The nation's leading technology trade group expects consumer spending on tech to keep growing, but headwinds from supply chain constraints add uncertainty to the forecast.
Speaking at a media-only event at CES, the annual trade show put on by the Consumer Technology Association, CTA Vice President of Research Steve Koenig said revenue in the consumer tech industry is set to reach $505 billion for 2022, up 2.8% from 2021. By comparison, revenue for the tech industry jumped 9.6% in 2021 and 7% in 2020.
CES began its exclusive media events in Las Vegas on Jan. 3, outlining major tech industry trends to watch in the coming year, as well as providing a sampling of exhibitors in the U.S. and around the world. The show opens for consumers on Jan. 5 as the U.S. faces a notable uptick in COVID-19 cases.
Koenig said software services revenues, in particular, rose 11.4% year over year for 2021, while hardware saw a 9% increase in the same period.
Additionally, consumers surveyed in the U.S. and Europe broadly indicated that they plan to stick with pandemic-era tech services — notably food delivery, streaming and wellness products.
"Everybody is looking to do things easier; work smarter, not harder. So they've been leveling up their tech to live a more 21st century lifestyle in the season of the pandemic," Koenig said in his remarks.
Tech's pandemic-era mainstays have also drawn attention from investors, Koenig later added, citing CTA research showing that venture funding for tech startups skyrocketed 105% between the third quarter of 2020 and the same period in 2021, reaching $158.2 billion.
More chips!
One thing that is likely to continue impacting the industry is the ongoing chip shortage and supply chain issue. Koenig said there are no immediate signs of a resolution but added that some shipping costs have decreased for small and medium-sized businesses, though he did not elaborate on specific cost structures.
The chip shortage has caused semiconductor lead times to increase by nearly six months between October 2020 and September 2021.
The building of new semiconductor fabrication plants would be the best long-term solution to the chip problem, with more facilities scheduled to begin operating by the middle of the decade, according to Koenig's onstage remarks.
Koenig later told S&P Global Market Intelligence in an interview that those new plants would play a major role in enabling next-gen electric automobiles and airplanes due to innovations in chip aggregation, where multiple functions that would normally require the use of several chips are packaged onto a single chip instead.
"It's going to take time, but I do think that the pace of innovation continues and we will see these products come to market," he said.
Inside the metaverse
Metaverse technologies — such as virtual reality, augmented reality, 5G and blockchain — will play major roles at CES and in society in the years to come, but a generalized consensus of what the metaverse is has yet to be fully realized.
"It's going to evolve probably over the next 20 years," Koenig told Market Intelligence. Facebook parent Meta Platforms Inc. rebranded in October 2021 while facing scrutiny over its core Facebook and Instagram products. Company CEO and Chairman Mark Zuckerberg previously said the concept remains five to 10 years away from fruition.
In a media-only preview space at CES, some exhibitors have utilized these technologies in their product lineups but not necessarily for what they deem as metaverse purposes.
Outside the metaverse
One example is the Crura product manufactured by France-based ActivMotion SAS, a hands-free sound device that wraps around a user's head and is mounted at the back of their ears. Its intent is for workplace communication and productivity purposes, allowing one to hear sounds from the device while enabling them to talk to others in-person without interference or distraction.
Pascal Sabatier, ActivMotion's associate CEO, refers to the technology as "audio augmented reality," pivoting from traditional views on AR that are often centered on visualizations and not auditory adaptions. When asked if the company considers itself to be a metaverse technology, he replied, "If you are talking about VR, the answer is no."
Another similar case pops up in a product designed to help users determine what eyeglasses to pick out without having to remove their physical pair of glasses. FittingBox SAS, a virtual try-on company, utilizes "diminished reality" that makes a physical pair of eyeglasses disappear and has users virtually "try on" another pair, as explained by Stéphanie Loutfi, the company's strategy and product marketing manager.
Its global client base is mainly made up of fashion companies, including Louis Vuitton. The company's clientele also includes retail chains and major eyewear players, said Loutfi.
Whatever it may be, office productivity, or perhaps e-commerce and fashion, the concept still has no formal definition.
"The metaverse is an evolutionary story, not a build-it story," Koenig later said in the interview, referencing how society views the internet today versus in the 1990s with dial-up modems.
"Is it going to be more social media, like with Meta? Is it going to be more of a consumer thing? Or is the enterprise really going to latch on this, like virtualized online training or seminars for customers?" he mused. "I don't know. But these are cool, new things, and I think consumers are gonna be into that."