It is going to be a flat year for devices, unless it isn’t

Written by on January 6, 2017 in Opinion with 0 Comments

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Bad news for mobile device makers: global shipments are expected to remain flat for the next couple of years. The good news: actually they won’t be flat if you ask customers if they plan to buy a new smartphone this year.

Confused? It’s all part of the fun of conflicting research results that come out at the same time.

On the doom-and-gloom side, Gartner said this week that combined shipments of PCs, tablets, ultramobiles (i.e. Microsoft’s Surface Pro, Lenovo Yoga 3 Pro, Apple’s MacBook Air, etc) and mobile phones are projected to remain flat in 2017 at around 2.3 billion. While some Asia-Pacific markets remain a growth source for mobile phones, overall the market is stagnating, says said Ranjit Atwal, research director at Gartner:

“As well as declining shipment growth for traditional devices, average selling prices are also beginning to stagnate because of market saturation and a slower rate of innovation,” added Atwal. “Consumers have fewer reasons to upgrade or buy traditional devices. They are seeking fresher experiences and applications in emerging categories such as head mounted displays (HMDs), virtual personal assistant (VPA) speakers and wearables.”

Worldwide devices shipments by device type, 2016-2019 (millions of units)

Device Type 2016 2017 2018 2019
Traditional PCs (Desk-Based and Notebook) 219 205 198 193
Ultramobiles (Premium) 49 61 74 85
PC Market 268 266 272 278
Ultramobiles (Basic and Utility) 168 165 166 166
Computing Devices Market 436 432 438 444
Mobile Phones 1,888 1,893 1,920 1,937
Total Devices Market 2,324 2,324 2,357 2,380

Atwal says that the mobile phone market will benefit from replacements, but replacement activity will differ in mature and emerging markets, the latter of which tend to view smartphones as their default computing/internet device and thus replace them more regularly.

However, a survey of 26,000 consumers in 26 countries from Accenture, released Wednesday, indicates that consumer purchases of smartphones will rebound this year, fueled by better security, new functions, improved performance and device refresh schedules.

According to Accenture, more than half (54%) of consumers surveyed said they plan to buy a smartphone in the next year, up from 48% in last year’s survey. China is the main driver of this upturn, with three-quarters (74%) of respondents in China saying they intend to purchase a smartphone in the coming 12 months, up from less than two-thirds (61%) in last year’s survey. The number of respondents in India and the United States who said they plan to buy a smartphone in the coming 12 months also increased by double digits over last year, to 79% in India (from 68% last year) and 52% in the United States (from 38% last year).

The reasons why they plan to get another smartphone include improved features and functions – particularly things like voice assistants – and falling prices, says David Sovie, global managing director for Accenture’s Electronics and High-Tech business.

“Growing acceptance of services powered by artificial intelligence, such as voice assistants, is also fueling this market upswing. 2017 will be the year when artificial intelligence goes mainstream in consumer devices,” Sovie added.

Accenture says that if anyone should be worried about consumer demand, it’s the firms that make specific types of connected devices, such as smartwatches and fitness monitors. The survey indicates that sales of those devices will remain sluggish in 2017 “due to high prices and persistent concerns about the security and privacy of their personal data.”

So are device sales in trouble? Only if you’re obsessed with hockey-stick growth charts. While there’s certainly going to be growing interest in digital services and trendy peripherals like AR/VR headsets in the next couple of years (and personally I predict that by this time next year the AR/VR space are likely to be in the same boat that smartwatches and fitness trackers are in now), mobile devices are still going to be central to the whole mobility paradigm. At worst, Gartner’s numbers indicate that OEMs will still sell a couple of billion mobile devices in the next few years, and they won’t sell less of them than they did in 2016.

Granted, that probably won’t be good enough for board members and investors. Still, considering what Samsung just went through in 2016, I would argue that any year where you can sell as many items as the previous year without any of them exploding is a good one.

This article was first published on our sister publication DisruptiveAsia.

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About the Author

About the Author: John is editor of Disruptive.Asia and was previously managing editor at Telecom Asia. He has been covering the Asia-Pacific telecoms industry since 1996. He has two degrees in telecommunications and has worked for six years in the US radio industry in various technical and advisory capacities, covering radio and satellite equipment maintenance, studio networking, news writing and production, the latter of which earned him several regional and national awards. .

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