Consumer Tech Spending Will See Small Contraction in 2014
Lower average selling prices for millions of new smartphones and tablets will help keep the global market for technology in 2014 at 1% below the levels of last year, according to the Consumer Electronics Association.
Mon, January 06, 2014
Computerworld — LAS VEGAS -- Lower average selling prices for millions of new smartphones and tablets will help keep the global market for technology in 2014 at 1% below last year's level, according to the Consumer Electronics Association.
The global technology market reached $1.068 trillion in 2013, but will adjust downward by 1% to $1.055 trillion in 2014, said Steve Koenig, director of industry analysis at the CEA, which sponsors the annual International CES event opening here this week.
Together, smartphones and tablets make up 43% of the total consumer technology market, with smartphones well above 30% of the total and the largest category by far, when compared to TVs, wearable devices, PCs, cameras and other devices.
"Sales growth for tablets and smartphones is slowing, but remains robust compared to other technology categories," Koenig said in a presentation to journalists Sunday. "There's a general decline in average selling prices" for both smartphones and tablets.
The decline in prices is a necessity for device makers if they want to penetrate emerging markets outside the U.S., Europe and other developed countries, he said.
Associated with the price decline to serve such markets is another reality: The U.S. in 2013 dropped from the top spot in consumer technology spending, a position now held by China. China's ascendency is partly due to its population of 1.3 billion people. There are 160 cities in China with more than 1 million residents, compared with nine in North America, Koenig noted.
CEA believes that the number of tablets to be sold globally in 2014 will reach 340 million, up from 242 million in 2013. Two-thirds of all tablets have displays that are less than 9 inches in size, and smaller tablets cost less. Many smaller tablets sell for $199, which means that in some countries like the U.S., a single household can afford to own several tablets.
Smartphones, meanwhile, have dropped in average price from about $444 in 2010 to an expected $297 in 2014, CEA estimates. Fully 70% of all smartphones at those lower prices will be sold in emerging markets in 2014, Koenig said.
CEA believes that smartphones will reach 1.2 billion sold in 2013, up from 1.007 billion in 2012.
CEA said part of the reason that China has become such a vibrant tech market is that surveys show Chinese consumers are more enthusiastic about the role of technology in their lives. When asked if technology can provide the tools needed to succeed in life, 90% of Chinese surveyed agreed, compared to 55% in the U.S., Koenig said.