Year of the Phablets

The new is chewing up the old. A set of hybrid products analysts call “Phablets” are eating deep into the shipment of traditional PCs, and causing grief for PC vendors with no strong offerings in the segment, according to industry consultants and research firms.

Phablets, which DisplaySearch's Richard Shim defines in a recent report as a “phone and tablet combination,” helped drive PC shipment into negative growth in the fourth quarter of 2012, as well as for the entire year, according to a report from IDC. The research firm confirmed this is but one of the challenges PC vendors are facing. It said further:

    The lackluster fourth quarter results were not entirely surprising given the spate of challenges the PC market faced over the course of 2012. IDC had expected the second half of 2012 to be difficult. Consumers as well as PC vendors and distribution channels continued to be diverted from PC sales by ongoing demand for tablets and smartphones. In addition, questions about the use of touch on Windows PCs vs. tablets slowed commercial spending on PCs.

This development shouldn't come as a surprise to anyone. Aside from the improvement in processing power and storage, the PC had not evolved beyond its traditional functions until recently. Even now, whatever advancements we are seeing in the PC segment (touch screen technology in Microsoft's Windows 8, for example) are being copied from the smartphone and tablet PC market.

For years, PC vendors were satisfied with renewal purchases in saturated Western countries, and new users in developing economies. That strategy hit the rocks when non-traditional PC makers began rolling out smartphones and tablets that offer many of the same functionalities as computers.

This development, coupled with the lightness and ultra-mobility of “Phablets,” is frightening to PC vendors — rightly, in my opinion. Smartphones initially offered users the ability to get online, but the screens were often too limited for serious web surfing. That has changed with the advent of larger screen smartphones, compact tablets, and larger varieties.

The trend has even extended into the enterprise space, with many companies buying tablets for workers in place of notebook computers. Nowadays, it's no longer surprising to attend conferences where most participants show up with tablet PCs rather than laptops. I've even been at events where people use tablets to film and take pictures. They look funny carrying around 10.1-inch equipment and using it to film or take pictures, but I bet the tablets get the jobs done.

Let me repeat that: Tablets get the job done. This is the crux of the matter and the main challenge facing PC vendors. In any economic segment, the emergence of a new product class that has the same functionalities as an existing device at a lower price or other distinct advantages, can immediately result in significant market share losses by sellers of the currently-dominant product. PC sellers didn't anticipate this development, and it shows in their performance.

IDC said global PC shipment fell 3.2 percent in 2012 to 352.42 million, compared to 363.89 million in 2011. Of the top 5 vendors, only Lenovo and Asus recorded an increase in sales, of 19.2 percent and 17 percent, respectively. Hewlett-Packard, which retains its No. 1 position in the market, experienced a 7 percent decline in unit shipments; No. 3 vendor Dell tumbled 13 percent, and Acer sank 10 percent.

None of these companies is a major player in the phablet segment. They should expect more turbulence and shipment declines in 2013, unless they develop a killer application/device that knocks phablets from their current perch atop the food chain. It won't happen in 2013.

18 comments on “Year of the Phablets

  1. Anand
    January 11, 2013

    The trend has even extended into the enterprise space, with many companies buying tablets for workers in place of notebook computers.

    @AnnaYoung, thanks for the post. Its interesting to know that companies are already investing in tablets for workers in place of notebook computers but I feel its better to invest in ultrabooks rather than invest in tablets directly. Advantage of ultrabooks is they are light, compact, easy to carry around just like tablets. Moreover ultrabook's have inbuilt hardware keyboard which is missing in tablets.

  2. Barbara Jorgensen
    January 11, 2013

    Hi Anna,

    Thanks for the economics POV of the PC/tablet/smartphone dynamic! I'm still a PC person (see “Why PCs Aren't Selling” blog), but market forces and personal preferences are two different matters. I haven't tried out all available tablets yet, so maybe the Surface is the bridge product people like myself are looking for. And I agree the phablet will change the market yet again

  3. Anna Young
    January 12, 2013

    @Anandvy, I received an Ultrabook well before Christmas. It was supposed to be my early Christmas gift. I love it. You're right, I still prefer Ultrabook over a tablet. I am not a fan of touchscreen device. The last touchscreen smartphone I owned was a Samsung Tocco when it first came out in 2008. It's just the ceaseless typo error frustrations I cannot endure. However, the increase demand in phablets /other mobile device suggests consumers' passion to be on top of technology game (it's the IN thing).

  4. _hm
    January 12, 2013

    Large screen smart phone, compact tablets and ultrabooks offers customer long awaited device with convergence of technologies. To evaluate real efficay of these devices, you should see young university student using them. They love these devices and are higlhy productive with these new genration of technologies.


  5. Anna Young
    January 12, 2013

    Hello Barbara thanks for your contribution. May be this might cheer you up Barbs, you're not alone, I lean more towards traditional PC any day. But as you rightly noted in your comment, Phablets will certainly change the mobile device market as highlighted in your comment, the shift is backed by combination of trends.

  6. bolaji ojo
    January 12, 2013

    Ultrabooks are a joke. They are lighter, that's about all the advantage they offer over notebooks. Beyond that I don't see the reason why I should buy them. Intel disappointed as far as I am concerned because I thought ultrabooks would be a lot cheaper than traditional laptops. They aren't. If they are a bridge in the PC world, that bridge heads off into Intel's pocket. That isn't where you stick the customers' heads.

  7. Anna Young
    January 13, 2013

    I like Ultrabooks for its light weight. I think for its size (thin) it's powerful, portable and easy for me to carry to work every day.

  8. Anna Young
    January 13, 2013

    @_hm, in addition, tablets, Ultrabooks, Phablets are portable and easy to carry around in your hand bags too.

  9. Wale Bakare
    January 13, 2013

    I think ultrabooks have close match to notebooks/laptops. You mentioned inbuilt hardware keyboard, how about that?

  10. Cryptoman
    January 13, 2013

    People are always curious about new devices and technology. They want to find out for themselves what that new device can do for them and whether it can be a good replacement for their existing device. So they go and buy it and use it for a while. During that phase, they start to realise what the new device can and cannot do. Judging by the behaviour of most consumers I see around me, the new smaller and lighter devices with sufficient processing power tend to be used as a “supplement to” rather than a “replacement for” the PCs at the moment. I see laptops and notebooks as I normally have been in the past. The difference today is there is either a tablet or a smart phone sitting just beside those good old laptops. Today, our hands are busier switching between those devices depending on the platform we need to carry out a particular task.

  11. t.alex
    January 13, 2013

    it seems having a Phablet and an Ultrabook is the way to go nowadays 🙂 Previously we must have a phone, a tablet, and a PC/notebook for work. Nowadays, only 2 is enough. 

  12. Anand
    January 13, 2013

    Beyond that I don't see the reason why I should buy them.

    @Bolaji, ultrabooks which can be converted to tablets are very easy to carry. You can easily attach and detach the keyboard and hence they are very flexible.

  13. Anand
    January 14, 2013

    I think ultrabooks have close match to notebooks/laptops.

    @Wale, you are right. I believe ultrabooks are extension of notebooks/laptops. The only difference i find is ultrabooks are very light, thin and easy to carry around. The only difference i find between the tablet and the ultrabook is availability of  hardware keyboard.

  14. Anand
    January 14, 2013

    The last touchscreen smartphone I owned was a Samsung Tocco when it first came out in 2008. It's just the ceaseless typo error frustrations I cannot endure.

    @Anna, did you try using SWYPE keyboard which is inbuilt in Samsung devices. I feel Swype is far efficient than other types of keyboard interface that are available. One more issue with Samsung touch screen is that it doesn't work if we touch with wet-hand.

  15. Anna Young
    January 14, 2013

    @Cryptoman, you're spot in your analysis. All the other smaller devices are just additional. I agree. It may also depend on what is generally used for?

  16. Anna Young
    January 14, 2013

    @anandvy, yes I did. But the irregular static friction wouldn't let me trust touch screen device again. So now it's public knowledge, I'm not a fan of touch Screen device.  🙂

  17. Barbara Jorgensen
    January 16, 2013

    It seems to me companies are approaching the phablet from two different sides. From the phone side, screens are getting bigger, so IHS calls big smartphones  “phablets.” From the PC side, laptops and notebooks now have detatchable keyboards, and those are called hybrid tablets. (Hablets?) But it doesn't sound like those provide cellular technology. I wonder what the ultimate phablet will be: a really big phone or a really small computer?

  18. Barbara Jorgensen
    January 16, 2013

    Hi Anna! I've been eyeing ultrabooks as well, but waiting for the prices to come down. Other than the form factor, how do they compare with laptops and notebooks?

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