The Consumer Technology Association (CTA) predicts that despite the third consecutive yr of declining numbers within the US
Finally, relative to hardware sales, total retail sales of the U.S. consumer technology industry will grow 1% to $505 billion in 2024, followed by 4.4% growth in 2025 to $527 billion.
This growth follows the contraction of the U.S. consumer technology market in 2023 and 2022 because of this of high inflation, slow economic growth and the impact on supply chains resulting from the pandemic, based on the CTA, which organizes the CES technology trade show in Las Vegas yearly.
The recent forecast represents a downward revision in percentage growth from the two.8% forecast in January.
Rick Kowalski, senior director of business intelligence on the CTA, said in an interview with GamesBeat that the group updates the forecast twice a yr. He said services will help drive industry sales in 2024, ahead of a possible hardware rebound in 2025.
“After two consecutive declines, the industry has seen some growth again,” Kowalski said. “Many of those declines (happened during years of declining hardware sales), but now we're seeing growth and are projecting pretty good growth of 4.4% in 2025.”
The growth is feasible partially because inflation has fallen, giving consumers a breather and the chance to spend a little bit more on products. Inflation is predicted to be 3% in 2024, in comparison with 3.4% in 2023. Inflation was 6.5% in 2022 and seven% in 2021, in comparison with 1.4% in 2020.
The 2025 cycle and beyond will mark the start of a serious technology alternative cycle, meaning equipment purchased throughout the pandemic – a part of a boom in technology spending sparked by the work-from-home movement – will turn into old and must be replaced, Kowalski said.
Deflationary tech products
More features and falling prices in lots of technology categories reflect the deflationary nature of the technology industry for the domestic economy. Over 750 million connected consumer technology devices can be shipped to the U.S. market this yr.
“Technology is inherently deflationary,” said Kowalski. “The pricing of technology products comparable to TVs, wireless earbuds and gaming hardware can’t be ignored. Technological innovations help industries develop more efficient strategies and encourage cost reductions and deflation. Looking ahead, we expect progress in
Artificial intelligence is predicted to drive growth in the buyer and enterprise technology sectors, increase efficiency and meet more consumer needs.”
Deflation within the technology industry is partly as a result of Moore's Law, a 1965 prediction by former Intel CEO Gordon Moore that the variety of components on a chip would double every few years as a result of technological advances. As semiconductor chips became miniaturized, the space between circuits became smaller. This meant electrical signals needed to travel shorter distances, and thus performance was higher. And with smaller circuits, chips may very well be smaller and use less material. This signifies that advances in chips – the muse of recent electronics – meant that chips could turn into faster, smaller, and cheaper at the identical time.
Of course, despite the pandemic's crazy supply chain problems, prices remained high and even rose as a result of parts shortages. Tech price deflation is an indication that Moore's Law is returning to normal.
While overall inflation within the U.S. was 3.4% in 2023, prices for a variety of consumer technology products fell that very same yr. Tech devices are amongst essentially the most deflationary items within the U.S. Consumer Price Index, consistently below core inflation.
According to CTA, prices for 4K Ultra HDTVs would fall 12% in 2023, while smart doorbells would fall 6%, wireless earbuds would fall 5%, and residential game consoles would fall 5%.
“Hardware price declines are normal for the industry,” said Kowalski. This also makes growth tougher.
Consumer spending on software and services accounts for one-third (33%) of total consumer technology, with six of the 12 major hardware categories examined expected to ship more units than in 2023, including computers (+3.6%), digital health devices (+1.2%) and digital cameras (+6.2%).
“Production alternative or replenishment for equipment that individuals bought throughout the pandemic – we’re seeing a rise in activity immediately,” Kowalski said.
The other possible reason for product updates is that AI is making its way into almost every product. AI PCs may very well be popular since the processing of AI programs and data takes place at the sting of the network, where privacy is simpler to implement than in centralized data centers. Other sorts of products, from smart glasses to massagers, are also implementing AI, making them more attractive.
“AI-enabled laptops can be popular this yr as recent models come out,” Kowalski said. “We see all the main processor manufacturers talking about their neural processing units being AI-enabled.”
While these AI PCs aren't way more expensive, the brand new features could prevent a faster price drop.
Notable trends
Dozens of AI-enabled laptops will hit the market in 2024. The U.S. market will ship 53 million laptops, up 4% from 2023. The PC market is saturated, Kowalski said, but laptops are sometimes among the finest sellers. PC makers tout a brand new gimmick yearly to sell recent products – and AI processing is a hot topic this yr.
Popular sporting events and greater availability of sports content on video platforms will drive spending on live TV streaming services up 11% this yr to almost $11.8 billion.
According to CTA, an increase in cross-platform games and indie titles, in addition to growing demand for subscription gaming services, will drive gaming spending to over $50 billion, up 3% from 2023.
methodology
Since 1967, the CTA has updated its forecast twice a yr for greater than 125 consumer technology services and products. This forecast serves as a benchmark for the buyer technology industry and highlights the scale and growth of the underlying categories and industry. Manufacturers and retailers use it to create product development plans, financial analysts use it to evaluate market opportunities, industry and general media use it to supply context for his or her reporting, government officials use it to know the scope of the industry to guide policy decisions, and the CTA itself uses it to focus on the industry's successes and challenges.
