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Media Tablet Growth Moves to the Emerging Markets

While few people may remember the anticlimax that followed the huge marketing campaign for the launch of Intel-based high-cost Ultrabook PCs, industry analysts can't help but reflect upon that event as they review the impact of low-cost notebooks on the personal computing market today.

Following a second consecutive quarter of softer than expected demand, International Data Corporation (IDC) has once again lowered its worldwide media tablet plus 2-in-1 forecast for 2014 to 233.1 million units.

Based upon their latest market study, they now forecast a 6.5 percent year-over-year growth rate -- which is well below the 12.1 percent growth rate previously forecast.

"When we look at the global picture, it would be easy to say that the tablet market is slowing down," said Jean Philippe Bouchard, research director at IDC. "But, when we start digging into the regional dynamics, we realize that there is still a good appetite for this product category."

While mature markets like North America and Western Europe will combine for flat unit growth in 2014, the remaining regional markets will generate 12 percent unit growth over the same period.


IDC anticipates that price pressure on media tablets with smaller screen sizes (less than 8 inches) and evolving tablet usage in emerging markets will fuel that unit growth.

While average selling prices (ASPs) are expected to stabilize at $373 in mature markets in 2014 due to the shift to larger screens and cellular-enabled tablets, ASPs in the rest of the world will decrease to $302, representing a price annual decline of 10 percent.

As an illustration of evolving tablet usage, shipments of tablets featuring a built-in option of voice calling over cellular networks in the Asia-Pacific (excluding Japan)(APeJ) region reached 25 percent this quarter, representing annual growth of 60 percent.

This trend suggests that end users in this region are looking for a single device that can meet their needs in terms of voice communication and media consumption, and for some that single device is a tablet and not a smartphone.

Driven primarily by small devices, IDC expects the rest of the world to account for the majority of shipments in the years to come. But in terms of dollars spent, medium- to large-sized devices in North America and Western Europe will still produce significant revenues.

This insightful market development scenario will likely become a case study at forward-looking business schools. The lesson learned is that vendors who ignore significant shifts in the marketplace demand do so at their own peril.

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