Sep 12, 2013 (07:09 AM EDT)
Tablets To Edge PCs In Q4: IDC

Read the Original Article at InformationWeek

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The entire connected device market, which includes smartphones, tablets and PCs, will grow about 27.8% this year, but not because businesses and consumers are snapping up new laptops and desktops. Growth for traditional PCs continues to slow, while smartphones and tablets are picking up the slack, said IDC.

IDC predicts that shipments of tablets will surpass those of laptops and desktops combined during the fourth quarter of the year. However, PC shipments will still outnumber tablets for the entire year. IDC expects to see tablets surpass PCs on an annual basis by 2015, though smartphone shipments will outpace both by a wide margin.

"At a time when the smartphone and tablet markets are showing early signs of saturation, the emergence of lower-priced devices will be a game changer," said Megha Saini, research analyst with IDC's Worldwide Quarterly Smart Connected Device Tracker. "Introducing new handsets and tablet devices at cheaper price points, along with special initiatives like trade-in programs from Apple and Best Buy, will accelerate the upgrade cycle and expand the total addressable market overnight."

We're already seeing a wave of such products. Google's Nexus 7, for example, is priced starting at $229. Other tablets, such as HP's slate come in even lower, at $179. Just this week, Intel predicted that its new Bay Trail processors will lead to the sub-$100 Android tablet in the near future. Laptops cannot compete with those prices.

[ Want to know what else Intel has in store? Read Intel's Post-PC Strategy: 4 Takeaways. ]

Today's leading smartphones continue to be extremely expensive, but hardware makers know that high-volume devices are where the growth is. Nokia, for example, has seen incredible success with the Lumia 520, a Windows Phone smartphone priced at just $150. It is the number-one selling Windows Phone device in the world.

The real tug-of-war, say IDC, will be between phablets (large smartphones) and smaller tablets.

"The device world has seen several iterations of cannibalization impacting different categories, with the last few years focused on tablets cannibalizing PC sales," said Bob O'Donnell, program VP, clients and displays, at IDC. "Over the next 12-18 months, however, we believe the larger smartphones, commonly called 'phablets', will start to eat into the smaller-size tablet market, contributing to a slower growth rate for tablets."

Today's smallest tablets have screens measuring seven inches. This includes the Nexus 7 from Google, as well as the Galaxy Tab 3 from Samsung. Meanwhile, there are a number of smartphones, such as the Samsung Galaxy Mega, that boast screen sizes greater than six inches. Further, the bulk of today's flagship devices (Galaxy S4, LG G2, Note 3, etc.) have screens well above the five-inch mark. Given the easier portability of even large phones and their high-speed connections, it isn't a stretch to see that phablets may chew into sales of small tablets.

This year, IDC expects to see shipments of desktop PCs reach 134.4 million, laptops reach 180.9 million, tablets reach 227.3 million and smartphones reach 1.01 billion. That means smartphones will hold about 65% of the connected-device market, with tablets trailing at 14.6% and laptops at 11.6%. IDC believes that all categories, with the exception of desktops, will grow over the next few years, with tablets seeing the highest growth rate.