New research from International Data Corporation (IDC) shows that consumer tech spending will reach $1.69 trillion this year, an increase of 5.3% over 2018, and it will hit $2.06 trillion by 2023.

The IDC’s Worldwide Semiannual Connected Consumer Spending Guide, released today, shows that traditional and emerging technologies will remain strong through 2023, with a five-year compound annual growth rate (CAGR) of 5.1%.

Emerging technologies such as augmented reality (AR) and virtual reality (VR) headsets, drones, on-demand services, robotic systems, smart home devices and wearables will have an impressive five-year CAGR of 13.2%, representing nearly a third of all consumer spending by 2023. Roughly 90% of emerging technology purchases will be on smart home devices and on-demand services.

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Meanwhile, three-quarters of consumer technology spending will be on traditional technologies, but with a relatively slow CAGR of 2.2% through 2023. Mobile telecom services, both voice and data, will represent more than half of this throughout the five-year period, followed by mobile phones and personal computing devices.

“Advances in technology continue to drive what ‘convenience’ means today and in the future for connected consumers. Ranging from consumer robots for household cleaning and maintenance to smart lighting or home security/monitoring systems, connected consumers are adopting these solutions in their homes and everyday lives as they go through their own digital transformation,” said Stacey Soohoo, research manager with IDC’s customer insights and analysis group, in a press release.

“Meanwhile, companies are exploring new opportunities to interact with their consumers, finding the right mix of personalization and functionality to provide frictionless experiences,” Soohoo said in a press release. “Technology providers are also blending digital and physical experiences, and this includes an evolving area and new addition to IDC’s Worldwide Semiannual Connected Consumer Spending Guide: on-demand services. On-demand services enable access to networks, marketplaces, content, and other resources in the form of subscription-based services and includes services like Netflix, Hulu, Spotify and others. As connected consumers juggle multiple services across their devices, it is essential for technology providers to understand how the adoption of these various technologies and services will impact their consumer’s experience in the future.”

The two largest use cases for consumer tech will be communication and entertainment, representing more than 70% of all spending throughout the forecast period. Traditional voice and messaging services will reap in more than half of all communication spending. Watching or downloading TV, videos and movies will dominate entertainment spending, as well as listening to music and downloading and playing online games. The use cases that will see the fastest spending growth over the forecast period are augmented reality games (136.3% CAGR) and virtual reality video/feature viewing (47.3% CAGR).

“That consumers are connected through a myriad of devices is a given, but IDC’s Connected Consumer Spending Guide reveals what kinds of applications and experiences they are spending their money on while using a device,” said Ramon T. Llamas, research director, devices and displays at IDC, in a press release. “Communication and entertainment have long been the mainstays among consumers and will hold the leading positions throughout the forecast. Beyond them is a long list of emerging use cases whose spend will outpace the rest of the market, including augmented reality, virtual reality, and home automation. These highlight the direction that consumers are going and players throughout the ecosystem should plan ahead to capture this expected rise in demand.”

As for where the money will be spent, the US will be the largest market with consumer technology spending forecast to reach $412 billion in 2019, up 5.5% over 2018. China will be the second largest market in 2019 with spending expected to reach $328 billion, followed by Western Europe at $227 billion. Mobile telecom services and mobile phones will be the two largest categories in all three regions. China will also see the fastest spending growth with a five-year CAGR of 6.8%.

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