Artificial intelligence (AI) and fast connectivity – critical ingredients for the next era of category leaders such as smartphones, smart home devices and smart speakers – will drive the US consumer technology industry to a record-breaking $398-billion in retail revenues ($301-billion wholesale) in 2019 and 3,9% year-over-year (YOY) growth, which includes streaming services revenue, according to the Consumer Technology Association (CTA).

“The consumer tech sector is fast approaching another milestone – almost $400 billion in annual revenues – as more consumers embrace the efficiency, safety, entertainment and anytime/anywhere communication that technology brings to our everyday lives,” says Gary Shapiro, president and CEO of the CTA. “Our latest research shows innovations in AI and faster connectivity are among the key drivers for the industry’s record growth.”

Unveiled in advance of CES 2019, the latest edition of CTA’s flagship, semi-annual “US Consumer Technology Sales and Forecast” sreport reflects US factory sales-to-dealers for more than 300 consumer tech products and related software and services.

Among the products projected to contribute significantly to the consumer tech sector’s growth in 2019 are:

  • Smart Speakers: Voice-controlled smart speakers including Amazon Echo and Google Home are projected to sell 36,6-million units (5% YOY increase) and earn $3,2-billion in revenue (7% YOY growth). Although adoption is slowing due to rapid voice integration in other devices such as TVs, smart home devices and other audio products, smart speakers remain a category to watch as consumers embrace the benefits of AI in their home.
  • Smart Home: Products that address home monitoring and security are driving the smart home category. CTA expects category sales – including smart thermostats, smart smoke and carbon monoxide detectors, IP/WiFi cameras, smart locks and doorbells, smart home systems, and smart switches, dimmers and outlets – to reach 29,4-million units in 2019 (23% increase) and $4,6-billion (17% increase).
  • Wireless Earbuds: Wireless earbuds are a standout audio product, with double digit growth projected for the next few years. Devices including Apple AirPods and Bose SoundSport Free are expected to sell nearly 16-million units in 2019 (up 44%) and approach $2-billion in revenue this year (46% growth).
  • Smartwatches: As fitness tech companies shift their focus from basic trackers to more sophisticated smartwatches, this category is expected to see 20,5-million units shipping in 2019, a 25% increase over last year, with revenues of $4,7-billion, a 19% increase.
  • Drones: Total drone sales are expected to reach 3,4-million units (4% increase) and just over $1-billion in revenue (4% growth) in 2019, as more consumers and businesses adopt drones for aerial photography, drone racing and recreation.

“The future is bright for many tech products consumers already know and love, as stalwart revenue drivers including smartphones, laptops and televisions continue to innovate,” says Steve Koenig, vice-president of market research at CTA. “2019 will mark the introduction of 5G-enabled devices and smartphones and next-gen screen technology such as 8K UHD televisions to the market. And constantly-evolving content from streaming services that enhances the experience across ‘the three screens’ – TVs, smartphones, laptops – will help push consumer spending in tech to new levels.”

The top revenue drivers for the industry show continued success:

  • Smartphones: After the introduction of premium, flagship models from major manufacturers with rising average selling prices, smartphone revenue is expected to reach $80-billion, a 2% increase in 2019. Unit shipments are expected to grow one percent to 170,7-million. This year marks the launch of the first 5G smartphones on the market. CTA expects 2019 US sales will reach 2,1-million units and cross $1-billion in revenue. By 2022, 76% of all smartphones sold will be 5G-enabled.
  • Laptops: In 2019, the US laptop market will sell 51-million units, up 3% over last year, and earn $28,4-billion in revenue (unchanged from 2018). Convertible models and cloud-based laptops remain high-growth areas within computing, as consumers continue to upgrade to the latest operating systems.
  • Televisions: Overall, unit sales of total digital displays in 2019 will remain above 42-million units (1% decrease) and register $22,6-billion in revenue (2% increase). More than three-quarters of TV shipments will be sets with 40-inch screens or larger. Future upgrades will be driven by 4K Ultra High-Definition (4K UHD) sets, which now make up more than half of all TV unit sales. 4K UHD will sell 22-million units (14% increase) and $16,4-billion in revenue (8% increase). Raising the bar on resolution, inaugural shipments of 8K UHD TVs will reach $545-million in revenue. And budding OLED shipments will reach 1,4-million sets with double digit growth through 2022.
  • In-Vehicle Tech: With more technology built into new cars than ever before, factory-installed automotive technology is projected to contribute $17-billion in revenue (9% increase) in 2019. Led by in-vehicle entertainment and driver-assist features such as active collision avoidance, lane keep assist and adaptive cruise control, consumer demand for advanced safety features pave the road for the self-driving car of the future.

Consumer spending on music and video streaming services is valued at $26-billion in revenue, 25% higher than last year. The availability of live TV streaming and exclusive, award-winning content through subscription video streaming services will push consumer spending to $18-billion in 2019, up 27% from 2018. On-demand music services (such as Spotify, Pandora or Apple Music) will bring in an expected $7,7-billion in revenue, up 22% as providers race to gain subscribers.