Consumer spending on tech to reach US$1.32 trillion this year
If you ever thought the tech industry for consumers was beginning to wane, the International Data Corporation has some stats for you.
Consumer purchases of traditional and emerging technology is forecast to reach US$1.32 trillion in 2019 – an increase of 3.5% from 2018. What’s more, the industry is set to remain strong over the 2018-2022 forecast period, reaching $1.43 trillion in 2022 with a five-year compound annual growth rate (CAGR) of 3.0%.
According to IDC, traditional technologies – personal computing devices, mobile phones, and mobile telecom services – will account for more than 96% of all consumer spending in 2019. Mobile telecom services will represent more than half of this amount throughout the forecast, followed by mobile phones. Spending growth for traditional technologies will be relatively slow with a CAGR of 2.4% over the forecast period.
In contrast, emerging technologies, including AR/VR headsets, drones, robotic systems, smart home devices, and wearables, will deliver strong growth with a five-year CAGR of 20.6%. By 2022, IDC expects more than 5% of all consumer spending will be for these emerging technologies. Smart home devices and smart wearables will account for more than 80% of the overall spending on emerging technologies in 2019. Smart home devices will also be the fastest growing technology category with a five-year CAGR of 38.0%.
"Connected technologies are transforming consumers' activities and habits, becoming more and more integrated into their daily lives. This is fueling the consumer's unquenchable thirst for content and immersive experiences delivered anytime, anywhere, via multiple formats and across a myriad of channels,” says IDC customer insights & analysis program vice president Jessica Goepfert.
“As a result, we see the balance of power shifting in consumer-facing industries. Whereas once upon a time, the enterprise called the shots, more and more consumer demands and expectations are propelling innovation.”
In terms of what’s next for consumer transformation, Goepfert says it’s unclear.
“Even more widely adopted and mature activities such as listening to music and shopping are being disrupted by new technologies such as smart speakers. And disruption presents opportunity,” says Goepfert.
Communication will be the largest category of use cases for consumer technology, representing nearly half of all spending in 2019 and throughout the forecast. Most of this will go toward traditional voice and messaging services, joined by social networking and video chat as notable use cases within this category.
Entertainment will be the second largest category, accounting for nearly a quarter of all spending as consumers listen to music, edit and share photos and videos, download and play online games, and watch TV, videos, and movies.
The use cases that will see the fastest spending growth over the forecast period are augmented reality games (82.9% CAGR) and home automation (59.8% CAGR).
"There's an expectation among today's consumers for a seamless consumer experience. The connected consumer is no longer a passive one; the connected business buyer is in control and it's essential for technology providers to understand this if they want to continue to grow and gain market share in this digital age,” says IDC customer insights & analysis group research manager Stacey Soohoo.
“As technology becomes more affordable and accessible, the connected consumer is expected to spend more as they leverage these platforms for entertainment, education, social networking, commerce, and other purposes.”