Watching video content is becoming an increasingly device-agnostic experience, taking place across smartphones, tablets, PCs and TVs. While linear TV’s last bastion is live content, as it has seen more and more viewing hours timeshift and placeshift over to other devices, viewing on TVs is falling.
We’ve long championed tablets (and phablets) as the main reason for this drop in viewing hours spent on the larger static screens, as the tablet (in combination with OTT and VoD) allows a viewer to watch video at their leisure – with pay TV operators having to adapt, albeit slowly. Now however, it looks like smartphones are eating into the sales of tablets, as IDC has slashed its growth forecast for tablet shipments. This is primarily as smart phones screen sizes have increased, so that they can be used just like a tablet.
IDC predicts that sales of PCs will fall 4.9% in 2015, to 293.1 million. Shipping 308.1 million units in 2014, IDC initially predicted a smaller 3.3% fall in sales. Its bad news as well in terms of revenue, with IDC saying the total PC market shrank 0.8% in 2014 to $201 billion, with 2019’s revenue expected to shrink to $175 billion, as well as declining 6.9% this year – prompting Intel to cut its quarterly revenue outlook by nearly $1 billion.
And with smartphones getting increasingly larger, as the most important computing platform in a majority of consumer lives, tablets are not really taking up the slack left by the misfortunes of the PC business. Bigger phones more capable of watching video on appear to be eating into the tablet sales, and IDC believes 234.5 million tablets and phablets will be shipped this year, up a little over 2% from the 2014 total. By comparison, IDC forecast 2014 tablet shipments would grow by 7%.
This is bad news for the segment, as IDC’s figures paint this growth figure as the future of the market until 2019. Gone are the days of double or even triple digit growth in this sector, as IDC now says the tablet and phablet shipments will grow at 2.1% CAGR to reach 269.4 million – meaning that the market cap for the tablet and phablet segment is really not very far away from maturation, at only another 35 million annual shipments. An increasing number of low-cost vendors are vying for those sales.
IDC takes the view that slowing tablet demand is a good thing for the PC makers, as “the PC ecosystem has also begun to see some fruits from efforts to narrow the divide between the PC and mobile devices in terms of both user experience and price points. Nevertheless, much more needs to be done as advances in both hardware and software are expected to benefit an ever wider spectrum of form factors, such as 2-in-1 devices that will further siphon demand from notebooks.”
So while PC shipments might recover by cannibalizing sales of tablets, it seems that the proliferation of WiFi outside of the home will make smartphones an increasingly indispensable device for consumers looking to consume video content on their terms – regardless of place or time. With OTT sinking its claws ever-deeper into the pay TV incumbents, the devices that will prove central to TV success will be portable and pocket-sized.