CES: Consumer Electronics Spending To Slip In 2014

Complete Coverage: CES 2014

With the consumer electronics industry seeing slower growth in spending on smartphones and tablets, the Consumer Electronics Association predicts that global spending will fall slightly by about 1% to $1.055 trillion from the record levels of 2013.

In its annual predictions for the tech sector right before the start of CES International 2014, The North American market will also see a slight 1% decline in spending to about $254 billion, according to Steve Koenig, director of industry analysis at CEA.

CEA executives described the current period as a transitional one between the growth spurt produced by the introduction of smartphones and tablets in the last few years and the next big wave of innovation.

"We are waiting for the next cycle of innovation to lift us again," Koenig said.

On the tablet and smartphone front, unit sales will still be strong and overall spending will grow. But manufacturers are increasingly pushing less expensive products, which is slowing the rate of revenue growth at a time when no new "must-have" category of devices has emerged.

Slowing growth in mobile device revenue is important because smartphones and tablets will account for about 43% of all spending in 2014.

Overall only 8 product categories make up 79% of global spending.

In 2013, smaller 9-inch tablets accounted for about 66% of all tablet spending, Koenig said. Such tablets tend to be less expensive.

Meanwhile, global smartphone prices have fallen from about $444 in 2010 to $297 in 2010.

Still sales of both items will be strong and the group is predicting that tablet penetration in the U.S. will cross the 50% penetration level in the next few months.

TV sales meanwhile are expected to slightly rebound globally by 2% in 2014 to about $247 million and the group is expecting that the market will stabilize at around 260 million to 275 million sets per year.

Newer UltraHD sets will see major increases in sales this year to about 8.7 million units, but most of that action will occur outside the U.S. The CEA is predicting that about half a million UltraHD sets will be sold in the U.S. in 2014, up from just under 60,000 in 2013. Sales will increase to around 2.9 million in 2017.

Shawn DuBravac, chief economist and senior director of research at the CEA, praised the Hollywood studios, Google's YouTube and Netflix for expanding their 4K content but stressed that "we are very early in the rollout in UltraHD. With under 60,000 units sold in 2013 growing to half a million in 2014 it is still a very nascent market."

Overall, he expected that about 20,000 new products would debut at this year's CEA.