Global shipments of smart connected devices — a product category that includes PCs, smartphones and tablets — will exceed 1.7 billion units by next year, according to a report issued recently by the International Data Corporation (IDC). Roughly a billion of these devices will be delivered to retailers in the world’s emerging markets.
Brazil, Russia, India and China (BRIC) are expected to receive around 662 million smart connected devices in 2014 with a total shipment value of more than $206 billion. Another 650 million units — with a shipment value worth around $204 billion — will go to the developed markets of the United States (US), the United Kingdom (UK) and Japan, according to the IDC report.
A shift in the market
The report indicates a shift in the worldwide market for computing devices as demand in emerging markets begins to exceed demand in developed economies.
The trend is likely to become more and more pronounced over the next four years as the IDC expects emerging markets to register a compounded annual growth rate of 17 percent between 2012 and 2017. At the same time, the research group forecasts a more modest seven percent growth for developed markets.
The overall growth in the demand for smart connected devices will be mainly driven by the increasing demand for smartphones both in emerging and developed markets, according to the IDC. Smartphone manufacturers are expected to account for some 1.4 billion units of the 1.7 billion devices to be shipped next year. The total value of smartphone shipments for 2014 is estimated at around $500 billion.
The venerable PC will still command a piece of the market next year, of course, albeit with a smaller shipment volume of 300 million units. The value of PC shipments in 2014 is forecast to reach $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, a research analyst at IDC. “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.”
A decrease in selling prices
The increase in smartphone and tablet shipments is accompanied by a corresponding decrease in average selling price. The average price of tablets declined from $525 to $426 between 2011 and 2012, registering a 19 percent decline year-over-year. The average selling price of smartphones meanwhile fell by 8.2 percent during the same timeframe, from $443 to $407 a unit.
The decrease in prices is most prominent in emerging markets, where IDC expects low-priced smartphones and tablets to encourage huge shipments in 2014 and beyond. Smartphones and tablets will continue to generate higher average selling prices in developed markets.
A race to the bottom
“Smartphone prices are now less prohibitive to first-time buyers in emerging markets,” said Bob O’ Donnell, IDC vice president for clients and displays. “Although the double-digit growth of smartphones and tablets in emerging countries is a mouth-watering prospect, the low selling price also means that vendors will face huge struggles to meet the demand 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 for smartphone and tablet vendors,” O’Donnell added.
The IDC believes increased consumer interest in various applications are another factor contributing to the growth in the demand for smart connected devices in emerging markets.
Millions of consumers throughout the developing world use their devices for gaming, mobile messaging, VOIP services, social networking and social commerce.
Governments in countries like India, Thailand, Turkey and the United Arab Emirates have likewise begun education programs that use connected devices, greatly increasing the market prospects of low-cost tablets among students.
About Henry Conrad
Henry Conrad is a 29-year-old game developer from Albuquerque, New Mexico. Aside from gaming and being a tech junky, he also dabbles in creative writing, which allows him to create great storylines and backgrounds for his characters.