Consumer Tech Facing 1st Revenue Decline Since 2009 on Virus, Supply Chain Woes

Retail consumer tech sales this year will fall 2.2% from 2019, the first revenue decline since 2009, said CTA’s biannual industry forecast Monday. Tech industry sales revenue is projected to be $406.8 billion in 2020 “as consumers struggle with economic uncertainty from the COVID-19 pandemic,” said the trade association.

The report factored four major considerations into the 2020 projections: longevity of the COVID-19 health crisis, economic hardship placing downward pressure on consumer spending, unemployment rates and supply chain issues. CTA is projecting a 5.2% rebound in 2021.

CEO Gary Shapiro cited the “indispensable role” technology played during social distancing mandates. Though economic uncertainty will affect earnings, “sales are close to stable,” which Shapiro called “an incredible feat given brick-and-mortar store closures and the skyrocketing rate of personal savings.” The tech industry is “resilient” and will help the country recover from the COVID crisis, he said.

The CE segment’s largest category -- smartphones -- will take a 6% hit this year in shipments and dollars, dropping to 153 million shipments worth $72 billion, said CTA. Following fall product announcements, more than 14 million 5G smartphones are seen shipping in 2020, generating $11 billion in revenue.

Despite a spike in sales during stay-at-home orders that pulled sales forward, laptop shipments will end up down 2% year on year to 52 million units, with revenue dropping 7% to $31 billion, said the report. TV sales were pulled forward in the first half but won’t offset an expected 14% revenue drop to $21 billion. TV shipments are forecast to decline 6% year on year due to the economic downturn and loss of live sports for much of the year. TV's 4K segment, with 25 million units, will have a 10% increase over 2019, and 8K TVs will ship over 900,000 units since their 2019 debut, it said.

Software and streaming services -- audio, video and video gaming -- are on track to reach a record high of some $86 billion this year, for 14% growth, benefiting from stay-at-home orders during the pandemic, said CTA. Consumer spending on video streaming services is expected to hit $27 billion for the year, up 23%. Audio -- including podcasts, audiobooks, music and streaming music services -- is tracking toward $8 billion, up 21%, by year-end. Video game software and services are pegged at $40 billion revenue, up 10%.

Do-it-yourself 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 have a 6% revenue decline to $13 billion. That’s despite a 12% shipment increase to 88 million units, led by smart displays, doorbells and door locks, CTA said.

Connected health technologies -- smartwatches, fitness trackers and monitoring devices -- are projected to rise 4% to 58 million units vs. 2019, but revenue will fall 4%, said CTA. Health-related devices with a surge in demand due to the pandemic are pulse oximeters, blood pressure monitors and connected thermometers. CTA expects a COVID-inspired bump in shipments of connected health monitoring devices this year, with units climbing 75% to 10 million; revenue is seen jumping 73% to $632 million.

The true wireless earbud category -- including Apple AirPods and Samsung Galaxy Buds -- is expected to grow by 29% to $8 billion in 2020 on sales of 67.5 million units, a 50% increase. Consumers are using the devices while working from home; a broad range of price points is helping to grow the category, it said. The anticipated release of next-generation gaming consoles should bring a 5% boost in shipments to 13 million, said CTA, with revenue forecast to grow 7% vs. 2019 to $3.9 billion.