Smartphone proliferation is the key factor expected to fuel global consumer electronics market size. Technological advancements, the emergence of 3G and 4G technologies and innovation are also expected to drive demand.
The industry has evolved significantly over the last few years owing to several new technological developments. Technological proliferation and the emergence of smart devices is expected to be the key factor driving growth over the next six years. However, growing adoption of tablets has led to decline in sales of traditional desktop PCs and laptops, which is expected to pose a challenge to growth.
The surge in demand for devices with large screens referred to as ‘phablets’, offers significant growth opportunities. Furthermore, advancements such as the emergence of IoT across devices such as fitness bracelets, rising consumer disposable income, and growing popularity of smart devices provide avenues for industry growth.
Development of devices compatible with emerging technologies such as 3G/4G is expected to impel demand. The industry offers ample opportunities for personal electronics suppliers and manufacturers to harness consumer behavior or intent and trends to emerge as a leader. Increasing penetration of BYOD market offers avenues for growth.
Global personal electronics market by product, 2012 – 2020 (Million Units)
Smartphones are expected to represent over 60% of the overall revenue by 2020, which can be attributed to the high degree of digital convergence and product innovation initiatives by key manufacturers.
The smartphone market is dominated by three major operating platforms, namely Android, iOS and Windows. Availability of multi-functional and cost-effective devices is expected to be the key force driving demand. The industry is extensively driven by strong demand in the Asia-Pacific region. This may be attributed to the emergence of cost effective Chinese manufacturers such as Xiaomi and Huawei.
Desktops are expected to rapidly lose revenue share on account of demand for portable devices. The digital camera market is expected to be restrained by the advent of powerful cameras embedded in smartphones and associated devices.
The introduction of new innovative and smarter tablets with extensive input capabilities offers opportunities for growth. In addition, government-driven initiatives in developing regions may also fuel demand over the next few years. Tablets address a few traditional technology barriers. Impairments or arthritis limits motor skills in users; however, tablets provide touch technology facilitating usage.
North America consumer electronics market is expected to emerge as the dominant regional industry owing to high penetration. However, growth is also accompanied by the significant disruption. The barriers to entry for smartphones have dropped considerably owing to the rise of Android operating system and several reference design platforms.
North America and Europe are mature markets and is expected to witness impetus from network operator’s early upgrade programs and smartphone growth. Smartphone sales in these markets are largely driven by replacement sales. Countries such as China and India are expected to witness substantial growth over the next few years.
Competitive Market Share Insights
The industry faces several challenges owing to evolving consumer preferences, supply-related delays and production disruptions. Personal electronics market is at an inflection point in terms of manufacturing and product development. Conventional supply chain planning is not adequate to meet future challenges. In order to manage intense competition, shrinking margins and ever-evolving consumer taste/preferences, manufacturers and OEMs focus on building an efficient supply chain. Consumer electronics market share is somewhat concentrated on a global level, but quite fragmented on a regional level, owing to the presence of domestic participants.
Personal electronics manufacturers also emphasize on understanding new imperatives of outsourcing, thereby adding value to supply chain operations. For instance, key industry players such as Apple, Dell and HP have successfully adopted contract manufacturing in order to focus on their core competencies and concentrate on their design and sales operations. Mergers and acquisitions also form a key business strategy in the industry; for example, Intrinsity, a fabless semiconductor company was acquired by Apple Inc. in 2010.
Collaboration plays an even more critical role owing to continuous product innovation and increased competition, especially during new product introduction (NPI) and promotion programs. A well-established distribution network along with broad product portfolio will help companies increase product volume and reduce costs.
Notable companies dominating smartphones market share include Samsung, Apple, LG, Huawei, and ZTE Corporation.
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