A report from ABI Research said that something like 285 million big tablet brands will have shipped by the time Hogmanay happens.
The US market has shipped 70 million tablets from the likes of Apple and Samsung – representing a tablet for every four people.
But Apple’s big chunk of the market is showing some signs of erosion. In 2013, 51 percent of the installed base is represented by Apple’s OS and 40 percent Android.
Samsung had 20 percent growth in the third quarter of 2013, said ABI Research.
Apple upped its ASPs by one percent but shipments fell by four percent compared to the previous quarter and revenues fell about three percent.
The worldwide semiconductor market is expected to grow 3 percent this year. The market has been seeing sequential growth for several consecutive quarters and most vendors believe they will end the year on a positive note, just barely.
“It has been a tough few years for the semiconductor industry. While we haven’t seen a dramatic decline in overall revenues since the 2008/2009 period the market has been pretty stagnant since 2010,” comments Peter Cooney, practice director. “We will see some growth in 2013 as the wider economic environment improves but major market growth is not expected until later in 2014, early 2015.”
The year will be remembered for several major mergers and acquisitions rather than record growth. Fujitsu and Panasonic semicon divisions are merging and Micron has scooped up Elpida. Intel has strengthened its portfolio with the ST-Ericsson GPU unit merger, while Broadcom bought Renesas Mobile’s LTE assets.
ABI Research noted that consolidation in the industry should come as no surprise, as chipmakers are forced to deal with far stiffer competition and lower margins.
“Margins are falling and the competitive environment is tough—especially in the mobile device market—this is driving vendors to re-evaluate their overall strategy and pull out of some of their once major markets. We have seen a number of major vendors exit the mobile device market – Freescale, TI, STMicroelectronics, and Renesas and we expect there are more to come,” said Cooney.
Shipments of budget smartphones are expected to see significant growth over the next five years, a report from ABI Research has found.
Low cost smartphones are defined as smartphones with a wholesale ASP below $200 and they are making significant inroads in OEM and carrier portfolios in emerging markets.
ABI expects shipments of such frugal smartphones to reach 238 million units. However, as emerging markets start to enter the fray, shipments will hit 758 million by 2018. Smartphone penetration in emerging markets, including BRIC countries, remains relatively low, so there is plenty of room for growth.
“Despite the low cost moniker, research has shown that the feature gap between low- and high-end smartphones is decreasing, making low cost smartphones a ‘good enough’ solution for price sensitive consumers in all markets,” says senior analyst Michael Morgan.
Oddly enough, big players don’t appear to be capitalizing on the trend. Much of the growth is coming from regional and Chinese OEMs, capable of delivering dual and quad-core phones below the $200 mark. Qualcomm is practically the only big name in the mobile industry to design a series of chips and reference designs for such phones. MediaTek is taking a similar approach and it’s making big gains.
However, cheap smartphones aren’t reserved for developing countries. Although most carriers and retailers in the west tend to place an emphasis on high-end devices, many users are going after cheap smartphones.
“We are increasingly seeing low cost smartphones appear as a solution for prepaid operators in developed markets,” adds senior practice director Jeff Orr. “By 2018, ABI Research believes low cost smartphones will account for 44 percent of all smartphone shipments as the market looks to capture the next billion smartphone users.”
Low cost OEMs like Alcatel, Huawei, ZTE and CoolPad stand to make a pretty penny on the trend, along with countless white-box outfits in mainland China.
As the smartphone juggernaut rumbles on, vendors are increasingly turning their efforts to emerging markets, with less disposable income and a much lower smartphone penetration rate. As smartphones are projected to outsell feature phones this year, the need for inexpensive smartphone designs is greater than ever and ABI Research reckons it will continue to grow.
ABI Research divides the smartphone market into three price brackets, low-cost smartphones priced at up to $250, mid range models in the sub-$400 price range and high-end devices, priced at $400+. Shipments of low-cost phones are expected to grow from 259 million this year to 788 million in 2018. Sales of high-end and mid-range phones are forecast to grow from 635 million to 925 million.
It is clear that there is a lot more room for growth in the low-end, and to some extent the mid-range. ABI Research estimates that low-cost units will account for 46 percent of all smartphone shipments by 2018, up from 28 percent last year.
Although most growth is expected in emerging markets, it is very likely that western consumers will change their habits as well. As smartphones mature it will become increasingly difficult to come up with very innovative designs and the lukewarm response to the Samsung Galaxy S4 and iPhone 5 might be a sign of things to come.
“As smartphone penetration moves from early adopters to mass-market and laggard consumer segments, the smartphone as a product will be less dependent on technical superiority, and more dependent on reliability and value,” said senior practice director, Jeff Orr.
Low-cost smartphones are expected to do exceptionally well in underdeveloped markets, with plenty of pre-paid users and very little in the way of subsidies. However, they could also play a role in developed markets, helping feature phone consumers convert to smartphones at a fraction of the cost of high-end gear.
A market research company said that tablets are set to cannibalise more PC sales as their popularity continues to grow.
ABI Research estimates that 145 million tablets will ship this year, with 50 percent of sales outside the USA. Price, new entrants to the market and increased shipments into enterprise will help drive the growth.
Business sales will account for as much of 19 percent during 2013, and a variety of slates using Intel chips and Windows 8 will begin to make more impact this year, according to Jeff Orr, senior director at ABI.
Meanwhile Israeii company Perion said it conducted a survey of 4,400 iPad users about how they used their machines. Ninety percent of those surveyed said they used their iPads to read and write email.
Women are more likely to read and write emails from their pads, while the favourite app is Apple Mail at 41 percent, Gmail at 31 percent and Hotmail at 13 percent. Eighteen percent of people use browsers to access webmail rather than using clients.