Revenues will drop by 2.2% in 2020, but consumer spending on streaming services and connected health devices will fare better than expected, says the Consumer Technology Association.
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The coronavirus pandemic and the resulting economic slump have impacted many industries with lower sales and weaker consumer demand. At the same time, the COVID-19 lockdown has triggered a greater need for products and services that can help people better stay and work at home. The US tech industry is one sector that will see its revenues drop this year even though certain segments will thrive as a result of the quarantine.
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In a report released on Monday, the Consumer Technology Association (CTA) forecast that US tech industry sales will dip to $406.8 billion in 2020, a decline of 2.2% from 2019. In projecting the decline, the CTA pointed to consumers struggling with economic uncertainty due to the coronavirus pandemic. In particular, sales of smartphones, laptops, and TVs will be hit.
Smartphone shipments are projected to drop by 6% to 153 million units, generating revenue of $72 billion. One break in the downturn will be 5G smartphones, with Apple and other vendors expected to unveil new devices in the fall. The CTA anticipates more than 14 million 5G phones will ship this year (a gain of 800% from last year), accounting for $11 billion in sales.
Though sales of laptops surged following the shift to remote working and stay-at-home orders, shipments are expected to fall by 2% this year to 52 million, with revenue dropping by 7% to $31 billion. In its forecast, the CTA cited reduced spending from both the consumer and enterprise markets.
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Purchases of televisions may grow for the year. But the increase won’t offset an overall annual decline due to financial conditions and the loss of live sports. For 2020, shipments of TVs will fall by 6% to 39 million while revenues will drop by 14% to $21 billion. On the plus side, 4K UHD TVs will carve out unit sales of around 25 million this year, a 10% increase from 2019. At the same time, sales of 8K UHD TVs will rise to 900,000 units, up 350% from last year when they were introduced in the US.
As the coronavirus lockdown has forced so many people to self-quarantine at home, certain tech products and services have benefited from a jump in consumer demand.
Spending on streaming and software services, including audio, video, and video gaming, are projected to hit a record high of $86 billion this year, up 14% from last year. Spending on video streaming services is expected to increase by 23% to $27 billion. Shipments of gaming consoles are forecast to rise by 5% to 13 million units, with revenues growing by 7% to $3.9 billion.
As people turn to podcasts, audiobooks, and music, revenues for audio services such as Apple Music, Pandora, and Spotify are forecast to rise by 21% to $8 billion. Spending on video game software and services are expected to hit $40 billion this year, up 10% from 2019.
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One segment likely to see more unit sales but lower revenues will be connected health devices. Shipments of health and fitness products such as smartwatches, fitness activity trackers, and connected health monitoring devices are forecast to rise 4% to 58 million units this year, but revenues will fall by 4% to $8.4 million.
As people monitor potential coronavirus symptoms and other conditions from home, the fastest growth in this segment has been with pulse oximeters, blood pressure monitors, and connected thermometers. As such, shipments of connected health monitoring devices are projected to rise by 75% to 10 million units, while sales are seen jumping 73% to $632 million.
Another beneficiary of the coronavirus quarantine will be wireless earbuds. More people are using these products as they work from home, while more devices are hitting the market at a wider range of prices. Wireless earbuds, including Apple AirPods and Samsung Galaxy Buds, could see unit sales surge by 50% to 67.5 million, with revenues rising by 29% to almost $8 billion in revenue.
This year’s decline in revenues will mark the tech industry’s first since 2009. But the CTA sees a rebound in 2021 with revenue growth of 5.2%.
CTA’s report reflects U.S. manufacturer shipments for more than 300 consumer tech products and related software and services. For its 2020 forecast, the CTA analyzed four factors: the longevity of the COVID-19 health crisis, the economic hardship placing downward pressure on consumer spending, unemployment rates, and supply chain issues.
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