As consumer electronics and connectivity continue to spread into other areas and products, the category’s revenues will continue to grow.
According to the Consumer Electronics Association’s mid-year sales forecast, revenues for the CE industry will reach $211.3 billion this year (up 2%), driven by the entry of new device categories and overall connectivity.
“The overarching trend is [the growth] of connectivity and the Internet of Things. More and more devices are becoming connected, and that’s helping the industry,” Steve Koenig, director of industry analysis for the CEA, tells Marketing Daily. “New categories are also pouring billions and billions of new revenues into the industry.”
The 2% overall growth from 2013’s $207 billion is in line with projections the CEA made in January. Steady growth is expected to continue into 2015, which will see another 1.2% growth to $214 billion in overall industry revenues. Though the overall growth rate has slowed from 2011’s 7.7%, the CEA says it sees no indications the category will drop below $200 billion in annual revenues in the future.
The biggest bright spot are emerging technology categories, such as 3D printers, wearable technologies (like health and fitness devices and smart watches), ultra HD television displays and smart thermostats. These emerging categories are expected to see 242% year-over-year growth in 2014 and 108% growth in 2015 as more consumers become more familiar with the categories and more companies enter them. While emerging categories only represent less than 3% of the entire CE industry revenue, their $5 billion contribution is huge, considering that two years ago, these categories were too small to track.
Other categories, such as audio (which includes headphones, bluetooth and television sound bars), automotive electronics and gaming consoles will also see double-digit growth rates, according to the forecast.
“We’re also seeing what we once thought of as discreetly differentiated categories [becoming connected],” Koenig says. “These are more and more overlapping with consumer electronics, looking like a Venn diagram.”
The growth of new products is balanced by a leveling out of some older, more mature categories. Total television sales, for instance, will decline 5% in 2014 (though as a subset, Ultra HD TV is performing better than projected). While still accounting for 35% of overall industry revenues, smartphones and tablets, will see mixed growth (smartphone revenues are expected to be up 7% from 2014, while tablet revenues will be down 3% this year) as the categories mature.
“These top revenue-driving products, namely LCD flat panel TVs and mobile connected devices, can now be found in millions of households in a remarkably short amount of time,” Koenig says. “Tablets have only been around since 2010, and we’re now close to 50% in household penetration. That underscores the importance of consumer electronics in our daily lives, whether it’s for work or for play.”