1b smart connected devices to be shipped to BRIC countries in 2014

The ASUS Transformer Book Trio is among the many smart devices launched at Computex.
The ASUS Transformer Book Trio is among the many smart devices launched at Computex.

At Computex in Taipei last week, tablets and mobile devices took centrestage. ASUS, maker of the Google Nexus 7, even introduced a tablet starting from just US$129. It looks like these vendors are right on track to tap a burgeoning demand for smart devices.

According to the International Data Corporation (IDCWorldwide Quarterly Smart Connected Device Tracker, global shipments of smart connected devices (PCs, tablets, and smartphones) are expected to surpass 1.7 billion units by 2014 with roughly 1 billion units delivered to emerging markets.

Within the emerging markets, the BRIC countries — China, India, Brazil, and Russia — are expected to generate shipments of 662 million units with a shipment value of more than US$206 billion. More than 650 million units are forecast to be shipped to developed markets, with the US, UK, and Japan capturing more than 400 million units with a shipment value of US$204 billion.

With the BRIC countries expected to surpass the total shipments to developed markets by 2014, it is clear that demand for smart connected devices is quickly shifting from developed to emerging markets. The emerging markets are expected to grow at a compound annual growth rate (CAGR) of 17 percent over the 2012-2017 forecast period, compared to the 7 percent CAGR expected in developed markets.

In terms of product categories, the smart connected device market will be largely driven by the growing demand for smartphones and tablets in both emerging and developed markets. Of the 1.7 billion units forecast to be shipped in 2014, more than 1.4 billion units are expected to be smartphones and tablets, representing more thanUS$500 billion in value. PCs, on the other hand, will be a comparatively small market with just over 300 million units shipped and a shipment value of less than US$200 billion.

“It is evident that smartphones and tablets have successfully established a strong presence as the ‘second screen’, owing to the transformation in usage patterns, device affordability, and, most of all, the comfort of a mobile and digital lifestyle,” said Megha Saini, Research Analyst with IDC’s Worldwide Smart Connected Device Tracker. “Vendors and OEMs need to be aware of the different usage patterns so as to drive product innovation that suits the tangible needs of their digital consumers.”

With the rise in global smartphone and tablet shipments, the average selling price (ASP) of these mobile computing devices is steadily decreasing. Tablet ASPs plummeted -19 percent year over year in 2012 to US$426, down from US$525 in 2011. Smartphone ASPs fell -8.2 percent year over year to US$407 in 2012, down from US$443 in 2011.

This pattern of decreasing price points is most prominent in emerging countries where IDC expects sub-US$300 smartphones and sub-US$350 tablets to drive huge shipments in 2014 and beyond. In developed markets, smartphones and tablets will continue to generate higher ASPs of US$490 and US$370, respectively, in 2014.

“Smartphone and tablet prices are now less prohibitive to first-time buyers in emerging markets,” said Bob O’Donnell, Program Vice President, Clients and Displays. “Although the double-digit growth of smartphones and tablets in emerging countries is a mouthwatering prospect, the low selling price also means that vendors will face huge struggles to meet the demands profitably. Given the competitive price points for cheaper smartphones and tablets, this price war is a race to the bottom and it’s not at all clear that this low-end market offers sustainable profits to smartphone and tablet vendors.”

Another factor fueling the growth of smart connected devices in emerging markets is the upsurge in the use of different mobile applications, such as mobile messaging, gaming, social networking, and social commerce, including mobile check-in services. Growing interest from governments, especially in education projects across countries like India, Thailand, Turkey, and the UAE, has also boosted the prospects of low-cost tablets for students in these regions. Indeed, the proliferation of cheaper, yet more capable devices, along with the deployment of 3G/4G services and changing usage patterns have been pivotal in driving the overall growth of smart connected devices in emerging markets.

 

 

Smart Connected Device Market by Product Category, Shipments, and Market Share, 2012-2017 (shipments in millions) 

Product Category

2012 Unit Shipments

2012 Market Share

2017 Unit Shipments*

2017 Market Share*

2012—2017 CAGR

Desktop PC

148.2

12.2%

123.8

5.3%

-3.5%

Portable PC

200.9

16.5%

209.5

9.0%

0.8%

Tablet

144.4

11.9%

410.3

17.7%

23.2%

Smartphone

722.4

59.4%

1,578.7

68.0%

16.9%

Total

1,216.1

100%

2,322.4

100%

13.8%

Source: IDC’s Worldwide Smart Connected Device Tracker Forecast Data, May 30, 2013

* Forecast estimates.

 

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