i3 - March/April 2019 - 50

By Steve Koenig

M A R K E T B E AT

Innovation Propels Industry
Revenues to New Highs

TA's January 2019 edition of the U.S. Consumer
Technology Sales and Forecasts affirms the strength of the
technology market. Consumers are upgrading to 4K
UHD TVs and streaming native 4K video content; they are enjoying faster broadband connectivity at home; and they are embracing smart home solutions with the excitement of voice control in
nearly everything. These advancements are no longer confined to
premium customers. Innovation is democratizing digital experiences and establishing a smart, 21st century lifestyle.

CTA forecasts 3.9 percent
growth in wholesale
revenues for consumer
technology products and
services in 2019.

This new era in technology is available
across an array of price points, form factors, brands and distribution points - all
of which will contribute to 2019's expected
$399 billion (3.9 percent growth) in retail
revenues. However, the potential for headwinds exists from escalating tariffs and the
possibility of a broader economic slowdown stemming from trade issues. Note,
while we acknowledge these risks exist,
any scenario beyond the 2018 picture is
not priced into our forecast.
Looking at U.S. wholesale revenues of
consumer technology products only
(excluding services), we observed 6.2 percent growth in 2018, but as we look to
2019, revenue is expected to reach $300.9
50

MARCH/APRIL 2019

billion, a 2.8 percent improvement. The
top five revenue categories are smartphones, laptop PCs, LCD TVs, factoryinstalled automotive technology and
tablet PCs. Collectively, these categories
account for $155.9 billion, 51.8 percent
of total wholesale revenues (excluding
services). This is a decline from 53.1 percent of total revenue in 2018.

Dynamic Shift

This shift is important. What it means is
while large volume categories continue to
determine the growth trend, emerging
sectors are contributing more. For example, wireless earbuds (46 percent revenue
growth in 2019) continue to benefit from

the shift in consumers mainly using
smartphones for music and the excitement around true wireless earbuds. Smart
home device sales (up 17 percent) remain
on the upswing as consumers adopt their
first anchor products (often a smart thermostat or Wi-Fi camera). The enormous
success of smart speakers is expected to
result in 36.6 million units shipped in
2019. An encouraging point for the industry, these ascendant, volume driven categories are purchased more frequently than
other products like TVs, cameras and PCs.

Centerpiece Tech

Smartphones are expected to account
for more revenue ($80 billion) than the
other top four revenue categories combined this year. With changes in smartphone subsidy plans, consumers are
moving towards phones with larger,
high resolution screens and upgraded
artificial intelligence (AI) and photo
capabilities. Next on the horizon for
smartphones are 5G-enabled devices
and hardware.
CTA's forecast estimates 2.1 million
5G-enabled smartphones and 1.5 million 5G home gateways will ship in 2019
as network carriers begin their commercial deployments. The growth in streaming services is also a reflection of
advancements in mobile technology. As
the focus of digital life revolves around
the smartphone, mobile services like
music and video streaming (revenues
growing 22 percent and 27 percent in
2019, respectively) will become a larger
component of how users access content.
Despite a decline in the computing
market (revenue fell five percent in 2019),
computing continues to see pockets of
growth. Laptop sales are expected to
increase as unit demand grows two percent in 2019 while unit demand for tablets
in 2019 (units down two percent compared to 2018) has stabilized as the market matures and new, prosumer models
offer advanced features and applications.
Overall, 2019 is a bright spot for the
industry assuming relative stability in
the domestic and global economy. For
more details on CTA's U.S. Consumer
Technology Sales and Forecasts, visit
CTA.tech/research.
I T I S I N N O VAT I O N

Clockwise from Left: David McNew/AFP/Getty Images, Ross D. Franklin/AP Photo, John Locher/AP Photo.

Business

http://www.CTA.tech/research http://www.CTA.tech/research http://www.CTA.tech/research

i3 - March/April 2019

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