Consumer tech revenue will hit $377 billion this year, up 6 percent, spurred by artificial intelligence (AI), voice-recognition technology and fast connectivity, the Consumer Technology Association said in its annual mid-year update.
Also announced: For the first time, whole-home Wi-Fi solutions, wireless ear buds and AR/VR headsets will each cross the $1 billion wholesale revenue milestone.
CTA publishes its “U.S. Consumer Technology Sales and Forecasts” report in January and July each year, reporting U.S. factory sales-to-dealers.
“Innovations in AI, voice and connectivity are making tech devices more helpful and versatile, and changing our lives for the better,” said Gary Shapiro, president and CEO, CTA. “And thanks in part to economic factors including tax reform and high employment driving our economy forward, even more consumers are bringing these remarkable tech innovations into their lives. Although tariffs and the trade war threaten to unravel the strong economic momentum driving tech adoption and sales, the current state of the industry is exciting and healthy going into the second half of the year.”
The CTA forecast reflects U.S. factory sales-to-dealers for more than 300 consumer tech products, and related software and services. Key categories projected to contribute significantly to overall unit and revenue growth include:
Smart Speakers: This category is experiencing a meteoric rise not seen since tablets, said CTA. The group expects the category to sell 39.2 million units (up 44 percent since 2017) and reach $3.2 billion in revenue (up 64 percent) after only three years on the market.
Smart Home: Sales will reach 41.2 million units in 2018 (up 43 percent vs. last year), earning $4.6 billion (up 36 percent). CTA includes smart thermostats, smart smoke and carbon monoxide detectors, IP/Wi-Fi cameras, smart locks and doorbells, smart-home systems, and smart switches, dimmers and outlets in this category.
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Whole Home Wi-Fi Solutions: These devices will cross the $1 billion revenue milestone for the first time in 2018 (up 103 percent) and sell 4.3 million units (up 115 percent). Also known as mesh networks, devices such as the Eero Home Wi-Fi system, Google Wi-Fi or Netgear Orbi, are experiencing substantial growth due to their simple home network set-up and ability to provide strong internet coverage throughout the home, said CTA.
Drones: Total drone sales are expected to reach 3.4 million units (8 percent increase) and just over $1 billion in revenue (4 percent growth) in 2018, as more consumers and businesses adopt drones for photography, recreation, drone racing and more.
Wearables: The total health and fitness market will reach sales of 46.1 million units in 2018 (up 9 percent increase) and earn $6.4 billion (up 10 percent). CTA includes fitness activity trackers, other health and fitness devices, smart watches, personal sound amplification products and sports tech within this category.
The smart-watch sub-category, meanwhile, is expected to sell 15.3 million units shipping in 2018, up 26 percent over last year, with revenues of $3.7 billion, up 19 percent.
“The new Internet of Things is the ‘Intelligence of Things’,” said Steve Koenig, CTA market research VP. “Connected products tap AI to enhance services, especially in categories including smartphones, connected cars and smart-home devices. And with 5G on our doorstep — the first 5G products will hit the market this year — we’re crossing into a new phase of faster and smarter connected devices.”
See more insight from Steve Koenig in his recent presentation at New Age Electronics’ Dealer Summit
CTA also named the top three revenue drivers: smartphones, laptops/notebook PCs and TVs.
Smartphones: This category performed better than expected in 2017, CTA said, as consumers showed more interest in high-end models. In recognition of rising average wholesale prices, The group upwardly adjusted 2017 and 2018 smartphone revenue to $69 billion and $78 billion, respectively, reflecting a 13 percent revenue increase in 2018. Unit shipments are expected to stay flat, with just a 1 percent uptick to 169.4 million in 2018.
CTA expects 2019 U.S. sales will reach 2.1 million units and cross $1 billion in revenue, with triple-digit increases through 2021.
Computing: Convertible models and Cloud-based laptops remain a high-growth area within computing, CTA noted. Unit sales for laptops are projected to sell 50.1 million units (up 3 percent) and stay flat with $28.4 billion in revenue
TVs: This category, meanwhile, saw demand slow for the early part of the year thanks to strong performances from total digital displays in 2017. CTA now projects total unit sales of digital displays will reach 40.4 million units (down 6 percent from last year), while higher average wholesale prices will keep revenue flat at $21 billion.
Future category growth will be driven by next-gen screen technology, CTA predicted.
4K Ultra HD TVs are forecast to sell 18.6 million units (up 11 percent) and generate $14.3 billion in revenue (up 7 percent). OLED unit sales are expected to reach 772,000 (up 45 percent) and earn $1.4 billion in revenue (up 42 percent) this year. In 2019, OLED display revenue will rise 50 percent to cross the $2 billion mark, said CTA.
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Other Findings
Factory Installed Automotive Technology: Factory-installed auto tech, including driver-assist features, is projected to contribute $15.7 billion in revenue (up 6 percent).
Streaming Services: Consumer spending on subscription music and video streaming services are projected to reach $19.7 billion in revenue in 2018 (up 38 percent). Spending on video streaming content is expected to reach $13.4 billion in revenue, and on-demand audio content is projected to bring in $6.3 billion in revenue in 2018.
