The smart connected device (SCD) market has continued 2012’s accelerated rate of growth through 2013, according to IDC’s Quarterly SCD tracker just out. Key trends forecast by IDC between now and 2017 include a swing back towards bigger tablets and a continued boom in smartphones fuelled by steadily falling prices. There will also be growth in hybrids or ultra-portable laptops as prices fall there too.
IDC has aggregated laptops, PCs, tablets and smartphones for a couple of years now in the SCD category as a way of assessing overall trends in portable device ownership, smoothing out relative movements between the sectors. This does not work perfectly, because it fails to take account of differences in average unit prices between the sectors, but currently these are not that great, so there is not too much distortion. Hitherto smartphones, despite being smaller, have not been that much cheaper than tablets or PCs because of the cost of engineering all their features in a lesser footprint.
Total SCD shipments are heading for 1.556bn by the end of 2013, up 30.3% on the 1.194bn of 2012, which is actually a faster rate of growth than the previous year. Both desktops and laptops were down, respectively by 10% from 149.2m to 134.4m and 12% from 205.1m to 180.9m. But IDC anticipates, probably correctly, that declining ASPs (Average Selling Prices) for hybrid devices with attachable or detachable keyboards, as well as attractive ultra-lite laptops with tablet features such as near instant boot up, will give some uplift for the portable PC category. The key there will be falling prices to make such devices affordable after being launched at ridiculous levels up to $1,000 or more.
IDC predicts desktops continuing to decline by a further 8.4% to 123m by 2017, while laptops will be up 8.7% on the 2013 figure to 196.6m by 2017. Those figures both look off beam to us, with the PC decline likely to be sharper, but with a correspondingly bigger rise in ultra-portables, especially if say all Windows hybrids are lumped into the PC category. After all, as IDC notes, PC shipments are set to decline even in emerging markets and the corporate sector where they have done best in recent years, albeit more slowly than the general trend. And can you see anyone buying a replacement PC for the home in the near future, instead of more tablets?
Although much has been made of the tablet boom, smartphones were the biggest gainers by far in both revenue and unit sales during 2012, with shipments soaring past thebn mark to 1.013bn, up from 717.5bn a year earlier. This followed a year in 2011 when for the first time overall mobile phones unit sales were flat, as saturation was reached in basic handsets before smart phones became cheap enough to replace them. This created pent up demand for replacement, which has been fuelled with a vengeance by a steady price erosion in smart phones.
There is now strong growth in smartphone sales across all markets, although driven almost entirely by availability in new lower price brackets, with huge gains in the sub $200 sector, which only became significant in 2012. Total mobile phone shipments, including basic handsets, will be 1.8bn in 2012, with IDC predicting it will be 2.3bn in 2017, by then nearly all phones will be smartphones. It may be over optimistic this time, given that the impact of falling prices will drop off, while current heavy device subsidies from operators may also decline. Rates of replacement may decline with growing dependence on software and server based functionality. And some emerging market networks make it just not worth it to buy a smartphone.
On the tablet front, IDC anticipates slackening growth over the next four years. This may be influenced by the 2013 figure of 221.3m units coming in slightly lower than the original 227.4m forecast. But it is still 53.5% up on the previous year and we see no real reason for IDC’s expectation growth will slide to just 22.2% year on year in 2014 to a total of 270.5m units and then come down to single-digit percentages. IDC is now anticipating it will be at 386.3m units in 2017, down on its earlier forecast of 407m units.
But tablets are coming down in price with availability of lower priced models at different form factors. IDC is showing its colors (most of its revenue from these reports come from PC vendors) anticipating that as smartphones and tablets collide, with the former get bigger and the latter smaller, it will be smartphones that win out. That is, by no means, a certainty.
It predicts that the proliferation of large phones (Phablets) could well push consumers back toward bigger tablets as the difference between a 6-inch smartphone and a 7-inch tablet isn’t great enough to warrant purchasing both. In fact Samsung now has a 7 inch smartphone. Meanwhile Apple’s launch of the iPad Air, a much thinner and lighter version of its 9.7-inch product, could herald another market transition back toward larger screens. There is some evidence here that video viewing, rather than app usage, both combined with social media functions, has become how people use tablets. As more video is consumed, it is reasonable to think that larger screens are needed, but 7 inch form factors with screens that are high resolution, still give the clarity of a TV screen when held at arms-length.
This is all splitting hairs, for there is little difference between a 7 inch smartphone and tablet, other than in the emphasis placed on different functions or utilities, in particular battery life. We think tablets and smartphones will, by then, no longer being reported as separate categories and the same may go for hybrids.