Apple is likely to hit a pothole for sales of its iPad this year with one report estimating shipments will slump by 40 percent in this calendar quarter.
But it won’t just be Apple that will be hit by the slump, according to a report in Taiwanese wire Digitimes.
All manufacturers are likely to see a fall as shipments of large screen smartphones – so called phablets – start to erode the tablet market.
Digitimes quotes its own intelligence unit saying that shipments of tablets worldwide will be 244 million this year, a drop on last year of something like 11.8 percent.
The tablet market also faces competition from low end notebooks which are to some extent being subsidised by Microsoft and other vendors.
Tablets are not generally seen by people as products that need upgrading. Apple will have to rethink its strategy on the sector as it prepares to launch more iPad models this year.
Shipments of notebooks are only set to grow 0.6 percent in 2015, amounting to 174.6 million units, while sales of tablets will fall by 3.5 percent to 185.6 million units.
That’s according to Taiwanese market intelligence firm Trendforce, which said that this year notebook vendors struggled to gain market share this year by essentially engaging in a price war.
But Caroline Chen, a notebook analyst at the company, said that next year we’ll see an array of different products with tablets and low priced notebooks facing stiff competition from smartphones and so called phablets.
She thinks notebook vendors need to rethink their strategies.
Tablets didn’t do well this year and overall 366 million mobile PCs – a category that she defines as including notebook computers and tablets – shipped. That’s largely similar to sales last year.
Subsidies from major players like Microsoft, Google and Intel have skewed the market. Chromebooks, she thinks, will account for eight million units in 2015.
She said that because subsidies from Intel and Microsoft lower manufacturers’ costs, the subsidies benefit end users. “It would be better if Microsoft and Intel can find more substantial ways to develop the market,” she said.
Out of the 74.53 million tablets expected to ship during the current calendar quarter, the Apple iPad will take the lead with 26.8 percent of the worldwide shipments.
That’s according to Digitimes Research, which said that out of those 74.5 million tablets, 20 million will be iPads, 27.8 million will be from other multinational vendors such as Samsung and Lenovo, and 26.7 million will be so-called “white box” or unbranded units.
Taiwan is the ghost in the tablet machine and accounts for two thirds of the global market for tablets with firms like Foxconn, Pegatron, Compal and Quanta churning them out.
While figures for tablets shipping in the fourth quarter seem healthy, and rose by sequential quarter by 17.6 percent, if you compare the figures year on year, there’s a decline of shipments by 10.1 percent.
The pundits have many theories as to why the tablet market is showing signs of stalling, but the favourite is that in Western markets most people already have one or more tablet and see little or no reason to either buy more tablets or to upgrade.
And increased sales of smartphones with larger screens – so called phablets – are nibbling away at the tablet market.
Fingerprint sensing technology has been with us for some time. But it seems that smartphone and tablet giants Samsung and Apple want to promote it a little bit more.
Research outfit IHS said the fingerprint sensor market will grow to be worth $1.7 billion by 2020.
The number of handsets and tablets using fingerprint sensors will total 1.4 billion units – four times the number of the 317 million units that will ship by the end of this year.
While Apple has been at the forefront of fingerprint sensing to date, other vendors are going to pick up the baton, said IHS. Samsung hasn’t yet got to the starting gate but is expectedto do so as soon as it finds a smaller rectangular sensor.
But while fingerprint sensors will have their vogue, swipe sensors will continue to exist, particularly in lower end smartphones.
One important element that will push adoption of fingerprint sensors are financial companies – companies like Mastercard, Visa and Paypal think they will be ideal for mobile payments.
Fingerprint sensing was first pioneered by Japanese banks but saw the sunset when there were several incidents of gangsters chopping off the fingers of victims to access accounts at ATMs.
A unit at research company IHS has torn apart an iPhone 6 Plus and shows that though you’ll have to pay $100 more to buy 0.8 inches of screen, it only costs Apple $16 more to make.
That gives Apple an even bigger margin on this model than on others. That will please Apple shareholders.
The bill of materials of an iPhone 6 with 16HB of memory is $196.10, and the additional screen size makes the bill of materials $215.60.
Andrew Rassweiler, a senior director at IHS, said: “Apple has always been adept at offering higher end iPhone models with enhanced desirable features and then pricing those versions for maximum profitability.
“In the past, the premium versions of iPhone offered higher memory configurations for additional profit. While Apple continues this memory strategy, the company is also taking a similar with the iPhone Plus, structuring its pricing to add bottom line profits on models that have a very desirable feature: a large phablet sized display.”
IHS thinks that Apple is second sourcing the microprocessor, the A8, between TSMC and Samsung factories. The A8 chip in these latest models costs $20, compared to $17 for the previous versions that used an Apple A7 chip.
Here’s a breakdown of the component costs for the iPhone 5S and the new phones, courtesy of IHS:
Phablets are smartphones with screen sizes between 5.5 inches and seven inches. And, according to market research company IDC, 175 million of them will ship this year, beating the 170 million portable PCs expected to ship this year.
It’s a horrible word, phablet.
But next year the devices will ship 318 million units, more than the 233 million tablets IDC predicts will ship in 2015.
Melissa Chau, research manager at IDC, said Apple is expected to announce it’s entering the fray in the next couple of the weeks. And by 2018, she said, phablets will grow market share from 14 percent now to 32.2 percent then.
Average selling prices for phablets and smartphones are set to drop and will dominate the portable sector in 2018, with 75.6 percent of the market.