Tablets, smartphones take hold in emerging markets
One billion smart connected devices -- tablet, smartphones, and PCs -- will be delivered to emerging markets in 2014. According to the International Data Corporation, 1.7 billion shipments of these devices are expected to go out worldwide next year.
The shift in demand for smart connected devices is moving from developed markets to emerging markets. Of the one billion devices being delivered to emerging markets, 662 million will go to BRIC countries -- Brazil, Russia, India, and China. That's more than the total number being shipped to the U.S., U.K., and Japan combined (400 million units) and all developed markets (650 million units). The shift can also be seen in demand growth. Emerging markets will see a compound annual growth rate (CAGR) of 17 percent from 2012-2017, while developed markets will have a CAGR of seven percent during that same time.
And in both developed and emerging markets it's the smartphone and tablet, not the PC that's driving growth. Of those 1.7 billion units that will be delivered worldwide next year, 1.4 billion will be smartphones and tablets. Here's the market share breakdown:
"Smartphone and tablet prices are now less prohibitive to first-time buyers in emerging markets," said Bob O'Donnell, Program Vice President, Clients and Displays, at IDC. "Although the double-digit growth of smartphones and tablets in emerging countries is a mouthwatering prospect, the low selling price also means that vendors will face huge struggles to meet the demands profitably. Given the competitive price points for cheaper smartphones and tablets, this price war is a race to the bottom and it's not at all clear that this low-end market offers sustainable profits to smartphone and tablet vendors."
Here's what he means. The average price of tablets has dropped 19 percent, from $525 in 2011 to $426 in 2012. Smartphone prices, meanwhile, fell about eight percent during that time, from $443 to $407. But those prices are much lower in emerging markets: less than $350 for tablets and less than $300 for smartphones. That's good for growth, but not necessarily good for the bottom line.
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