The global market for mobile PCs tallied shipments below expectations in the fourth quarter (Q4) of 2013, despite the strongest sequential growth in four years, according to a new report from IHS Technology (NYSE: IHS). A key reason cited by analysts is the conservative buying plan by PC vendors during the holiday season.
Here are the numbers: Shipments of mobile PCs worldwide totaled 52.6 million units in Q4 up 9.4 percent from 48.1 million in the third quarter. However, IHS analysts say this was far below the 55.3 million units expected by the industry.
“Things were looking positive for the fourth quarter of 2013 after the third had come in on target. The introduction of new platforms and the arrival of Intel’s new-generation Atom processor Bay Trail were expected to enable a new entry-level pricing point for the PC market not seen since the netbook,” said Craig Stice, director for compute, servers and storage at IHS, El Segundo, Calif., in a statement.
“But with the consumer PC market struggling, PC vendors proceeded to maintain a conservative buying plan for the holiday season with attempts to keep inventory levels lean. As a result, entry-level PCs did not make it into high volume for the holidays, and overall shipments underperformed the initial heady outlook,” Stice added.
The good news is the 9.4 percent growth in Q4, which was the strongest sequential growth since the fourth quarter of 2009, and the second straight sequential rise after a five percent drop in Q2, according to the IHS report, “Mobile PC Remains Soft in Q4."
Overall, the declines seen over the past few years are expected to level off, according to Stice, although the market "isn’t likely to bounce back to the double-digit growth once seen in years past."
The biggest challenge for the mobile PC market, which includes laptops and PC tablets, is the growing competition in the wireless world of smartphones and tablets.
Wireless-enabled mobile PCs and smartphones are projected to be the highest volume applications over the next five years, driven by both consumer and enterprise users. Shipments of high-speed, wireless-enabled mobile PCs, alone, are forecast to exceed 125 million devices in 2018, according to IHS.
"In the home, high-speed wireless-enabled PCs will be used to stream HD content to the TV on the home network," said Stephanie Gibbons, senior analyst for connectivity at IHS, in a statement. "In the office space, mobile PCs equipped with high-speed wireless will be able to receive and transfer large files in seconds—compared to minutes—and act as a source device for larger displays for use in applications such as video conferencing.”
But there are some bright spots, said analysts. They expect PC vendors to replenish inventory with new products that feature Intel's Bay Trail processors, which provide longer battery times and more powerful graphics. Other potential drivers include the Chinese New Year and the expiration of the Windows XP operating system (OS) in April, which may drive consumers to new machines with the Windows 8 OS.
However, big PC brands, including Apple, ASUS, HP, Lenovo, Samsung, Sony, and Toshiba, are expected to reduce their notebook shipments for 2014 due to scheduling delays and weak demand, according to a NPD DisplaySearch's recent Quarterly Mobile PC Value Chain and Insight Report. The projection for 2014 shipments for the top nine notebook PC brands is 134 million units, down from a previous estimate of 152 million units.
“The declines in notebook PC shipments will have many effects on the notebook PC value chain in the coming year,” said Jeff Lin, value chain analyst for NPD DisplaySearch, Santa Clara, Calif., in a statement. “We expect panel makers to shift Gen 5 and 6 capacity from TFT LCD for notebook panels to oxide, LTPS, and other technologies. OEM and ODM businesses will face new challenges in the allocation of product development resources for Windows OS and Android OS. Also, as Samsung reduces notebook PC shipments, HP, Lenovo, and Asus will fill the gap in the European market.”
The delay cited by the NPD DisplaySearch report is for shipments of Intel's Broadwell CPU, which is expected to push original-design-manufacturer (ODM) production demand from Q2 2014 to Q3 2014. Combine this with the expected launch of a 12.9-inch Apple iPad, it could create more competition for potential PC buyers, said analysts.
Tablets already hold the largest share in the mobile PC market. Global tablet PC shipments are expected to increase to 315 million units in 2014 with a more than 65 percent market share in the mobile PC market, according to NPD DisplaySearch. Shipments are expected to reach 455 million units by 2017, reaching a market share of almost 75 percent.
One key driver behind the growth in shipments is the falling average selling prices (ASPs) from $311 to $296 by 2017, which is expected to drive adoption particularly in emerging regions, according to NPD DisplaySearch. Emerging regions are expected to account for 62 percent of the market (385 million units) by 2017, up from 57 percent (274 million units) in 2014.
“Momentum for the tablet PC market is in full swing as it has become the dominant mobile PC form factor,” said Richard Shim, senior analyst at NPD DisplaySearch, in a statement. “Competition is expected to increase as traditional notebook PC brands, including Lenovo, HP, and Dell update their product portfolios to emphasize tablet PCs. Increased competition will mean more attention on, and development of, various segments of the market, which will ultimately lead to greater choice and devices that better fit the needs of consumers.”