Excitement about emerging technologies and the resilience of historically leading categories will drive the U.S. consumer technology industry to a record-breaking $351bn in retail revenues ($266bn wholesale) in 2018 – 3.9% higher than 2017, according to new research from the Consumer Technology Association (CTA).
Unveiled in advance of CES 2018, the latest edition of CTA’s semi-annual industry report, the U.S. Consumer Technology Sales and Forecasts, includes for the first time a projection for consumer spending on music and video streaming services – valued at $19.5bn in revenue, 35% higher than just last year. CTA added streaming services sales – which include internet-enabled services that deliver on-demand or linear video content (e.g., Netflix, Hulu and Sling TV) and on-demand audio content (e.g., Spotify, Pandora or Apple Music) – to better capture the full expanse of the ever evolving and expanding consumer technology market. Excluding the addition of streaming services, total industry revenue would increase by 2.2% in 2018.
“Technology is improving our lives in more ways than ever – and consumer enthusiasm is growing just as quickly as companies can bring their innovations to market,” said Gary Shapiro, president and CEO, CTA.
“Our forecast incorporates several key economic factors including a strong stock market, continued job growth and stable rules for international trade to forecast these record-setting sales for breakthrough technologies and longtime market leaders alike. And the driving themes of 2018, including voice computing, artificial intelligence and connectivity that make our lives better and more efficient, will be on display across the show floor this week at CES 2018.”
CTA is the nation’s largest tech trade association – its semi-annual report serves as a benchmark for the U.S. consumer technology industry, charting the size and growth of underlying product categories. The CTA consensus forecast reflects U.S. factory sales-to-dealers for more than 300 consumer tech products.
Emerging Technologies Expand
Overall, U.S. sales of connected devices are projected to reach 715 million units in 2018 – a 6.6% increase year-over-year. Specific products projected to contribute significantly to this growth include:
Smart Speakers: Coming off of a tremendous 2017 holiday season, voice-controlled smart speakers, including Amazon Echo and Google Home, are going gangbusters. Unit sales increased 279% in 2017, and CTA projects 2018 unit sales will reach 43.6 million units (60% increase) and earn $3.8bn in revenue (93% growth). As voice recognition technology is integrated into more speakers at a variety of price points, smart speakers is a category to watch in 2018.
Smart Home: The popularity of smart speakers will have a ripple effect on the smart home market, as consumers discover the benefits of voice-activated home automation. CTA expects sales in the category – including smart thermostats, smart smoke and carbon monoxide detectors, IP/WiFi cameras, smart locks and doorbells, smart home systems, and smart switches, dimmers and outlets – to reach 40.8 million units in 2018 (41% increase over 2017), earning $4.5bn (34% increase).
Virtual Reality (VR): Popularity among gamers and an increasingly competitive market continue to drive growth for VR/AR headsets and eyewear, with unit shipments projected to grow to 4.9 million units this year (25% increase) tallying $1.2bn in revenues (18% increase).
Drones: Total drone sales are expected to reach record highs of 3.7 million units in 2018 (20% increase) earning $1.2bn in revenue (17% increase). CTA’s forecast also delineates U.S. drone sales for units below and above 250g, the FAA’s division for mandatory drone registration. Drones below 250g are expected to reach just over 2.2 million units this year, while drones above 250g will reach 1.5 million units shipped.
Wearables: The total health, fitness and sports tech market – including fitness activity trackers, other health and fitness devices, hearables, over-the-counter hearing devices, smartwatches and, for the first time, sports tech (such as a smart basketballs or baseball bats) – is expected to reach sales of 49.3 million units in 2018 (four percent increase) and earn $6.4bn (one percent increase).
“Consumers are rapidly adopting new, emerging technology products – with voice-activated smart speakers as the stand-out of 2017 and 2018 – sparking growth in smart home devices, as voice interaction adds a new level of convenience and excitement to our lives,” said Brian Markwalter, senior vice president of research and standards, CTA. “At the same time, core categories – such as smartphones, laptops and TVs – continue to surpass expectations. 2018 will prove to be a milestone year for TVs, especially as LCD 4K UHD TVs make up half of all TVs sold in 2018.”
Maturing technologies continuing
The top five revenue categories will contribute just over half of total wholesale industry revenue (51%) in 2018.
Smartphones: Following the introduction of new flagship models from major manufacturers in 2017, smartphones will continue to anchor the industry and see slight growth in 2018. Unit volume will reach 189 million smartphones (two percent increase) shipping in 2018, with revenues expected to reach $62.9bn (three percent increase).
Laptops: In 2018, the commercial and consumer laptop market will sell 50.1 million units, up three percent over last year, and earn $28.4bn in revenue. Convertible models remain a high-growth area within computing.
Televisions: Performing better than expected in 2017, unit sales of total digital displays in 2018 are projected to reach 44.2 million units (two percent increase) and $22.1bn in revenue (two percent increase). Future category growth will be driven by next gen features.
4K Ultra High-Definition (4K UHD): For the first time, 4K UHD TVs will make up half of all total digital displays sold in 2018, with unit sales forecast to hit 22 million units (27% increase) generating $15.9bn in revenue (14% increase).
Automotive Electronics: Factory-installed automotive technology, from driver-assist features to entertainment systems, is projected to contribute $15.9bn in revenue (5.9% increase) – the result of strong automotive sales, propelled by a rising tide of tech, from sensors and artificial intelligence to safety and infotainment systems.
Tablets: After tremendous adoption in recent years, some tablet sales have been cannibalized by convertible, 2-in-1 laptops as standalone tablet adoption has leveled off and replacement cycles have slowed. Tablet sales will decline in 2018. CTA expects sales of 45.6 million units (12% decrease) and revenues of $12.5bn (13% decrease).
