Smartphones to cannibalize tablets, but it's the PC getting eaten

Tablets are where the growth is right now, with sales of touch devices eating away at the market share of traditional PCs. But that’s not the only cannibalization going on in the tech world. The iPad mini certainly impacted on sales of the standard-sized iPad upon launch. And with the line between tablets and smartphones becoming increasingly blurred, market analysis firm IDC predicts large-screen (5+ inch) smartphones will start to gnaw away at the smaller (7-8 inch) tablet market from 2014.

"The device world has seen several iterations of cannibalization impacting different categories, with the last few years focused on tablets cannibalizing PC sales," Bob O'Donnell, Program Vice President, Clients and Displays, observes. "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".

IDC’s Worldwide Quarterly Smart Connected Device Tracker expects the smart connected device market (made up of PCs, tablets, and smartphones) to grow globally by 27.8 percent year over year in 2013, building on the impressive 30.3 percent growth witnessed in 2012. Predictably this growth will be powered by tablets and smartphones, with PC shipments dropping by 10 percent this year.

Four months ago IDC predicted tablets will be out-shipping PCs by 2015 and while the firm is still sticking to that time frame, it forecasts tablet shipments will surpass total PC shipments in the fourth quarter of 2013 -- presumably as a result of tablet manufacturers pumping out more product for the holiday season.

Looking forward, the firm says global smart device shipments will surpass two billion units by the end of 2015 with a market value of $735.1 billion. By 2017, PC shipments are expected to drop to 13 percent, while tablets and smartphones will contribute 16.5 percent and 70.5 percent respectively to the global market.

Tablet and smartphone growth will largely be fuelled by the proliferation of low cost devices.

"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," says 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 BestBuy will accelerate the upgrade cycle and expand the total addressable market overnight".

Smart Connected Device Market by Product Category, Unit Shipments and Market Share, 2013 and 2017 (shipments in millions)

Source: IDC Worldwide Quarterly Smart Connected Device Tracker, September 11, 2013.

Photo Credit: Timothy R. Nichols /Shutterstock