Amid all the cool and strange gadgets making their debut at this year’s Consumer Electronics Show -- test your pee at home! Add fragrance to your VR game! -- it’s sometimes easy to forget just how large a slice of the economy tech sales represents.
But it’s going to be a somewhat smaller slice this year, with the Consumer Technology Association, the trade group behind CES, projecting that retail revenues of technology products in the U.S. will fall to $485 billion this year, compared to $497 billion last year.
Sales set a record in 2021 at $512 billion.
And while the trade group acknowledges that both a potential recession and continuing inflation are likely to dampen spending, tech spending is still $50 billion higher than before the pandemic.
Sales of laptops, LCD TVs, tablets, smartphones and gaming consoles are all expected to be muted. One exception is OLED TV, a technology the association expects to add $2.3 billion in sales. Sales of home gaming consoles are also expected to slow, while portable gaming consoles are likely to spur $1.5 billion, up 41% from 2022.
The CTA sees three areas for significant growth:
*Technology services, including gaming, video, audio and apps, are expected to notch their fifth straight year of growth, creating $151 billion in sales.
*Automotive technology, with factory-installed tech forecast to grow 4% to $15.5 billion.
*Health and fitness technology, including fitness subscription services, digital therapeutics and recently approved over-the-counter hearing aids.
The NPD Group also published a forecast calling for a much more significant drop, at 5%, and remaining flat in 2024. It sees tech sales starting to grow again in 2025, forecast to gain 2%.
“The replacement cycle for many technology products is three to four years and, in some cases, more,” writes Paul Gagnon, vice president and technology industry advisor for the Port Washington, New York-based market research company. “That, in conjunction with challenging economic conditions, is slowing spending in the industry. Upgrade cycles for pandemic-driven purchases will ramp up in 2024.”
It predicts strength in unit sales of TVs, up in the low single digits, and home automation devices.