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October 31, 2013

Worldwide Tablet Shipments to Increase 53.4 Percent in 2013 - But PCs? Not So Lucky.

New Gartner research that was recently released points to the continued worldwide decline of PCs in 2013, while tablets appear to be truly ascendant. Worldwide shipments of all computing devices (PCs, tablets and mobile phones) will nevertheless increase 4.5 percent over 2012. Gartner projects that total shipments will reach 2.32 billion units in 2013. That is a relatively astounding number, but it does include numerous low cost devices. In fact, Gartner underscores that the overall worldwide market going forward will clearly be driven by a shift to lower-priced devices in nearly all device categories.

PCs (specifically desktops and laptops of all shapes and sizes, with the exception of Ultrabooks) will see an 11.2 percent decline in shipments. However, that decline is relative - Gartner still forecasts that an enormous 303.1 million PCs will ship in 2013. That is still quite a drop from 2012's 341.3 million shipped units.

Meanwhile, Ultrabooks - super lightweight laptops with certain tablet-like characteristics, which were expected to take up the decline in desktops and larger laptops - will in fact grow substantially in units shipped through the end of the forecast period, 2014. However they will not keep pace with the total decline in PC shipments, as the chart below notes.

The chart clearly continues to show a great deal of growth for mobile phones, but that number isn't particularly interesting. At some point in the future we will have achieved near universal global saturation and mobile phone numbers will inexorably head in that direction of total global saturation. As the numbers show mobile phone shipments are projected to grow 3.7 percent, with volume of more than 1.81 billion units in 2013 and 1.9 billion in 2014.

Pricing is an interesting issue for the mobile phone market. Regardless of the steady growth noted above - and regardless of how Apple prices its iPhones - Gartner says that the opportunity for high average selling price (ASP) for high end smartphones is now ending. Growth is expected to come from mid-tier smartphones (which in fact is what the Apple 5c is) in mature markets and low-end Android smartphones in emerging markets.

Tablets Growth is Huge

Rather, the far more interesting numbers are those that forecast tablet growth. Tablet shipments are expected to grow a huge 53.4 percent this year alone, with shipments projected by Gartner to reach 184.4 million units. For 2014 Gartner is forecasting tablet shipments of 263.2 million, an even more substantial leap.

Premium tablets are faced with continued price decline in the 7" form factor, as a larger number of consumers prefer smaller form factors when it comes to content consumption. That is interesting to note, especially in light of Apple increasing the cost of its iPad with retina display to $399, even as Google and Amazon drive 7" prices down to $229.

Gartner recently conducted a substantial global consumer survey consisting of 21,000 respondents across Brazil, China, France, Germany, Italy, the U.K., the U.S. and Japan. Gartner claims that the research has confirmed Gartner's own long-standing assumption that when it comes to consumer tablets, smaller is clearly better. The survey uncovered that the "average screen size" of the tablets in use across the countries noted ranged from 8.3 to 9.5 inches. However, a hefty 47 percent of respondents said they owned a tablet that was 8 inches or less in size.

Mobile OS Influences

Android will remain the leading mobile operating system, as it is on pace to account for 38 percent of shipments in 2013, as the chart below indicates. The collective Windows OS segment is projected to decline 4.3 percent in 2013, which is due entirely to the decline in traditional PC sales, but the segment will return to growth in 2014 as mobile OS shipments increase 9.7 percent.

Gartner says that Microsoft's acquisition of Nokia does not have a major impact on its Windows forecast, as Gartner already assumed that Nokia would have accounted for the vast majority of Windows Phone share throughout the forecast. Gartner further assumed that only minimal volume would come from other OEMs, such as HTC or Samsung.

The bottom line is that tablets are clearly a device segment to be reckoned with. It will be interesting to see how Apple continues to fare here. Although collectively all Android makers combined outsell iPads, the iPad is still - as the just announced iPad Air makes quite clear (and as do the many reviews that simply call it the best tablet yet made) - the state of the art tablet against which every other tablet must be judged. And it owns the single largest share of sales for specific products.

Finally it is worth noting that Apple CEO Tim Cook stated in no uncertain terms, during Apple's latest earnings call, that the tablet market is still in its early days and will be a huge market ongoing. Yes indeed, Gartner has just confirmed it.

Edited by Blaise McNamee

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