Margins beep challenge for device mkt

MUMBAI, INDIA: As the overall device market starts to saturate, the increasing pressure on margins will continue, and vendors will look at different ways to cope with the ongoing issue of lower margins. While the trend of declining prices is inevitable, consumers increasingly value other features in a device - beyond just the price. For example, new tablet users look for smaller screens and greater portability, while current tablet users look for better connectivity in their tablet replacements.

Worldwide combined shipments of devices (PCs, tablets, ultramobiles and mobile phones) are projected to reach 2.5 billion units in 2014, a 6.9 per cent increase from 2013 according to Gartner, Inc. Device shipments grew 4.8 per cent in 2013. Sales of traditional PCs will continue to hamper the overall growth of devices, and substitution from PC to tablet will decline.

"Tablet substitution of notebooks will start to dissipate from this year onwards as consumers and businesses align the right device with the right usage pattern. As they do this, we will see where dedicated devices (such as tablets), or hybrid devices (detachable or convertible devices), fit in the overall portfolio of devices," said Ranjit Atwal, research director at Gartner.

Mobile phones, the largest segment of the overall device market, are expected to reach 1.9 billion units in 2014, a 4.9 per cent increase from 2013. "While the lack of compelling hardware innovation marginally extended replacement cycles in 2013, we've witnessed an upgrade path in the emerging markets. Latin America, the Middle East and Africa, Asia/Pacific and Eastern Europe have all upgraded their phones, which will help to compensate for mature market weakness in the near term," said Annette Zimmermann, principal research analyst at Gartner.

In 2014, the worldwide tablet market is forecast to grow 38.6 per cent as overall adoption continues to grow faster in markets outside North America. "The adoption of tablets has been largely concentrated in the U.S., with the dominance of Apple. Market dynamics in other regions are different, as the uptake of lower cost, smaller, non-branded tablets, becomes more apparent," said Atwal.