Tablet growth stops for first ever quarter
The final quarter of 2013 saw strong IT market growth offset by less than stellar tablet performance, says Oscar Diamond
The UK IT market was down 0.4 per cent by value in Q4 2013, compared with Q4 2012. This slight fall was the product of a tumbling average selling price (ASP) for tablets and the continuing decline in mobile computing. This countered expansion in a market otherwise experiencing growth.
Tablets experienced their first December value decline since records began. A decline of 2.6 per cent contributed to a Q4 year-on-year value growth of only 0.5 per cent. Volumes however rose 19 per cent, showing that this market has not fully matured yet.
ASP dropped 15.6 per cent, driven by a slew of entry-level releases in Q4, opening up price bands that previously did not exist for this market. The range of tablets available is now broader than ever; when the market was new, only premium devices were available. Given the option, many consumers are opting for entry-level tablets.
While the tablet market looks to be seeing value growth slowing, the same cannot be said for tablet keyboards, which drove keyboard value growth in Q4.
Keyboards grew 4.2 per cent in volume and 22.8 per cent in value, with a price increase of 17.9 per cent. Tablet keyboards add a lot of functionality to tablets and can extend product lifespan, so consumers see them as a good investment.
Additionally, tablet keyboards target the premium tablet range, allowing vendors to charge a high price.
The mobile computing market continued its long-term decline, down 15 per cent in volume but only 6.9 per cent in value. The limited value decline is due to a range of factors for which consumers are willing to pay a premium. These include ultra-thins (less than 2cm thickness), touchscreen devices and computing tablets (tablets that run full OSes).
However, these growth areas still represent only a small amount of the market and are not enough to stop the decline.
In contrast to mobile computing, desktops had a very strong Q4 with growth of 6.5 per cent in volume and 16.1 per cent in value. Value growth was driven by B2B server deals and consumer high-end towers that offer more power than is available in tablets or other mobile computing devices.
The growth in desktop computing marks a turnaround after years of long-term decline.
Networking had a strong Q4, driven by B2B projects in enterprise hardware. In communication devices (routers, switches and hardware) volume was up 17.2 per cent and value was up 26 per cent.
Businesses are upgrading their infrastructure to cope with big data demands, and to handle more mobile devices on their networks.
The smaller communication cards area (networking cards, powerlines) is suffering value declines. Powerlines are growing in volume but pricing is dropping rapidly as brands compete with each other. Networking cards are suffering value declines as prices are dropped in order to boost flagging sales.
The storage market saw volume growth of 5.1 per cent but value decline of 1.2 per cent. The retail side of the market had a much stronger quarter than the B2B side, with growth of eight and 10.5 per cent in volume and value respectively. The consumer market is benefiting from consumers buying smaller devices with less internal storage and so external storage is attractive.
The B2B market suffered declines in both volume and value of 3.7 per cent and 11.3 per cent respectively. With smaller business able to move to cloud storage, the need for local storage is falling.
Media streamers (boxes that stream internet video to a TV) saw massive Q4 growth of 99.6 per cent in volume and 25.6 per cent in value. This was driven by new launches in the entry-level market which brought the ASP down by 37.1 per cent.
Many sectors saw good growth including those that had suffered during the meteoric rise in popularity of tablets. The tablet market has already become an integral part of the IT market, but it can no longer be considered the growth driver.
Oscar Diamond is account executive on the IT panel at GfK