IDC : The end of the PC era

1. 2013 saw PC shipments contract by 9.8%, the severest on record.

2. The bad news is not over as the category is expected to see another drop of 6.1% in 2014 basis lackluster demand from in developing markets
3. The weak economic environments in emerging markets coupled with significant shifts in device priorities is causing the decline in PC category.

4. Long-term growth in PC shipments is expected to remain just below zero, with shipments in 2018 expected to decline 0.2 percent

India Smartphone Markets (Q3 2013) – IDC

Indian smartphone markets is witnessing explosive growth in the smartphone segment primarily driven by lower priced smartphones from domestic handset makers are eating into market share of feature phones in India. IDC’s Q3 2013 report records increase in smartphone numbers by 229% (YoY) to clock 12.8 mln units in Q3, 2013.

The overall mobile phone market (Feature Phones and Smartphones) had a 12% growth YoY and a 7% growth quarter over quarter (QoQ) with the share of feature phones sliding further to make 81% of the total market in 3Q13 despite the feature phone market growing at 3% in 3Q2013 over 2Q2013.

The growth trend in smartphones is expected to continue in the future because of the narrowing price points between high end feature phones and the entry price point of low end smartphones.

India Mobile Phone Q3 2013 market shares

Q3 2013 India Smartphone Market shares

Q3, 2013 Smartphone Market shares- IDC

The worldwide smartphone market grew 38.8% year over year in the third quarter of 2013 (3Q13), according to the IDC. Thus, a total of 258.4 million smartphones were shipped in 3Q13, establishing a new record for units shipped in a single quarter by more than 9.0%. The previous high was 237.0 million units shipped in the second quarter of 2013. Price points have declined significantly, driven largely by low-cost Android solutions.China has become one of the fastest growing smartphone markets in the world, accounting for more than one third of all shipments last quarter. This trend is expected to continue going forward. The Android smartphone platform has created vast opportunities for new vendors to get into the smartphone space and, in turn, has produced new competitive pressures at the top of the market. Vendors from outside the top 5 continue to control nearly half the worldwide smartphone market in terms of shipments. In 3Q13, Chinese vendors Huawei and Lenovo moved past LG, and not far behind are two more Chinese companies, Coolpad and ZTE. Any of these vendors could change position again next quarter. But in addition to having close shipment volumes, they all have one key ingredient in common: Android. This has been a huge factor in their success, but it also speaks to the challenges of differentiation on the world’s most popular platform.Looking ahead, strong momentum is expected to continue going into the fourth quarter, and another record quarter and year in the worldwide smartphone market. With already strong growth in 3Q13 and multiple vendors launching flagship models, the market will be poised to reach one billion units for the year. It’s a significant milestone considering the market shipped just half a billion units in 2011. Moving forward, what remains to be seen is how the various companies and platforms will stay differentiated and relevant in the increasingly competitive market.

In the worldwide mobile phone market (inclusive of smartphones), vendors shipped 467.9 million units in 3Q13 compared to the 442.7 million units shipped in 3Q12, representing 5.7% year-over-year growth. Third quarter shipments were up 7.0% when compared to the 437.4 million units shipped in 2Q13.

Interestingly enough the category of phones apart from the smartphones reduced by 18.4% from 256.5mln handsets in Q3 2012 to 209.5mln Q3 2013. Feature Phones are thus a shrinking category globally!

India Smartphone Markets (Q2 2013) – IDC

Smartphone shipments in india grew by 50% QoQ to 9.3 million units (Q2, 2013) as against 6.1 million units(Q1, 2013)
The total mobile phone shipments increased by 4% QoQ and 21% YoY in the country.
The feature phone market is declining but still accounts for 85% of the mobile phone market in the country.
67% of 9.3M Indian Smartphone Shipments In Q2 2013 Are Sub-$200 Phones
Shipments of Phablets (smartphones between 5-inch to 6.99-inch screen size) shipments have increased by 17 times annually and now accounts for 30% of the smartphone shipments in Q2 2013
Shipments of smartphones between 3.49-inch and 4.99-inch has also increased significantly over the past few quarters and now account for the majority of smartphone shipments for the quarter Smartphones less than 3.49-inch has dropped massively and now accounts for only a small portion of the smartphone shipments.
Windows Phone has taken 5.6% market share in India, largely on the strength of Nokia’s smartphones, which had 5% of the market.

Top 5 Smartphone vendors- Micromax is closing in on Samsung for no.1 spot, riding the ‘phablet’ wave
– Samsung continues to lead the smartphone market with 26% market share, driven by shipments of low end Samsung Galaxy Star and other mid range smartphones. Samsung’s massive aggressive marketing in the country has a significant contribution to this.
– Micromax has 23% smartphone market share and has crossed 2 million shipment units, significantly driven by Micromax’s Canvas series.
– Karbonn has 13% smartphone market share which has apparently seen an uptick in its A series and the newly launched Titanium range of smartphones.
– Nokia has 5% smartphone market share which has apparently seen an increase in Nokia Lumia 520 sales volume. Dedicated advertising and marketing push towards positioning Lumia phones as a quicker and cooler replacement to other brands is working in its favor. Nokia is still feel the growth is still very slow as compared to other players, primarily due to the Windows Phone 8 operating system which is is slowly filling all the major gaps in the software but is still quite nascent as compared to its iOS and Android counterparts.
– Sony also has 5% smartphone market share and IDC says Sony’s mid tier phones and low end dual SIM phones are doing well.

The key for growth in India, as with most emerging markets, is low-priced phone equipped with a large screen and dual SIM slots. The dual SIM phenomena, which had accelerated the growth of local vendors in feature phone, turned to dual SIM smartphones flooding the Indian market. Topped with an attractive sub $200 price tag, these smartphones are proving highly attractive

India PC Shipments (Q2, 2013): IDC

The overall India PC shipments for Q2 2013 stood at 3.53 million units, representing a substantial year-on-year growth of 24.0% over Q2 2012 and a quarter-on-quarter surge of about 30.2 % over Q1 2013.

State-led manifesto driven spending on notebooks steered commercial investments in the India PC market in Q2 2013. Special projects currently being executed in states like UP, Rajasthan, and Tamil Nadu accounted for roughly one third of the total PC market size in Q2. However, the organic demand for PCs in India outside special projects has weakened, which remains a cause of concern for PC vendors. Further, the rupee slide derailed enterprise spending, as the investment decisions remained seemingly delayed across most of the verticals.

The consumer market in Q2 witnessed a marginal growth over Q1 2013 aided by back-to-school campaigns and loading of stocks across partners in preparation to the impending price hike on account of rupee volatility.

HP recorded its highest ever quarterly market share with an exceptional 34.1% share in Q2 2013 dominating both consumer and enterprise segments
Even with Dell globally going south, Dell in India, took the second position with a share of 11.0% in Q2 2013. Their presence at the entry level price-band has given them much room to drive their volumes.
Acer took third with a market share of 10.4% propelled by large deals in the states of Tamil Nadu and Rajasthan, which fueled their growth in the commercial PC market in Q2

Q3 has historically witnessed strong consumer buying in lieu of the forthcoming festive season in various parts of the country. This is also well aided by the back-to-school/college season and related campaigns undertaken by vendors and partners across different regions. IDC expects 2013 to be no different. Consumer sentiments have peaked at the right time as they begin to reconcile with the market reality on inflation and related pressures. Retail walk-ins have improved and share of consumer wallet looks to move back to PCs, which is an encouraging sign for the consumer PC vendors.

However, the PC business continues to thrive on wafer thin margins and it is still early to comment on the success of new form factors, which were anticipated to drive the overall value of this business. Also, outside special projects, demand from enterprises and government remain largely suppressed painting a gloomy scenario on commercial PC business, in the near future.

Tablets to oversell Laptops by 2015: IDC

A snapshot of the Tablet category catching up with Portable PCs, by 2015

IDC Q1, 2013: When Smartphones prevailed over Dumbphones

Manufacturers shipped 216.2 million smartphones worldwide in Q1, 2013, compared with 189 million regular cellphones, according to IDC. IDC Q1, 2013 numbers compare facorably to 402.4 million units in the Q1,2012 (YoY) and down from 483.2 million units in the Q4, 2012.Smartphones thus made up 51.6 percent of the 418.6 million mobile phones shipped. The shift to a global majority of smartphones is now being driven by consumers in developing countries such as China, India and Indonesia.

Samsung retains the smartphone crown taking 32.7% of the market shipping out 70.7 million smartphones – thus becoming the defacto Android standard. Samsung’s up 61% over a year earlier.Apple slipped in its numbers to close Q1, 2013 at 17.3% of the smartphone market share with 37.4 mln units. Apple’s market share market share fell to 17% from 23% a year earlier. Samsung’s dominance of the smartphone markets is so superior that it ships more smartphones than its next 4 competitors put together.

Total Mobile phone shipments increased 4% YoY driven solely by 41% increase in smartphones compensating 19% drop in dumbphones.

Post PC or PC Plus?

IDC in its most recent report indicates that Tablets will surpass Desktops globally by 2013 and notebooks by 2014. IDC indicates, global shipments of smart connected devices to have increased about 30% in 2012, surpassing last year’s 1 billion units shipped with $576.9 billion generated. Tablets pushed the growth rates with a scorching 78% YoY growth (2013 versus 2012).

IDC also notes shipments of desktop PCs will continue dipping, another 4.3 percent, in 2013
Notebooks will see a marginal growth of 0.9 percent.
Tablets, are predicted to register a new high of 190 million units shipped in 2013 with year-over-year growth of more than 48 percent.
IDC says smartphones will also grow another 27 percent, posting 918.5 million units shipments this year.

In terms of OEMs, Apple significantly closes the gap with market leader Samsung in the last quarter of 2012 with the combination of the iPhone 5 and iPad Mini bringing the company up to 20.3 percent unit shipment share as compared to 21.2 percent for Samsung.

Interestingly enough then, PC majors such as HP and Dell would increasingly get outmoded by the likes of Amazon – the antithesis of device majors.

So then, does this mean the end of the PC era? The Post PC era? … as Steve Jobs had crystal gazed. Well, it looks a certainity with these numbers and yet i would claim it as dawn of the PC plus era! Its a contrarian view given the convergence scenario – but i do believe that we will see a mobile stack of 4-5 devices going forward – Smartphone, Tablet, Notebook, Smart Watch or Google Glass and more (Smart TV, Smart Car and Smart Refridgerator not counted).

Tablets will occupy a unique place. PCs will occupy a unique place – Physical keyboards are actually really important. Both devices will co-exist with more and more convertibility and ability to work together. The convergence eco-systems will also work on platform portability across the range of converged devices.

Hence it is not so much as “passover” of the PC as the emergence of new computing devices which only add to the PC to further the case of always on ubiquitous computing.

Smartphones take over Feature Phones (Finally!)

Long time back, i had been musing if Smartphones could become the primary mobile/handheld devices in the future. If IDC numbers are to be believed 2013, would the year smartphones would tip over feature phones accounting for 50.1% of the total mobile phone shipments. Further more over a 5 yr period, Smartphones will clock a 10.3% CAGR making up for a CAGR loss of 3% in feature phones by 2017, thereby growing the mobile phones category by 4%.

The three key reasons of rapid massification of smartphones are
1. Data centric network roll outs (3G/4G)
2. Drop in Entry cost from $600 (2009) – $50
3. Open source eco-system that are pushing the economies of scale.

As Smartphone breaks price barriers, the distribution and reach is reaching hitherto untouched segments and economies such as India, Brazil, South Africa, China, Indonesia. China has already topped USA as the top smartphone seller globally. the tablet below summarized IDC’s growth matrix for Smartphones on a global basis.

Now then to my favourite old question – A 70% Android share- Is that a tenable proposition even as the competition keeps increasing? Or do we see a new world order in Smartphone OS 5 yrs down the line? Or will Android become to Smartphone what Windows became to PCs?

Platform extension may be the pointer and the answer to this.

Another compelling thought – Will Smartphones give way to a more real time immersible experience such as Augmented Reality on Glasses or Contacts?

Q4, 2012 Smartphone Market shares- IDC

The new IDC report for smartphone shipments in Q4, 2012 hands it over to Android – which seems to have reached more dizzying heights than what Symbian/Nokia ever reached in their near monopolistic regime heydays. the two systems accounted for 91.1 percent of operating systems on all smartphone shipments during the fourth quarter of 2012. For the year 2012, Android and iOS accounted for 87.6 percent of operation systems on smartphones shipped.

Android smartphone vendors and Apple shipped a total of 207.6 million units worldwide during Q4 which is a 70.2 percent increase from the 122.0 million shipments of Q4 2011.

Android Saw triple-digit growth for the year. According to IDC, Samsung was the biggest contributor to Android’s success as 42.0 percent of all Android smartphone shipments during the year were by Samsung. The report notes that the intra-Android competition has not stifled companies from keeping Android as the cornerstone of their respective smartphone strategies.
At the end of 2012, Android had a 68.8 percent of market, with over 497.1 million shipments. In 2011, Android’s market share was 49.2 percent with 243.5 million shipments.

iOS also continued to register strong growth. But the report notes that iOS’s year-over-year growth has slowed compared to the overall market. Of course the report also mentions the growing buzz around a large-screen iPhone and a cheaper variant, which it says would help sustain growth. iOS shipments for 2012 stood at 135.9 million smartphones which represents an 18.8 percent market share. This is a 46 percent growth compared to 2011 when iOS smartphone shipments stood at 93.1 million at a market share of 18.8 percent.

BlackBerry OS: The report states that the decision to postpone the release of BB10 to 2013 left the platform vulnerable in 2012 and reliant primarily on older smartphones running on BB7. As a result, BlackBerry’s tight grip on enterprise users has loosened. BlackBerry had 32.5 million shipments for 2012, which gives it a market share of 4.5 percent. This is down 36.11 percent from 2011 where it had 51.1 million shipments and a market share of 10.3 percent.

Windows Phone/Windows Mobile: The report notes that this has made some progress in Q4 of 2012. Nokia’s Lumia phones were the key driver in Microsoft’s success, says IDC. Windows Phone/Windows Mobile had a 17.9 million shipments and represents a 2.5 percent market for mobile OS on smartphones. This is 98.9 percent increase from 2011 when it had only 9.0 million shipments which was a market share of 1.8 percent.