Demand for laptops will be weak in the first quarter of the year, and not only because of the market share being stolen by tablets.
The Notebook Company MD Christopher Riley says laptop demand - not counting netbooks - was already moving downwards before the tablet industry caught fire. "Apple's iPad, the soon-to-follow Android and Windows slates, and more recently, Windows RT tablets, are simply acting to aggravate these already existing problems."
Research company Gartner has noted that about 821 million tablets and smartphones would have been sold last year, and will pass the one billion-mark this year. Smart devices account for about 70% of total devices sold in 2012.
The International Data Corporation (IDC) says the global smart connected device market - a collective view of PCs, tablets, and smartphones - grew 27.1% year-over-year in the third quarter of last year. It expected that holiday season trade would continue to reach record levels, growing 19.2%.
Holiday season growth was expected to be driven by tablets and smartphones, which were envisaged to grow 55.8% and 39.5% year-over-year, respectfully, while PCs were expected to decline slightly from this quarter a year ago.
IDC expected the worldwide smart connected device space to continue to surge well past the strong holiday quarter, and predicts shipments to surpass 2.1 billion units in 2016, with a market value of $796.7 billion worldwide.
Slow start
"For most businesses, smartphones and tablets will not entirely replace PCs, but the ubiquity of smartphones and the increasing popularity of tablets are changing the way businesses look at their device strategies and the way consumers embrace devices," said Carolina Milanesi, research VP at Gartner.
However, Riley says it appears the general consensus among market watchers is that the first quarter of 2013 will not witness an upsurge in laptop demand. He says it could be an even less lucrative quarter for notebook markets than usual.
"Generally, the first quarter of the year is a slow season due to the fact that many people are still recovering from the spending sprees of the festive season. Adding to the challenges, this year, notebook vendors will have to contend with Windows 7 notebook oversupply, pressing many to offer as many price cuts as is possible.
"Installing Windows 8 on units will help somewhat, but it must be remembered that many owners of Windows XP/Vista and 7 systems are probably not yet ready for performance upgrades. They might even opt to buy a new phone or a tablet instead of a PC," says Riley.
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Riley notes that while there will be pressures on laptop sales, the popularity of tablets will continue. "Apple iPads will continue to outsell our range of laptops during the first quarter of this year," said Riley, "and, frankly, I see this continuing into the year."
It has also become standard that most desktops will be replaced by laptops, says Riley.
IDC says while this is a multi-device era, market dynamics are shifting in terms of product category. In 2011, PCs - a combination of desktop and portable computers - accounted for 39.1% of the smart connected device market.
By 2016, PCs are expected to drop to 19.9% of the market, says IDC. Smartphones will be the preferred product category, with share growing from 53.1% in 2011 to 66.7% in 2016. Tablets will also grow significantly, with share growing from 7.7% in 2011 to 13.4% in 2016.
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