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CES 2017: Tech's Winners and Losers for the Coming Year

Consumers in the United States should spend a record amount on technology in 2017, driven by the Internet of Things (IoT), emerging technologies, and a willingness to get even more connected, according to a new report from the Consumer Technology Association (CTA).

The CTA, which puts on the annual Consumer Electronics Show (CES), released the latest edition of its twice-yearly report, "U.S. Consumer Technology Sales and Forecasts," on the eve of this year's show in Las Vegas. In the report, the trade association said it expects retail spending in the U.S. on technology to hit $292 billion in 2017.

That would be a record and growth of 1.5% year-over-year for the industry. The CTA expects the increase to be driven by sales of emerging technology products such as smart-home devices, wearables, and 4K Ultra HD televisions.

"Our forecast reinforces our belief that connectivity is going to be one of the driving trends of our time," said CTA CEO Gary Shapiro in a press release. "More and more consumers are discovering the remarkable benefits connected products deliver, providing anytime/anywhere access to information, entertainment and each other."

CTA CEO Gary Shapiro (left) gives an interview during CES Unveiled Las Vegas. Image source: CTA.

These are the expected 2017 tech winners

In a broad sense, the big winner for the upcoming year will be connected devices. That's a broad and growing category that includes everything from smart appliances to devices like Amazon's (NASDAQ: AMZN) Echo. CTA expects the total connected device market to hit 600 million units in 2017, a 5% year-over-year increase.

CTA forecasts major sales increases in a number of categories including:

  • Smart Home: CTA called this the "most popular means of IoT engagement" and predicts sales of 29 million units in 2017, a 63% percent increase over 2016.

  • Digital Assistants: This is where CTA slots Echo (which could arguably also be called a smart-home device). The Amazon product, which was a big seller over the Christmas season, leads a category expected to grow to 4.5 million units, a 52% year-over-year gain.
  • 4K Ultra High-Definition (4K UHD)Unlike 3D televisions, which never quite caught on, 4K UHD seems to be gaining traction. CTA expects shipments of 4K UHD displays to reach 15.6 million units in 2017, a 51% increase over 2016.

  • Virtual Reality (VR) and Augmented Reality (AR): This is the big winner in year-over-year growth (with a number of mainstream products released at the end of 2016). CTA expects sales of 2.5 million units, a 79% gain.

  • Drones: Despite rules restricting their use in many areas, drone sales will top 3.4 million units in 2017, according to the association, a 40% rise from last year.

"2016 was an important year of transition – with potentially game changing products including VR headsets and digital assistant devices gaining steam within mass consumer markets. I expect 2017 to be a year where many of these emerging tech categories find their footing and really take off," said CTA Chief Economist Shawn DuBravac.

These are technology's 2017 losers

Even using the term "loser" is relevant, but a number of mature technologies will see flat growth or declines, according to the CTA. These include televisions, which had a record 2016, but will see a 2% decrease in units sold in 2017, and tablets, a high-volume category that will decline by 5% as consumers wait longer to upgrade. In addition, laptops will be flat with 2016 and the desktop market will decline by 7% in volume and 8% in dollar value.

It's about adoption

Smart-home technology and connected devices have been around for a few years, but it took the Echo to give the category a much-needed push. It's likely that many early adopters bought the product as a music player above all else, but started using it as a digital assistant/smart-home device once they got comfortable with it.

In some ways, Amazon took a technology idea that first-adopters liked and brought it to the masses. That has led to a number of me-too products from other technology companies that will further push the category.

If these CTA predictions are correct, this could be the year where the IoT and connected homes move from science fiction and early adopters to near normal.

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Daniel Kline has no position in any stocks mentioned. He wrote this in the St. Louis airport while trying to get to CES. The Motley Fool owns shares of and recommends Amazon.com. The Motley Fool has a disclosure policy.