Status of the Electronic Industry |
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In this 1955 report on the status of the electronics industry, Radio−Electronic magazine editor Hugo Gernsback summarizes a presentation made by RCA president Charles Odorizzi to the Cleveland Society of Security Analysts. He began thusly: "Few if any industries, in such a relatively short period of time, have experienced such amazing growth as electronics. From 1940 to the war's end in 1945, the annual dollar volume of the industry increased from $500 million to $4.6 billion." So was born what President Dwight D. Eisenhower would in 1961 term the Military-Industrial Complex. Being a capitalist and small government type at heart, I am somewhat conflicted with the concept because on the one hand I eschew government controlling industry and academia (aka communism), yet on the other hand I recognize the need for maintaining a strong military in order to both deter and defend against foreign aggression. The same goes for allowing pure market forces to determine the direction of research and production without government intervention; the result would be the same as allowing a purely democratic form of government - the majority, even by a thin margin, would decide what everybody else does. That is why America's representative republic works (or until recently used to work) so well - it is a carefully crafted mix of government and public coordination of policy. Status of the Electronic Industry
... Comprehensive survey of a new giant ...
Few if any industries, in such a relatively short period of time, have experienced such amazing growth as electronics. From 1940 to the war's end in 1945, the annual dollar volume of the industry increased from $500 million to $4.6 billion. Then followed a post-war dip that quickly was corrected by three principal factors: first the rise of the new television industry; second the industrial adoption of electronic controls; and third, the implementing of a realistic concept and standard of national defense requirements. So rapid was the upturn that in a little more than six years after the war's end - by 1952 - the electronics industry had achieved a $7 billion annual volume. Today, the curve continues to rise. By latest estimates, the electronics industry should show a total business that will reach close to $9 billion by the end of 1955. According to surveys by RCA, these figures will maintain their climb and by the end of 1957 the annual total should be nearly $12 billion. All of you will recollect how the television receiver industry made its spectacular advance from a mere $1 million at factory prices in 1946 to its peak of $1.4 billion in 1950. By 1957, a year when color television is expected to be making rapid progress, black-and-white sales are expected to drop back to less than $400 million. By that time, it is estimated the industry factory billings of color sets will be near the billion mark. Thus, the estimated total of television set sales to the consumer, namely 6.4 million units in black-and-white and color, will then be approaching the total sales of 6.6 million units reached by black-and-white sales alone in 1950. Government purchases of electronic equipment, which will total $2.5 billion for the industry this year, are estimated to increase to approximately $2.9 billion by 1957. In only one broad classification of electronics, that of automobile radios, industry sales seem to have reached a condition of stability. For several years auto radios have maintained annual sales slightly in excess of $100 million, a total that is likely to remain constant for the next few years at least. The majority of remaining classifications in the electronics field provide food for thought for the optimist. These include the sales of repair parts and replacement tubes, broadcasting and communications, industrial and commercial equipment, service and installation, and, of course, color television. Let me give you an idea of the potentials of these groups by comparing the industry's going rate with rates projected into 1957. Repair parts and replacement tubes, which will gross about $250 million this year at factory prices, will total $453 million in 1957. The present and future totals for the broadcasting and communications industry are $1 billion and $1 1/2 billion, respectively. Industrial and commercial equipment will increase from $274 million to $520 million; color television, now a mere infant, will expand to $950 million in four years. Servicing Servicing, in my opinion, is a subject that has not been given its due importance in most industrial analyses. Today, however, industrialists are paying more and more attention to its role in successful manufacturing and merchandising. Service with a capital "S" has become a vital building block in the foundation of American business. Would the automobile have developed into a $45 billion industry if owners had been forced to repair and maintain their own cars? Would the electronics industry have made giant strides toward its present $9 billion position if buyers had not known that trained technicians were available to keep their instruments in operating condition? The answer obviously is "No." The attitude of the manufacturer toward service was certain to change as he recognized the irresistible changes in life and customs. Service, therefore, has become an important facet of the nation's business structure. The consumer knows the value and economy of keeping the products of modern science and industry at peak efficiency. When properly organized, service pays its own way. It is a good investment that produced manifold returns in many forms. Some measure of the importance of service to electronics is shown by the fact that today nearly 100,000 service technicians are employed in the industry, most of whom are in radio and television service for the home. With the expected growth of the electronics industry, more than 125,000 technicians will be needed in 1957. I know of no merchandiser who is more thoroughly sold on the role of service in making and repeating sales than Frank M. Folsom, president of the Radio Corporation of America. Often he has said: "In every city of the United States there is a successful business that is a living monument to some man with the simple but fundamental objective of making sure his customers were properly taken care of." In 1946, when television emerged from behind the curtain of war to begin its phenomenal growth, the industry's return for servicing home television and radio sets was less than $145 million, not including the cost of parts. Four years later, in 1950, comparable figures had increased to $710 million. In 1953, the total was $1.4 billion and by the end of 1957, this part of the electronics industry will contribute $2.7 billion annually to the national economy for the home installation and maintenance. In other words, during the next four years, from January 1, 1954, to January 1, 1958, the industry's gross income from this service will have almost doubled. With these figures in hand, it is only natural that they should be compared with the overall volume of business produced by the electronics industry. Total annual sales of this industry grew from $1.6 billion in 1946 to $8.4 billion in 1953. Thus, in 1953, service was responsible for 16.4% of electronic industry sales. This is almost as much as the total sales of all electronic products, to both consumers and the Government, in 1946. As the use of electronic apparatus increases with automation and the application of electronic controls to industry, plus the spread of television service, the sales of service will increase accordingly. Electronics Is Core of Automation Undoubtedly, you have frequently encountered the word automation. You will hear more of this trend of industry to conceive, design and build the automatic factory-automatic to a great extent from raw material to finished product. We have not yet arrived at the latter state but we are making good progress, for electronics is the core of automation, and the electron is one of the world's most versatile and flexible tools. We are succeeding through electronic controls and automation in speeding up the progress of industry, and by so doing are reducing the time lag that heretofore has slowed up the conversion of raw materials into finished goods. This increased impetus of production also has made it possible materially to reduce the costs to the ultimate consumer. By taking the developments of scientists and engineers and merchandising them with modern, efficient methods we have contributed substantially to the nation's economy. Although this record of achievement is outstanding, the promise of the electronics industry in the future is even brighter. One of the most impressive long-range views was expressed a short time ago by Brig. Gen. David Sarnoff, chairman of the board of RCA, who said: "Whatever the size of the electronics, television and radio business seven years hence may be, I am sure that more than 50% of the volume will be in products and services that do not exist today."
Posted March 11, 2022 |
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Hugo
Gernsback, Editor 
Recently
C. M. Odorizzi, executive vice president of the Radio Corporation of America, addressed
the Cleveland Society of Security Analysts, giving a comprehensive view of the electronic
industry. The following is a condensed report of this most informative talk.