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‘Pivotal Point’ In Tech: IoT & Emerging Tech Driving Revenue Growth

4K Ultra HD products to lead the way

Broader adoption of the Internet of Things (IoT) and enthusiasm for emerging technology will drive the U.S. consumer technology industry to $286.6 billion in retail revenues — $224 billion wholesale — in 2016, according to the Consumer Technology Association’s (CTA) semiannual sales forecast.

Sales of burgeoning tech products such as wearables, smart-home devices and drones will deliver an increase of 1.3 percent over last year’s industry revenues.

A breakdown of the outlook for emerging technology categories looks like this:

• 4K Ultra HD Ecosystem: 2016 will be a flagship year for 4K UHD TVs, driven in part by the market introduction of next-generation technologies like high dynamic range (HDR). CTA expects shipments of 4K UHD displays will reach 15 million units, a 105 percent increase, and revenue will exceed $12.9 billion (a 69 percent increase). New to the market in 2016, 4K UHD Blu-ray players will further build the 4K UHD ecosystem, with 700,000 units sold and $63 million in revenue.

• Wearables: Driven by the popularity of fitness activity trackers, unit sales of all wearables in 2016 are forecast to reach almost 48 million units, a 39 percent increase. Fitness activity tracker volumes will hit 28 million units in 2016 — a 60 percent increase from 2015 — with revenues reaching $2.2 billion, a 62 percent increase. After a year of strong growth, smart-watch unit growth is slowing, while revenue will decline for the first time. Units are expected to increase 15 percent to 12.2 million units, earning $2.8 billion in revenue, a decline of 8 percent.

• Smart Home: CTA projects the smart-home category — including smart thermostats; smart smoke and CO2 detectors; IP/Wi-Fi cameras; smart locks; smart-home systems; and smart switches, dimmers and outlets — to reach 9.5 million units sold in 2016, a 29 percent increase. Revenue will grow to $1.3 billion, a 24 percent jump.

• Drones: Drone sales are expected to reach record heights, topping 2.4 million units, up 112 percent from 2015, and $799 million in shipment revenues, an 80 percent increase from 2015. CTA’s forecast also delineates expected U.S. drone sales for units below and above 250 grams, the FAA’s division for mandatory drone registration, expected to reach 1.6 million units (below 250 grams) and 825,000 units (above 250 grams).

• Virtual Reality: With several global tech leaders introducing VR headsets to the consumer market in 2016, CTA expects this to be the tech sector’s overwhelming leader in year-to-year growth. Unit sales will increase by 296 percent over last year, reaching 800,000 units sold. Total revenues are projected to reach $432 million, a 332 percent increase this year.

• Digital Assistant Devices: This is the first year the CTA report has included projections for voice-activated device that provides a Cloud-based artificial intelligence-powered virtual assistant, such as Amazon’s Echo. Sales are projected to reach 2.2 million units, up 32 percent in 2016 and earn $392 million in revenue, increasing 32 percent.

• 3D Printing: Ever-expanding 3D printing capabilities will drive the sector’s unit sales growth to increase 56 percent from last year, to reach 171,000 units sold. Total revenues will reach $148 million, a 35 percent increase.

“We’re in the midst of a critical transition period, as more IoT products offer the anytime/anywhere access and seamless experiences that today’s consumers want and need,” said Gary Shapiro, president and CEO, CTA. “This is a pivotal point in consumer technology history, as emerging tech categories — virtual reality, voice-controlled digital assistants, drones — push the entire industry forward. And the value of these innovations goes far beyond entertainment — today’s technology is changing our lives for the better.”

As for mature sales categories, the five largest product sectors of the tech industry, including smartphones, tablets, LCD televisions, laptops and desktop computers, will collectively contribute $114 billion, or 51 percent, to the tech industry’s revenue this year, and smartphones and TVs will be responsible for most of that growth in 2016. However, in 2017, for the first time in several years, these five categories combined will account for a little less than half of industry revenue.

A breakdown of the mature category leaders goes like this:

• Smartphones: CTA projects unit shipments to reach 183 million in 2016, up 5 percent, while revenues will reach $55 billion, a 4 percent increase. As tremendous innovations in smartphone hardware over the past few years have lengthened the replacement cycle, 2017 will be the first year smartphones see a slight decline in unit sales and revenue.

• Televisions: The TV market will remain on par with 2015, with unit sales estimated to reach 39.7 million units in 2016, down 1 percent, and revenues expected to reach $20 billion, a 3 percent increase. LCD TVs, the category leader, will contribute 38.9 million units, a one percent decline, and $19.2 billion, 2 percent growth). Key areas of growth are large screen sizes, 4K UHD and smart-TV displays.

• Tablets: After momentous growth and widespread adoption over the past five years, tablet sales will decline again in 2016. CTA expects sales of 65 million units in 2016, a 2 percent decrease, and revenues of $19 billion, down 5 percent.

• Laptops: Unit shipments of laptops are expected to reach 25 million units in 2016, a 6 percent decrease. Revenues are expected to reach $15.8 billion, an 8 percent drop.

• Desktops: Amid an accelerated decline, desktops are projected to sell 7.0 million units, a 13 percent decrease, earning $4.6 billion in revenue, a 15 percent decrease.

“Technology is constantly and continuously reinventing itself, often cannibalizing its own growth before anything else does,” said Shawn DuBravac, chief economist, CTA. “The swath of emerging categories hitting the market in 2016 and the exponential growth of IoT are indelibly shaping the way we live our lives. How we use the internet, and the new products coming to market today, are changing who we are becoming.”

Tech-Spend Intentions Reach 18-Month High

Christmas in July promotions and back-to-school shopping have lifted consumer tech-spending sentiment to its highest level in more than 18 months, according to a Consumer Technology Association (CTA) index.

The CTA Index of Consumer Technology Expectations (ICTE), which measures consumer expectations about technology spending, increased 4.1 points in July to reach 91.6, the highest reading for tech spending since November 2015, the trade group said.

CTA chief economist Shawn Du- Bravac attributed the uptick to early promotions, back-to-school shopping, new product introductions and a slight rise in consumer confidence following last month’s Brexit uncertainty.

What’s more, the rise in tech-spend sentiment “suggests strength ahead of the second half of the year,” he said.

The CTA index is updated on a monthly basis through consumer surveys, with new data released on the fourth Tuesday of each month.