Smart Home Devices

A Report on the Home Electronics Market
Written by Nate Hendley

Earlier this year, CES 2018 took place in Las Vegas, Nevada. The exposition was launched in 1967 and originally named the Consumer Electronics Show. This is one of the flagship events of the home electronics sector. Some 182,198 industry representatives and 4,598 exhibiting companies attended CES 2018.
Simply put, home electronics – also called consumer electronics – are electronic devices used by consumers in everyday life for entertainment, communications, or working at home. Popular home electronic goods would include MP3 players, digital cameras, camcorders, video game consoles, DVD players, smartphones, laptops, computers, printers, or paper shredders.

In a January 16, 2018 article, Forbes magazine cited health sensors, convertible tablets, and micro-LED TVs as some of the top technology trends at CES 2018. Health sensors are wearable devices that monitor a person’s health, store medical data, and give automated warnings if they sense something like a cardiac arrest. Convertible tablets can work as laptops with foldable features such as keyboards that can be positioned according to user preference.

“Convertibles offer a higher degree of functionality than tablets alone, so look for that tech trend to continue to boom this year,” noted Forbes.

Micro LED TVs, meanwhile, are also intriguingly futuristic. “No, LED TVs aren’t new, but what about micro LEDs? In these devices, LEDs are tiny – thinner, in fact, than a strand of human hair. They also produce their own light, an important factor when it comes to contrast. They consume less power too,” stated Forbes.

Of all the trends at CES 2018, however, the growing acceptance of ‘smart home’ products was arguably the most significant. Amazon’s Alexa virtual assistant technology, incorporated in the company’s Echo and Echo Dot ‘smart’ speaker systems, epitomizes this growing field. Consumers can verbally command Alexa to dim lights, play music, maintain to-do lists, and provide sports scores or news reports.

“When you think of the smart home device market, you probably think of Amazon’s Alexa tiny – and for good reason. In 2018, though, look for the competition to increase, especially from products that can connect to the big three tiny – Amazon Echo, Google Home, and Apple HomeKit,” reported Forbes.

Forbes’ observations are particularly noteworthy because CES has an impressive reputation for showcasing emerging products and technologies. Products introduced at the show include videocassette recorders (VCRs) in 1970, digital versatile discs (DVDs) in 1996, and high definition television (HDTV), two years later.

CES is hosted by the Consumer Technology Association (CTA), a trade association representing the huge American consumer technology industry. This industry, which includes home electronics, is currently worth an estimated $351 billion and employs over fifteen million people in the U.S. The CTA represents more than 2,200 firms, roughly eighty percent of which are small businesses or startups.

The CTA also publishes detailed reports about home electronics and consumer technology. This summer, for example, the organization released an update of its U.S. Consumer Technology Sales and Forecasts report. The update predicts a red-hot market.

“Artificial intelligence (AI), voice-recognition technology and fast connectivity – critical ingredients for smart speakers, smart home technologies, and smartphones – will help spur overall U.S. consumer technology industry revenue to $377 billion in retail revenues in 2018, a six percent increase,” reads the report.

Sales figures cited in the report give credence to Forbes’ selection of major tech trends at CES 2018. “Convertible models and cloud-based laptops remain a high-growth area within computing. Unit sales for laptops are projected to sell 50.1 million units (three percent growth) and earn $28.4 billion in revenue (relatively unchanged from 2017),” notes the U.S. Consumer Technology Sales and Forecasts document. Wearables such as “fitness activity trackers, other health and fitness devices, smart watches, personal sound amplification products, and sports tech,” will achieve “sales of 46.1 million units in 2018 (nine percent increase) and earn $6.4 billion (ten percent increase),” adds the report.

And of course, smartphones remain as popular as ever. “In recognition of rising average wholesale prices, CTA upwardly adjusted 2017 and 2018 smartphone revenue to $69 billion and $78 billion respectively, reflecting a thirteen percent revenue increase in 2018. Unit shipments are expected to grow one percent to 169.4 million in 2018,” states the CTA.

Like Forbes, the U.S. Consumer Technology Sales and Forecasts report singles out smart home products for scrutiny.

Smart home speaker systems such as Amazon Echo “are experiencing a meteoric rise not seen since tablets. CTA expects the category to sell 39.2 million units (44 percent growth over 2017) and reach $3.2 billion in revenue (64 percent growth) after only three years on the market.”

Other smart home electronics including ‘smart’ locks and doorbells, thermostats, carbon monoxide and smoke detectors, light switches and dimmers are also becoming must-have items for tech-savvy consumers. Overall sales of such smart home devices “will reach 41.2 million units in 2018 (a 43 percent increase over 2017), earning $4.6 billion (36 percent increase),” says the U.S. Consumer Technology Sales and Forecasts report. The growing acceptance of computerized voice technology is driving demand for such products, adds the CTA.

Consumers are buying many of their home electronic products online rather than in-person. A report issued in August 2018 by NPD Group, which does business and marketing research, cited a sixteen percent increase in Internet-based sales of consumer electronics within the past year. The study also found that the amount spent per online consumer electronics purchase decreased by seven percent in the same period.

“Growing online purchase frequency – especially for phone cases, screen protectors, portable chargers, wired headphones, and other lower-priced grab-and-go items – is shifting customer traffic from in-store to online. This is why today’s retailers are focused on driving consumers into their physical stores for TVs and other big-ticket, highly interactive purchases, allowing the online channel to focus on more transactional consumer interactions,” stated Steven Baker, vice president and industry advisor for the NPD Group, in a press release.

While home electronics might epitomize leading-edge technology, such products originate as raw materials mined from the earth. Circuit boards in mobile phones are made from silicon, oil-derived plastics, and metals such as nickel, zinc, and lead. Rechargeable mobile phone batteries are fashioned from nickel, zinc, lithium, and cobalt, among other things, while liquid crystal displays (LCDs) require glass, liquid crystalline, mercury, and plastic.

A December 29, 2016 feature in the New York Times offers a detailed description of how mobile phones are actually built. The article centers on Apple iPhones, the company’s “most profitable and best-selling product. More than a billion have been sold since the first one was released.” As of two years ago, roughly fifty percent of the world’s iPhones were made in Zhengzhou, China.

“Apple buys many of the components for iPhones – like the memory chip, the modem, the camera module, the microphone, and touch-screen controller – from more than two hundred suppliers around the world. Foxconn, the Taiwanese company that runs the Zhengzhou facility, produces some smaller parts, such as metal casings,” states the Times. “Apple orders many of the components from global suppliers and then sells them en masse to one of its contract manufactures based in China.

“There are ninety-four production lines at the Zhengzhou manufacturing site, and it takes about four hundred steps to assemble the iPhone, including polishing, soldering, drilling, and fitting screws. The facility can produce 500,000 iPhones a day or roughly 350 a minute… After the iPhone rolls off the assembly line, it is placed in a sleek white fiberboard box, wrapped, and put on a wooden pallet, and then wheeled out to waiting trucks.”

An article on ‘How Stuff Works’ reports a similar process for making computers. Using information from Toshiba, the piece notes how computers are manufactured from materials such as bauxite, glass, silica sand, iron ore, gold, and steel.

The ‘brain’ of the computer, known as the central processing unit or CPU, is “mostly made of crystalline silicon which can be sourced from common sand. First, that silicon must be purified. This is one of the most critical steps because even a minute trace of impurities can cause chips to fail. Once in purified form, the silicon is formed into wafers, which are simply thin sheets of crystalline material… Then the CPU maker etches or imprints lines onto the surface of the wafer. This process is followed by the actual placing of transistors and circuits,” states the article.

At present, a vast number of home electronic products are made in China, largely because it is a low-cost locale for labour. China is also a popular hotspot for making mobile phones because it has abundant supplies of rare earth minerals.

As for the near future, it is safe to say that soaring demand for smart home products, among other hot consumer goods, will spur further growth in the home electronics sector.

“Although tariffs and trade war threaten to unravel the strong economic momentum driving tech adoption and sales, the current state of the industry is exciting and healthy going into the second half of the year,” stated CTA President and CEO Gary Shapiro in a July 2018 press release.



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