October 25, 2013
Smartphone And Tablet Revenue Exceeds All Other Electronics Put Together
Peter Suciu for redOrbit.com – Your Universe Online
Tablets and smartphones remain in hot demand, so much so that this year’s combined smartphone and tablet factory revenue will exceed that of the rest of the entire consumer electronics market this year.
According to a new report from research firm IHS iSuppli this is the first time that this has ever occurred, as worldwide original equipment manufacturer (OEM) factory revenue for media and PC tablets along with 3G/4G mobile handsets will amount to $354.3 billion for 2013. The IHS Inc. Applications Market Forecast Tool (AMFT) predicted that this will be three percent more than the $344.4 billion for OEM factory revenue for the consumer electronics (CE) market.
The latter, of course, remains a broad category that includes hundreds of product types such as televisions, audio equipment, cameras, video game consoles and even home appliances. Historically, the massive CE market has dwarfed the tablet and smartphone segment, with IHS iSuppli reporting that CE was 30 percent larger than the tablet/mobile space just last year.
Consumer electronics OEM factory revenue has remained flat in recent years, seeing less than one percent growth from 2007 to 2013, while in the same period smartphones and tablets have expanded by a factor of nine. This is up from just $41.2 billion in 2007, and revenue this year is expected to rise by a robust 31 percent.
“Consumer demand for smartphones and tablets has been flourishing in the past few years while sales growth for CE products has languished in the doldrums,” said Randy Lawson, senior principal analyst for semiconductors at IHS. “The fact that these two product categories are on their own able to generate more OEM factory revenue than the entire CE market illustrates the overwhelming popularity of smartphones and tablets. Meanwhile, the CE market has gone flat, with many of the major product types experiencing either low growth or declines in revenue during the past six years.”
The functionality of the devices is certainly part of the appeal, and in many cases these devices aren’t only being used as second screen devices, but are becoming primarily screens.
“Consumers simply are finding more value in the versatility and usefulness of smartphones and tablets, which now serve as the go-to devices for everything from phone calls, to photography, to navigation, to media playback, to fitness tracking,” added Lawson. “Because of this, smart mobile platforms are displacing sales of CE products such as digital still cameras, camcorders, GPS and media players.”
A number of factors are driving down the CE industry’s bottom line, including the fact that US shipments of flat-panel TVs are set to decline by as much as seven percent for the second half of 2013. In other words it's not likely to be a good holiday season for TV makers.
“Driven by holiday sales, the second half of the year is always critical for determining the fate of the US TV market,” said Veronica Thayer, analyst for consumer electronics and technology at IHS. “However, even with TV brands offering lower prices during this year’s Black Friday than they did in 2012, sales in the second half will decelerate sharply. The US television market continues to be stymied by the long-term slowdown in replacement and secondary purchases, with most U.S. homes already owning one or more flat-screen televisions.”
While mobile and tablet continue to see growth, the revenue is also starting to slow, and is expected to 'only' increase by 18 percent next year to reach $418.6 billion. Even so, the gap will likely widen, rising from a 22.2 percent advantage compared to the CE market next year to nearly 35 percent by 2017.