Falling PC And Mobile Shipments See Device Market Decline

Worldwide device shipments are set to decline 3 per cent this year, Gartner has forecast.

It marks a second consecutive year of decline of combined shipments for devices (PCs, tablets, ultramobiles and mobile phones), following a 0.75 per cent decline last year.

“The global devices market is not on pace to return to single-digit growth soon,” Ranjit Atwal, Gartner research director, commented.

“Growth is on pace to remain flat during the next five years. All segments are expected to decline in 2016, except for premium ultramobiles and utility mobile phones (entry level phones), which are expected to show single-digit growth this year.

“We expect premium ultramobiles will start benefiting from the collective performance and integration of the latest Intel CPU platform and Windows 10.”

Gartner expects that the PC market will record an 8 per cent decline this year, as the installed base bottoms out, with a halt in replacement cycle extensions.

“The effect of currency depreciation on the market is diminishing,” Atwal noted. “The second quarter of 2016 was the first since the second quarter of 2015 least impacted by currency depreciation.”

Following four consecutive quarters of decline, regions such as Western Europe, where the euro had depreciated significantly last year, with PC prices increasing, displayed flat market growth (a decline of 0.9 per cent) in the 2016 second quarter, Gartner notes.

PC sales will bottom out this year if this situation prevails, Gartner states, while noting that the market in Western Europe remains difficult following the Brexit vote.

“Device vendors are mitigating the currency depreciation of the pound in two ways — first, they are taking advantage of the likelihood of a single-digit decline in PC component costs in 2016,” Atwal commented.

“Second, they will ‘de-feature’ their PCs to keep prices down. With these changes, Gartner expects PC prices in the UK to increase by less than 10 per cent in 2017.”

To achieve flat growth next year, business spending in the market needs to flourish, Gartner states.

“The inventory of Windows 8 PCs should have been cleared, and large businesses in mature markets are now looking to move to Windows 10 through 2018,” Atwal stated.

“In addition, more affordable hardware and increasingly available virtual reality content (such as games, stories and other entertainment) will enable consumer PC buyers to upgrade in order to experience immersive offerings.”

Meanwhile, Gartner states that total mobile phone shipments are on pace for a 1.6 per cent decline this year, while the smartphone segment continues to grow, however more slowly than in previous years.

This year, “the Android market will continue to be bolstered by Chinese vendors offering more affordable premium devices”, while, despite the availability of the iPhone 7, Gartner expects a weaker year-on-year volume performance from Apple, with volumes stabilising after a very strong 2015.

Gartner expects smartphones to reach 1.5 billion units this year, increasing 4.5 per cent, with premium smartphones declining 1.1 per cent.

“We expect the market for premium smartphones to return to 3.5 per cent growth in 2017, as stronger replacement cycles kick in and in anticipation of a new iPhone next year, which is expected to offer a new design and new features that are attractive enough to convince more replacement buyers,” Roberta Cozza, Gartner research director, commented.

Worldwide Devices Shipments by Device Type, 2015-2018 (Millions of Units)

Note: The Ultramobile (Premium) category includes devices such as Microsoft’s Windows 10 Intel x86 products and Apple’s MacBook Air.  The Ultramobile (Basic and Utility Tablets) category includes devices such as iPad, iPad mini, Samsung Galaxy Tab S2, Amazon Fire HD, Lenovo Yoga Tab 3, Acer Iconia One.  Source: Gartner (October 2016).