Tuesday, July 31, 2018

Digital Device Shipments Still Impacted by Lower Demand

The consumer electronics and mobile device vendors have experienced a significant slowdown in demand, due to a number of related factors that result in the ongoing downward trend. This is a global phenomenon, where few markets across the globe are likely to drive significant new growth opportunities.

The combined personal computer (PC), media tablet and smartphone markets are on pace to record 0.9 percent growth and eventually reach 2.28 billion units in 2018, according to the latest worldwide study by Gartner. The PC and tablet market is estimated to decline by 1.2 percent in 2018, while the mobile phone market is forecast to increase by just 1.4 percent.

Digital Device Market Development

"The PC market is still hindered by the undersupply of the DRAM market for all of 2018, due to the lack of new wafer capacity coming online. As a result, PC vendors will continue to increase their prices throughout 2018," said Ranjit Atwal, research director at Gartner. "Larger screens and more graphic boards also mean rising costs, adding to the bill of hardware materials for businesses and consumer buyers."

While the PC market is price-sensitive, Gartner is anticipating business user demand migrating to high-end PCs -- such as ultramobile premium devices -- where the overall value is better. Gartner now estimates that shipments of ultramobile premium units to increase by 12 percent in 2018.

The next major shift in the PC market will be marked by the end of support for Microsoft Windows 7 in January 2020. "It is becoming paramount for businesses to migrate to Windows 10 as soon as possible, and certainly by the end of 2019," said Mr. Atwal.

North America kicked off the first Windows 10 migration phase in 2015 and will complete around 2019. Western Europe is increasing its adoption in 2018. However, in China, Japan and other emerging regions, migration plans are shifting from 2018 to 2019 as they continue to prepare for inherent complications in changing process and procedures for Windows-as-a-service.

While the global device market is affected by macro-economic factors and technology developments, it can also be influenced by the Chinese device market alone. "China accounts for over 20 percent of global spending on devices so any changes occurring there can have a significant ripple effect globally," said Mr. Atwal.

With nearly 1.9 billion units to be shipped in 2018, mobile phones are the main influencer of the global digital device market growth. In China, mobile phone sales declined 8.7 percent in 2017 to 428 million units, but are estimated to grow 3.3 percent in 2018 -- representing 23 percent of total mobile phone sales this year.

Outlook for Asia-Pacific Upside Growth

The traditional PC market in China is on pace to decline by 1.7 percent to 38.5 million shipments in 2018, representing 21 percent of global traditional PC shipments. According to the Gartner assessment, the reduction will come despite China being business-dependent, with two-thirds of PC shipments coming from the enterprise and commercial market segment.

"The downward trend that China is experiencing is undoubtedly affecting the worldwide device market," said Mr. Atwal. "China is an interesting country to watch this year. The continued roll-out of a Chinese version of Windows 10 in the second half of 2018 as well as Apple iPhone's replacement cycle expected through 2019 will generate demand."