The US consumer technology industry is set for a rebound, with the Consumer Technology Association (CTA) projecting a 1% growth in overall retail revenues in 2024, followed by a 4.4% growth in 2025. This positive outlook comes after two consecutive years of declines in hardware sales, which were attributed to high inflation, slow economic growth, and supply chain disruptions caused by the pandemic.
According to Rick Kowalski, senior director of business intelligence at the CTA, the new forecast is a downward revision from the initial 2.8% growth prediction in January. However, the industry is cautiously optimistic about the future, with Kowalski stating that services will help support sales in 2024, followed by a potential bounce back for hardware in 2025.
**Deflationary Tech Products and the Impact of Moore’s Law**
One of the key factors driving the rebound of the US consumer tech market is the deflationary nature of technology products. The CTA highlights that falling prices and increased features in various tech categories reflect the deflationary impact of the industry on the domestic economy. This can be attributed to technological innovation, which fosters cost reduction and deflation.
Technological advancements, such as Moore’s Law, have played a significant role in driving tech product deflation. Moore’s Law, formulated by former Intel CEO Gordon Moore in 1965, predicted that the number of components on a chip would double every couple of years due to tech advances. This led to the miniaturization of semiconductor chip features, resulting in faster performance, smaller chips, and lower production costs.
While the pandemic caused severe disruptions in the supply chain and led to increased prices for certain tech products, the industry is now seeing a return to normalcy. This is evident in the price declines observed in various consumer technology products in 2023. For example, 4K Ultra HDTVs declined by 12%, smart doorbells by 6%, wireless earbuds by 5%, and home game consoles by 5%.
**The Role of Services and AI in Driving Growth**
Consumer spending on software and services is a significant contributor to the US consumer technology market, accounting for one-third of total consumer technology. The CTA forecasts an increase in units shipped for several hardware categories in 2024, including computing, digital health devices, and digital cameras.
Additionally, the replacement or replenishment of devices purchased during the pandemic is expected to drive an uptick in activity. As equipment bought during the work-from-home movement starts to age, consumers will likely seek newer and more advanced tech products.
Another factor driving growth is the integration of artificial intelligence (AI) into various tech products. AI-enabled laptops, in particular, are expected to be popular in 2024, with major processor manufacturers focusing on AI processing capabilities. The implementation of AI in products such as smart glasses and massagers also adds to their appeal.
**Conclusion**
The US consumer technology industry is poised for growth in the coming years, despite recent declines in hardware sales. The CTA’s revised forecast predicts a 1% increase in overall retail revenues in 2024, followed by a 4.4% growth in 2025. The industry’s rebound can be attributed to factors such as falling prices, increased features, and the replacement cycle for tech products purchased during the pandemic. Additionally, the integration of AI in various products and the growing demand for software and services are expected to drive further growth. As the industry continues to evolve, technological innovation and deflationary trends will shape the future of consumer technology.
