Market Overview

Total Consumer Tech Revenue to Reach Record $377 Billion in 2018, Says CTA Mid-Year Report

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Whole home Wi-Fi solutions to cross $1 billion revenue milestone

Artificial intelligence (AI), voice-recognition technology and
fast connectivity – critical ingredients for smart speakers, smart home
technologies and smartphones – will help spur overall U.S. consumer
technology industry revenue to $377 billion in retail revenues in 2018,
a six percent increase, according to the Consumer Technology Association
(CTA). The mid-year update of CTA's flagship report, U.S. Consumer
Technology Sales and Forecasts
, also shows whole home Wi-Fi
solutions, wireless earbuds and augmented/virtual reality headsets will
each cross the $1 billion wholesale revenue milestone for the first time
this year.

"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. The
biannual report serves as a benchmark for the U.S. consumer technology
industry, charting the size and growth of underlying product categories.

Emerging Categories

Key categories projected to contribute significantly to overall unit and
revenue growth include:

           

Smart Speakers: Voice-controlled smart speakers, including
Amazon Echo, Google Home and Apple HomePod, are experiencing a
meteoric rise not seen since tablets. CTA expects the category to
sell 39.2 million units (44 percent growth over 2017) and reach
$3.2 billion in revenue (64 percent growth) after only three years
on the market.

 

Smart Home: Riding the wave of voice technology popularity,
smart home devices continue to get smarter and more versatile. CTA
expects smart home device sales – including 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 – will reach 41.2 million units in 2018 (43
percent increase over 2017), earning $4.6 billion (36 percent
increase).

 

Whole Home Wi-Fi Solutions: 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. These devices will cross the $1
billion revenue milestone for the first time in 2018 (103 percent
increase) and sell 4.3 million units (115 percent increase).

 

Drones: Total drone sales are expected to reach 3.4 million
units (eight percent increase) and just over $1 billion in revenue
(four 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 – including
fitness activity trackers, other health and fitness devices,
smartwatches, personal sound amplification products and sports
tech (such as a smart baseball bats or basketballs) – will reach
sales of 46.1 million units in 2018 (nine percent increase) and
earn $6.4 billion (ten percent increase).

 

 

As some companies turn their focus from fitness trackers to
smartwatches, this sub-category is expected to sell 15.3 million
units shipping in 2018, a 26 percent increase over 2017 with
revenues of $3.7 billion, a 19 percent increase.
 

"The new Internet of Things is the 'Intelligence of Things'," said Steve
Koenig, vice president of market research, CTA. "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."

Top 3 Revenue Drivers – The Three Screens

The top three revenue drivers of the industry showing continued strength:

           

Smartphones: After the introduction of premium, flagship
models from major manufacturers, smartphones performed better than
expected in 2017 as consumers showed more interest in high-end
models. In recognition of rising average wholesale prices, CTA
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 grow one percent
to 169.4 million in 2018.

 
2019 will mark the introduction of the first smartphones with 5G
connectivity on the market. CTA expects 2019 U.S. sales will reach
2.1 million units and cross $1 billion in revenue, with triple digit
increases through 2021.
 

Laptops/Notebook PCs: Convertible models and cloud-based
laptops remain a high-growth area within computing. Unit sales for
laptops are projected to sell 50.1 million units (three percent
growth) and earn $28.4 billion in revenue (relatively unchanged
from 2017).

 

Televisions: Total digital displays demonstrated strong
performance in 2017 and as a result, consumer demand in early 2018
slowed. CTA now projects total unit sales of digital displays will
reach 40.4 million units (six percent decrease from 2017), while
higher average wholesale prices hold total revenue at $21 billion,
on par with 2017. Future category growth will be driven by Next
Gen screen technology:

 
Showing strong growth, 4K Ultra High-Definition (4K UHD) TVs are
forecast to sell 18.6 million units (11 percent increase) and
generate $14.3 billion in revenue (seven percent increase). OLED
unit sales are expected to reach 772,000 (45 percent increase) and
earn $1.4 billion in revenue (42 percent growth) this year - and in
2019, OLED display revenue will rise 50 percent to cross the $2
billion mark.
 

Factory Installed Automotive Technology: Shedding light on
the self-driving car of the future, factory-installed auto tech,
including driver-assist features, is projected to contribute $15.7
billion in revenue (six percent increase).

 

Streaming Services Rise: Consumer expenditures on
subscription music and video streaming services are projected to
reach $19.7 billion in revenue in 2018 (38 percent higher than
last year). Spending on video streaming content (e.g., Netflix,
Hulu and Sling TV) is expected to reach $13.4 billion in revenue
and on-demand audio content (e.g., Spotify, Pandora or Apple
Music) is projected to bring in $6.3 billion in revenue in 2018.

 

"We are undergoing a huge shift in how people consume content," said
Rick Kowalski, senior manager of market research and business
intelligence, CTA. "Video streaming services are offering an increasing
amount of exclusive content and live TV streaming options are becoming
widely available this year – and that has more consumers exploring their
over-the-top video options. Music streaming services continue to gain
subscribers at a furious pace, luring regularly paying music listeners
with attractive introductory offers and benefits such as ad-free
listening. This remarkable growth in streaming services shows us that
the phrase ‘content is king' is more relevant than ever."

CTA publishes the U.S. Consumer Technology Sales and Forecasts
twice a year, in January and July, reporting U.S. factory
sales-to-dealers. It was designed and formulated by CTA, the most
comprehensive source of sales data, forecasts, consumer research and
historical trends for the consumer technology industry. Multi-year
projections cannot account for unpredictable factors such as changes in
tariffs, trade laws, interest rates and federal policy. For more
information, visit CTA.tech/salesandforecasts.

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