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IoT to drive US consumer tech industry to $287bn, says CTA

Steve Rogerson
January 6, 2016
The ever-expanding adoption and continued growth of innovations comprising the IoT will help lead the US consumer technology industry to $287bn in retail revenues ($224bn wholesale) in 2016, according to the Consumer Technology Association (CTA) in a report issued at this week’s Consumer Electronics Show in Las Vegas.
Well-established technologies including smartphones, televisions and laptops will continue to drive US retail revenues and lead to one per cent industry growth in 2016. While these categories – together with tablets and desktops – account for 51 per cent of the consumer tech industry’s revenue, the catalysts for industry growth are newer innovations such as wearables, virtual reality and drones.
“2016 will be another great year for consumers,” said Gary Shapiro, CTA president and CEO. “As more products become connected, we’ll be able to manage our lives in ways that weren’t possible even just a few years ago. The exponential growth of the IoT and the lightning-fast speed of innovation are key reasons we’ll see such strong growth across so many tech categories. Highly sophisticated technology is becoming more affordable and accessible – improving our safety, productivity and entertainment.”
While the CTA forecasts overall industry growth in 2016, the strong household penetration of mature categories, such as tablets, televisions, PCs and laptops, and continued industry innovation are declining or slowing growth and placing pressure on margins for some manufacturers and retailers. For example, despite a projected 65 per cent increase in revenue for ultra high-definition TVs in 2016, the CTA expects revenue for the overall TV market not to increase this year.
“Aggressive competition, longer product replacement cycles and disruptive innovation replacing legacy products create financial challenges for segments of our industry,” said Shapiro. “However, we believe newer categories, continuing innovation and improving economic conditions provide additional cause for industry optimism.”
The CTA’s consensus forecast reflects US factory sales to dealers and covers more than 300 tech products. The semi-annual report serves as a benchmark for the consumer technology industry, charting the size and growth of underlying categories.
IoT connectivity is transforming core consumer tech categories. In video, smart TVs are projected to sell 27 million units in 2016, a 13 per cent increase over 2015, and streaming media players will sell 15.8 million units (five per cent increase). Connected speakers and wireless headphones are the standout categories in audio. Unit sales of Bluetooth and Airplay-capable speakers are expected to reach 17.4 million units in 2016 – a 40 per cent increase – and $1.5bn in revenue, while sales of wireless headphones will reach 3.9 million in unit sales (increasing 30 per cent) and $623m in revenue.
The CTA expects the smart home technology category – including smart thermostats, smart smoke and CO2 detectors, IP and Wifi cameras, smart locks, smart home systems, and smart switches, dimmers and outlets – to reach 8.9 million units sold in 2016, a 21 per cent increase, with $1.2bn in revenue.
Led by the popularity of fitness activity trackers and smart watches, unit sales among all wearables in 2016 are forecast to reach 38.4 million units. Fitness activity tracker volumes will hit 17.4 million units in 2016 – a 12 per cent increase from 2015 – with revenues reaching $1.3bn. Smart watches are expected to increase 28 per cent to 13.6 million units, earning $3.7bn in revenue, an increase of 22 per cent.
As the dominant sales category in the industry, smartphone unit shipments are projected to reach 183 million this year, up five per cent from 2015. Smartphone revenues will reach $55bn in 2016, a four per cent increase from last year.
After significant growth and wide adoption over the past five years, tablet sales will continue to decline in 2016. The CTA projects unit sales to reach 60 million this year, a nine per cent decrease from 2015. Revenues are expected to hit $18bn, down 12 per cent.
After a banner year of sales growth in 2015 that saw LCD TV shipments climb ten per cent to top 39 million units, the TV market should reach a steady state in 2016. The CTA projects revenues will reach $19bn for all TV sets and displays in 2016, on par with 2015, as volumes drop one per cent to just under 40 million units. 2016 will be a phenomenal year for 4K ultra high-definition (UHD) TVs – driven in part by the market introduction of next-generation technologies – with shipments of 4K UHD displays projected to reach 13 million units, an 83 per cent increase. The CTA expects revenue from 4K UHD displays in 2016 to top $10bn, marking a 65 per cent increase.
Unit shipments of traditional laptops are estimated to reach 27.6 million units in 2016, a two per cent increase over 2015. Increasing sales of two-in-one computers (including both convertible laptops and detachable tablets) will drive this category’s growth, with 11.7 million units sold in 2016 (48 per cent growth over last year) and $8bn in revenue.
The CTA expects US sales of drones weighing more than 250g – the minimum for FAA-mandated registration – to reach one million units in 2016, a 145 per cent increase from 2015’s total. When adding drones weighing 250g or less to those totals, the total forecast for 2016 drone sales tops 2.8 million units (up 149 per cent from 2015) and $953m in shipment revenues, a 115 per cent increase from last year.
With several notable VR headsets coming to market in 2016, the CTA expects unit sales to increase by 500 per cent over last year, to reach 1.2 million units sold. Total revenues are projected to reach $540m, a 440 per cent increase.
An expanding diversity of 3D printing capabilities will drive the sector’s growth in 2016. The CTA expects 3D printer sales to increase 64 per cent from 2015, to reach 179,000 units sold, with total revenues of $152m, a 38 per cent increase.
“We are at a time when new tech categories can come out of seemingly nowhere and lead to disruption in the blink of an eye,” said Shawn DuBravac, chief economist and senior director of research at the CTA. “Digitisation is rapidly changing the landscape of our daily lives, and consumers are clearly choosing to infuse tech in all facets of their lives. As economic fundamentals improve – a strengthened labour market, solid consumer spending, lower energy prices – the tech industry’s bottom line will continue to surpass record unit and revenue levels in 2016.”