Rising volume can’t keep up with falling prices.
Global consumer technology sales hit $1.1 trillion last year, but will slip back a few billion dollars in 2014. That’s the top line forecast from the Consumer Electronics Association, which represents the industry in the U.S. and organises CES, which is getting underway now in Las Vegas.
Smart phones and tablets have driven the market for the past four years, and are expected to account for 43% of global technology sales in 2014, dwarfing televisions and personal computers. But even so, overall revenue is weakening.
“Sales growth for tablets and smart phones is slowing” said Steve Koenig, an industry analyst with CEA. “Volume and growth is becoming increasingly reliant on lower end devices. Lower end devices are what’s required to penetrate developing markets”.
Developing markets, like China, are pulling ahead of traditional powerhouses like North America (expected to slide 1% in 2014) and Europe (down 6%). And the action is around mobile devices, not television sets. Smart phones are at the top of Chinese consumers’ wish lists, with 59% saying they want to buy one. The least desired products are HDTVs, with only 32% expressing interest.
Prices will continue to slide, as Chinese manufacturers pump up sales in the domestic market. In 2010, the average unsubsidised price of a smart phone was $444 globally. Last year, it was $345, and it’s expected to fall under $300 in 2014. As prices fall and global unit sales climb, overall revenue from smart phones and tablets is still expected to grow, by 6% and 9% respectively, but that’s slower than 2013, which those figures were 27% and 30%. With other product categories weakening, the overall result will be a 1% drop in total consumer technology sales in the coming year, according to Koenig.