and BS digital broadcasting services. By the end of fiscal 2011, 39.97 million households will view terrestrial digital broadcasts, while 28.13 million households will view BS digital broadcasts. On a monetary basis, the two markets will amount to 2,149 billion yen and 597.2 billion yen, respectively.

As a means of covering areas outside the reach of digital broadcast waves, IP broadcasting service is planned to be offered for the re-transmission of terrestrial waves. The market of pay-per-view multi-channel broadcasting that is approaching maturity will see intense competition among terrestrial cable TV operators, IP broadcasters and satellite broadcasters, which will further accelerate industrial restructuring through management integration and alliances.

This is the sixth version of NRI's IT market forecasts, following those made in 2000, 2001, 2003, 2004 and 2005. NRI plans to publish the details of the forecasts outlined above as a book entitled Korekara joho tsushin shijo de nani ga okorunoka— IT shijo nabigeta 2007 (What will occur in the information and communications market— IT market navigator 2007) on December 21, 2006 by Toyo Keizai Inc.