U.S. tech industry revenue to decline 2.2%
2020 spending falls in 2020 amid pandemic says CTA
Technology industry retail sales revenue will reach $406.8-billion in 2020 in the U.S. – a 2.2% decline year-over-year – as consumers struggle with economic uncertainty from the COVID-19 pandemic, according to a new report by the Consumer Technology Association (CTA). The report also finds consumer spending on streaming services and connected health devices will perform better than expected amid the pandemic.
While this year’s revenue decline marks the industry’s first since 2009, the tech industry’s 2.2% loss in 2020 reflects its strength relative to the overall U.S. economy’s anticipated rate of decline. Looking ahead to 2021, CTA projects tech industry revenue will rebound with projected revenue growth of 5.2%.
“The tech sector is an industry of solutions, playing an indispensable role in our lives during a difficult time,” said Gary Shapiro, president and CEO, CTA. “Technology innovations have kept us connected, productive and entertained during social distancing. While today’s economic uncertainty will impact the bottom line, sales are close to stable — an incredible feat given brick-and-mortar store closures and the skyrocketing rate of personal savings. The tech industry is resilient and will help our nation recover from this crisis.”
CTA’s twice-yearly U.S. Consumer Technology One-Year Industry Forecast reflects U.S. manufacturer shipments for more than 300 consumer tech products and related software and services. factored four major considerations into the 2020 projections, including longevity of the COVID-19 health crisis, economic hardship placing downward pressure on consumer spending, unemployment rates and supply chain issues.
Software and Streaming Services – Spending on streaming and software services including audio, video and video gaming have risen amid stay-at-home orders, and are projected to reach a record high of $86 billion in 2020 (14% growth over last year).
* Video: Millions of American households have turned to video streaming services for entertainment during the pandemic, pushing consumer spending to $27 billion in 2020, up 23% over last year.
* Audio: With consumers embracing podcasts, audio books and music, audio services such as Apple Music, Pandora and Spotify will reach $8 billion in revenue, up 21%.
* Video Gaming: Also witnessing growth as Americans shelter in place, the video game software and services category will reach $40 billion in revenue this year, up 10%.
Connected Health: Shipments of health and fitness technologies such as smartwatches, fitness activity trackers and connected health monitoring devices are projected to rise to 58 million units in 2020, up 4% over last year, reaching $8.4 million in revenue (down 4%). The devices seeing the fastest growth include pulse oximeters, blood pressure monitors and connected thermometers. As a result of consumers monitoring potential COVID-19 symptoms and an increase in people managing chronic conditions from home, shipments of connected health monitoring devices will grow to 10 million units in 2020 (up 75%) and earn $632 million in revenue (up 73%).
True Wireless Earbuds: Devices such as Apple AirPods or Samsung Galaxy Buds will see strong growth in 2020, selling 67.5 million total units in 2020 (up 50%), earning almost $8 billion in revenue (up 29%). Millions of Americans use these devices as they work from home, and devices at various price points are coming on the market.
Gaming Consoles: The highly anticipated release of the next generation of home gaming consoles this fall will boost 2020 shipments to 13 million units, a 5% increase over last year, earning $3.9 billion in revenue (up 7%).
“Technology brings undeniable value during a time like this,” said Richard Kowalski, director of industry analysis and business intelligence, CTA. “While there is uncertainty and risk, we see so many bright spots in the tech industry as consumers embrace technology to keep connected, stay healthy and have fun.”
Top Revenue Categories
Smartphones: The pandemic and resulting economic downturn will impact smartphones, the largest revenue generator in the industry. Shipments will decrease 6% to 153 million units, earning $72 billion in revenue (down 6% over last year). A bright spot in this market will be 5G smartphones, with major product announcements expected in the fall. Over 14 million 5G smartphones are expected to ship in 2020 (800% growth over last year) and generate $11 billion in revenue (a 665% jump), following last year’s market introduction.
Laptops: Despite a surge during stay-at-home orders that pulled sales forward, laptop shipments will be down 2% over last year to 52 million units, and earn $31 billion in revenue (down 7%), as result of reduced consumer and enterprise spending.
Televisions: Similar to laptops, purchases of TVs were also pulled forward for the year, but the jump in sales will not offset an expected annual decline due to the economic downturn and loss of live sports. Overall, TV manufacturers will ship 39 million units in 2020 (a 6% decrease from 2019) and earn $21 billion in revenue (down 14%). Growth areas for TV sales in 2020 include 4K Ultra High-Definition (4K UHD) TVs, which will account for about 25 million units (a 10% increase over last year) and 8K UHD TVs which will ship over 900,000 units (up 350% since last year’s U.S. market introduction).
DIY Smart Home Products: Now among the largest revenue-generating categories, DIY smart home product sales – such as smart speakers and displays, smart appliances, smart doorbells and locks, Wi-Fi cameras, smart thermostats and home robots – will rise to 88 million units (12% growth) and $13 billion (6% decrease). Category growth drivers include smart displays, smart doorbells and smart door locks