Chips are in short supply, crimping manufacturer’s ability to produce enough product in enough varieties to satisfy demand. Supply chain and shipment problems are stalling products that do get made from getting into the country and being delivered to distributors and retailers. Staffing issues are making it difficult for products to get to consumers.
And yet, at last week’s CES Unveiled in New York to kick off the CES 2022 season, CTA projected that U.S. consumer technology revenues will reach a record $487 billion this year, a 7.5% rise over 2020, and forecasts that 2022 sales will rise a more modest 2.2% and reach $498 billion.
“The pandemic strengthened consumers’ relationship with technology forever,” explains Gary Shapiro, CTA president and CEO. “From working to learning, staying connected with loved ones and taking care of our health, tech played a crucial role in improving our lives. Tech has proved time and again that innovation makes our country resilient in the face of crises. Even though the U.S. still deals with supply chain shortages, labor gaps, vaccination rollouts and looming inflation, tech will help us keep pushing forward.”
Hardware sales growth has been hardy in 2021, rising 8.1% YOY, but CTA expects revenues to flatten in 2022 with just a .7% increase projected. Perhaps finally feeling the impact of the chip, supply chain, and shipping issues, next year’s consumer tech revenues will instead be fueled by “software/services” – gaming, video, music, apps, and PC software – which CTA says will jump 7% after a more modest 5.9% increase projected for this year, affirming the old adage that “content is king.”
What products are sparking this year’s tech boom? According to CTA’s 23d Annual Consumer Technology Ownership & Market Potential Study, home ownership of 4K TVs jumped 16% this year, and Ultra HD sets will for the first time be present in the majority in U.S. homes.
Thanks to the mass of workers first forced, then willing, and now demanding to work from home, sales of PCs and 2-in-1 notebooks rose 10% in 2021, with household penetration rising to 38%. Smart appliances, smart doorbells, and connected sports or fitness equipment all experienced 7% jumps in home ownership in 2021. And according to Lesley Rohrbaugh, CTA director of research, 196 million US adults plan to install some sort of smart home products in the next 12 months.
Hardware for Sale
Robust sales of 5G smartphones, true wireless earbuds, health/fitness, e-bikes, and smart home also are fueling 2021 tech sales.
According to CTA, more than 106 million 5G smartphones are expected to ship in 2021, a 530% jump from last year, generating $61 billion in revenue, a 404% YoY increase. Overall shipments of all smartphones will rise 10% to 154 million units, generating $73 billion in revenue, up 15%.
Around 88 million true wireless earbuds, led by Apple AirPods and Samsung Galaxy Buds, are expected to ship in 2021, a 27% jump from 2020, and will earn $8.7 billion, an 8% increase.
Sales of health and fitness tech will reach $13 billion in revenue this year, a 12% increase from last year. CTA projects a total of 1.2 million e-bikes will ship in 2021, up 15%, earning $1.9 billion in revenue, a 3% jump, and more than 100 million smart home devices are due to ship in 2021, an increase of 11%.
“Despite global economic challenges, the pandemic accelerated innovation across industries and left Americans with more time to try new tech products and services,” opines Rohrbaugh. “Many have embraced the convenience of working from home, which has driven demand for tech that allows people to have their own in-home office. Spending more time at home meant we invested more in our homes, from security monitoring, voice activated appliances, lighting, entertainment and more.”
Q4 Holiday Shopping Trends
As per usual, the fourth quarter will be the driver for 2021’s robust revenues; according to Rohrbaugh, 86% of Thanksgiving week shoppers plan to purchase tech, and CTA projects that Q4 spending will reach $142.5 billion, a modest .5% rise from last year’s holiday season. A total of $104 billion will come from hardware with $38.5 billion generated from software & services, mostly gaming and video representing 41% and 37% of the category spending, respectively.
Holiday tech shoppers are expected to hit an all-time high of 191.3 million U.S. adults, thanks in large part to a wider variety of shopping options, both online and at physical stores, such as taking advantage of BOPIS (Buy Online, Pick-up In Store) “omni-shopping” options, according to Rohrbaugh. For instance, results from CTA’s pending CTA 2021 Pre-Black Friday Study indicates a mix of physical and virtual buying.
For instance, 95% of consumers plan to do their shopping at brick & mortar retailers, while 93% plan to buy online. Parsing the survey results further, 47% of consumers plan to check product availability online, 46% will use an app to make purchases, and 17% will use tech – phone and watch payment systems – to pay in-store.
With all the publicity surrounding supply chain and shipping problems, consumers have started their holiday shopping early – but CTA expects that Thanksgiving week buying will remain strong. CTA’s survey says that 20% of consumers will look for deals on Black Friday while 16% plan to wait for Cyber Monday bargains.
The usual device suspects dominate consumer demand and desire for holiday gift giving and receiving. According to CTA’s 28th Annual Consumer Technology Holiday Purchase Patterns Study, smartphones and PCs remain the top two gifts adults want to receive. Wearables jumped to the third most desired gift, while TVs remained #4 and video game consoles dropped to #5, tied with e-book readers.
What consumers want to receive as gifts does not jibe with what consumers plan to give as gifts, a result of the price delta between desire and reality. Repeating at the top of the planned gift giving list are headphones/earbuds. New at #2, however, is streaming/download services, usually in the form of gift codes for several free months. Dropping one spot to #3 are mobile device cases while smartphones drop to the #4 most planned gift. Portable battery chargers repeat from 2020 as the fifth most intended gift.